Senator IAN CAMPBELL (6:14 PM) —I table a replacement explanatory memorandum and move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard .

Leave granted.

The speech read as follows—

The Trade Practices Amendment (Country of Origin Representations) Bill is designed to restore public confidence in country of origin labelling claims.

Persistent public complaints that many labels are misleading or dishonest have given consumers good reason to be sceptical about origin labelling claims. At the same time, recent court decisions have created confusion about the meaning of such commonly used terms as `Made in Australia' and `Product/Produce of Australia'. As a result, the market value of Australian origin claims has been eroded, to the point that producers and manufacturers are wary of making claims and many consumers are losing confidence in labelling altogether.

The fundamental problem is obvious. Consumers want simple, clear and credible labels, based on consistent and reliable standards. Unfortunately, the Trade Practices Act 1974 does not provide such standards, only a general prohibition against false or misleading representations. The result has been shifting legal interpretations and general uncertainty. This legislation will address these problems and at last deliver clarity and confidence to labelling.

The Trade Practices Act will be amended to establish, for the first time, a clear general test for country of origin labelling claims. This test will apply to all representations that goods are `Made in' a particular country. A separate, higher standard will be set for goods carrying the premium `Product/Produce of' label.

To qualify for the `Made in Australia' label, a product will have to be substantially transformed in Australia and at least 50 per cent of the cost of producing or manufacturing the product must have occurred in Australia. The same test will, of course, apply to imported goods.

These will be the minimum standards for goods to carry an unqualified claim of origin.

The use of the substantial transformation test will align Australian law with international practice. Setting the threshold at 50 per cent will ensure that all goods labelled as `Made in Australia' will have the majority of their costs incurred in Australia.

Some people may argue for a higher threshold but this would disadvantage many local industries always considered to be producing Australian products. These firms employ Australians and invest in Australia's future.

Who would tell a person working at General Motors Holden or Ford that the cars they are making are not Australian, just because some of their components are imported ? Our trading partners do not hesitate to recognise these products as Australian; nor should we.

A 50 per cent threshold recognises the integration of Australia into the global economy, and the realities of modern manufacturing. The test compares favourably with the regimes applied by other developed nations such as Canada, the United Kingdom and Japan. Indeed, Canada uses the same combination of a substantial transformation test supported by a content or value-added test.

The Government recognises that consumers and producers also want to identify goods which are totally Australian or as near to it as possible.

This legislation will restrict the application of `product of / produce of' labels to goods in which all significant ingredients or components, and all or virtually all production processes, have occurred in the country of origin.

Local citrus growers, pork producers and other primary producers will be able to proudly label their products as `Product/Produce of Australia'. They will also know that products using a significant imported ingredient will not be entitled to the premium `Product of Australia' label.

These statutory definitions underpinning the use of `Made in Australia' and `Product/Produce of Australia' claims are the core of the new policy framework for regulating country of origin labelling. However, these definitions alone will not always provide certainty or an outcome consistent with public expectations. In the past, efforts at reform have failed because the standards proposed have been rigid. An effective regulatory regime must be flexible as well as clear in its fundamental principles.

Within the framework set by the legislation, the Government has made provision for further regulation in specific sectors if this is required. This flexibility does not compromise the strength of the fundamental standards being set for `Made in' and `Product/Produce of' claims. Further regulation will need to be consistent with the standards set by the Trade Practices Act. However, the framework will allow, where necessary, additional regulations to address circumstances in specific sectors. The food industry is an obvious case. Consumers often seek additional information on food products. The seasonal availability of ingredients, and the fact that some ingredients cannot be produced in Australia for climatic or other reasons, are distinctive characteristics of the industry. In light of these factors, the Government has asked the Australian New Zealand Food Authority to consider the need for such regulation in the food industry.

Madam President, it is necessary to give the labelling regime the flexibility to address any irregularities which may arise. To protect the integrity of the regime, the Government has developed mechanisms which will allow key aspects of the general tests to be amplified by regulation. The method for calculating production or manufacturing costs, and the processes which may be included in the definition of a substantial transformation, could be refined through these provisions. In some cases, regulation could be used to confirm that unrealistic costs cannot be used to inflate Australian content levels. As it is not intended that unsophisticated processes, such as the conversion of concentrate to fruit juice, should qualify as a substantial transformation, the bill will allow for such processes to be excluded from the definition of substantial transformation. Appropriate public consultations will be required before such action is taken.

Past proposals often sought to limit the range of permissible origin claims. This bill welcomes innovative marketing and will encourage the positive promotion of Australian content. One of its first effects will be to reinvigorate the well known and respected Australian Made logo which has fallen into disuse because of legal uncertainties and confusion generally about `Made in Australia' claims. This will deliver a real benefit to many Australian firms which, in the past, have relied on the logo to enhance their profile in the marketplace. The bill also includes provisions supporting new industry-based logos, encouraging further innovation.

The changes proposed by the Government are significant and offer the only credible approach to a lasting solution of the issue. As an indication of its commitment, the Government has decided to implement a major public education and awareness campaign, supported by funding of $1.2 million in 1998/1999.

The bill contains a number of miscellaneous amendments. Two of these amendments deliver major reforms promised in the Government's New Deal: Fair Deal package. One amendment will extend the ability of the Australian Competition and Consumer Commission to take representative actions on behalf of small business. The second amendment will provide for the appointment of a full time commissioner with a background in small business. Both amendments will enhance the capacity of the ACCC to assist small business.

In conclusion, with this bill the Government is proposing an effective labelling scheme—a scheme which will set a realistic threshold for unqualified claims while supporting premium claims and industry specific marketing initiatives.

Consumers will be able to buy Australian with confidence, knowing exactly what is meant by country of origin claims.

Firms will be able to label with confidence, knowing exactly what tests they must satisfy to claim origin.

I commend this bill to the Senate.

Debate (on motion by Senator Chris Evans) adjourned.