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Monday, 11 October 1999
Page: 9414


Senator RIDGEWAY (9:00 PM) —I am glad to see that we are talking about the automotive industry. I rise to speak on behalf of the Australian Democrats. I would like to make it clear at the outset that the Australian Democrats support the creation of the Automotive Competitiveness and Investment Scheme and we will support the passage of the ACIS Administration Bill 1999 , the ACIS (Unearned Credit Liability) Bill 1999 and the Customs Tariff Amendment (ACIS Implementation) Bill 1999. I understand that the intention of the scheme is to encourage competitive investment and innovation in the automotive industry in the context of a reduction in the motor vehicle tariff from 15 per cent to 10 per cent in 2005 with the possibility of a further reduction to a zero tariff by 2010. Those two qualities alone—competitive investment and innovation—are things to be applauded. But whilst we support the creation of the scheme, we do have a number of concerns.

Our first concern is that the government has labelled the scheme as transitional. But the question will inevitably arise as to whether the scheme should be continued beyond the end of the year 2005. To achieve the APEC target of free trade by 2010, the tariff wind-down program for automobiles will need to continue beyond 2005. Hence it must be expected that, when the government reviews ACIS in 2005, as is proposed, there will be industry pressure to extend this assistance program to 2010 as a trade-off for the further tariff cuts. If this transitional assistance package is likely to last for 10 years rather than five, we would like the government to be realistic and acknowledge the possibility of that fact. Our second major concern relates more generally to this government's industry policy which largely has as its focus the provision of assistance to mature and general ly slow growth industries like motor vehicles and textiles, clothing and footwear. The government still does not seem to recognise the gains that could be made if the focus were shifted towards the newer, high growth, knowledge intensive sectors like information technology and telecommunications.

The Customs Tariff Amendment (ACIS Implementation) Bill 1999 contains the amendments to the Customs Tariff Act 1995 which will reduce the tariff on motor vehicle imports from 15 per cent to 10 per cent from 1 January 2005. I understand that the Australian Labor Party will be moving an amendment, the effect of which will be to require that review to commence by 1 July 2003 which will, among other things, consider the appropriate rates of customs duty to apply from 1 January 2005. The Australian Democrats can see sense in the approach being proposed by the Labor Party, and we intend to support their amendment. This assistance package is about ensuring competitiveness and innovation in the automotive industry in the context of trade liberalisation. We think it is appropriate to put the assistance package in place and review its operation to ensure that we can pursue the tariff reduction from 15 per cent to 10 per cent without causing undue harm to the industry itself.

The government has committed itself to a review of this scheme in 2005. We understand the government's position to be that the reduction in tariff from 15 per cent to 10 per cent is set in stone and their review will consider whether assistance should be continued and how we will achieve a zero tariff rate by 2010. The Australian Democrats cannot see why an inquiry cannot consider all of the issues: namely (1) whether the industry can sustain a reduction in tariff from 15 per cent to 10 per cent; (2) whether assistance should be continued and, if so, in what form; and (3) if and how we can achieve the reduction to a zero rate tariff by 2010. We do not believe, nor do we think, that it is appropriate that the tariff reduction to 10 per cent must be taken as a given. That should occur only if there is an expectation closer to the time that it can be sustained by the industry.

In closing, I think the point to be made amongst all of this is that there has to be accountability in policy development. I believe that one way of moving towards that goal is by ensuring that there are appropriate mechanisms in place for monitoring and review to ensure that there is long-term sustainability for the industry. The Australian Democrats support this package of bills and when we reach the committee stage we will be supporting the amendments to be moved by the Australian Labor Party.