Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

The purpose of the Tradex Scheme Amendment Bill 2008 is to decouple Tradex from duty drawback, thereby removing unintended consequences to Tradex of changes made to duty drawback in September 2006. It is also designed to strengthen the regulatory procedures surrounding Tradex. Tradex is a coalition government initiative which commenced on 24 June 2000. It was introduced through the coalition government’s 1997 ‘Investing for Growth’ industry statement. Under Tradex, duty and GST are exempted upfront for imported goods intended to be re-exported or used in the manufacture of goods destined for export. Importers are the focus of Tradex. Tradex is closely related to and coupled in legislation with duty drawback, under which exporters can make a claim for reimbursement of the duty and GST on goods imported into Australia and subsequently re-exported. Exporters are the focus of duty drawback.

This bill will do two things. Firstly, it will decouple Tradex from duty drawback. Changes made to duty drawback in October 2006 specifically restrict to exporters and their assignees eligibility for a duty drawback refund. Since Tradex is aimed at importers, this prevents importers from claiming if they import the good but are not the ultimate exporters of a good or value added good—for example, if they have on-sold to a manufacturer who then exports the product. Secondly, the bill improves the administration of Tradex, most specifically in increasing the powers of the Secretary of the Department of Innovation, Industry, Science and Research, and in issuing and revoking or suspending Tradex orders. The bill also introduces an increased burden of proof on Tradex claimants that the nominated goods will be re-exported.

Having said that, I do believe that more can be done to improve this scheme, and I would urge the government to consider these suggestions. While I support the tightening of procedures regarding claiming for Tradex, it has been brought to my attention that there remains a possible loophole which may need to be addressed. As the scheme stands, there is nothing in place, I am informed, which would prevent an importer from importing, say, brand-name handbags and then selling those very same handbags to international tourists, who would then take those handbags—that is, export them—back out of the country. The importer could, under Tradex, claim an exemption for duty and GST. I am sure that the minister and the government would agree that, if my information is right, this is very much against the intent and spirit of Tradex. The goods have not been value-added in any way, nor have they been used in manufacturing in Australia. I urge the government to advise on my suggestions and, if they are found to be correct, I would ask Labor to consider closing this loophole. At the same time, I would also ask the government to consider streamlining the administration of the scheme from the importer’s point of view. The scheme should be as easy as possible to access, without compromising its rigour.

Currently, importers are required to get very specific licences to import under Tradex. This could be much broader—that is, it could give an importer a licence to import generally under Tradex. This would greatly reduce the required paperwork, and it would not necessarily weaken the scheme as, under the amendment bill before us today, importers will be required to prove the product will be re-exported anyway.

The issues I have raised need assessment and possible addressing at a future time. These issues have been raised with me since the coalition’s original bill was tabled. I would be surprised if Labor has not received similar feedback. Nevertheless, since this is a bill of the former coalition government, the coalition supports its passage.

Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

I thank the Senate for its consideration of the Tradex Scheme Amendment Bill 2008. This is an urgent matter that requires the attention of the chamber and I thank the opposition for their consideration in ensuring that this matter is treated as non-controversial. With regard to the matters that Senator Abetz has raised with me, quarters that know a great deal about these questions have suggested to me that in terms of the ‘Louis Vuitton issue’, where tourist shopping operators are able to use the scheme, the decoupling of Tradex from the drawback regulations will clarify these circumstances and the eligibility of other tourist shopping operators for Tradex refunds without impacting on that eligibility. The changes apply to existing Tradex users. They will be able to ensure that the new arrangements will have no material effect on existing operators and that the eligibility will become more certain. I am advised that the requirements of this scheme allow for the secretary to approve the concessions that are available and to ensure that requirements are met to the best interests of the users of the scheme. Again, I thank the Senate for its consideration of the bill.

Question agreed to.

Bill read a second time.