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Thursday, 20 May 1965

Senator ANDERSON (New South Wales) (Minister for Customs and Excise) (12:55 PM) . - I move -

That the Bill be now read a second time.

Mr. President,the bill I have just introduced represents a major change in the nomenclature of Australia's customs tariff but not in the levels of import duties chargeable under our fiscal policy. The Bill puts into effect a Government decision to recast the Tariff into the internationally recognised language of the Brussels Nomenclature. The new tariff, however, does not make any significant change in the level of duties. Historically, there have been three major nomenclature changes in Australia's customs tariffs since Federation. They are represented on the statute book by the Customs Tariff 1902, the Customs Tariff 1908 and the Customs Tariff 1921. Not included is the Customs Tariff 1933, from which the present Customs Tariff 1933-1965 is derived, since the 1933 tariff, although it resulted in major changes in the levels of duties, largely replaced the Customs Tariff 1921 as amended, without changing the nomenclature of the earlier Tariff Act.

Honorable senators may be interested if 1 recall some of the facts about these three earlier tariffs. The 1902 Tariff was introduced by the Rt. Hon. C. C. Kingston, P.C., K.C., Minister for Trade and Customs, on 8th October 1901, as a budget measure, it comprised some 136 items and was a single column tariff and took effect from 4 p.m. Victorian time on the 8th October 1901. The next tariff with a major nomenclature change was introduced by the Hon. Sir William John Lyne, K.C.M.G., the Treasurer of the day, as a tariff proposal, on 8th August 1908, again as a budget measure. This tariff of about 30 pages comprised 444 main items. It was a two column tariff, giving, firstly, a general rate and secondly, a preferential rate, in some cases, to goods the produce or manufacture of the United Kingdom.

The next major nomenclature change was introduced on 24th March 1920, by the Hon. Walter Massy Greene, the Minister for Trade and Customs. This tariff was a three column tariff providing for British and Dominion preferential rates, an intermediate tariff rate - what we today speak of as the most-favoured-nation tariff - and a general tariff rate. Its wording and numbering in a great many items was identical with today's tariff. Indeed, it is remarkable that much of the wording used in the 1902 and 1908 tariffs has been carried forward to the present day and is still retained in sub-items and paragraphs in many items in the new Tariff Bill before the Senate.

So much for past tariffs. As I stated earlier, the Tariff Bill I have just introduced differs from previous tariffs in that it is, for all practical purposes, a change in working without a change in rate. In other words, it was drawn up, so far as it was practicable, so that the rates of duty applying under the present legal tariff will continue to apply after this bill is enacted. There will be some marginal differences between the existing and proposed rates and in some areas of low trade significance a rationalisation of residual rates has been made, but basically, the levels of tariff protection and the areas of non-protection are the same.

A handbook, entitled " Introduction to the New Australian Tariff", which was prepared in my Department and released as a training document early this year, is being circulated for the information of honorable senators. This handbook gives a concise explanation of the new tariff nomenclature, its origin, and how it works. Also available for perusal is a concordance showing each item, sub-item, paragraph and sub-paragraph in the bill, and the principal tariff items and operative rates of duty in the Customs Tariff 1933-1965 that are the source of each reference in the bill. Honorable senators may select any item in the Bill, note the rates proposed and, by turning to that item number in the concordance, compare the new rates with existing rates.

In addition, in order that persons could see whether the tariff rates or the protection under which they now operate would be changed in the new Act, my Department released, at the end of January, a draft Tariff for general information. Honorable senators will recall that I notified them at that time of the release of the draft Tariff and that copies of the draft were placed in the Libraries in the Commonwealth Offices in the capital cities. Members of the public were invited to report discrepancies they believed they had detected to the Comptroller-General of Customs on a special form released for that purpose. In most cases it has been possible to make adjustments to the Schedule to maintain the status quo, in other cases it was found that the goods were currently being wrongly entered and in a small number of cases it was concluded that there should be no amendment to the published draft. I am glad to be able to assure honorable senators that should any further major discrepancies be detected they will be adjusted at the first convenient time. lt may be of assistance to honorable senators if I outline the principal provisions of the Bill. It is in 4 parts of 29 clauses and 4 schedules. Part I, comprising clauses 1 to 12, is typical preliminary material giving definitions of words and the meaning of terms used in the Bill. Clause 6 relates percentage rates shown in the First and Second Schedules to the value of the goods, clause 7 defines f.o.b. price, that is to say. free on board price, a term used in some items in the First Schedule, while clause 8 defines rates of duties.

