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Picture of Peter Costello

Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Media Release of 19/12/2000

NO.116

Treasurer and Minister for Industry, Science and Resources

Government Response to the Productivity Commission Report on Australia’s General Tariff Arrangements

The Federal Government today announced its decision to retain the general tariff rate at 5 per cent and to retain the 3 per cent duty on business inputs under the Tariff Concession Scheme.

The decisions follow the Government’s consideration of the Productivity Commission’s Review of Australia’s General Tariff Arrangements. The Commission was asked to review General Tariff Arrangements covering all tariffs under reference (except the textiles, clothing and footwear and passenger motor vehicle industries).

The Commission’s report was released today by the Treasurer, Peter Costello.

The Government believes the general tariff can be removed when there are clear and substantive benefits including trade benefits in doing so, and duty on business inputs can be removed when there are clear net benefits, both to be addressed within the context of responsible fiscal policy.

"The Government accepts the Productivity Commission’s view that there are benefits to be obtained from the removal of the general tariff, but that such benefits would be relatively small", Mr Costello said.

"The Commission has estimated that removal of the general tariff would provide a small increase in GDP – rising from less than 0.04 per cent in the first year to about 0.08 per cent after nine years. However, the Commission also identified that there would be transitional costs as a consequence of reducing the general tariff to zero".

"We consider there would be benefit in holding these current arrangements for the present and moving to withdraw them at a time consistent with trade and fiscal objectives".

Senator Minchin noted that Australia’s current tariff regime put it at the forefront of trade liberalisation in the Asia Pacific region. He pointed out that Australia had reduced its tariffs significantly over the past decade and they were now among the lowest in the world.

"These changes have delivered greater efficiency to our manufacturing industries." Senator Minchin said. "It’s now time to consolidate and call on the rest of the world to catch up with Australia’s lead."

Australia remains firmly on track to meet its international obligations, especially the APEC goal of free trade by 2010. Australia’s strong record of reform provide it with a powerful bargaining position in future trade negotiations.

The Commission also suggested changes to the Project and Policy By-laws Schemes to streamline the administration and reduce compliance costs for industry. The Government will consider changes to the Project and Policy By-laws Schemes in the new year.

Copies of the review are available from the Productivity Commission’s website (www.pc.gov.au).

CANBERRA
19 December 2000

Contact: Minister Minchin’s Office
Jennifer Eddy
08 8237 7190

Treasurer’s Office
Niki Savva
03 9650 0244