Bills Digest no. 136 2009–10
Customs Tariff Amendment Bill (No. 1) 2010
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
Contact officer & copyright details
Passage history
Customs Tariff
Amendment Bill (No. 1) 2010
Date introduced: 11
March 2010
House: House of
Representatives
Portfolio: Home
Affairs
Commencement: Sections 1 to 3 and Schedule 1, items 2 and 3: the
day the Act receives Royal Assent. Schedule 1, item 1: 14 December
2009
Links: The
links to the Bill, its Explanatory Memorandum and second
reading speech can be found on the Bills page, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The Bill amends the Customs Tariff Act
1995 to incorporate end-dates for three concessional items in
Schedule 4 which deals with concessional rates of duty.
Item 53C of Schedule 4 of the Customs Act 1995 provides
a mechanism to reduce the rate of customs duty from 10 per cent to
5 per cent for certain goods entering Australia on or after 1
January 2005. These goods are non-passenger motor vehicle (PMV)
goods that are classified to the same tariff classifications as PMV
parts and components. The rate of customs duty applicable to PMV
parts and components was 10 per cent.
On 1 January 2010, the rate of customs duty on PMV parts and
components fell to 5 per cent, making item 53C of Schedule 4
redundant from that date. As the proposed amendment to the
Customs Act 1995 will insert an end-date of 31 December
2009 and hence have a retrospective commencement, the Senate
Standing Committee for the Scrutiny of Bills examined the proposed
amendment and made the following comments:
Retrospective commencement
Clause 2, item 2 and Schedule 1, item
1
As a matter of practice, the Committee draws
attention to any bill that seeks to have retrospective impact and
will comment adversely where such a bill has a detrimental effect
on people.
These items relate to the commencement and
completion dates of a mechanism in item 53C in Part III of Schedule
4 to the Customs Tariff Act 1995 to reduce the general
rate of customs duty from 10% to 5% for certain goods for home
consumption. They initially appear to have a retrospective effect
because Clause 2, item 2 provides that the commencement date of
Schedule 1, item 1 is 14 December 2009 and Schedule 1,
item 1 provides for a commencement date of the mechanism of 1
January 2005 and a completion date of 31 December 2009. However,
there is no detrimental result because this is essentially a
technical amendment giving effect to Customs Notice (No. 3)
2009 published in Special Commonwealth Gazette S213 of
14 December 2009. In addition, the Committee notes from
the Explanatory Memorandum that the general rate of the relevant
customs duty fell to 5% from 1 January 2010 (see pages 4 and 5 of
the Explanatory Memorandum).[1]
On 12 May 2009, the Government announced a retargeted Textile,
Clothing and Footwear (TCF) assistance package from 2009-2010 to
2015-2016. Under the package, the Clothing and Household Textile
Building Innovative Capability scheme would replace the TCF
Post-2005 (SIP) Scheme from the Scheme’s 2010-2011 program
year. The new package redirected $55 million towards innovation,
mainly to the clothing and household textile sectors, with $25
million in additional funding. The package also included a new TCF
Strategic Capability program to support innovative capability in
the TCF industries.[2]
As recommended in the review of the TCF industry by Professor
Roy Green, Building Innovative Capability, the new package
would be partially funded by discontinuing the TCF Product
Diversification Scheme (PDS) and not proceeding with the TCF Supply
Chain Opportunities Program. The PDS applied to the clothing and
finished textile sectors and was legislated to continue until 30
June 2017. The principal legislation implementing the new TCF
assistance package, the Textile, Clothing and Footwear Strategic
Investment Program Amendment (Building Innovative Capability) Bill
2009, was passed by the Senate on 18 March 2010 with two amendments
which were agreed to by the House of Representatives on 18 March
2010.[3]
The TCF Expanded Overseas Assembly Provisions Scheme (EOAP)
commenced on
9 June 1999 and provides assistance, through duty concessions, to
firms that assemble clothing and footwear overseas from
predominantly Australian-made fabric and leather, and then import
them back into the Australian market. Since the EOAP began the duty
or revenue forgone has totalled $40 million, with annual duty
foregone of approximately
$3 million.
The EOAP was scheduled to expire in 2005 but was extended under
the TCF Post-2005 Assistance Package announced by the Howard
Government in November 2003. However, there has only been limited
use of the EOAP in recent years as TCF tariffs have fallen and the
EOAP is scheduled to conclude on 30 June 2010. In his review of the
TCF industry, Professor Green gave the following assessment of the
EOAP:
It has generated a pull-through of
Australian-made fabric and leather for firms assembling clothing
and footwear offshore and bringing them back for domestic
consumption. However, because of the reducing rate of tariffs for
the finished product, the value of the scheme is declining.[4]
As from 1 January 2010, two different tariff rates apply across
a range of TCF goods:
- 10 per cent for clothing and for certain finished and household
textiles (these items make up the bulk of TCF imports), and
- 5 per cent for cotton sheeting, woven fabrics, sleeping bags,
table linen, tea towels, carpets, footwear, textile yarns, sewing
threads and finished leather.
Australian tariff
rates: TCF items (all rates expressed as per cent of
value)
| |
Clothing, finished
textiles, household textiles
|
Cotton sheeting, woven
fabrics
|
Sleeping bags, table
linen
|
Carpets
|
Footwear
|
Footwear parts
|
Other*
|
|
2005–09
|
17.5
|
10
|
7.5
|
10
|
10
|
7.5
|
5
|
|
2010
|
10
|
5
|
5
|
5
|
5
|
5
|
5
|
|
2015
|
5
|
5
|
5
|
5
|
5
|
5
|
5
|
* Textile yarns.
Source: Parliamentary
Library
Item 1 inserts an end-date of 31 December 2009
into item 53C of Schedule 4 so that the current rate of customs
duty of 5 per cent, which is applicable to passenger motor vehicle
(PMV) parts and components, is the same as the rate of customs duty
for certain non-PMV goods.
Item 2 inserts an end-date of 30 June 2010 into
item 61 of Schedule 4 to provide for the expiry of the EOAP.
Item 3 amends the end-date of item 73 of
Schedule 4 from 30 June 2017 to 30 June 2011 to provide for the
early cessation of the TCF Product Diversification Scheme.
Michael Priestley
30 March 2010
Bills Digest Service
Parliamentary Library
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