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Wednesday, 9 October 1985
Page: 893

Senator CHANEY —I refer the Minister for Industry, Technology and Commerce to the estimate by the Australian Automotive Dealers Association that the Government's fringe benefit tax will cost 12,000 jobs in the car industry by permanently reducing sales by 50,000 cars a year. Also, is he aware of the claim by the Managing Director of GWA Motors Ltd that the tax will reduce industry volume by between 2.5 per cent and 5 per cent in 1986-87? Does the Minister agree that the fringe benefits proposal will have a serious effect of the order suggested on the vehicle industry? If not, what is the Government's estimate of the impact of the new tax? Was an estimate of reduction in motor vehicle sales available to the Cabinet when it considered the tax changes? If so, what was it?

Senator BUTTON —I have not seen the Automobile Chamber of Commerce's estimate of reduction in the volume of jobs as a result of the fringe benefit tax in respect of the use of motor cars for private purposes. I did see that a Mr Ray Baxter from Mazda made a speech in Melbourne about the impact of the fringe benefit tax on the industry generally.

Senator Chipp —He used to play centre half-forward for Footscray.

Senator BUTTON —That is a very important thing to intrude into my answer! No doubt Senator Chipp is very proud of his interjection. I did see the report of Ray Baxter's speech about this and his estimate. I do not quite know how people arrive at these estimates. They vary considerably. Mr Graham Spurling from Mitsubishi in fact welcomed the tax as having a beneficial effect.

Senator Chaney —On Mitsubishi.

Senator BUTTON —Of course. Mr Ray Baxter, of course, would be largely motivated by the fact that he is Managing Director of Mazda, which is a company already suffering some disbenefits from the devaluation of the Australian dollar. I am saying that I think all these estimates have some sort of subjective element in them. There were estimates done at the time of the original White Paper which contained a different proposition in respect of the fringe benefit tax on motor vehicles. My recollection is that it was suggested that the impact would be of the order of the figures mentioned by Mr Baxter. I speak from recollection. As I recall, the White Paper proposal was that the value of all the vehicles should be assessed on the basis that 24 per cent of the value of the vehicle was the estimated running cost of a particular car. In the proposal now announced there are variable rates proposed in respect of various mileage uses and the bulk of Australian manufactured cars fall within the middle range, which is at the 16 per cent rate. I think there must be substantial variations from the assessment of the original figures following publication of the tax White Paper.

Senator CHANEY —I have a supplementary question, seeking to avoid any misunderstanding. I understand the answer to mean that the Government had some figures for a proposal which was not adopted. Are we to take it from the Minister's answer that the Government had no actual estimates before it of the impact of the fringe benefit tax at the rate actually proposed before it made the decision to adopt that tax?

Senator BUTTON —That is correct. I just make the point-perhaps I did not make it clear before and I should make it clear-that the impact as assessed of a more severe fringe benefit tax on the motor vehicle industry would inevitably be reduced by a less severe package and that in any event it is impossible to make accurate estimates in respect of these things, or even accurate guesses, because what will happen depends on a great variety of factors and, most particularly, on the behaviour-

Senator Messner —Do you suggest that these are ideologically based moves?

Senator BUTTON —Yes. In order to provide some neutrality, fairness and equity in the tax system, that is right. I know that the honourable senator will spend the next few months gathering together the carpetbaggers from various sections of the community and will fix them all up with some special, concessional treatment, as his side did over 20 years in government, thus getting the taxation system into the mess it is in now.

Senator Peter Baume —Who are the carpetbaggers?

Senator BUTTON —The honourable senator will know. He is able to identify them. There is no point in asking me who his carpetbaggers are. He knows-not me.

Senator Messner —In the car industry?

Senator BUTTON —No, I do not mean the car industry.

The PRESIDENT —Order! There are far too many interjections.

Senator BUTTON —If I might complete the answer, it is very hard to make an accurate estimate, and of course that is implicit in Senator Chaney's question, when he asked: `This body says this, that body says that, somebody else says something else-what is your guess?' The question is as simple as that.