In excellent news this morning, The Age reports that Christine Milne's amendments to the Luxury Car Tax, exempting fuel efficient vehicles from the levy, are already having an impact!

Ian Porter writes:

"THE changes made to luxury car tax have already started to influence the design of premium cars, with Audi announcing plans to install smaller diesel engines in some of its models so they consume less than seven litres per 100 kilometres - and become exempt from the tax."

Audi Chief Joerg Hofmann is quoted as saying:

"Since the legislation passed with the seven-litre exemption, we have had to look at our whole range again."

He said the company had two diesel engines, both four-cylinder units, which would both consume less than seven litres in the A6.

"It was not the original plan because we were not focused very much on the diesel side for the A6. Now with the new legislation, why not bring in a four-cylinder turbo-diesel engine?"

Mr Hofmann said the exemption for cars which consume less than seven litres per 100 kilometres was the only good part of the tax and that Audi was already planning to release smaller engines in some of its models so that they were priced below the $75,000 threshold for fuel-efficient cars.

Aside from the lovely (if sadly iimplicit) praise for the Greens in singling out our amendment as the only good part of the legislation, this is exactly the point - the tax is supposed to encourage more fuel efficient vehicles onto the marketand discourage gas guzzlers. We agree with Hoffman that it would have been amuch better outcome if the Government had agreed to our original proposal and replaced the tax with a tax on vehicle fuel consumption and greenhouse emissions, dealing with equity through the income tax system where it belongs, but at least that has been referred to the Henry Review and is still under consideration.

Australian car manufacturers would do well to follow Audi's example and increase the efficiency of their cars to take advantage of the tax break, to shift their focus in line with a market that is increasingly conscious of climate change and peak oil, and simply to do what is right!

In particular, the Federal Chamber of Automotive Industries should stop whingeing about the tax and about the Greens' amendments which delivered them a substantial benefit, and get cracking convincing their membership to take advantage of the tax break for efficient vehicles. If they don't, their members should get with the program, move with the times, and ditch the old guard who do their lobbying in favour of some who understand the world we are all now operating in.

Those who are dragging us back into the past need to get out of the way of those who are building the future.