Bills Digest no. 38 2015–16
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WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
Cat Barker
Foreign Affairs, Defence and Security Section
4 November 2015
Contents
Purpose
of the Bill
Background
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions
Other provisions
Date introduced: 17
September 2015
House: House of
Representatives
Portfolio: Infrastructure
and Regional Development
Commencement: A day
fixed by Proclamation, or six months after Royal Assent, whichever is sooner.
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent, they
become Acts, which can be found at the ComLaw
website.
The purpose of the Aviation Transport Security Amendment
(Cargo) Bill 2015 (the Bill) is to amend the Aviation Transport Security Act
2004 (the Act) to introduce an additional type of industry participant
referred to as a ‘known consignor’ and allow a broader range of matters to be set
out in the Aviation Transport Security Regulations 2005 (the Regulations).[1]
A known consignor scheme, the detail of which would be set
out in the Regulations, would provide an alternative means of compliance with
clearance requirements for air cargo, under which the sender or originator would
be responsible for preventing unlawful interference with goods up to the point
at which they are taken onto an aircraft.
The Act establishes a regulatory regime to ‘safeguard
against unlawful interference’ with aviation and implement Australia’s
obligations under the Convention on International Civil Aviation (known
as the Chicago Convention), including as it was amended in the wake of the
events of 11 September 2001.[2]
The Act and Regulations impose different requirements on a range of ‘aviation
industry participants’.[3]
Currently, supply chain security for air cargo as provided under the Act and
Regulations is administered through two schemes:
- the
Regulated Air Cargo Agent Scheme, which applies to businesses that make
arrangements with airlines for carriage of air cargo, or that operate a site
for the purpose of storage, handling, examination or processing of air cargo
and
- the
Accredited Air Cargo Agent Scheme, which applies to businesses that
provide road transport of cargo that will later be carried by air.[4]
Under both schemes, agents are responsible for, and must
take certain steps to ensure, the security of all cargo from the time they
receive it until it leaves their possession.[5]
The current regulatory framework meets Australia’s
international obligations. However, the United States has changed the security
requirements for US-bound air cargo. In particular, all air cargo travelling to
the US on passenger aircraft must be examined at deconsolidated or ‘piece’
level—that is, each individual box, carton or other item. This has been a
general requirement under US law since 2012, but Australian carriers have been
operating under an exemption, under which Australian screening requirements
were recognised as adequate. [6]
The Regulation Impact Statement (RIS) indicates that at present, most air cargo
for export is examined at Cargo Terminal Operator facilities at airports on an
‘as presented’ basis, which in practice often means examination of already
consolidated cargo (such as at container or pallet level).[7]
Following a review of security arrangements for incoming
air cargo in late 2014, the US Transport Security Administration (TSA) advised
Australia in early 2015 that the existing arrangement would not continue. The
TSA has since agreed to extend recognition of Australian screening requirements
to the end of July 2017, subject to development of a detailed
implementation plan.[8]
The Bill, along with changes foreshadowed to the
Regulations, is the Government’s preferred method of ensuring compliance with
the amended requirements for US-bound air cargo, an important component of
which is the establishment of a known consignor scheme.[9]
While it will be a matter for the Regulations rather than the Act, at this
stage the Government is proposing the amended arrangements apply only in
relation to US-bound air cargo.[10]
The Government intends the amendments in the Bill and those foreshadowed to the
Regulations will both commence in July 2016.[11]
Australian air freight to the US
The Department of Infrastructure and Regional Development
(the Department) sent a discussion paper to stakeholders in May 2015 that
provided information about air cargo sent to the US.[12]
Based on customs data, which the Department acknowledges does not provide a
comprehensive picture, during 2014:
- 25 per cent
of all Australian exporters sent air cargo to the US
- 10.6 per cent
of Australian exporters exported only to the US (that year) and
- almost
18,000 tonnes of air cargo was sent to the US, valued at nearly
$4.8 billion.[13]
The majority of Australia’s export air cargo is carried on
passenger aircraft.[14]
The Government has assessed that businesses exporting certain products would
face significant difficulties finding an alternative means of export to the US.[15]
Options considered in the
Regulation Impact Statement
The Regulation Impact Statement (RIS) for the Bill outlines
four options for dealing with the changes to requirements for Australian air
cargo being taken to the US.
