New tax changes to be the death of local textile industry

The managing director of one of Australia's last remaining vertically integrated knitwear mills has denounced the Federal Governments plan to wind-up its duty concession scheme next June as the final death knock for the local industry.

 
Steve Tsonidis, general manager of Melbourne-based knitwear and textiles manufacturing company ABMT textiles, said forcing companies that use Australia-made fabrics and get them assembled overseas to pay import duties on top of GST would make his business unviable.

Since 2000 imported garments that use Australian-made fabrics have been granted a duty concession under the Expanded Overseas Assembly Provisions (EOAP) scheme.

With this scheme set to be wound up in June 2010, members of the Australian textile industry say they will be disadvantaged as importers who use fabric produced overseas will only be charged a single 10 per cent tariff on the assembled garment, and pay no GST.

"This will affect 30-40pc of our business and put our viability into serious question," Mr Tsonidis said.

For the past 15 years, ABMT have collaborated with Andorra Australia- a manufacturer and wholesaler of undergarments and base wear ?C to develop specialist fabrics such as ultra-lightweight Merino wool blends.

The garments are sold in Target and Target Country stores Australia-wide and marketed as Australian made.

Andorra Australia managing director Sam Goulopoulos said without the duty concession under the EOAP scheme Andorra would be taxed twice for using fabrics developed and made especially for it by ABMT.

"This is a real kick in the pants,"  Mr Goulopoulos told Rural Press this week.

"We are the largest user of Australian wool in the country without a doubt and now we are going to have to pay import tax just to use local yarn and fabric."

"We have managed to survive for 40 years by constantly reinventing ourselves but if it is going to be prohibiting to buy Australian made products then Government are just going to force us to look overseas."

He said the retraction of EOAP came as Andorra had received ??substantial?? increase in demand for its Merino wool garments with Target doubling its orders next year.

"For winter 2010 we have our largest order ever and now we are going to have to charge our customers more when we have worked hard to promote Australian made."

Ladies knitwear market has rallied in the past 24 months, with DFAT reporting it as the third top category of Australian imported textiles worth more than $488 million last year, with 62pc sourced from China.

Council for Textiles and Fashion industries Australia (TFIA), the peak body for Australia's' textile industry is in the process of campaigning against the changes.

"There is no justification for removing this concession for Australian garment manufactures who are keen to use Australian fabrics," TFIA executive director Jo Kellock said.

"The double-tax impost would make Australia-made fabric products uncompetitive in a highly price sensitive market."

But a Senator for Innovation and Industry spokesperson told Rural Press this week that Australian textile, clothing and household members would be compensated when the EOAP scheme closed with additional assistance via a new building innovative and capacity program introduced to the parliament last month.

"This will be passed into law next year," the spokesperson said, when full compensation details would be finalised.

The TFIA is the peak body representing more than 4000 textiles, clothing and footwear businesses and employs about 10pc of all manufacturing workers in Australia.