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Thursday, 28 May 1987
Page: 3474

Mr BRAITHWAITE(10.47) —I cannot let the opportunity pass without replying to some of the comments that have just been made by the previous speaker, the honourable member for Stirling (Mr Ronald Edwards). He spoke about what this Government had done to try to ensure the success of market performance for our primary industries and primary producers. I remind those listeners who might have been taken in by such talk of what this Labor Government has done for the primary producers and the cost of production. In the Customs Tariff Amendment Bill, the Excise Tariff Amendment Bill and the Customs (Valuation) Amendment Bill we are addressing the price of fuel. A promise in March 1983 to reduce the price of fuel by 3c a litre has eventuated in a 13c a litre increase. That is just one aspect. I could also mention the wage system in Australia and the legislation that was introduced into the House and withdrawn for very good reasons; that is, to take it out of the way for an election. I tell the Minister for Science (Mr Barry Jones), who is at the table, that it will not be taken away; it will be an election issue. It involved a system being cemented into place to the detriment of every primary producer, small business and big business in Australia. I subtly remind the honourable member for Stirling that there are such things as fringe benefits tax and capital gains tax, all of which add substantially to the cost of production for those primary producers in respect of whom this Government affects a type of concern for the market conditions operating throughout the world. The honourable member talked of the effects of the tariff, subsidies and bounties in other countries. I will address that matter later on.

The three Bills being debated today are the Customs Tariff Amendment Bill 1987, the Excise Tariff Amendment Bill 1987 and the Customs (Valuation) Amendment Bill 1987. I was more than happy to add my name as a seconder to the amendment moved by the honourable member for Ryan (Mr Moore). The National Party of Australia is concerned about particular aspects of Government policy with respect to the first two Bills I mentioned and will use this debate to express those concerns. The Customs Tariff Bill contains 12 schedules enacting a range of changes to the Customs Tariff Act 1982 covering nearly all aspects of government trade, sectoral and industry policy. A large part of this Bill adjusts tariff rates on imported petroleum products to match variations in the excise rates applicable to equivalent local products as a result of the import parity prices. It also implements a large part of the recommendations of the Industries Assistance Commission on the chemical and plastics industries, as well other IAC recommendations. Other amendments relate to the closer economic relations agreement, the textiles, clothing and footwear industries and the car plan.

The changes in excise and customs duties in certain refined petroleum products are designed to offset exactly the changes in revenue from crude oil excise and royalty. I do not wish at this stage to deal with the legislation in relation to tariff rates on oil imports but, as I have pointed out previously, there is an inadequacy in the Government's revenue policies with respect to the Australian oil industry as expressed in the Excise Tariff Amendment Bill.

I refer now to the car plan. Among a number of changes associated with the Government's sectoral policy for the car industry, the base quota validity period for all new motor vehicles is extended to 18 months, allowing a three-months leeway before and after the calendar year. A general tariff rate of 60.5 per cent, 3 per cent above the base quota rate, is introduced for vehicles imported in each of four periods of 18 months under the multiple period tender scheme. The developing countries margin for new quota allocations is brought into line with Australia's new system of tariff preferences, those countries being issued with a margin of 5 per cent instead of 7.5 per cent.

The rates of duty earlier phased down on citrus fruit juices will be reintroduced until 9 December 1987 as a result of the IAC interim report on citrus fruit, after which the rates will again phase down. The National Party welcomes this IAC report on citrus industry support. This assistance for the industry should increase revenue by $235,000 in 1987. My colleague the honourable member for Hinkler (Mr Conquest) will debate this aspect when he speaks later.

I refer now to the closer economic relations with New Zealand and the forum island preferences. Under the provisions of CER, duty free entry is granted to child safety and booster seats and ball-point pens of New Zealand origin. It is interesting to note, when referring to the theme of buying `true blue' Australian products, that about six months ago one of these ball-point pens was placed in my hand. I understand that it was a Bic pen, which was commonly available in Australia. However, the Department of Trade and Resources, which is promoting this program, made available on its counter New Zealand Bic pens with which people could write an order for true blue Australian products. I wonder what improvements this aspect of the legislation will make, given that the Department of Trade and Resources can get all the ball-point pens of New Zealand origin that it requires. That was a rather interesting point. The amendments provide for phased reduction to duty free on certain rubber goods of New Zealand origin following mutual determination under CER. Not only has the National Party always supported CER but it was Doug Anthony, its great supporter, when Minister for Trade, who implemented that program. The duty reductions under CER will result in a modest decrease in revenue.

