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

I rise to speak on the Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017. This bill amends the Customs Tariff Act in five ways. These amendments seek to fix a mistake made by the Turnbull government in a tariff subheading in the act relating to some mosaic tiles; incorporate industry feedback on the classification of 'machining goods' within new domestic tariff subheadings; realign with international practice a tariff subheading for herbicide paraquat dichloride, which contains an added emetic; extend concessional arrangements for importing automotive prototype and components as announced in the 2017-18 budget; and remove a $12,000 special customs duty on certain used and second-hand motor vehicles. Labor will support this bill through the House today because these changes are to support Australian businesses and clarify the frameworks relating to tariffs.

The bill before the House today amends the subheading in section 3 of the Customs Tariff Act to be repealed and replaced. This subheading relates to certain mosaic tiles. If you are unsure what a mosaic tile relates to, you need to look no further than the Customs Tariff Act 1995. According to the act, they include:

Tiles, cubes and similar articles, whether or not rectangular, the largest surface area of which is capable of being enclosed in a square the side of which is less than 7 cm.

Not eight centimetres, not 7½ centimetres, but less than seven centimetres. If you are ever in an argument with your friend or a family member in the mosaic tile section in Bunnings, or you face a question at trivia about what constitutes a mosaic tile, you can thank the Customs Tariff Act 1995 for the clarification.

The reason this subheading is being repealed and replaced is because the Turnbull government's approach to drafting legislation means that it simply made a mistake. All the well-known and public flaws of the Turnbull government and its proposed policy and legislation mean we are here today to fix one of its errors. The Customs Tariff Amendment (2017 Harmonized System Changes) Act 2016 created tariff subheading 6907.30.10 for certain mosaic tiles, and mistakenly assigned to it the customs duty rate of five per cent, rather than the correct rate of free. During the second reading of this bill, the Assistant Minister for Immigration and Border Protection, the member for Mitchell, said:

This amendment will ensure that Australian businesses have certainty about customs duty rates applied to these goods.

'Certainty' is what this government has not been able to provide with the mistake it made in its legislation in the first place. Hence, we are here today making another amendment to the Customs Tariff Act 1995, using this particular legislation to fix up the errors of the Turnbull government.

Thankfully, Australian businesses were not adversely affected by the errors of the Turnbull government due to a notice of intention to propose customs tariff alteration, published on 14 December 2016 and tabled as the Customs Tariff Proposal (No. 1) 2017 in parliament on 15 February 2017. The amendments included in the bill before the House today will correct the customs duty rate assigned to subheading 6907.30.10 to free per cent, as opposed to the erroneous five per cent, backdated to take effect from 1 January 2017. This will ensure that Australian businesses are not paying a customs duty they do not have to, something that Labor wholeheartedly supports. If only it was just as easy to fix all the other errors in the Turnbull government's unfair budget.

The Customs Tariff Amendment (2017 Harmonized System Changes) Act 2016 created a new classification rule for machining centres classified under tariff subheading 8465.20. Since the changes, feedback from industry has indicated that the composite nature of these machining centres, and the fact that they often perform multiple tasks, makes classifying them in accordance with the domestic subheadings difficult. The purpose of today's amendment is to simplify the classification of machining centres able to perform two or more machining operations with an automatic tool change. The amendment repeals the domestic subheadings created by the act and significantly rationalises the number of subheadings. Multiple machine operations—such as machines that do bending and assembly or split or splice—are covered by the new tariff subheading. Labor will support the amendment and always compel the Turnbull government to genuinely consult with stakeholders and industry as they have done here.

Paraquat dichloride, commonly referred to as 'paraquat', is more than 130 years old, although the properties that led to it being used as a herbicide were only recognised in 1955. The herbicide, more commonly known as a weed killer, is highly lethal if consumed by humans. Given paraquat's toxic nature, it is commonly dyed blue for safety reasons. It contains an added emetic agent to induce vomiting if digested. A decision of the World Customs Organization caused the Australian classification of this particular substance containing the added emetic agent to become misaligned with international practice. This bill will repeal the additional notes in schedule 3, chapter 29 and replace it with the title 'additional note'. Schedule 3 relates to the classification of goods, and general and special rates of duty, while chapter 29 relates to organic chemicals. Additional note 2 in chapter 29 will also be repealed. This directs that paraquat dichloride with an added emetic be classified to a certain tariff subheading where a free rate of customs duty is applied. This will realign Australia's classification with international practice. Tariff subheading 3808.93.00 will also be repealed. That particular subheading covers herbicides, anti-sprouting products and plant-growth regulators and has a customs duty rate of five per cent. A new subheading will be created to realign paraquat dichloride. It will be reclassified to a newly created tariff subheading ensuring that that particular substance will be free of rate of tariff of customs duty.

As part of these amendments, goods currently classified under a certain tariff subheading are reclassified to a newly created tariff subheading. These changes are cost neutral, and Labor is appreciative of that. We are glad the amendment before the House will ensure this, making the framework for the tariffs more easily understandable and ensuring the safety of all those who use this particular herbicide.

