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Thursday, 25 November 1999
Page: 12765


Mr ENTSCH (11:04 AM) —in reply—I would like to thank the members for Denison, Barker, Blaxland and Newcastle for their contributions to this debate on the Tradex Scheme Bill 1999 [No. 2], the Tradex Duty Imposition (Customs) Bill 1999 , the Tradex Duty Imposition (Excise) Bill 1999 , the Tradex Duty Imposition (General) Bill 1999 , and the Customs Tariff Amendment (Tradex) Bill 1999 [No. 2] . I certainly would like to respond to a number of issues raised by members during the debate.

As members would be aware, bills for the implementation of the Tradex scheme were originally introduced into the House on 24 June 1999. In early September the department received new legal advice from the Australian Government Solicitor, reassessing their original view that there were no legal or constitutional difficulties with the Tradex legislative package.

The focus of the new legal advice was in relation to whether the bills complied with certain provisions of the Constitution. In particular, section 55 of the Constitution provides that laws imposing tax, except laws imposing duties of customs or of 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 Tradex scheme provides for the imposition of Tradex duty in circumstances where goods are dealt with other than in accordance with the provisions of the Tradex scheme. The Australian Government Solicitor's new advice highlighted the potential for Tradex duty to be seen as a duty of customs or a duty of excise under certain circumstances and recommended that the original Tradex Duty Imposition Bill be replaced by three new imposition bills. Thus, to put the issue beyond doubt and to ensure that Tradex duty was not open to challenge on the basis of the validity of laws imposing taxation, the government decided that the only pertinent course was to withdraw the original legislative package and replace it with the bills being debated today. Three new Tradex duty imposition bills ensure that Tradex duty can be collected in circumstances where it could be argued that the tax is a duty of customs, a duty of excise or where the duty is neither a duty of customs nor a duty of excise.

The issue of the appropriate tariff rate that is to apply to goods imported under the Tradex scheme that are diverted to the domestic market was also raised during the debate. Tradex allows importers to import goods free of customs duty and sales tax on the condition that the goods are re-exported in their original or modified form. Tradex does, however, provide flexibility to the importer for the diversion of goods in the domestic market in circumstances where exporters' orders have been cancelled or in circumstances beyond the importer's control which mean that the goods are not exported. In these circumstances, the importer is liable to pay Tradex duty on the goods diverted to the domestic market.

Tradex duty is merely an amount equivalent to the customs duty that would have been payable at the time of import had the goods not entered under the Tradex scheme. In short, these goods face the same tariff treatment as they would have done if they had been imported in the usual way. Some have argued that the tariff applied to goods that are sold on to the domestic market should not be the sum of the duty on the components but rather the tariff that applies to the final good where this is lower.

Both the Tradex scheme and the related Manufacturing in Bond scheme are designed to enhance international export competitiveness and not impact on domestic assistance arrangements. They are not designed to allow companies to circumvent assistance arrangements and budget settings in relation to the three per cent duty on business inputs under the Tariff Concession scheme.

As you are aware, the Productivity Commission is currently conducting a review of Australia's general tariff arrangements and the associated concession schemes. The government is not considering any changes to tariff policy prior to the completion of the commission's inquiry.

In conclusion, the Tradex Scheme Bill 1999 [No. 2] and the four associated bills provide for the introduction of new, streamlined arrangements for Australian exporters who import goods for further processing prior to export or export goods in the same condition. Tradex will provide real benefits to Australia's exports and, together with the introduction of the goods and services tax, will improve our international competitiveness as a trading nation. It is pleasing to see that there is broad general support for this important policy initiative, and I commend these bills to the House of Representatives.

Question resolved in the affirmative.

Bill read a second time.


Madam DEPUTY SPEAKER (Mrs Gash) —If no member wishes to consider the bill in detail, I will put the report question forthwith. The question is that this bill be reported to the House without amendment.

Question resolved in the affirmative.