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Wednesday, 16 August 2000
Page: 19193

Mr KERR (10:46 AM) —I will be brief in my comments in relation to the Customs Tariff Amendment Bill (No. 3) 2000. It is a continuation of a process of tidying up what the government calls nuisance tariffs, and that is tariffs that apply at the five per cent rate where there is no local manufacture or producer that would be adversely affected by their removal. In this case, I understand, after consultation on a proposed list of over 1,000 items, the government has put forward the removal of that five per cent tariff on some 268 items. We accept its assurances that there are no local producers.

Obviously from time to time, even after these changes, people do advise that they have been adversely affected. In the past, the government has responded by recognising that and then coming back and making any necessary adjustments. I assume that will be the case were there to be some inadvertence in this particular package. To the extent that we believe the government has proceeded on this in an entirely appropriate way, we are content to let the legislation go through. There are also a couple of tidying up measures of that kind, where previous pieces of legislation had inadvertent consequences, and they are being fixed by this bill. Again, the opposition is quite happy to support it.

There is a substantial change in relation to new excise arrangements for toluene. Here, the government is fixing a mess of its own making. There has been considerable concern about substitution in the petrol industry, and it has been a matter of open scandal that fuel products have been watered down with substitute products on which excise has not been paid. In other words, there has been fraud on the Commonwealth on a very large scale, and the government has been extraordinarily slow to react to it. There have been packages of legislation intended to address it, but not effectively. This particular piece of legislation, one hopes, will be the completion of a task of closing a loophole that has been left open for far too long. What it does is impose an excise duty on imported toluene and similar chemicals which can be used as fuel substitutes.

Of course, the reason those products were used as fuel substitutes is that they came in essentially free of duty. Toluene is used as a base in paint production and a number of other chemical manufacturing processes. It is quite appropriate to have it enter for those purposes without duty, but it was being diverted, put into the petrol pump and into the back of mum's and dad's car, at a cost to the community of millions and millions of dollars.

Mr Snowdon —Please forgive me, I have to leave.

Mr KERR —I express regret at the departure of the shadow parliamentary secretary in the middle of this flow, but it is understandable. The government has allowed this scandal to go on essentially without effective response for a very long period of time and I think it is correct to say that nobody has been brought to account. So essentially the community has been the victim of theft on a very large scale, with fraud against the Commonwealth worth tens of millions if not hundreds of millions of dollars. No-one, to the best of my knowledge, has been charged with fraud or deception in relation to these matters. The investigative processes have been allowed to grind exceedingly slowly with no suggestion that they are grinding exceedingly finely. There is no suggestion that there is any enforcement activity at the end of the day. The remedial legislation has been very slow in coming before the parliament. The opposition is entitled to say that this was quite scandalous.

We are approaching this particular piece of legislation as non-controversial and, of course, it is because it has our support. It is an occasion to say bluntly that this is one of the worst examples of government administration that has occurred under the Howard government. It has been an example of turning a blind eye to a problem that was plainly known to the government, wishing it would go away, perhaps not realising the scale of the fuel substitution scandal, and responding only when the matter became a matter of public scandal. Then its response in the first place was ineffectual and it required further legislation that now comes before this parliament after advice from the opposition and after considerable criticism in the public domain. The revenues to the Commonwealth have been adversely affected by the loss of millions of dollars of revenue to thieves who have defrauded the Commonwealth and not been subject to any prosecution action or, to the best of my knowledge, a vigorous attempt to pursue them with the objective of prosecution.

The opposition is content to support this bill. I understand that there are not to be any substantial changes other than the one to toluene with respect to the competitiveness of our manufacturing sector. The opposition is pleased, with those blunt comments in relation to the toluene matter, to support this package of legislation.