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House of Representatives

ACIS Administration Amendment Bill 2009

Explanatory Memorandum

Circulated by the authority of Senator the Hon Kim Carr, Minister for Innovation, Industry, Science and Research

General outline and financial impact

Outline

The ACIS Administration Amendment Bill 2009 (the Bill) amends the ACIS Administration Act 1999 to implement changes to the Automotive Competitiveness and Investment Scheme (ACIS) as announced in the Government's automotive policy, A New Car Plan for a Greener Future (the New Car Plan) (
http://www.innovation.gov.au/Industry/Automotive/Documents/NEWCARPLANGREENERFUTURE.pdf).

This Bill, together with the Automotive Transformation Scheme Bill 2009, will revitalise the Australian automotive industry though increased support for the investment and innovation necessary for the long-term economic and environmental sustainability of the industry.

These Bills, along with other elements of the New Car Plan, demonstrate the Government's commitment to securing the future of this strategically vital sector of the Australian economy. That is why in 2008, the Government commissioned the Hon Steve Bracks to conduct the Review of the Australian Automotive Industry. The key recommendation of the Review was the introduction of a new, retargeted legislative scheme to provide transitional assistance until 2020. In announcing the New Car Plan on 10 November 2008, the Government responded to the recommendations of the Review by committing to establish the new Automotive Transformation Scheme, to replace assistance under ACIS from 2011 and to make transitional provisions for ACIS that will take effect from 2010. The passage of these Bills will implement this commitment.

This Bill provides for a smooth transition to the new Scheme by repealing ACIS Stage 3 and by providing increased uncapped assistance for persons registered under ACIS as motor vehicle producers in 2010. These changes to ACIS and the establishment of the Automotive Transformation Scheme are supported by the automotive industry, which has been extensively consulted as part of the Review's process and through the development of this legislation.

A majority of the amendments in the Bill reflect the repeal of ACIS Stage 3, which was to run from 2011 to 2015, and allow for its replacement by the Automotive Transformation Scheme.

This Bill also amends the formulae for working out unmodulated production credit for persons registered as motor vehicle producers under ACIS. The effect of the amendment is to increase assistance to motor vehicle producers at a time when the reduction of tariffs on passenger motor vehicles will reduce both the level of protection and the assistance available for the vehicle producers.

The formulae has been amended for both uncapped and capped production credit to correct an anomaly where there were different levels of assistance for vehicles sold domestically versus those sold for export. As a result of this amendment, all Australian manufactured vehicles sold regardless of destination, will receive the same level of assistance.

Financial impact statement

The fiscal gain of the ACIS Administration Amendment Bill 2009 is estimated at $1 135 million over the next seven years (excluding administration costs). The fiscal gain reflects the estimated savings from the repeal of ACIS Stage 3 ($1 215 million) and an estimated cost of $79.6 million in additional ACIS assistance in 2010. These costing are estimates as the amount of assistance is partially based on the value of motor vehicles sold.

NOTES ON CLAUSES

Clause 1: Short title

1. This clause provides for this Bill, once enacted, to be cited as the ACIS Administration Amendment Act 2009.

Clause 2: Commencement

2. Subclause (1) provides that the commencement date for sections 1, 2 and 3, and anything in this Act not elsewhere covered by this table, is the day on which this Act receives Royal Assent. The date of commencement for amendments to the ACIS Administration Amendment Act 2009 contained in Schedule 1 of the Act is at the same time as the Automotive Transformation Scheme Act 2009 commences.

Clause 3: Schedule(s)

Schedule 1: Amendments

3. This schedule removes reference to ACIS Stage 3 and amends the formulae for working out unmodulated production credit.

ACIS Administration Act 1999

Section 4 - Overview of the Act

Item 1 - Subsection 4(1A)

4. This item repeals ACIS Stage 3.

Item 2 - Subsection 4(1A)

5. This item makes a technical amendment to paragraph 4(1A)(b) that is consequential to the repeal of ACIS Stage 3.

Item 3 - Subsection 4(1A)

6. This item removes paragraph 4(1A)(c).

Item 4 - Subsection 4(2)

7. This item makes a technical amendment to paragraph 4(2)(b) as a consequence of the repeal of ACIS Stage 3.

Item 5 - Subsection 4(2)

8. This item repeals paragraph 4(2)(c).

Item 6 - Subsection 4(2A)

9. This item removes reference to ACIS Stage 3.

Section 6 - Definitions

Item 7 - Subsection 6(1)

10. This item removes reference to ACIS Stage 3 from the definition of ACIS Stage.

Item 8 - Subsection 6(1)

11. This item removes the definition of ACIS Stage 3.

Item 9 - Subsection 6(1)

12. This item amends the definition of ACIS year as a consequence of the repeal of ACIS Stage 3. The final ACIS year will commence on 1 January 2011.

Item 10 - Subsection 6(1)

13. This item makes a technical amendment to the definition of final quarter as a consequence of the repeal of ACIS Stage 3.

Item 11 - Subsection 6(1)

14. This item removes reference to ACIS Stage 3 from the definition of final quarter.

Section 42 - Secretary to work out unmodulated production credit for each MVP

Item 12 - Subsection 42(1)

15. This item amends the formula for working out unmodulated uncapped production credit for a participant registered as a motor vehicle producer (MVP). The amended formula allows participants registered as MVPs to receive uncapped production assistance for vehicles sold for export (other than to New Zealand).

Item 13 - Subsection 42(1)

16. This item amends one component of the formula for working out unmodulated uncapped production credit. The amended formula means assistance for MVPs, for production, is no longer tied to the tariff rate. Component 'B' of the formula for working out uncapped production credit will be 7.5 per cent in 2010.

Item 14 - Subsection 42(1)

17. This item inserts a definition to reflect the amendment to the formula which allows uncapped production assistance for vehicles for export (other than to New Zealand).

Item 15 - Subsection 42(2)

18. This item amends the formula for working out the unmodulated capped production credit for a participant registered as an MVP. The amended formula allows participants to receive the same level of capped assistance, in addition to uncapped assistance, for vehicles produced in the domestic market or in New Zealand, as those sold for export.

Item 16 - Subsection 42(2)

19. This item is a technical amendment consequential to the amendment to the formula for working out unmodulated capped production credit for MVPs.

Section 53 - Stage caps on ACIS

Item 17 - Subsection 53(1)

20. This item removes reference to ACIS Stage 3 from the table setting out the stage caps under ACIS.

Item 18 - Subsection 53(2)

21. This item removes reference to ACIS Stage 3.

Section 62 - Establishment and maintenance of ACIS ledger

Item 19 - Subsection 62(3)

22. This item removes reference to 3 stages for the purposes of establishing and maintaining the ACIS ledger.

ACIS Administration Amendment Act 2003

Item 20 - Item 88 of Schedule 1

23. This item removes reference to ACIS Stage 3.

Item 21 - Paragraph 91(a) of Schedule 1

24. This item removes reference to ACIS Stage 3.


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