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Wednesday, 20 April 1966

Mr HOWSON (Fawkner) (Minister for Air) .- I move-

That the Bill bc now read a second time.

The Bill now before this Chamber proposes amendments to the Customs Tariff 1966 which came into operation on 14th February 1966. The Bill comprises . 13 schedules dealing with the following subjects taken schedule by schedule.

The First Schedule deals, in part, with tariff amendments based on recommendations arising out of reports by the Tariff Board on -

Woven cotton fabrics, bed linen, etc..

Woven man--made fibre fabrics,

Pigments and colour lakes,

Tinned iron and steel hoop, strip, plates and sheets, Magnetos and parts. and reports by the Special Advisory Authority on -

Continuous filament polyamide raw yarns, Woven fabrics of glass fibre, and Polyethylene monofil and rope.

On cotton fabrics and on man-made fibre fabrics the Board recommended uniform rates of duty - 55 per cent, ad valorem under the General Tariff and 471/2 per cent, under the Preferential Tariff. The General Tariff rate of 55 per cent, ad valorem as recommended by the Board will applyto cotton fabrics weighing more than 6 oz. per square yard. In the case of cotton sheeting, however, an upper limit of S0.25 per square yard has been imposed to avoid any overprotection in the very high priced field.

The Board's recommendation on manmade fibre fabrics would have far-reaching effects on the local industry. It would reverse the former pattern of protection which had been in force for some years and which encouraged local production of the lower value fabrics - for which long runs are available - and discouraged manufacture of the higher priced materials. As this might lead to a significant change in the industry's pattern of production, the Government was concerned that the industry should have time to make any adjustments it considered necessary without undue dislocation of production. Accordingly, it is proposed that the duties on man-made fibre fabrics will have a minimum rate of $0.20 per square yard. An upper limit of $0.50 per square yard is also proposed for all man-made fibre fabrics except some special fabrics used principally for furnishing. Although a reduction in the present duties on lower value fabrics and an increase in duties on the higher priced materials is proposed, the variations from the former levels of protection are somewhat less than those recommended by the Board. The industry, however, will again be reviewed by the Tariff Board within two years.

In the case of the Preferential Tariff Rate, international commitments prevent adoption of the uniform level of 471/2 per cent, ad valorem recommended by the Tariff Board. We have, of course, given undertakings under the General Agreement on Tariffs and Trade and under bilateral trade agreements which commit us on the preferential margins in our Tariff. As a consequence it is proposed that the Preferential Rate be 45 per cent, ad valorem on some cotton fabrics, 521/2 per cent, on other cotton fabrics and 55 per cent, less$0.021 per sq. yd. on man-made fibre fabrics, instead of the rate of 471 per cent, recommended by the Board.

On synthetic organic pigments, colour lakes and preparations based thereon, the Tariff Board has recommended duties of 45 per cent, ad valorem General Rate and 30 per cent, ad valorem Preferential Rate. These rates are incorporated in the Bill and are higher than the former ordinary protective duties, but lower than the combined ordinary and temporary protective duties. New protective ad valorem duties of 25 per cent. General and 15 per cent. Preferential will also apply to cadmium pigments.

On tinned iron and steel hoop, strip, plates and sheets, deferred duties of$1 1.50 per ton (General Rate) and $5.70 per ton (Preferential Rate) were to operate on and after 1st January 1966. Customs Tariff legislation requires, however, that the question whether deferred duties should or should not operate from the date of deferment shall be referred to the Tariff Board for inquiry and report. The deferred duties "on tinplate were first introduced in 1920, but have been progressively deferred after each subsequent inquiry and report by the Tariff Board.

In the latest report, the Board indicates that tinplate production, which commenced in Australia in 1957, is now an integral part of the iron and steel industry. The Board commends the local manufacturers on their ability to compete with imports without any increase in the present operative rates of 7i per cent, ad valorem, general rate, and free, preferential rate, and considers this ability to be of national importance. It recommends no change in these rates but cancellation of the deferred duties which, it points out, are no longer realistic in relation to current f.o.b. prices. The Bill reflects the Government's acceptance of the Board's recommendations. For flywheel type magnetos, which are now manufactured locally, new protective ad valorem duties of 42i per cent., general rate, and 25 per cent., preferential rate, have been introduced on the recommendation of the Tariff Board. Other types of magnetos no longer produced in Australia, however, will be subject to non-protective duties. The amendment on continuous filament polyamide raw yarns follows a report by the Special Advisory Authority. A temporary additional duty of 15 cents per lb. has been applied on yarns of this type. On woven fibreglass fabrics, other than insect screening and decorative furnishing fabrics, a temporary additional duty of 15 per cent, ad valorem has been imposed following a report by the Special Advisory Authority. In respect of polyethylene monofil. the Special Advisory Authority has recommended a temporary additional duty when the price is less than 40 cents per lb. f.o.b. This duty is incorporated in the Bill.

