Bills Digest No. 10, 2017–18
PDF version [542KB]
Paul Davidson
Economics Section
9
August 2017
Contents
Purpose of the Bill
Structure of the Bill
Committee consideration
Senate Standing Committee for the
Scrutiny of Bills
Senate Standing Committee for the
Selection of Bills
Financial implications
Table 1: financial impact statement
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Key issues and provisions
Schedule 1—Incorporation of Proposal
Schedule 2—Other amendments
Part 1—Machining centres
Part 2—Paraquat dichloride
Part 3—Automotive service providers
Part 4—Used or second-hand vehicles
Part 5—Technical amendments
Date introduced: 21
June 2017
House: House of
Representatives
Portfolio: Immigration
and Border Protection
Commencement: Schedule
1 and Schedule 2, Part 3 commence on 1 January 2017. Schedule 2, Parts 1, 2,
and 5 commence 28 days after Royal Assent. Schedule 2, Part 4
commences on 1 January 2018.
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent,
they become Acts, which can be found at the Federal Register of Legislation
website.
All hyperlinks in this Bills Digest are correct as
at August 2017.
Purpose of
the Bill
The purposes of the Customs
Tariff Amendment (Incorporation of Proposal and Other Measures) Bill 2017 (the Bill)
are to amend the Customs
Tariff Act 1995 (the Act) so as to:
- remove
the $12,000 duty on imported used and second-hand motor vehicles and
- make
a number of corrections and technical amendments.
Structure
of the Bill
The Bill contains two Schedules. Schedule 1
incorporates a tariff proposal in the Act. Schedule 2 contains five parts
where Parts 1–3 and 5 provide for a number of corrections and technical
amendments to the Act. Part 4 provides for amendments to the Act in
relation to the importation of used and second-hand motor vehicles.
Committee
consideration
Senate
Standing Committee for the Scrutiny of Bills
At the timing of writing, the Bill had not been considered
by the Committee.[1]
Senate
Standing Committee for the Selection of Bills
The Selection of Bills Committee recommended that the Bill
not be referred to a committee for inquiry.[2]
Financial
implications
The Government considers that the Bill will reduce customs
duty revenue by $13.5 million over the forward estimates (Table 1).
Table 1: financial
impact statement
| Revenue ($m) |
2016–17 |
2017–18 |
2018–19 |
2019–20 |
2020–21 |
| Extending concessions for automotive prototypes |
-1.5 |
-3.0 |
-3.0 |
-3.0 |
-3.0 |
| Removing the $12,000 special duty on used and
second-hand motor vehicles |
- |
- |
.. |
.. |
.. |
.. Not zero, but rounded to
zero.
Source: Explanatory
Memorandum, Customs Tariff Amendment (Incorporation of Proposal and Other
Measures) Bill 2017, p. 4.
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[3]
Parliamentary
Joint Committee on Human Rights
At the timing of writing, the Bill had not been considered
by the Committee.[4]
Key issues
and provisions
The Act imposes customs duty on goods imported into
Australia. The rate of duty applicable to particular goods is determined by the
classification to which those goods belong.[5]
In most cases reference will need to be made to Schedule 3 of the Act, which
classifies goods according to the International Convention on the Harmonized
Commodity Description and Coding System (the Harmonized System) and sets out
the rate of duty that applies to such goods.[6]
The Harmonized System aims to ensure that imports (and exports) are classified
on a standardised basis for customs purposes throughout the world. Australia
has been a signatory to the Harmonized System since 1988. Schedule 1 and parts
1 to 2 and 4 to 5 of Schedule 2 to the Bill amend Schedule 3 to the Act.
