The Budget is released and details begin to emerge
The Australian Federal Budget for the 2018/2019 year was announced in Parliament on 8 May 2018. Individual summaries for portfolios can be found at the relevant websites for the portfolio agencies.
The following issues were announced which may have an impact for those in the customs and trade industry. I had deferred any commentary until more detail came to light on some of the issues.
Biosecurity Import Levy
As I suggested shortly before the Budget was announced, there is a proposal for a new levy on imports by sea to cover an ‘enhanced biosecurity system’. The levy is estimated to raise $325M over the three financial years from 2019 – 20, an average of $108M each year.
The levy is intended to start from 1 July 2019 and would be:
- introduced on sea containers and non-containerised imports by sea (not on airfreight);
- introduced on port terminal operators for goods that are unloaded and cleared under the Biosecurity Act;
- set at $10.02 per incoming twenty-foot equivalent sea container and $1 per tonne for non-containerised cargo; and
- 1% of the current cost of importing a container.
Of interest is that the levy is being imposed on port terminal operators. Presumably it will be passed on down the supply chain to shipping lines, then to freight forwarders and then to importers. However a real issue arises from the way it will be imposed and whether each party will add an administrative or other charge at each stage.
Also of interest are the revelations that the additional charge is not for cost recovery of existing biosecurity reviews but is a levy apparently to be ‘set aside’. Readers would be aware that existing processing charges on full import declarations already include a portion for biosecurity review. It would appear that the levy is intended to cover contingencies against future events which may require a significant response, such as another prawn ‘white spot’ infestation. Being characterised as a ‘levy’ also means it falls outside of the regime established by the Department of Finance Cost Recovery Guidelines which would require prior consultation with details to be provided. It could also mean that those liable to the levy could recover it against all containers moved, including empty containers or those there for export. Accordingly, we are all keen to hear the additional services to be provided and how this levy will be charged and imposed.
The budget provides for $293.63M allocated over 4 years to strengthen air cargo and international mail security. In addition $121M will be going to increase inbound cargo screening and $122M towards increasing ABF and AFP officers at airports.
On a domestic level, the additional budget allowance will increase security screening at certain regional airports and allow for the installation of new x-ray and personal screening equipment. Police at airports will be granted additional powers, including requiring passengers to prove their identity.
A significant 'non-budget' development is confirmation that the 'piece-level' scanning procedures adopted for exports to the US are now to be adopted for all goods for export by air. This is to be implemented by 1 March 2019 and poses a challenge for all in the supply chain.
Single Window for Trade
The Budget included a promise of $10.5M to ‘transform and modernise’ the supply chain by completing the business case for a ‘single window’ for international trade documentation. Not the single window itself but merely the business case as to its likely costs and benefits. This was first promised as part of an election commitment in 2016 and is moving very slowly. By comparison, NZ’s ‘Trade Single Window’ (or TSW) commences on 1 July this year!
Australian Trusted Trader Programme (ATTP)
There is a non-specific statement in the Budget to the effect that those in the ATTP would not be required to produce a Country of Origin (COO) document for goods imported under ‘certain’ FTAs. However, those FTAs were not identified nor was the process by which preferential status would be able to be claimed. It could be difficult to implement in FTAs where COOs are compulsory such as ChAFTA, as the FTAs themselves may need amendment. There has since been confirmation that the funding is only for a first step to consider where the arrangements could be implemented. This is in response to industry requests.
SME export hubs and other trade-related matters
The Budget contained some other promises of funding to assist SME operators to more comprehensively engage in trade and take the benefit of FTAs which have been negotiated and which are being negotiated:
$20M (over four years) towards funding ‘Industry Growth Centres’ for two more years as well as an ‘SME export hubs program’. The details have yet to be provided, but it would appear to be a grant program that will enable a group of SMEs in a region to get funding for activities to benefit them as a group, such as brand development, enhancing supply chains and upskilling
$15M to DFAT to boost ‘economic diplomacy’ to include continuing and expanding the FTA outreach program as well as engaging more with business including provision of economic and security insights
a small boost for Austrade including $3.2M to develop a new national brand
investments in freight and rail infrastructure including $400M for a new rail line at Port Botany
$51.3M over four years to grow agricultural exports
additional agricultural counsellors in key export markets