FBT changes dominate climate debate

Labor minister Mark Butler (C) says legislation will be drafted for the ETS before the election. Source: AAP

LABOR'S crackdown on work-related benefits to help pay for a shift to an emissions trading scheme (ETS) continues to anger the motor industry after the government said it would mainly impact luxury car owners.

Changes to fringe benefit tax (FBT) arrangements on car leasing and salary sacrifice packaging aim to raise $1.8 billion of the $3.8 billion needed for an early shift from a fixed carbon pricing regime to an ETS in 2014.

The move, which will impact about 320,000 people, has angered automotive groups and the opposition, but the government is determined to push through the measure, even if it means recalling parliament.

"In the event that parliament were to resume before the election, I could take draft legislation to the parliament," Climate Change Minister Mark Butler said on Wednesday.

If rejected, Labor would take it to the election and seek a mandate from voters, he added.

Shadow treasurer Joe Hockey said the surprise change was like taking a baseball bat to an already ailing motor vehicle industry.

"This is poorly thought out, there was no consultation with any stakeholders," he told reporters after meeting with car salesmen in western Sydney.

However, Mr Hockey stopped short of committing the coalition to block the measure, saying "we would not start from yesterday" when asked if he would back the change.

The senior Liberal agreed with car retailers who say they rely on the FBT scheme to keep up sales in an already cut-throat sector.

But Deputy Prime Minister Anthony Albanese said people were "fiddling the system" by buying expensive luxury cars and claiming personal travel as a work-related expense.

"The chances are it's not a Holden Commodore, it's a BMW," he said.

Treasurer Chris Bowen tried to soften the blow, adding that people entitled to dispensation would still be able to get it as long as they could justify their claims.

"If you are not using your car for business, then you don't need a business-use deduction," he said.

The savings from the FBT measure form the single biggest plank of Labor's push to an ETS next year, and neutralise lingering voter antipathy toward imposition of the $24 a tonne carbon tax.

Other savings will come from public service job cuts and the scrapping or winding back of some clean energy programs.

Prime Minister Kevin Rudd says the ETS push is in line with a promise he made to Australians in 2007 during his first leadership term, and will save the average Australian household $380 in 2014/15.

But industry says changes to the FBT scheme will hit middle-income earners hardest.

"Motorists ... should not be targeted to help minimise the budget impact of other policy decisions," Australian Automobile Association director Andrew McKellar said.

The Australian Greens, who are critical of cuts to environmental programs, are promising to stall any government legislation related to the earlier ETS move in the upper house.

"We won't be moving to the ETS in 2014," said Greens leader Christine Milne.

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