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Wednesday, 26 November 2008
Page: 11574


Mr RIPOLL (7:08 PM) —It is a pleasure to be speaking on the Tax Laws Amendment (Luxury Car Tax—Minor Amendments) Bill 2008. It is good to be following the member for Fadden, as he made a number of comments about the role that the government have played in these bills, about what has happened in the Senate in terms of the opposition’s opposition and their attempted blocking of the measures that we are putting in place, and about the non-government senators and their amendments—and because his comments just point very clearly to the opposition’s view of themselves in this place. The opposition are not here to try and make some good outcomes out of certain policy areas; they are here just to obstruct. They are here to ensure that the government have difficulty, because of the numbers in the Senate, in passing their amendments. But the opposition will not have it all their way, because the reality is that in the Senate there are a number not only of Independents but of independent thinkers who actually see some benefit in the policies that we put forward—in particular in relation to the luxury car tax. I will get to a number of other points that were raised by opposition members.

This bill makes a number of minor and technical amendments to the A New Tax System (Luxury Car Tax) Act 1999, the Taxation Administration Act 1953 and the Tax Laws Amendment (Luxury Car Tax) Act 2008 to ensure that amendments to the tax laws amendment act passed earlier this year operate as intended. That is the clear purpose of the bill that is before us today. These amendments will clarify the operation of the law to ensure that the amendments moved by non-government senators operate as intended. This bill is to deal with those changes and those amendments that came through the Senate. Unlike what we just heard from the previous speaker and from other speakers on the opposition side, this amendment bill is about making sure that the consequences and the purposes of this bill carry through the intended amendments of the Independent senators—in particular, Senator Fielding’s amendment, which provides for a refund of the increase in the luxury car tax to primary producers and eligible tourism operators who purchase eligible four-wheel-drive and all-wheel-drive vehicles, and Senator Xenophon’s amendment, which provides for vehicles purchased under a contract entered into before 7.30 pm on 13 May 2008 and delivered after 1 July 2008 to be subject to the 25 per cent luxury car tax rate. I can well see and understand the intentions of those two Independent senators in moving those amendments to this bill.

Firstly, these amendments will ensure that the luxury car tax refunds are payable to eligible businesses where the businesses actually bear the cost of the luxury car tax regardless of the arrangements used to finance the vehicle. I think that is an important part of recognising that the way a vehicle is purchased may vary depending on the circumstances, the structure of the business, how a specific individual enters into a finance contract or how they purchase a vehicle. Therefore we need to recognise that through these amendments and make sure that that is taken into account and that the proper mechanisms are in place to deal with it.

Secondly, these amendments ensure that contracts that were entered into before 7.30 pm on 13 May 2008 are the relevant contracts for determining the luxury car tax rate of 25 per cent, when subsequent financing arrangements are made. This is to ensure that, despite the passing of time, at a particular point the 25 per cent luxury car tax still applies to those contracts. What often happens is that arrangements are made at a specific time but the financing arrangements may not be approved at the same time, and therefore you have to have some other period between when a contract may be signed and when the actual financing arrangements are carried through, made or agreed.

Further, these amendments ensure that the luxury car tax refunds are paid directly to claimants. I think it is important, in the way that this scheme operates, that the claim goes directly to the claimants—those who are actually putting forward their money in the purchase of those vehicles—and that it does not go through some other system. Therefore what these amendments clarify is that farmers and tourism operators—those people are at the core of the principle behind this—will be able to receive refunds of the increase to the luxury car tax where they lease a vehicle and also bear the cost of the tax and the changes. These amendments also ensure that those who entered contracts to purchase a luxury car before 13 May 2008 are not precluded from paying the 25 per cent because they later decide to finance the car through hire purchase or leasing arrangements.

Not only does this take into account the timing issue and make sure the right amount of luxury car tax is paid; it also caters for the different financing arrangements which are in place. So these are good amendments. They are minor amendments, which will make these changes operate as intended and ensure that the processes that are in place are functional and efficient. In the 2008-09 budget the government took a decision to increase the rate of luxury car tax from 25 per cent to 33 per cent. That was part of the Rudd government’s plans to make the tax system fairer and to contribute to a strong fiscal position. There would not be too many people either here or out in the community who ought to be arguing against this position, because, for the very large majority of people, a luxury car is something they will never be able to experience, given that we are in tough global times.

