Shayne Neumann (Blair, Australian Labor Party, Shadow Minister for Indigenous Affairs) Share this | Link to this | Hansard source

Australia's participation in world trade organisations is particularly important. Countries that trade together and engage in enterprise and commerce together are less likely to have disputes and are more likely to engage in amity and goodwill amongst countries. Australia is a willing and important middle power in that field and we have participated in many, many organisations internationally which have improved trade, commerce and intercourse between nations.

This legislation, the Customs Tariff Amendment (Expanded Information Technology Agreement Implementation and Other Measures) Bill 2016, is important. This legislation comes under the World Trade Organization's expanded Information Technology Agreement, as does the World Customs Organization fifth review of the International Convention on the Harmonized Commodity Description and Coding System, which we dealt with recently.

I will say at the start that Labor will support this legislation. Australia is a net importer of information technology and imports an estimated $18.9 billion worth of expanded Information Technology Agreement products every year. The bill will specifically amend the Customs Tariff Act to create new tariff subheadings to allow certain IT products to be separately identified, amend the customs duty rates for selected tariff subheadings so that they incrementally reduce to free and remove obsolete customs duty rates. This will reduce the size of the Customs Tariff Act.

In the 2016-17 budget, the government committed to reducing the customs duty rates for information technology products over time to free to be consistent with Australia's requirements under the World Trade Organization's expanded Information Technology Agreement. Those reductions will begin incrementally from January 2017. I must say the government has kept a fine line. It has just got this legislation in. It could have done it a bit earlier, but it has decided to bring it in at this late stage, and we will support it.

In certain circumstances, commitments were made to reduce the customs duty rate for particular goods within a classification while the customs duty rate for other goods within the classification will remain unchanged. This will require the creation of new tariff classifications to separately identify the subset of goods. The bill will reduce customs duty rates, with the amount and timing dependent on the particular category of items belonging to the particular group. It is expected this will benefit both businesses and individuals. It has an $80 million cost to the taxpayer, but we will support it anyway.

The Department of Industry, Innovation and Science and the Department of Foreign Affairs and Trade undertook consultation with affected industries, which identified potential domestic manufacturers and suppliers that would potentially require a longer time to adjust to reduced prices of competing imported products. This input from industry is reflected in the two categories—phase-in rates at F and G--which account for eight of the tariff subheadings and will reach free by 2020-21. The staged categories A through to E represent 106 tariff subheadings and will achieve free by two years earlier, by 2019, for items like printer ink circuits.

Some Australian items will be affected by these changes, including speakers and car components, but, overall, I am satisfied the bill will provide opportunities for Australian businesses in new markets. As I said earlier in this very short speech, that is particularly important. It will reduce documentation requirements for those businesses currently claiming preferential rates or tariff concessions. Just for the information of those who might be listening, in 2019, for example, arcade machines, sound amplifiers, staple machines and cards incorporating magnetic strips will go to free. In 2021, car speakers, time switches, battery clamps on cars and other components in cars will go to free. It is expected that all changes will be effected by the middle of 2021.

Labor supports the legislation. It is important for there to be certainty in business, certainty in commerce and certainty internationally, and that is why Labor supports this legislation. As I said, the government kept it fine. The timeline is pretty close, but we see that the reduction in tariffs will begin early next year. We will support the legislation.

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

I rise to speak on the Customs Tariff Amendment (Expanded Information Technology Agreement Implementation and Other Measures) Bill 2016. I follow on from the contribution of the shadow minister and will pick up on some of the points that he made. I am particularly interested in this bill and the benefit it will provide to Australia's digital economy, which has been valued in the past year at roughly $79 billion and has the potential to rise. It grew over the course of the year before that from $50 billion. It is through the use of cloud technology and through the things that we are using more and more each day such as smartphones and tablets that businesses are finding better ways of working, smarter ways of working, and more efficient ways of reaching customers and conducting business.

Digital technology is a big thing for us, particularly when it comprises at this point 5.1 per cent of total GDP. So anything that can be done to reduce costs needs to be welcomed and this Customs Tariff Amendment (Expanded Information Technology Agreement Implementation and Other Measures) Bill promises to reduce some of the costs to business through the purchase of information technology. We are a net importer of information technology. Those imports, as the shadow minister indicated, are nearly $19 billion worth of expanded information technology agreement products each year. A huge amount of money is being spent on digital technology in this country, particularly by businesses. As I said, this is not a small amount of money when you consider the value of the broader digital economy to the Australian economy.

A lot of people have worked out that, for those businesses that actually get their act together and do embrace digital technology, it does pay dividends. I recently had the opportunity to read through a Deloitte Access economics report that was prepared for Google Australia. Deloitte Access have been doing work in this space for a number of years tracking what small and medium businesses are doing when it comes to technology, how they are using it and what it is doing to their business. Deloitte Access recently released the updated version of that work, and I commend them for it. It is important that the tech sector in this country demonstrates the value of digital technology to businesses and encourages others to take on digital technology, start engaging and see the benefit of it.

