EXPLANATORY STATEMENT

 

Select Legislative Instrument 2006 No. 134

 

Issued by the Authority of the Minister for Industry, Tourism and Resources

 

                        ACIS Administration Act 1999

 

ACIS Administration Amendment Regulations 2006 (No. 1)

 

The ACIS Administration Act 1999 (the Act) established the Automotive Competitiveness and Investment Scheme (ACIS) to:

provide transitional assistance to encourage competitive investment and innovation in the Australian automotive industry in order to achieve sustainable growth, both in the Australian market and internationally, in the context of trade liberalisation.

 

Section 116 of the Act provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or, matters necessary or convenient to be prescribed for carrying out or giving effect to the Act.

 

ACIS rewards eligible activity by registered participants in the form of duty credits, which are fully tradeable instruments and which can be used to acquit a liability for customs duty on eligible automotive imports.  The ACIS Administration Regulations 2000 (the Principal Regulations) set out which activities fulfilled the purpose of ACIS and therefore were eligible for ACIS assistance.

 

Regulation 9 of the Principal Regulations sets the automotive services that may be claimed for under ACIS.  These automotive services were limited to those automotive services "relating solely to", among other things, automotive "design, development, engineering or production".  The May 2006 decision of the Federal Court in the case of Secretary, Department of Industry Tourism and Resources v Brambles Australia Limited (VID 1230 of 2005), widened the meaning of "relating solely to" beyond what was originally intended when ACIS was first developed.  The Regulations would amend regulation 9 to give it the meaning originally intended.

 

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

In accordance with the consultation requirements of Section 17 of the Legislative Instruments Act 2003, a draft version of the proposed Regulations was circulated widely for comment among stakeholders.

 

The Regulations commenced on the day after they were registered.

 

Further details are set out in the Attachment.

 

ACIS Administration Amendment Regulations 2006 (No. 1)

 

Subregulation 9(2)     

 

Regulation 9 of the Principal Regulations sets the automotive services that may be claimed for under ACIS.  These automotive services were limited to those automotive services "relating solely to", among other things, automotive "design, development, engineering or production".  Recently the meaning of "relating solely to" has been extended beyond what was originally intended when ACIS was first developed. 

 

The proposed amendment will clarify the original intent of the policy makers by replacing the phrase "relating solely to" in subregulation 9(2) with the phrase "that constitute".

 

Subregulation 9(4)     

 

According to the ACIS Administration Act 1999, at Section 3, the purpose of ACIS is to:

provide transitional assistance to encourage competitive investment and innovation in the Australian automotive industry in order to achieve sustainable growth, both in the Australian market and internationally, in the context of trade liberalisation.

 

Subregulation 9(4) listed some activities which are ineligible for ACIS assistance because they do not further the purpose of ACIS.  This list was not meant to be exhaustive. 

 

Recently certain activities, which it originally was intended should not receive ACIS assistance, have been declared to be eligible for ACIS assistance.  This is essentially an unintended consequence of the way regulation 9 was drafted.  To return to the original intent of ACIS the following will be added to the existing list of ACIS ineligible activities in subregulation 9(4)

(f) any activity that is peripheral or incidental to the production process in Australia; or

(g) any activity that is not integral to the production process in Australia; or

(h) the hire to a person of goods for use in the production process in Australia; or

(i) the transportation of components to, or within, Australia.

 

It should be noted that the list of ineligible activities in the amended subregulation 9(4) will still not be exhaustive, and the eligibility of activities not mentioned will be determined on the basis of those activities fulfilling the purpose of ACIS.