BILLS DIGEST NO. 28, 2015–16              12 October 2015

Customs Amendment (Fees and Charges) Bill 2015 [and] Customs Depot Licensing Charges Amendment Bill 2015 [and] Import Processing Charges Amendment Bill 2015

Rob Dossor
Economics Section 

Date introduced: 16 September 2015

House:  House of Representatives

Portfolio: Immigration and Border Protection

Commencement:  See page two of this Bills Digest.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page for the Customs Amendment (Fees and Charges) Bill 2015, the Customs Depot Licensing Charges Amendment Bill 2015 and Import Processing Charges Amendment Bill 2015, 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.

Purpose of the Bills

The purpose of the three Bills discussed in this Bills Digest form a package that seeks to implement part of the Government’s response to the Joint Review of Border Fees, Charges and Taxes (the Fees Review) by adjusting import processing charges and enabling full recovery of custom broker licence charges and import processing costs.[1]

Structure and commencement of the Bills

Each of the three Bills in the legislative package has one Schedule.

The Customs Amendment (Fees and Charges) Bill 2015 (the Fees and Charges Bill) amends the Customs Act 1901 by changing the warehoused goods declaration fees and establishing circumstances when new warehouse licence charges and customs broker licence charges are payable.[2] Sections 1 to 3 of the Fees and Charges Bill commence on Royal Assent. Schedule 1 commences at the same time as Schedule 1 to the Customs Depot Licensing Charges Amendment Bill 2015 (see below).

The Customs Depot Licensing Charges Amendment Bill 2015 (Depot Licensing Bill) amends the Customs Depot Licensing Charges Act 1997 by modifying warehouse licence applications charges and customs broker licence charges.[3] Sections 1 to 3 of the Depot Licensing Bill commence on Royal Assent. Schedule 1 commences on 1 January 2016.

The Import Processing Charges Amendment Bill 2015 (Import Bill) amends the Import Processing Charges Act 2001 by increasing and rationalising import processing and warehouse charges.[4] Sections 1 to 3 of the Import Bill commence on Royal Assent. Schedule 1 commences on 1 January 2016.

Important definitions

Warehoused goods declaration fee

Warehoused goods are goods that have been imported into Australia and are being held in a customs warehouse before being released for home consumption. Section 71BA of the Customs Act prescribes that ‘an owner of warehoused goods who makes an import declaration in respect of the goods is liable to pay a fee (the warehoused goods declaration fee) for the processing of the declaration’.[5]

Warehouse licenses

Warehoused goods can be stored in either a licensed warehouse or a customs depot. Part V of the Customs Act provides that a person or partnership can be licensed to operate a warehouse, while Part IVA of the Customs Act provides that a person or partnership can be licensed to operate a depot. The main difference between a licensed warehouse and a customs depot is that warehouses are used for longer term storage of goods.[6]

Customs broker licenses

A customs broker is a person licensed under section 183C of the Customs Act to comply with the provisions of or requirements under the Customs Act on behalf of the owner in relation to those goods.[7] The Department of Immigration and Border Protection (DIBP) processes and assesses applications for customs broker licences.[8]

Import processing charges

Import processing charges have been applied since 1997. They fall into two categories:

•       import declaration processing charges which are imposed by section 71B of the Customs Act and

•       warehouse declaration processing charges which are imposed by section 71DI of the Customs Act.

For more information on Import Processing Charges see the Bills Digest to the Import Processing Charges Amendment Bill 2013.[9]

Background

In 2012, the Low Value Parcel Processing Taskforce concluded that Customs and Border Protection fees and charges were crossed-subsidised and that ‘a more cost reflective fee structure could be established’.[10]

Prior to December 2013 only a proportion of all cargo and trade functions provided by DIBP were cost recovered. In the 2013–14 Budget, it was announced that DIBP would restructure the import processing charges to recover all import related cargo and trade functions provided by DIBP.[11] Import processing charges and warehouse declaration processing charges were subsequently increased in December 2013 (through the Import Processing Charges Amendment Act 2013).[12] This legislation was supposed to make import processing charges fully cost-recoverable.[13]

In September 2014 the Australian Government commissioned a review by the Australian Customs and Border Protection Service (ACBPS) and DIBP jointly with the Department of Agriculture to, among other things, investigate current and future cost recovery based charging for services, particularly those resulting from industry demand factors.[14] At the time of commissioning the review, no evidence was cited suggesting that import processing (including customs broker) charges were not fully cost-recovered after the December 2013 changes.[15]