Other amendments concerning passionfruit products complete the implementation of the new forum island countries preference scheme, allowing for duty free entry of passionfruit pulp under the terms of the arrangement. Although there is no immediate risk to Australia's passionfruit industry from imports, the National Party is most concerned that the Government closely monitor the duty free entry of passionfruit pulp under the forum island countries preference scheme to identify any severe effects on the local industry. If the Minister can give those assurances, we will be more than happy.

I refer now to clothing and footwear. A series of amendments made in the context of current textiles, clothing and footwear sectoral policy cover variations in developing country exclusions, tender quota dates of duty, extension of the 1986 quota allocations, phased duty reductions under CER and changes to avoid large variations in duty rates on footwear from New Zealand and developing countries as a result of currency fluctuations. In the context of the Government's decision on the textiles, clothing and footwear industries, the tariff rate on knitted towelling and towels increases from 35 per cent to 60 per cent and the tariff rate for interior textile blinds increases from 2 per cent to 25 per cent. These changes are designed to remove anomalies that permit these goods to enter at rates lower than those that apply to substitute products.

Mr Hand —I am interested in what you are saying.

Mr BRAITHWAITE —This is certainly rivetting stuff, and it is good to know that the honourable member from the left wing is listening. It is good stuff. It is encouraging the attendance of members in the chamber, which the Minister at the table has long sought, to hear these, as I say, rivetting explanations.

Mr Hand —What is wrong with the TCF package? What is wrong with it? Tell us.

Mr BRAITHWAITE —I am just trying to assist the Minister at the table. I am not saying what is wrong with it; I am saying what the Bill does. It might be of interest to the honourable member for him to listen for a while instead of interjecting. Another amendment reduces the general tariff rate on knitted fabrics laminated with plastic from 25 per cent to 2 per cent. It should be placed on record that the National Party of Australia broadly welcomes the reduction of assistance with respect to textiles, clothing and footwear. The decisions of relation to those industries should result in a net increase of approximately $2.1m in a full year.

I now deal with chemicals and plastics. The main part of the Government's decision on the IAC report on the chemicals and plastics industries is also implemented and provides the first step in the phasing in of the long term rates. Most tariff rates above 25 per cent fall to 20 per cent, while rates on some basic chemicals are reduced in the first phase to 20 per cent. Other provisions will permit the duty free entry of caustic soda and certain films and plates for specific purposes.

Other changes give effect to the Government's decision on the IAC report into the chemicals and plastics industries, allowing for the duty free entry of fertiliser grade phosphoric acid, and for the import of high density polyethylene resin for use in the extrusion of film for bag production, at a reduced tariff rate of 20 per cent to December 1987, after which time the applicable rate will become 20 per cent. It has been suggested that the eventual tariff reduction in this area to 10 per cent is too severe, particularly when one takes into account the 5 per cent developing country tariff preference. Chemical companies can set up quickly in developing countries and could thus qualify for 5 per cent tariff entry, making Australian producers vulnerable. The National Party is also concerned to see that Australian industries will be adequately protected from dumping in forthcoming anti-dumping legislation. We would again appreciate assurances from the Government that these concerns will be taken up, the decisions to reduce protection to the chemicals and plastics industries are likely to diminish Customs duties by $10m in the next financial year.

I would like to mention the effect of this whole tariff situation as far as our industries are concerned, particularly when tariffs are used as a protective measure. Some people would feel that they provide a crutch for industries in Australia which prevents them from modernising, expanding and adopting technology. I refer to an article in the Australian of 12 May. It was reported that ICI Australia Ltd was prepared to pay $1m to end at least two decades of bad work practices at its Botany complex. I mention this because the million dollar payment was connected with work practices that had developed under a protection scheme offered because of high tariffs which protected the company from the influences of the market. The million dollars was a one-off payment to about 800 workers.

The company believes it will save nearly $2m a year in on-going costs which were caused by what the company describes as overtime rorts. For instance, workers will no longer be able to claim for overtime unless they actually work it. The example was given that employees who worked as little as 20 minutes overtime were entitled to be paid for 4 hours. The company came to this arrangement in order to save $900,000 lost because of bad practices. The company was said to be pleased to get rid of on-going, costly and dishonest practices. I think that is a fair criticism of tariffs, duties and everything else of that nature which protect Australian industries from becoming efficient. I think that that says it all. It is interesting that ICI, which will participate in this new arrangement, has already come to the conclusion that it must front up to these work practices which were brought about by the implementation of some of these duties.

I refer to electronic goods. Following the IAC report on the power electronics industry a 20 per cent tariff is imposed on most power electronic goods under reference. Of course, there is a lot in this Bill in connection with this area. I do not believe we should spend too much time debating it now because the IAC report covers it.

