Bruce Baird (Cook, Liberal Party) Share this | Hansard source

Thanks very much, Mr Deputy Speaker Kerr. It is great to see you in that role after your very impressive stay at the UN. I wish tonight to rise in support of the Customs Legislation Amendment (New Zealand Rules of Origin) Bill 2006. The CER we have with New Zealand is a very important document because a major part of our trade goes to New Zealand. New Zealand represents our largest source of tourists into this country and, likewise, we are the No. 1 source of tourists for New Zealand. In respect of investments in New Zealand, we are No. 1. New Zealand also ranks significantly in this country. Trade both ways is very significant.

The CER was developed in 1983. We have been through the 20th anniversary, when the New Zealand parliament reviewed the CER agreement to consider the issues and the problems, where they still existed. At the invitation of the New Zealand government, I visited the parliament and spoke to people there, and they encouraged the Australian parliament to also look at the issues and problems from our perspective. It is true that the Trade Subcommittee of the Joint Standing Committee on Foreign Affairs and Trade was probably a little tardy but we reviewed the agreement some 23 years after the CER was inaugurated in 1983, and we are about to present the report to parliament.

The Trade Subcommittee found that the CER had served both countries very well. It had significantly developed trade in both countries. It had removed many of the barriers, and it encouraged development. As a result, we moved very much to a free trade environment although we certainly still had the issues around common currency and common borders. In reviewing the CER, it was true to say that, from discussions with industry and departments on this side and on the New Zealand side of the equation, there were no major problems. They were more looking forward—for example, how we could improve the common border situation. There was no great enthusiasm for common currency on either side of the Tasman. We looked at how we could reform telecommunications such that there is a greater ease of relationship between the two countries and without the barriers to investment that exist on either side of the Tasman, as we have two major competitive organisations operating: Telstra and New Zealand Telecom.

Overall, it has been a great success. New Zealand is our major trading partner. We have a very long term relationship. As part of the ANZAC, these two countries are brought together not only commercially but also through a significant emotional attachment. We regard New Zealanders and Australians as being interchangeable on most days—except when we play rugby or cricket against one another and then things change a bit! With respect to the rest of the time, obviously the very significant level of migration from New Zealand into Australia means that we have many New Zealanders in very senior jobs across the whole economic spectrum. In our report, we are looking at the need for trade coordination so that it is easier for a plumber in Australia to get a job in New Zealand and vice versa. This is particularly important when we have very low unemployment levels and as we try to solve some of our skills shortages resulting from the resources boom. That is being addressed by individual trade associations.

This legislation addresses the rules of origin. It was interesting, when the Trade Subcommittee visited New Zealand, that the only major issue raised with us by ministers was the question of New Zealand suits being brought into Australia. They said that some Australian suit manufacturers, based predominantly in the state of Victoria, the member for Maribyrnong’s state, were complaining about the importation of New Zealand suits and that they were unable to supply suits because part of the product was produced offshore. We could really call this legislation the ‘Customs Legislation Amendment (New Zealand Rules of Origin, Especially for Suits) Bill’ because it is all about suits from New Zealand. It is somewhat ironic, when today lots of our footwear and textiles are imported from China and from South-East Asia in large quantities, that we should be arguing with New Zealand over the importation of suits. But that is the way it is: part of it is produced in China and it was decided that we should address it. When the Trade Subcommittee came back from New Zealand we spoke to the Minister for Justice and Customs—you would know that role particularly well, Mr Deputy Speaker Kerr, having been a proud occupant of the role in past times—about the problems that the New Zealanders had raised with us. I am sure there are other very good reasons why this bill was produced relating to other commodities and products, but I am aware that this was one issue which concerned the New Zealanders.

As we know, the Australia-New Zealand Closer Economic Relations Trade Agreement, or ANZCERTA, came into force in March 1983. It was revised and updated in February 2006 and continues to be strong and viable. There are a number of bilateral ministerial meetings on a regular basis designed to look at this issue. One of the issues we had, which will be coming forward in the recommendations, was the need, because it cuts across so many different portfolios, to have one ministry responsible for driving the program. To a certain extent, the Treasury has been in that driving role, and we will see how that develops, but that was one area where it seemed people were not quite sure who was driving the program to ensure we had a common economic union with New Zealand.

The amendments are set to come into force on 1 January 2007. Under the review a preferential entry of goods provides New Zealand goods and services with preferential access to the Australian market by eliminating barriers to trade between our nations in a gradual phase-out process. The first step in this process is to eliminate tariffs on goods which have been either wholly manufactured or substantially manufactured in New Zealand, as defined by the rules of origin. Under these, at least 50 per cent of the cost of producing the goods must be incurred in Australia or New Zealand. Ever since 1990, all goods that have met these rules of origin have been able to be traded duty free between Australia and New Zealand. Due to the nature of changes within our economies—in other words globalisation, which you would have heard a lot about at the UN, Mr Deputy Speaker—some business representatives have seen these rules of origin as a hindrance to growth and further trade. In accordance with one of the current rules, manufactured goods imported from New Zealand are originating and therefore eligible for a preferential rate of duty if the last process of manufacture occurs in New Zealand and the goods satisfy a regional value content requirement. This is totally sensible and totally realistic. Why did we not think of that before? Congratulations to those involved in bringing forward this legislation.

Sometimes, despite the majority of the stages in production occurring in Australia or New Zealand, the final stage is outsourced, thus creating a tariff to be imposed on the good when traded between Australia and New Zealand. This bill implements amendments to the CER that would also allow the change in the tariff classification method to be used, along with a regional value content requirement, to determine whether goods from New Zealand are New Zealand originating goods. The reality is that we have a free trade arrangement with New Zealand and a common economic market. We are bringing products in directly from China anyway with very little tariff, so if the last part of the good is produced in New Zealand then this makes sense.

The CTC approach being adopted through this legislation examines the product’s non-originating inputs and makes a determination as to whether substantial transformation has taken place in producing the final good. This will therefore enable such goods to be considered ‘New Zealand originating’. This approach is based on the World Customs Organisation’s harmonised system of tariff codes and is widely used throughout the world. We see this as being useful. It will smooth out some of the bumps in our trade relationship more than have a dramatic impact.

As stated by our Minister for Trade at the time, along with his New Zealand counterpart, the last process of manufacture method will continue to be available alongside the new change in tariff classification method. This provision will be in effect until December 2011, allowing traders and manufacturers time to come to terms with and adapt to the changes. It is an entirely sensible arrangement.

One of the key ministers we saw had suit manufacturers in his electorate, which I think focused his mind particularly on this issue. I am glad we resolved it. I am glad the relationship with New Zealand remains strong and firm. May we long beat them in cricket and in rugby, but let us get our economic union in working order so that the arrangements of the past no longer bog us down in unnecessary bureaucratic requirements. This will facilitate the strength of our combined economies, which is to the mutual benefit of Australia and New Zealand. I commend the bill to the House.

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