John Faulkner (NSW, Australian Labor Party, Cabinet Secretary) Share this | Hansard source

I table a replacement explanatory memorandum relating to the Fisheries Legislation Amendment (New Governance Arrangements for the Australian Fisheries Management Authority and Other Matters) Bill 2008 and revised explanatory memoranda relating to the Tax Laws Amendment (2008 Measures No. 2) Bill 2008, the Tax Laws Amendment (2008 Measures No. 3) Bill 2008, and the Excise Legislation Amendment (Condensate) Bill 2008 and a related bill, and move:

That these bills be now read a second time

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

CIVIL AVIATION LEGISLATION AMENDMENT (1999 MONTREAL CONVENTION AND OTHER MEASURES) BILL 2008

The Civil Aviation Legislation Amendment (1999 Montreal Convention and Other Measures) Bill 2008 will modernise Australia’s arrangements for air carriers’ liability. It does this by implementing the Convention for the Unification of Certain Rules for International Carriage by Air done at Montreal on 28 May 1999, known as the Montreal Convention.

In addition, the bill will make amendments to modernise and update various legislative provisions related to scope of carriers’ liability.

The Montreal Convention updates the arrangements applying to the liability of air carriers during international carriage of passengers and cargo. This includes the liability arrangements for:

• the death or injury of a passenger;
• the loss or damage to a passenger’s baggage;
• the loss or damage to a freight shipment, as well as:
• delays to the scheduled arrival of a passenger, baggage or freight.

At the moment, liability arrangements for international travel are usually determined with reference to the ‘Warsaw Convention’, and its amending protocols and treaties. Under the Warsaw system, in some circumstances the amount of compensation is limited to a cap that was set in the 1920s. This cap has not been adjusted for inflation, and is set in a currency that no longer exists – that being the ‘franc poincare consisting of 65.5 milligrams of gold of millesimal fineness 900’.

The Montreal Convention modernises these arrangements to ensure that equitable compensation is available to injured passengers.

The Montreal Convention removes the cap on carriers’ liability, and provides for a two-tier system of liability. Applicants will be able to claim up to 100 000 Special Drawing Rights, equivalent to around $172 000 Australian dollars, as at 25 February 2008, on a strict liability basis. Up to this limit, the applicant will not need to prove that the carrier was at fault. Damages above the 100 000 Special Drawing Rights threshold are available to the claimant, unless the air carrier is able to prove that the damage was not caused by the negligence or other wrongful act or omission of the carrier, its servants or agents.

Another advantage of the Montreal Convention is that it provides for a ‘fifth jurisdiction’ to hear claims for damages. The ‘fifth jurisdiction’ allows passengers to bring an action for damages in the country where the passenger resided at the time of the accident, provided it is a country that is serviced by the carrier, and the carrier has premises in that country. This will make it easier for Australians to enforce their legal rights in Australia, rather than having to deal with the legal system in a foreign country. 

The Montreal Convention has important benefits for business.

It will help business by creating efficiencies in the paperwork associated with the transportation of passengers and cargo. It does this by allowing simplified electronic records to be used for both freight and passenger air transport. This means that business will no longer have to use the old fashioned system of paper-based waybills, and can instead use improved electronic billing systems.

Finally, the bill will modernise the language associated with some of the legislative provisions dealing with carriers’ liability. It will do this by inserting a definition of family member into the Civil Aviation (Carriers’ Liability) Act 1959, while removing references to children who are ‘legitimate’ and ‘illegitimate’. The new definition affects who can enforce liability under the Act in the event of a passenger death.

The categories of family member who will be able to enforce liability will be expanded. It will now include step-siblings and wards of the passenger; as well as any foster-sibling, foster-child or guardian who is wholly or partly dependent on the passenger for financial support. Additional categories of family member will be able to be prescribed by regulation. This will allow the Government to quickly implement any future Government policy decisions in relation to families.

The bill will implement these changes by making amendments to:

• the Civil Aviation (Carriers’ Liability) Act 1959;
• the Air Accidents (Commonwealth Government Liability) Act 1963; and
• the Civil Aviation Act 1988.

The bill introduces a new Part IA to the Civil Aviation (Carriers’ Liability) Act 1959 to give the Montreal Convention the force of law in Australia. Part IA is modelled on Part II, but amended to give effect to the Montreal Convention. Like other parts of the Act, the bill includes provisions which give certain Articles of the Convention a particular application to suit Australia’s judicial system and legal policy.

