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Tuesday, 16 October 1984
Page: 1779

Senator BUTTON (Minister for Industry and Commerce)(8.00) —The Senate is debating cognately three tariff Bills. In the course of this afternoon and this morning several honourable senators contributed to the debate, and I will make some brief comments about remarks made in the course of the debate. Senator Lewis made a thoughtful speech about beer drinking and particularly the way in which the excise on beer should be structured. He suggested a sliding scale of excise duty rather than the present grouped scale. I am sure that at an appropriate time that could be taken into account. He also raised the question of developing country preferences and referred particularly to a company in Bendigo of which he has some knowledge and to the import competition for that company's products from the People's Republic of China. He asked me to tell him what the Industries Assistance Commission thought about this. I say with great respect to him that I think there is some confusion regarding the role of the IAC and dumping complaints, which are not initially at least in the hands of the IAC, and how countervailing duties are assessed in the case of countries such as the People's Republic of China. He could have widened that question to include what are sometimes called the demand economies. The practice is to assess the value of goods produced in such countries by using a third country as a check, as it were, for comparative purposes. That is the best method available to government, particularly the Customs Service, to do that. If Senator Lewis wants to follow up that matter, I am sure that can be done.

Senator MacGibbon made some comments, particularly about the coal export levy, and I think quite fairly pointed out that government charges, whether they be Federal or State-particularly State charges in the case of Queensland-bear heavily on the profitability of such an industry and need to be subject to constant examination. The only thing that aroused my ire, indeed my interest, in what Senator MacGibbon had to say was his attack on the coal export levy, which was introduced by the late Rex Connor in the time of the Labor Government from 1972 to 1975. He characterised that levy as some sort of socialist plot. All I can say to Senator MacGibbon is that there were seven years of Liberal government when the socialist plot of Rex Connor might have been denounced or indeed when the policy might have been changed-and it was not. I refer him to some of the statements made over the years by Liberal-National Party government spokesmen on this issue. Senator Chaney, when referring quite recently to the coal export levy, said:

We will abolish the coal levy in our first year of office.

I remind Senator MacGibbon and other Opposition senators that precisely the same promise was made in 1975. In seven years of office that promise was not carried out. Between 1976 and 1978 there were a number of versions, leading finally in 1981 to a statement by the discredited former Treasurer that the phasing out of that policy was 'no longer appropriate'.

Senator Peter Rae —We didn't break over 120 promises in our first 18 months.

Senator BUTTON —If the honourable senator wants me to add them up I will some time, but I am referring to the coal export levy at the moment which is the subject of debate. It may be painful for me to quote from what the discredited former Treasurer said; nonetheless the coal export levy is the topic we are dealing with and that is the one I wish to concentrate on. In the 1976 Budget Speech it was stated:

It is the intention of the Government to remove this particular levy . . . but for budgetary reasons . . . it is not possible to recover it in one stroke.

It will, however, be reduced immediately, in what the Government regards as a first step towards completely phasing out this particular tax within three years .

In the 1977 Budget Speech the then Treasurer stated:

I re-affirm the Government's intention to remove the remaining duty next year . . .

In the 1978 Budget Speech the then Treasurer stated:

The Government has decided to delay the phasing out of the remaining duty on export coal.

And so it goes on. I have referred to what the then Treasurer said in the 1981 Budget Speech, but let me just draw attention to the coal export duty receipts. In 1976, the first year of the Fraser Government, export duty receipts totalled $121m; by 1982-83 they were $66m. I think that is somewhere in the order of the figure at the moment. But I only mention these things because it is sometimes said: 'Let he who is without sin, cast the first stone'. I make no reference to the former Secretary of the Department of the Treasury when I say that. I simply say that there is not much point in Senator MacGibbon giving us a lecture here about this Budget when one looks at the record of the previous Government.

Senator MacGibbon referred to one other matter which is not particularly relevant to this debate. He suggested that this Government had imposed a 2 per cent revenue duty on the aircraft industry and a 20 per cent sales tax on this industry. Neither of those things is true; they were both imposed by the Fraser Government. They are the only matters which I wish to deal with in respect of the speech made by Senator MacGibbon.

Senator Peter Rae —Do you accept the rest of his comments?

Senator BUTTON —No, I do not, but I do not waste the Senate's time, as some people do, in dealing with irrelevant issues. Senator Rae has moved an amendment to the second reading motion in regard to the Customs Tariff Amendment Bill (No. 3). I just want to put one or two matters on the record because that amendment is particularly directed to the question of some dissatisfaction, legitimate in some ways, over the issue of the tariff imposed on hot stamping machines. The Customs Tariff Amendment Bill covers a number of matters, including tariff changes arising from the Budget and decisions on Industry Assistance Commission reports. However, the Opposition has directed its attention in the amendment-I understand the reasons why-to the arrangements being made for hot stamping machines.