Option 1 is to maintain the status quo. The
Government does not consider this a viable option. Given the US will not accept
Australian cargo unless the methods, techniques and equipment used for piece
level examination are approved, prescribed and overseen by the Government, it
considers ‘it is questionable whether many exporters will be able to continue
to export to the US at all’ if the current situation was maintained.[16]
Option 2 is to require piece level examination of all
US-bound air cargo. The Government considers this option would have adverse
impacts on trade, including significant delays and disproportionate impacts on
particular sectors, such as perishable exports.[17]
Option 3 is the Government’s preferred option, and the
one that would be facilitated by the Bill. It would introduce piece level
examination alongside a known consignor scheme for US-bound air cargo:
... It would allow industry participants choice in how they
meet the TSA's requirements by stipulating that 'piece level' examination could
be achieved either by having cargo submitted for enhanced piece level
examination at a specified regulated freight forwarder, or by
originating from another kind of regulated business – a Known Consignor (emphasis
added).[18]
Option 4 is to introduce piece level examination
alongside a known consignor scheme for all export air cargo.[19]
The RIS notes that option 3 is preferred by
representatives of smaller exporters because those not exporting to the US will
not be subject to increased costs, while option 4 is preferred by ‘some
industry participants (particularly large freight forwarders)’, which consider
option 3 may not allow for economies of scale, and anticipate difficulties
separating US-bound and other air cargo.[20]
It concludes:
... current tight timelines and [option 4’s] potential impact
on non-US exporters would not allow efficient implementation in the short term.
The preferred option (Option 3) could be expanded to include all export air
cargo in future as necessary.[21]
While the RIS provides some analysis and justification for
the Government’s approach, it does not include full costings and a cost/benefit
analysis for the above options. It states those details will be included in the
RIS for amendments to the Regulations because they will ‘continue to evolve’
throughout development of the scheme and further consultation with industry.[22]
The Department expects the results of detailed costings and cost/benefit
analysis to support the Government’s preferred option.[23]
The Senate Standing Committee for Selection of Bills recommended
the Bill not be referred to a committee for inquiry and report.[24]
The Senate Standing Committee for the Scrutiny of Bills sought
the Minister’s advice on whether proposed subsection 44C(3A) could be
more narrowly drafted.[25]
The Committee’s concern is outlined in the ‘Key issues and provisions’ section
of this Digest.
Non-government parties and independents did not appear to
have commented publicly on the Bill as at the time of publication of this Bills
Digest.
Major interest groups did not seem to have commented
publicly on the Bill as at the time of publication of this Bills Digest. The
Freight & Trade Alliance appears to support a known consignor scheme, while
information about the proposed scheme on the Export Council of Australia’s and
Australian Federation of International Forwarders’ websites appears neutral.[26]
Interest groups may not be inclined to comment in detail while they are still
engaged in consultations led by the Department on the details of the proposed
scheme.
The Department has been consulting industry stakeholders
such as exporters and freight forwarders, including through release of
discussion papers in May and October 2015 and workshops held in June and July
2015.[27]
The May discussion paper indicated submissions in response would be treated as
public documents and may be posted to the Department’s website, except where a
submitter has asked for a submission to remain confidential.[28]
No submissions had been posted on the Department’s website as at the time of
publication of this Digest.
