Senator ABETZ (2:11 PM) —Mr President, my question is to the Minister for Innovation, Industry, Science and Research, Senator Carr. Has the government received direct representations from Australian car manufacturers expressing concerns about the damage to their businesses and job opportunities caused by the proposed 30 per cent increase in the luxury car tax?

Senator CARR (Minister for Innovation, Industry, Science and Research) —The government has worked on the presumption in the past that there was bipartisan support for taxing luxury cars in this country, which of course was the position for 30 years. The present luxury car tax, I remind the Senate, was introduced by the previous government in 2000. What has changed? This is not a tax on ordinary Australians, as Senator Minchin has been suggesting. The tax applies only to vehicles that cost more than $57,123. The tax is payable only on the value of the car that exceeds that threshold. Nine out of 10 cars sold in Australia are totally unaffected by the tax. The luxury car tax has been fixed at 25 per cent for many years. The government proposes to increase the tax to 33 per cent. That is still significantly lower than the 45 per cent rate that applied under the wholesale sales tax regime before 2000. The tax is payable on only the most expensive 10 per cent of cars sold in Australia.

The luxury car tax on the Ford Territory Ghia will increase by some $500 while the tax on the Porsche 911, currently retailing at over $300,000, will increase by around $14,600. None of this stands in the way of motorists looking for a good alternative. There are many choices available under the luxury car tax threshold, including the Honda Civic, for instance, and the Toyota Prius. The government’s proposal is expected to raise an additional $555,000 million over four years. It is part of a responsible integrated budget strategy that delivers a $22 billion surplus. That surplus is essential to our efforts to tackle the inflationary legacy of the Howard-Costello government.

The PRESIDENT —Order! Senator Carr, resume your seat. There is too much noise on both sides of the chamber. Ministers answering questions are entitled to be heard.

Senator CARR —Thank you, Mr President. The simple proposition that is before the chamber at the moment is that the opposition is seeking to destroy the government’s surplus. It is seeking to undermine the government’s efforts to tackle the inflationary legacy which has been left to this country by the Howard-Costello government. The position that is being advanced by the senators opposite is that they are not prepared to face up—

Senator Abetz —Mr President, I rise on a point of order.

Opposition senators interjecting—

The PRESIDENT —Senator Abetz, your own are drowning you out as you are trying to take a point of order. You are entitled to be heard as well as others.

Government senators interjecting—

The PRESIDENT —Order! Senator Abetz is entitled to be heard in silence.

Senator Abetz —Thank you, Mr President. The minister has now had three minutes to answer a very simple question, which was: has the government received direct representations from Australian car manufacturers in relation to the luxury car tax proposal? My question was very specific and I would invite you, Mr President, to remind him of the question.

The PRESIDENT —There is no point of order, but I do remind the minister of the question.

Senator CARR —Thank you, Mr President. Of course the government has had representations from a wide range of people with regard to the Australian automotive industry and the serious challenges that are being faced by the Australian automotive industry. I have had no representation, of course, from conservative senators in this place because they do not seem to appreciate the importance of the Australian automotive industry. They are in fact doing their very best to undermine the Australian automotive industry.

What we have to face up to is a simple fact: the opposition is seeking to destroy the surplus that has been created by this government and is central to our efforts to tackle the inflationary legacy that has been left by the Howard-Costello years. The opposition has decided to stand up for lower taxes on luxury cars rather than for lower interest rates for working families. (Time expired)

Senator ABETZ —Mr President, I ask a supplementary question. Can the minister confirm that in fact he was incorrect and that the Hawke Labor government introduced a luxury car tax not the Howard government? Can he also correct himself that the threshold for luxury car tax is not $57,123 but in fact $57,180? And, whilst he is at it, given the government’s stated desire to do everything it can to support Australia’s car industry, why is it ignoring the views of Australian manufacturers and pushing ahead with this luxury car tax surcharge, and how many jobs will be lost because of the proposed surcharge?

Senator CARR (Minister for Innovation, Industry, Science and Research) —I am advised that the luxury car tax applies to vehicles that cost more than $57,123. I am further advised that it was introduced by the previous government, in 2000. It is quite clear that the opposition now wishes to stand up for lower taxes on luxury cars rather than for lower interest rates for working families. We do not think it is unreasonable for people who have done well in recent years, particularly those in the top income brackets, to pay just a little bit more for a luxury car. This is a balanced measure that makes the tax system fairer by requiring a greater contribution from those with the greatest ability to pay. Those opposite have given us a timely reminder— (Time expired).