South Pacific Tyres and Tyre-tax levy

Maria call on Government to abolish tyre material import tax levy

Last Friday I visited the South Pacific tyre factory in my electorate and had discussions with management as well as representatives from the Australian Tyre Manufacturers Association about the issues facing Australia's tyre industry.

South Pacific Tyres is a significant industry and an important contributor to the Australian economy. It is also of great importance to my local community. With a 40 per cent market share in passenger and commercial tyres, South Pacific employs some 800 workers at its Campbellfield-Somerton site in my electorate of Calwell, as well as 6,000 workers nationally. It is a major supplier of tyres to Melbourne based car manufacturers such as Ford—which is also in my electorate of Calwell—Holden and Toyota, and Mitsubishi in South Australia.

South Pacific Tyres has a long history of association with Melbourne's north, and during that time it has strived to achieve world's best practice in the manufacturing of its product and the efficiency of its operations. It provides a safe and secure environment for its workers because it understands that its work force is central to its overall success. Testimony to that is the fact that it has a work force that sticks with it for years. I was given the opportunity to meet many of those workers on my tour last Friday.

In the past 20 years, the industry as a whole has faced a diminishing tariff regime which has led to a reduction in the number of tyre manufacturers from six to two and in the number of factories from 16 to five.

There are three issues I want to raise this evening in the House. Before this government took office in 1996, tyre manufacturers imported raw materials free of any tax levy. In 1996 the government imposed a three per cent levy on the importation of raw material in order to raise revenue for its budget targets, indicating that it would remove the levy as soon as its fiscal position improved. Eight years later and with considerable budget surpluses, there is no sign of the government fulfilling its initial promise, despite repeated submissions by the industry minister, the member for Groom, to remove the levy, including representations from peak bodies and the Australian Chamber of Commerce and Industry and despite this pledge by the government as part of the Liberal Party's election promises in 2001: `We remain disposed to the removal of the levy under the tariff concession scheme when it is fiscally responsible to do so.' Despite all this, there is no sign or movement from the government on this issue to date.

It is possible that, despite the budget surplus, it may not be responsible to remove the levy at this time; but it could also be that this levy, which nets the government $400 million per annum, is a significant revenue raiser and one it is reluctant to part with. The paradox about this particular tariff, however, is that, although tariffs are traditionally meant to protect jobs and industry, on this occasion this tariff is doing the opposite and actually threatening jobs. The ATMA has made it very clear that the continuation of the levy will worsen the already challenged market share of the Australian tyre manufacturers and thus threaten the industry's viability. This is because the tyre manufacturing industry faces added challenges from the importation of cheap, second-hand tyres from Japan. These used tyres sell for $50 to $60, compared to the locally produced tyres which cost about $100, but they have a shorter life expectancy than new tyres and they also raise serious issues of established safety standards being compromised.

The proliferation of these cheap imported tyres raises another issue also—that is, the growing problem of disposing of old and discarded tyres. It is not enough that local manufacturers have to compete with cheaper imports; they also have to deal with the cheaper tyres that are offloaded into Australia and have to be disposed of each year in an environmentally friendly and responsible manner, which of course costs lots of money and requires many resources. Fortunately, South Pacific Tyres is already working with the Department of the Environment and Heritage to come up with a plan to tackle this problem.

The industry wants me to convey its concerns to the House. It is seeking the government's cooperation in lifting the three per cent levy, but it acknowledges that this could be difficult to do in one hit and therefore proposes a gradual phasing out in order to help it remain competitive and to help it continue to produce excellent Australian-made tyres which are safe and affordable. More importantly, lifting the levy will ensure that South Pacific Tyres and the local tyre industry as a whole are able to continue to provide much needed jobs for Australian workers and especially for the workers in the electorate of Calwell.