I still hear—although I find it almost amusing—the deniers on the other side. Not only are they in denial about climate change; they are in denial about a global financial crisis. They seem to support that it exists when it suits their agenda but then deny that it exists when it comes to anything that the government must do in response to protect Australians and the Australian economy. There seems to be this bizarre concept on the other side that the global financial crisis only exists to suit their own purposes, rather than that it just exists. Somehow the global financial crisis is the fault of the government in Australia. It is a bizarre concept but we have just heard it again from members of the opposition—particularly the last speaker—who were saying that somehow we were to blame. I am more than prepared to stand up in this House and say that we are responsible for dealing with it, that we are responsible for all the actions we take and that we are responsible for what happens to the Australian economy, regardless of who created this mess, regardless that it is a global financial crisis. But surely none of the opposition members link the election of the Rudd Labor government late last year with the collapse of Lehman Brothers in the United States. Surely the opposition does not somehow link the election of the Rudd Labor government late last year with what seems to be now approaching a recession in the United States, what is currently happening to financial systems in Indonesia and other parts of the world or the financial crisis that we are experiencing globally. Surely not!

But, every time I come into this place or listen to some of the debate in here, that seems to be the view put forward by the opposition. They are trying to say that it is not just that we are now responsible because we are in government and therefore we must deal with it; they are somehow trying to say that we are to blame for it happening. It is a bizarre concept but it certainly seems to be the view being put forward by a number of opposition members. We heard it only moments ago when the member for Fadden was speaking on this. I actually wrote his words down: we were to blame for the global financial crisis. I think they might have to have another look at what is actually taking place in the world.

I do not believe that ordinary Australians are offended by a small increase in the luxury car tax from 25 per cent to 33 per cent. Nor do I think they are offended by the fact that tourism or farmers would particularly be excluded from paying that extra and would be getting a refund for it. I think there is good cause to show that not only are the intent, purpose and drive behind what we are trying to achieve with this bill and this policy right but so are the exemptions.

It is also notable that the opposition purport that this was something that was uniquely being driven by the Rudd Labor government, that somehow this is all of our doing. The reality is that a luxury car tax of sorts is not something new. Luxury car taxes have been in place for quite some time. In fact, under the Fraser government a type of luxury car tax was introduced—certainly a tax of vehicles over a certain price. So it is nothing new. It is not something that the opposition should be arguing against; it is an accepted and legitimate method of taxation for vehicles over a certain price range. It is also something they support. Even though they come into this House, say that they are against these measures and that they will vote against things in the Senate and carry on—as oppositions will do—they do not have a great policy objective. So, while there might be some argument and debate over some of the finer points and refinements of certain policies, the mere fact that there has been an increase from 25 per cent to 33 per cent in itself is not an excuse for the opposition to block these bills and use the excuse of certain categories of operators in Australia, after the amendments have been made to make sure farmers and tourism operators get a refund.

I think it is just a little bit cheap and a little bit shallow of the opposition. It is reflected in the opposition’s reactions to a whole range of other areas—like the way it reacted to bank deposit guarantees, short selling and all the critical and essential things that this government has had to do and has willingly done. This government has taken up its responsibility to make sure that these things took place in a very timely way. We have been saying in here that we have taken strong and decisive action, because that is exactly what it is: strong and decisive. In times of global crisis, you do not sit around twiddling your thumbs, looking around the room, hoping somebody else will come up with a policy and a direction. What you do is consult and lead. And that is exactly what we have done. We have done it in a whole range of areas. We have done it in the short-selling area. We have done it by guaranteeing peoples’ bank deposits—both large and small. We have made arrangements to make sure that we restore not only domestic confidence in our banking and financial systems but also international global confidence that the corporate governance system of Australia is robust and sound.

