Key points

• The Bill proposes two policy measures that aim to improve Australia’s international trade practices:
  
  • Schedule 1 of the Bill creates a controlled regulatory environment (colloquially referred to as a ‘regulatory sandbox’) for selected businesses to trial new trade procedures and technologies.
  • Schedule 2 of the Bill formalises the legislative processes regarding Notices of Intention to Propose Customs Tariff Alterations.
• Schedule 1 reintroduces amendments original proposed by the previous Government in the Customs Amendment (Controlled Trials) Bill 2021. The 2021 Bill lapsed at the dissolution of the 46th Parliament.
• The Senate Scrutiny of Bills Committee had concerns regarding the lapsed 2021 Bill’s reliance on delegated legislation to deal with significant matters. The arrangements that were the subject of the Committee’s concern are unchanged in the 2022 Bill.
• Schedule 2 clarifies that Notices of Intention to Propose Customs Tariff Alterations are legislative instruments not subject to disallowance.

Introductory Info

Date introduced: 30 November 2022
House: House of Representatives
Portfolio: Home Affairs
Commencement: Schedule 1 commences on a day to be fixed by Proclamation or six months after Royal Assent, whichever is sooner.
Schedule 2 commences the day after Royal Assent.

Purpose and structure of the Bill

The Customs Legislation Amendment (Controlled Trials and Other Measures) Bill 2022 (the Bill or the 2022 Bill) has two Schedules:

• Schedule 1 – Main amendments concerns controlled trials. The purpose of Schedule 1 is to amend the Customs Act 1901 to create a regulatory framework for selected businesses to conduct international trade by participating in time-limited controlled trials.[1]
• Schedule 2 – Other amendments formalises the legislative arrangements for Notices of Intention to Propose Customs Tariff Alterations. The purpose of Schedule 2 is to amend the Customs Act to clarify the operation of the Legislation Act 2003 in relation to Notices of Intention.[2]

The two Schedules relate to two separate policy measures that are independent of each other. As such, this Bills Digest sets out the relevant background, committee consideration, and analysis of provisions under each Schedule number.

History of the Bill

The Coalition Government introduced the Customs Amendment (Controlled Trials) Bill 2021 into the House of Representatives on 24 November 2021. The 2021 Bill was not debated, and it lapsed at the dissolution of the 46th Parliament.[3]

Schedule 1 of the 2022 Bill is drafted in identical terms to the 2021 Bill. A Bills Digest was prepared for the 2021 Bill, and some content in this Bills Digest has been sourced from that earlier one.[4]

Schedule 2 of the 2022 Bill was not included in the 2021 Bill.

Schedule 1 (controlled trials and regulatory sandbox)

Background

What are controlled trials and regulatory sandboxes?

When it comes to policy reform, it may be prudent to conduct a controlled trial or experiment first to test the policy’s effect before its widespread implementation. Consequently, Schedule 1 of the Bill creates a controlled regulatory environment (colloquially referred to as a regulatory sandbox) for selected businesses to engage in time-limited customs trials. In other words, if passed, the Bill will create a legislative framework for selected businesses (defined as ‘approved entities’) to conduct cross‑border trade in ways that would not normally be allowed by the Customs Act.

As children are encouraged to play in a sandbox and contain any potential messiness within the sandbox, a government’s use of a regulatory sandbox can also encourage participating businesses to test innovative methods and new technologies in a controlled regulatory environment under the government’s supervision.[5]

For example, under the Bill, approved entities may be temporarily allowed to trial a new customs procedure at the Australian border. Results from these controlled trials may assist the Australian Government in gaining insight into how to streamline existing procedures, which can serve to facilitate more efficient and effective international trade over the long-term.

Regulatory sandboxes are frequently used in the regulation of financial technology industry (commonly known as the FinTech industry). This is because new financial technologies can be highly disruptive to the banking sector and therefore must be carefully monitored.[6] However, the use of regulatory sandboxes has spread to other sectors (for example, Australia’s energy sector).[7]

In her second reading speech for the 2022 Bill, Home Affairs Minister Clare O’Neil said:

Regulatory sandboxes ensure regulation keeps pace with industry developments, remains fit for purpose and does not become a barrier to innovation and productivity. This [Bill] is among the first regulatory sandbox mechanisms identified within a customs framework, worldwide.

