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Wednesday, 27 May 1987
Page: 3388


Mr MOORE(11.48) —The two Bills before us, the Customs and Excise Legislation Amendment Bill 1987 and the Customs Tariff (Commonwealth Authorities) Amendment Bill 1987, flow from part of the May statement, or the mini-Budget, whatever way we care to look at it. The Opposition will move an in-principle amendment to the Customs and Excise Legislation Bill 1987 which will be circulated. In Committee we will move further amendments, both of which will be circulated.

The Customs and Excise Legislation Amendment Bill contains three principal items. The first is the payment of customs duty by Commonwealth authorities. It is well known that at present duty free entry of imports is granted to all Commonwealth departments and statutory authorities with the exception of a number of trading agencies, most notably Qantas Airways Ltd and the Commonwealth Bank. New section 131B will remove the exemption from liability to pay customs duty by those Commonwealth authorities or by persons acquiring goods for use of a particular Commonwealth authority.

The issue as to the appropriateness of government departments, authorities and instrumentalities paying taxation on overseas purchases formed part of the considerations of the Committee of Review on Government High Technology Purchasing Arrangements, commonly known as the Inglis Committee.

In its report of February 1986 the Committee recommended that all Commonwealth agencies, other than departments, be required to pay customs duty. The Committee concluded that the concession of duty free entry of imports granted to most Commonwealth agencies leads to economic distortions and promotes a loss of efficiency for the whole of the economy. However, the Committee was of the view that arguments in support of Commonwealth departments to pay duty were not as convincing as those used in support of duty payment by non-departmental Commonwealth agencies, the latter competing either directly or indirectly with the private sector. Hence, the Committee disfavoured recommending the payment of customs duty by Commonwealth departments. The decision to do this was immediately met by a response from Telecom Australia and Australia Post in passing on to the consumers of Australia the cost of the increase in payments affecting those two authorities. We saw that immediately in the recommendation of Telecom for an increase in local call charges of 3c and an as yet unspecified increase for long distance calls. Similarly, Australia Post is making noises about an increase in postal charges of 1c to cover the cost of the proposed imposts. It is a case of the Government once again taxing the users of Australia in areas where there is minimal competition, especially in the postal service, and gaining additional revenue for its own use through this means. On top of that the Government has moved to impose a processing fee on customs applications.

Clause 7 of the Bill contains the supposed cost recovery provisions, which impose a charge of $200 upon the processing of applications for a refund of customs duty. The Australian Customs Service receives thousands of refund applications yearly. The necessity for the refund system arises as a result of an overestimation on the part of customs agents of customs duty payable. There are numerous reasons for refunds of duty. These are provided primarily under regulation 126 (e) of the Customs Act and include the following:

applicability of a tariff concession at the time of customs entry which, for various reasons, may not have been utilised;

an error in the rate of duty selected by the customs' computerised entry system;

lack of complete documentation at the time of entry and, hence, in order to avoid additional storage changes, the higher rate of duty is paid, pending receipt of the correct documentation; and

non-dutiable charges may not be available at the time of duty entry.

It is claimed that this measure will raise approximately $6m in a full year. It is estimated that the application for refunds on duty that will not now be made as a result of the imposition of the $200 fee will involve approximately $1.1m in forgone refunds. Frankly, that is a tax on the users. It seems to me that the responsibility for an error made in the classification of goods or items at the time of their entry into Australia should not be imposed upon the owner of the goods in the way implied. For the Government to charge $200 to process any item, one of the great rewards of which is to make those concerned forgo $1.1m, is to ramp the system considerably. A person who applies for a refund of customs duty, where the overpayment is the fault of the customs agent or the Australian Customs Service, should not have to pay a tax on that error, as this legislation implies. On top of that, the charge involved forces a whole category of people, on the Government's own admission, to not apply for what is justly due to them.

This measure is totally inappropriate and totally wrong in its application. If a charge is to be made for ascertaining whether an error has been made, and if the error is found to lie with the applicant, the forfeiture of the $200 would seem to be reasonable. But if the error is found to lie with the Customs Service, in my view that fee should be immediately refunded and the whole overpayment of the duty refunded to the person concerned, otherwise the fee is clearly another form of tax on the user. I would have thought that was highly unacceptable to any reasonable person.

