House of Representatives

Second Reading Speech

by the Parliamentary Secretary (Cabinet) to the Prime Minister the Hon Chris Miles MP

I move that the bill be now read a second time.

The bill gives effect to the Government's decision, announced in the context of the recent Premiers conference, to remove the wholesale sales tax exemption currently enjoyed by all levels of government in relation to motor vehicles, and parts for those vehicles, provided wholly or partly for private use as part of remuneration.

Affected governments and government bodies will no longer be able to acquire sales tax free cars that are to be used, or made available for use, for private purposes by employees with little or no restriction. For example, cars that are typically made available by Governments to Senior Executive Service officers, which those officers are free to use more or less as they please outside working hours, will no longer be able to be acquired free of sales tax by the Government employer. This will be the case whether or not those cars are formally provided as part of a salary package.

On the other hand, cars that are to be used for private purposes infrequently and irregularly, or where the private use is to be restricted to travel between home and the workplace or other travel incidental to the employee's duties, will still be able to be acquired sales tax free. This will cover, for example, most 'pool' and government-plated cars, where the private uses of the cars are restricted in the ways I have outlined.

The institutions affected by these changes include Commonwealth and State Governments and authorities, State/Territory bodies, local governments, public transport authorities ATSIC, the Reserve Bank and State libraries, museums and art galleries established in the capital city of a State. Schools, universities, public hospitals and public benevolent institutions will not be affected by these changes. Vehicles that will be affected include motor cars, station wagons, panel vans, utilities and 4WDs, provided they are designed to carry a load of less than one tonne, and motor cycles.

The changes apply to dealings with cars after 3.15 pm Australian Eastern Standard Time on 11 June 1996, and are expected to raise additional revenue of between $50 million and $100 million in 1996-97.

Further details of the measures are contained in the Explanatory Memorandum being circulated to honourable members.

I commend the bill to the House.