The remaining amendments contained in the First Schedule are of four origins. Firstly, they include increased duties on mica capacitors and on certain measuring, controlling and recording equipment. These changes were recommended in Tariff Board reports tabled in the Parliament some time ago, but their introduction was deferred pending international negotiations. Arising out of these and other international negotiations, the duties on electric type writers, safety razors and outboard engines have been reduced. For example, when the Tariff Board's report on internal combustion piston engines was tabled, the Government announced that a most favoured nation rate of 37i per cent, ad valorem was being adopted for outboard engines, but that it would be prepared to reduce the rate to 25 per cent, ad valorem, as recommended by the Board, depending on the result of international negotiations. This Bill leaves the preferential rate at its existing level of 15 per cent, ad valorem but reduces the general rate from 37i per cent, to 25 per cent, ad valorem. Secondly, the tariff alterations in the First Schedule remove certain preferences previously accorded to goods of Rhodesian origin. Thirdly, there are amendments in the First Schedule to improve the translation from the Customs Tariff 1933-1965 to the new tariff based on the Brussels Nomenclature which operated from 1st July 1965. The changes ensure continuation of the duty position existing prior to 1st July 1965.

The remaining alterations in the First Schedule - these, in fact amount to the great majority of changes in that Schedule - make amendments to the Customs Tariff to give effect to the duty changes involved in the New Zealand-Australia Free Trade Agreement concluded last year. The changes were first introduced to operate from 1st January 1966, under the Customs Tariff 1965, which Act was repealed on 13 th February 1966. The changes were again introduced by "Gazette" notice on 14th February 1966, by reason of decimal currency legislation, to amend the Customs Tariff 1966. In accordance with statute, the changes formally came before the Parliament by proposals introduced on 8th March and are incorporated in this Bill.

The rates of duty in the Schedule to the Bill differ from those set out in the Tariff Proposals in that they incorporate not only the initial reductions, but also the subsequent phasing out of duties over periods of either two or eight years. These subsequent duty reductions are indicated by the prefixes "NZ(A)", "NZ(B)" and " NZ (C) " that appear against the relevant rates in column 4. In accordance with the provisions set out in section 17a, the letters " NZ (A) " provide for further reductions in duty on 1st January 1968, 1st January 1970, 1st January 1972, and 1st January, 1974.

The Bill thus carries forward the 20 per cent, reduction which took effect from 1st January 1966, and provides for four similar reductions, which amount to 20 per cent, of the old rate or 25 per cent, of the new rate, to take effect at two-yearly intervals. In respect of the letters " NZ (B) ", section 17a provides that these goods become free of duty on 1st January 1968, while " NZ(C) " provides for 20 per cent, reductions commencing on 1st January 1967, and proceeding at two-yearly intervals until no duties remain. Reductions in duty under the New Zealand-Australia Free Trade Agreement also occur in paragraphs 21.07.49, 22.08.99 and 29.25.19. In these cases, because the rates of duty do not reduce below the excise rate imposed on similar Australian made goods, it has been necessary to spell out in column 4 the rates of duty that will operate on the changeover dates.

The Second to Ninth Schedules to this Bill amend the Second and Third Schedules to the principal Act and such changes are consequential on changes made to the First Schedule. The Tenth Schedule provides for a small amendment as recommended by the Tariff Board in its report on motor vehicles and removes a so called deletion allowance for the non-supply of certain parts on built up vehicles, which concession the Board found had not been much used. Also included in the Tenth Schedule are tariff changes arising out of the Tariff Board report on replacement motor vehicle engines and certain replacement parts. On replacement motor vehicle engines and engine parts, the Government has accepted the Tariff Board's recommendation for new ad valorem duties of 35 per cent., general rate, and 27i per cent., preferential rate, irrespective of horsepower ratings. Previously the duties were 42± per cent., general rate, and 25 per cent., preferential rale, but were subject to reduction according to horsepower rating.

