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Thursday, 27 June 1996
Page: 2348

Senator PARER (Minister for Resources and Energy)(10.51 a.m.) —I thank honourable senators for their contributions to this debate on the Customs Amendment Bill 1996 and the Customs Tariff Amendment Bill (No. 1) 1996. I would like to make a couple of comments in regard to the contributions by honourable senators.

These bills have been introduced by the government to satisfy an election commitment made in the `Meeting our commitments' document. They are designed to pay for various government programs. It should be pointed out that in fact the previous Labor government intended to impose a five per cent tariff on all policy by-law and tariff concession orders for the business sector. During the election campaign the now government in principle supported that approach but said that it would discuss the matter with business organisations.

As a result of those discussions, it became perfectly obvious that going down the Labor Party line posed particular problems in regard to consumption goods. It was the view during those discussions that, by not applying the three per cent that this government was applying—rather than the five per cent of the previous Labor government—this could well be unworkable because it would probably be impossible at the time of a tariff concession application or a policy by-law application to determine whether the goods being imported were for business or consumption.

I suppose good examples of this would be things like radios—whether a radio was for domestic use or to go into a motel. What would be the eventual end use of even a simple thing like a mobile telephone? For that reason, the government decided to apply the three per cent figure to all goods being imported. I will address that in a minute.

Prior to doing that, I will respond very briefly to the approach of the Democrats, which I found—and I am sure the opposition did—totally confusing. On one hand, they were saying that you should not have a three per cent tariff on capital goods being imported for business; on the other hand they were saying we should not reduce the tariffs—in other words, increase the tariffs on all the goods coming into Australia. I suppose that is fairly typical of the Democrat approach to it.

Just by way of clarification, I notice that the opposition have said that they will support the first bill but move an amendment to the second bill; basically they are saying, `Send it back and do it all over again.' The opposition's approach is that they are strongly of the opinion that the tariff should not apply to consumption goods. The Democrats have made the position even more difficult for us by saying that they will go along with the government's proposal providing we apply it only to luxury goods. If we had definitional problems previously, this enhances those definitional problems.

In view of the position taken by the opposition, and in view of the importance we place on this Customs Tariff Amendment Bill (No. 1), I foreshadow—I believe there have been some discussions with the opposition on this—certain amendments which will be debated in the committee stage. The amendments offer a compromise position to the government's proposed three per cent tariff concession rate increase for all tariff concession goods, principally to quarantine consumer goods from the tariff rate increase.

The government believes this will pick up the substantive theme of the opposition's second reading amendment circulated by Senator Cook on behalf of the opposition during the debate yesterday afternoon. The principal amendment in the schedule of three proposed by the government is amendment No. 2, which removes consumption goods from the three per cent tariff rate increase for tariff concession goods. This amendment will restore the tariff rate for those tariff concession goods. While it is conceded that the amendment does not implement the complete rate increase proposed by the government, the government believes it is an acceptable and workable compromise.

The quarantining of consumption goods from the rate increase has been able to be achieved without introducing a split in the tariff concession decision making process along the consumer versus business input lines. The government has always maintained, as indeed did the previous government, that a decision as to whether or not a tariff concession order should be issued should be dependent on whether or not the tariff concession order tests have been met and not whether the goods are consumer goods or business inputs.

Once a decision on the granting of the concession is made, however, then the duty to apply to goods imported under the concession instrument can proceed, if necessary, on the determination of whether the goods are classified as consumption goods or not. That is the essence of the proposed amendment No. 2. Consumer goods referred to as consumption goods are removed from the three per cent tariff rate increase on the basis of an international tariff classification and harmonisation document prepared by the United Nations and applied to the Australian tariff by the Australian Bureau of Statistics in accordance with the international guidelines set out in the United Nations paper. The United Nations papers classify all internationally traded goods as consumption goods, intermediate goods or capital goods. It is these documents which are used to define consumption goods in the government's proposed amendment No. 2.

The other amendments which are proposed by the government, Nos 1 and 3, deal with several minor matters which have arisen during the course of parliamentary debates on these bills. Depending on the outcome of the second reading debate, I would be happy to further detail the matters in respect of the other amendments at the committee stage of the bill.

Might I just say in conclusion that, while it is not something we would prefer in view of our `Meeting our commitments' document prior to the last election, we believe we have found a way that does satisfy the opposition concerns in respect of consumption goods. It is a way that does not create the definitional problems which would have occurred if we had gone down the opposition's previous route, and that was for some determination to be made when the application was made for the tariff concession without knowing whether those particular goods—there are a lot of them, some 23,000—would actually be used for capital requirements or for consumption.

Under any circumstances we would not have supported the opposition's amendment, but under these circumstances we ask the opposition to rethink this matter. They have not had as much time as we would have liked to give them to consider this matter, but I believe this is a satisfactory outcome which addresses the opposition's concerns. It removes the consumption goods from the application of a tariff in a way which is fair. It is at arm's length. It means that determinations are made by an independent body.

These determinations do not change at great speed every six months. There are minor adjustments made at the fringes. It seems that this is the only way to approach it in order to satisfy the consumption good problem and, at the same time, get away from the complications that would have arisen with determinations having to be made when applications were made for these tariff concession orders. It might be helpful if Senator Cook responded to the compromise position I have outlined.