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Tuesday, 31 August 1993
Page: 671


Senator ROBERT RAY (Minister for Defence) (4.31 p.m.) —I move:

  That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

  Leave granted.

  The speeches read as follows—

BOUNTY LEGISLATION AMENDMENT BILL 1993

This Bill is an omnibus measure proposing amendments to four bounty Acts. In particular, the Bill proposes amendments to the Bounty (Books) Act 1986 to continue bounty assistance on Australian Book production until 31 December 1997 and to the Bounty (Computers) Act 1984 to introduce a new definition for "research and development" to limit eligibility of that factory cost, as well as to strengthen the ability of the Australian Customs Service to substantiate claims made under the scheme. It also proposes some minor technical amendments to the Bounty and Capitalisation Grants (Textile Yarns) Act 1981 and the Bounty (Machine Tools and Robots) Act 1985.

First, I will address the proposed amendments to the Bounty (Books) Act 1986.

Bounties have been paid on the production in Australia of certain books covered by the Florence Agreement since 1969. As a signatory to the Florence Agreement, Australia cannot impose tariffs or other charges on the importation of books of scientific, cultural or educational value. Bounty is paid on the local production of such books in order to assist the Australian printing industry compete with overseas book printers.

The Amendments proposed in this Bill are the Government's response to the Industry Commission's recommendations contained in its report No. 27 of 15 October 1992 on book production. In that report the Industry Commission commented that productivity improvements in book production appears to have more than offset the effects of the gradual reduction of assistance and that continued reduction of the bounty rate and other assistance is likely to maintain pressure to improve efficiency. The Commission supported the continuation of the orderly reduction in assistance within the general program of tariff reductions announced by the Government in March 1991.

In relation to bounty assistance, the Commission's main recommendations were:

1.  that rates be reduced in four steps from the current 13.5 per cent to 4.5 per cent by 1997;

2.  that the present $500 minimum claim amount be replaced by a minimum publisher's production cost per production run of $3700 per title with effect from 1 January 1994; and

3.  that the present arrangements, whereby either the publisher or a printer may claim bounty, remain unchanged.

The Government has accepted all the Commission's recommendations and this Bill implements those recommendations in relation to bounty assistance by extending the life of the bounty to 31 December 1997 and annually phasing down bounty rates from the current 13.5 per cent to 4.5 percent by January 1997.

The Bill also proposes to extend bounty eligibility to directories other than Australian telephone directories and time tables on the condition that they contain less than 30% advertising and to specifically exclude company prospectuses from bounty eligibility as they are in a similar class of publications to annual reports and shareholders reports, which are already excluded as they are unlikely to be printed offshore because of time restraints.

I will now address the amendments proposed to the Bounty (Computers) Act 1984.

The computer bounty is an important element of the Government's policy for the computer industry, which for bounty purposes includes manufacturers of modems, multiplexers, microprocessors, computer sub-assemblies, electronic microcircuits and, since July 1991, printed circuit boards.

The decision in 1990 to continue the computer bounty scheme, which resulted in the extension of the scheme until 31 December 1995, reflects a commitment by this Government, and indeed this parliament, to encouraging increased development and use of computer equipment and microprocessor technology.

In 1992/93, the computer bounty program provided about $75 million of direct assistance to 927 registered manufacturing premises. The program is expected to provide $78 million to industry in 1993/94 and slightly lower levels in forward years with the adoption of the legislative changes proposed in this bill. On current trends, without either legislative or administrative changes, the budget outlays for this program are expected to be in the order of $88 million in 1993/94.

The amendments in particular introduce a definition of "research and development" to clarify and limit the eligible expenditure which might be included under this phrase.

This proposed definition, together with the proposed amendment to the method of calculating value added by a manufacturer in section 6 of the Act, expressly requires that in order for expenditure on research and development to qualify for inclusion in a manufacturer's bountiable factory costs, the research and development must be likely to result in the manufacture of bountiable equipment within the bounty period; that is, by 31 December 1995.

There are two other substantive amendments to the Bounty (Computers) Act contained in this Bill which are explained in greater detail in the explanatory memorandum to the Bill. One is designed to strengthen the ability under the Act to substantiate claims (clause 10 of the bill), by requiring bounty recipients to keep records and accounts which are relevant to claims for several years, in line with provisions in other bounty Acts.

The other introduces an administrative reform to allow interstate manufacturing operations to lodge consolidated claims across state and territory borders thereby reducing administrative effort and costs for some claimants.

FINANCIAL IMPACT STATEMENT

The measures contained in this Bill which extend the operation of the Bounty (Books) Act 1986 until 31 December 1997 are expected to result in additional bounty payments as follows:

  $10.2m in financial year 1993-94 (commencing 1 Jan 1994),

  $19.2m in financial year 1994-95,

  $17.2m in financial year 1995-96,

  $13.2m in financial year 1996-97, and

  $5.4m in financial year 1997-98 (finishing on 31 Dec. 1997).

The measures contained in this Bill relating to the Bounty (Computers) Act 1986 which tighten the eligible bountiable costs definitions, and which strengthen the ability of the administrators of the scheme to substantiate claims made under it, are expected to result in Budget savings in 1992-93 dollars as follows:

  $2.8m in financial year 1993-94, (commencing 1 Nov. 1993)

  $13.8m in financial year 1994-95, and

  $12.1m in financial year 1995-96 (ending on 31 Dec. 1995).

The measures contained in this Bill relating to the Bounty and Capitalisation Grants (Textile Yarns) Act 1981 and the Bounty (Machine Tools and Robots) Act 1985 are all technical in nature and are expected to have no financial impact.

I commend the Bill to the Senate and present the Explanatory Memorandum to the Bill.

