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Thursday, 2 June 1994
Page: 1226


Senator PANIZZA (4.42 p.m.) —I rise briefly to support my colleague Senator Watson in his endeavours to put through the Senate the Sales Tax (Exemptions and Classifications) (Two-Wheel Drive Vehicles with Jeep, Platform, Pick-up or Utility Body Type) Amendment Bill 1994. At present we all know, or should know, that there is no sales tax on four-wheel drive vehicles provided they have a one-tonne carrying capacity and are used in primary industry. That has been the case for quite a while.

  There is a situation where a two-wheel drive utility is not given the same consideration, except in certain circumstances—that is, when it is used in primary industry and also when it has a one-tonne carrying capacity. A two-wheel drive vehicle can be exempt from sales tax when it is used on a farm and that use is contiguous to the farm. In other words, if a farm is broken into two lots a farmer could travel from one to the other and still be eligible for sales tax exemption. Also, that two-wheel drive vehicle can be exempted from sales tax if the owner only takes it off the farm to his nearest service dealer for servicing or to fuelling areas and that sort of thing. That is allowed. So long as it stays around the farm in general and does not wander too far, the exemption applies.

  Senator Watson's bill seeks to exempt from tax all two-wheel drive vehicles used on farms. I believe it will not make too much difference to the federal government budget in terms of imported vehicles. I certainly commend the bill. After all, it virtually extends the situation so that a two-wheel vehicle can be used in the ways provided for.

  The most potent aspect of this bill is the fact that it will include the same capacity utility that is manufactured in Australia—in other words, the vehicle better known by its original name, `utility'. Only 12 months ago I read that the coupe utility, as we know it, was invented in Australia. A lady wrote to Ford in 1926 saying she wanted a vehicle to enable her to attend church on Sundays and take the pigs to market on Thursdays. I believe Ford came up with such a vehicle.

  If the sales tax exemption is extended to two-wheel drive vehicles, provided they are mainly used on a farm and for allied works, then Australian made utilities could be included. Of course, there are some very good Australian made utilities—namely, the Ford and the Holden. There may be others I do not know about, but they are the main ones. If such vehicles are brought into this exemption, people would be encouraged to buy Australian produced vehicles. On that basis alone I believe this bill should succeed.

  At present 21 per cent sales tax is payable. Today I took out a comparison between the cost of two-wheel drive vehicles and the cost of four-wheel drive vehicles, one with sales tax and one without. If one takes a diesel Toyota Hilux utility as a standard sort of vehicle, one sees that a 4x2 utility before tax is priced at $21,596. There is $3,404 tax on that, so to buy one of those vehicles would cost $25,000. Going to the diesel 4x4, I discovered that such a vehicle is priced at $27,916 without sales tax. With sales tax of $4,450, the price goes to $32,000. So there is a difference of roughly $7,466.

  If we take the sales tax away from the two-wheel drive vehicle, a two-wheel drive could be sold to the farmer for $21,596 instead of $27,916, which is the price of a 4x4—a difference of $6,000-odd. This would not encourage a farmer to go for a bigger or heavier vehicle than is considered to be necessary. It is all very well to have a four-wheel drive vehicle, but why pay the extra if one does not need such a vehicle? Without the sales tax on the four-wheel drive and without the sales tax on the two-wheel drive—$25,000 for a two-wheel drive with sales tax and $27,916 for a four-wheel drive without sales tax—there is only a difference of $2,000-odd between one and the other.

  Of course, a salesman might say, `For that difference you may as well buy the heavier one.'  The heavier one is all very well if one needs it, but the heavier vehicle needs more maintenance, because it uses more fuel and tyres wear out more quickly. So a farmer is encouraged to buy a heavier vehicle than he might need. He may need a heavier vehicle; for instance, on our place we use some heavier ones and some lighter ones. If a person needs a heavier one, he will buy it, but for the person who is happy to have the lighter one, there is a big differential and he will buy the light one.

  Bearing in mind how many of these vehicles are used on farms around Australia, I fully support the move by Senator Watson to get this legislation passed by the Senate. As I said, it will not make any material difference to the number of imported vehicles sold, but it will make a big difference to the number of Australian vehicles sold, because I can see a swing from these imported two-wheel drive vehicles back to the Australian made. I commend Senator Watson's bill and hope it has the support of the Senate.