NO.116

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