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Wednesday, 6 May 1987
Page: 2716


Mr BARRY JONES (Minister for Science and Minister Assisting the Minister for Industry, Technology and Commerce)(4.28) —I move:

That the Bill be now read a second time.

This Bill is an omnibus measure proposing amendments to various bounty and subsidy Acts. The major proposals contained in the Bill are:

(i) Amendments to the Bounty (Textile Yarns) Act 1981, arising from the Government's textile, clothing and footwear decision late last year. These amendments propose to remove the present disincentive on local yarn producers who wish to engage in export production by extending the eligible production costs upon which bounty is paid to include a producer's overheads associated with export production as and from 1 July 1987;

(ii) Amendments to the Fertilisers Subsidy Act 1986 to give effect to the Government's intention that locally produced fertiliser should be subject to the new assistance regime set out in the Act from 20 August 1986-The date of commencement of the Act;

(iii) Amendments to the Bounty (Books) Act 1986 to acquit undertakings given to the Senate Standing Committee for the Scrutiny of Bills and the Parliament during the debate on this Act last sittings that certain determinations of the Comptroller-General of Customs under the Act would be subject to parliamentary scrutiny via the tabling and disallowance provisions applicable to regulations; and

(iv) Amendments to the Subsidy (Cultivation, Machines and Equipment) Act 1986, to remove the present impediment on manufacturers of equipment prior to the commencement of the Act from receiving subsidy on that equipment, where the equipment was held in the manufacturer's stock at the commencement of the Act.

In addition, the Bill makes a number of technical amendments and effects a series of drafting changes to update the administrative provisions in various other bounty and subsidy Acts. These amendments are set out in detail in the explanatory memorandum which has been circulated.

I shall now outline the major proposals in the Bill. Part IV contains the proposed amendments to the Bounty (Textile Yarns) Act 1981 relating to the extension of eligibility for bounty to a proportion of overheads associated with production for export. From 1 July 1987 companies eligible for the yarn bounty whose production is mainly-at least 50 per cent-sold in Australia will be able to claim bounty on 30 per cent of bountiable costs associated with production for export. This amendment has been introduced not as a subsidy to export production but to address an anomaly in the present Act which has penalised yarn producers who were exporting. Under the current bounty fixed overheads associated with export production are not included as part of a producer's eligible costs. The amendment to the Act will address this anomaly while maintaining the basic objective of the yarn bounty scheme. That objective is to support local production of yarns for use in Australia and, at the same time, provide downstream users access to yarns at minimum rates of duty. This is borne out by the requirement that a company's production must be domestically oriented to qualify for the bounty and by the fact that only a proportion of overheads will be eligible for bounty.

The proposed amendments to the Fertilisers Subsidy Act 1986 are contained in Part V of the Bill. That Act introduced new assistance arrangements for fertilisers, giving effect to the Government's decision last year to remove the subsidies payable on imported fertilisers, and reallocate those savings by increased subsidy payments-via increased rates of subsidy-on locally produced phosphatic fertilisers.

It was the Government's intention that the new higher rates for locally produced phosphatic fertilisers apply immediately-that is, from 20 August 1986. In fairness, however, to people already committed to consignments of imported fertilisers, the Act contained a provision to continue the previous arrangements on fertilisers exported to Australia before 20 August 1986. Although the transitional provisions of the Act gave effect to the Government's intention relating to imported fertilisers, there is some doubt as to whether the new subsidy regime would apply to locally produced fertilisers as and from 20 August 1986. The proposed amendments make it clear that this is the case.

Part III of the Bill contains the proposed amendments to the Bounty (Books) Act 1986, the principal of which are the amendments in clause 10 which treat the Comptroller-General's declarations for the purposes of section 4 of the Act as if they were regulations, so that the Parliament's ability to scrutinise the declarations is preserved via the tabling and disallowance provisions applicable to regulations. The Senate Standing Committee for the Scrutiny of Bills drew the Government's attention to this matter when the Act was before this Parliament last sittings.

The last measure which I propose to deal with here relates to the proposed amendments to the Subsidy (Cultivation Machines and Equipment) Act 1986 in Part VI of the Bill. That Act introduced new assistance arrangements for certain farm machinery as part of the Government's rural economic policy of 15 April 1986. In essence, those arrangements replaced tariffs on certain farm machinery with direct assistance to local producers and importers from that date until 31 December 1990. An important element of the new regime was that the assistance for manufacturing extend to all classes of `eligible' stock on hand at the commencement of the Act, so that this machinery would not be overpriced as against new machinery produced during the subsidy period. It has become apparent that the existing legislation does not have this effect. The proposed amendment in clause 21 of the Bill will correct the position by removing the present technical impediment on manufacturers of equipment prior to 15 April 1986 from receiving subsidy on that equipment where the equipment is held in stock on that date.

Financial Impact Statement

With one exception, the amendments in this Bill have no direct financial implications. The exception is the amendment to the Bounty (Textile Yarns) Act 1981 relating to the extension of eligibility for bounty to a proportion of a producer's overheads associated with production for export. Given the current low level of yarn exports, it is expected that an additional $300,000 in bounty payments under the Act will be made in 1987-1988, the financial year when the extension commences.

I commend the Bill to the House and present the explanatory memorandum to the Bill.

Debate (on motion by Mr Connolly) adjourned.