Part 4 of Schedule 2 to the Bill amends Schedule 4 to the
Act, under which goods imported into Australia in specified circumstances,
including goods imported for use by particular persons or bodies in particular
industries, may be subject to a lesser rate of duty than would otherwise apply.[7]
Schedule
1—Incorporation of Proposal
Item 1 repeals existing subheading 6907.30.10 of
Schedule 3 which relates to specific mosaic tiles and provides that the duty
rate is free, replacing the current rate of five per cent. The Customs
Tariff Proposal (No. 1) 2017 which item 1 relates to, corrects an
error in the Customs
Tariff Amendment (2017 Harmonized System Changes) Act 2016 which
erroneously referred to mosaic tiles under subheading 6907.30.10 as being
subject to a customs duty of five per cent.[8]
Item 2 provides that the amendment made in item
1 takes effect from 1 January 2017 in order to ensure that businesses are
not unduly subject to an erroneous customs duty of five per cent.
Schedule 2—Other
amendments
Part
1—Machining centres
Item 1 repeals Schedule 3 subheadings 8465.20.10 to
8465.20.60 (inclusive) which deal with machining centres. Currently, machine
operations are differentiated according to: seven operations across three
tariff subheadings subject to a five per cent duty rate; and a further seven
operations across three tariff headings which are duty-free.
Item 1 repeals subheadings 8465.20.10 to 8465.20.60
and replaces them with proposed subheadings 8465.20.70 and 8465.20.80
to provide for machining centres that can provide two or more identified
operations. Those relating to two or more of sawing, planing, milling, moulding
(by cutting), grinding, sanding, or polishing will remain subject to a five per
cent duty rate. Those relating to two or more of bending, assembling, drilling,
morticing, splitting, slicing, or paring remain duty-free.
The Explanatory Memorandum to the Bill explains that the
reason for item 1 is due to industry feedback that ‘the composite nature
of these goods made classifying them ... difficult’.[9]
Item 1 therefore better allows for the composite nature of the goods by
permitting them to be classified according to performing two or more
operations.
Part 2—Paraquat
dichloride
Paraquat dichloride is a chemical commonly used as a
herbicide. The effect of items 3 and 4 is to repeal the Additional Note
of Schedule 3 Chapter 29 (which deals with chemicals) relating to paraquat
dichloride. Currently paraquat dichloride is classified as a residual category
under heterocyclic compounds with nitrogen hetero-atom(s) only.
Item 5 amends the Act to add a new classification
specifically relating to paraquat dichloride in Schedule 3 Chapter 38.
Currently, herbicides, anti-sprouting products and plant-growth regulators are
all subject to a five per cent customs duty rate. Item 5 replaces
this with proposed subheadings 3808.93, 3808.93.10 and 3808.93.90
to add paraquat dichloride with added emetic (a substance commonly inserted to
induce vomiting if ingested) and to provide that it be duty-free (consistent
with its current duty rate status in Chapter 29). The item also provides
that a five per cent customs duty remains on all other herbicides,
anti-sprouting products and plant-growth regulators.
Part 3—Automotive
service providers
Item 7 amends table item 39 paragraph (b) in
Schedule 4 of the Act, which provides a concessional rate of duty to certain
goods in relation to motor vehicles (or components of motor vehicles) designed
or engineered, (or in the process of design or engineering) under the
Automotive Transformation Scheme.[10]
Currently, only ‘motor vehicle producers’ are eligible to
receive concessional duty rates (currently duty-free), which essentially apply
to prototype design or engineered motor vehicles or components. Item 7
extends the concessional duty to automotive service providers. The amendment is
largely as a result of the announcements by Australian motor vehicle producers—Ford,
Holden, and Toyota—that they will cease manufacturing in Australia. However,
all three companies have announced that they will provide other automotive
industry services. Therefore, the addition of ‘automotive service providers’ to
table item 39 paragraph (b) will permit those companies (and other automotive
service providers) to import prototype design or engineered motor vehicles
duty-free.
Part 4—Used
or second-hand vehicles
Part 4 proposes to remove the $12,000 special
customs duty that currently applies to used or second-hand motor vehicles,
which are generally classified according to engine size and/or vehicle type. In
addition, such imports are generally subject to a five per cent customs duty
rate, unless they are imported from a Forum Island Country, a Least Developed
Country, a Developing Country, or Canada, in which case they are duty-free (but
still subject to the $12,000 special customs duty). The five per cent customs
duty will remain on used or second-hand motor vehicles.
