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Tuesday, 1 February 1994
Page: 59


Senator VANSTONE (6.24 p.m.) —It is important to discuss this matter today, the day when the petrol tax price rises come into effect—the tax price rises that, according to Labor, we were never going to have. As Labor members opposite will recall, during March last year many of them went scurrying around the country and around every marginal electorate they could get to saying, `We are not going to increase taxes. Don't vote for a Hewson Liberal government because if you vote for a Hewson Liberal government taxes will go up and things will cost you more'. What do we find straight after the election—one long litany and saga of broken promises. This is yet another one which has come to fruition today. This broken promise is one of particular importance because the last election was primarily fought on the issue of broadening the tax base. The great scare campaign run by Labor was, `If you broaden the tax base, everything will go up; this will hit low income earners more than anyone else'. That was the argument run by Labor against the Liberal and National parties at the last election.


Senator Sherry —It's true.


Senator VANSTONE —I note that Senator Sherry says that it is true. He accepts then that broadening the tax base—that is the proposition he is putting—can negatively impact on low income earners. What he is not saying to you, Mr Acting Deputy President, is that the package the coalition was looking at took off a lot of taxes as well. Yet the proposal that this government puts forward, and has in fact implemented, is simply to increase tax without taking off any other taxes. That is the difference. The lie and the deceit of Labor's campaign were to say that a GST would put everything up without mentioning the decreases that were coming about because of taxes that we were taking off. That was the great deceit that people opposite either participated in or were so intellectually bereft of any political skills that they got sucked into not knowing what was happening, not knowing what their party was campaigning and not seeing the deceit that was being foisted upon the Australian electorate.

  That was a deceitful campaign in which Labor said, `Don't vote for these people; they are going to put up taxes', without mentioning that we were bringing other taxes down. The Labor Party went further than that and said, `Vote for us; we are not going to put them up'. And here it is putting up taxes. This will have a disastrous impact on low income earners. The simple reason is that, firstly, low income earners spend a greater proportion of their income on petrol than do high income earners. It necessarily follows from that fact that this is going to impact on low income earners—the battlers, the people who Labor says it is meant to represent, yet for 10 years has failed to do so.

  There is another practical reason why this will impact more heavily on low income earners than on middle and high income earners. Low income earners necessarily have older cars and necessarily, therefore, have the bulk of cars that cannot take unleaded petrol. This price rise is not just a straight price rise; it is a price rise to increase the incentive, according to Labor, to people to buy unleaded petrol—that is, unleaded petrol is going up by more. That means that low income earners, who necessarily have the cars that cannot take unleaded petrol, will be the ones who have to pay more.

  It is all very well for Mrs Kelly to run around the country saying, `This is an environmental move; this is going to encourage people to use unleaded petrol'. That may be the case for people who have the opportunity—for people who obviously now have cars that use unleaded petrol, the high income earners, the people who have bought new cars. For them it is a bit of a windfall to be paying less, in a proportional sense, than people who buy leaded petrol. But the low income earners, those who do not have cars that take unleaded petrol or that cannot take unleaded petrol—and there are plenty of cars in that category—have to pay more. As yet Labor has offered no satisfactory explanation for this other than that lead in the environment is causing difficulty with health. We do not dispute that; of course that is true. But to pretend that this slight differential in price is going to make a difference to purchasing patterns when, in order to actually effect that difference, somebody has to go and buy a different sort of car, is simply ludicrous. The government has no understanding of how a market works.

  Obviously if people have the choice, they may well make the change to use the cheaper petrol. But the case that we are arguing is for the people that do not have the choice—the millions who do not have a job and who are relying on unemployment benefits and who cannot simply change to another car. What about those people who have a low income job and cannot, at this point, change to another sort of car?

Sitting suspended from 6.30 to 8.00 p.m.


Senator VANSTONE —Just before the dinner break I was making the point that the coalition believes it is important to discuss today the absolutely disastrous impact on low income earners of Labor's broken election promises which culminate today in yet another petrol tax increase. I made the point that basically Labor deceived the electorate at the last election. It went around saying, `Don't vote for the coalition people; they will give you a GST, an increase in tax', without mentioning the decreases in tax that my party was proposing at the same time. It also marched around the country saying, `Look, we are not going to put up taxes; vote for us', yet here is another example of yet another broken promise from a government with a litany of them.

  This is just another tax increase, and we say it will affect low income earners the most. Unlike the Fightback package, this measure provides no compensation for low income earners. The point was made that low income earners, as opposed to high income earners, will be doubly affected by this increase. Firstly, lower income earners spend a larger proportion of their income on petrol—that is obvious; and, secondly, lower income earners are least likely to have a new car that can take unleaded petrol. So it follows that they are the most likely people to be driving vehicles that take only leaded petrol and therefore they will have to pay much more for their petrol.

  Labor has tried to say, `Look, this is an environmental move; it will discourage people from driving cars that won't take unleaded petrol'. The disincentive means nothing to those who cannot afford to make the choice. It is nothing more than another tax and another penalty. Those who can afford to make the choice of whether to buy a new car—and I think all new cars take unleaded petrol—


Senator Sherry —They have to.


Senator VANSTONE —Okay. High income earners now buy cars that take unleaded petrol, so the only people to be affected by this increase are middle income earners who perhaps have a chance to swap over. The argument is that this is a real incentive for middle income earners, but we say that 2c a litre is perhaps not a big enough incentive. We are not the only ones to say that; plenty of other people say that as well. We particularly say that low income earners do not have the choice as they do not have the resources to change over. We want to know what the government says in this regard.