The Eleventh Schedule gives effect to the Government's decisions following receipt of the Tariff Board's reports on peanuts, peanut oil and olive oil; and glass grains (ballotini). The first mentioned report makes recommendations on rapeseed oil and on mixed vegetable oils. These have been accepted by the Government and new protective rates of 40 cents per gallon, general, and . 267 cents per gallon, preferential, are being applied. These new duties are in line with those on other vegetable oils for which rapeseed and mixed oils are substitutes. The Government has accepted also the Board's suggestion that the long term needs of the local peanut, cottonseed and safflower oils industry be determined in a general review of all vegetable oils. The Board has already been asked to undertake this inquiry. For glass grains, also known as ballotini, which are used mainly in reflective signs and which are now being successfully produced in Australia, the Bill provides protective ad valorem duties of 35 per cent., general rate, and 25 per cent., preferential rate.

The balance of the amendments in the Eleventh Schedule are necessary to improve the translation from the Customs Tariff 1933-1965 to the new tariff based on the Brussels Nomenclature which operated from 1st July 1965. These changes ensure a continuation of the duty position existing prior to 1st July 1965. The Twelfth and Thirteenth Schedules provide for machinery changes to keep the Second and Third Schedules of the principal Act in step with the amendments made to the First Schedule by the Eleventh Schedule.

I now wish to refer to other aspects of this Bill which are of a more uncommon nature, Mr. Deputy Speaker. Normally, tariff bills provide merely for the enactment of rates of duty that have been introduced some months earlier by tariff proposals. However in this Bill there are amendments to the sections of the principal Act. Firstly there is clause 6, which provides the machinery for the phasing of the New Zealand rates. Next there are modifications to the definition of " deferred duties ". This is a drafting amendment and no change of substance is involved.

Clause 8 re-expresses the existing powers accorded the Minister in sections 24 and 25 of the principal Act. Section 24 confers on the Minister the power to make directions concerning parts for goods such that -

(a)   where the rate of duty on the whole of the goods is a fixed amount of money, say five dollars per machine, the Minister may determine the proportion of the five dollars that should be paid on part of the machine. This is ordinarily done by reference to the relative value of the part to the value of the whole; and (b) where the rate of duty on the whole goods is lower than the rate of duty on some or all of the component parts going to the making up of the whole, the Minister has power to reduce the duty on the parts to the level of the whole goods.

Section 25 confers on the Minister the power to make directions concerning the duty on goods imported as a composite unit or set in one of two ways; either as if -

(a)   the duty would be that payable on each article as if it had been imported separately; or

(b)   the duty would be that payable as if only the rate of duty applying to the article that gives the goods their essential character was applied to the goods.

Clause 9 inserts a new section 29a in the pri'ncipal Act and relates to concentrates, for example concentrated citrus juices. Powers to charge duty on concentrates are presently contained in section 141 in the Customs Act 1901-1965. However it is considered desirable that the powers should be part of the Customs Tariff rather than the Customs Act and a bill to amend the Customs Act concurrently will be introduced shortly. Section 29a provides for a concentrate to be treated as if it were a quantity equal to such quantity of the nonconcentrated goods into which it could be converted. These concentrations may be determined in one of two ways. They are either, first in accordance with a stipulated formula - for example, it could be stipulated that the quality of capsicine imported was to be determined on the basis that it was equal to 5i times its weight of dry chillies - or, secondly, as determined by the Collector at the time of importation of the goods having regard to the degree of concentration. Thus an orange juice concentrated five times would pay duty at five times its volume as imported on order made by the Minister.

The new legislation will clarify the legal position concerning the Minister's powers to make general directions as distinct from ad hoc directions and will require general directions to be published in the " Gazette ". Any such direction or the cancellation of such a direction that will result in an increase in the rate of duty will not be permitted to operate before the date the direction is published in the " Gazette ". Documentation to assist honorable members in their examination of the legislation is being distributed with copies of the Bill. I commend the Bill.

Debate (on motion by Dr. J. F, Cairns) adjourned.

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