To explain clause 9, I should perhaps firstly explain the present method whereby preferential rates are accorded to certain countries. The Customs Tariff 1933-1965 makes provision for goods the produce or manufacture of the United Kingdom to be admitted at rates set out in the column in the Schedule that is headed " British Preferential Tariff ". Canada and New Zealand obtain preference, generally at British preferential tariff rates, through separate preferential tariffs, which direct the British preferential tariff rate in the Customs Tariff to apply to Canadian or New Zealand goods, or, in special cases, make other duty provisions. Honorable senators will recall that in past tariff debates, there have often been, consequential to the main Tariff Bill, preference bills which were passed after the main Bill, usually without debate. These bills formally altered preferences to line up with the main Tariff Act.

In the new Tariff, all preference provisions have been included in the one Tariff. Furthermore, as it had been decided to restrict the new Tariff to a two-column Tariff, in particular items, preferential rates, different from British preferential rates, have been identified and are spelt out in the preference column in the new Tariff Bill, by specifying the name of the country, identified by code prefix, and the rate of duty applying under the particular item. Clause 10 sets out what countries are or may be deemed to be preference countries and how they can be identified by appropriate abbreviations in column four in the First Schedule.

An important change in the new Tariff is the method of numbering. In the new Tariff a wholly numerical sub-division of items - instead of the present pattern of number, letter, number, letter - has been adopted. Clause 11 tells how the commencement of an item is to be recognised, how the commencement of a sub-item is to be recognised and so on. Since the new nomenclature is based on precise classification, it provides a rigid set of rules to enable goods to be classified. Clause 12 formally recognises these interpretative rules and their basic use. The rules themselves are set out as Part I of the First Schedule. Part II of the bill deals with the imposition of the duties and covers clauses 13 to 23. Clauses 13 to 16 stipulate when customs duties are imposed, to what countries the rates in columns 3 and 4 of the First Schedule apply and what is to be done if two rates are shown as applying to goods depending on whether the choice lies between the higher or lower of the rates quoted. Clauses 17 and 18 deal with deferred duties and temporary duties in the same language as in the present customs tariff and thus introduce no changes to the present procedures.

Clause 19 takes the place of the third column in the old Tariff and this clause can be used if it is desired to surcharge goods from countries other than goods from countries entitled to most favoured nation treatment. Let me elaborate here on clause 19. Clause 19 gives power to surcharge named goods from a named country by 20 per centum, but it should be noted that in clause 19 (5) the 20 per centum surcharge is applicable only to column 3 of the First Schedule. The surcharge is not applicable to the preferential rates in column 4.

In the existing Customs Tariff 1933-1965 the third column specifies duties which are applied to countries not accorded most favoured nation treatment. On a number of items these duties are higher than most favoured nation rates and the surcharge varies from 21/2 per cent, to as high as 45 per cent. Present legislation places no limitations on the surcharge that may be imposed on non-most favoured nation countries by amendments to the Tariff.

The new Tariff will not carry forward the present surcharges and countries formerly affected will receive the benefits of most favoured nation tariff treatment from 1st July, 1965. The purpose of clause 19 is to give a limited reserve power which could be invoked if difficult problems arose in the field of international trade. Other countries have similar provisions. Let me assure the House this power will not be used to accord Tariff protection. Tariff protection will continue to be accorded only after the matter has been considered and reported on by the Tariff Board and the Board's report accepted by the Government. I would also draw the attention of honorable Senators to the fact that any order I might make - this would only be as a result of a positive decision of the Government - has to be published in the " Gazette " and in accordance with clause 28 has to be laid on the table of both Houses and is subject to disallowance in the same manner as regulations. Opportunity to debate any such order is therefore available to honorable senators.

Clause 20 extends concessional duties to certain classes of importers or to certain broad classes of goods. These provisions could not be included in the First Schedule because the Brussels nomenclature does not lend itself to such strictly national provisions. Such concessions were accordingly included in a Second Schedule to this Bill. All the provisions in the Second Schedule appear in the Customs Tariff 1933-1965 in practically identical words and at the same rates of duty. The Second Schedule thus enables all the existing concessions to be continued.

Clause 21 deals with substitutes and imitations. At present, substitutes are dealt with by section 139 of the Customs Act 1901- 1963 and imitations by Prefatory Note No. 1 to the old customs tariff. With two exceptions, all the present substitute notices have been written into the First Schedule of the Tariff and clause 21 remains as a reserve power. Clause 22 (1) provides power for the Minister to strike a proportion of a specific rate where a part for an article which is subject to a fixed rate of duty is imported. For example, if household clothes washing machines are subject to duty at a rate of £6 each, it would seem inequitable to charge £6 on a part of the machine such as the revolving tumbler. Clause 22 (2) makes provision for the Minister to direct that the duty on parts for goods shall not be higher than the duty on the whole goods into which the parts are to be incorporated. Both these powers are presently usable by the Minister under existing legislation.