CUSTOMS LEGISLATION AMENDMENT BILL 1993

This Bill is an omnibus measure proposing amendments to the Customs Act 1901, the Anti-Dumping Authority Act 1988, the Customs Legislation (Tariff Concessions and Anti-Dumping) Amendment Act 1992 and the Customs Legislation (Anti-Dumping Amendments) Act 1992. The main proposals contained in the Bill relate to:

(1)  amendments to the Customs Act 1901 to refine the rules of origin as a consequence of the 1992 Closer Economic Relations Review;

(2)  amendments to the Customs Act 1901 to substitute a new definition of a "place outside Australia" to ensure tighter Customs control over people and goods moving between Australia and Area A of the Zone of Cooperation in the area known as the "Timor Gap";

(3)  amendments to the Anti-Dumping Authority Act 1988 to enable the Authority to maintain confidentiality over its recommendations to the Minister, prior to the Minister's decision on those recommendations;

(4)  amendments to the Customs Act 1901 to clarify that the undeclared possessions of ship's crew are forfeited to the Crown; and

(5)  amendments to the Customs Act 1901, the Customs Legislation (Tariff Concessions and Anti-Dumping) Amendment Act 1992 and the Customs Legislation (Anti-Dumping Amendments) Act 1992 to effect certain minor technical changes.

I will now briefly outline the proposed changes:

(1)  Rules of Origin

The proposed amendments to the rules of origin effected by Clause 10 of the Bill are a response to the Government's agreement to the outcome of the 1992 review of the Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA). The proposed amendments also extend the administrative and technical aspects of that agreement to other preference arrangements.

Rules of origin are those rules which previously appeared in section 151 of the Customs Act 1901 (the Act), to determine whether particular goods imported into Australia are eligible for entry at preferential rates of duty.

Clause 10 of the Bill inserts a new Division 1A of Part VIII into the Act to provide a better defined and more predictable basis for calculating the origin of goods. The concept of "factory or works" cost of goods as calculated in accordance with rules set out in Gazette notices issued by the Comptroller, has been replaced by specific provisions contained in the Act (new sections 153C—153G refer). Furthermore, the Bill includes diagrams and explanatory notes in a new Schedule inserted in the Act as a means of illustrating the operation of the rules of origin in their application to New Zealand.

In relation to New Zealand, it should be noted that there is some modification of the rules of origin in certain circumstances. New section 153K of the Act implements the agreement between Australia and New Zealand to allow a two percent margin of tolerance in meeting the usual fifty percent area content requirement, where an unforeseen circumstance (such as an adverse movement in exchange rates) would otherwise result in a shipment failing to qualify for preference. The amendment is intended to assist manufacturers in such unforeseen circumstances, whilst ensuring that the preferential trade benefits of ANZCERTA are not diverted away from Australian and New Zealand manufacturers.

Other amendments peculiar to New Zealand modify the treatment of materials of mixed origin to allow the area content of such materials to contribute to the area content of the final product in circumstances where otherwise they would not.

The amendments will make the rules of origin more objective in their application and should overcome weaknesses in the previous provisions which had enabled some claimants for preference to circumvent the spirit of the rules.

(2)  Timor Gap

The amendments contained in Clause 5 of the Bill are a response to concerns that the Customs barrier controls (reporting of cargo, passengers and crew) don't presently cover the movement of persons and goods to and from Area A of the Zone of Cooperation (being that area in the Timor Sea in respect of which Australia and Indonesia have agreed to cooperate in the exploration for and exploitation of any petroleum resources). The proposed amendments to the current definition of "place outside Australia" therefore extend Customs barrier controls over movements to and from Area A of the Zone of Cooperation.

(3)  Anti-Dumping Amendments

The Government has decided that section 28 of the Anti-Dumping Authority Act 1988 should be amended to allow the Authority to await the Minister's decisions on the recommendations contained in its reports before releasing those reports to the public. Earlier release could encourage parties to cooperate less than fully in the public inquiry held by the Authority, reserving some arguments to put to the Minister once they knew what recommendations had been made by the Authority. Were this to occur, considerations of natural justice could mean that the Minister would have to seek the view of other parties on these arguments, leading in effect to a second inquiry being undertaken personally by the Minister.

The proposed amendment in clause 23 of the Bill allows the Authority to delay the release of its reports until after the Minister has made a decision.

(4)  Undeclared Possessions of Ship's Crew

From an operational point of view, it is desirable for Customs officers to have the ability to require information as to the possessions of ship's crew and for there to be a sanction for not fully declaring those possessions which represents a real deterrent to non-compliance. If there is no penalty for non-compliance, there is no incentive for crew members to ensure they fully report their belongings to Customs and could encourage crew to secrete prohibited or dutiable goods with the intention of smuggling the goods ashore at some later time during the ship's stay in port.

Clause 6 of the Bill proposes an amendment to section 64AA of the Customs Act to specifically include a report of the possessions of the ships crew in the ship's arrival report and create a statutory requirement for full disclosure of all crew belongings. If such belongings are not declared and are subsequently found secreted in a crew member's cabin, they can be regarded as forfeited goods under paragraph 229(1)(e) of the Act.

In addition to the amendments outlined above, the Bill proposes a number of minor technical amendments which essentially correct cross-references between provisions and citation errors. These amendments are explained in greater detail in the Explanatory Memorandum.

Financial Impact Statement

The proposed amendments in this Bill have no direct financial implications.

I commend the Bill to the Senate and present the Explanatory Memorandum to the Bill.

  Debate (on motion by Senator Reid) adjourned.

  Motion (by Senator Robert Ray) agreed to:

  That the bills be listed on the Notice Paper as separate orders of the day.