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Monday, 6 December 2004
Page: 22

Senator CHAPMAN (2:07 PM) —My question is directed to the Acting Leader of the Government in the Senate, representing the Minister for Industry, Tourism and Resources. Will the minister inform the Senate of the benefits to the Australian economy which have flowed from tariff reductions? Has the minister considered any alternative policies and what has he concluded from any such consideration?

Senator MINCHIN (Minister for Finance and Administration) —I thank Senator Chapman for that very good question, because 1 January 2005 marks a significant milestone in this government's efforts to foster an internationally competitive and innovative manufacturing sector in Australia. In less than four weeks time, tariff levels for the TCF and automotive industries will drop as part of the government's commitment to reducing tariff levels to no more than five per cent across industry. These tariff reductions, which are to take place in less than four weeks, represent a saving to consumers of around $700 million per annum. Under these new schedules, car tariffs will be cut to 10 per cent and to 17.5 per cent for most clothing and finished textiles.

Tariff reform has of course been a crucial plank of our economic reform agenda. We understand that firms need assistance to adjust to these lower levels of tariffs and we have implemented very significant industry assistance packages. By 2015, these industry packages will be worth about $7 billion to the auto industry and $1.4 billion to the TCF industry. Despite what we hear from the left, particularly the union movement, in many cases tariffs do not make firms competitive or viable on their own and they do not assist companies to innovate or to invest. As some in the Labor Party understand, it is consumers who pay the cost of tariffs. Existing TCF tariffs alone are going to cost consumers up to $1 billion a year or about $150 for every household. So the TCF tariff reductions to take place in less than four weeks represent alone a $6.3 billion tax cut for Australian families over the life of this package. The car industry is a great example, as Senator Chapman would know, of the benefits of tariff reductions. Ten years ago, with a tariff of 27.5 per cent, Australian manufacturers produced 312,000 vehicles and exports of just under 24,000. In 2003, with a tariff of 15 per cent, 407,000 vehicles were produced and there were exports of 120,000 vehicles—a fantastic result for the industry.

Of course there was a time when those opposite in the Labor Party had a genuine commitment to tariff reform, but you have to go back to the mid-eighties to find it, although I must acknowledge that even the current Leader of the Opposition supported tariff reform in 1995, when he said that tariffs are the most anticompetitive practice in which any government can engage. He ought to make that point to Mr Doug Cameron. But as is so often the case with our political opponents, there is lots of rhetoric and not much action. So instead of endorsing the government's tariff reforms, the ALP went to the last election with a policy to slow down the legislative reductions in auto and TCF tariffs to pay for their shambolic and hopeless tax package—the one where the $600 was not real. When they did that, they finally abandoned any claim to responsible economic management. Nevertheless, the government does welcome the ALP's belated announcement that they will support the government's TCF package after blocking its implementation for so long. The tariff cuts that will take place on 1 January are a tax cut for ordinary Australians and they are a vital part of the government's economic reform program.