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Amendment Bill (No. 2) 1999
Date Introduced: 24 June 1999
House: House of Representatives
Portfolio: Justice and Customs
Commencement: The amendments reducing the
rate of customs duty on: imports of inputs to the manufacture of
information industries equipment are taken to have commenced on 1
July 1998; on imports of medical and scientific equipment are taken
to have commenced on 1 September 1998; and imports of certain
machines, parts or accessories for machine tools and robots are
taken to have commenced on 1 April 1999.
The major amendments proposed by the Bill:
- reduce the rate of customs duty to free on imports of inputs to
the manufacture of information industries equipment
- reduce the rate of customs duty to free on imports of medical
and scientific equipment, and
- reduce the rate of customs duty for certain machines, parts or
accessories for machine tools and robots.
As there is no central theme to the Bill a brief
background to each major amendment is outlined in the 'Main
Provisions' section outlined below.
Industry and public reaction to proposed
The amendments proposed by the Bill have not
been reported in the major dailies as having attracted any negative
industry or public reaction.
Schedule 3 amendments - information
The major amendments proposed by
Schedule 3 remove the customs duty on inputs to
the manufacture of information industries equipment. The origin of
the amendments can be said to be twofold, namely, to give effect to
a commitment announced in the Government's Investing For
Growth industry statement of December 1997, and to meet
Australia's obligations under the international Information
The Information Technology Agreement (ITA) was
the principal outcome of the first ministerial meeting of the World
Trade Organisation (WTO) held in Singapore in 1996. The ITA seeks
to eliminate tariffs on computers and other information technology
equipment by January 1 2000. Basically, the ITA is a list of
different hardware and software products on which duties will be
Major categories of products included in the ITA
are analogue and digital computer processing machines, input units
(e.g. scanners, keyboards), output units, (e.g. printers),
calculators, word processors, automatic teller machines, parts and
accessories of the above; static converts (power supplies) for ADP
machines and telecommunications devices, telephones and video
phones, facsimile machines, microphones, loudspeakers, telephone
answering machines, magnetic tapes and disks, transmission
apparatus (other than radio or television broadcasting apparatus),
digital still image video cameras, pagers, aerials and antennas,
capacitors, resistors, printed circuits and semiconductors
(including diodes, transistors, and photosensitive semiconductors),
optical fibre cables, certain digital photocopiers, and certain
measuring and checking apparatus.
Also included in the ITA is a broad range of
computer software, including CD-ROMs for reproducing phenomena
other than sound or image.
Australia, along with Canada, China (Taiwan),
the countries of the European Union, Hong Kong, Iceland, Indonesia,
Japan, Korea, Norway, Singapore, Switzerland, Turkey and the United
States were founding signatories to the ITA. Passage of the Bill
will enable Australia to implement the ITA.
On 8 December 1997 the Prime Minister released
the Government's Investing For Growth industry statement.
In relation to the Australian information technology industry the
Prime Minister made the following commitment:
The Government will also remove tariffs on
inputs to the manufacture of information industries equipment.
The major amendments proposed by
Schedule 3 reduce the rate of customs duty on
inputs to the manufacture of information industries equipment from
5% to free.
Schedule 4 amendments - medical and
The major amendments proposed by
Schedule 4 remove the customs duty on imports of
medical and scientific equipment, with the exception of goods which
are included in the passenger motor vehicle manufacturing plan
(e.g. speed indicators and revolution counters).
The amendments represent, for the most part, the
Government's response to the December 1996 report of the Industry
Commission on Australia's medical and scientific equipment
industries. In January 1996, the Government referred the medical
and scientific equipment industries to the Industry Commission. The
Industry Commission's report had two main aims, namely, to examine
the development potential of the Australian medical and scientific
equipment industries in domestic and export markets, and to
identify barriers to that potential being realised and suggest
measures to remove them.