The Bill will enable the modification or waiver of existing licensing, importing and exporting obligations under the Customs Act, for trial periods of up to 12 to 18 months.[8]  [emphasis added]

Figure 1 below shows how the use of a regulatory sandbox fits into the overall policy design and regulation process for the FinTech industry. The experience may also be applicable to Australia’s customs and trade industry.

Figure 1: the role of regulatory sandboxes in FinTech regulation

Source: IASbaba coaching services, Framework for Regulatory Sandbox Introduced, 20 October 2020.

Why does the trade industry need a regulatory sandbox?

Australian businesses that engage in international trade can face heavy regulatory burden. As such, the business sector has provided feedback to the Australian Government for the purpose of creating a regulatory sandbox to simplify trade regulations.[9]

Professor David Widdowson from Charles Sturt University explains the complexity of trade regulation:

Members of the international trading community must deal with multiple regulatory authorities when importing or exporting goods. Remarkably, trade-related regulatory requirements are administered and enforced by more than 30 agencies at the federal level in Australia, as well as some at the state and territory level. There is very little administrative coordination among the various agencies and the linkages between them have not been automated.

For example, to import a motor vehicle you will require approval from the Department of Infrastructure, Transport, Regional Development and Communications. There is also a need to lodge an import declaration with Australian Border Force, pay relevant duties and taxes, and arrange a biosecurity inspection with the Department of Agriculture, Water and the Environment…

If you are importing a luxury vehicle you will also need to be registered with the Australian Tax Office for the GST and the Luxury Car Tax. And if you wish to drive on Australian roads, then state and territory registration and insurance requirements come into play.[10] [emphasis added]

Given the complexity of trade regulation, the Coalition Government announced its Simplified Trade System (STS) reform agenda in the 2020-21 Federal Budget.[11] According to a joint media release by former Foreign Affairs Minister Marise Payne and former Trade Minister Dan Tehan:

The [simplified trade] system will create a simpler, more efficient and digitised trade framework so more Australian businesses can take full advantage of the opportunities offered by international markets.[12]

The former Government saw the creation of the legislative framework for a regulatory sandbox to test innovative customs procedures, as part of the its Simplified Trade System agenda that aimed to ‘streamline border services to reduce administrative complexity and improve the efficiency of international trade.’[13]

How will the controlled trials work?

Important details of the controlled trials have not been released yet. However, judging by the name (which derives from the scientific term ‘randomised controlled trials’), it is likely that the controlled trials will involve a control group and an experimental group to measure the effectiveness of a new customs policy or procedure.

In relation to the 2021 Bill, the Senate Scrutiny of Bills Committee argued that important details about the controlled trials (for example, qualification criteria for participation in the trials) should be made explicit in the primary legislation. The Government argues that the controlled trials need to be able to be quickly modified to respond to new situations, therefore the use of delegated legislation is preferable. These arguments are discussed below in the ‘Committee consideration’ section.

Committee consideration

At the time of writing, the 2022 Bill had not been considered by any Parliamentary committee. However, the Senate Scrutiny of Bills Committee and the Senate Legal and Constitutional Affairs Legislation Committee considered the 2021 Bill prior to the dissolution of the 46th Parliament. Their findings are likely to be relevant for Schedule 1 to the 2022 Bill. Some of these issues are canvassed in the next section.

