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Textiles, Clothing and Footwear Development Authority Amendment Bill 1991
House: Senate Portfolio: Industry, Technology and Commerce
Purpose To repeal provisions relating to the Textiles, Clothing and Footwear Development Authority (TCFDA) Raw Materials Processing and Plant and Equipment Modernisation Programs and requirement that the TCFDA review and report to the Minister by 30 June 1992 on the operation and effectiveness of the Textiles, Clothing and Footwear Industries Plan (the Plan).
Background Australia's textiles, clothing and footwear (TCF) industries form a significant part of Australia's manufacturing sector. In 1987-88, TCF industries contributed some $3.9 billion to value added which represented approximately 7% of total manufacturing value added. In 1987-88, there were over 3000 TCF businesses which employed approximately 111 600 people. Levels of assistance to TCF industries are the highest for Australian manufacturing. The Industries Commission (IC) estimates that the average effective rate of assistance to TCF industries in 1988-89 was close to 150%. The IC estimated that the cost to consumers of protection to TCF industries in 1988-89 totalled approximately $1.7 billion or approximately $300 per household. The effective rates of protection to TCF industries are falling as a consequence of changes announced under the Plan. The current Plan came into operation on 1 March 1989 and is scheduled to run until June 1995. The objectives of the Plan are to encourage industries that are efficient and internationally competitive, inspire greater innovation and export orientation, and to reduce dependency on community support. The Plan contains various measures to help TCF industries to restructure, including the gradual removal of tariff quotas, a shift to a tariff only system, and a progressive reduction in bounty rates. In the TCF Development Authority - State of the Industry Report 1990, the Authority reported that TCF industries, despite adjustment being made, still remain some of the most highly protected industries in Australia and that more adjustments are required if TCF industries are to become internationally competitive.
The Australian textile industry produces a wide range of products including cotton, woollen yarns, a variety of fabrics and other textile products. The yarns and woven fabrics sectors of the textile industry comprises 280 businesses with an annual turnover of approximately $2 billion and employs 22 000 people. The remaining textile sectors consist of 450 businesses, employ approximately 13 000 and have an annual turnover of around $1.5 billion. Production and sales of textiles have improved throughout the 1980s with production increasing by approximately 3% a year and sales by approximately 2% a year. The value of textile imports in 1988-89 totalled $2.066 billion. The major sources of imports were Japan, Korea, Hong Kong, China and New Zealand. Australia exported $1.313 billion in textiles in 1988-89. The majority of Australian textile exports go to New Zealand and the US. In 1987-88, the Australian clothing industry comprised 2116 businesses, had an annual turnover of $3.923 billion and employed approximately 63 230 people. In 1989-90, clothing imports grew by 20% to $908 million, while the Australian market remained static with an annual turnover of approximately $4.2 billion. The major sources of imports were China, Hong Kong, Italy, Korea and Taiwan. There is no current data for 1989-90 clothing production and sales, except for combined data for the clothing and footwear industries. This data indicates that manufacturers sales fell by 7% compared to the previous year. In 1989-90, the value of Australian clothing exports totalled approximately $107 million (an increase of 67% over 1988-89). The majority of Australian clothing exports go to the US and New Zealand.
In 1987-88, the Australian footwear industry comprised 216 businesses, had an annual turnover of $749 million and employed 11 964 people. In 1989-90, supplies to the Australian market totalled 62 million pairs of shoes with imports and local production accounting for approximately half of the market each. Australian footwear producers supply approximately two thirds of the market's leather footwear requirements. While retail footwear sales grew by approximately 9% in 1989- 90, local production declined by more than 25%. The value of footwear imports in 1989- 90 totalled $338.9 million. The major sources of imports in 1989-90 were Taiwan, South Korea, China, Italy, Brazil and the Philippines. In 1989-90, Australian exports totalled $24 million. The majority of exports go to New Zealand.
The TCFDA was established in May 1988 and is responsible for managing the TCF Plan. The principal elements of the TCF Plan include reforms to import arrangements, an Industries Development Strategy, and adjustment assistance for employees displaced in the course of industry restructuring. The Industries Development Strategy provides assistance to TCF industries for restructuring and revitalisation. The Strategy aims to facilitate value-adding, increase the industries' export orientation, encourage import replacement, promote global manufacturing practices and develop better infrastructure support. The Strategy comprises a number of programs - the Raw Materials Processing Program; the Industries Efficiency Program; the Industries Infrastructure Program; the Export Development Program; the Capitalisation Grants Program; and the TCF Labour Adjustment Program.
The Government, in its 12 March 1991 statement, ` Building a Competitive Australia', made a number of announcements relating to the TCF Industries Development Strategy including: that it would be revised to comprise four main programs - the Incentives for International Competitiveness Program, the Infrastructure Support Program, the Import Credits Program and the Capitalisation Grants Program; all four programs would be administered by the TCFDA, however, the Capitalisation Grants Program and the Import Credits Scheme would be managed in cooperation with the Australian Customs Service; an increase of $15 million per annum for the Incentives for International Competitiveness Program and Infrastructure Support Program; and revocation of the mid- term review of the Plan.
Main Provisions The principal effects of clause 4 will be to amend section 7 of the Principal Act, which contains the functions of the TCFDA, by removing those functions relating to the development and implementation of the Raw Materials Processing Program, Plant and Equipment Modernisation Program, and 30 June 1992 review of the Plan.
Section 12 of the Principal Act, which requires the TCFDA to review and report to the Minister by 30 June 1992 on the operation and effectiveness of the Plan, will be repealed by clause 5.
Divisions 1 and 2 of Part IV of the Principal Act, which deal with the Raw Materials Processing Program and Plant and Equipment Modernisation Program, will be repealed by clause 6.
A new subsection 37(2) will be substituted into the Principal Act by clause 7, that will set out new eligibility criteria for financial assistance under the International Competitiveness Incentive Program. An applicant for assistance under the Program will be required to submit to the TCFDA: * his/her business's objectives in relation to production of TCF products in Australia; and * his/her plans for achieving those objectives in terms of certain matters, including organisational restructuring, investment, export development, raw materials processing and any other matters that in the TCFDA's opinion are likely to improve international competitiveness and assist in meeting the objectives of the Plan; and * information on his/her ability, at the end of the time for which assistance would be granted, to be internationally competitive at Government announced levels of assistance.
A new subsection 42(2) will be inserted into the Principal Act by clause 8, that will allow the TCFDA to enter into arrangements with other bodies under which a body is to: * subscribe for or acquire shares in, or debentures or other securities of, a company; or * underwrite issues of shares in, or debentures or other securities of, a company; or * lend money.
Information Sources * Department of the Prime Minister and Cabinet, Building a Competitive Australia, March 1991. * Industries Assistance Commission, Annual Report 1988- 89. * Industries Assistance Commission, Annual Report 1989- 90. * Textiles, Clothing and Footwear Development Authority, Annual Report 1989- 90. * Textiles, Clothing and Footwear Development Authority, State of the Industry Report 1990.
Bills Digest Service 27 November 1991 Parliamentary Research Service
For further information, if required, contact the Economics and Commerce Group on 06 2772460.
This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
Commonwealth of Australia 1991.
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Published by the Department of the Parliamentary Library, 1991.