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Thursday, 5 December 1985
Page: 3070

Senator BUTTON (Minister for Industry, Technology and Commerce)(8.18) —I thank honourable senators for their fulsome support of the Bounty (Commercial Motor Vehicles) Amendment Bill (No. 2) and the Subsidy (Grain Harvesters and Equipment) Bill. However, a couple of questions have arisen in the course of the debate to which I wish to refer. Senator Macklin raised a question in his comments on the grain harvester bounty legislation. It is perfectly true that the company in South Australia to which he referred rather circumspectly-I am not sure that he mentioned its name; it was Horwood Bagshaw Ltd-did raise some doubts about the larger harvester produced by them qualifying for the 12.5 per cent outward subsidy because the value added in the production of the machine was below the 40 per cent eligibility threshold.

Since those doubts were raised, the management of Horwood Bagshaw has been to Canberra and has had lengthy discussions with officers in my Department. As a result, the company is reassessing its position. It certainly looks as though it would not be as disadvantageous as was expressed in its earlier representations. There are arrangements for ongoing discussions on that question. I do not think there is any point in my anticipating the details of those discussions at this stage.

Senator Short raised the question of the switch from bounty to tariff in respect of certain components referred to in the Bounty (Commercial Motor Vehicles) Amendment Bill. Of course, he is quite correct in stating that there does not seem to be any difference in the level of assistance accorded currently to bountiable components through switching from a bounty to a tariff. Certainly the Government has not claimed any such reduction.

The level of assistance, however, where there is a difference, is that accorded to the assembly operation, which is reduced by this change. Where assemblers are currently being paid bounty at the rate of 20 per cent for the use of those components, under the new arrangements these payments will phase out and assemblers using locally sourced components will be faced with a phased increase in the cost of these components of up to 20 per cent, while assemblers using imported components will face a phased increase in the cost of their components of up to 25 per cent. This is one of the measures we have taken to reduce the high level of assistance accorded the assembly sector, which is currently around 95 per cent in effective rate terms, down to an estimated 65 per cent.

So there is a substantial reduction in assistance to the assembly operation. This applies, of course, only to those currently bountiable components on which phased tariffs are to be introduced. I must say to Senator Short, that in terms of the problem of this particular industry, we have had that debate before in the Senate. It is a very difficult industry with which to grapple, but I assure Senator Short that in terms of the assembly operations it represents a considerable reduction in assistance.

Senator Short also sought to draw some inconsistency between the grain harvesters bounty and the phasing out of the bounty for commercial motor vehicles. Any apparent difference in approach arises from the difference in intent of the two quite separate measures. The grain harvesters bounty is aimed at reducing the cost to users. The Senate is aware of the circumstances in which it was announced, and in fact we have been chided for that in the course of debate here. The beneficiaries of that are the farm sector. The phasing out of the commercial motor vehicle bounty is, as I have already stated, to reduce the current high level of assistance accorded to the assembly sector of the commercial motor vehicle industry, such as it is. I think they were the two matters of substance with which I had to deal. I commend the Bill to the Senate.

Question resolved in the affirmative.

Bill read a second time.