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Thursday, 25 November 1999
Page: 12757


Mr HATTON (10:26 AM) —As indicated by the shadow minister, we will be supporting the Customs Tariff Amendment (Tradex) Bill 1999 [No. 2] today. We indicated that we supported the bill after its introduction in October 1999. We also indicated that we would support the bill after its introduction in June 1999. The Parliamentary Secretary to the Minister for Industry, Science and Resources, in his second reading speech in October 1999 was efficient, because there is only one change in his second reading speech from October back to June. Instead of this bill and two associated bills, in October we found that it was this bill and three associated bills. It may have been more efficient if he had just said that he was giving the second reading speech as it was—understand all the rest of it—and change the two associated bills to three associated bills.

We understand, based on the assessment of the shadow minister and the Parliamentary Library, that the reason we have gone from two to three associated bills is that there was a problem with the drafting of the first lot in regard to section 55 of the Constitution and that what we have before us now is actually in conformity, because we have a separate imposition of tax bill, a separate customs duty bill, a separate excise bill, and they are involved in this cognate debate.

We have three bills, not two, and we are dealing with them all cognately. Hopefully, this will not be up for challenge by anyone in that regard. But it is up for challenge on a number of other grounds. This goes back to the Prime Minister's `Investing for Growth' speech. In that speech, he indicated that, after review, it was passingly conceded that the Labor government programs were to ensure that the Manufacturing in Bond and the old Texco systems gave an advantage to Australian manufacturers in terms of customs duty forgone and an ability to bring in product for re-export from Australia. A critical part of that was that there should be a manufacturing process in Australia, and that manufacturing process was to add value to those products for re-export. A subsidiary thing associated was that you could import some materials, not go through a manufacturing process and re-export them.

The Prime Minister has tied these changes—in `Investing for Growth', and somewhere in what I have read they have been tied, either by the Parliamentary Secretary to the Minister for Industry, Science and Resources or someone else—to the GST process. The argument for their being tied is that these are a set of changes to make Australia more competitive, so when they looked at `Investing for Growth' they looked at a series of different areas which needed changing. They argued that in our treatment of customs and the approaches of customs to both Texco and to the Manufacturing in Bond area—and the changes in relation to that have been dealt with previously—things needed changing. The Prime Minister argued that there would be greater competitiveness for Australian business because of the introduction of a goods and services tax.

I would point out that there is a bit of a problem here in the government arguing that we will increase our competitiveness by having these changes—with their approach to how business should operate with regard to customs duties, and the imposition that has been put in place with regard to the GST. In fact, it is anomalous, because the approaches go in two entirely different directions. Here, in these bills, we are told that the old Texco bills had a bit of a problem, that they had to be reversed; that we had a shortfall of $100 million in investment that was not being taken up; and that, after review, it is expected that these changes will mean that it will be a lot easier for business to access these programs and we will get more manufacturing or remanufactured output and export for Australia.

The approach devised by the department and announced by the parliamentary secretary is that the regulatory scheme that we had in the past should be turned on its head. And how should it be turned on its head? It is the same, by the way, in the explanation in October as it was in June: we should adopt an exemption based system, reducing compliance costs for users. That should involve a more light-handed approach to access and compliance requirements, and stronger reliance on self-assessment and periodic settlement.

As far as I know, with the value added tax that this government is introducing, there is actually a reversal of that. There is not much self-assessment for business in the GST; there is not much of a change to a more light-handed approach to access and compliance requirements—in fact, the reverse is the case. So on the one hand, in these bills, what we are being offered is a change to self-assessment and, if you break the law, in the end we will come and audit you and get you, maybe, and that is supposed to improve our situation. On the other hand, with the value added tax—the most complex form of a goods and services tax that one can imagine—the work that business will have to do because of the massive amount of regulation that is produced by this government will be immense. So their task will be much harder in that regard and it will be more difficult for them to pursue their business practices, although this is supposed to make it easy for them on the other end.

They have also relaxed some regulatory arrangements relating to eligibility, registration and ongoing compliance costs. The parliamentary secretary has argued that in doing so, because the criteria will be well spelt out and so on, $100 million more will be able to be accessed by business. It is very interesting if that is the case. We were not told the reason for those changes—and I hope that in his summing up we might finally get the reason, if it was the constitutional drafting problem that was the cause for these changes and for the bills being whipped out and then brought back to us now. But we also have not been given an explanation as to whether or not there really would be $100 million worth of extra manufacturing involved here in extra access, because we have only been told that there was only a 50 per cent take-up of the $200 million program.

What does the government actually say in its financial impact statement? It says that it has planned for an additional $30 million as revenue forgone due to an expected increase in the utilisation rate. So the parliamentary secretary is saying, `Well, it is 50 per cent; there was $100 million of a $200 million program that had not been taken up.' But in its actual financial statement it says, `Well, even with these changes, we only expect to get another $30 million.' One would hope that, for the scheme to work well and effectively, it would be pushed in such a way that the other $70 million would be taken into account and that that would in fact be the target. But the expectation here is only that $30 million.

