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Thursday, 25 November 1999
Page: 12751


Mr KERR (9:58 AM) —This package of five bills, which includes the Tradex Scheme Bill 1999 [No. 2] , Tradex Duty Imposition (Customs) Bill 1999 , Tradex Duty Imposition (Excise) Bill 1999 , Tradex Duty Imposition (General) Bill 1999 and Customs Tariff Amendment (Tradex) Bill 1999 [No. 2] , replaces three bills that the government introduced on 24 June and later discharged from the Notice Paper . There is no explanation in the explanatory memorandum or the second reading speech relating to this new package and nothing to explain why the previous bills were discharged.

It is, however, suggested in a Parliamentary Library Research Service Bills Digest that the probable reason that this occurred was to satisfy section 55 of the Constitution. That provision in the Constitution provides:

Laws imposing taxation shall only deal with the imposition of taxation, and any provision therein dealing with any other matter shall be of no effect.

Subsidiary to that, it states:

Laws imposing taxation, except laws imposing duties of customs or excise, shall deal with one subject of taxation only; but laws imposing duties of customs shall deal with duties of customs only, and laws imposing duties of excise shall deal with duties of excise only.

The Library suggested that the package introduced on 24 August probably failed to satisfy section 55 of the Constitution. As somebody who prides himself on being a constitutional lawyer, I must admit that I failed to detect that error when the bills were first brought into this place, and I plead guilty to that oversight. But it does surprise me that the drafters of these measures, who must have carriage of these matters routinely, also failed to address their minds to something which is within their particular sphere of routine administration. I am wondering whether the changes that have occurred in terms of the privatisation arrangements with respect to the office of the Crown Solicitor, and the increasing tendency to outsource work, may have contributed towards the loss of institutional memory in relation to the way in which these matters should be dealt with for parliamentary processes.

I am raising this only by way of an introduction. But I do think it is a serious matter that, over time, the storehouses of institutional memory that have reposed in government in the various departments have become much less deep—the well is much shallower now as, increasingly, outsourcing has taken out of the system people with great experience of the processes of administrative law and constitutional law, and parliamentary experience—and there is the tendency for departments to seek advice other than through the AGS and, in turn, for AGS to reduce its resources and capacity.

Of course, it is not just in the area of legal services where this may be a matter of concern—although, if instances like this became more frequent, one would imagine how red-faced the government would be to pass a package of bills, have them proceed through the parliament, begin collecting a revenue based on those measures and then be subjected to a constitutional challenge on the basis of a technicality. One can imagine how awkward that would be. So I do not diminish that. But, of course, the same issue of a diminishing store of public experience is reflected in a whole range of different areas of administration.

I might just instance a meeting I had recently with the Australian Institute of Engineers. They pointed out—I cannot remember the time frame but I think it was during the last decade, although it may have been a shorter time frame—that, of over 70 per cent of their membership being employed in the public sector, less than 30 per cent is now employed in the public sector. They were saying that that means that, essentially, there is nobody in large areas of public administration who knows what is going on in outsourced contracts or who can judge the effectiveness of tenders. Further, there is no central capacity to, in a sense, oversight and look at issues of broader public policy such as whether the infrastructure that is in the public domain is being maintained or whether it is in a situation where we may be storing up a number of potential public crises which will emerge when the infrastructure becomes unable to be maintained properly. At that point, whether it be public water supplies, power supplies or whatever that have been outsourced, whilst you might say it is a matter that the private sector utiliser of that resource has made some judgments on in relation to their private interests—the return on capital and the rate of maintenance that is appropriate to sustain that infrastructure over the period of what they see as its economic life—the long-term consequences for the community—


Mr DEPUTY SPEAKER (Mr Nehl) —Order! The chair is loath, as always, to interrupt the flow of the member for Denison, but so far we have not heard any reference to Tradex. I acknowledge your concern about infrastructure and those things, but I would be grateful if you could perhaps occasionally refer to the subject of the bill.


Mr KERR —I will conclude this small point. I was really drawing attention to the package: how it is structured and what would have been a consequence were the apprehension of the Parliamentary Library's Research Service accurate that the reason for the bill being withdrawn and represented in this way was a failure to apprehend the constitutional problem. In public life these kinds of deficiencies can have much more serious consequences than mere constitutional invalidity. But, Mr Deputy Speaker, you are quite right to chastise me.


