Michael Keenan (Stirling, Liberal Party, Shadow Minister for Justice and Customs) Share this | Link to this | Hansard source

I rise to speak on the Customs Tariff Amendment Bill (No. 1) 2010. This bill amends the Customs Tariff Act 1995 to incorporate end dates for three concessional items in schedule 4, which deals with concessional rates of duty. The bill contains three amendments to the Customs Tariff Act 1995. Two of these amendments relate to the import concessions for the textiles, clothing and footwear industry. The third amendment provides a mechanism to reduce the general rate of duty for certain goods that were not of a kind used as components in passenger motor vehicles.

Item 53C of schedule 4 of the Customs Tariff Act 1995 provides a mechanism to reduce the rate of customs duty from 10 per cent to five per cent for certain goods entering Australia on or after 1 January 2005. These goods are non-passenger motor vehicle goods that are classified to the same tariff classifications as passenger motor vehicle, PMV, parts and components. The rate of customs duty applicable to passenger motor vehicle parts and components was 10 per cent. On 1 January this year the rate of customs duty on PMV parts and components fell to five per cent, making item 53C of schedule 4 redundant from that date. As the proposed amendment to the Customs Tariff Act 1995 will insert an end date of 31 December 2009 and hence have a retrospective commencement, the Senate Standing Committee for the Scrutiny of Bills examined the proposed amendment and made the following comments in relation to it:

As a matter of practice, the Committee draws attention to any bill that seeks to have retrospective impact and will comment adversely where such a bill has a detrimental effect on people.

These items relate to the commencement and completion dates of a mechanism in schedule 4, part III, item 53C of the Customs Tariff Act 1995 to reduce the general rate of customs duty from 10 per cent to five per cent for certain goods for home consumption. They initially appear to have a retrospective effect because clause 2, item 2 provides that the commencement date of schedule 1, item 1 is 14 December 2009 and schedule 1, item 1 provides for a commencement date of the mechanism of 1 January 2005 and a completion date of 31 December 2009. However, there is no detrimental result because this is essentially a technical amendment giving effect to Customs Notice (No.3) 2009, published in Special Commonwealth Gazette S213 of 14 December 2009, and in it the committee notes from the explanatory memorandum the general rate of the relevant customs duty fell five per cent from 1 January 2010.

As you can see, Mr Deputy Speaker, this is a relatively dry bill. I will continue to speak about the Clothing and Household Textile Building Innovative Capability Program. On 12 May 2009, the government announced a retargeted textile clothing and footwear assistance package from 2009-10 to the year 2015-16. Under the package, the Clothing and Household Textile Building Innovative Capability Program would replace the Textile, Clothing and Footwear Post 2005 Scheme from the scheme’s 2010-11 program year. The new package redirected $55 million towards innovation, mainly to the clothing and household textile sectors, with $25 million in additional funding.

The package also included a new Textile, Clothing and Footwear Strategic Capability Program to support innovative capability in the textile, clothing and footwear industries. As recommended in the review of the textile, clothing and footwear industries by Professor Roy Green, Building innovative capability, the new package would be partially funded by discontinuing the Textile, Clothing and Footwear Product Diversification Scheme and not proceeding with the Textile, Clothing and Footwear Supply Chain Opportunities Program. The product diversification scheme applied to the clothing and finished textiles sectors and was legislated to continue until 30 June 2017. The principal legislation implementing the new textile, clothing and footwear assistance package, the Textile, Clothing and Footwear Strategic Investment Program Amendment (Building Innovative Capability) Bill 2010, was passed by the Senate on 18 March this year with two amendments which were agreed by the House of Representatives on the same day.

The Textile, Clothing and Footwear Expanded Overseas Assembly Provision Scheme commenced on 9 June 1999 and provides assistance through duty concessions to firms that assemble clothing and footwear overseas from predominantly Australian made fabric and leather and then import them back into the Australian market. Since the scheme began, the duty or revenue forgone has totalled $40 million, with annual duty forgone of approximately $3 million. The scheme was scheduled to expire in 2005 and was extended under the Textile, Clothing and Footwear Post 2005 Assistance Scheme announced by the Howard government in November 2003. However, there has been only limited use of the scheme in recent years as TCF tariffs have fallen and the scheme is scheduled to conclude on 30 June this year. In his review of the textile clothing and footwear industry, Professor Green gave the following assessment of the scheme:

It has generated a pull-through of Australian-made fabric and leather for firms assembling clothing and footwear offshore and bringing them back for domestic consumption. However, because of the reducing rate of tariffs for the finished product, the value of the scheme is declining.

From 1 January this year, two different tariff rates apply across a range of TCF goods: 10 per cent for clothing and for certain finished and household textiles—these items of course make up the bulk of TCF imports—and five per cent for cotton sheeting, woven fabrics, sleeping bags, table linen, tea towels, carpets, footwear, textile yarns, sewing threads and finished leather. The opposition supports the measures that have been proposed in this bill.

Brendan O'Connor (Gorton, Australian Labor Party, Minister for Home Affairs) Share this | Link to this | Hansard source

in reply—I would like to thank the member for Stirling for his contribution to the debate and for his support for the bill. The Customs Tariff Amendment Bill (No. 1) 2010 contains amendments to the Customs Tariff Act 1995 that insert or vary end dates for three concessional items in schedule 4. Successful passage of this bill through the parliament will enable the incorporation of these amendments in the customs tariff to give effect to recent government decisions and to provide certainty to importers.

The cessation of the Expanded Overseas Assembly Provisions Scheme and the early cessation of the Product Diversification Scheme implement a component of the government’s TCF innovation package, as announced in the 2009-10 budget. This package will provide assistance to the textile, clothing and footwear industry through grants rather than through a combination of grants and duty concessions. Importers in the Australian industry producing TCF goods are aware of the pending changes through budget announcements and through advice from the Department of Innovation, Industry, Science and Research.

Concessional items 61 and 73 in the customs tariff give effect to duty concessions under these schemes. The items are therefore no longer required and are being end dated. For item 61, the end date is 30 June this year. For item 73, the end date is 30 June 2011. While importers will no longer be able to earn duty credits under the Product Diversification Scheme after 30 June 2010, the end date of 30 June 2011 for item 73 will provide importers with an additional 12 months to use those credits.

Item 53C in schedule 4 of the customs tariff provided a mechanism to reduce the general rate of customs duty from 10 per cent to five per cent for certain goods that were not of a kind used in passenger motor vehicles. However, when the customs duty for motor vehicle components fell from 10 per cent to five per cent on 1 January this year, item 53C became redundant. The insertion of an end date of 31 December 2009 in item 53C was previously given effect through Customs Notice (No.3) 2009 and the tabling of Customs Tariff Proposal No.1 (2010). I commend the bill to the House.

Question agreed to.

Bill read a second time.

Ordered that the bill be reported to the House without amendment.