Stop the Cars Start the Violins – Going into the Danger Zone

Another day, another example of Chris Uhlmann taking 7.30 away from the Kerry O’Brien days and taking them closer to A Current Affair and Today Tonight.  This example of embodying the spirit of Frontline, Uhlmann provided a platform for the propaganda coming from the Novated Lease industry. As ever with my deconstructions, the original transcript is in italics.

CHRIS UHLMANN, PRESENTER: When Kevin Rudd announced this week that he was terminating the carbon tax he had to find billions of dollars in budget cuts to cover the lost revenue. He found nearly $2 billion by cutting tax benefits on the salary packaging of cars.

The Prime Minister claimed his changes would save the average family $380 a year. What he didn’t mention was that it might cost some Australian workers their jobs. 

A Captain Obvious comment here – almost every revenue saving measure from governments cost jobs.  Certainly, the promised blood-in-the-corridors cuts to the public service being promised by the Liberal Party will cause Australian workers their jobs.  From the start, Uhlmann is making this into a “The Nasty Government Doesn’t Like Jerbs*” story.

This afternoon, a Melbourne-based car leasing company announced it was sacking 80 people – half its workforce – because of the move. 

Danny Wilson is a director of that company, NLC, and he joined me earlier.

Danny Wilson, welcome. 

Note there are no other people being interviewed here – no-one to balance out this person with a clear vested interest.

DANNY WILSON, NLC DIRECTOR: Thank you, Chris.

CHRIS UHLMANN: Can you tell us when and how you learned about this decision to change the tax rules on cars?

DANNY WILSON: Well we came into work on 16th. The day started normally. At about 10 o’clock in the morning we got advice from one of our advisors, our accounting advisors saying, “Hey, have you heard?” And they then sent us through information that – in actual fact in the first instance it wasn’t even written information, it was just information taken off the live press conference that Senator Bowen had done I think up in Townsville and that’s when we learned about it, yeah.

Not sure of the relevance of any of this, especially the “we came into work…” or the timing of the announcement – it would be interesting to discover when in our history the action of the government ever been communicated to every interested party.

CHRIS UHLMANN: And what was the effect on your business?

DANNY WILSON: Immediate, immediate and catastrophic. To give you an indication, we’ve got 1,000 – about 1,000 applications in our system at the moment for cars. Now, in a normal cycle of business we would actually progress about 950 of those through to an order. As at this morning, out of those 1,000, it looks like only about 300 people will progress so the effect has been immediate and catastrophic. The phones have stopped ringing. People are just not wanting to progress.

The question here is very Mike Moore – this isn’t an investigative interview. He has just accepted verbatim what this one business owner has said – especially not questioning the exaggerated “catastrophic”.  Also left unexamined is the idea of how stable this business is, where an announcement of a future small change in taxation law can have such an instant, “catastrophic” effect.

CHRIS UHLMANN: So what have you told your staff today?

Dorothy Dix would be proud.

DANNY WILSON: Ah, Chris, unfortunately this afternoon we had to tell our staff that we would be making about half our staff redundant. We’ve got about 145 staff and we’ve had to make about 75 staff redundant. And we’ve advised, we’ve advised the group that we’ll be doing that. We’ll actually be working through with individuals tomorrow, but at 3.30 this afternoon we’ve had to give that information to our staff.

I can’t recall Uhlmann asking public service chiefs from Queensland for this kind of emotive, largely irrelevant detail about what happened to workers in an industry seemingly based on a tax rort. Or people from sustainable industries that have suffered from government changes, such as the cuts to solar feed in tarriffs. It would be interesting to see what Uhlmann asks next.

CHRIS UHLMANN: So you’ve told people that they will be sacked tomorrow. What was that meeting like?

Very soft and Mike Moore indeed. I think they should have added some mmmmms and noddies to the answer about to be provided.

