Senator MARSHALL (8:37 PM) —I will start by commending Senator Bishop for a very valuable contribution to this debate. The Tax Laws Amendment (Luxury Car Tax) Bill 2008 increases the luxury car tax rate from 25 per cent to 33 per cent to apply on and from 1 July 2008. Let me be clear from the outset that this bill is about Australians contributing their fair share. I have heard some members of the opposition flippantly refer to this measure as simply a grab for tax. Maybe they ought to consider what has happened in tax since the Labor government have been elected. We are delivering, in our first nine months and with our very first budget, $46.7 billion in tax cuts over the next four years, which will mean more money in the budgets of working families. Let me be specific as to what that $46.7 billion in tax cuts over the next four years means to working families. A family on a single income of $40,000 will be $20.19 per week better off, or $1,050 over the course of a year. A family on a single income of $80,000 will be $21.15 a week better off, or $1,100 a year, and families with a combined income of $100,000 where the primary earner’s income is $60,000 will be $31.73 a week better off, or $1,650 a year. The government have now delivered massive tax cuts and will continue to deliver significant tax cuts to working Australians over the course of the forward estimates.

With this bill we are at the same time plugging the gaps in the system and reducing the overall tax burden on working families. This increase was announced in the 2008-09 budget as part of the government’s package of measures to enhance fairness in the tax system. The government believe that Australians who can afford luxury vehicles have the capacity to contribute to revenue at a higher rate than other car buyers. Let us appreciate from the outset that the budget the Labor Party brought down last May was a tough budget. It had to be a tough budget because we were left with a 16-year high inflation rate. It had to be a tough budget to address the legacy left to us by the Howard government. Some hard decisions had to be made, and we would have preferred not to have had to make some of the decisions, but at the required time we delivered significant personal income tax to working families and we are making some adjustments to the taxation rates in other areas. These are necessary to deliver the significant surplus that we have to address inflation, to keep downward pressure on inflation, and, consequently, downward pressure on interest rates. These are responsible measures.

The measure is expected to raise $555 million in additional revenue over the forward estimates. Since 1979, successive Australian governments have imposed an additional tax on luxury vehicles. The luxury car tax was introduced on 1 July 2000 when the GST was introduced and the wholesale sales tax was abolished. Luxury car tax applies to cars whose price, including the GST, exceeds the luxury car tax threshold. This is currently $57,123. Certain types of cars are exempt from the tax. This includes most commercial vehicles, most second-hand cars, motor homes, campervans and prescribed emergency vehicles. We are not changing the arrangements to those categories of cars. A car specifically fitted out for transporting a person with a disability who uses a wheelchair is excluded from the definition of a ‘luxury car’ provided the car is not also GST free under the GST laws. It is estimated that around 10 per cent, or around 100,000, of all new car sales made in Australia in 2007 were subject to luxury car tax. The tax is applied to both imported vehicles and domestically manufactured cars. Of the top 20 selling cars in 2007, which cover more than 50 per cent of the car market, fewer than four per cent are subject to the luxury car tax. Of the five Toyota Tarago models, only one attracts the luxury car tax. Of the three largest selling people-mover brands, this is the only model that will be impacted by the tax increase. In real terms, the price increase for the vehicle is just over one per cent.

Let me make the point again, because the opposition seems to be unable to understand the point of the bill: this bill is about all Australians contributing their fair share. This is about the government recognising the need to reduce the overall tax burden on working families. That is why the opposition are opposed to this bill. They do not want to make this contribution. We recognise that there are some opposite who do not want to pay more for their luxury cars. While those opposite do not want to pay more for their luxury vehicles, the legacy they have created from over a decade of financial mismanagement is hurting working Australian families. When you combine this with active targeting of working Australians through Work Choices, Australians have had it tough. Not only are those opposite unwilling to pay more for their luxury vehicles; they do not seem to notice that the very same working families that suffered dramatic increases in the cost of living voted them out. They are still trying to govern from opposition. In doing so they are vandalising the budget: cherry picking pieces of legislation that they choose to support or oppose based on crass short-term populism geared towards grabbing headlines. This is nothing more than political opportunism, and it is political opportunism that we have experienced consistently since the conservatives have been in opposition. They left this government with a legacy of the highest inflation in 16 years. It is us who have had to make the hard decisions about putting pressure on inflation and therefore downward pressure on interest rates in the interests of all Australians. It leaves you wondering what position they are going to take next. Is the opposition to this legislation coming from Brendan Nelson’s office or that of Malcolm Turnbull? We will never know.

Senator Jacinta Collins —Or Peter Costello!

Senator MARSHALL —Yes—or is it from Peter Costello? I heard Mr Swan mention the difficulty that the opposition now have in the three stooges approach to their leadership. You have Brendan Nelson, who cannot do the job; Malcolm Turnbull, who cannot get the job; and of course Peter Costello, who will not do the job—or maybe he will? We will see in the future. As those opposite continue to play games with our economic future, going for the cheap media grab, they refuse to take any responsibility for the chaos that they are responsible for in the first place. I wonder whether or not the Australian people will take them seriously, given the situation they are in.

This government is fighting to make sure that this country is on a sound economic platform. The 2008 budget, delivered by Treasurer Swan, set out the government’s agenda very clearly. We must remember that, in negotiating our way through the current economic climate, we are in fact negotiating our way out of the Howard government’s inflationary legacy. It is a legacy marked by reckless spending and characterised by largesse and short-term investments. This government is not about that; this government is about making the hard decisions for the long-term prosperity of this country.

We have shown the opposition how to actually deliver on election promises. In doing so, we are breaking away from the Howard government’s legacy of financial mismanagement and broken promises. The 2008 budget has put working Australians and their families at the centre of the Rudd government’s commitment to tackle inflation. We are laying the building blocks for a stronger and more modern Australia. The centre of the budget is the $55 billion Working Families Support Package, which delivers on tax cuts the government committed to during the election. These tax cuts will help Australian families with childcare and education costs.

The Australian people rejected the coalition’s Work Choices laws and its policies of division. The Australian people embraced a team that was more concerned with their issues—concerned with the bread and butter issues that Australians know are the most important. The budget contained a $40 billion investment in Australia’s future to build new and improved roads, hospitals and schools. The budget is the first step towards a new, more modern Australia with first-class economic and social infrastructure. We can now start investing in the schools, hospitals, roads, railways and communication projects that working families rely on every day. These projects were neglected by our predecessors for more than a decade.

We have had the courage to make the tough decisions. We have had the courage to make the tough decisions in the budget. These decisions are hard in the short term, but they are the decisions that will make Australia stronger in the long term. That includes delivering a surplus of $21.7 billion in our first budget. We have done away with $7 billion worth of the Liberal’s reckless spending. Additionally, we have invested $55 billion in our Working Families Support Package. By investing in infrastructure, water, child care, GP superclinics and an education revolution, we are telling these families that they now have a government which have them at the forefront of their minds.

We have been asked to ensure working Australians’ future quality of life. We have been asked to provide working Australians with quality opportunities both now and into the future. We have been asked to ensure fairness. That is why we recognise that it is important that we enhance fairness in the tax system. This legislation will do just that. While we are engaged in a program of delivering on our election promises and building a stronger Australia, the Liberals have their eyes firmly set on a Pagani Zonda, a so-called supercar. There are a lot of people doing it tough out there, and inflation is hurting them at the checkout. By increasing the luxury car tax from 25 per cent to 33 per cent from 1 July 2008, we are not just being economically responsible, we are also working hard to ease the pressure on working Australians and their families and to make the tax system fairer.