Shayne Neumann (Blair, Australian Labor Party, Shadow Minister for Immigration and Border Protection) Share this | Hansard source

I rise to speak on the Customs Amendment (Collecting Tobacco Duties at the Border) Bill 2018. This piece of legislation is part of a range of measures to crack down on the proliferation of illicit tobacco in Australia. This bill, along with two others debated this week, implements measures announced in the 2018-19 budget under the banner of the black economy package.

Labor is supporting the passage of this bill through the House to stop illicit tobacco and, ultimately, improve health outcomes for all Australians. Our commitment on this side of the House to stop the scourge of tobacco speaks for itself. Smoking is the single most important preventable cause of ill health and death in Australia, accounting for more than 15,000 deaths each year. Labor governments have led the way and made significant advancements towards drastically reducing that number. It was Labor who introduced and fought for world-leading plain-packaging legislation which, complemented with other policies, has seen adolescent smoking rates drop to a record low. A strong, principled stance on reducing society's exposure to tobacco products has significantly improved the overall health of all Australians.

The Customs Amendment (Collecting Tobacco Duties at the Border) Bill 2018 amends the Customs Act 1901. It will require tobacco importers to pay import duty on tobacco products on importation into Australia from 1 July 2019. So, duty will be paid on tobacco products upon importation into Australia. This removes the option of imported tobacco products entering Australia in a licenced warehouse without the payment of import duties. That's really critical: there will be payment at the point of it being imported. From 1 July 2019, it will no longer be possible for duty to be paid on tobacco products on a weekly or monthly basis in accordance with permissions granted under section 69 of the Customs Act. Movement permissions to allow the movement of tobacco products to or from warehouses will cease on the same day.

The bill also includes transitional arrangements for the treatment of tobacco products that are still in warehouses on 1 July 2019. Owners of these tobacco products will be required to pay outstanding duties, unless they enter into an arrangement to pay the outstanding duty over the following 12 months and provide security for doing so. Owners of tobacco products who do neither of these things may have their tobacco products sold, or otherwise disposed of, by the government.

Labor supports these measures to tackle the black economy and stop illicit tobacco entering the supply chain. 'Illicit tobacco' refers to tobacco sold to Australian consumers without payment of relevant taxes. I think there wouldn't be a person in this chamber who hasn't had complaints by legitimate and lawful sellers of tobacco concerning illicit operations in their electorates.

Contraband tobacco is manufactured legally outside Australia and then smuggled into our country or into the supply chain without paying relevant taxes. When illicit tobacco enters the market without paying excise, it means that tax or duties aren't being collected by the government to pay for the services that we expect in our society, such as health, education or indeed infrastructure. It's reported that close to a quarter of the illegal tobacco sold in Australia is 'leakage' from licensed warehouses. By applying duties at the border rather than when the tobacco leaves warehouses, we're closing this loophole and the potential for illicit tobacco to be spread in Australia.

Illicit tobacco is one of the many branches that criminal networks use to fund their nefarious operations. Profits from illicit tobacco help fund other branches of criminal activity, including human trafficking, people smuggling, illegal firearms and drug smuggling. This is one of the many reasons we must take every step possible to crack down on illicit tobacco and the people who run these illegal operations.

The change in timing of when tobacco is charged is an important measure to reduce the importation of illicit tobacco. However, the sneakiest thing about this measure is that it sees the budget, on the budget papers, return to surplus a year ahead of time. This measure alone will boost tax receipts once and once only by $3.27 billion in the 2019-20 financial year. So the Liberal government are relying on a one-off tobacco-taxation-collection-timing trick to help them reach a budget surplus.

In the 2018-19 budget, the government miraculously announced that they were going to reach a surplus in the 2019-20 financial year, a year earlier than previously anticipated. This measure means that, instead of duty being collected in later years, when it leaves a warehouse, the revenue—as I say, over $3 billion—will be collected once, in the 2019-20 financial year. And 2019-20 just happens to be the year that the government, on the budget papers, will reach a surplus. How surprising! What a miracle! The Red Sea has parted. The water has turned into wine, and all of a sudden a surplus is created by the government by a tax-timing trick.

The government are using the risk of illegal tobacco entering the market to reach a surplus a year ahead of when they would expect to achieve it. It's clear that, without this one-off tobacco-tax-collection-timing trick, the very much out-of-touch government would not be achieving the surplus in the year they say, on their own budget papers. Without this timing trick, the return to surplus would be pushed back another year—and all this from a government which have doubled the debt on their watch.

Labor have consistently shown our commitment to policies which reduce the scourge of illegal tobacco in Australia as well as tobacco related illness and disease in Australia. That's why Labor supports the proposed measures in the bill today and the other measures to tackle the black economy. It's just important that the government's trick be called out in speeches that we make.

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