The bill will not implement the Convention for the purposes of domestic carriage within Australia. Domestic carriers will continue to be governed by Part IV of the Carriers’ Liability Act, which provides for liability limits of $500,000 Australian dollars.

The Joint Standing Committee on Treaties has supported accession to the Convention. The Committee recommended binding treaty action be taken in its Report number 65, tabled on 20 June 2005. The implementation of the provisions of the Convention by this bill is a necessary step towards this. Australia is currently the only OECD country not to have signed the Montreal Convention. The countries most Australians travel to ratified the Montreal Convention years ago. The USA, Japan, China and New Zealand ratified in 2003, and the United Kingdom and most European countries ratified in 2004.

The Montreal Convention provides improved consumer protection to international air passengers and cargo consignors when the country of destination or origin is also a party to the Convention. It also facilitates important business efficiencies. 

Acceding to it will maintain Australia’s international standing as a leading nation in international aviation reform. I commend the bill to the Senate.

CUSTOMS AMENDMENT (STRENGTHENING BORDER CONTROLS) BILL 2008

I am pleased to introduce the Customs Amendment (Strengthening Border Controls) Bill 2008. It contains amendments to the Customs Act 1901 that will strengthen border enforcement powers for Customs officers and implement three new regimes to allow Customs greater flexibility in dealing with the importation of prohibited imports.

Presently, Customs officers may board a ship or aircraft under the Customs Act for various border enforcement purposes. These purposes generally involve the apprehension of suspected offenders against the Customs Act, the Criminal Code or any other prescribed act, like the Fisheries Management Act 1991 or the Migration Act 1958.

Personal search powers cannot be invoked until such time as officers on board a vessel can form a reasonable suspicion that it has been engaged in the commission of an offence.

However, there have been an increased number of occasions in more recent times where officers have faced resistance when boarding foreign ships suspected of being involved in illegal activities, and where evidence of illegal activities have been disposed of before they could be secured by the officers.

The proposed amendments in the bill will enable the officers to, immediately upon boarding a suspicious ship or aircraft, search persons on board for:

• weapons;
• items that may have helped a person escape; and
• evidence of the commission of an offence.

The search powers are appropriate because they will significantly reduce the threat of harm to these officers while exercising their powers, help prevent the escape of persons detained on suspicion of committing an offence and help prevent evidentiary material from being disposed of.

Upon finding any of these items, an officer will be able to take possession and retain the item for 60 days until:

• the reason for retaining the item no longer exists;
• until the item is not used in evidence;
• or any extension is granted from the court.

The bill also clarifies the use of the frisk powers for search by creating a single definition that applies to the whole Customs Act.

The bill also implements three new regimes to allow Customs greater flexibility in dealing with the importation of prohibited imports that are low value and low risk and provides Customs officers with additional powers to deal efficiently with prescribed prohibited imports of this sort.

Presently, Customs only has the power to seize imports, and that is a time consuming and resource intensive process.

This bill will enable Customs to establish a tiered response to sanctions for dealing with prohibited imports.

First of all, the bill allows a person to voluntarily surrender certain prohibited imports that have not been concealed.

Secondly, infringement notices might be issued for certain offences including importing certain prohibited imports and border security related offences; and, thirdly, it allows the granting of post-importation permissions for certain prohibited imports, rather than the automatic seizure of the goods.

This bill allows Customs officers to perform their role more effectively and more efficiently

CUSTOMS LEGISLATION AMENDMENT (MODERNISING) BILL 2008

This bill contains amendments to the Customs Act 1901 and the Customs Legislation Amendment and Repeal (International Trade Modernisation) Act 2001 to improve the operation of:

• the new SmartGate solution;
• the Certificate of Origin requirements for the Singapore-Australia Free Trade Agreement;
• customs brokers’ employment arrangements; and
• the duty recovery and payments of duty under protest.

Customs introduced SmartGate, a so-called automated passenger-processing solution, in August 2007. What SmartGate does is allow air passengers and crew to use an automated clearance process through the immigration point at the border.

This bill will amend the Customs Act to ensure that any false and misleading information provided using the SmartGate solution is covered by the existing offence provisions related to making false and misleading statements to an officer of Customs.

The bill also gives effect to recommendations of the first Ministerial Review of the Agreement by Australia and Singapore in July 2004. They would allow importers to provide less documentation to Customs when claiming preferential rates of duty on imported goods under that agreement.

To recognise the changing employment practices that are taking place in the customs brokers’ community, this bill will also remove the present restrictions in the Customs Act which prohibit individual customs brokers from being employed by more than one customs brokerage at the same time.

