Improving Customs Regulations

I rise in support of the changes to the Customs Tariff Act in the Customs Amendment (2022 Harmonized System Changes) Bill 2021 and the related bill. I want to acknowledge all those previous speakers who have spoken on such an important bill. It’s not very often that you get to speak on bills like this in this place, but today is one of those days, and I’m very, very pleased to be able to speak on it.

Australia is a trading nation. It relies on its ability to trade with the world. It was once said of Australia that we relied on the back of the sheep. Thankfully we have diversified much of our income to minerals, education and all sorts of things which we trade with the rest of the world. The minister for agriculture often stands up in this place and talks about how in Australia we create five times the amount of food and fibre that we consume. So we need to be able to trade that with the world, and that is a part of our ongoing ability to be able to maintain our standard of living. In order for us to be able to do this, there are certain rules that we need to comply with—the WTO, for example. We’re a proud member of the WTO, and we, as Australians, pride ourselves on being a part of the rules-based order. That’s important not just when it comes to security but also when it comes to trade.

We see our relationship with China at the moment as an example. China has banned or put restrictions on some Australian goods, such as wine, beef, barley and some coal products. Those are decisions that have been made outside the international rules-based order, outside agreements—fundamental agreements—that we have made as members of the WTO. That is to the eternal shame of the Chinese Communist Party, and it’s something that we should continue to fight on behalf of Australians, Australian businesses, Australian growers and Australian manufacturers so that China change their view on this and start observing the international rules-based order in how they deal with countries like Australia, because, as the Prime Minister often says, we will continue to stand up for Australia and Australians’ interests, even if that means upsetting some of our international friends and other countries as well. We will continue to stand up for Australian interests, and certainly I will play my part in doing that.

Talking about WTO, trade and tariffs leads me to this bill. The purpose of the Customs Tariff Amendment (2022 Harmonized System Changes) Bill 2021 is to update Australia’s tariff codes in the Customs Tariff Act to be consistent with the updated international 2022 harmonised system. The 2022 harmonised system is the common name for the harmonised commodity description and coding system. Mr Deputy Speaker, I know that you are absolutely fascinated by this subject and that you are absolutely on board with it, as most members are. But you’ll be keen to know that these new provisions will commence on 1 January next year, in 2022. The World Customs Organization updates the international harmonised system on a five-yearly basis—not four years, not six years; five years—to reflect changing trade patterns and emerging goods. All World Customs Organization members, which includes Australia, need to implement the 2022 harmonised system in their domestic tariff codes once again by 1 January 2022. The 2022 harmonised system update will ensure that international tariff codes can keep pace with modern types of goods and changing trade patterns. There are changes to reflect technological change. For example, new classifications will be created for new and emerging products, such as drones and 3D printers. There are classifications for products that nobody wants to buy anymore, such as world globes and answering machines. Mr Deputy Speaker, you would not want to be in a business right now where you’re trying to buy and sell world globes and answering machines, would you?

An honourable member interjecting

And facsimiles—thank you to the member for Leichhardt. You just wouldn’t want to be in that sort of business right now.

However, there will be new classifications created for products with increasing or diversifying patterns of trade—not that I would want to be in this sort of business, but edible insects, for example, are the ‘in’ thing! There will be changes in relation to those things. Other certain electronic components will also see new classifications because of increasing patterns of consumption. I don’t know why anybody would want to eat edible insects, but I guess that’s a matter for them!

There will also be new classifications created to improve the monitoring of goods such as e-waste, and chemicals and substances controlled under international conventions such as the chemical weapons convention and the Montreal Protocol on Substances that Deplete the Ozone Layer. We all remember that chlorofluorocarbons used to be in fly spray and all the aerosols. Australia banned those, with good reason, because they deplete ozone.

