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Treasurer defends company car FBT change as 'reasonable' and 'prudent' Treasurer defends company car FBT change as 'reasonable' and 'prudent'
(2 months later)
The treasurer, Chris Bowen, has dug in behind the government’s contentious changes to fringe benefits tax, acknowledging the overhaul is unpopular, but arguing it is a necessary part of prudent economic management.The treasurer, Chris Bowen, has dug in behind the government’s contentious changes to fringe benefits tax, acknowledging the overhaul is unpopular, but arguing it is a necessary part of prudent economic management.
Bowen told the National Press Club it was reasonable to ask people claiming business use of a vehicle under salary-sacrificing concessions to provide some evidence, particularly when there were now smartphone apps enabling consumers to keep records.Bowen told the National Press Club it was reasonable to ask people claiming business use of a vehicle under salary-sacrificing concessions to provide some evidence, particularly when there were now smartphone apps enabling consumers to keep records.
The $1.8bn FBT crackdown was unveiled on Tuesday as part of savings measures associated with a promised overhaul of Julia Gillard’s clean energy package. The government intends to move to a floating carbon price one year earlier than legislated.The $1.8bn FBT crackdown was unveiled on Tuesday as part of savings measures associated with a promised overhaul of Julia Gillard’s clean energy package. The government intends to move to a floating carbon price one year earlier than legislated.
The FBT crackdown helps make that decision budget-neutral. But car manufacturers, automotive groups, car dealerships and the opposition have blasted the change at a time when the local industry is under intense competitive pressure. Industry groups have also criticised a lack of consultation prior to the change.The FBT crackdown helps make that decision budget-neutral. But car manufacturers, automotive groups, car dealerships and the opposition have blasted the change at a time when the local industry is under intense competitive pressure. Industry groups have also criticised a lack of consultation prior to the change.
On Thursday, the opposition leader, Tony Abbott, criticised the government for cooking up the change in secret. He also argued the change would hit middle-income households. “Yesterday, the government said that this would basically impact on rich people driving BMWs – wrong, wrong, wrong,” Abbott told reporters in Queensland.On Thursday, the opposition leader, Tony Abbott, criticised the government for cooking up the change in secret. He also argued the change would hit middle-income households. “Yesterday, the government said that this would basically impact on rich people driving BMWs – wrong, wrong, wrong,” Abbott told reporters in Queensland.
“It's nurses driving Camrys, it's charity workers in Falcons, it's salesmen in Holdens – these are the people who are going to be impacted by these changes for hundreds of thousands of people, most of them earning not much more, or even less in many cases, than average weekly earnings,” Abbott said.“It's nurses driving Camrys, it's charity workers in Falcons, it's salesmen in Holdens – these are the people who are going to be impacted by these changes for hundreds of thousands of people, most of them earning not much more, or even less in many cases, than average weekly earnings,” Abbott said.
Car leasing firm NLC announced 80 staff redundancies on Thursday afternoon in the wake of the government’s FBT overhaul.Car leasing firm NLC announced 80 staff redundancies on Thursday afternoon in the wake of the government’s FBT overhaul.
Labor has previously rejected Treasury advice to pare back FBT concessions, but Bowen stood by his policy advice from agencies that about two-thirds of people affected by the rules change earned more than $100,000 a year.Labor has previously rejected Treasury advice to pare back FBT concessions, but Bowen stood by his policy advice from agencies that about two-thirds of people affected by the rules change earned more than $100,000 a year.
The change does not affect existing contracts.The change does not affect existing contracts.
Bowen acknowledged today that the measure had prompted a significant backlash, but he contended that the budget would not return to surplus without difficult decisions.Bowen acknowledged today that the measure had prompted a significant backlash, but he contended that the budget would not return to surplus without difficult decisions.
“And I'm up for that task as treasurer,” he said. “If it's too controversial for [shadow treasurer Joe] Hockey, well that's a matter for him to explain how he's going to reform the Australian economy.”“And I'm up for that task as treasurer,” he said. “If it's too controversial for [shadow treasurer Joe] Hockey, well that's a matter for him to explain how he's going to reform the Australian economy.”
Bowen said he would not take lectures from the Coalition on creating uncertainty for the car industry when the opposition planned to cut automotive assistance to car makers by $500m.Bowen said he would not take lectures from the Coalition on creating uncertainty for the car industry when the opposition planned to cut automotive assistance to car makers by $500m.
Bowen was originally intending to address the club to promote his new book, Hearts & Minds, but switched the topic to the economy given his return to the frontbench after Labor’s leadership change.Bowen was originally intending to address the club to promote his new book, Hearts & Minds, but switched the topic to the economy given his return to the frontbench after Labor’s leadership change.
The treasurer quipped that he had supported Kevin Rudd’s return to the prime ministership before it was fashionable to do so. Bowen spent a period on the backbench in early 2013 because he was an overt supporter of Rudd in the botched attempt to reinstall him as Labor leader in March. In Rudd’s successful leadership challenge last month Bowen was elevated to the Treasury portfolio.The treasurer quipped that he had supported Kevin Rudd’s return to the prime ministership before it was fashionable to do so. Bowen spent a period on the backbench in early 2013 because he was an overt supporter of Rudd in the botched attempt to reinstall him as Labor leader in March. In Rudd’s successful leadership challenge last month Bowen was elevated to the Treasury portfolio.
“My colleagues will forgive me for saying that I believe Treasury is the most Labor portfolio of them all,” Bowen told the Press Club on Thursday afternoon.“My colleagues will forgive me for saying that I believe Treasury is the most Labor portfolio of them all,” Bowen told the Press Club on Thursday afternoon.
“Treasury is core business for Labor because we are at our best when we use market forces to drive economic growth – and use the national wealth created by economic growth to drive greater opportunities for people from all walks of life.“Treasury is core business for Labor because we are at our best when we use market forces to drive economic growth – and use the national wealth created by economic growth to drive greater opportunities for people from all walks of life.
“Labor governments don’t just adopt policy settings that promote economic growth, we are advocates for growth and explainers of the need for sometimes difficult policy decisions which may have short-term adjustment pain but long-term economic benefit. This is in many ways the Hawke-Keating model of reform,” he said.“Labor governments don’t just adopt policy settings that promote economic growth, we are advocates for growth and explainers of the need for sometimes difficult policy decisions which may have short-term adjustment pain but long-term economic benefit. This is in many ways the Hawke-Keating model of reform,” he said.
Returning to a Hawke-Keating “consensus” model for controversial economic reform was a key message of Rudd supporters unhappy with the former treasurer Wayne Swan’s tendency to aggravate business interests.Returning to a Hawke-Keating “consensus” model for controversial economic reform was a key message of Rudd supporters unhappy with the former treasurer Wayne Swan’s tendency to aggravate business interests.
Bowen also used his lunch-time speech to continue Kevin Rudd’s recent arguments about the importance of managing the transition in the Australian economy. Rudd argues the local investment boom in the mining sector is now over, and the long economic boom in China is moderating.Bowen also used his lunch-time speech to continue Kevin Rudd’s recent arguments about the importance of managing the transition in the Australian economy. Rudd argues the local investment boom in the mining sector is now over, and the long economic boom in China is moderating.
“We have reached a crossroad,” Bowen said on Thursday afternoon.“We have reached a crossroad,” Bowen said on Thursday afternoon.
“This is not a crisis. But it is a challenge.” He said economic growth in Australia would not fall off a cliff, but the government had to look to new drivers of growth, including manufacturing and services.“This is not a crisis. But it is a challenge.” He said economic growth in Australia would not fall off a cliff, but the government had to look to new drivers of growth, including manufacturing and services.
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