Senate Standing Committee for the Scrutiny of Bills

In its Scrutiny Digest 18 of 2021, the Committee raised the concern that significant matters regarding controlled trials were to be specified in delegated legislation rather than the primary legislation.[14]

As discussed above, Schedule 1 to the 2022 Bill (like the 2021 Bill) aims to create a controlled regulatory environment for participating businesses to conduct time-limited customs trials. The Bill provides that the Comptroller-General of Customs (a position held by the Australian Border Force Commissioner) can, by legislative instrument, determine the qualification criteria that entities must meet in order to participate in controlled trials.[15]

The Committee view was that significant matters, such as the qualification criteria for participation in controlled trials, should be included in the primary legislation unless a sound justification could be provided for the use of delegated legislation.[16]

The Committee found that the Explanatory Memorandum to the 2021 Bill did not provide a sufficiently clear reason as to why these significant matters could not be included in the primary legislation.[17]

Consequently, the Committee requested that the Minister provide more detailed advice regarding:

• why it was considered necessary and appropriate to leave the qualification criteria for participation in controlled trials to delegated legislation, and
• whether the 2021 Bill could be amended to include at least high-level guidance regarding these matters on the face of the primary legislation.[18]

Ministerial response

The former Assistant Minister for Customs, Jason Wood, provided a response to the Committee addressing its concern.[19] Assistant Minister Wood justified the use of delegated legislation to determine significant matters:

Administering the controlled trials framework in delegated legislation enables controlled trials to be undertaken with a greater degree of certainty and administered in a timely manner. Due to the short timeframes for each of the trials, it is critical to the success of the program that there is flexibility to refine those elements in a timely manner before the next phase commences.

While qualification criteria apply generically, the Australian Border Force (ABF) will also require the flexibility to update the qualification criteria as the types of trials conducted and customs practices evolve. While initial trials may be small and the qualification criteria would be basic, as the types of trials conducted evolve and become more complex, so would the base requirements for participants to ensure as much consistency as possible across the suitability of participants. Placing qualification criteria in delegated legislation provides a degree of consistency across all participants in any trial, while allowing for the fact that appropriate qualification criteria at one point would not necessarily be sufficient in later trials. If the Customs Act 1901 (Customs Act) needed to be amended each time the qualification criteria for trials needed to change, this could delay new trials relying on the amended criteria to potentially lengthy legislative change processes. This would frustrate the ABF’s ability to conduct future controlled trials, which may require revised base level requirements for participation to meet emerging risks in international supply chain security…

I note that as the qualification criteria are determined in a legislative instrument, they will be subject to parliamentary scrutiny and disallowance. The Comptroller-General of Customs’ powers to make rules with respect to controlled trials, including qualification criteria, cannot be delegated.[20] [emphasis added]

The Committee’s comment regarding the ministerial response

The Committee noted the ministerial response and said:

The committee has generally not accepted a desire for administrative flexibility or a reliance on non‑legislative policy guidance to be sufficient justifications for leaving significant matters to delegated legislation. As such, it remains unclear to the committee why at least high-level guidance in relation to these matters could not be included on the face of the primary legislation.[21]

As such, the Committee:

• drew this matter to the attention of senators and left to the Senate, as a whole, the appropriateness of leaving the qualification criteria for participation in controlled trials to delegated legislation, and
• drew the matter to the attention of the Senate Standing Committee for the Scrutiny of Delegated Legislation.[22]

The issue regarding the use of delegated legislation is discussed below in the ‘Key issues and provisions’ section of this Digest.

Senate Legal and Constitutional Affairs Legislation Committee

The 2021 Bill was referred to the Senate Legal and Constitutional Affairs Legislation Committee for inquiry and report by 22 March 2022.[23] In its report, the Committee (chaired by Senator Sarah Henderson of the Liberal Party) recommended that the 2021 Bill be passed.[24]

While acknowledging the concern raised by the Scrutiny of Bills Committee, the Senate Legal and Constitutional Affairs Legislation Committee concluded that the 2021 Bill was appropriately structured as it provided ‘flexibility in a dynamic trade environment, while ensuring that [controlled] trials will have consistent qualification criteria and can [be] implemented expeditiously.’[25]

However, Australian Labor Party Senators made additional comments that resonated with the concern raised by the Scrutiny of Bills Committee:

Labor senators are, again, disappointed that the [Coalition] government proposes to use delegated legislation, so avoiding parliamentary scrutiny on important elements of this bill which should be included in primary legislation.[26]

Policy position of non-government parties/independents

Liberal Party of Australia

Schedule 1 of the 2022 Bill is drafted in almost identical terms to the 2021 Bill, a Bill that the Coalition Government introduced to the 46th Parliament. Therefore, it is likely that the Liberal Party will support Schedule 1 provisions regarding controlled trials.