Therefore, as a result of the amendments, imported used or
second-hand motor vehicles from a Forum Island Country, a Least Developed
Country, a Developing Country, or Canada will become completely duty-free.
Imported used or second-hand motor vehicles from any other country will remain
subject to a five per cent customs duty, apart from where those vehicles
imported are from the United States or from Japan.
Item 35 repeals table items which cover used or
second-hand motor vehicles which originate from the United States. Table items
935, 937, 939, 941, 943, 945, 947, and 949 in Schedule 5 of the Act provided
for a transitional customs duty arrangement in accordance with the
Australia-United States Free Trade Agreement.[11]
Under that Agreement, since 1 January 2010, all used or second-hand motor
vehicles have been subject only to the special customs duty of $12,000 (that
is, the general customs duty has been zero). Item 35 repeals the special
customs duty and as a result such vehicles will no longer be subject to a
customs duty of any kind.
Item 36 repeals analogous table items with regards
to Australia’s commitments under the Japan-Australia Economic Partnership
Agreement (which are covered in Schedule 11 to the Act).[12]
From 1 April 2016, imported used or second-hand motor vehicles from Japan were
subject only to the special customs duty of $12,000 (that is, the general
customs duty has been zero). Item 36 repeals the special customs duty
and as a result such vehicles will no longer be subject to a customs duty of
any kind.
Part 5—Technical
amendments
Item 38 amends the description relating to tanned
or crust skins of sheep or lambs in Schedule 3 Chapter 41 to correct the number
of dashes that appear before the description.
Item 39 amends the description relating to other
woven fabrics of cotton under Schedule 3 subheading 5212.2 to correct the
number of dashes that appear before the description where the fabric weighs
more than 200 g/m2.
[1]. Senate
Standing Committee for the Scrutiny of Bills, Index
of bills considered by the committee, 2017, The Senate, Canberra, 21
June 2017.
[2]. Senate
Standing Committee for the Selection of Bills, Report,
7, 2017, The Senate, Canberra, 22 June 2017.
[3]. The
Statement of Compatibility with Human Rights can be found at page 5 of the Explanatory
Memorandum to the Bill.
[4]. Parliamentary
Joint Committee on Human Rights, Index
of bills and legislative instruments, 2017, The Senate, Canberra, 20
June 2017.
[5]. User’s
Guide: the operation of the Act in Customs Tariff Act
1995.
[6]. International
Convention on the Harmonized Commodity Description and Coding System, done
in Brussels on 14 June 1983, [1988]
ATS 30, (entered into force for Australia and generally on 1 January 1988).
[7]. User’s
Guide: the operation of the Act in Customs Tariff Act
1995.
[8]. For
information on Customs Tariff Proposal (No. 1) 2017 see: P
Dutton, Summary of alterations: Customs Tariff Proposal (No. 1) 2017,
Australian Parliament, Canberra, 15 February 2017.
[9]. Explanatory
Memorandum, Customs Tariff Amendment (Incorporation of Proposal and Other
Measures) Bill 2017, p. 2.
[10]. The
Automotive Transformation Scheme (ATS) is established under the Automotive
Transformation Scheme Act 2009. The ATS ‘provides
eligible businesses that are involved in the Australian automotive industry
with cash payments to cover up to 15% of the cost of investing in plant and
equipment, and 50% of the cost of investing in research and development. Cash
payments are also available for activities related to the production of motor
vehicles, engines and engine components’. Australian Government, ‘Automotive Transformation Scheme (ATS)’,
business.gov.au website.
[11]. Australia-US
Free Trade Agreement, done in Washington on 18 May 2004, [2005] ATS 1
(entered into force on 1 January 2005).
[12]. Agreement
between Australia and Japan for an Economic Partnership, done in
Canberra on 8 July 2014, [2015] ATS 2 (entered into force on 15 January
2015).
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