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Carbon tax: It’s not all about fat cats

Humble pie: Cheap cars such as this Hyundai Getz can still be packaged too, says Lease Express managing director Robert Andrews.

Fringe benefits tax change to hurt blue-collar workers, not-for-profit organisations

General News logo18 Jul 2013

BLUE collar and low-paid workers – Labor’s traditional supporter base – will suffer the most if proposed changes to fringe benefits tax are adopted, a finance industry spokesman says.

That’s quite apart from knocking out around 80 per cent of the leasing industry’s volume and employment, according to Robert Andrews, managing director of Lease Express.

“Judging by the comments from Mr Albanese, you can see they assume that packaging is only for fat cats,” Mr Andrews said.

“It’s patently untrue. On our books, the average car value is well under $40,000 and our average salary for a packager, the mean average is around the $60,000 to $65,000 mark.

“ There is a fallacy that it (novated leasing) is a fat cat product, well it isn’t. What it does do, it keeps lower-income earners in newer, safer, greener cars,” Mr Andrews said.

What was often overlooked was that packaged vehicles were often secondhand vehicles, Mr Andrews said.

“We are probably one of the most flexible in the market for leasing secondhand cars.

“Apart from new cars, we also lease late-model secondhand cars, and that’s affording access (to newer, cleaner vehicles) to people who don’t have a lot of money.

“We do not-for-profit organisations and we have two customers in a particular jurisdiction where the people, after their other packaging, were actually down to $32,000 gross income.

“They still package a little Hyundai Getz and save $20 a week. That’s a big saving when you are not earning much.

“Not everyone is on a low income, but if every fat cat in town leased a car, it’s still be minimal compared to the blue-collar and unskilled workers who lease cars through us.”

Mr Andrews the policy change had all but frozen the industry, with people unsure of what to do next.

“It leaves the industry in limbo because, as of today, all we have is car drivers and dealers asking what do we do now? “They say `I’ve ordered a car but I haven’t settled yet. Where does that leave me?’,” Mr Andrews said.

“Dealers may have 100 cars in the pipeline to various packagers and buyers, what do they do?” Mr Andrews said the fringe benefits tax system had enabled a healthy turnover of vehicles in Australia, promoting the purchase of newer, cleaner cars.

“The whole car industry turns over much more quickly these days, which keeps the second tier and third tier in newer cars.

“Ten or 15 years ago, kids got a $500 banger which barely had a seatbelt and would belch out smoke.

“Now they are probably buying ex-novated cars, which probably cost $10,000 or $11,000, which are pretty well up to speed, only one generation behind, but they are still good cars, and safe.”

Mr Andrews said the government’s estimates of how much revenue abolishing the statutory calculation method would raise was probably inflated.

“The knock-down effect on stamp duty revenues (for the states) and every other charge will be big. In my opinion, the $1.8 billion is fallacious.

“There is no way that could be considered a net saving, because they obviously haven’t taken into account the knock-ons.”

But Mr Andrews said the salary packaging industry was not the only sector that should be put under the revenue microscope. He said there were more egregious examples of salary packaging still out there.

“The thing that annoys us in the industry is the lurk that exists in health, where doctors are allowed to package meals, holidays and weddings. That still exists, but no one’s talking about that.

“A surgeon in a hospital can package a wedding. Now you work that out.”

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