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Thursday, 19 February 1987
Page: 259

Senator CHANEY —My question is addressed to the Minister for Industry, Technology and Commerce. I note that yesterday the Minister refused to accept the suggestion that the Australian economy is in a crisis. I refer him today to part of Australia's economy, namely, the car industry. I ask the Minister: Does he accept that there is a crisis in that industry, given the loss of sales of some 150,000 cars last year, the fact that in that year total new vehicle sales hit a 14-year low, that it was the worst year for passenger vehicles since 1968, and that an estimated 12,000 people lost their jobs in vehicle retailing? I ask whether the Minister is aware that an industry newsletter, `AIM', has recently described the situation in these terms:

At no stage in its history has the industry had so many government-induced negative factors-sales tax, FBT, devaluation and unleaded fuel-going against it without compensating factors.

What can and what will the Minister do to assist the industry by reducing the Government's contribution to this alarming situation in an industry for which he is so directly responsible and with which he is so closely identified?

Senator BUTTON —I have not seen that particular newsletter, `AIM'. On a number of occasions I have said that the car industry has been going through a very difficult and serious period, and there are a number of reasons for that. I do not think it is quite accurate to blame what are described as government-induced factors. There have been enormous effects of the depreciation on the car industry and there has been a decline in the purchasing power of wage earners, as a result admittedly of Government policies in some respects; but I think a whole complex of factors is responsible-we have had recent discussions with the industry about that-which does not entirely reflect the view expressed in the `AIM' newsletter in terms of the factors which have been responsible for the 1986 results. I certainly accept that things such as the changes to unleaded petrol and the method of calculating sales tax affected, in the early part of 1986, the purchasing habits of consumers of motor vehicles because those things led to an increase in price-of some $240, for example, for a six-cylinder car. That is correct.

But those factors are relatively small compared with the impact of the depreciation on the motor vehicle industry. The unleaded petrol issue is not a consequence of any decision of this Government. The changes to the sales tax merely involved a method of calculation of sales tax which was requested by the Commissioner of Taxation because the then existing regime of sales tax had been badly abused and not implemented adequately by the Taxation Commissioner. So a variety of factors in respect of the matters listed in the article have to have some qualifications placed upon them. All those factors added together, I think, are small compared with the total impact on consumers as a result of wage moderation and the effect of the depreciation of the dollar on vehicle prices.

Senator CHANEY —Mr President, I concede that this is not the time to debate the Minister on the response which he has given, but I ask a supplementary question which I preface by saying that we have never sought to oversimplify this and we agree that there are many factors, many of which are government influenced and controlled. I ask again: Given the seriousness of the situation, given the fact that sales tax, for example, was increased in the last Budget, not just modified in the way the Minister described, and the fringe benefits tax is having some impact, does the Minister propose to take any action in these areas which are directly affected by his Government to ease the position of an industry which employs many tens of thousands of Australians?

Senator BUTTON —Senator Chaney says he does not want to debate the question, but he has introduced a new method of debating the question in his supplementary question. It is not true to say that sales tax was increased by this Government in the last Budget across the board--

Senator Chaney —I did not say it was across the board.

Senator BUTTON —I know, but let us look at the facts. It was in respect of luxury vehicles, all of which are imported and the importation of which does not affect employment in the local car industry.

Senator Chaney —Tell that to the dealers.

Senator BUTTON —I concede that it may well affect employment in certain dealerships in respect of imported cars. In terms of the local industry and the Australian manufacturing industry, the additional sales tax on luxury vehicles was, I think, welcomed by members of the local industry because it has a beneficial effect for them in terms of their share of the market. In respect of most imported vehicles there has been a detrimental effect, no doubt. In respect of some-the best quality vehicles-it does not seem to have happened at all.