DANNY WILSON: Ah, look, as you can imagine, that was a very, very difficult meeting. We’ve been going for 19 years as a business. Many of our staff have worked with us for a long time. I’ve got people who I work alongside of that are not only colleagues, but they’re friends and I won’t be working alongside them on Monday. And we do a customer survey every year where we talk about your experience of our product and this year we got a 98 per cent satisfaction rating for our business. And when we got that that was a huge point of celebration for us. You only get that because you’ve got a lot of good people working really hard to deliver a good outcome and to have to look at those same people today and tell ’em they won’t have a job come Monday has been very difficult for us.

7.30 becomes A Current Affair.  I half expected music and slowed pictures of staff emptying their desks to emphasise the emotive dimensions of the story – making sure at this stage the audience fully understand that The Government Is To Blame for this.  However, Uhlmann does add an attempt at balance and context next.

CHRIS UHLMANN: But can you understand what the Treasurer says and that other people might have sympathy with it that is this is a rule that allows people really to use their private car as a tax break. Why should that break exist? 

DANNY WILSON: Well I guess I’d say is two things to that, Chris. The first thing I’d say is, look, it’s fair and reasonable for the Treasurer to make an opinion about all parts of the Australian economy, but in this particular instance I think that the information that he’s made that decision on seems to be grossly inaccurate. The information the Treasurer’s talking about is that this is a program that’s aimed at high-end income people and I think he said they were all packaging BMWs this morning. But that’s not the case. If you look at people who are packaging cars in our organisation, they’re people – you know, half the people: under $80,000 worth of income. The average car: about $34,000 worth of income. So that there’s lot of misinformation that’s gone out there. 

And if the Treasurer thinks that this program is a rort, then we’d be happy to engage with him and talk with him about that. It’s important to remember that this is not a new program that somehow has just blossomed overnight. This program was introduced by the Keating Government in 1986. It was reviewed extensively in the Henry Tax Review of 2011 and Ken Henry did make some recommendations of changes to this government which then the Gillard-Swan Labor Government took up and introduced into the budget and none of those people said it was a rort. So there’s been no voice from the Government over a long period of time saying this is a rort. If the Government’s thinking that’s the case now, then we want to talk to them, we want to understand why they think that’s the case and how we would work with them to change that, but from our perspective, we don’t see it as a rort.

There’s plenty to challenge about these assertions from the vested interest, such as the possibility that, like our fashions and music choices, economic conditions have changed since 1986* – our car industry is no longer in a Danger Zone. Perhaps Uhlmann could have challenged the way Wilson has, like Joe Hockey, attempted to garner sympathy from the audience by putting the focus on people on incomes under $100,000 using the scheme.  As was pointed out by Chris Bowen, treasury advice indicates that 2/3rds of those using salary sacrifice for their cars earn more than $100,000 – a fact Uhlmann chose not to pull out in response. What did Uhlmann do, however? This.

CHRIS UHLMANN: Is it the decision itself or the way that it was made that bothers you most?

Not a challenge, not a discussion about the possibility that the novated lease industry won’t die – but instead might need to concern itself with providing cars for people for business use alone.  Just an irrelevant question about the way the decision was made.  Not substance of policy, just appearance in the way it was done.

DANNY WILSON: Well I think both, in honesty. I think the way that it was made indicates that there’s not good information, the Government hasn’t sought to be consultative and then basically to stand up at 10 o’clock on one day and kill a business that’s been running for 19 years is pretty hard on that business and it’s not only our business, it’s the sector. We’re not alone in having to do this. I know many of the other companies who deliver service into our sector are making the exact same decision as us and it’s just very distressing for us all. And for the Government to just do that on a whim, as it were, or it seems at least that to us, it’s very unsettling.

Kill a business? The business of providing leased cars for business use is not being killed here – it is still going, even if they lose staff at the processing new claims part of it.  Such emotive and incorrect language, however, is not countered, not contextualised – just left there, hanging in the air as Chris Uhlmann says…

CHRIS UHLMANN: Danny Wilson, thank you.

No wonder the response from Wilson was

DANNY WILSON: My pleasure, Chris.