The goals of the Fees Review included:

•       exploring deregulation opportunities to minimise, where possible, the administrative burden for industry and Government and to consider better aligning border charges levied by the Commonwealth

•       achieving at minimum a revenue neutral position, balancing user charging arrangements for the management and protection of our border without unduly impeding economic growth and Australia’s international competitiveness

•       exploring opportunities to consolidate the number of border fees, charges and taxes and reduce complexity associated with their collection and

•       aligning fees and charges with future border initiatives, new services being requested by industry and longer term objectives.[16]

The report of the Fees Review has not been made public, but has been summarised by DIBP. It is said to have identified, among other things, that charges for the three licence types (customs broker, warehouse and depot licences) are ‘currently misaligned’.[17] It recommended ways in which charges could be aligned across all licence types including:

•       the introduction of an application charge for broker and warehouse licences, along with a reduction in licence grant fees for warehouse licences and

•       the introduction of a variation charge for warehouse licences.[18]

According to the Explanatory Memorandum of the Fees and Charges Bill, the Fees Review found that full-cost recovery of import processing charges is not occurring and that custom broker charges only recover approximately 30 per cent of the total expenditure base.[19]

Committee consideration

Senate Standing Committee for the Selection of Bills

At the time of writing the Senate Standing Committee for the Selection of Bills had delayed its consideration of the Bills discussed in this Bills Digest until its next meeting.[20]

Senate Standing Committee for the Scrutiny of Bills

At the time of writing the Senate Standing Committee for the Scrutiny of Bills had not considered the Bills in this legislative package.

Policy position of non-government parties/independents

The Bills in this legislative package do not appear to have raised concerns or commentary from non-government parties or independent senators or members.

Position of major interest groups

The Freight and Trade Alliance (FTA) stated in relation to the finalisation of the Fees Review:

Winners are the express courier and internet trade sectors.

Losers are commercial importers who continue to carry the bulk of the cost recovery burden and now face a price increase on air and post import declarations.

Whilst the rest of the industry remains relatively untouched, customs brokers face an astonishing 100% grant and renewal fee increase.[21]

Financial implications

The Fees and Charges Bill and the Depot Licensing Bill marginally increase licensing charges and together will generate an estimated $1.1 million over the forward estimates.[22] The Import Bill rationalises and generally increases import and warehouse declaration processing charges to the current highest rate for all modes of receival. It is estimated that this will generate $106.4 million over the forward estimates.[23]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bills’ compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. [24] The Government considers that each of the Bills is compatible.

Parliamentary Joint Committee on Human Rights

At the time of writing the Parliamentary Joint Committee on Human Rights had not considered the Bills in this legislative package.

Key issue

Lack of transparency

According to the Explanatory Memoranda to each of the Bills, a Regulatory Impact Statement has been prepared, but will not be published until all recommendations arising from the Fees Review have been considered and finalised.[25]

Similarly, no finalised, current Cost Recovery Implementation Statement (CRIS) has been made public incorporating the changes to import processing fees. While a revised CRIS would not be required until 1 January 2016, the lack of publicly available information around the proposed changes provides the Parliament with less information about the need for the changes to import processing charges.[26] The Australian Government Cost Recovery Guidelines state ‘the documentation for a specific cost recovered activity should be detailed enough to allow the Parliament, those who pay cost recovery charges, and other stakeholders to analyse the activity’.[27]

Key provisions

Fees and Charges Bill

The Fees and Charges Bill makes amendments to the Customs Act.[28]

Items 1 to 4 make changes to the warehoused goods declaration fee, slightly decreasing the electronic declaration rate and increasing the document declaration rate. The amendments change the fees currently set out in the Customs Act and also change the upper limits on the fees that can be prescribed under the regulations. The current and proposed fees are set out in Table 1 below:

Table 1: Current and proposed warehoused goods declaration fees

Type of declaration

Current

Proposed

Amount set out in Act

Maximum amount that may be prescribed

Amount set out in Act

Maximum amount that may be prescribed

Electronic

$23.20

$34.80

$23.00

$34.00

Documentary

$60.00

$90.00

$63.00

$94.00

Source: section 71BA of the Customs Act and items 1 to 4 of the Fees and Charges Bill.

