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Monday, 14 October 1991
Page: 1876

Mr McLACHLAN(9.45 p.m.) —-We have no objection to the Customs Tariff Amendment Bill (No. 2) 1991 being debated cognately. It is primarily a housekeeping exercise, but it does implement some policy decisions, the most notable of which is Australia's ratification of the Florence agreement and extension of developing country preference to Czechoslovakia and Namibia. We do not oppose the Bill, but we do have concerns about some aspects of it, which I shall raise a little later.

This debate is occurring against a background of disarray within the Government ranks about industry policy. The reality of that, of course, is that the Government simply cannot tackle the fundamental structural impediments which besiege us all and which are costing industry in this country around $50 billion a year. We are all aware of those impediments in the industry relations system and the tax system; in transport, communications and the waterfront; in bureaucratic red tape, green tape and black tape; and in the Government's pervasive anti-investment stance--to name just a few. They have resulted in 870,000 people being unemployed and perhaps 100,000 small businesses going out of existence in the last 12 months. More than that and worse than that has been the loss of investment and business confidence--not to forget the fact that we have in this country, according to the Reserve Bank, $29 billion of non-performing debt and high real interest rates.

Not surprisingly, we are seeing some Government Ministers starting to run around the place panicking, grasping at straws, whilst one or two others use the policy vacuum to further their own political ambitions. Some of these demands are a little more sensible than others, if somewhat belated. I was interested to hear, for example, the Minister for Industry, Technology and Commerce (Senator Button) starting to talk about fast tracking major projects--some of those, that we all know about, in Western Australia; some in the forestry industry; and so on. He is finally acknowledging what the coalition has been saying for a long time now--that Australia is no longer an attractive place to invest. That is being said by business leader after business leader, not so much in words but by people voting with their dollars and, very sadly, moving those dollars offshore.

It is a pity that the Minister did not see fit to speak out loudly some time ago when those bad decisions were being taken but, whilst the latter day conversion of the Minister is welcome, the facts are that he and his Government have been in power for eight years and there is still no indication that the Government will accelerate the broad structural reform agenda, where the really big gains and the big dollars are.

Nor is there any indication that Senator Button is pushing in this area either. It seems that he is limiting his concern. Although he mentions this area once or twice, he seems to be limiting the main thrust of his concern to taxation and to less ideologically provocative matters. Not once have I heard anybody from the Government discuss the $20 billion that could be picked up from industrial relations reform which has been referred to time and time again by the Business Council of Australia. And this is not even refuted by the Government. Nevertheless, I think that very conservative estimate is there to be picked up. Although the words are now being used by the Government, addressing the real problem is some time further down the track if we are lucky.

The only signal that business is getting at the moment is that the Government has lost its way. It has abrogated its responsibility to govern in the interests of all Australians and instead is acting on its own behalf in a confused manner and to self-serving ends. Not surprisingly, this vacuum has given rise again to a debate which we thought had been put aside. That vacuum has encouraged a revival of the protectionist debate, a debate which the MTIA said, after 12 March, was dead. It is not quite dead because it keeps on coming to the surface. I suppose it is raised again because of the Government's unbalanced approach to protection cuts in that it refuses to act on the structural reform side of the ledger, which was mentioned by Senator Button in his letter to the Prime Minister (Mr Hawke).

If the Government acts on only one side of the ledger, it is perpetrating a system which is patently unfair. It reduces protection on one side, does not do the structural reform on the other side and finishes up with a system which is unnecessarily destructive of jobs and industries. I have to say that it is small wonder in these circumstances that some are seeking new versions of the old and failed palliatives. But whilst this debate goes on, yet again we are ignoring the real issues and losing valuable time in this country. As I said a minute ago, we are losing potentially $50 billion of certain benefits that would flow from fundamental change.

It is against this sad background that we are debating the Bill tonight. As I said at the outset, this Bill implements a number of changes, most of which have been previously announced. I will briefly run through them. Schedule 1 provides free rates of duty for pre-tanned bovine leather, and this corrects an anomaly created by the conversion to the harmonised tariff which operated from January 1988. Subsequent to the decision to remove the tariff on wheelchairs, schedule 2 reduces the tariff on wheelchair parts to zero and removes an anomaly we forewarned of earlier. The need for this amendment highlights the danger of piecemeal tariff changes because of the inevitable tariff anomalies created, a subject relevant to changes to implement the Florence agreement, which I will come to in a minute.

Schedule 4 redefines orange juice to include the products of oranges and raises the rates of tariff. Surprisingly we agreed in this case that those rates should be raised. Schedule 5, amongst other things, reduces the duty rate for aviation gasoline following a reduction in the excise rate. The reduction represents the cost component included in the customs duty to fund the operation of the rescue and firefighting service at capital city airports. This service was withdrawn on 1 July 1991. That schedule also implements measures to enable Australia's partial accession, announced last year, to the 1950 UNESCO agreement, called the Florence agreement, on the importation of goods of an educational, scientific and cultural character. Included in these changes is the introduction of zero duty rates for audio cassettes as from 1 July 1991. These previously attracted a 17 per cent duty.

