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:
not reduce the sugar tariff beyond the present
level of $55 a tonne as we have already met our obligations under the World Trade
Organisation (GATT `94) agreements;
recognise and uphold the Queensland Government's
responsibility for administering the single desk export arrangement in that State;
*maintain the Commonwealth sugar infrastructure
development program."
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:
(i) contrary to the specific promise by the Coalition
at the 1996 Federal election to maintain the tariff at $55 per tonne;
(ii) contrary to recent tariff decisions of the Federal
Government on motor vehicles and textiles, clothing and footwear; and
(iii) a measure which will adversely and unfairly
impact upon cane farmers.
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