SIMON BIRMINGHAM: Thanks very much for coming along today. It’s a pleasure to be here with my colleague Senator Mathias Cormann, the Shadow Assistant Treasurer, Tom Zorich, the Liberal candidate for Wakefield, and with John Chapman, the chief executive of the Motor Trade Association of South Australia.
We are very concerned at Labor’s announcement yesterday with regards to its new fringe benefits tax – a $1.8 billion tax hit. This really is a demonstration of the rank hypocrisy from the Labor Party. We have Kevin Rudd and Labor constantly saying they stand up for the car industry and yet, in rank hypocrisy, they then go and apply a new $1.8 billion tax on the car industry. You really do have to wonder: what type of madness is it to, on the one hand, be propping up an industry with hundreds of millions of dollars in subsidies and, on the other hand, applying a new billion-dollar-plus tax hit to that same industry.
Mathias is here as one of our key treasury and taxation spokespeople and I’ll invite him to say a few words before John and Tom also get to say a few words.
MATHIAS CORMANN: What should be obvious to everyone across Australia now is that Kevin Rudd is still the same bad old Kevin. Yet again under Kevin Rudd an important industry for Australia has been taken by complete surprise by a massive tax hit. This is a $1.8 billion tax hit on the car industry which is very bad news not only for the car industry; it’s very bad news for South Australia.
It is a massive tax hit on the car industry at the worst possible time and it, of course, flies in the face of the Rudd Government’s own Henry Review recommendations which, of course, recommended the current fringe benefits tax arrangements as they apply to the car industry, so what is obvious today is that Kevin Rudd is still the same bad old Kevin. He still makes decisions on the run. He still takes important industries across Australia by complete surprise and, whenever the Labor Party is out there casting around for more cash, nobody is safe.
This is a $1.8 billion tax hit that comes on top of the world’s biggest carbon tax. It comes on top of all of the additional red tape. It comes on top of all of the additional burdens that the Rudd and Gillard Labor Governments have already imposed on the car industry and other industries across Australia over the past six years. It is time for a change of government. There is a better way. It is time for people across Australia to be given the opportunity to send this Government packing.
SIMON BIRMINGHAM: Thanks, Mathias. John Chapman from the Motor Trade Association.
JOHN CHAPMAN: Thank you, Senator. The Motor Trade Association’s extremely concerned about the policy on FBT [fringe benefits tax]. It’s having a direct impact already on our dealer members. We’re seeing cancellations of orders flowing through from leasing companies and, indeed, salary packaging companies.
This is of major concern at a time, particularly in South Australia, where we’re facing a very, very uncertain retail environment. In fact, there are reports that the country is in recession, that South Australia is in recession, so the policy itself… it’s a policy we believe has been designed on the back of a napkin. It certainly affects Holden, as one of our major manufacturers in this state, at a time when Detroit are considering what they do with our manufacturing in South Australia for Holden, the Australian made vehicle. The people in Detroit would be asking Mike Devereux, the chief executive of Holden, ‘what does all this mean?’ and Mike would have to be saying to them ‘I’m not sure but I don’t think it’s good’.
It couldn’t have come at a worse time for industry. As to small business and indeed business, we now have a massive, massive red tape burden. Every person who has a car, either salary packaged or indeed has as part of their employment package, will now have to fill out a logbook and people talk about apps – well, I haven’t seen any of those yet – but it will mean that people will be spending time, including government employees, filling out logbooks. There’ll be people in business that will have to assess the logbooks and then we’ll have the people who actually have to pay the tax and that’s business. It’s created uncertainty and we’re very, very unhappy and concerned.
JOURNALIST: Can you elaborate on what immediate effect you’ve seen?
JOHN CHAPMAN: We’ve had some reports this morning that, already, dealers have been notified that orders that were in the wings have been cancelled. That is a direct effect and we wouldn’t be isolated here in South Australia – that would be happening nationally because salary packaging firms are big organisations that buy a lot of vehicles. At the moment, I don’t know what they’re able to actually tell their potential clients in relation to salary packaging vehicles because we don’t know what the rules are but it’s not good.
JOURNALIST: What do you think this might mean for the future of the Australian car industry?
JOHN CHAPMAN: Well, as I’ve mentioned, I think, in terms of Holden, it couldn’t have come at a worse time. One thing Holden desperately need at the moment is stability. They’ve just launched a brand new vehicle, the VF, which is a fantastic car and, at a time… now we suddenly have people going ‘ooh, we might just actually hold off til we understand what this means’. We don’t know how long it’s going to take to clarify this. It will most likely have to go through the Parliament. When is the Parliament going to be recalled to do this? There are so many uncertainties.
JOURNALIST: So, it’s basically scaring the market but there’s no clarity about how it actually is implemented and how much you have to pay?
JOHN CHAPMAN: We don’t know what the rules are going to be. We know that people will have to have logbooks, so there will actually be an actual calculation of what the FBT is, as opposed to a statutory percentage rate which has applied in the past, which was a simple and very effective way.
