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Monday, 6 December 1999
Page: 12815

Mr McMULLAN —My question is to the Prime Minister. Prime Minister, didn't you promise during the election that new cars would be `dramatically cheaper' with the GST? If so, why did you backflip last week on 3AW, saying, `Well, I don't know that anyone can guarantee what people are going to charge. How much the price will fall will depend on the market'? Prime Minister, if now you won't guarantee a `dramatic' fall in prices, what sort of price cut will you guarantee?

Mr HOWARD (Prime Minister) —As usual, the opposition spokesman either misquotes or inadequately quotes what I said. Let me, for the benefit of those opposite, go back to what I did say. I predicted—and it remains my prediction—that, as a consequence of the introduction of the GST, cars in this country will be cheaper. That remains my prediction. That is what I said in the election. There has been no backflip. There has been no backsliding. If there has already been some discounting in anticipation of the change, then of course that is a consequence of the new tax system. It is not a consequence of anything else. It remains the case that the amount of tax levied under the new system is dramatically lower than the tax levied under the Labor wholesale sales tax system. You go from a 22 per cent wholesale sales tax to a 10 per cent goods and services tax. That represents a very dramatic lowering of the imposition of taxation on the sale of cars and, therefore, the prediction made by the coalition before the election was that the price of cars would be dramatically lower. Of course, that remains our prediction.

I was asked on a radio program a particular question and I gave that answer. I do not deviate from the belief that, as a result of the introduction of the new taxation system, cars in this country will have a lower price. Obviously, in anticipation of the change, the market is behaving in a particular fashion. That is to be expected. The industry spokesman for the opposition knows that; anybody who understands any kind of behaviour of markets knows that.

But, at the end of the day, I believe that cars in this country will be cheaper after the introduction of the new taxation system. Many of them are already cheaper. That is a direct consequence of the announcement of our new taxation policy. My take-out from all of this is that the Australian Labor Party wants to slug the car consumer with a higher rate of tax and a higher price than does the coalition. If the Australian car buyer will accept that, if the Labor Party wants to live with that, then the Labor Party is welcome to do so. I stand by what I said in the election campaign: it remains my belief, my prediction, that the price of cars in this country will be lower as a result of the introduction of our new taxation system.