Coalition vows to remove FBT ‘noose’

THE federal Coalition has vowed to abandon the Rudd government’s changes to fringe benefits tax rules if elected this weekend as industry battles with a dramatic slump in car lease sales since the tax reform was announced in July.

Shadow minster for finance, deregulation and debt reduction, Andrew Robb, said today that the outlook for salary packaging and car leasing businesses would automatically improve with a Coalition election victory.

Mr Robb made the pledge to around 100 industry representatives in Melbourne after Coalition leader Tony Abbott and shadow treasurer Joe Hockey earlier this week released an “open letter to the Australian car industry, employers and employees” promising to make the new FBT rules “null and void” if elected.

“On the eve of the election we felt it was vitally important to reassure the sector that should the Coalition be elected, this ill-conceived, $1.8 billion hit on the economy and jobs will not proceed,” Mr Robb said today.

“This was a dreadful decision by the Rudd government, right up there with the disastrous snap ban on the live cattle industry.

“If they (Labor) had thought about it, they would have realised there were going to be hundreds of jobs lost, thousands later on, (and) that $160 million would be wiped from sale in only five weeks.” Quoting figures compiled by the Australian Salary Packaging Industry Association and the Australian Fleet Lessors Association, which co-hosted the event at Etihad Stadium, Mr Robb added that “nearly 5000 cars less have been sold (and) 26 per cent of fleet sales have collapsed in July”.

Mr Robb dismissed comments by industry minister Kim Carr, who described concern about the FBT changes as “hyperventilation in the leasing industry” and that the fall in lease sales did not come as a result of the tax reform.

“There is a 26 per cent reduction in lease sales in one month nothing else has happened,” Mr Robb said.

“He (Senator Carr) didn’t explain what else had caused that and he’s saying blankly nothing has happened and it’s all a fabrication.

“Well, it’s a disgraceful slur on your industry, on your bona fides, on the impact on thousands of your staff, and it is unforgiveable.

“This will be the first thing we do ... If we get elected, immediately you’ve got that noose removed from around your neck. Immediately you can tell your staff we’re back in action.” Asked whether the entire FBT should be scrapped, Mr Robb said “we have to keep some balance in this”.

As reported, the Labor government has removed the 20 per cent FBT statutory formula method for salary-sacrificed and employer-provided vehicles in a bid to save taxpayers up to $1.8 billion and help pay for an early move to an emissions trading scheme.

Mr Robb today described the changes as a “grubby little political move” made to wedge the Coalition into a policy corner.

“This was done, I think, along with many of the other cuts they have made, to try and wedge us. It was a political move,” he said.

“They didn’t think of the consequences, they thought of the politics. They thought these things would be hard for us to swallow, that we’d have to go and find savings elsewhere.

“Well, on some things we had to swallow hard and take the savings and say we would reverse it later on. But on this decision, this was a step too far, in our view. There were too many peoples’ lives and jobs at risk immediately.

“Not only that, it has served the industry and the country well, this particular measure.

“And, thirdly, the car industry is under all sorts of pressure, and then they pull this rug from underneath.

“They talk about $200 million down the track for the manufacturers but, at the same time, they smack the whole industry with a $1.8 billion tax.

“It is just unforgiveable. It was pure politics. They were just trying to deal with the moment, and damn the consequences,” he said.

Australian Salary Packaging Industry Association president Leigh Penberthy welcomed the Coalition’s commitment and said it was regrettable that the industry body had “not been able to achieve the same level of engagement with the government despite numerous requests and a commitment from the prime minister to arrange the necessary meetings”.

“The Rudd Labor government has scrambled to repair the damage caused by this proposed change through the $200 million industry handout and further contribution to the auto transformation fund,” Mr Penberthy said.

“These so-called band aids are designed to help the supply side of the equation ignoring the fact that a sledgehammer has been take to demand stimulus by this ill-conceived FBT change.

“These key developments, along with the ongoing support from the shadow minister for innovation, industry and science Sophie Mirabella, have been our only glimmer of hope for the continuing prosperity of the motor and related industries and the 320,000 associated workers and their families.” Senator Carr and Mr Rudd reaffirmed their commitment to the Australian car industry in Adelaide yesterday at the factory of leading parts supplier Futuris Automotive.

Senator Carr described the election as “a referendum on the future of auto industry”, adding that “if Liberal policy was implemented there will be no car industry”.