I want to deal particularly with the Excise Tariff Amendment Bill, which amends the Excise Tariff Act 1921 to enact alterations that have occurred since October 1981 to the excise tariff on certain refined petroleum products and naturally occurring liquefied petroleum gas. The alterations to the excise on petroleum products have been made as a consequence of the policy since 1 March 1986 of fully offsetting changes in revenue from crude oil excise and royalty by corresponding across the board changes in excise duty on petroleum products. LPG excise is reduced progressively from $50.77c per kilolitre at 1 October 1986 to $5.02c per kilolitre on 1 May 1987.

A reduction is effected in the top marginal rate of the excise duty on old oil from 87 per cent to 80 per cent of the Bass Strait import parity price to offset the substantial decline in world crude oil prices that occurred around August 1986. The decreases in petroleum product excise rates effective from 16 October, 1986, 17 January, 1987 and 14 February, 1987 are expected to result in decreases in revenue of about $85m, $5m and $176m respectively. The increase in excise rates effective from 14 March, 1987 is expected to result in a revenue increase of $30m in 1986-87. These changes are expected to offset the changes in revenue from crude oil excise and royalty. Alterations in LPG excise are expected to reduce revenue by about $50m in 1986-87. The July 1986 reduction in the top marginal rate of excise on old oil from 87 per cent to 80 per cent is expected to reduce revenues by about $67m in 1986-87. But this will be outweighed by a revenue gain of about $300m from increased Bass Strait crude production since that time.

In commenting on government policy in this area I can do no better than refer to a statement made recently by the Executive Director of the Australian Petroleum Exploration Association, Mr Keith Orchison. He pointed out that the petroleum industry is the most heavily taxed group in Australia, contributing 12 per cent of the Government's revenue in the last decade. In the last 10 years the petroleum industry has paid more than $50 billion in taxes to Federal and State governments. Of this, petroleum producers paid $34 billion, refiners and markets the remaining $16 billion. The Federal Government received 96 per cent of this $50 billion. That is not a bad take off. This has been picked up in the form of excise on crude oil and LPG production, royalties on offshore production and company tax.

Mr Orchison said that the imposition of discriminatory taxes, applying only to the petroleum industry, has resulted in producers paying a top marginal tax rate of 91 per cent on old oil production. Even on new oil production the top marginal rate of taxation under either the excise or resource rent tax systems is close to 70 per cent. Again I can do no better than echo Mr Orchison's comments that the nation would be best served by removing secondary taxation, enabling it to achieve the optimum exploration level need for Australia's oil self-sufficiency.

The other proposal in the Excise Tariff Amendment Bill is a mechanism to collect a duty differential on certain manufactured goods, which incorporate an imported product upon which customs duties have not been paid. The collection of duty differentials on certain manufactured goods is estimated to yield $200,000 in a full year.

I refer again to the fuel prices. The famous promise of the Labor Government in relation to fuel prices was that a 3c a litre reduction would occur after the March 1983 election. In this Bill what we have seen, far from a 3c decrease, is a 13c a litre increase. This is why the cost of fuel is channelling so much into the coffers of the Federal Government. This Government does not have a great record on promises. One was made as little as two months ago to the effect that there will not be an early election, discounting of course an election on 11 July in favour of one at the end of the year and possibly as late as March next year. There is a huge list of broken promises, starting with fuel pricing and ending with the early election which the Government has now announced. I refer to the $4 billion expenditure cuts announced in the May mini-budget and its basic philosophy of selling off Australian assets in order to meet the expenditure commitments which this Government has built up over time.

Finally, I raise the problem of retail fuel prices. It is commonly known that around Australia at the moment there are two wholesale levels-a wholesale level which is available at a lesser price to those freeholding sites, or what we might call the jobbers, and a wholesale level which is available to company leasehold outlets. In my own city of Mackay in the last six months there has been a severe discount war. The freeholders have been able to hold a certain price, because of the reduced wholesale prices available to them through the various schemes offered, whereas the leaseholders have had to bear the full wholesale price, which is sometimes discounted, and try to make a profit. What is happening in Mackay is happening all over Australia. Leaseholders are being forced to the wall by trying to retail fuel at a 2c or 3c a litre margin when the cost to their establishment is often 4c to 5c a litre. I believe that there must be something in the prices surveillance area at which the Minister could look in order to solve the problem.

The National Party does not oppose these Bills. We use the debate on them to point out once again the operations of this discredited Government in making promises which it does not fulfil and which, quite often, as in the case of fuel, it reverses.