Salary Sacrifice Industry

The Salary Sacrifice Industry went from never making a political donation, to making six-figure payments every year to the major parties in order to stop the revival of a short-lived policy that threatened their business model.

In the lead up to the 2013 election, during the brief period when Kevin Rudd returned as Prime Minister, with new Treasurer Chris Bowen at his side, the Labor Party announced that the tax perk to buy vehicles out of pre-tax income for personal use would end, saving the budget $1.8 billion dollars.

In response to the policy announcement, the Australian Salary Packaging Association gave their first ever donation of $250,000 to the Liberals. Then Opposition Leader Tony Abbott declared that if elected, he would not proceed with the measure.

Abbott won the election and dumped the measure as government policy. The new peak body, the National Automotive Leasing and Salary Packaging Association, started making donations to both parties, which totalled $357,700, in the lead up to the next election in 2016.

Both of the major parties are now on the take, with donations steadily coming in each year so that parties know there will be a continuous income stream. More was spent on Labor after the 2013 election loss, presumably in order to bring them around.

Then, in May 2016, two months before the federal election, Labor Opposition Leader  Bill Shorten wrote to the Industry to assure them that the tax break would not change, by which point at least $200,000 had been donated to the Labor Party.

The shares in the industry boomed by 8 per cent after this letter was made public.

The Greens established a Senate Select Committee into political donations. We invited the two Associations to appear before the Committee but they refused. The Greens pushed to compel their attendance but were unsuccessful because Liberal and Labor parties didn’t agree to them appearing and giving evidence.

The industry has consistently advertised on radio and Sky News (predominantly watched by politicians) spruiking the importance of the industry, knowing that much of their profitability would shrink if salary sacrificed vehicles were only limited to business use.

The industry has used political donations to influence policy outcomes to ensure its continued profitability.

References

  1. Letter to NALSPA: https://nalspa.org.au/wp-content/uploads/2018/11/Letter-to-NALSPA.pdf
  2. Labor pledges to retain tax break on company car perk. Sydney Morning Herald. 5 May, 2016.