DISSENTING REPORT ON THE CONSIDERATION OF CUSTOMS TARIFF AMENDMENT BILL (NO.2) 1997 (NO 3)

CUSTOMS TARIFF AMENDMENT BILL (NO. 2) 1997 (NO. 3)

DISSENTING REPORT ON THE CONSIDERATION OF CUSTOMS TARIFF AMENDMENT BILL (NO.2) 1997 (NO 3)

On behalf of the Australian Democrats and the Australian Labor Party members of the Senate Rural and Regional Affairs and Transport Legislation Committee

NOVEMBER 1997

Customs Tariff Amendment Bill (No 2) 1997 (No 3)

This Dissenting Report believes that the Government has created the confusion surrounding the issue of removal of the sugar tariff and therefore has to take responsibility for the outcome of any vote by the Senate against the removal of the tariff. There are two reasons why this so.

The first is the direct promise given by the Coalition in its primary industries' policy, Reviving the Heartland, prior to the 1996 federal election, that it would not remove the tariff on sugar which states:

"A Liberal-National Government will:

The second action taken by the government which has led to wholesale confusion in the sugar industry and among parliamentary representatives was the decision to remove the tariff on sugar by tabling a Customs Tariff Proposal in the House of Representatives on 26 March 1997.

This pre-empted a proper parliamentary debate about reform in the sugar industry, removed the tariff from July, 1997 and leaves us with no other option than to vote against the validating legislation.

On a number of occasions claims have been made that cane farmers and some of their representatives only agreed to the removal of the tariff under duress. In evidence before the Committee, Canegrowers Chair Mr Bonnano set out the nature of the consultation undertaken. (see 2.11). While we do not doubt Mr Bonnano's

sincerity, there is much evidence that cane farmers in Queensland and New South Wales feel they have been ignored by some of their representatives and shut out of any real participation in the process. A survey of around 5000 cane farmers, conducted by Senator Woodley, resulted in a vote of over 90 per cent (of the surveys returned) against the removal of the tariff.

It is clear that statutory bodies such as the Canegrowers will have to develop much more participatory means of consultation if they are to avoid serious revolt from those they represent.

However, the issue of consultation is not just a problem for Canegrowers. The committee has encountered the same problem in trying to assess the extent of consultation behind legislation such as the Wheat Bill and the change from a slaughter levy to a transaction levy for sheep.

The lack of consultation has added fuel to resentment in cane farming areas against the loss of the tariff.

The Dissenting Report takes issue with the Majority Report's finding of an alleged `clear connection' between tariff removal and agreement for the retention of Single Desk Selling. Rather, the Committee heard a description from the Canegrowers of an environment in which Competition Policy was used to force them to choose between the tariff or single desk selling.

That environment has now changed. Since that agreement was made, on the basis that competition reform would be applied across the board so that everyone benefited, the Government performed a policy backflip and froze tariffs on cars and textiles.

The Dissenting Report finds that no evidence was given to demonstrate that single desk selling would automatically be dismantled if the tariff was retained. Descriptions of persuasive environments prior to the government's decisions on car and textile tariffs do not constitute evidence to support arguments that tariff retention means the loss of the single desk.

The Committee heard evidence that a proposed merger between CSR and Mackay Sugar would be jeopardised by the retention of the tariff. However, the authors of the Dissenting Report have balanced the perceived benefits of the merger against the loss of the tariff and find that tariff retention is of a much higher direct benefit to grass roots growers throughout Australia. The loss of the tariff is estimated to reduce the average cane farmer's income by around $3000 a year. The New South Wales Government estimated in its submission to the inquiry that around 2000 jobs in that state have been placed in jeopardy by the loss of the sugar tariff.

It must also be noted that Opposition Senators have little opportunity to impact upon the competitive environment of Australian sugar through legislation - the tariff is the only aspect to be voted on in Federal Parliament. It is the only one of 74 recommendations of the SIRWP Report that can actually be dealt with by legislation.

The recommendation of the Majority Report of a return to import parity pricing is welcome. It is government recognition that the impact of the loss of the tariff will be significant. However, a slight increase in sugar prices is not enough to compensate cane farmers for the immediate financial losses they will suffer from loss of the tariff and the potential future losses when imports increase as a result of the tariff's abolition.

Furthermore, we note that, despite the assurances given by Mr Tony Gentile that "there is no plan in existence either now or in the future, for the importation of sugar by Australian soft drink fillers," the ACCC believes that, "although CSR and MRS may have a substantial share of the Australian refined sugar market, import competition will provide an effective constraint on their pricing decisions."

It is also significant that Mr Gentile conceded during the inquiry that the savings of around $7 million a year the soft drink industry will gain from the loss of the tariff will not be passed on to consumers.

Given the weakness of anti-dumping legislation, the authors of the Dissenting Report believe that future imports of sugar will seriously threaten the viability of the Australian sugar industry. We note further that ACCC has predicted a significant rise in world sugar production and refining capacity.

Recommendation of the Dissenting Report of the Rural and Regional Affairs and Transport References Committee

The Dissenting Report finds that the section of the Customs Tariff Amendment Bill (No 2) 1997 (No 3) relating to abolition of the sugar tariff not be passed as it is:

Senator John Woodley
Australian Democrats
Member, Senate Rural and Regional Affairs and Transport Legislation Committee

Senator Kerry O'Brien
Australian Labor Party
Member, Senate Rural and Regional Affairs and Transport Legislation Committee

Senator Michael Forshaw
Australian Labor Party
Member, Senate Rural and Regional Affairs and Transport Legislation Committee