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Tuesday, 16 October 1984
Page: 1729

Senator PETER RAE(12.16) —I was going to propose, Mr President, that we did not take these Bills cognately. There are certain separate matters, and I propose that Customs Tariff Amendment Bill (No. 3) 1984 should be taken separately from the others. There is a proposal of which the Government and honourable senators have had notice in relation to what I might summarise as the hot stamping machines question which arises under Customs Tariff Amendment Bill (No. 3).

The PRESIDENT —Order! You will need leave to propose that course of action, because I understand that it has already been agreed that the three Bills be taken together.

Senator PETER RAE —Mr President, I seek leave to propose that course.

Senator Gareth Evans —Is it not possible for Senator Peter Rae to do whatever he wants to do about hot stamping machines in the context of a cognate debate provided that, as is the practice of this place, the Committee stages and second readings are voted upon separately?

Senator PETER RAE —I do not pursue my application. I shall deal with the Bills in the order in which they appear. The first is the Customs Tariff Amendment Bill (No. 3) 1984, which proposes to amend the principal Customs Tariff Act in a wide variety of ways. The amendments will implement a number of decisions taken by the Government about Customs duties applying to certain beer, manufactured tobacco products, and aviation fuels. They will implement decisions on Industries Assistance Commission reports in relation to the computer industry and electric motors, interim duty arrangements to apply to certain motor vehicles for the period 30 May-the commencement date of the Government's motor vehicle plan-to 31 December 1984, and changes to the designation of certain countries and places eligible for declared preference country and developing country preferences as a result of independence or of the changing of the names of places in question. There are amendments to developing country preferences in relation to fireworks from the People's Republic of China, Hong Kong and Taiwan.

There are amendments to provide specifically for hot stamping machines in item 84.35 of the tariff, which change, it is claimed, was the result of an Administrative Appeals Tribunal determination, to which I shall turn in more detail. There are a number of administrative alterations, which include an amendment to section 13 (4) (a) to clarify the intention that the phasing of rates of duty apply to Schedule 3 only, and amendments to section 26A, sub- sections (2) and (3), to include reference to the fact that indexation of certain amounts of Customs duty occurs on a particular day. There are a number of tidying up matters.

The Bill is very comprehensive. If one were to discuss the items in detail it would take some hours to describe them and to talk about their potential impacts . Obviously that is not appropriate, but I do refer to a few of them. With regard to the motor vehicle policy, there is the addition of two legal notes, one for definition of variants and the other for cars without engines; an increase in duty and quantitative restrictions-that is, quotas-in relation to certain four-wheel drive vehicles, for instance, the Subaru four-wheel drive and the Toyota Tercel; and the decrease in duty by 10 per cent for utilities and pick-ups which were previously treated as variants and which are not treated as non-variant type utilities and pick-ups. The duty arrangements for the computer industry have been substantially altered. Most of the duties have been reduced to minimum levels, or notice has been given that rates will be reduced. These proposals fit in with bounty proposals which have been introduced and which have been through the legislative process. Manufacturers, suppliers and customers have welcomed the decisions that have been taken in relation to the computer industry, which, of course, is an increasingly important industry in Australia as well as in a large number of countries. The proposed changes as a result of the Budget have received some discussion in this place in relation to other legislation which has already been before us.

In regard to the question of reducing the anomalies which were said to exist regarding alcohol levels, it has already been pointed out that the imposition of a 20 per cent sales tax on very light alcohol beer can be seen as a socially undesirable action, however equitable it may have been as between the manufacturers and purveyors of soft drink and the manufacturers and purveyors of the very light alcohol beer. It may be that the social benefit of the reduction of the damage which is done in the community as a result of the consumption of alcohol was taken to outweigh the commercial equality argument in this instance. I point to the fact that many people in the community would regard the decision of the Government as a wrong decision and a decision which should not have been taken. There is, however, a welcome reduction in the amount of excise payable in respect of light alcohol beer-not the very light; the light-and that is to be welcomed.

The steps that have been taken with regard to manufactured tobacco-bringing it closer to cigarettes and cigars-is something which I suppose has some equity merit. When one looks at the increase in aviation fuels one wonders whether it is not a case of hitting again the small man, as this Government appears to have done so often, and also hitting the people in the country areas who depend upon light aircraft. General aviation is being subjected again to an extra imposition as a result of the changes which are being made. That cost is then passed on to the people who are the users of general aviation. Substantially, they are people in the rural areas of Australia.

I notice that the changes concerning developing country preferences are not real changes in relation to the termination of the problems that exist in the world today as to the countries which are entitled to developing country preference. One can mount a very good argument as to why a developed nation such as the Republic of Korea, which has had a tremendous investment of capital and technology from both Japan and the United States of America in particular and which has developed very rapidly a very modern manufacturing economy, should be reconsidered in relation to its entitlement to developing country preference. There are a number of countries which have, I believe, developed to the stage where they no longer qualify for developing country preferences of the nature that have been given to them in the past. Whether one phases down the developing country preferences or simply eliminates from the list some of the countries which have now reached the stage of development whereby they should be reviewed is a matter on which we are eagerly awaiting some government decision. It is a decision which has been a long time coming and one which we believe is overdue. However, these are all Budget matters. They are matters which arise out of the Government's right to prepare and to introduce a Budget. The Opposition will not be opposing any of the items however much we may feel that some of them are not the most desirable decisions which could have been taken in the best interests of Australia.