It will best place our national economy to deal with the very real issue of decreasing car sales. We heard again from members opposite and other members of a decrease in luxury car sales of potentially up to 20 per cent. While I have not checked that specific figure, it is probably close to the number. There has been a decrease in ordinary car sales in the magnitude of some 15 per cent—and that is probably growing. That is a worrying statistic. But on this side, we have not just worried about that statistic; we have actually done something about it. We have put together a massive fund and provided the Australian automotive industry with a strategic plan over the coming decade to ensure that it not only survives but grows stronger, finds new innovative ways to operate and remains competitive and efficient so that we keep the jobs and create more jobs in that particular sector.

This bill, while it is about minor and technical amendments, is part of a larger suite of bills which look at the whole automotive industry. I am quite proud to speak on this, as I said earlier on. It is, while minor, a very important part of the range of policies that we are bringing to the table in the national interest.

These amendments are required to provide clarity and certainty to car buyers, to finance companies and to car dealers. I strongly urge the opposition to support this. This bill will give the sort of clarity and certainty that is desperately needed in the marketplace. If they were true to what they say to people about them representing small business and how small business is the backbone of the Australian economy, they would do something real by backing this bill in this place here today. That is what they ought to do.

I have spoken to auto manufacturers, car dealers and people who work at dealerships and, let me tell you, they are very frightened about their industry and their jobs. They are frightened about the future and what is happening in the world and the impact that is having. The numbers that we read out in this place about sales being down between—let us say—15 and 20 per cent are reflected in job losses. That potential reduction in jobs is something that we need to look at carefully. If those sales continue to decline, fewer salespeople will be required, fewer vehicle delivery people will be required and fewer people will be required pre-delivery—fewer people will be required in that industry. This is causing enormous pressure and fear within that industry.

We have been taking a number of actions to ensure that there is a future for the automotive industry in Australia, including allocating billions of dollars to it. We have looked at a green car scheme and other ways that we can co-invest with industry. We have made sure that they are part of the strategy.

We have also taken some action to assist finance companies, including automotive finance companies, to return some stability to what have been longstanding dealerships right across the country. Through no fault of their own, they have had the rug pulled out from under their feet. I have to say that right now I do not have too many good words to say about GE Finance, GE Money or GMAC in terms of the way that they have operated. While they did give some months of notice, when you consider the amounts of money that were invested in terms of floor plans for dealerships, it is a little bit too rich for those companies to be pulling out of longstanding relationships with auto dealers who have looked after them by giving them their business over many years—and in some cases decades.

To just walk away from the auto dealers in Australia is wrong. Some of them will be able to refinance; some of them will be able to pick up and enter into new arrangements, but others will struggle because of the magnitude of finance that is required. People who are listening may not understand, but even a modest sized auto dealer may have a floor plan worth tens of millions of dollars. Some of them have enormous investments of sunk capital through their franchise arrangements into the physical structure that houses the cars, which is often required by prestige car dealerships. They have a lot of money tied up in that. They cannot simply pack up and go home. They need that finance to make sure that they have liquidity in their dealerships.

That is certainly not part of this bill but it is part of the general suite of bills and policies that we are putting forward in terms of stabilising the Australian economy and ensuring that the automotive industry is stabilised. Through the luxury car tax, we will ensure that there is a proper tax regime for those people who can afford it. People ought to be able to buy luxury cars if they can afford them, but they should pay an appropriate amount of tax. That is the key here. I do not think that it is onerous to move from 25 to 33 per cent, particularly given that these minor amendments will provide for a rebate for those people who fall into either the category of ‘farmer’ or ‘tourism operator’. Those arrangements are good policy.

The government has also asked David Murray to explore options to help facilitate larger and more liquid institutions to provide liquidity support to various market link investment vehicles. APRA will also fast track applications for finance companies. We are doing a whole range of things in trying to make sure that not only the confidence of the auto dealers is restored but also the finance companies that will deal with them have some certainty about their futures. All in all, I commend this bill to the House. It makes some minor amendments that the Senate has put forward. Thank you. (Time expired)