The bill further amends the Customs Act to limit the time for the recovery of customs duty to four years in all cases, except in the case of fraud or evasion where no time limit will apply. This proposed new regime is a response to the decision of the High Court in Malika Holdings Pty Ltd against Stretton, a case decided in 2001, and it is consistent with the existing regime for the recovery of other indirect taxes.

The bill will also clarify the process for making a payment of customs duty under protest. Further, the bill will amend the Customs Act to enable the chief executive officer, in certain circumstances, to offset an amount of unpaid duty on goods against any amount of refund or rebate the owner would be eligible for if the owner pays that duty.

This is a bill which assists the administration of Customs by making a number of provisions which will modernise the relevant legislation and, as I say, improve the administration of Customs in consequence.

CUSTOMS TARIFF AMENDMENT (TOBACCO CONTENT) BILL 2008

The Customs Tariff Amendment (Tobacco Content) Bill 2008 contains a minor amendment to the Customs Tariff Act 1995.

This bill will insert a definition of ‘tobacco content’ into the Customs Tariff Act. While ‘tobacco content’ is referred to in the Act, there is no definition of what this actually means. The amendment will specify that the existing references to ‘tobacco content’ include anything added to the tobacco leaf during manufacture or processing.

The amendment confirms that the customs duty payable on tobacco and tobacco products is based on the total weight of the goods.

The measure reflects what has been the practice of the Australian Customs Service and industry since the introduction of the term in 1999, however, the current lack of certainty about the definition poses a potential risk to revenue.

The introduction of this definition into the Customs Tariff Act will protect revenue by confirming and maintaining current practice with regard to imported tobacco products.

The term ‘tobacco content’ was first introduced into the Customs Tariff on 1 November 1999. As a result, the measure contained in this bill will apply from that date.

EXPORT MARKET DEVELOPMENT GRANTS AMENDMENT BILL 2008

The Government went to the election with a plan to improve Australia’s export performance.

We made a clear commitment to revitalise Australia’s trade policies and structures.

The introduction of the Export Market Development Grants Amendment Bill 2008 represents a down payment in the process of restoring trade policy settings to a more sustainable position.

And further reforms will follow the major review of trade policies and programs I have already announced.

The Review will be chaired by well known businessman John Mortimer with the assistance of leading economist John Edwards.

Given the challenges we are confronting in the global environment, and given Australia’s poor performance on trade over the past decade, now is the time to review how we should be shaping our policy approach for the 21st Century.

This is a review for the future. It will assess how we can again improve our productivity and competitiveness to ensure we can take up emerging trade opportunities.

We need to learn from the success of the 80s and 90s in meeting the challenges of the future. We need to look at what is needed for the new millennium, with all the intervening challenges and opportunities.

One of my expectations for the Review of Export Policies and Programs is to receive advice on the formulation of a more strategic whole-of-government approach to advancing Australia’s international economic and commercial interests. We must look at how we formulate our domestic policy settings in a way that ensures they are all working towards enhancing our level of productivity, international competitiveness and export performance.

The Rudd Government is focusing on Australia’s level of international competitiveness and the review’s advice will be instrumental in that process. The review will also make an assessment of the challenges and opportunities currently facing Australian exporters and international business. It will assess the investment revolution that has been occurring within Australia and globally. It will look at what is happening in terms of both inward and outward investment in Australia.

Australian direct investment abroad now rivals foreign direct investment in Australia. In just 20 years the stock of Australian direct investment abroad increased from 32 per cent to 92 per cent of the stock of foreign investment in Australia. Given these trends it will not be long before Australian business assets abroad exceed foreign business assets in Australia.

This is not Australian companies exporting jobs. Rather it is ensuring that they are a part of the global production and supply chains.

The Howard Government’s failure to invest in the drivers of economic growth – skills, education, innovation and IT – their failure to develop an integrated trade and economic policy contributed to one of Australia’s worst trade performances in our history.

Under the last six years of the Howard Government – and despite the resources boom:

• Total export revenues grew at an annual average rate of only 5.8 per cent compared with 10.7 per cent in the 18 years following the float of the dollar in 1983;
• Goods exports grew at an average annual rate of 6.4 per cent compared with average growth of 10.3 per cent since 1983;
• Services exports grew at about a third of their long term average;
• Manufacturing export growth collapsed—growing at only 3 per cent compared to 13 per cent since 1983.