Item 9 inserts definitions for warehouse licence application charge, warehouse licence charge and warehouse licence variation charge. Items 10 and 11 establish that applications for warehouse licences and variations to such licences must be accompanied by a warehouse licence application charge (item 10) or warehouse licence variation charge (item 11).

Item 12 repeals section 85 and provides new sections which make the warehouse licence charge payable in respect of the grant of a warehouse licence or the renewal of a warehouse licence (proposed section 85) and establish that the warehouse licence charge must be paid in accordance with the regulations (proposed section 85A).

Item 14 inserts proposed section 87A which establishes when a refund of the warehouse licence charge is required, specifically, if the licence is cancelled before the end of the financial year (proposed paragraph 87A(a)) and the former licence holder has paid some or all of the licence in that financial year (proposed paragraph 87A(b)). The amount of the refund will be determined in accordance with a formula that will be set out in the regulations.

Item 15 provides definitions for customs broker licence application charge and customs broker licence charge.  Item 16 requires that a customs broker licence application charge accompany an application for a broker’s licence.

Items 17 and 18 repeal section 183CL (item 18), which currently allows fees in respect of broker’s licences to be prescribed in the regulations, and insert proposed section 183CJA (item 17), which requires a person seeking to be granted a customs broker licence to pay the customs broker licence charge (proposed subsection 183CJA(1)) by the end of the day the customs broker licence comes into force (proposed subsection 183CJA(2)). The customs broker licence charge must also be paid for the renewal of a customs broker licence (proposed subsection 183CJA(3)) before the end of the day the renewal of the licence comes into force (proposed subsection 183CJA(4)).

Section 270 of the Customs Act allows regulations to be made to give effect to the Act. Item 20 inserts proposed subsection 270(1A) which allows regulations to be made in relation to the charging, paying and recovery of fees in respect to any matter under the Act or the regulations.

Items 21 to 23 outline that the amendments made by the Fees and Charges Bill apply as follows:

•       the new fees for import declarations apply to declarations made on or after 1 January 2016

•       application fees for warehouse or broker licences apply to licence applications made on or after 1 January 2016

•       fees for applications for variations to warehouse licences apply to variation applications made on or after 1 January 2016

•       the revised fees for the grant of warehouse or broker licences apply to licences granted on or after 1 January 2016 (regardless of whether the application for the licence was made before that time)

•       the revised fees for the renewal of warehouse or broker licences apply to renewal decisions made on or after 1 January 2016 (regardless of whether the licence was granted before that time)

•       the existing fees for the grant or renewal of warehouse or broker licences, and the current requirements for paying those fees, continue to apply in relation to licences granted or renewed before 1 January 2016.   

In other words, applications, grants of licences, renewals and fees will remain the same until 1 January 2016.

Depot Licensing Bill

The Depot Licensing Bill makes amendments to the Customs Depot Licensing Charges Act.[29]

Items 1-3 amend both the short and long title of the Act to reflect that the Act will now also deal with the imposition of charges in relation to warehouse licences and customs broker licences. Currently the Act only deals with charges imposed in relation to depot licences. The Act will be renamed the Customs Licensing Charges Act 1997.

Item 4 inserts definitions for broker’s licence, Comptroller-General of Customs, customs broker licence application charge, customs broker licence charge and warehouse licence as well as those inserted by item 9 of the Fees and Charges Bill (above).

Item 6 inserts new Part 3 to Part 5 in the renamed Customs Licensing Charges Act.

Proposed Part 3 deals with when warehouse licence charges are payable (proposed section 6B), the amount of the warehouse licences charges, specifically warehouse licence application charges (proposed section 6C), warehouse licence charge (proposed section 6D and section 6E) and warehouse licence variation charge (proposed section 6F). The current and proposed fees are set out in Table 2 below:

Table 2: Current and proposed warehouse licence fees

Type of charge

Current charge

Proposed charge

Amount set out in Act

Amount set out in Act

Maximum amount that may be prescribed

Warehouse licence application charge

$0 (no current fee)

$3,000

$4,500

Warehouse licence charge

$7,000

$4,000

$6,000

Warehouse licence renewal charge

$4,000

$4,000

$6,000

Warehouse licence charge—dual-licensed place

$1,000

$1,000

Warehouse licence renewal charge—dual-licensed place

$0 (no current fee)

$0

Warehouse licence variation charge

$0 (no current fee)

$300

$450

Source: regulations 35 and 36 of the Customs Regulation 2015 and proposed sections 6C to 6F of the Customs Licensing Charges Act.

