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Thursday, 2 June 1994
Page: 1230

Senator WATSON (5.04 p.m.) —in reply—I thank all honourable senators who have participated in this debate. It has been a good debate because, certainly from Senator Cook's perspective, it has enabled him, as Minister for Industry, Science and Technology, to refocus on the problems facing our manufacturing industry and the role it has in primary industry.

  I would like to draw particular attention to the contribution made by my colleague Senator Panizza. As usual, he brought a very practical and constructive perspective to this whole picture and emphasised the need for removing the present anomaly in the interests of both the manufacturing industry and the farming community.

  I also thank the Australian Democrats for their support and acknowledge in particular Senator Spindler's contribution. Of all people in this chamber, no senator is more single-mindedly supportive of our manufacturing industry than Senator Spindler. I thank him for his support.

  I also thank the minister for the considered way in which he looked at this matter and for the fact that he went back to his department and asked his officers to do some sums. I also acknowledge the fact that he is keen to improve the competitiveness of the vehicle manufacturing industry in Australia. If this bill has does nothing more than pick up that issue, it has been a success.

  Judging from the debate, there is no doubt that this bill will pass this chamber. Therefore, I would also like to acknowledge the support that we have had from the Greens. With their support, plus the support of the Democrats, this bill will certainly pass this chamber.

  I hope that the discussion that this bill has initiated will make the government acknowledge the role of the manufacturing industry and the problems confronting our producers. They feel that they can compete with these imported vehicles. As we know, there is always a problem with Japan because it tends to price its products at a price which the market will bear rather than relating it to cost. We must bear that in mind otherwise we end up with an artificial view of the impact of trading.

  The object of my bill is very simple: it aims to ensure fairness and equity in the application of sales tax to vehicles which are used mainly in the agricultural industry. We believe that there is an anomaly in the current legislation which discriminates unfairly against two-wheel drive vehicles over four-wheel drive vehicles. My motivation is that Australian manufacturers are feeling the full brunt of this discrimination since they have returned to the production of these sorts of vehicles, the one-tonners, which essentially fulfil the role—except in the mud and on high inclines—of four-wheel drive vehicles.

  My bill seeks to extend the sales tax exemption currently applying to four-wheel drive vehicles to two-wheel drive vehicles of the same body type and used for the same purpose in the agricultural industry. Under the existing legislation, two-wheel drive vehicles, including those manufactured by Ford and General Motors, are hit with a 21 per cent tax.

  The restriction of the sales tax exemption to four-wheel drive vehicles can no longer be justified. It originated from Treasury's view that only four-wheel drive vehicles have the specifications which categorise them as specially suitable for agricultural purposes.

  I point out to the Senate that this view is no longer tenable or appropriate. The whole purpose of the bill is fairness and equity. Through a massive ongoing development program to upgrade the quality and capacity of commercial vehicles, locally manufactured two-wheel drive utilities produced by Ford in particular now have performance capabilities that equal those of most four-wheel drive vehicles used in the agricultural industry. The effect of the anomalous treatment of two-wheel drive vehicles is that serious distortions have occurred in buying patterns within the rural sector. This bill removes these serious distortions.

  Because of the exemptions, four-wheel drive vehicles can be purchased at virtually two-wheel drive vehicle prices. I thank Senator Panizza for providing the figures that show this position so clearly. In the financial impact section we acknowledge that there will be loss of revenue. Often when we seek to remove anomalies to correct things there is some loss of revenue.

  But what is more important? Are we just revenue driven in this country, or do we have some sense of fairness and equity in trying to balance these things out? My private member's bill does not limit the extension of the exemption only to locally produced vehicles. The bill does not discriminate against foreign two-wheel drive vehicles. However, I must say that a lot of the people who have supported the bill hoped that I had tried to do that. Of course, in that event we would have run into some GATT problems.

  My bill makes two-wheel drive vehicles used mainly in the agricultural industry cheaper by several thousand dollars. Two-wheel drive vehicles will become more price competitive with imported four-wheel drive vehicles, and this will lead to an increase in demand for two-wheel drive vehicles—particularly the locally produced ones—despite the arguments put by Senator Cook and his department that essentially the imported vehicles would have a price advantage.

  I point out the existing discriminatory position. I suppose that is one of the very many reasons why investment is lacking in this country. It is true that in some sectors demand is picking up, but the problem is investment. We are facing a major problem in this country. Yesterday, I was disturbed to read that overseas investors are pulling out of manufacturing investment in Australia. This is not a good sign. In other words, overseas investors are increasingly lacking confidence in putting their money into manufacturing activities in Australia. This is a challenge that Senator Collins has to face as the Minister for Primary Industries. I would have liked to have heard Senator Cook speak with his industry, technology and science hat on today; we might have got a different type of response. Unfortunately, Senator Cook is representing the hard-headed Treasurer. We acknowledge that there is a loss of revenue in terms of sales tax and customs. We are quite open about that.

  I ask Senator Cook to look at the reasons why investment is lacking. Small manufacturers are still recovering from the recession and they are still trying to get their balance sheets right. Because of pressure from the banks they are not being allowed to go into investment activities until their balance sheets are right.

  Here is another opportunity to try to get investment moving in Australia. Getting investment moving means more jobs. We believe that when we look at the extra profits that are needed to be made here in Australia there is sufficient reason to support this bill.

  I thank honourable senators for their contributions. I thank the Greens, the Australian Democrats and my colleagues in the Liberal Party. Above all, I thank John Anderson, Deputy Leader of the National Party, because it was his initiative in identifying this problem that led to me introducing this private member's bill. I have merely been the conduit for moving it through the Senate.

  Question resolved in the affirmative.

  Bill read a second time.

  The bill.