I turn to the procedures at the Customs barrier to be implemented in July-what have been commonly referred to as minor rearrangements. The Treasurer (Mr Keating), in his economic statement on 13 May, announced changes to the duty free concessions available to passengers arriving in Australia. Principally, the new arrangements governing duty free entitlements for passengers concern changes to the duty free limit such that from 1 July 1987 all goods to the value of up to $400 may be brought into Australia duty free and sales tax free, with a limit of $200 for persons under 18 years of age. Prior to the Treasurer's announcement, passengers were allowed a $200 duty and sales tax free limit. However, at the same time as increasing the duty free limit, the Government has severely restricted the duty free status of goods brought into the country. Whereas before the changes, goods for personal use were allowed duty free entry with no restrictions, from 1 July 1987 the only major passenger concession outside the $400 limit will be the duty free status of personal clothing. Most goods besides personal clothing and personal hygiene products will be fully assessable towards the $400 limit. While the Government's decision to increase the duty free limit from $200 to $400 is at face value a seemingly attractive measure for passengers arriving in Australia, the overall effect of the Government's changes involves a number of very significant problems. Prime amongst these problems are the effects of the changes on the duty free industry in Australia. As the changes involve the removal of duty free status from a number of high turnover goods, such as watches, cameras and certain jewellery items, some audio and electronic equipment and sports equipment, the duty free industry in Australia is likely to suffer as a consequence. Travellers are now likely either to reduce their purchases of high priced goods such as jewellery because the price of such goods would automatically exceed the $400 duty free limit, or transfer their buying intentions from domestic purchases to overseas purchases. The inevitable consequence is a downturn in the activity of the duty free industry in Australia, with a consequential loss of economic activity.

Other major criticisms of the Government's new arrangements concern the very severe administrative problems that are likely to occur. While the Government has stated that the changes will result in fewer administrative problems, the opposite is the more likely outcome. The adverse effects of the changes on passenger facilitation through Customs points of entry will be significant. Because the Government has severely restricted the amount and type of goods that will be allowed into Australia free of duty and sales tax, the inevitable consequence is an increase in the policing of the new requirements. Travellers leaving Australia may now find it necessary to declare all goods at their point of departure-Customs Form No. G110; startling knowledge-to ensure that those same goods will be permitted duty free entry when they are reimported into Australia. Such arrangements will significantly add to the administrative burdens experienced at airports.

A new brigade of Customs officers will undoubtedly emerge to ensure that adequate policing of the new arrangements can be carried out. I wish to pause here to recite some past experience. For years, the Customs Service had been trying to get more officers at the point of entry, both for inspection and to facilitate passenger and goods movements throughout Australia. Because of austerity programs within government over the years, its requests have usually been declined. I can well remember many occasions when the Comptroller-General has endeavoured to increase his work numbers in the front areas of entry-Sydney airport in particular and other airports and ports in general-without success.

To require these forms to be filled out as people depart through, for instance, the Sydney terminal will add to the queues at the barriers. It will certainly mean that the numbers of people on duty at those points will have to be sizably increased. The flow of traffic could not be accommodated at the current barriers if this sort of documentation were to be required. Having received the documentation, what is there to guarantee that someone will not take out a watch, itemise it, and return with a different watch? It seems that, by going to such an extraordinary extent, we are inviting people to break the law.

What about those passengers arriving in Australia? The sizable barrier that confronts them at Sydney airport will still be in place because it is a passport and health inspection area. Presumably, under the proposed arrangements, when a passenger comes to the next barrier-at 7 a.m.-with his declaration of goods, not only will he have to say that he has $400 of duty free goods but, presumably, he must vouch for them. There could be a variety of vouchers in a variety of currencies. Nobody can tell me that someone cannot cook up a foreign price voucher, because I have seen it done. So, at 7 a.m., a whole host of people coming into Australia-50 per cent of them tourists-will be required to prove that the goods, purchased in yen, American dollars, sterling or whatever, that they are bringing into Australia are worth less than $400. Customs officers will be expected to stand there and say: `Right, where are your documents for the following items? Unless you can prove otherwise, we are going to say that they are worth more than $400'. The hold up of passengers at major airports will be enormous. The staffing requirements of the Customs office will have to be substantially increased. Certainly, the revenue-to-cost analysis will probably prove the effort to be not worth while.

As a consequence, there will be harassment of travellers, already angry from overnight trips, which will inevitably lead to a stream of protests to the Customs officers and to the Minister for Industry, Technology and Commerce (Senator Button) who will find that his correspondence and the level of complaints from a rather vexed area of Customs at Sydney airport will increase in large measure.

Other unintended consequences-a good term these days-will be the treatment of travellers who departed from Australia prior to 13 May. Currently, 65,000 Australian tourists are overseas, and they may be especially disadvantaged by the proposed arrangements. If they return to Australia post 1 July, we are uncertain, at this stage, whether the Customs Service will assess their circumstances on a flexible basis. Australian tourists overseas face the very real possibility that they may be unduly taxed under the new arrangements.