I think it is important that honourable senators have a clear understanding of what is being proposed in this legislation in respect of these machines. The action being taken is in accordance with a long standing approach to such problems-I am not necessarily saying it is a correct approach-by successive governments and occurs where a change in the tariff classification of goods has the effect of removing the protection previously understood to have been received by Australian industry. These changes in classification generally arise from decisions of the Administrative Appeals Tribunal or the courts, which I emphasise are not considering the rates of duty payable and, hence, the industry assistance aspects. They are examining the characteristics of the goods concerned and ruling on the classification in terms of the tariff description which accords with an international convention.

The effect of a changed classification can be the loss of tariff protection previously enjoyed by a local industry following an earlier Government decision on a report by the Industries Assistance Commission or the Temporary Assistance Authority. On the understanding that it receives that level of protection commercial decisions are often made involving investments in capital equipment. It has been the practice of successive governments to take measures to restore such protection where it is changed by classification decisions. Examples of this are: Rubberised fabric in 1978; boys clothing in 1978; coins and medallions in 1982; polyurethane systems in 1983; and temperature control units also in 1983.

I should emphasise that action to achieve this purpose is not taken by Customs quietly behind closed doors. It is taken very publicly. It is initially taken by inclusion in a Customs tariff proposal introduced into the House of Representatives or by a Gazette notice when Parliament is not sitting. It is then confirmed into law through Bills such as the present one. It is therefore open to Parliament to reject the action proposed, but this raises the question of alternative action. The alternative is for the Government, following the classification decision resulting in reduced protection, to take no action at all. The affected industry can either live with the consequences, which may mean a cessation of production of the goods concerned, or it may seek reinstatement of protection through the IAC or TAA processes. This latter course must involve delays in time, considerable costs to many interests, not just the industry concerned, and a period of uncertainty. I believe it is because the latter course has been seen to be unreasonable that governments have chosen the course reflected in the Bill before us today.

There has been some public comment about the case of hot stamping machines coming, I suggest, from importing interests, quite legitimately. There is, however, a local producer, Milford-Astor Pty Ltd, which on the basis of a Customs classification made in 1981 understood that these machines were protected with a rate of 20 per cent, which has recently been phased down to 15 per cent. Customs considered that the machines were included in the tariff item covered by the IAC report on miscellaneous industrial machinery in 1978, which led to the 20 per cent rate of duty. The fact that the subsequent Administrative Appeals Tribunal decision has the effect of saying that the machines were not covered by that inquiry, does not change the fact that the administering department believed it did. Certainly since 1981 Customs have operated on that basis. As such this case does not differ from those I referred to earlier. It conforms with the longstanding practice. Milford Astor is a relatively small company engaged in producing what it regards as high technology machines. It currently employs about 40 people and has made significant investment in export marketing of its machines. The company has informed me that any reduction in the tariff operative before the Administrative Appeals Tribunal decision would: Firstly, increase import competition; secondly, reduce the batch size in production; thirdly, raise unit costs; and fourthly, reduce competitiveness on export markets.

For the reasons I have outlined the Government rejects any claim that there has been improper action in the case of hot stamping machines. The coalition parties took similar action when they were in government. I am, however, aware that the practice involved in such cases has been questioned, as I said before, quite legitimately in some quarters, and I can inform the Senate that it is my intention to ensure that the mechanisms involved are reviewed. The purpose of such a review would be to see whether other courses are available but which do not involve the costs and uncertainties for industry that I referred to earlier.

I read that matter into the Hansard because it is a statement of practice and policy which has been in existence for some time. I want to make it clear that as far as the Government is concerned, because of the queries that have been raised, it is quite happy to have that practice reviewed. I am prepared to undertake that the Department of Industry and Commerce will conduct such a review and report early next year to the Parliament the result of any such review. It was suggested in Senator Rae's amendment initially that it might be desirable to send the matter to the Senate Standing Committee on Industry and Trade. We would not be apprehensive about that. As I understand Senator Rae's amendment we feel that in the interests of public exposure of the issues the course which I have suggested as an alternative may be more expeditious, less time consuming and productive of the desired degree of public exposure which the issue would certainly have when the findings of such a review were reported back to the Senate. Because I have suggested that course, we oppose the amendment which has been moved by Senator Rae. The course of action which I have just outlined publicly has been privately drawn to the attention of Senator Rae and Senator Jack Evans, the Australian Democrats' spokesman on these matters.

I return quickly to the coal export levy, which created some comment in the course of the debate. From the Government's point of view the abolition of the coal export duty would have been consistent with the Government's overall approach to rationalising taxes and charges on the coal industry, particularly if it had occurred through the introduction of a resource rent tax. However, such a move would require support from State governments which, as I think Senator MacGibbon pointed out, has not at this stage been forthcoming. Under the circumstances the Government was persuaded that the duty was having a particularly adverse impact on mines dependent upon underground operations to maintain coal quality. The Government does not consider that the same case exists for those producers who remain subject to the duty. Their existence is not under any threat from the imposition of the duty. Nonetheless, having said that, I take on board some of the comments which have been made by way of general criticism of Government charges on industry. Those matters are in the mind of the Government and are of concern. I thank honourable senators for their general support of the legislation and for the comments which have been made. I commend the three Bills to the Senate.