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Tuesday, 11 February 1986
Page: 45

Senator PUPLICK(4.21) —I want to address a few remarks to the report of the Industries Assistance Commission on passenger concessions. Legislation for inward duty free shopping was introduced into this place and forced through as a result of a shoddy little deal between the Government and the Australian Democrats, despite the fact that it was massively opposed by the Australian Customs Service, which not only has responsibility now for the monitoring of inward duty free shopping but also was alert to the security risks and other dangers which would be a consequence of the introduction of inward duty free shopping. The Government similarly refused to allow the Senate to have any form of inquiry into the problems for Customs at the barrier that would be associated with the introduction of inward duty free shopping. It is interesting to note that the Industries Assistance Commission has investigated this matter over a number of years. It has been the subject of considerable discussion by the Bureau of Transport Economics and by various interdepartmental committees, all of which, on the basis of their expert advice, have recommended against inward duty free shopping.

If one looks at page 84 of the report one is drawn to the question of passenger and aircraft safety. It was argued as a great point by Senator Sanders that somehow inward duty free shopping would enhance passenger and flight safety. That is totally untrue. The IAC nails that assertion by saying:

In its 1979 study, the Bureau of Transport Economics was sceptical of the safety claims made. It had not found any evidence of accidents having been exacerbated by duty free goods being carried on an aircraft . . . The fire risk from passengers' alcohol was considered to be no greater than that from the airlines' own stocks of liquor . . . Even if duty free goods, carried as cabin baggage, were a serious safety risk, inward duty free shopping would not solve the problem unless carriage of all duty free goods in the cabin of the aircraft were banned.

The Government, of course, does not propose to do that. The report indicates the additional costs to the Customs Service of the introduction of inward duty free shopping. It draws attention to the fact that the Customs Service and the Department of Immigration have specifically disagreed with the claim that inward duty free shopping would facilitate passenger movement through the barrier and the Customs terminals. It draws attention to the difficulties that will be encountered with the necessity from time to time for the alteration of passenger Customs declarations. On page 87 the report goes on to indicate:

There is also doubt whether inward duty free shopping could be restricted to airports.

Undoubtedly, we will now see the expansion of this area and a consequent loss of revenue to the Government. The rationale for the export of goods through duty free shops is criticised by the report as a violation of the destination principle of indirect taxation. The concluding paragraph of this section of the report, paragraph 7.4.4, states:

The reference requires the Commission to comment on the applicability of recommended concessions to goods purchased in Australia by arriving persons before they pass through the Customs barrier. The objectives of passenger concessions are passenger facilitation, immigration, and cost-effectiveness in Customs administration. The Commission does not believe that inward duty free shopping helps to achieve any of these objectives. Indeed, the probability is that, in some airports, it would hinder Customs in processing passengers and achieving the other objectives of barrier control. The Commission therefore considers that passenger import concessions should not apply to goods purchased in Australia by arriving persons before they pass through the Customs barrier.

The Government has decided, for what I think are quite improper and shoddy reasons, to reject the recommendations of the IAC. I believe that the Government will wear the responsibility for the loss of revenue and increased difficulty for the airlines and the Customs Service. It will wear the responsibility for the additional opportunity which is provided for smuggling and the entry of narcotics into this country by the use of the inward duty free system, which I discussed at length last year in my speech on the Customs legislation which introduced it. I believe it will be found that the very shoddy and underhand deal which the Government entered into and which was promoted by certain sections of the Government to the detriment of revenue and the Customs Service will be a lasting blot on the Government's record in this area and is a clear indication of how little attention the Government is prepared to give to the expert and considered recommendations of the IAC in this matter.