It is important that we reach those targets because it is important that Australian manufacturing—and the core idea here is that Australia could be a better manufacturing hub for the region—should be allowed to develop, and develop fully and strongly. I note particularly in regard to this that this has been tied in with the Manufacturing in Bond approach. The member for Newcastle has argued for a very long time—in committee and also in the House—for a much broader approach to Manufacturing in Bond. He has argued that it should not just be in designated places, but that countrywide we could have a flexible, innovative approach to Manufacturing in Bond that would give us a greater advantage in terms of our exports.

This set of proposals, taken off the board and put back without explanation so that we have had to figure out what the explanation was, is aimed at turning the regulatory scheme on its head. One wonders whether in the future a coalition government will come back to try to turn the regulatory scheme of the goods and services tax on its head. Where the regulatory imposition has been taken off in this circumstance, in the goods and services area it has been heavily imposed on small and medium businesses in Australia with no prospect whatsoever that that heavy-handed regime, that aggressive regime, that regime that creates such an impost for Australian businesses, would be modified.

As I said, yesterday there was another path opened to the government. If they were determined upon a goods and services tax they could have chosen a less heavily regulated model. They could have chosen not to run with the VAT—the most complex, the most difficult, the most time consuming approach to a goods and services tax; instead they could have done it with the retail sales tax and a very strong audit mechanism. They have not chosen to do that, they have chosen to impose the most paper intensive, and these days the most electronic intensive, process of regulation on Australian businesses.

So one would hope that if there is a benefit—and not the $30 million extra but $100 million extra benefit to Australian business from these changes—it will not be cut across by the complexity of the changes that have been brought in by the GST bills, which are in the mind of the Prime Minister and in the mind of the government, corollaries to this because they are supposed to be about increasing business competitiveness.

In that regard I will mention one other thing. At the time that he released `Investing for Growth,' the Prime Minister realised that he had to actually change a position that he had adopted previously. When they came to government, this coalition government knocked off the export market development grants. They did not see any purpose in going ahead with that. They also knocked off the DIFF scheme. They wanted to save money wherever they could. But in doing that they prejudiced the ability of Australian manufacturers to build towards Australia really becoming a hub of business in the Asia-Pacific region.

At least in `Investing for Growth,' the Prime Minister took a step back and conceded that the former Labor government had been right. He conceded that the Export Market Development Grants scheme should be extended to 2001-2002, and that an extra $300 million should be expended in doing that. What he did not do was reintroduce the DIFF scheme. As a result, our business competitiveness, our ability to deal within the region, has been hampered.

Here I would note that the coalition government, in putting forward these proposals in June, and again in October—and we have finally got to debate them now—has the support of the Labor opposition, and that support is not conditional. We hope that this will work. We hope that the changes in regulation will work and have an effect.

But there is a great danger in a move to industry regulating itself, in that the audit mechanisms adopted by the government may not be fully pursued. Those people who see the regulations being put back in their hands rather than in government hands as a chance to import goods into Australia and then re-export them, skirting the controls that were there previously, must be pursued and prosecuted so that this scheme can work in the way it should.

The Prime Minister was asked, in relation to the `Investing for Growth' statement, about support for government programs. He indicated that while we were in government we had had support from the Democrats. He said:

. . . in government the Labor Party always has a de facto Coalition arrangement with the Australian Democrats.

How times change. One could easily say that that is the case and has been the case since the GST was supported by the Australian Democrats so heavily and so readily.

I will finish on this point. He said:

. . . the reality is that they are a centre/left group within the Australian political firmament—

so it is interesting to see that the conjunction is so close—

. . . they are further to the left of the Labor Party on most economic issues and they support the Labor Party on social issues . . .

He then said:

When we were in opposition we were very responsible and supported most of the Labor Party's economic reform so that they were able to do a lot better with their program.

That is stretching the truth, and it is stretching the truth very strongly. A great deal of Labor's economic program was fought against, tooth and nail, by this government when it was in opposition. When it is in government, it likes to say that it supported most of that program. It battled against most of the major changes that we made. Its tooth and claw battling to pull those pieces of legislation apart, to stifle them and to stymie them has seen its final resolution since 1996, when one after another the major initiatives taken by the ALP have been clawed back, none more so than in the superannuation area. The government has stifled that change, refusing to go on with the major changes by Labor to increase the input into super from nine per cent to 15 per cent. This government fought against it the whole way, as it fought against a whole range of Labor changes.

In propaganda terms, the government says that it is at one with us and supported us so greatly. The memory of a lot of people may be short but my memory is not. From 2 January 1985 I have watched this whole process very closely, in my previous work and now here. It is not true that this government was totally supportive or almost entirely supportive. It supported us, when it chose to do so, only for what it saw as its political advantage.

We support these bills. In doing so, now that they are in conformity with section 55 of the Constitution, we hope that the move to self-regulation and self-assessment does not open up a hole for this set of changes to be exploited. We hope that the government audit process will not be just put on a shelf but will be pursued energetically to ensure that we get another hundred million dollars worth of credit to Australian manufacturers, that we really do become a stronger hub within the Asia-Pacific region and that Australian businesses can become stronger as a result of the proposed legislation.