That matter which will take a little time to explain concerns the complex question of the classification of hot stamping machines. Not everybody is immediately aware of what a hot stamping machine is. It is a machine which is used in the process of printing. For many years it has fallen under item 84.35 of the tariff. This means that it was able to be imported at a 2 per cent duty rate. Two major parties are involved in the question of hot stamping machines. One is the Australian domestic manufacturer, who obviously receives an advantage if the duty is higher but who has been carrying on business for a good many years without the protection of a high tariff. The second is the importer, who obviously has a tremendous advantage if the duty is 2 per cent as opposed to what it will be under this amending Bill-20 per cent.

There is a concern as to the process by which the change from classification 84 .35, which is the 2 per cent duty, to 84.59, which is the 20 per cent duty, was arrived at. In fact, a very considerable case has been put to both the Government and the Opposition-and, as I understand it, to the Australian Democrats-by people involved in the process whereby an administrative action appears on the face of it to be contrary to the provisions of section 23 of the Industries Assistance Commission Act, which requires that there be a report of the Industries Assistance Commission before the Government changes the classification for duty purposes of any particular item. In the case of hot stamping machines it is claimed that there has not been any such inquiry. In fact, the matter went before the Administrative Appeals Tribunal, which ruled that the Australian Customs Service had sought to introduce an amendment to the Customs tariffs specifically to refer hot stamping machines at the higher rate of 20 per cent, and the Tribunal ruled that the Customs Service was not entitled to do so.

I have received telexes not only from the importer who has, as I have said, the clear interest in ensuring that the duty is kept at its lowest form of 2 per cent but also from the manufacturer of hot stamping machines, who states:

The present tariff ruling on hot stamping machines is imperative to ensure the viability of our manufacturing and export program.

Each standard model of the machines we manufacture is produced in batches of 10 to 25 units in order to effect savings in quantity production and this enables us to export a fair percentage of our machines.

If the duty on this equipment is reduced we will lose market share which will result in us producing in smaller batches and being less competitive.

Even a partial loss of the local market would most likely force us to have this equipment manufactured overseas.

We therefore urge you to proceed with the transfer from 84.59 to 84.35 of the rate of duty of 15 per cent applicable to hot stamping machines and thereby ensure that the present ruling of the Administrative Appeals Tribunal does not destroy the market for our products.

The alternative view is put by Professional Consulting Services on behalf of Leonhard Kurz (Australia) Pty Ltd, the importer of hot stamping machines, in a telex which states in part:

The above Bill passed all stages in the House of Representatives yesterday, notwithstanding an Opposition motion for amendment to delete from it item 58 in Schedule 3, which alters the rate of duty on hot stamping machines (a type of printing machine) from 2 per cent to 20 per cent.

This alteration has been made contrary to law, in that the alteration breaches the requirement of section 23 of the Industries Assistance Commission Act 1973. Mr A. Cadman moved that the alteration be deleted from the Bill, tabling in support of that motion a statutory declaration which sets out all of the facts of this matter.

The Minister representing the Minister for Industry and Commerce, Mr J. Brown, opposed the motion, acting on advice conveyed (as I understand it) by officers of the Australian Customs Service. The statements made to the House by the Minister against the amendment motion, based on that departmental advice, contained statements which were false and misleading.

On behalf of our clients, we request that the Opposition in the Senate move amendment of this Bill to delete the unlawful alteration. Mr Cadman is able to supply all of the facts in support of this request.

I have with me a very thick file and a 20-page statutory declaration, together with all the annex- ures which have been prepared in support of the Kurz case. The telex continues:

In the event that it is possible to do so, we would be grateful if this Bill could be referred to committee prior to debate in the Senate, so that the unlawful alteration and all of the facts surrounding it may be subjected to examination. We will be pleased to present ourselves for examination by the Senate or a committee of the Senate on any matter raised in the declaration tabled in the House, and on any other matter considered relevant to this issue.

Those telexes, in summary form, raise the matters which are before us with regard to this part of the Bill. This issue has a long history, and that history is set out in the 20-page statutory declaration made by Mr Ian Richard Rodda, a tariff consultant, of 45 Stirling Avenue, North Rocks, in the State of New South Wales. He states in that declaration that he is employed in the professional consulting services section of Rudders Import Export and International Division and that in conjunction with a colleague he has been retained by Leonhard Kurz ( Australia) Pty Ltd on that firm's behalf as tariff consultant. I seek leave to table, as did Mr Cadman, that 20-page statutory declaration which sets out the whole of the background in relation to this case

Leave granted.

