Monday, 30 August 2021
Customs Tariff Amendment (Incorporation of Proposals) Bill 2021; Second Reading
I rise to contribute to the debate on the Customs Tariff Amendment (Incorporation of Proposals) Bill 2021. I indicate from the outset that Labor will support this bill. The Customs Tariff Amendment (Incorporation of Proposals) Bill amends the Customs Tariff Act 1995 to incorporate customs tariff proposals that provided concessional rates of customs duty to a number of products. Firstly, the bill will amend and extend the free rate of customs duty for prescribed medical or hygiene products that are capable of use in combating the novel coronavirus that causes the disease known as COVID-19. The products include face masks, gloves, clothes or gowns, goggles, glasses, eye visors, face shields, soaps, COVID-19 test kits and reagents, viral transport media and disinfectants. This is obviously an important step as we continue to fight the COVID-19 pandemic, although it goes without saying that our fight has been made all the harder by the failures of the Morrison government in managing the pandemic. Prime Minister Scott Morrison had two jobs this year: a speedy, effective rollout of the vaccine, and quarantine. He has failed both. As such, this measure is now more necessary than ever.
The bill also lists new items to provide a free rate of customs duty for goods that are for use in the program known as the F-35 Lightning II Joint Strike Fighter program. Under the memorandum of understanding for the development of the Joint Strike Fighter, Australia has committed to achieving tax neutrality under the F-35 Lightning II Joint Strike Fighter program. However, goods imported for use in this program, such as parts for general use and certain textile items, may have an applicable rate of customs duty of up to five per cent. As such, this bill will provide a free rate of customs duty for goods, ensuring we meet our obligations under the MOU.
The bill will also add new items to provide a free rate of customs duty for prescribed motor vehicles and motor vehicle components for research and development activities by automotive service providers previously registered under the Automotive Transformation Scheme. Registrations of automotive service providers under the Automotive Transformation Scheme ended on 31 March 2021, by operation of the Automotive Transformation Scheme Regulations 2010. As such, automotive service providers are no longer able to access the concessional rate of customs duty. The explanatory memorandum to this bill states:
Automotive service providers maintain a significant Australian presence, including through the engineering services and design and product development.
The prescribed motor vehicles and components are those which are used in:
… testing, quality control, manufacturing, evaluation or engineering development of motor vehicles designed or engineered, or in the process of being designed or engineered, in Australia by a person who was registered as an automotive service provider under the Automotive Transformation Scheme …
Labor supports all of the measures outlined in this bill. We will move to pass it quickly, and we will not support any amendments in the committee stage. As such, I commend this bill to the Senate.
I must say it's pleasing to follow my friend from Queensland and to hear that the Labor Party, the other governing party of this country, is prepared to support this legislation and to do so as efficiently and quickly as possible, so I won't speak for too long. I want to make a few points. The first is that the Customs Tariff Amendment (Incorporation of Proposals) Bill 2021 amends the Customs Tariff Act 1995 to incorporate three proposals. Shortly I'll speak to each of them. The first is with respect to medical and hygiene products, the second is with respect to imported goods for the F-35A Lightning II Joint Strike Fighter program, and the third is with respect to certain motor vehicle components.
Firstly, in relation to medical and hygiene products, as Senator Watt mentioned, the specific ambit of this proposal is to capture those medical and hygiene products which have a role to play in combatting the COVID-19 virus. Putting to one side Senator Watt's somewhat gratuitous comments with respect to the federal government, I would commend all the Australian companies within our borders that have been manufacturing those products. They've been doing a sterling job in ensuring that we have the sovereign capacity to manufacture those products which are needed by the Australian people. Having said that, it is important that we remove the customs duty with respect to the products which need to be imported. It should be noted that there will be $3.8 million of costs incurred in the budget over the estimates period in relation to this measure, but I certainly would have thought that it's clearly to the benefit of the Australian community for those costs to be borne and for those medical and hygiene products to be imported free of customs duty and used by the Australian people.
Secondly, for one moment I want to touch on how significant the MOU is that was entered into with respect to the Joint Strike Fighter program. This is an MOU that was entered into by the Australian, Canadian, Danish, Italian, Norwegian, British, US and Turkey governments in relation to the Joint Strike Fighter. It's an extraordinary achievement for those nations to enter into that agreement. I want to read some of the recitals from that MOU to underline the importance of this agreement, because there may be an amendment coming from some in this chamber on this issue. The first is:
Recognizing the benefits to be obtained from international cooperation regarding standardization, rationalization, and interoperability of military equipments ...
The second is:
Desiring to cooperate in the production, sustainment, and follow-on development of the Joint Strike Fighter ...
The third is:
Recognizing the benefits of continued cooperation in the JSF Program ...
The fourth is:
Seeking to establish a model for international cooperative acquisition programs ...