Clause 23 deals with the question of duty on sets and on machinery incorporating electric motors and other driving units. Subclause (1) allows the Minister to direct that the duty shall be payable either on the basis of the duty payable on the one article in the set which gives the set its essential character, or, alternatively, on the basis of the duty payable on each article in the set as if each were imported separately. The need for alternative approaches stems from the recognition that sets may be of two principal types - firstly, the set comprising a principal article with several makeweight articles and secondly, the set with more or less equal articles such as occurs in a canteen of cutlery. In the first case the duty can be collected on the basis of the main article, in the second case on each article. The powers to be accorded the Minister under clause 23 are presently operated by powers conferred by Prefatory Notes Nos. 11 and 1 2 to the customs tariff.

Part III of the Bill covering clauses 24 to 27 deals with the imposition of primage duties. As honorable senators know, primage duty ispresently imposed by the Customs Tariff (Primage Duties) 1934-1958. This Act is proposed to be repealed and primage duties, not at higher level than are presently being imposed, will now be imposed by the Third Schedule to this Bill. Honorable senators will note that clause 24 of the Act imposes primage on goods from countries other than certain countries specified in that clause and if goods are not included by Tariff Item number in one of the four Parts, they are exempt from primage duty.

In addition, a Ministerial Order will be published in the Gazette on 1st July 1965 exempting from primage duty all the existing primage exemptions which are expressed in general terms, such as machinery for use in the mining industry and so on. This provision is given by clause 27 and is subject to disallowance by either House.

Part IV comprising clauses 28 and 29, deals with miscellaneous matters. Clause 28. provides that Orders made under clauses 9, 19 and 27, are subject to Parliamentary disallowance, while clause 29 provides for the repeal of the Customs Tariff 1933 as amended to date, the preference tariffs and the primage tariffs. The details of the Acts to be repealed are set out in the Fourth Schedule to the Bill.

Turning then to the schedules, the First Schedule is the principal schedule and is that based on the Brussels nomenclature so far as the first four numbers of the items are concerned. The fifth, sixth and seventh numbers where they occur are divisions of the four figure items which are introduced for national purposes so as to retain the existing rates of duty and to differentiate between areas of protection and nonprotection and international preferences. The commodities in the First Schedule and the rates applying thereto are basically those subject to the Customs Tariff 1933- 1965 and now to be repealed. This is the main tariff schedule setting out the substantive duties applying on all imported goods. The Second Schedule makes provision for concessional entry for goods for the Commonwealth, for foreign governments as approved, for diplomatic personnel, for principal by-law purposes, for re-imported poods and many other concessional provisions in the Customs Tariff 1933-1965. The Third Schedule is the Schedule which takes the place of the Customs Tariff (Primage Duties) 1934-1958. It is divided into four Parts. Goods classifiable in the First Schedule under the items in the First Column of the four Parts of the Third Schedule, except to the extent of any goods listed in the second column are liable to primage duty. The Fourth and last Schedule sets out the titles of Acts, to be repealed.

In conclusion, may I remind honorable senators that the main schedule to the Bill has been translated from the existing Tariff Act in accordance with the Government's direction that any changes in the levels of duty should be minimal, but that rationalisation should be made to produce a workable document. The translated document will thus maintain existing levels of protection and is not expected to cause us any difficulties insofar as our international commitments are concerned. The timing of the Bill is 1st July 1965, and this requires the Bill to be enacted before this session of Parliament ends. The timing for a major change of this nature can only be 1st July in any year without destroying the value of two years trade statistics. The Commonwealth Statistician is geared for the change over from 1st July this year. From the point of view of overseas trade talks, the transition to a similar tariff to that adopted by the European Community and many African and Asian States has much to commend it.

Honorable senators may also be interested in comments on the new Tariff published by the Melbourne Chamber of Commerce in the February issue of Commerce News. 1 have copies of the Press release for perusal by any interested senator and I shall merely quote from a circular letter sent by the Customs Agent Section of that Chamber when forwarding the Press article to their clients, as follows -

This Section agrees with the statement by the Minister for Customs and Excise, Senator Anderson, that an Australian tariff with a common Nomenclature to that used by many other countries and one which presents a more logical and systematic approach to tariff classification, should be a benefit to all concerned with imports.

Earlier I said that members of the public had been invited to report discrepancies they had detected in the translation as disclosed by the draft Tariff released at the end of January. Those advices received before this Bill went to print were of course incorporated in the Bill. However, in the past two to three weeks additional reportings have been received which require modifications to the schedule. Any attempt to add these to the schedule at this stage would introduce a major printing problem and I intend therefore to make the changes by " Gazette " notice to operate from 1st July 1965. These changes would then be introduced into the Parliament by Tariff Proposals in August and be debated by both Houses in duc course. Other changes requiring to be introduced by " Gazette " notices are the changes introduced by Tariff Proposals of 18th and 23rd March 1965, 8th April 1965 and 6th and 11th May 1965 and which, because they have not been debated, have not been included in this Bill. They will also be re-introduced by Tariff Proposals in August and debated at a convenient date. 1 commend the bill to honorable senators.

Debate (on motion by Senator O'Byrne) adjourned.

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