It might as well have been Joe Hockey or Tony Abbott saying exactly the same thing to Uhlmann.

I am generally reluctant to agree to those who constantly complain about the “LNP Bias” of the ABC – painting every employee as being some kind of spokesperson of the Federal Opposition. It is untrue and unhelpful to make generalised repetitive tweet and blog attacks on the corporation. There should be concerns, however, when interviews like this – geared to lead the audience to only one conclusion – are aired. It’s poor journalism and it leads the ABC open to questions of bias.

*jerbs

*1986

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3 thoughts on “Stop the Cars Start the Violins – Going into the Danger Zone

  1. >Not sure of the relevance of any of this, especially the “we came into work…” or the timing of the announcement – it would be interesting to discover when in our history the action of the government ever been communicated to every interested party.

    By contrast, when the Fringe Benefits Tax was introduced into Australia in 1986 it had been discussed in the 1985 week long ‘tax summit’, and also been party of the 1984 election campaign platform.

    So when business complains about this being an ‘ambush’, I think it’s a fair comment.

    I don’t mind the change, but it is a very unusual way to deal with policy change in a fairly contentious area. After all: what’s the point in abolishing this system if it only results in the government spending more on subsidizing car manufacturers when sales fall suddenly?

  2. Of course it was a tax rort, thats why people did it. Thats why *I* did it. I mean, it would have been a *better* tax rort if I earned much more, and wanted a beemer instead of a camry, but it was a way of minimising tax and getting a new car at the same time.

    The scheme was originally set up for those who spent a significant amount of time travelling for work purposes in their own private vehicle, and helped with the idea of a “company car” that could also be used for private uses without getting complicated with log books and claims and such. But then it suited the companies to offer “perks” to all their employees rather than the top management (who may have well actually needed to travel), so many of hoi polloi us took it up. And then, to get the tax break to make it worthwhile, we had to drive *at least* 25,000km a year, which meant that many of us spent pointless days towards the end of the financial year driving for no reason to nowhere in particular, trying just to get to the minimum required kilometres to meet the contract. Case in point, I usually do about 18,000km a year, which meant I had to add about 7000km to my driving each year – in other words, I had to pointlessly burn ~600 litres of petrol and thereby add ~1380kg of CO2 to the atmosphere for absolutely no reason bar avoiding paying a higher tax rate. Friends and family were begged to take driving holidays in my car, just so that I didn’t have to do all that excess driving by myself. I think I drove to Sydney (from Wollongong) for work maybe twice a year in the 5 year lease, otherwise it was 100% private use. Oh yes, leasing a car was a great rort that positively encouraged wasteful, carbon-polluting behaviour.

    I’ll miss the perk, of course, but if it was used as intended, it would only make sense to lease a car if one’s own private vehicle was used extensively for work purposes as well, I’d say if work related travel was more than, say, 50% of the kilometres accrued, or more than 25000km accrued (whichever is more) then a lease car *should* be used. But otherwise, leasing should become close to par with simply claiming those “work related travel expenses” back on one’s tax return, just like those who don’t have access to salary sacrifice options to lease car companies do it. And yes, that means log books/ log apps.

    There is no possible justification to encourage people to pointlessly burning up petrol just to reduce their tax bill, just the opposite. If anything, we should be encouraging people not to travel unnecessarily, or even using *public transport* over private use vehicles, yes even for business use. *Especially* for business use.

    • The requirement to drive 25000km had already been removed by a flat 20% FBT rate. It’s not a rort if it’s the way the law was intended to work. Let’s stop accusing those of us who took up the option as being cheats, and discuss that the environment has changed and (perhaps!) it’s no longer useful to use the tax system to encourage ordinary workers to upgrade their cars much more frequently than they otherwise might. Maybe the change should have been to make differential rates for Aus- vs foreign-built cars, or to have “socialised” changing it from being a common part of a salary package to only being for work purposes before changing the rules overnight. The trouble with giving warning about tax or benefit changes is the bubble it creates before the change.

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