Mr DEPUTY SPEAKER (Mr Nehl) —Not chastise, remind.


Mr KERR —You must understand, Mr Deputy Speaker, that I am also under immense pressure from my colleague—whipping me for the opposition and reminding me that a number of other speakers are not yet in a position to attend to the chamber and that I am expected to do my duty for a reasonable period of time rather than to simply address this bill in short form and sit down. I have taken the liberty that emerged because of this issue of constitutionality to perhaps expand more broadly than would otherwise be proper.

I will now come to the background of the package of bills. The opposition does support this initiative. In fact the government's industry statement `Investing for Growth' mentions two schemes claimed to improve Australia's attraction as a site for regional manufacturing and warehousing: the Tradex scheme and the Manufacturing in Bond scheme.

The Tradex scheme will replace the Tariff Export Concession scheme, known as the Texco scheme. It will also allow most drawback users to gain up-front exemption from duty and other taxes on goods imported for re-export. The explanatory memorandum states that, according to an initial analysis of unpublished ABS data, the utilisation of the existing Texco and drawback schemes is running at 50 per cent. That claim cannot be verified, because the government has not released the ABS report for public scrutiny. But, on its face, I take that as valid.

From this conclusion, the government suggests that the exporting community is forgoing approximately $100 million of eligible claims. However, in its financial impact statement it allows for an additional $30 million as revenue forgone due to an expected increase in the utilisation rate.

These bills establish the Tradex scheme. The object is to allow for the importation of goods without the payment of customs duty or other taxes, provided the goods are subsequently exported in their original or modified form. Intending participants in the scheme are required to apply and obtain a Tradex order. Criteria are set for the applications for Tradex orders. If a Tradex order holder fails to export the goods in accordance with undertakings under the provisions of the scheme, the duty or tax that would have applied becomes payable. This bill, along with the other four bills, provides the legislative basis for the Tradex scheme.

The anticipated benefits of Tradex are a reduction in compliance costs for users, a more self-assessment oriented operation with a lighter approach to access and compliance, and the relaxation of some regulatory arrangements in relation to eligibility, registration and ongoing compliance requirements.

That broad framework is contained in the Tradex Scheme Bill 1999 [No. 2] . Tradex Duty Imposition (General) Bill 1999 gives the authority to recover Tradex duties where a participant fails to export the goods in accordance with the Tradex scheme and imposes a liability as a tax within the meaning of section 55 of the Constitution.

The next bill in the package is the Tradex Duty Imposition (Customs) Bill 1999 . This bill imposes a liability as a duty of customs within the meaning of section 55 of the Constitution and provides the authority to recover Tradex duty, as in the bill above.

We then have the Tradex Duty Imposition (Excise) Bill 1999 , which imposes a liability as a duty of excise within the meaning of section 55 of the Constitution and provides the authority to recover the duty as a tax, as in the bills above.

The next bill is the Customs Tariff Amendment (Tradex) Bill 1999 [No. 2] , which inserts an item into the Customs Tariff Act 1995 to enable goods under the Tradex scheme to be allowed to be imported without payment of customs duty.

On their face, these measures will improve the arrangements that currently exist—and they are arrangements that have the support of the opposition. There is, of course, the parallel scheme, the Manufacturing in Bond scheme, which has passed this parliament, I believe. I think it has passed now through all the parliamentary processes. In that area it is the opposition's contention that there could be some significant improvements in part of the complementary package between Manufacturing in Bond and the Tradex arrangements.

We have made a number of representations to the government on behalf of manufacturers and freight forwarders, who would use that Manufacturing in Bond system, with the object of securing greater efficiencies in that part of the broad scheme that is being designed, in a sense, to facilitate Australia being able to compete as a manufacturing place against countries which offer trade-free arrangements or other arrangements which are designed to mean that no unnecessary transactional frictions, costs, get built into the production of goods onshore in Australia—which are good for employing labour and generating revenue—which are then used for export. That is a very valuable thing.

I see my relief hoving into view. I am rescued from the obligation to expand further on the Tradex legislation, which is just as well, as I have really exhausted all I wish to say. Mr Deputy Speaker, I thank you for your indulgence earlier.

I commend the package of legislation, all five bills, which now comply with the Constitution, to the tender mercies of this Main Committee.