The government has attracted widespread criticism from Australia's automotive industry and salary-packaging businesses since announcing a $1.8 billion cut in FBT concessions on Tuesday, with those opposed to the changes claiming it will cost hundreds of jobs and potentially tens of thousands of new-car sales.
Abbott says the government’s decision will cost 320,000 Australians an average of $1400 a year and “has already damaged the car industry”.
“Labor has offered no proof for their claims about rorting of the FBT arrangements,” Abbott says. “Instead, it appears to be yet another Kevin Rudd rush-job.
“Mr Rudd is all talk and no action, but when he finally does act he ends up destroying people’s jobs.”
The opposition leader says the impact of the policy change has already been felt across the industry.
“In just 48 hours NLC leasing has made redundant 75 staff, McMillan Shakespeare is in a trading halt, Qantas group has frozen all motor vehicle purchases, the sale of Smartsalary is now on hold, and car yards in major cities are already reporting lost orders,” he said.
“This means even more pressure on local jobs in South Australia and Geelong as well as in car dealerships across Australia,” he said. “Even South Australian Labor Premier Jay Weatherill has said it is ‘a bad decision’.
“For an industry still reeling from the impacts of Labor’s carbon tax, this bad decision has come at the worst possible time.”
Federal Treasurer Chris Bowen has leapt to the defence of the revised FBT rules he announced jointly with the Prime Minister earlier this week, insisting that claims that the FBT changes will cause serious damage to industry were “alarmist and irresponsible”.
“Mr Abbott and Mr Hockey have claimed these changes will cause massive damage to the car industry but the biggest threat to the car industry in Australia is the Coalition themselves, who have confirmed they would cut at least $500 million from auto industry assistance,” Bowen said.
Bowen maintained that two-thirds of the 320,000 Australians currently salary sacrificing a car under FBT rules earned over $100,000 a year – a figure refuted by Abbott, who quotes an industry estimate that as many as 75 per cent of those earn less than $100,000 a year.
Bowen sought to clarify some of the changes, insisting that they were not as onerous as they had been widely reported, with drivers only required to account for 12 weeks in a five-year period, and confirming the changes would not affect existing commitments, even if the vehicle was on order and had not yet been delivered.
“Legitimate business use of a car can still be salary packaged and there are no changes to other items that can be salary packaged such as taxis, panel vans and utes, as well as laptops and benefits for not-for-profit workers,” he said.
“The Australian people are used to the negative politics of fear from Mr Abbott and Mr Hockey, who have made an art form of it for the past three years. It is no surprise they are stoking fear again over these changes because they have no credible policies themselves.”
Abbott said the Coalition had already detailed how it planned to pay for abolishing the carbon tax as well as keeping tax thresholds and fortnightly pension and benefit increases.
“Our plans do not need a $1.8 billion new tax hike on cars, introduced without warning or consultation,” he said.