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Wednesday, 4 June 2008
Page: 4407

Mr PYNE (11:12 AM) —I am pleased to be speaking today on the Passenger Movement Charge Amendment Bill 2008, a bill that will implement some of the announcements made in the budget a couple of weeks ago. I foreshadow that I will be moving a second reading amendment at the end of my brief remarks. A departure tax was first introduced for persons departing Australia for another country by the Departure Tax Act 1978. The rate was initially set at $10 and remained at that level until 1981, when it was increased to $20. The rate was reduced in 1988 from $20 to $10 and subsequently the rate was increased from $10 to $20 in 1991 and from $20 to $25 in 1994. The Departure Tax Amendment Act 1994 changed the name of the Departure Tax Act 1978 to the Passenger Movement Charge Act 1978 and increased the rate of charge from $25 to $27. The PMC was introduced in July 1995, replacing the departure tax. The PMC is levied under the Passenger Movement Charge Act 1978 and collected under the Passenger Movement Charge Collection Act 1978. The PMC was introduced as a cost recovery measure to recoup the notional cost of customs, immigration and quarantine processing of passengers entering and leaving Australia and the cost of issuing short-term visitor visas. However, in law, the PMC is a tax.

The Australian Customs Service administers the PMC legislation through arrangements with each transport carrier, and the arrangements are standardised for each type of carrier. The PMC was increased to $30 per passenger on 1 January 1999. However, in the 2001-02 budget the then government announced that it would increase the charge by $8 to $38 to offset the increased cost of inspecting passengers, mail and cargo at Australia’s international airports. Generally speaking the PMC is payable by all passengers departing Australia by air and sea. Section 5 of the collection act contains a number of exemptions, such as those for diplomats and children under 12 years. There are 12 categories of exemption in total, and the PMC is not levied on incoming passengers.

While initially a cost recovery measure, the PMC became more controversial over allegations that it has become yet another general revenue-raising measure. That the PMC had moved beyond cost recovery and was contributing to consolidated revenue was clear from the evidence given to the Senate Legal and Constitutional Affairs Legislation Committee on 28 May 2001 by an official of the Australian Customs Service. Mr Woodward said:

In round terms, our assessment of the over-recovery—and this is revealed in answers to questions that have been asked before, on notice—is something like an $80 million collection greater than the actual costs of customs, immigration and quarantine, but the passenger movement charge is a tax. It is not a pure cost recovery arrangement, and that indication of moving away from direct relativity came out when the $3 increase was made at just about Olympics time. So that is clearly on the public record.

It is not now clear whether the PMC is over-recovering costs. The PMC has not been increased since 2001. So its real—that is, inflation adjusted—value has fallen and costs would have risen over the same period. This bill is required to put into place the government’s budget measure increasing the passenger movement charge from $38 to $47. The measure is due to take effect on 1 July 2008 and applies only to tickets purchased on or after that date. The government will be seeking to have the bill passed through the Senate as quickly as possible to enable the change to take effect.

The increase in the passenger movement charge announced in the 2008-09 budget is designed to raise $459.3 million over four years, $106.3 million in 2008-09 alone. Budget papers state that the increase will contribute to offsetting the cost of a range of aviation security initiatives which until now have not been cost recovered. The passenger movement charge also recovers the costs of processing international passengers at international airports and maritime ports and the cost of issuing short-term visas overseas.

The opposition has attacked the government over this increase on two grounds: national security, as this tax grab is accompanied by a cut to Customs funding; and tourism, as this tax grab will increase the cost of tickets. While the measure is claimed to be offsetting the cost of aviation security initiatives, the new revenue that will flow accompanies cuts in real terms to Customs and other border security measures. This is really a revenue-raising exercise cynically dressed up as a border security measure.

This tourism tax increase accompanies other tourism and passenger related tax increases in this budget amounting to nearly $1 billion, while funding has been cut to Tourism Australia by nearly $6 million. This legislation will impact on the travelling public as it will increase the cost of airline tickets by $9. Consequently, there will be flow-on effects to airlines and tourism operators as holiday making in Australia becomes more expensive for overseas tourists. The shadow minister for tourism has maintained consultation with stakeholders throughout the budget process and has strong views on the subject.

Australian working families looking to take a break and have a holiday are unfortunately going to be slugged as of 1 July 2008 by this new tax, courtesy of the Rudd government’s first budget. The 2008-09 budget has revealed an increase in the charge from $38 to $47, a 24 per cent increase, which will force up the price of airline tickets for Australian holidaymakers and particularly Australian families. It is another inflationary tax hike to add to the growing pile, with taxes on premixed drinks and luxury cars announced pre budget.

The government has been especially tricky with respect to this measure. They have claimed in their promotional material that this tax, which will raise almost $460 million over the next four years, is necessary to offset the cost of a range of aviation security initiatives and the cost of processing international passengers at international airports. If this were true, we would see that money being put back into Customs. The fact is that Customs has seen its budget slashed this year by $51½ billion in real terms. It really is a raw deal for Customs. Next year alone, they will collect $106 million from this tax on the public, only to see it funnelled back into Treasury’s general revenue, as Customs have to continue protecting Australia’s borders with reduced funds. The opposition calls on the Rudd government to admit that this revenue will not be used to protect Australian travellers and that this is just another ALP tax hike. I move:

That all words after “That” be omitted with a view to substituting the following words:

whilst not declining to give the bill a second reading, the House:

(1)   notes:

(a)   that the increase to the Passenger Movement Charge is an unfair slug on Australian working families;

(b)   that the Government has shown itself to be both tricky and cavalier in its attitude to Australia’s border security by cutting Australia’s Customs Budget by $51.5 million in real terms next year, while at the same time announcing a measure that will raise $459.3 million over four years, allegedly to offset ‘the cost of a range of aviation security initiatives’;

(c)   that  this tourism tax increase accompanies other tourism and passenger related tax increases in this Budget amounting to nearly $1 billion, while at the same time funding has also been cut to Tourism Australia by nearly $6 million; and

(2)   calls for the Government to refer to the Joint Standing Committee of Public Accounts and Audit for examination  the application of revenue derived from the Passenger Movement Charge, in particular the increases in revenue provided for in the Budget, and examine the potential to establish a new noise abatement fund from these revenues to provide relief for residents living within the 25-30 ANEI contours, to mitigate the ongoing burden of aircraft noise for people and families living in these areas”.

The DEPUTY SPEAKER (Hon. Peter Slipper)—Is the amendment seconded?

Mr Forrest —I second the amendment and reserve my right to speak.