The Howard Government’s poor trade performance bequeathed Australia:

• A trade deficit for more than five consecutive years;
• A trade deficit for the December 2007 quarter of $6.9 billion which was the worst quarterly trade deficit on record;
• 69 consecutive months of goods and services trade deficits;
• A current account deficit at record levels of around 6 per cent of GDP;
• Soaring foreign debt of $554 billion in 2006-07; and
• Net exports making a positive contribution to Australia’s economic growth in only two of the past 11 years while during the previous Labor Government net exports made a positive contribution to growth in 10 of the 13 years.

This is a sorry story and like so much of the Howard legacy a squandered opportunity.

In 2001 and then again at the 2004 election the Coalition promised to double the number of exporters.  They failed to meet their own target by almost 50%.

It is critical that as part of the economic reform agenda the new Government does all it can to restore Australia’s trade performance:

• to ensure that our trading sector once again becomes a positive contributor to economic growth
• to ensure the Australian economy will be sustainable beyond the resources boom.

The Rudd Government is committed to the implementation of a trade policy that will restore Australia’s level of productivity, international competitiveness and export growth.

This will be pursued in the context of the twin pillars approach to trade policy for sustainable economic growth.

That is, trade liberalisation at the border will be complemented by economic and trade reform behind the border. There’s not much point making progress on the tough fight to secure improved market access opportunities if we are not productive and competitive enough to take them up.

Multilateral trade liberalisation will be a central component of the first pillar for sustainable economic management. We will be pressing for multilateral liberalisation across all sectors – agriculture, industrial products and services.

Since the establishment of the GATT, the international trading system has evolved and strengthened over the past six decades. The gains have been profound:

• World trade growth has consistently outstripped world economic growth.
• World trade is now worth around one-quarter of global GDP.
• And world trade has been growing twice as fast as world output over the past five years.
• Tariffs have been steadily reduced.
• The Uruguay Round, which established the WTO, for the first time opened up trade in world agriculture and services, as well as establishing a regime to deal with trade-related intellectual property rights
• The Uruguay Round also established the WTO’s dispute settlement system to rule on trade disputes and to enforce its rulings.

A successful conclusion to the WTO Doha Round would help to provide a much-needed degree of certainty and a confidence boost to the global outlook. As I have said on a number of occasions securing an outcome this year will be difficult, however I believe it is doable.

I am encouraged by the political commitment that was displayed at the Davos meeting I attended in January. The strength of that political commitment will be apparent over the next few months as we seek to make real progress.

I am committed to again providing strong leadership of the Cairns Group and effective representation of its interests, recalling that it was the last Labor Government which established the Group and provided it with the leadership it needed to pursue its interests in the Uruguay Round.

As Chair of the Cairns Group I will not only be working to press the group’s interests but will reach out to other groups to see where common positions lie and where differences remain.

Labor will seek to complement trade liberalisation gains derived from the multilateral process at the regional level through APEC and the ASEAN plus 6 - that is ‘WTO plus’.

We believe that the previous Government dropped the ball on APEC. It didn’t provide it with the attention, energy or drive necessary over the past decade. It squandered the opportunity last year as host of APEC to truly position APEC within the region.

Labor is committed to restoring APEC as the pre-eminent regional forum.

It was the last Labor government that initiated and sold the idea of APEC to the region, and drove its liberalisation momentum via the Bogor Goals.

We will also take every opportunity provided by the ASEAN plus 6 to pursue deeper integration into the region and use these forums to pursue our trade and economic objectives.

At the bilateral level comprehensive FTAs can further advance and deepen liberalisation measures – that is ‘WTO plus plus’.

We are currently engaged in intensive efforts, with New Zealand, to integrate with ASEAN, through the ASEAN-Australia-New Zealand FTA (AANZFTA) negotiations.

We are also continuing FTA negotiations with Japan, China, the Gulf Cooperation Council, Chile and Malaysia.

FTA studies are also either being conducted or are under consideration with Korea, Mexico, Indonesia and India.

The Rudd Government has recalibrated Australia’s trade liberalisation policy back to where it should be - back to where Australia’s trading interests really lie.

The previous government reversed the order. They put all of their eggs in the FTA basket – squandering the opportunity to achieve substantial gains for Australian industry by making a real commitment to the Doha Round.

So this government will make the Doha negotiations our central trade priority – as they should be – complemented at the regional and bilateral level by the other liberalisation efforts.

Important as trade negotiations are, the real benefits of liberalisation will only be maximised if countries tackle ambitious reform agendas behind the border.

That is another key message I have been delivering in the bilateral visits I have undertaken since I have been the Trade Minister, the message that all arms of economic policy must be working together to drive productivity growth.

Productivity growth is central to international competitiveness. And international competitiveness is, in turn, key to a strong and prosperous trade performance.