Proposed Part 4 deals with when customs broker licence charges are payable (proposed section 6G), the amount of the customs broker licence application charge (proposed section 6H) and the amount of customs broker licence charge (proposed section 6J). The current and proposed fees are set out in Table 3, below:

Table 3: Current and proposed customs broker licence fees

Type of charge

Current charge

Proposed charge

Amount set out in Act

Amount set out in Act

Maximum amount that may be prescribed

Customs broker licence application charge—natural person who does not intend to act as broker in own right

$0 (no current fee)

$130

$195

Customs broker licence application charge—any other case

$0 (no current fee)

$1,300

$1,950

Customs broker licence charge—natural person who does not intend to act as broker in own right

$120

$240

$360

Customs broker licence charge—any other case

$1,200

$2,400

$3,600

Source: regulation 115 of the Customs Regulation 2015 and proposed sections 6H to 6J of the Customs Licensing Charges Act.

The proposed Part 5 makes current section 7, which deals with the making of regulations, a new part and extends the power to make regulations to include the new provisions.

Import Bill

The Import Bill makes amendments to the Import Processing Charges Act.[30]

Section 5 of the Import Processing Charges Act sets out the current import declaration processing charges and warehouse declaration processing charges. Under the current section charges differ according to whether the imported good arrived by air, sea or mail. Item 1 of the Import Bill repeals and replaces section 5 to remove the differentiation between goods received into the country through different methods and provide different import declaration processing charges for electronic declarations and for documentary declarations. The current and new charges are set out in Table 4 below:

Table 4: Import and warehouse Declaration Processing Charges

Import and warehouse declaration processing charges

Current

Proposed

Value of goods

Less than $10,000

Equal to or greater than $10,000

Less than $10,000

Equal to or greater than $10,000

Imported by air— electronic declaration

$40.20 (up to $45.00 may be prescribed)

$122.10 (up to $183.15 may be prescribed)

$50.00 (up to $75.00 may be prescribed)

$152.00 (up to $228.00 may be prescribed)

Imported by air— documentary declaration

$48.85 (up to $73.30 may be prescribed)

$122.10 (up to $183.15 may be prescribed)

$90.00 (up to $135.00 may be prescribed)

$192.00 (up to $288.00 may be prescribed)

Imported by mail— electronic declaration

$40.20 (up to $45.00 may be prescribed)

$122.10 (up to $183.15 may be prescribed)

$50.00 (up to $75.00 may be prescribed)

$152.00 (up to $228.00 may be prescribed)

Imported by mail— documentary declaration

$48.85 (up to $73.30 may be prescribed)

$122.10 (up to $183.15 may be prescribed)

$90.00 (up to $135.00 may be prescribed)

$192.00 (up to $288.00 may be prescribed)

Imported by sea— electronic declaration

$50.00 (up to $74.00 may be prescribed)

$152.60 (up to $228.90 may be prescribed)

$50.00 (up to $75.00 may be prescribed)

$152.00 (up to $228.00 may be prescribed)

Imported by sea— documentary declaration

$65.75 (up to $98.60 may be prescribed)

$152.60 (up to $228.90 may be prescribed)

$90.00 (up to $135.00 may be prescribed)

$192.00 (up to $288.00 may be prescribed)

Source: Section 5 of the Import Processing Charges Act and item 1 of the Import Processing Charges Amendment Bill 2015.

Item 2 states that amendments to import and warehouse declarations charges will to declarations communicated to the Department on or after 1 January 2016.

Concluding comments

It is hard not to criticise the lack of transparency during this legislative process. The full cost recovery of import processing was meant to have been achieved through the Import Processing Charges Amendment Act. This costing model likely reflected the costs at the time. These costs may have evolved since then and necessitated a review and further changes. The lack of evidence and information presented, however, introduces doubts as to whether either the Fees Review or the subsequent changes to import processing charges are justified.

Additionally no current CRIS or regulatory impact statement has been made available to accompany the legislation despite the fact that the legislation will marginally increase total import processing charges.

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.

© Commonwealth of Australia

Creative Commons

With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.

In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.

To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.

Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.