That underlines the significance of this MOU: 'Seeking to establish a model for international cooperative acquisition programs'.
The fifth is:
Affirming their intent to use their best efforts to ensure that international cooperation under this ... MOU will maximize benefits ... that will accrue to each of them ...
That includes the Australian people and the Australian government with respect to manufacturing within the country. The sixth is:
Seeking to establish a robust vehicle of cooperation that will span the life cycle of the JSF Air System ...
The seventh is:
Recognizing the importance of technological and industrial cooperation to the national security of all Participants ...
And the eighth is:
Recognizing that industrial participation will be an important parameter in the Participants' various national decision-making processes ...
You can see the significance of the MOU that was entered into in relation to the Joint Strike Fighter program. It is extraordinarily significant. Nine countries are engaging in international cooperation with respect to a major military procurement project. It's an extraordinary MOU and an extraordinary precedent, which is extremely important.
In the second part of the bill, providing that the custom duties will be free with respect to the Joint Strike Fighter program—and I'll speak about that in a moment—gives effect to the obligations that this country has entered into under the MOU. Australia actually has obligations under the MOU in this regard. We already have those obligations under that international agreement which has been entered into by this country, and everyone in this chamber should recognise those obligations which have been entered into under that agreement.
I want to talk about section 16 of the MOU, the agreement which has been entered into by the Australian government. Section 16.1 provides:
Customs duties, import and export taxes, and similar charges will be administered in accordance with each Participant's respective laws and regulations.
So it is recognised on the face of the MOU that our customs duties will be governed by Australian laws—Australian customs governed by Australian laws, and that's as it should be. Second, it says:
Insofar as existing national laws and regulations permit, the Participants will endeavor to ensure that such readily identifiable duties, taxes and similar charges, as well as quantitative or other restrictions on imports and exports, are not imposed in connection with work carried out under this MOU …
That's the obligation in the MOU which has been entered into by the Australian government. It requires the Australian government to actually go through the process, which has now been gone through, with respect to the Joint Strike Fighter Program, so we're actually meeting our obligation.
It should also be recognised that, if this legislation were not passed for any reason—and that obviously isn't going to occur given the opposition is supporting the government in relation to this legislation—that wouldn't change the situation; the Australian government would still have to bear the cost of the duties, because there's another clause under section 16 which provides that, in the event this legislation were not passed, that cost would simply be added to the costs Australia has to bear under the Joint Strike Fighter program. Some may wish to vote against this bill, and we'll wait and see if they do, but, under section 16 of the MOU, even if they did, it wouldn't change the economic result at all. Australia would still have to bear the cost, which has been estimated to be in the order of $6.7 million. Australia would still have to bear its share in relation to that customs duty. So, even if those who are thinking of voting against this bill were to do so, it wouldn't really change the economic consequence, which I again stress has been entered into by the Australian government.
The third section of this bill deals with the motor vehicle industry and componentry industry with respect to goods imported in pursuit of the Automotive Transformation Scheme. In that respect, I fully support all of the government's measures; I'm passionate about all of the government's measures with respect to enhancing manufacturing in Australia and my home state of Queensland. Senator Stoker, who's in the chamber at the moment, would know there are great companies in Queensland doing wonderful things in the manufacturing space, and that's absolutely important for our Australian manufacturing sovereign capacity. With that, I commend the bill to the chamber.
At the request of Senator Steele-John, I move:
At the end of the motion, add ", but the Senate notes that the continued rollout of the Joint Strike Fighter program:
(a) is a profligate and unnecessary waste;
(b) is marred by technical failures and of increasingly limited strategic value; and
(c) should be immediately cancelled".
The Customs Tariff Amendment (Incorporation of Proposals) Bill amends the Customs Tariff Act to implement measures that encourage continued research and development in the automotive sector, enable Australia to fulfil defence commitments and facilitate access to supplies that support the health and wellbeing of the Australian community.
The bill incorporates three customs tariff proposals that were tabled in parliament earlier this year. Customs Tariff Proposal (No. 1), which was tabled in February, extended to 30 June 2021 the free rate of customs duty for prescribed medical and hygiene products, such as face masks and certain disinfectants. Customs Tariff Proposal (No. 2), tabled in March, provided for concessional treatment for imported goods for use in the F-35 Lightning II Joint Strike Fighter program. Customs Tariff Proposal (No. 3), which was tabled in May, provided for the concessional treatment of prescribed goods that are for use in research and development activities in motor vehicles or their components where they are designed or engineered in Australia. In accordance with these customs tariff proposals, the amendments in this bill will extend existing schedule 4 item 57 and insert new items 51 and 39A into the Customs Tariff Act.
I thank senators for their contributions to the debate, and I commend the Customs Tariff Amendment (Incorporation of Proposals) Bill to the Senate.