The Connected Small BusinessesReport indicated that, for example, advanced Australian small businesses have reached greater levels of digital engagement compared to small and medium enterprises that have basic digital engagement. Those advanced businesses are 1½ times more likely to be growing revenue, which is a big deal for them. They are eight times more likely to be creating jobs. In an environment where there are those that are questioning whether or not technology and innovation are killing of jobs, this is an example where, if digital technology is embraced, it actually creates jobs. The Connected Small Businesses Reportfound businesses that are much more advanced in the uptake of technical digital technology and digital engagement are eight times more likely to be creating jobs. They are seven times more likely to be exporting. Why? Because they are opening up markets, opening up pathways to new customers and creating business opportunities rapidly. They are 14 times more likely to be innovative. They generate 1.4 times more revenue per employee and they have got a much more diversified customer base.

However, the report found more than 90 per cent of small and medium businesses are not taking full advantage of today's digital tools, with many business identifying inadequate skills as a barrier to making the most of the web. That is a big issue. The report itself, which is available online, does actually examine some of the reasons behind that. Some of the reasons put forward as to why businesses are not taking up digital technology to improve the way they run, to work smarter, to create more revenue, to be able to create more jobs is a belief that the digital tools themselves are not effective for their business. There are concerns around data security and privacy. There is a lack of skills and knowledge, as I referred a few moments ago, to using these digital tools either on the part of the business owner or their staff.

One of the big reasons why these tools are not being used is the concern around the cost of adopting them. This has been a big issue for quite some time. For a number of years, we have been raising the fact that there are big differentials between the prices that are being charged for Australian businesses here compared to their competitors. As I said, if you use those digital tools properly, you can open up customer bases not just on the domestic front but internationally. In Australia, our own businesses are being slugged much more for their software and for their hardware. Those costs, in actual fact, were the subject of a former Standing Committee on Infrastructure and Communications report that was brought down a couple of years ago entitled: What cost? IT pricing and the Australia tax.

The report talked about the big differentials in pricing that are imposed on Australian businesses, particularly small businesses, which has been my concern. That report was brought down in July 2013. It has been sitting there. We have called a number of times for the former communications minister, the member for Wentworth, now Prime Minister, to actually respond to it because being able to reduce the cost barriers for the uptake of digital technology within SMBs would make a big difference. It would not only improve the efficiency of Australian businesses but it would also mean that they could make more money, open up opportunity in new markets, hire more people. This would obviously be a great thing for the Australian economy. It would also obviously be a good thing for communities to have thriving small businesses in their area that are much stronger, hiring more people and providing opportunity for locals outside of our major cities.

Again, in the face of all the concerns, in the face of all the evidence, Professor Ian Harper, in his review of our competition laws, indicated that this was an issue and that we need to find ways to help people impacted by these price differentials. It has been shown time and again as a barrier that the government has failed to respond to. The report is sitting there. The former House of Representatives Infrastructure and Communications Committee report What cost? IT pricing and the Australia tax has been sitting there with no response. It is great to be able to reduce tariffs—that is fantastic—but that is a small portion of the total cost that is being faced, and, dare I say it, the benefit of that tariff reduction will basically disappear in the blink of an eye once there are, for example, any movements in currency. If the value of our dollar decreases, you will see a huge impact on pricing in this country. As I said before, we import $19 billion worth of product. This is a big deal.

If the government want to make an impact on this and want to see prices being reduced for small and medium enterprises in this country, particularly with the amount of technology that is required to ensure we get the most out of our digital economy, they should be acting on the report and they should be acting on what Professor Harper has said. They should be making sure that we reduce the cost impact on businesses, because of the longer term economic and community benefit that arises as a result of something that is becoming more and more pervasive, that is meaning something to businesses and that can actually change the way in which the Australian economy performs, particularly as other parts of the world are waking up to this and are moving very quickly to ensure that smarter businesses are taking a bigger share of their economy.

Alex Hawke (Mitchell, Liberal Party, Assistant Minister for Immigration and Border Protection) Share this | Link to this | Hansard source

I thank the opposition for their support and their contributions in relation to the Customs Tariff Amendment (Expanded Information Technology Agreement Implementation and Other Measures) Bill 2016. This bill amends the Customs Tariff Act 1995 to progressively eliminate customs duty rates on certain information technology products. The elimination of customs duty rates on these products will benefit Australian industries and consumers, through lower import costs. The bill gives effect to Australia's international obligations under the World Trade Organization's expanded Information Technology Agreement. I commend the bill to the House.

Question agreed to

Bill read a second time.