The Explanatory Memorandum states that there will be no
financial impact to the Commonwealth resulting from the Bill.[29]
As required under Part 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s
compatibility with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of that Act. The Government
considers that the Bill is compatible because it does not raise any human
rights issues.[30]
The Parliamentary Joint Committee on Human Rights reached the same conclusion.[31]
Known consignors as a new category
of aviation industry participant
Section 9 of the Act includes definitions of terms
used throughout the Act. Item 2 will insert a definition of ‘known
consignor’ into section 9 and provide that it means a person approved as a
known consignor in accordance with regulations made under section 44C. Item 1
will amend the definition of ‘aviation industry participant’ to include known
consignors in that definition. The definition of aviation industry participant
is fundamental to the operation of the aviation security regime established by
the Act and Regulations, which operate by imposing obligations and
responsibilities on all participants and different categories of participants.
Enabling the Regulations to
establish a known consignor scheme
While the Act establishes the broad parameters of Australia’s
aviation transport security regime, much of the detail of the scheme is contained
in the Regulations. Section 44C of the Act sets out matters that may be provided
for in the Regulations in relation to examination and clearance of cargo, for
the purposes of safeguarding against unlawful interference with aviation. Included
among these matters are the establishment of the schemes that currently apply
to regulated air cargo agents and accredited air cargo agents.[32]
The amendments described below will enable an equivalent regulatory framework
to apply to the proposed known consignor scheme.
Item 7 will insert proposed
paragraph 44C(1)(aa) to allow the Regulations to establish a known
consignor scheme, under which certain persons that carry on a business that
includes handling, or making arrangements for transport, of cargo may be
approved as known consignors. This is the key amendment in the Bill, as it
provides the authority required for details of the Government’s proposed known
consignor scheme to be included in the Regulations.
Items 10, 11, 13–19 and 21
include complementary amendments to subsections 44C(1) and (2). Those
subsections currently set out particular matters the Regulations may deal with
in relation to regulated air cargo agents and accredited air cargo agents. Items 10,
11 and 13–19 will amend those subsections so that the Regulations
may also specify how those matters are to be dealt with in relation to known
consignors. The matters include, for example, conditions that must be complied
with, training requirements for employees, and examination and clearance
requirements. Item 21 will include as an additional matter the
application and approval process that will apply to the known consignor scheme.
Other amendments to the regulation
making power under section 44C
Without limiting the regulation-making power in
subsection 44C(1), subsection 44C(2) provides further detail on some
of the matters the Regulations may cover. Item 20 will insert proposed
paragraphs 44C(2)(ga) and (gb) to make it clear the Regulations may
provide for how cargo is to be handled in order to receive clearance for the
purposes of being taken onto an aircraft, and to maintain its status as cleared
after receiving clearance.[33]
This may include methods, techniques or equipment to be used. These amendments
will allow the Regulations to specify these matters both in relation to:
- the
proposed known consignor scheme, under which cargo will be cleared earlier in
the supply chain and
- alternative
means of complying with requirements for US-bound cargo, including through
enhanced piece level examination at a specified regulated freight forwarder.
Cargo Terminal Operators have been able to accept air cargo cleared by an
Enhanced Air Cargo Examination provider at facilities outside an airport and
load it onto aircraft without further examination since July 2015.[34]
Item 23 will insert an ‘avoidance of doubt’
provision. Proposed subsection 44C(3A) will make it clear that
regulations or other legislative instruments dealing with examination of cargo
may provide for, or require, cargo to be opened, deconsolidated or unpacked,
whether or not the owner or anyone else has consented. This will be
particularly relevant to US-bound cargo not originating from a known consignor,
where such steps will be required in order to satisfy the US requirement for
piece-level examination. The Scrutiny of Bills Committee noted that the
Explanatory Memorandum states that the purpose of examination is to detect
explosives, and that the proposed subsection is intended to displace common law
principles or fundamental rights that might otherwise apply to the opening of
cargo.[35]
The Committee sought the Minister’s advice on whether the power to make
legislative instruments authorising the opening, deconsolidation or unpacking
of cargo could be expressly limited to the purpose of detecting explosives.[36]
Increasing the range of matters
that may be included in notices made by the Secretary
Subsection 44C(3) allows regulations made under certain
paragraphs of subsection 44C(2) to provide that some or all of the matters
set out in those paragraphs are instead to be specified in written notices made
by the Secretary of the department administering the Act. A notice may impose
restrictions on persons or classes of persons to whom it may be given. Currently,
the matters are:
- the
examination of cargo
- the
procedures for dealing with examined cargo
- the
methods, techniques and equipment to be used for examination and
- the
circumstances in which cargo may receive clearance.