In relation to tariffs on medical and scientific
equipment imports, the Industry Commission's findings included:
The value of imported medical and scientific
equipment, which is clearly classified as such in the Customs
Tariff, is at least $1.8 billion. Total imports are certainly
Prior to July 1996, virtually all imports
entered duty free. Three quarters were classified as duty free by
the Customs Tariff. The rest had a nominal tariff of 5 per cent but
nearly all entered under some form of tariff concession. In July
1996, these concessions were modified - mainly to raise the
concessional rate of duty from zero to 3 per cent.
The increase in the concessional duty rate has
inflated costs to sections of the domestic medical and scientific
industries. Some imported equipment and components are used to make
other pieces of equipment. In such cases, the increase in
concessional duty will simply inflate their manufacturing costs and
erode the competitiveness of some companies within the
At the same time, the changes will not
appreciably benefit local production of any other equipment. There
is little domestic production of the types of equipment that are
imported. Where it does exist, most of it is unaffected by imports.
Indeed many local manufacturers use imports to fill out their
The Industry Commission recommended that the
remaining tariffs on medical and scientific equipment in Chapter 90
of the Customs Tariff Act 1995 be reduced to zero, with
the exception of items used in passenger motor vehicles.(3)
In a Media Release of 24 July 1998, the
then Minister for Industry, Science & Tourism the Hon. John
Moore, released the Government's response to the Industry
Commission's report on Australia's medical and scientific equipment
industries. The Minister said:
The Government had also decided to remove a
range of tariffs on medical and scientific equipment. Most imported
medical and scientific equipment enters Australia duty-free, or is
eligible for some form of tariff concession, because it doesn't
compete with locally-produced equipment. There are also cases where
imported equipment and components are used in local manufacture of
equipment. In these cases, the existing 5% tariff rate inflates
manufacturing costs and reduces the competitiveness of medical and
scientific equipment industries. I see little justification for
retaining the tariff.(4)
The major amendment proposed by Schedule
4 of the Bill reduces the rate of customs duty on imports
of medical and scientific equipment from 5% to free.
The amendments in Schedule 4 of
the Bill relating to components for passenger motor vehicles (e.g.
speed indicators and tachometers) do not reduce the applicable rate
of customs duty (i.e. 15%). However, the amendments do make
provision for a reduction in the rate of duty from 15% to 10% from
1 January 2005. This is consistent with the Government's motor
vehicle manufacturing plan.
Schedule 6 amendments - machine tools
The major amendments proposed by
Schedule 6 of the Bill reduce the rate of customs
duty from 5% to free for certain machines, parts or accessories for
machine tools and robots. The amendments represent the Government's
response to the Industry Commission's August 1996 inquiry into the
machine tools and robotics industries.
In January 1996 the then Assistant Treasurer
referred the Australian machine tools and robotics industries to
the Industry Commission for inquiry. The Industry Commission's
report can be said to have had two main objectives, namely, to
report on the effectiveness of the machine tools and robots bounty
scheme and to identify and report on areas of overlaps between that
form of assistance and other assistance.
The major recommendation of the Industry
Commission in relation to tariff assistance to the Australian
machine tools and robotics industries was to recommend that the
tariff on items 8466.10, 8466.20, 8466.30, 8466.93 and 8466.94 of
Schedule 3 be reduced to zero from 1 July 1997.(5) The rationale
for this recommendation was:
Certain parts for machine tools are identified
separately in the Tariff Schedule. As production of most parts is
not in practice assisted by the bounty now, the status quo could be
maintained simply by reducing the rate of duty on those items to
zero. This would allow the by-law items 48, 49 and 55 to be
- Investing For Growth, Address by the Prime Minister
the Hon John Howard M.P., National Press Club, Canberra, 8 December
- Medical and Scientific Equipment Industries, Industry
Commission, Report No. 56, December 1996, p. xxiii.
- ibid., at p. xxvi.
- Media Release, 'Government Responds To IC Report On Medical
& Scientific Equipment Industries', Minister for Industry,
Science & Tourism, 24 July 1998.
- The Machine Tools and Robotics Industries, Industry
Commission, Report No. 52, August 1996, p. xii.
- ibid., at p. 68.
21 September 1999
Bills Digest Service
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