  This not only affects low income earners, but it particularly affects low income earners in rural areas. As my colleague Senator Tierney pointed out, the Service Station Association of New South Wales said yesterday that retail prices in some parts of Sydney are obviously much lower than those in rural areas and that price discounting in the metropolitan area will soften the blow for metropolitan residents of Australia.

  But no such discounting is happening in rural Australia, which is currently desperately affected. Thousands and thousands of farmers are not enjoying the incomes they used to enjoy. They are very much in what we might call the low income category with no chance to get the benefit of discounting. There are lots of old cars out in the country. We do not see brand spanking new cars purchased in rural Australia. Additionally, these people will not have the opportunity to benefit from price discounting as perhaps metropolitan people will.

  When this price rise was announced, Mr Bruce Lunn, secretary-general of the Australian Automobile Association, also warned that people who drove cars that took only leaded petrol would obviously pay more. That is the point we are making. It affects the people who cannot afford to make the change. It is all very well for those people who can afford to make the change. That is fine. But what the government does not seem to understand is that thousands and thousands of people—low income earners, young people—cannot afford to make that choice. How many young people have a brand spanking new car that takes unleaded petrol as their first car? There are not many at all. They will be affected by this 2c a litre increase.

  Then there is the effect on the business community. We cannot afford to say, `So what, that is the business community—it can afford it'. It does not afford it; it passes on the increase, and honourable senators opposite and I, as consumers, will pay for that through every product we purchase. Every business that uses petrol will pass on that increase; the price will be marked up. As a product goes through the production chain there is a cascading effect. So in the end the price of a lot of goods and services will go up because petrol prices go up.

  Yesterday John Anderson, one of my colleagues from the National Party of Australia, indicated that he thought this would have a devastating effect. He actually calculated that it would cost Australia's commodity based export industries at least $65 million a year. It is all very well to laugh these things off and say, `Oh well, it is only 2c a litre', but lots of litres of petrol are used. The price keeps adding up all the time.

  The Road Transport Forum said that the government had conducted a very slick PR campaign. It does not believe that the price increase in leaded fuel will deter people from using leaded petrol at all. It went on to say that in fact people did not seem to know that diesel fuel costs would also rise.

  The Victorian Automobile Chamber of Commerce executive director, Mr Bob Davison, made the point that, according to the information he had, a 1c or 2c differential would not make much difference. He said there would have to be something like a 10c price gap to make a difference in any event.

  I say that this measure will affect low income earners much more than anyone else as they do not have the opportunity or the money to make the change to a car which uses unleaded petrol. It is a relative benefit to high income earners who drive new cars which use unleaded petrol, but it is only a relative benefit because they also are paying more. It will allegedly make a difference to middle income earners. However, the Victorian Automobile Chamber of Commerce tells us that it will not make a difference anyway, that this is just some form of dressing allegedly to help the environment, when in reality it is only a revenue raising matter. It will not make that much of a substantive difference.

  Another of my colleagues, the shadow Treasurer, Alexander Downer, repeated what every Australian knows—that the petrol bowser is just a substation of the Australian Taxation Office. This is a revenue raising measure described as being something to help the environment. In some small way it may make a contribution, but only in a very small way. In any event it will have a disastrous impact on low income earners.

  I notice that Mrs Kelly, the Minister for the Environment, Sport and Territories, says that the increase is calculated to be 40c a week. I do not know what sort of car Mrs Kelly drives, how far she drives or how many litres of petrol her car takes. No doubt, as she lives in Canberra, she probably does not drive very far at all. She is a minister, so I wonder how long it is since she has driven her own car. Plenty of cars take 60 litres. If we calculate 2c a litre, then filling up a car just once each week—plenty of people do not live in close-knit suburban Canberra and need to fill their cars more than once a week—will cost $1.20 a week. Therefore this will cost Australians at least $50, probably something closer to $55 a year. Low income earners in particular will be devastated by this change.

  I will not take much longer. I understand the government wants an agreement on one speaker a side and we do not want to take up any more time than we absolutely have to. When I look across the chamber I see the specious and somewhat sickening smiles of people who openly stand up in this place and say, `You people are political ignorants; you don't know how to win an election'. What revolts me about that is that those people are basically smirking and saying, `The way to win an election is for a major party to lie to the Australian people, to deceive the Australian people as to the course of action it will take'.

  Those opposite sit over there and are actually proud of that. They are proud that they have deceived Australians. They think it is smart because they have another term of government and they can do what they like in that term of government, including putting up taxes. Those people opposite either participated knowingly in that deceit or are so stupid that they could not see what was happening. They were so politically unaware as to what was being said that they did not see the deceit that their leaders were foisting on the Australian public. I think that is what is particularly galling.

  Last, but not least, I think it is interesting to note that during the election a letter that Gordon Bilney—who is from my state—wrote to his constituents said:

Yet in the end, elections are about more than `policies and promises'. For, too often, those `policies and promises' have a way of changing, after a government gets in. Maybe you've noticed.

Since the election Mr Bilney has had plenty of opportunity to notice how much policies and promises change because this government has the worst record for broken promises. This increase in petrol tax, this broadening of the tax base, is just another example. By doing this, it is doing the things that it said in the election were so dreadful—that is, broadening the tax base and putting a greater burden on low income earners. Now, all of a sudden, it is okay. I think it stinks, and the government deserves to be condemned, especially for what it does to low income earners, particularly low income earners in rural Australia.