Australia's automotive industry has been in transition since the announcement that Holden, Ford and Toyota will close their manufacturing operations in Australia. Labor has been aggrieved by the demise of the automotive industry in Australia. We believe the Abbott-Turnbull government has watched this unfold and responded inadequately. In the wake of these changes, the automotive industry has announced plans to continue other automotive industry activities such as sales and distribution and design and product development. The 2017-18 budget included an extension of concessional arrangements for importing automotive prototype and components to automotive service providers to promote research and development. Labor is glad this will benefit Australian businesses and workers as the amendments apply to relevant goods imported on or after 1 January 2017 and goods imported into Australia before 1 January 2017 where the time for working out the rate of customs duty on the goods had not occurred before 1 January 2017.

Item 39 in schedule 4 of the Customs Tariff Act provides a customs duty exemption for motor vehicle producers within the meaning of the Automotive Transformation Scheme Act 2009 to import automotive prototypes and components. The Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017 will amend item 39 in schedule 4 to extend this concession to automotive service providers by inserting 'all automotive service providers' after the words 'motor vehicle producers'. From a budget perspective, extending the concessional arrangement to automotive service providers is estimated to reduce customs duty revenue by $13.5 million over the forward estimates, including the current financial year. That being said, given the nature of the automotive industry and the fact that it employs 50,000 people directly and up to 200,000 people indirectly across Australia, Labor wants to support this workforce as the industry is in transition, so we will support this.

The Customs Tariff Act applies customs duty of $12,000 plus an ad valorem component of five per cent where applicable to use on second-hand motor vehicles imported from those countries. In reality the $12,000 customs duty is rarely applied as importers are able to claim an exemption if they obtain a vehicle import approval issued by the Department of Infrastructure and Regional Development. It should be noted that it's an offence to ship a road vehicle into Australia before obtaining a vehicle import approval.

Labor believes today's amendments won't have a negative impact on vehicle safety standards in regards to imported vehicles. Given this, the bill will repeal the $12,000 duty component for used and second-hand motor vehicles imported under various tariff subheadings, including tariff subheading 8703, with effect from 1 January 2018. The amendments to those mentioned subheadings relate to items 9 to 34, also replacing 'secondhand' as one word: the word 'second-hand' hyphenated. I don't know why they are doing that, because both forms of the word are technically correct by grammatical standards, but Labor supports good grammar as well as these amendments.

For goods imported under the general rate we will now have a customs duty rate of 5 per cent. The amendments also repeal multiple tables in schedule 5 as well as repealing multiple tables in schedule 11. The table items repealed under schedule 5 relate to preferential rates of customs duty negotiated in the Australia-United States Free Trade Agreement. The total items repealed under schedule 11 relate to the preferential rates of customs duty negotiated in the Japan-Australia Economic Partnership Agreement. For goods imported under these free trade agreements the amendments will have a customs duty rate of free.

Removing the $12,000 duty from used and second-hand motor vehicles is expected to have a negligible cost to revenue over the forward estimates. We strongly believe in budget repair. It's fair, and we will continue to push the government to follow our lead. We believe that the current government's last budget was anything but fair.

In conclusion, the current bill before the House makes important amendments to Customs Tariff Act 1995. These matters may seem trivial or minor in comparison to other issues and other matters dealt with in this place, but incorrect classifications and tariffs have real financial impacts for Australian businesses, consumers and individuals. If the incorrect tariff is applied to the goods, either the government loses tariff revenue or consumers face price increases as companies pass on these costs to consumers. I am thankful for the clarification and reminder of what constitutes a mosaic tile and that we've had the opportunity today to correct the many errors made by the government in this one area.

We—that is, Labor—will also continue to engage with industry when determining tariff classification to hold to government to account when they fail to do so. We will work with the automotive industry as it transitions. We will continue to support Australian businesses and ensure the framework relating to tariffs is clear and functional, and for that reason we commend the legislation to the House and support the government's bill.

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

I thank the shadow minister, the member for Blair opposite, for his contribution to the debate. I thank him for his eloquent explanation of mosaic tile classifications. I know that will be the talk of Bunningses around the country in coming weeks and months! I do appreciate his good candour. I do appreciate his commitment to an error-free administration at some point in the future. This tape committing to error-free customs tariff amendments in hundreds of thousands of line items may come back to haunt him one day!

I want to say to the house that the Customs Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017 contains a number of amendments to the Customs Tariff Act 1995 that will assist Australian businesses and consumers. The first amendment incorporates the Customs Tariff Proposal (No. 1) 2017 into the act, ensuring that the correct customs duty rate of free is legislated as tariff subheading 6907.30.10, which applies to certain mosaic tiles. The second amendment extends existing concessional arrangements for imports of automotive prototypes and components to include automotive service providers, and the third amendment removes the $12,000 special duty on used and second-hand motor vehicles. The special duties is rarely applied as importers are able to seek exemptions. The final collection of amendments will improve the usability of the act by simplifying the classification of certain machining centres, realigning Australia's classifications of the chemical Paraquat dichloride with international practice, and making some minor formatting corrections. I appreciate the member opposite's commitment to good grammar and the government's commitment also to good grammar. Notwithstanding that we do not have to go into committee over the grammar of the bill, I do commend the bill to the House.

Question agreed to.

Bill read a second time.