Disclaimer: Bills Digests are prepared to support the work of the Australian Parliament. They are produced under time and resource constraints and aim to be available in time for debate in the Chambers. The views expressed in Bills Digests do not reflect an official position of the Australian Parliamentary Library, nor do they constitute professional legal opinion. Bills Digests reflect the relevant legislation as introduced and do not canvass subsequent amendments or developments. Other sources should be consulted to determine the official status of the Bill.

Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library’s Central Entry Point for referral.

[1].              Department of Immigration and Border Protection (DIBP), ‘Joint review of border fees, charges and taxes’, DIBP website, accessed 7 October 2015.

[2].              Customs Act 1901, accessed 24 September 2015.

[3].              Customs Depot Licensing Charges Act 1997, accessed 6 October 2015.

[4].              Import Processing Charges Act 2001, accessed 6 October 2015.

[5].              Customs Act 1901, accessed 7 October 2015.

[6].              Explanatory Memorandum, Customs Amendment (Fees and Charges) Bill 2015, p. 5, accessed 9 October 2015.

[7].              Customs Act 1901, sections 183C and 181.

[8].              Department of Immigration and Border Protection (DIBP), ‘Cargo and trade related activities 2015–16’, cost recovery implementation statement (CRIS), p. 3, accessed 30 September 2015. Note, while this CRIS includes information on the proposed changes, it is not the final CRIS which is required to be released prior to the proposed changes taking effect.

[9].              H Gobbett, Import Processing Charges Amendment Bill 2013, Bills digest, 28, 2013–14, Parliamentary Library, Canberra, 2013, accessed 25 September 2015.

[10].              Low Value Parcel Processing Taskforce, Final report, The Treasury, Canberra, ACT, 2012, p. 12, accessed 24 September 2015.

[11].              Australian Government, ‘Part 1: revenue measures’, Budget measures: budget paper no. 2: 2013–14, p. 10, accessed 25 September 2015.

[12].              Import Processing Charges Amendment Act 2013, accessed 25 September 2015.

[13].              S Morrison, ‘Second reading speech: Import Processing Charges Amendment Bill 2013’, House of Representatives, Debates, 3 December 2013, p. 980, accessed 29 September 2015.

[14].              Australian Customs and Border Protection Service (ACBPS) and Department of Immigration and Border Protection (DIBP), ‘Joint review of border fees, charges and taxes’, industry consultation paper, 17 September 2014, p. 2, accessed 24 September 2015.

[15].              S Morrison (Minister for Immigration and Border Protection), Review of border fees, charges and taxes, media release, 17 September 2014, accessed 30 September 2015.

[16].              Australian Customs and Border Protection Service (ACBPS) and Department of Immigration and Border Protection (DIBP), ‘Joint review of border fees, charges and taxes’, op. cit., p. 3.

[17].              Department of Immigration and Border Protection (DIBP), ‘Joint review of border fees, charges and taxes’, DIBP website, accessed 24 September 2015.

[18].              Ibid.

[19].              Explanatory Memorandum, Fees and Charges Bill, op. cit., p. 2.

[20].              Senate Standing Committee for the Selection of Bills, Report, 12, 2015, The Senate, 17 September 2015, accessed 24 September 2015.

[21].              Freight and Trade Alliance, ‘Finalisation of the Joint Review of border fees, charges and taxes’, media release, 5 June 2015, accessed 25 September 2015.

[22].              Explanatory Memorandum, Customs Depot Licensing Charges Amendment Bill 2015 (Depot Licensing Bill), p. 3, accessed 25 September 2015; Explanatory Memorandum, Fees and Charges Bill, op. cit., p. 3.

[23].              Explanatory Memorandum, Import Processing Bill, op. cit., p. 2.

[24].              The Statement of Compatibility with Human Rights can be found at the following pages of the Explanatory Memoranda to the Bills: page 4 for the Fees and Charges Bill and Depot Licensing Bill and page 3 for the Import Processing Bill.

[25].              Explanatory Memorandum, Depot Licensing Bill, op. cit., p. 3.

[26].              Department of Finance, Australian Government cost recovery guidelines, 3rd edn, resource management guide, 304, Canberra, July 2014, p. 48, accessed 29 September 2015.

[27].              Ibid., p. 12.

[28].              Customs Act 1901, accessed 7 October 2015.

[29].              Customs Depot Licensing Charges Act 1997, accessed 6 October 2015.

[30].              Import Processing Charges Act 2001, accessed 6 October 2015.