Item 22 would amend subsection 44C(3) to
also include:
- the
places where examination is to be conducted
- the
things to be detected by examination
- the
procedures for dealing with things detected by examination
- the
supervision and control measures for dealing with cargo that has received
clearance
- how
cargo is to be handled in order to receive clearance (proposed
paragraph 44C(2)(ga)) and
- how
cargo is to be handled to maintain its status as cleared after receiving
clearance (proposed paragraph 44C(2)(gb)).
The Explanatory Memorandum states that the ability to
specify matters in notices instead of the Regulations ‘allows for a greater
degree of flexibility to respond to things such as changes in technology’.[37]
It appears at least some of these notices would not be legislative instruments,
meaning this amendment may further reduce Parliamentary scrutiny of the above
matters.[38]
However, as noted in the Explanatory Memorandum to the Bill that initially
introduced subsection 44C(3), publication of some of the information that
might be included in such notices could compromise aviation security.[39]
Section 9 contains definitions of ‘regulated air
cargo agent’ and ‘accredited cargo agent’ for the purposes of the Act. Item 2
will amend this section to provide that a ‘regulated agent’ means a regulated
air cargo agent or an accredited cargo agent. Item 1 will make a
consequential amendment to the definition of aviation industry participant. Items 10,
11, and 13–19 include consequential amendments to section 44C
of the Act. These changes will simplify references to those participants.
Section 44B of the Act outlines when cargo is taken
to have received clearance, and when it is taken to be cleared, for the
purposes of being taken onto an aircraft. Item 6 will repeal and
replace subsections 44B(2) and (3). The proposed known consignor scheme will
provide for examination and clearance earlier in the supply chain, in
conjunction with obligations to ensure the security of cargo up to the point at
which it is taken onto an aircraft. This amendment will take account of that,
and proposed paragraphs 44C(2)(ga) and (gb), by clarifying which
aspects of the Regulations must be complied with in different circumstances.
Members, Senators and Parliamentary staff can obtain
further information from the Parliamentary Library on (02) 6277 2500.
[1]. Aviation Transport
Security Act 2004 and Aviation Transport Security
Regulations 2005; both accessed 13 October 2015.
[2]. Aviation
Transport Security Act 2004, section 3; Convention
on International Civil Aviation, opened for signature 7 December 1944,
[1957] ATS 5 (entered into force for Australia 4 April 1947),
accessed 13 October 2015; J Anderson, ‘Second
reading speech: Aviation Transport Security Bill 2003’, House of
Representatives, Debates, 27 March 2003, pp. 13,749–50,
accessed 13 October 2015.
[3]. This
term is currently defined to include airport and aircraft operators, regulated
and accredited air cargo agents, persons who occupy or control an area of an
airport, certain persons performing security functions, Airservices Australia,
and contractors to a person in any of those categories: Aviation Transport
Security Act 2004, section 9.
[4]. Department
of Infrastructure and Regional Development (DIRD), ‘Regulated
Air Cargo Agent (RACA) scheme’ and ‘The Accredited Air Cargo Agent (AACA)
scheme’, DIRD website, both accessed 13 October 2015.
[5]. Ibid.
[6]. DIRD,
‘Regulation impact statement—Part 1: Enhancing US-bound air cargo security’
(RIS Part 1), Explanatory
Memorandum, Aviation Transport Security Amendment (Cargo) Bill 2015,
pp. 19–20, accessed 12 October 2015.
[7]. Ibid.,
p. 17. See further DIRD, Maintaining
acceptance of Australian air cargo (May 2015
discussion paper), DIRD, May 2015, pp. 16–17,
accessed 4 November 2015.
