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Monday, 30 March 1987
Page: 1749

(Question No. 5089)

Mr Beale asked the Minister representing the Minister for Industry, Technology and Commerce, upon notice, on 19 February 1987:

(1) What was the cost to the Government of the textiles yarn bounty in (a) 1986 and (b) what is the estimated cost in 1987.

(2) Are the bounty arrangements designed in such a way that extra income could reduce a company's bounty entitlements.

(3) Is he or is his Department aware of any cases where export opportunities have been rejected because the income earned from textile exports would reduce a manufacturer's bounty entitlement and, if so, which companies and which export orders have been involved.

Mr Barry Jones —The Minister for Industry, Technology and Commerce has provided the following answer to the honourable member's question:

(1) (a) Bounty payments for 1986 under the Bounties Textile Yarn Act 1981 totalled $90,856,100.

(b) While bounty payments can be calculated for calendar 1986, as monthly payment details are available, all forward estimates for the textiles bounties are made on a financial year basis. The Report on the Forward Estimates of Budget Outlays 1987-88 to 1989-90 indicates that the forward estimate for bounty payments to Australia's textile, clothing and footwear industries in 1986-87 is $68.7 million and in 1987-88 is $71.3 million.

(2) The current yarn bounty is paid on eligible factory costs for certain yarns which are used in the local textile and clothing sectors. These arrangements were not specifically designed to reduce entitlements when firms gained extra income. They were designed to provide certain levels of tariff equivalent assistance for production aimed at the domestic market.

Exported yarns are specifically excluded from bounty eligibility. Factory costs associated with export production are deducted from factory costs which form the basis of the calculation of bounty. As a result, the situation could reduce per unit overhead costs and hence, a company's bounty entitlement.

(3) The Minister and his Department are aware of cases where it has been suggested that some export opportunities have not been realised because of this effect on overhead costs. Accordingly, the Government, in its recent consideration of TCF assistance, decided that, from 1 July 1987, bounty eligibility will be extended to overheads associated with production of bountiable yarns for export.