Senator PETER RAE —I thank the Senate. Whilst there is concern about some of the other items in the Bill, there is particular concern about two matters: Firstly, the interests of the industry, which are for government decision; and, secondly, the processes by which any decision has been arrived at. This could properly be a matter for consideration by the Senate. It is the view of the Opposition that the Senate should express its view and express a degree of concern that a prima facie case appears to have been made out that a breach of the normal procedures has occurred in this case. On behalf of the Opposition I now move:

At end of motion, add ', but, in relation to the Customs Tariff Amendment Bill (No. 3) 1984, the Senate is firmly of the opinion that the following matter should be referred to the Standing Committee on Industry and Trade: The application of the procedures for the imposition of duty on the importation of hot stamping machines into Australia, with particular reference to the propriety of the administrative action involved in increasing the duty without a report from the Industries Assistance Commission and any associated matters'.

I have added the final words 'and any associated matters' to the copy of the amendment which was circulated to honourable senators because I understand that Senator Jack Evans wished to see words to that effect added. I now foreshadow that if this motion is carried, pursuant to standing order 196A, after the Bills have been read a second time, I will move:

(1) That the Customs Tariff Amendment Bill (No. 3) 1984 be referred to the Standing Committee on Industry and Trade for inquiry and report upon the appropriateness of the procedures followed in increasing the duty imposed on the importation of hot stamping machines into Australia, with particular reference to such increase being imposed by administrative action in the absence of a report from the Industries Assistance Commission.

(2) That the Committee report to the Senate on or before 18 October 1984.

I understand that the Committee would be prepared to look at this matter. So that it can be dealt with expeditiously, as we are sitting for probably only a matter of a few days, I propose that the Standing Committee on Industry and Trade have a quick look at this question and report by Thursday, 18 October 1984 .

Senator Gareth Evans —Have you discussed this with the Minister?

Senator PETER RAE —The Minister for Industry and Commerce (Senator Button) is aware of these proposals. He has had them for a week or more. I have notes here referring to discussions with his office in relation to these proposals which state the office has shown an attitude which indicates a degree of sympathy.

The DEPUTY PRESIDENT —The Standing Orders have been suspended so that these three Bills can be taken through all three stages together. Your amendment to the second reading of the three Bills is in order but if you wish to move later that one Bill be referred to a committee, you will require leave to do so.

Senator PETER RAE —Would that be after the second reading?


Senator PETER RAE —I was just giving notice of my intention so that honourable senators would be aware of the steps that are proposed in relation to this matter. There is some obligation to find out whether the correct procedures have been adopted and what should have happened when applying the law which achieved this result, which will have a very significant effect one way or the other on the two major companies involved in this industry.

Because of time constraints I propose to speak relatively briefly to the next Bill on the list, the Excise Tariff Amendment Bill (No. 2) 1984, which again is quite comprehensive. It proposes changes to the excise rate on crude oil produced from areas discovered after 17 September 1975, called new oil. This measure is expected to raise revenue to the value of some $317m in 1984-85. Other changes which will be made by the Bill include a reduction in the excise on liquefied petroleum gas by $12.27 per kilolitre, reflecting the soft state of the world export market for LPG, and the removal of the excise on grape spirit for fortifying wine with effect from 22 August 1984. The excise paid in 1983-84 on fortifying spirit will be refunded in full by the Government. This measure reflects a recantation by the Government which imposed, with disastrous effects, a duty on grape spirit for fortifying wine. At last, as a result of the efforts of the Opposition and the industry, the Government has seen the folly of its ways. We are grateful that it has taken steps to remove the excise.

The Bill will increase the number of decimal places in the excise rate for beer from two places to five places with effect from 18 July 1984. One wonders how such a measure could make so much difference, but it is estimated by the beer industry that when the automatic six-monthly indexation took place in February this year, the rounding effect, because of the failure to have a larger number of decimal places, cost the industry approximately $20m. Again, this amendment, which will remove an unfortunate extra imposition on the industry, is welcomed. The Bill will remove the requirement that Australian gin must be made only from grape, grain or fruit spirit. This measure is the result of a recommendation by the National Health and Medical Research Council which reviewed the rules in relation to gin and found that unnecessary costs were imposed and that the requirement was outdated. The Government is implementing that recommendation. Again, we support this measure.

The Bill will implement changes to the definition and rates of excise for beer as a result of the Budget. I have already referred to that matter. The Bill will increase excise rates on tobacco, aviation gasolene and aviation kerosene. I have already referred to these changes in relation to the customs tariffs Bills. As I say, it is unfortunate that rural Australia is again being hit by this Government which appears not to be overly concerned about the impact that its measures have on the people who live in rural areas and gain a lot of export earnings for Australia from rural pursuits.

The excise on new oil will raise the price of fuel Australia-wide, not only in rural areas to which I have just referred but also for every consumer and for industries in general, particularly the wheat and grain growing industries which are very heavy fuel users and which have already suffered very severely as a result of drought and other things. We have reached the point where the imposition of various fuel levies and the resultant costs will have a counter- productive effect on a number of industries in Australia unless very great care is taken. The time may have come where the levelling off in the world market is the justification for carrying out a very considerable review of the imposition of various sorts of taxation on oil in Australia. The Customs Tariff (Coal Export Duty) Amendment Bill 1984 proposes to exempt from payment of the coal export duty blended coal from open cut and underground mines.

Sitting suspended from 12.45 to 2 p.m.