The Government has completely ignored the recommendations of the Industries Assistance Commission in this matter. Usually, governments take considerable notice of the IAC. It recently undertook a comprehensive review of customs and sales tax concessions available to passengers to Australia. In its report of 6 November 1985, its preferred recommendation was for a $1,000 duty and sales tax free limit, available for use every three months, to ensure that the Customs facilitation at airports was enhanced. Alternatively, the IAC recommended that the value of the concessional limit be reduced from $1,000 to $750 if a restriction on the frequency of use of concessions was not introduced. In completely rejecting the IAC's recommendations, the Government has forsaken Customs facilitation at the airports and, instead, has changed the rules merely to maximise revenue. It is quite clear that $400 will allow very little through and that, therefore, a substantial increase in the amount of inspection, charging and interviewing of all arriving passengers in Australia will be required. If the figure recommended by the IAC were accepted, a far more general approach could be taken, which would facilitate the much speedier handling of tourists and residents arriving home at points of entry. As a consequence, the Opposition finds the Government's proposals a general nuisance factor for operations at the airports.

Another aspect of the Bill is the change in the fuel duty rebate system. The rebate of customs and excise duties respectively now includes the following measures. First, there will be an increase in the minimum amount of litres that may be subject to a claim for rebate of duty, from 1,000 to 2,000 litres. Secondly, there is the removal of the concession that permits applications to be considered on a quarterly basis-with additional details, as prescribed by regulation, to be supplied by the claimants for duty free rebate, including full details of sales, supplies and usage of diesel fuel. Thirdly, there is a provision to enable a collector to reduce, in certain circumstances-when the collector is not satisfied with the correctness of the particulars or estimates in an application-the estimated amount of litreage claimed as eligible for rebate.

Fourthly, there is the averaging of the rate of rebate, whereby the price on the last day of each of the six months immediately before the month in which the application for rebate was made is the relevant rebate rate. That measure was effected because of the continual fluctuations in the duty rates as a result of import parity pricing changes. Fifthly, there will be the introduction of an on-the-spot penalty system as an alternative to prosecution, with the penalty being three times the amount of rebate wrongfully obtained, although that penalty can be offset against current or future applications for rebate.

What are the consequences of that? Currently, the rural sector in receipt of rebates can apply on a quarterly basis for any deliveries of up to 1,000 litres made to a property. That has been wiped out, and the new figure is 2,000 litres. That is a considerable increase and above the average used by the average farmer or rural producer during the six-month period. We must bear in mind that deliveries are not made every day of the week; they are made in accordance with property activity, such as harvesting, planting and so on. There is no regular pattern of delivery of diesel. Therefore, the Government has moved away from accommodating that practice to a six-month claim.

In addition, the average rate will apply, so that rises and falls within the six-month period will be the risk of the rural sector, the purchaser. That is passing the buck-but do not think that it stops there. Presumably, it means that unless a 2,000 litre purchase has been made within the six-month period, the whole rebate system will go out of the window. In addition the farmer is bogged down with a list of more forms to fill in. The farmer has done particularly well from this measure! He can now claim only twice a year rather than once every quarter. He can make a claim only if he purchases 2,000 litres within that time frame and, irrespective of the ups and downs in prices, his claim can only relate to the price on the last day of the period. In addition, he has to take out his pen and probably a small pocket computer-which the Minister for Local Government and Administrative Services (Mr Uren) would use every day-to fill in the forms. So he has been really well treated. I am sure that even the honourable member for Calwell (Dr Theophanous) would understand those problems. He faces them every day on his farm. As a consequence, the rural sector has been disadvantaged in every respect.

The Opposition proposes an amendment, which has been circulated, to the motion for the second reading, and in Committee we will move the further amendments which have been circulated. I move:

That all words after `That' be omitted with a view to substituting the following words:

`whilst not declining to give the Bill a second reading, the House-

(1) notes with concern the Government's measures to introduce further imposts at a time when the business community and the general public are already suffering under excessive government taxes and charges;

(2) condemns the Government for the adverse impact on families, business and the farm sector of the increases in telephone and postal charges which will result from the withdrawal of customs exemptions for Telecom and Australia Post, and

(3) deplores the Government's decision to introduce a $200 processing charge for applications for a refund of duty'.


Mr DEPUTY SPEAKER (Mr Drummond) —Is the amendment seconded?


Mr Braithwaite —The amendment is seconded.


Mr DEPUTY SPEAKER —Does the honourable member reserve his right to speak later?


Mr Braithwaite —Yes.