2002

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

HOUSE OF REPRESENTATIVES

ACIS ADMINISTRATION AMENDMENT BILL 2002

EXPLANATORY MEMORANDUM

(Circulated by authority of the Minister for Industry, Tourism and Resources, 
the Honourable Ian Macfarlane MP)

ACIS ADMINISTRATION AMENDMENT BILL 2002

OUTLINE
The ACIS Administration Amendment Bill 2002 (the Bill) makes a series of minor amendments to the ACIS Administration Act 1999.

ACIS Administration Act 1999 Amendments
The Bill makes a minor change to the ACIS Administration Act 1999 (the ACIS Act) that will allow eligible motor vehicle producers to claim Automotive Competitiveness and Investment Scheme (ACIS) uncapped production credits for the production of derivatives of passenger motor vehicles such as utilities, panel vans and pick-ups with effect from the date of commencement of ACIS.

Prior to the introduction of ACIS, the automotive industry received uncapped duty credits for the production of these derivative vehicles from the Duty Free Allowance (DFA).  In June 1997, when announcing future assistance arrangements for the automotive industry, the Government stated that the DFA would continue and that a new transitional assistance program would be introduced.

ACIS was announced as the new transitional assistance program in April 1998.  ACIS was subsequently modified to embody two elements - an uncapped element, and a capped element (limited to $2 billion).  The uncapped element is the continuation of the DFA.  Motor vehicle producers (MVPs) are eligible to earn incentives under both elements of ACIS for the production of motor vehicles according to the following calculations and definitions:

Uncapped incentives, equal to 15 per cent of the value of production of passenger motor vehicles (PMVs) sold in Australia and New Zealand, multiplied by the current PMV tariff rate; and,
Capped incentives, calculated as follows:
•	10 per cent of the value of production of PMVs sold in Australia and New Zealand, multiplied by the current PMV tariff rate; and,
•	25 per cent of the value of all other motor vehicle production (other than PMVs sold in Australia and New Zealand), multiplied by the current PMV tariff rate.

Capped production incentives form part of a broader pool of incentives that is limited to $2 billion over five years through the operation of modulation.  

The current ACIS definition of passenger motor vehicles unintentionally excludes utilities, panel vans and pick-ups.  As a result MVPs are only eligible to claim capped payments for the production of these vehicles.  Modulation means that the production of these derivative vehicles receives a lower rate of payment than if they were paid from the uncapped element.  This is clearly inconsistent with the Government’s 1997 stated intention to continue the DFA.

This Bill makes specific provision in the ACIS Act for the production of utilities, panel vans and pick-ups to attract uncapped incentives from the commencement date of ACIS, in line with the Government’s publicly stated intention.

FINANCIAL IMPACT STATEMENT

The financial impact of the Bill on Commonwealth revenue forgone is expected to be in the order of $5 million, with motor vehicle producers becoming eligible for higher rates of payment for claims made in 2001-02.  It is anticipated that the revenue impact will fall in the financial year 2002-03.

ACIS ADMINISTRATION AMENDMENT BILL 2002

NOTES ON CLAUSES
Clause 1	Short Title
1.	Clause 1 is a formal provision specifying the short title of the Bill.
Clause 2	Commencement
2.	Clause 2 provides for the commencement of the Act.  Subclause 2(1) provides that each provision of the Act specified in column 1 of the table commences, or is taken to have commenced, on the day or at the time specified in column 2 of the table.

Clause 3	Schedule(s)

3.	Clause 3 provides for the Schedule to the Act.  It provides that the Acts specified in the Schedule to the Bill are amended or repealed as set out in that Schedule.

Schedule 1	Utilities and other specified load-carrying vehicles

ACIS Administration Act 1999

Item 1 	Subsection 6(1)
1.	This item inserts the definition of specified load-carrying vehicles, which specifically includes those customs tariff classifications that cover utilities, panel vans and pick-ups. 

Item 2 	Subsection 42(1) (definition of A)
2.	This item adds the production value of specified load-carrying vehicles to the formula that is used by the Secretary to calculate the amount of unmodulated uncapped production credits for MVPs.

Item 3	Subsection 42(1) (note)
3.	This item clarifies that a passenger motor vehicle or a specified load-carrying vehicle is a motor vehicle for the purposes of ACIS.  

Item 4	Subsection 42(2) (definition of C)
4.	This item adds the production value of specified load-carrying vehicles to the formula that is used by the Secretary to calculate unmodulated capped production credits for MVPs.

Item 5	Transitional Provisions
5.	As the amendments made by this Bill operate from the commencement date of ACIS, 1 January 2001, this item allows an MVP to amend past ACIS returns to take account of the amendments included in this Bill.
If the Secretary becomes aware that any calculation made under section 42 of the ACIS Act is not correct because it does not take account of the amendments included in this Bill, then this item also requires the Secretary to amend that calculation and amend the ACIS ledger accordingly.