MATHIAS CORMANN: If I can just say here: I mean, this is vintage Kevin Rudd. It is policy on the run. It is taking important industries across Australia by surprise, not having thought through the detail, not having thought through the implications whether it is for the car industry, on this occasion, or for other industries on previous occasions. Kevin Rudd is still the same bad old Kevin. He doesn’t do his homework, he shoots from the hip, he doesn’t go through proper process and, of course, it is important businesses across Australia who are here left to deal with the consequences of yet more Labor chaos, yet more Labor dysfunction, yet more of Labor’s messes.
SIMON BIRMINGHAM: Before we take other questions, I might let Tom Zorich… who is just going to say a couple of quick words on the local impacts from the area where Holden, of course, manufactures.
TOM ZORICH: Thank you, Simon. This will have a devastating effect to the people within the electorate of Wakefield. It will also have an effect on the people of South Australia and also Australians generally. This has the ability to reduce the manufacturing of cars and affect jobs, so in my area this will be another burden of unemployment in the electorate. Currently, Labor and Nick Champion have done very little to address this problem and we have very high unemployment in the seat of Wakefield – around over 9 per cent and youth unemployment is up to 44 per cent – so this will have a major effect to our electorate.
SIMON BIRMINGHAM: Thanks, Tom. Questions.
JOURNALIST: Mr Albanese’s characterised this as clamping down on a rort and something that should have been done a while ago. He sort of added the proposition that there might be people driving BMWs that are up to most mischief here. What do you think of those comments?
MATHIAS CORMANN: Well, that is a ridiculous proposition. I mean, firstly, the current arrangement is entirely in line with the recommendations that were made by the Henry Review into the tax system which was initiated by Kevin Rudd himself and, if it has been such a rort as Mr Albanese is claiming, why has it taken them six years to do anything about it? I mean, this is just a rush of blood by Kevin Rudd. It is just vintage Kevin Rudd. He didn’t know where to find some more cash so he just casts around and he targets yet another industry, on this occasion the car industry, taking them by surprise, not having done his homework and, I mean, this is affecting nurses, schoolteachers, call centre employees. I mean, this is not affecting at the ‘top end of town’. This affecting people with incomes of below $100,000 per annum, so I mean, clearly, Mr Albanese’s just trying to justify the unjustifiable which is yet more Labor chaos, yet more Labor dysfunction, with businesses and families across Australia being asked to pay the price.
JOURNALIST: Do you think it’s an efficient tax already, as it stands, without any alterations?
MATHIAS CORMANN: Well, the arrangements that are in place are the arrangements that were recommended by the Henry tax review which looked at these issues carefully. What we are now doing is… this announcement’s just been made and, as has been said, a lot of the detail is not very clear yet. We are working with the car industry and with other stakeholders on how best to fight what is yet another Labor Party tax attack.
JOURNALIST: Senator, what’s actually being asked of people is to fill in a logbook for three months in every five years. Is that really so much of an impost?
MATHIAS CORMANN: Well, it is just completely unnecessary and it goes counter… it flies in the face of the recommendations what were made by Kevin Rudd’s own tax review, the Henry tax review which he commissioned, and, of course, I mean, let there be no doubt: this is a $1.8 billion tax hit on the car industry. This is a $1,400 additional tax for 320,000 customers looking at purchasing a new car. There are no two ways about it. This is just another Labor Party tax targeting an important industry for Australia without any notice.
SIMON BIRMINGHAM: If I can just add there: what is very important to understand about yesterday’s policy announcement by Mr Rudd is the result of it is more tax, increased red tape and it heightened business uncertainty. More tax, increased red tape and heightened business uncertainty. Those are the three real consequences of this change and let’s not forget Mr Rudd changed this tax pretending that, at the time, he was terminating the carbon tax. That is blatantly and manifestly untrue. The carbon tax will still be here right through and, in fact, will be more than it is today by 2020 – significantly more. It will go from $24 a tonne to $38 a tonne by 2020, yet we will still have Mr Rudd’s new fringe benefits tax in law at the time if he gets his way, so there will be a double hit to car manufacturers, to car retailers and to the economy generally that will be paying the carbon tax, will be paying the new fringe benefits tax, will be facing increased compliance costs and, as Mr Chapman from the Motor Trade Association rightly said, this could not possibly come at a worse time in terms of the message about business uncertainty and doing business in Australia and government just changing its mind on a whim when the people in Detroit are making decisions about future investment here in South Australia.
JOURNALIST: Can you reconcile the ills you’ve identified with this current tax scheme with the Liberal Party’s own plans to cut back car industry assistance? I mean, you’ve got your own plans too which could be equally damaging to Holden potentially.
SIMON BIRMINGHAM: This is the madness, of course, of it all, that this Government is proposing to give hundreds of millions of dollars in car industry subsidies from the taxpayer’s pocket but then is wanting to take billions of dollars – that will damage the car industry’s future – from taxpayers. In net terms, of course the car industry is going to be far worse off under the Labor Party because of this new fringe benefits tax.