As a rule, changes Australia implements to its tariff code are required to be consistent with the updated harmonised system on a duty rate neutral basis—that is, whatever duty rate applies to goods under the old classification will continue to apply to the good under its new classification. For the current update, three categories of goods cannot be updated on a duty rate neutral basis. These three categories of goods are: flat panel displays; semiconductor based transistors; and electronic waste and scrap. We will create new classifications for these three categories of goods as part of the 2022 harmonised system. Goods will transfer to these new classifications from many different existing classifications, which means it’s not possible to maintain all the different duty rates that may have applied to these goods. The duty rates for these three categories of goods will be set as ‘free’, to ensure that no importers are worse off.

To be a little controversial—I’m never one to turn away from being a little controversial!—I want to turn to the changes to tobacco products. To any kids that might be listening to this: if you’re smoking, tobacco is not good for you. Don’t smoke, kids. If you’re in the car, you shouldn’t be smoking in the car. If you’re a parent with kids in the back, you shouldn’t be smoking with kids in the back. If you’re an adult and you want to smoke: I’d love to be able to say you should just go ahead and do it, but you’re not only impacting on your own health and your family’s health; you’re impacting on the public purse, because chances are you’re going to get sick before you should get sick, and the public is going to have to look after you when you go into hospital. If you’re smoking right now, put it out and quit smoking. You will be all the better for it.

However, I digress. The changes to tobacco products as part of the 2022 harmonised system will create a new classification for tobacco products intended for inhalation without combustion. These are the new fandangled e-cigarettes for vaping. I don’t know too much about vaping; I will probably get lots of emails about vaping now because I’ve said that! What I do know is that they are full of chemicals. I’ve heard the argument before that vaping turns people away from cigarettes; I don’t know if that’s true or not. But breathing in chemicals can’t be good for you, can it? It just can’t be good for you. If you are smoking cigarettes or vaping, put it aside; it’s probably not good for you. But if you are going to continue to vape, these goods are currently classified as ‘other tobacco’ and have an excise equivalent customs duty of $1,576.50 per kilogram of tobacco content applied. We need to amend the Customs Act to ensure that this new classification falls within the scope of existing border measures for tobacco products. This means importers will continue to pay duty on these goods at the border, like for all other tobacco products, so there is no new risk to the revenue, because that’s all-important. We also need to amend the Customs Tariff Act to ensure that the excise-equivalent customs duty rates applied to these goods is indexed twice a year, like other tobacco.

Mr Deputy Speaker Vasta, I know you are on the edge of your seat right now, but I want to conclude by saying that these changes will help Australian businesses. Australian businesses, both importers and exporters, are expecting these changes to be implemented by 1 January 2022. Ensuring Australia’s tariff code reflects the most up to date version of the harmonised system will make it easier for our importers and our exporters to trade with other countries—and, as I said at the opening of my speech, that is a very important thing. We have to be able to trade with the world. These sorts of technical bills, whilst as boring as they possibly can be, are very, very important not just for our businesses but also for our country’s revenue. The sooner the amending legislation is introduced into parliament, the sooner businesses can begin preparing for the new version of the harmonised system.

Australia was able to secure a number of important outcomes requested by Australian businesses in the process of negotiating the update to the harmonised system. I know, Mr Deputy Speaker Vasta, you’re wondering what changes we were able to secure, and that’s a very good question. These priority outcomes included securing our preferred definition of virgin olive oil, a single classification code for placebos and clinical trial kits, our preferred classification for LED lighting products and a separate classification for synthetic diamonds.

The harmonised system has 97 chapters—almost as long as this speech!—split into headings and subheadings. Each heading and subheading has a unique code and description which can be used to classify all tradeable goods. These codes and descriptions are agreed by all 198 members of the World Customs Organization, including Australia. Australia independently determines the customs duties that apply to goods traded into Australia. We use the structure provided by the harmonised system, supplemented by domestic subheadings, to identify those goods that are subject to Australian customs duties. I am of a mind to ask for an extension of time, but I think I’ll leave it there!

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