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Tuesday, 12 November 2002
Page: 6082

Senator McLUCAS (2:53 PM) —My question is to Senator Minchin, the Minister for Finance and Administration. Is the minister aware that some Australian food processing companies manufacture several hundred product lines, some of which contain varying sugar content? Can the minister confirm that under his new sugar tax proposal any company making an application for an export rebate will be required to calculate the level of sugar used in each product, possibly as often as once a month, and then apply for a sugar tax rebate? What assessment has the government made of the administrative cost burden imposed on Australian food manufacturers under this sugar tax proposal?

Senator MINCHIN (Minister for Finance and Administration) —I firstly point out that the department of agriculture has been responsible for arrangements pertaining to the sugar levy including negotiations with the industry and the determinations, so it is not my direct responsibility. Again, the opposition is misdirecting its questions.

I again state that we have absolutely no regrets about the way in which this matter has been handled. We had to decide how we were going to fund this package; we decided to fund it responsibly through a levy. Levies are not unprecedented. Of course, the Labor Party is a past master of levies; it introduced the aircraft noise levy in 1995. There is a very good precedent from the former Labor government in relation to levies. We say that if particular industries have particular problems it is a much more responsible and effective approach to impose a levy of this kind for a specific duration and of a specific level and dedicate it to a specific task, which is in this case the sugar industry.

Of course sugar manufacturers who use sugar products are not going to be happy. Nobody likes it when the price of their product is increased, albeit by a very small amount for a specified period. We understand that, but we decided that the most effective way of doing this was to place the levy at that point in the production chain rather than introduce a consumer-wide levy. The fact is that Australian manufacturers who use sugar products continue to have the enormous benefit of some of the lowest sugar prices in the world and some of the lowest prices that sugar has ever had.

So manufacturers are still in a very good position. They have the benefit of the generally very good and very benign economic conditions prevailing in this country, very good conditions for manufacturing and, as I say, very low input costs in a relative sense. We have obviously spent a long time—or Mr Truss, as the minister responsible for agriculture, has—with the industry discussing this with them, taking account of their issues and seeking to ameliorate the impact. We have kept that impact as low as we possibly can and the levy will only be in place for as short a time as possible.

Senator McLUCAS —Mr President, I ask a supplementary question. I note that the minister in no way addressed the issues that the manufacturing industry is facing. Can the minister advise what assessment the government made of the competitive advantage provided to imported food products by the imposition of their sugar tax on domestic products and the consequential administrative cost burden on processors making applications for rebates? Can the minister confirm that there will be no protection for Australian food products forced to compete in the domestic market against imports unburdened by the Howard government's sugar tax?

Senator MINCHIN (Minister for Finance and Administration) —As I said, Senator McLucas, you are asking the wrong minister. The responsible minister is the Minister for Agriculture, Fisheries and Forestry and I do not represent the minister for agriculture. So it would help if the opposition knew to whom they should be directing these sorts of questions. Nevertheless, I repeat that sugar manufacturers in this country still have the enormous benefit of some of the lowest input costs in the world. This is a very small levy that is deliberately designed to ensure that Australian manufacturers can continue to have access to Australian sugar. Without this, there will not be a sugar industry. The whole point of this package is to ensure that the Australian sugar industry can restructure, reform and survive and continue to provide sugar to Australian manufacturers who use sugar products.