[8]. RIS Part 1,
pp. 19–20.
[9]. Ibid.,
pp. 14–16.
[10]. Ibid.,
pp. 25–26.
[11]. Ibid.,
p. 13.
[12]. DIRD,
May 2015 discussion paper, op. cit.
[13]. Ibid.,
pp. 3, 13–17.
[14]. RIS Part 1,
op. cit., p. 17.
[15]. Ibid.,
p. 18.
[16]. Ibid.,
p. 21. See further pp. 23–24.
[17]. Ibid.,
pp. 22, 24–25.
[18]. Ibid.,
p. 15. See further pp. 25–26.
[19]. Ibid.,
pp. 15, 26.
[20]. Ibid.,
p. 22.
[21]. Ibid.
[22]. Ibid.,
p. 13.
[23]. Ibid.,
p. 28.
[24]. Senate
Standing Committee for Selection of Bills, Report,
13, 2015, The Senate, 15 October 2015, accessed
19 October 2015.
[25]. Senate
Standing Committee for the Scrutiny of Bills, Alert
digest, 11, 2015, The Senate, 14 October 2015, p. 1,
accessed 19 October 2015.
[26]. P
Zalai, ‘Australian
exporters to set a global benchmark in transport security’, Freight &Trade
Alliance website, 4 July 2015; Export Council of Australia, ‘Important update:
agreement established to strengthen US-bound air cargo security’, Export
Council of Australia website, 26 July 2015; Australian Federation of
International Forwarders, ‘Weekly news
highlights & activities update—October 8’, Australian Federation of
International Forwarders website, 8 October 2015; all accessed
21 October 2015.
[27]. RIS Part 1,
op. cit., p. 27; DIRD, Maintaining
US acceptance of Australian air cargo: Regulatory changes: Discussion paper,
October 2015, accessed 4 November 2015.
[28]. DIRD,
May 2015 discussion paper, op. cit., p. 10.
[29]. Explanatory
Memorandum, op. cit., p. 2.
[30]. The
Statement of Compatibility with Human Rights can be found at page 3 of the
Explanatory Memorandum to the Bill.
[31]. Parliamentary
Joint Committee on Human Rights, Twenty-ninth
report of the 44th Parliament, 13 October 2015, p. 1,
accessed 19 October 2015.
[32]. Aviation
Transport Security Act, paragraphs 44C(1)(b) and (c).
[33]. ‘Receives
clearance’ and ‘cleared’ are defined in section 44B of the Act, as amended
by item 6 of the Bill.
[34]. For
information on Enhanced Air Cargo Examination, see DIRD, ‘Strengthening
US-bound air cargo security’, 20 October 2015, and ‘Factsheet—Enhanced
Air Cargo Examination’, 7 August 2015, DIRD website, both accessed
21 October 2015.
[35]. Senate
Standing Committee for the Scrutiny of Bills, Alert digest,
op. cit. Note the Explanatory Memorandum (p. 10) incorrectly refers
to subregulation 44B(2) instead of subregulation 4.41B(2) as the provision that
stipulates the purpose of examination.
[36]. Ibid.
[37]. Explanatory
Memorandum, op. cit., p. 9.
[38]. The
Explanatory Memorandum for the Bill does not address the issue of whether or
not the Secretary’s notices are legislative instruments. Nor do the Explanatory
Memorandum to the Bill that inserted subsection 44C(3) or the Explanatory
Statement relevant to regulation 4.41J: Explanatory
Memorandum, Aviation Transport Security Amendment Bill 2006, p. 24,
accessed 20 October 2015; Explanatory
Statement, Aviation Transport Security Amendment Regulation 2012
(No. 3), accessed 4 November 2015. A range of factors determine
whether or not something is a legislative instrument: Legislative Instruments
Act 2003, accessed 23 October 2015 (see in particular sections 5–8).
[39]. Explanatory
Memorandum, Aviation Transport Security Amendment Bill 2006, op. cit., p. 24.
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