When it comes to trade and economic reform Labor has form. The Hawke and Keating Governments modernised the Australian economy from 1983 to 1996 via comprehensive economic and trade reforms of which tariff cuts in 1988 and 1991 were significant components. We opened up the economy, we floated the Australian dollar, we cut tariffs, we deregulated the financial sector, we achieved wage restraint via the Accord with the trade union movement to lock in low inflation, we secured retirement income reform, we instituted a national competition policy, we made significant cuts to company and personal income tax and we won greater independence for the Reserve Bank.

Those measures achieved the strong productivity growth of the 1980s and early 1990s that contributed much to double digit growth in Australia’s exports. As a result Australia emerged as one of the most open, flexible and competitive economies in the world.

As the second pillar of sustainable economic growth, Labor will again build on our economic and trade reform record to restore our level of productivity and international competitiveness and to restore our trading performance.

Trade policy is more than trade negotiations. It is integral to our economic sustainability beyond the resources boom. It’s about ensuring that our nation diversifies and secures growth though the expanding opportunities presented in world trade.

And that means meeting the challenge of building a productive and competitive Australia.

Gaining market access through multilateral, regional and bilateral agreements is only part of the picture.

We are working hard to improve market access but we are also determined to improve the export facilitation programs available to assist Australian firms work in difficult international markets.

Under existing legislation, the Government is required to initiate a review of the Export Market Development Grants scheme by 2010.

Given the integral role of the EMDG in the current mix of export policies and programs the EMDG review will be brought forward and undertaken as part of the Mortimer inquiry.

Economic policies designed to assist Australia’s exporters were cut, or faced funding shortfalls under the Howard Government.

The Export Market Development Grant scheme – which enjoys significant support among Australia’s business community – was cut in half in real terms since 1995-96.  A study of the scheme in 2000 concluded that it returns $12 of exports for every $1 of outlay.

The successful International Trade Enhancement Scheme and the Innovative Agricultural Marketing Program were abolished in 1996. A study of the ITES scheme in 2000 concluded that it returned $18 of exports for every $1 of outlay by the Government.

These schemes contributed to the success of export growth under Labor when it was last in government, with overall export revenues more than doubling throughout Labor’s time in office.

The former Government never really understood or valued these schemes.

In 1997-08 and in 2004-05 they made changes to both the eligibility criteria and the thresholds for the EMDG which made the scheme harder to access and, as a result, in six of the ten years following 1997-08 the scheme was underspent.

Business called for improved access to the scheme but those calls were ignored.

But Labor was listening and, during the election campaign last year, we committed to a number of improvements to the EMDG scheme.

By introducing the Export Market Development Grants Amendment Bill 2008 into the House today I am delivering in full on that commitment.

The provisions of this Bill represent a down payment, a start on improving the EMDG scheme to ensure that it better meets the needs of Australia’s export businesses.

Through this Bill we are delivering, in full, on key elements of the trade policy that we took to the election.

The measures I am announcing as part of the Bill before the House are unashamedly pro-business.

It amused me during the election campaign that the former government ran advertisements accusing me of being anti-business.

I have never been anti-business in my life.

I have always worked closely with business people and I have listened to them.

Business has been calling for the changes to the EMDG that are contained in this Bill for some time and we listened to business.

In all likelihood further improvements will be made to the scheme as a result of the work Mr Mortimer and Dr Edwards are doing.

They too are listening to business and their report will lead to further improvements to trade policies and programs.

The Rudd Government is a pro-business government.   

This Bill provides a much needed boost to exporters by enabling businesses incurring eligible promotional expenses during 2008-09 to be able to claim grants under more generous assessment criteria than those in place in recent years.

The Bill increases the maximum grant by $50,000 to $200,000.

It lifts the maximum turnover limit from $30 million to $50 million.

It reduces the minimum expenditure threshold by $5,000 to $10,000.

It allows costs of patenting products overseas to be eligible for EMDG support

And it increases the limit on the number of grants able to be received by a business from 7 to 8.

The EMDG scheme will be more accessible to services exporters by replacing the current list of eligible internal and external services with a new ‘non-tourism services’ category which will provide for all services supplied to foreign residents whether delivered inside or outside of Australia to be eligible unless specified in the EMDG Act Regulations.

It also allows State, Territory and regional economic development and industry bodies promoting Australia’s exports to access the scheme.  This provision has been warmly welcomed by a number of regional tourism authorities who, for the first time, will now be able to access the scheme.

Finally, business development programs like the EMDG scheme need good governance measures.

The previous Government removed the l