Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

I rise to speak on the Customs Tariff Amendment (2012 Harmonized System Changes) Bill 2011 and to support the comments of the member for Stirling. This bill has no financial impacts on the economy, except perhaps creating a lot of reading for the thousands of customs agents around the nation. The bill makes no changes to any existing level of tariff or any existing tariff preferences. This bill merely contains some 800 amendments to the existing classification numbering system in the Customs Tariff Act 1995, which resulted from the fourth review of the International Convention on the Harmonised Commodity Description and Coding System, commonly referred to as the harmonised code. These amendments are fully supported by the coalition.

The Harmonised Commodity Description and Coding System is an international standard system of names and numbers for classifying traded products that are exported and imported throughout the world. Australia is a signatory to this harmonised system. This standardised system of classifying products has been developed over a period of 100 years and is currently maintained by the World Customs Organisation, based in Belgium. The harmonised system has the aim of facilitating international trade and is used by more than 200 countries and economies throughout the world. Today, over 98 per cent of all merchandise and international trade is classified using this method.

The harmonised coding system provides a vital tool in facilitating international trade as, firstly, it provides an organised basis for each nation to set their customs tariff schedules whereby the rates of duty payable are transparent and easily understood by both importers and exporters; secondly, it provides a method for the collection of international trade statistics for administrative and statistical purposes; and, thirdly, it provides a background to enhance effective trade negotiations between all countries. The harmonised system is therefore the universal economic language and a code for goods. It is an indispensable tool in international trade.

The harmonised system uniquely identifies all traded goods and commodities with a six-digit code. These six-digit codes are uniform across all countries that have adopted the system. However, countries may also use additional digits to create eight-digit codes for their own domestic purposes. The Customs Tariff Act provides an eight-digit classification made up of a six-digit international classification supplemented by two digits for our own domestic tariff purposes.

I will give a few examples of how the harmonised code system works to uniquely identify all traded goods and commodities. The entire classification system is organised into 21 sections and 96 chapters. The first two numbers of each six-digit code identify the commodity's chapter. The 96 chapters begin at 01, which includes all live animals, and then proceed to categories with increasing complexity. As an example, let us say you are interested in importing or exporting pink batts for, who knows, as far-fetched as it may seem, some government one day may have lost its way to such an extent that it dreams up some harebrained scheme that spends billions of dollars to give away free pink batts to all and sundry. Sometimes, fact is stranger than fiction. In any such tax-free funded giveaway, the local industry would be unlikely to supply all of the demand required. This would result in thousands upon thousands of containers of pink batts being imported into the country from all corners of the globe. Therefore, knowing what the six-digit harmonised code for pink batts is becomes important.

Pink batts are made of fibreglass, so the place to start to look to find their six-digit harmonised code is in section 14, which include articles of stone, plaster, cement, asbestos, mica and similar materials, ceramic products, glass and glassware. Within section 14 there is chapter 70, entitled 'Glass and glassware', which includes commodities such as float glass sheets, toughened safety glass, mirrors and drinking glasses. Therefore, the first two numbers of the six-digit harmonised code for pink batts is 70, taken from chapter 70. Drilling down further, subchapter 70.19 includes products made of glass fibres including glass wool and articles thereof. Drilling down even further, you will find the six-digit harmonised code for pink batts is 70.19.39. Once you have the harmonised code, you can look at the Australian customs tariff rates to find that the duty payable on pink batts is five per cent.

As another example, again far-fetched, let us imagine for the sake of an argument that during a brainstorming session the same government came up with the idea of giving away free television set-top boxes. Again, fact is sometimes stranger than fiction. Therefore, knowing what the six-digit harmonised code is for set-top boxes should be important, although the government might decide just to pick a number for the price at random—say, $400 each.So the place to start to look to find the six-digit harmonised code for set-top boxes is in section 16 of the code, which includes machinery and mechanical appliances, electrical equipment, sound recorders and reproducers, televisions and parts and accessories, and articles such of. Then within section 16 is chapter 85, which includes TV image and sound recorders and parts and accessories of such articles. Then, drilling down further, you will find the six-digit code for set-top boxes is 85.29.90. With this number, you will be able to look up the Australian Customs tariff schedule to find that the rate of duty payable on set-top boxes is five per cent.

