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Thursday, 20 May 1965

Senator ANDERSON (New South Wales) (Minister for Customs and Excise) (1:15 AM) . - I move -

That tile Bill be now read a second time.

Mr.President, with one exception ; the repeal of Section 144, relating to the valuation of proprietary medicines - this Bill to amend the Customs Act contains only amendments consequential to the principal change as contained in the Bill for the new Customs Tariff. Clauses 1 to 4 of the Bill are procedural changes While clauses 5 and 6 repeal sections 131, 138, 139 and 140 of the Principal Act. The sections so repealed related to matters to which I shall refer.

Section 131 .exempted goods the property of the Commonwealth from liability to Customs duty. This provision is duplicated in the existing Customs Tariff 1933-1965 and will now be found as item 1 in the Second Schedule to the Customs Tariff Bill. Thus, section 131 can be repealed.

Section 138 directed that the higher rate of duty is to be charged whenever goods are classifiable under two tariff items. More elaborate rules for the classification of goods will be found in Part I of the First Schedule to the .Customs Tariff Bill and this enables Section 13.8 to be repealed.

Section 139 provided that substitutes may by Ministerial Notice be chargeable with duty at the rate applicable to the goods for which they are substitutes. This power is transferred to Clause 21 of the Customs Tariff Bill and Section 139 of the Customs Act becomes redundant.

Section 140 made provision for the Minister to vary the duties on parts in approved circumstances and this principle is carried forward in clause 22 of the Customs Tariff Bill.

Leaving aside clause 7 for the moment, clauses 8 and 9 make certain procedural alterations to sections 151, 151 A, 151B and 153 A by bringing together various provisions in the Customs Act and preferential tariffs relating to goods the produce or manufac?ture of overseas countries and by clarifying the meaning of value in relation to goods. Similar amendments are made to sections 154 and 160 by clauses 10 and 12 of the bill. There are no changes of substance involved.

Clause 1 1 which inserts a new section 155 sets out how inland freight charges on goods sent from Canada to Australia are to be calculated. This provision exists at present in the Canadian Preference Tariff which is to be repealed by the earlier bill.

The amendments proposed by clauses 13 to 15 pf the Bill to sections 271, 272 and 273 recognise the alteration of the titling Of Customs by-laws from departmental bylaws to by-laws. Section 273e, which is repealed by clause 16 of the Bill, provided rules for deciding when by-law items should take precedence over non by-law items. This directive is transferred to the interpretative rules in Part I of the First Schedule to the Customs Tariff Bill. This completes the .changes directly .concerned with the changes involved in recasting Australia's Tariff and I return to clause 7 of this Bill, which repeals section 144 of the Principal Act in accordance with a decision of the Government.

Section 144 of the Customs Act provided that the valuation of incomplete medicinal and toilet preparations imported for completion and preparation for retail sale should be calculated on the value of the completed goods less .certain costs incurred in Australia. Bearing in mind that bulk materials were imported, this meant that duties applied by section 144 valuations were out of proportion to the value of the goods imported. The result of this type of valuation was to discourage manufacturing in Australia in that the same type of duty would be payable on the fully imported product without the cost of setting up a manufacturing factory in Australia,

As Australia's tariff is geared to encourage investment 'and the production of goods in Australia the need for section 144, which was part of the original 1901 Act and served as a revenue raising device, has passed. Technically, objections to section 144 can be raised on several grounds. First, the section is contrary to the accepted principle that a duty should be ascertainable at the time of clearance of the goods; next, the basis of valuation provided under the section is not wholly related to the materials imported; thirdly, the section is discriminatory in that it isolates two particular kinds of commodities for special treatment as to valuation for duty; fourthly, the provisions of the section may be easily circumvented by using a different trade name, or by shipping from a country where the product is not sold domestically or by putting up the goods in expensive packs in Australia; and lastly, the administration of the section is so complex that the bulk of any duties collected are absorbed in the administrative costs. In all the circumstances the Government is of opinion there will be less restriction on trade if section 144 is repealed as is now proposed. I commend the Bill to honorable senators.

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

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