The audio cassette industry, which is dominated in Australia by EMI and Sony, accepts the removal of tariffs on its output but it is concerned that tariffs on its inputs, C-zero cassettes and magnetic tape, will remain. It is requesting that tariffs on these two inputs also be removed. I have to say that the coalition has some sympathy with this position. Not surprisingly, however, Greencorp Magnetic, the only manufacturer of magnetic tape in this country, opposes the removal of its tariff, in part, I suppose, because it pays tariff on inputs such as chemicals.

The Government's apparent reasons for not removing tariffs on the audio cassette industry inputs are, firstly, that it wishes, in its own words, to contain the effect of tariff changes arising from the Florence agreement; and, secondly, the tariffs on these inputs are being phased by 5 per cent by 1996 as part of the general tariff reductions. Whilst it is true that tariff rates for magnetic tapes and cassettes will be at that rate--5 per cent, by 1996--the fact is that the Government has set a precedent to remove tariffs by its decision to accede to the Florence agreement in the first place.

The coalition does not consider this is a make or break industry issue, but the principle at stake is quite important. Earlier this year, for example, and as already mentioned, the Government created a similar anomaly when it neglected to remove the duty on wheelchair parts at the same time as removing the tariff on wheelchairs.

We have given the audio cassette industry's request lengthy consideration but, on balance, we have concluded that to move amendments to correct the clearly anomalous situation created by the Government's decision would almost certainly create even more anomalies in this and, indeed, in other industries such as the computer industry where magnetic tape is also manufactured. In other words, the Government has opened a Pandora's box, and to make some changes would probably make it worse. Instead, the Government is asked by us to provide an assessment of the impact of the changes on the audio cassette industry and to provide a guarantee that it will closely monitor the impact of those changes on the industry. We believe that the Government would have been far wiser to adhere to a program of phased and predictable tariff reductions across the board, but now that it has deviated from that principle it must be prepared to ensure that it does not create an unsustainable situation for one industry. We seek the Minister's assurances on that score.

There is another proposal in this Bill I would like to comment upon. Schedule 6 includes Czechoslovakia and Namibia as countries eligible for developing country status and, therefore, should have access to the 5 per cent preferential duty margin. Neither of these countries can be described as major trading partners, I have to confess. At this time we do not oppose these amendments. But we have to express some doubts about the developing country status of these countries. We will not oppose it because, as tariffs phase down, the preference, the advantage that that preference gives phases down with it. But if we keep on extending developing country status to more and more countries it could certainly undermine tariff assistance for some industries overnight and thus negate the whole point of phased, predictable tariff reductions which we have repeatedly said are the way to deal with this problem.

There may well be other grounds for extending developing country status to these countries, and I am not suggesting that we should not encourage trading links with them. But I query whether developing country status is the best way of achieving this from their point of view or from ours, especially when, as I said, tariffs are coming down in Australia. Quite frankly, the best thing we can do for `developing countries' is to trade with them, and the quicker, in a predictable and transparent way, that that protection comes down, the more benefit it will be to developing countries throughout the world. I think the work has been done, if my memory serves me right, to show that $1 of trade is worth $2 of aid, and that if we were to get rid of all of these protective mechanisms around the world, that would be more beneficial to the developing countries than all of the aid provided by the Western world at the present time.

As I indicated at the outset, the coalition does not oppose this Bill, but we would like the Government's responses and assurances on the particular issues that I have raised. I would ask the Government to get its act together on industry policy and to provide the direction and policy that is so urgently needed.

On the subject of the Excise Tariff Amendment Bill 1991, the Bill amends the Excise Tariff Act 1921 to incorporate two tariff proposals tabled in the Parliament earlier this year. The proposals provide for an increase in excise duty payable on naturally occurring liquefied petroleum gas and a reduction in the excise duty on gasoline used in aircraft. On the first, the excise duty paid on LPG is adjusted each year on 1 April and 1 October in accordance with excise policy announced in April 1980. The excise rate will increase from $5.78 per kilolitre to $35.94 per kilolitre for the period from 1 April 1991 to 1 July 1991, with the significant increase apparently reflecting higher prices resulting from the Gulf war. From 1 July 1991, the excise on LPG was replaced by a resource rent tax under the Petroleum Resource Rent Tax Amendment Act 1991. Consequently, this system by which the excise is adjusted each six months has now concluded.

In regard to the gasoline for aircraft, the excise duty payable will fall, with effect from 1 July 1991, following the Civil Aviation Authority's decision to remove rescue and fire fighting services from secondary capital city airports. The reduction in the excise rate reflects the withdrawal of that part of excise revenue directed towards the provision of these services, and is mirrored by a reduction in duty on imports of gasoline for aircraft contained in the Customs Tariff Amendment Bill, which I mentioned earlier. The decision to remove the rescue and fire fighting services was taken following a review by the Civil Aviation Authority of existing arrangements, and was supported by airport users and the aviation industry. The coalition does not oppose this Bill.