Bills Digest No. 101  1999-2000


Numerical Index | Alphabetical Index

Customs Tariff Amendment Bill (No. 3) 1999

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer and Copyright Details

Passage History

Customs Tariff Amendment Bill (No. 3) 1999

Date Introduced: 8 December 1999

House: House of Representatives

Portfolio: Justice and Customs

Commencement: The amendments increasing the customs duty on imports of certain non-medical and non-scientific goods classified to tariff headings 9017 to 9031 are taken to have effect from 3 September 1999. The amendments reducing the customs duty on imports of certain tinplate and cansheet are taken to have commenced on 1 October 1999.

Purpose

The major amendments proposed by the Bill:

  • increase the customs duty on imports of certain non-medical and non-scientific goods classified to tariff headings 9017 to 9031 from free to 5%, and
  • reduce the customs duty on imports of certain tinplate and cansheet from 5% to free.

 

Background

As there is no central theme to the amendments proposed by the Bill, a brief background to each major amendment is set out in the 'Main Provisions' section of this Digest.

Main Provisions

Schedule 2 amendments - medical and scientific instruments

The major amendments proposed by Schedule 2 increase the customs duty on imports of goods classified to tariff headings 9017 to 9031 from free to 5%. The goods subject to the proposed increase include:

  • certain goods for drawing, marking-out and mathematical calculating instruments
  • certain rulers made from wood or plastic and steel tape measures
  • certain gas and liquid measuring devices, and
  • certain machines for balancing mechanical parts and electrical test benches.

The customs duty on imports of the above goods was reduced to free on 1 September 1998 following the Government's implementation of the Industry Commission's report 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 somewhat higher.

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 industries.

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 product range.(1)

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.(2)

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.

The rationale given by the Government for re-instating a 5% rate of customs duty on imports of goods classified to tariff headings 9013 to 9033 is:

Following implementation, some Australian manufacturers of non-medical and non-scientific goods covered by headings 9013 to 9033 informed Government that his removal of tariff assistance had affected their manufacturing viability and profitability. In light of these representations, the 5% rate of duty was reinstated from 3 September 1999 ... .(3)

The reinstatement of a 5% rate of customs duty on imports of goods classified to tariff headings 9013 to 9033 is estimated by the Government in its Explanatory Memorandum to the Bill to raise approximately $809,000 per annum.(4)

Schedule 3 amendments - tinplate and cansheet

The major amendments proposed by Schedule 3 reduce the customs duty on imports of goods classified to tariff headings 7210.11.00, 7210.12.00 and 7212.10.00 from 5% to free. The goods subject to the proposed increase include certain tinplate and cansheet.

Canstock is aluminium sheeting used in the production of aluminium cans, comprising bodystock (ie. aluminium used for can bodies), endstock (ie. aluminium used for can ends) and tabstock (ie. aluminium used for can opening tabs).

The customs duty on imports of tinplate and cansheet classified to tariff headings 7210.11.00, 7210.12.00 and 7212.10.00 was reduced to free on 22 September 1999 and gives effect to the Government's response to the Industry Commission's report on Australia's packaging and labelling industries.

In February 1995, the Government referred the packaging and labelling industries to the Industry Commission. The Industry Commission's report had two main aims, namely, to examine the efficiency of the Australian industries supplying packaging and labelling for downstream industries and the international marketing conditions for the packaging and labelling industries, including any barriers facing imports into Australia or exports from Australia.

In relation to tariffs on packaging and labelling, the Industry Commission's findings included that the cases for tariff reductions in relation to steel tinplate and aluminium canstock were particularly strong and argued that:

The Industry Commission recommended that the Commonwealth Government should remove the tariff on tinplate and aluminium canstock from 1 July 1997.(6)

Endnotes

  1. Medical and Scientific Equipment Industries, Industry Commission, Report No. 56, December 1996, p. xxiii.

  2. ibid., at p. xxvi.

  3. Explanatory Memorandum, Customs Tariff Amendment Bill (No. 3) 1999, p. 5.

  4. ibid.

  5. Packaging and Labelling, Industry Commission, Report No. 49, February 1996, p. xviii.

  6. ibid., at p. xix.

Contact Officer and Copyright Details

Ian Ireland
24 January 2000
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members
and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 2000

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 2000.

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