Hundreds of jobs will be lost across the country as a direct result of the Federal Government’s changes to fringe benefits tax (FBT) rules.
Melbourne-based salary packaging business NLC last night confirmed the changes had left it with no option but to make 74 of its 143 staff redundant, while fellow Victorian operation Selectus told ABC News it would be forced to cut up to 100 of its 140 employees if there was no change in the government’s stance in the coming days.
On Tuesday, Prime Minister Kevin Rudd and Treasurer Chris Bowen announced a $1.8 billion cut in FBT concessions for salary-sacrificed and employer-provided vehicles as part of its plan to help cover the $3.8 billion switch from a fixed to a floating carbon price.
The changes force workers with salary-sacrificed and employer-provided cars to use a logbook to keep detailed records of the personal and business use of their vehicles in order to claim FBT concessions, and drew instant and widespread criticism from leading industry and local manufacturing figures who claim the changes will hammer new vehicle sales.
Victorian Premier Denis Napthine said the “ill-conceived and precipitous” policy change would affect more than 300,000 Australians who leased vehicles and claimed FBT concessions, and predicted local car makers could take a hit of up to 10,000 sales per year.
“This would represent an unwelcome blow at the worst possible time to the local car manufacturing industry,” Napthine said.
“The Federal Labor Government must review these ill-considered tax policy changes that will prejudice jobs and investment in our local car industry.
“We urge that if the Federal Labor Government is not prepared to abandon this policy, it should at least consider reviewing the scope of the new application of the tax to exempt locally-produced cars.”
Holden spokeswoman Andrea Matthews said the changes would have a “significant impact” on its business, the scope of which it was yet to fully determine.
“We did do an initial assessment earlier in the week and that initial assessment did indicate that it is going to have a significant impact on our business,” Matthews said.
“We don’t know the size of that impact yet in terms of sales of new Holdens, we’re just working through that at the moment.”
Matthews admitted Holden had not met with the government since Tuesday’s announcement, but said it enjoyed an ongoing dialogue with both major political parties and insisted it planned to respond through the Federal Chamber of Automotive Industries (FCAI).
“We have ongoing conversations with both sides of politics and none of that has changed,” she said.
“We did make a statement earlier in the week that we support the FCAI’s position where they’re requesting the government to reconsider the decision on the policy, and that stands, we would be keen for the government to relook at that.”
Last night, Labor Senator for NSW and parliamentary secretary in the Rudd ministry Doug Cameron criticised the industry’s fierce reaction to FBT changes.
“The car industry has no right to argue they should survive off the back of people making unsubstantiated claims on taxpayers,” Cameron told AAP.
“The car companies are crying wolf.”
Victorian Automobile Chamber of Commerce executive director David Purchase said new car dealers would suffer the most from the government’s policy changes.
“They are telling us that, already, orders have been cancelled, settlements suspended and deliveries to customers postponed,” Purchase said.
“We know of one member, with multiple dealership franchises in Victoria which normally sells between 120-150 cars a month as leased or company cars. Customers have put a stop on these sales until further notice, resulting in some employees being surplus to requirements.
“While sales have stopped, stock keeps arriving from orders placed months in advance. The dealership will soon become overstocked with cancelled back orders and the arrival, and storage, of new vehicles.
“If swift action is not taken, this could be as big an issue as the floor plan credit crisis in 2008.
“We call on the Federal Government to reverse its decision. If changes to FBT are desired, there should be consultation with all sectors of the automotive industry, and new car dealers, in particular. The retail, service and repair sector of the automotive industry is significant and should not be ignored.”