Of course, the government could bypass this step and just pick up the phone and call Harvey Norman and ask Gerry what his advertised price is to supply and install set-top boxes, which I understand is less than $150. Then they could ask Gerry what special deal he could do on a million units. This step would save the government the burden of finding out what the harmonised code for set-top boxes is. If the government had employed the negotiating skills of the Minister for Immigration and Citizenship following his recent five for-one-deal with the Malaysians, who knows what deal he could have got out of Gerry?

All products, even dangerous pollutants, have six-digit harmonised codes. We have all heard the minister for global warming—I am sorry; the Minister for Climate Change and Energy Efficiency—talk about carbon pollution. But when the minister talks about carbon pollution what he is actually referring to is that dangerous pollutant called carbon dioxide. I am not sure why he is so confused and gets the two muddled up. It may come as a surprise to many that this dangerous pollutant is actually a commodity that is traded internationally and has its own unique six-digit harmonised code. Firstly, carbon dioxide falls within section VI for the harmonised codes, titled 'Products of chemical or allied industries'. Then, within section VI, there is chapter 28, titled 'Inorganic and Organic chemicals and their compounds'. This section includes chlorine, hydrogen, nitrogen, oxygen, sodium, calcium, iodine and even distilled drinking water. Therefore, as carbon dioxide is located within chapter 28, the first two numbers of its six-digit code are 28. Drilling down further you will find that the six-digit code for carbon dioxide is 28.11.21. Therefore, when someone imports or exports carbon dioxide for the purpose of injecting this dangerous pollutant into soft drinks, beer or champagne or even to use it to increase the growth of plants they will need to know the six-digit harmonised code is 28.11.21. That will enable them to find out the rate of duty payable. Surprisingly, the tariff rate on this dangerous pollutant is zero. While the government is trying to tax it, you can actually import carbon dioxide into Australia for free.

While carbon dioxide has the harmonised code of 28.11.21, carbon is classified under a completely different code. Carbon, which includes carbon black and other forms of carbon, has the harmonised code of 28.03.00. Therefore, if the House is going to support this bill, I call on the minister to get it right, to respect the international harmonised system of which Australia is a signatory and, when he talks about pollution, to stop getting these harmonised codes mixed up.

Getting back to the reasons for this bill before the House, the World Customs Organisation reviews the harmonised code every five years to consider amendments to the code to reflect changes in industry practices, technological developments and international trade patterns. The codes have been revised through the years. Some codes have been deleted completely, others have been placed elsewhere in the classification, some codes have been combined and others have been split into two or more.

The latest and fourth review of the harmonised system occurred in June 2010, with some 800 amendments. Just one example of these 800 new changes is the creation of two new subheadings to separately identify live ostriches and emus. Before, ostriches and emus were classified under the same heading—something that every schoolchild knows is not correct. Other amendments from the fourth review of the harmonised system include deleting more than 40 subheadings due to the low volume of trade in the specified products. No doubt, when the time comes for the fifth review, the category of pink batts could be high on the list for those to be considered for deletion. Given that over the next decade there will still be thousands and thousands of containers in storage throughout Australia, it seems that there will be very little need for international trade in this product in the future.

Other changes include new subheadings for specific chemicals controlled under the Rotterdam convention, which is designed to promote shared responsibility and cooperation among parties in the international trade of certain hazardous industrial chemicals and pesticides. The aim of the convention is to protect human health and the environment from potential harm and to contribute to the environmentally sound use of hazardous products. The Rotterdam convention is very important. As with the weakening of our economy with the carbon tax, this will only reduce our ability to deal with real pollutants and real poisons like mercury and other heavy metals and organic carcinogens.

In conclusion, as Australia is a signatory to the harmonised system convention, we are obligated, along with all other signatories worldwide, to implement these changes to the harmonised codes from 1 January 2012. Hence the need for the bill, which has the full support of the coalition.

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