Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Attorney-General) Share this | Link to this | Hansard source

Labor supports the passage of the Customs Tariff Amendment (Incorporation of Proposals) Bill 2006. The bill seeks to implements two customs tariff proposals in legislation to, firstly, reduce the rate of customs duty from three per cent to zero for machinery that incorporates or is imported with other goods which, for technical reasons, render the machinery ineligible for a tariff concessions order under Customs Tariff Proposal No. 4 2005. Secondly, the bill allows for duty-free entry of certain aircraft parts, materials and test equipment used in the modification of aircraft under Customs Tariff Proposal No. 1 2006, and also expands the Enhanced Project By-law Scheme, the EPBS, to include the duty-free entry of qualifying goods for the power supply and water supply industries in Customs Tariff Proposal No. 1 2006.

The structure of the bill is such that schedule 1 incorporates Customs Tariff Proposal No. 4. Item 1 amends the existing item 47 of schedule 4 of the Customs Tariff Act 1995 to repeal the rates of duty and substitute a duty-free status. The financial impact statement states that the cost to revenue will be a loss of $2 million per annum. Item 2 provides that the changes are taken to apply where the goods were imported on or after 11 May 2005. For goods imported before 11 May 2005 where the calculation occurred before 11 May 2005, this item has retrospective effect to the 2005 budget.

Schedule 2 incorporates Customs Tariff Proposal No. 1 2006. Item 1 amends the existing item 31, which allows for the duty-free entry of certain aircraft parts, materials and test equipment in schedule 4 of the Customs Tariff Act 1995 to add goods for aircraft modification to the list of goods determined to the duty free. Presently this is restricted to goods only for repair or maintenance. The financial impact statement states the cost to revenue as a loss of an unquantifiable but minor nature.

Item 2 repeals and replaced the existing item 71, which underpins the EPBS to include the power supply and water supply industries under the scheme. The financial impact statement states that the cost to revenue is a loss of $10 million per annum in each of the financial years from 2006-07 to 2009-10. Item 3 provides that item 1 applies to goods that are entered for home consumption on or after 1 July 2006. Effectively, this means that item 1 will have retrospective effect to the beginning of the 2005-06 financial year. Item 4 covers transitional arrangements.

The EPBS provides tariff duty concessions on eligible capital goods of significant sized projects in the mining, resource-processing, food-processing, food-packaging, manufacturing, agricultural and gas supply industry sectors. The bill before us will retrospectively expand this scheme from 1 July 2006 to include the power supply and water supply industries. The proposal was previously announced by the government in the federal budget. According to the explanatory memorandum, the EPBS has four objectives, which are:

• to encourage and enhance investment in the establishment of world class operations;
• to encourage the involvement of Australian industry in supplying goods and services;
• to lower input costs for industry where there are sound reasons for doing so; and
• to facilitate Australian industry participation in domestic and international supply chains.

The EPBS enables eligible goods not made in Australia or goods technologically superior to those made in Australia to be imported duty free. They include functional units—that is, machinery integrally connected to perform a process—procurement packages and equipment packages; a quantity of the same type of machinery, equipment or their components which are used across the project; parts, pipelines, conveyers and flexible flow lines; and stainless steel materials to be directly incorporated into the goods identified above. Under the EPBS, eligible goods can be imported in separate shipments and still be eligible, but applications must be lodged before the eligible goods are imported. Whilst these customs tariff proposals do not necessarily represent Labor’s priorities, Labor is prepared to facilitate passage of the bill.

Chris Pearce (Aston, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Link to this | Hansard source

It is my pleasure to represent the Minister for Justice and Customs and the Attorney-General in summing up this bill this morning. The Customs Tariff Amendment (Incorporation of Proposals) Bill 2006 contains amendments to the Customs Tariff Act 1995 that were included in Customs Tariff Proposal No. 4 of 2005 and Customs Tariff Proposal No. 1 of 2006.

Firstly, the bill will alter item 47 of schedule 4 to the Customs Tariff Act by reducing the rate of customs duty from three per cent to free for goods entered under this item. Item 47 applies to machinery that incorporates, or is imported with, other goods which for technical reasons render the machinery ineligible for a tariff concession order. The lowering of the duty rate maintains consistency with the 2005-06 budget decision to remove the three per cent duty on business inputs that are subject to a tariff concession order.

Secondly, the bill alters item 31 of schedule 4 to the Customs Tariff Act. This item allows for duty-free entry of certain aircraft parts, materials and test equipment for use in the manufacture, repair and maintenance of aircraft. The bill proposes to amend item 31 by extending duty-free entry to certain goods used in the modification of aircraft. The extension of item 31 will strengthen the international competitiveness of Australia’s aviation and maintenance industries, and is consistent with the government’s policy to improve the international competitiveness of these industries.

Finally, the bill will alter item 71 of schedule 4 to the Customs Tariff Act by expanding the Enhanced Project By-law Scheme to include the duty-free entry of qualifying goods for the power supply and water supply industries. The inclusion of the power supply and water supply industries in the terms of item 71 will encourage investment, increase opportunities for Australian industry to participate in major projects and lower business input costs. I want to thank the member for Gellibrand for her remarks, and through her I thank the Australian Labor Party for supporting this bill. I commend the bill to the House.

Question agreed to.

Bill read a second time.