At the time of writing, the positions of other parties and independents could not be identified.

Position of major interest groups

Business sector

The Australian business sector appears cautiously optimistic about the creation of a regulatory sandbox for the customs and trade industry.

Industry representative bodies such as the Freight & Trade Alliance (FTA) and the Australian Peak Shippers’ Association (APSA) have stated:

The [2021] Controlled Trials Bill creates a regulatory framework that seeks to encourage innovation in developing best practice regulation through testing new business practices and technologies before committing to legislative change. Results from Regulatory Sandbox trials will build the evidence base to inform longer term deregulatory reform. The ABF [Australian Border Force] is separately developing the Regulatory Sandbox Guidelines which will contain specific details of how to propose and manage trials.

FTA/APSA are seeking member feedback on what we see as a positive initiative.[27] [emphasis added]

In a similar vein, trade law specialist Andrew Hudson has commented:

The exciting aspect for industry is to see what proposals are intended to be tested in the “controlled trials” conducted through the Regulatory Sandbox.[28]

Law Council of Australia

The Law Council of Australia (LCA) broadly supported the 2021 Bill’s proposed legislative framework to facilitate controlled trials under the Customs Act, but raised concerns with some aspects.[29] Details of the LCA’s concerns are discussed further below in the ‘Key issues and provisions’ section of this Digest.

Financial implications of Schedule 1

According to the Explanatory Memorandum to the 2022 Bill, there are no specific financial implications resulting from the Bill.[30] However, individual controlled trials may have financial and other implications, depending on the specific trial.[31]

Key issues and provisions for Schedule 1

Key issue no. 1 – definition and scope of controlled trials

Item 2 of Schedule 1 inserts definitions of ‘controlled trial’ and ‘controlled trial provision’ into the Customs Act. The definitions determine what kind of controlled trials Customs can establish and participants (approved entities) can take part in.

‘Controlled trial provision’ is defined as the following:

(a)    Part IV (importation of goods); other than Division 1 of that Part (which deals with prohibited imports)

(b)   Part IVA (depots)

(c)    Part V (warehouses)

(d)   Part VI (exportation of goods), other than Division 1 of that Part (which deals with prohibited exports)

(e)   Part VIA (electronic communications)

(f) Part XI (agents and customs brokers)

(g)    Part XVA (tariff concession orders)

(h)   Regulations made for the purposes of a provision covered by paragraph (a), (b), (c), (d), (e), (f) or (g).[32]

As noted, controlled trials are intended to explore better administrative and regulatory processes associated with imports, exports and licensing.[33] By defining the meaning of ‘controlled trial provision’, the effect of item 2 is to limit the scope of controlled trials to these listed Parts of the Customs Act.[34] Some stakeholders have criticised the definition as being too narrow.[35]

Key issue no. 2 – Comptroller-General’s power to make legislative instruments in relation to controlled trials

Proposed section 179K (at item 4 of Schedule 1) provides that the Comptroller-General may, by legislative instrument, determine qualification criteria that entities must meet in order to participate in any controlled trial.

Proposed section 179L empowers the Comptroller-General to make, by legislative instrument, rules that outline the operation and administration of each specific controlled trial, such as rules relating to the purpose of the trial and its duration.

The Explanatory Memorandum provides examples of qualification criteria:

Examples of qualification criteria could be that an entity is able to pay all of its debts as they become liable, the entity satisfactorily complies with Customs-related laws, or that corporate entities have a registered ABN. This provision has effect of ensuring a degree of consistency and transparency in the expectations common for all trials.[40]

As noted above, the Senate Scrutiny of Bills Committee raised concerns in relation to the 2021 Bill that significant matters, such as the qualification criteria for participation in controlled trials, should be included in the primary legislation unless a sound justification could be provided for the use of legislative instruments.[41]

The Explanatory Memorandum offers an explanation as to why the Government considers that the use of delegated legislation is preferable:

The rules outlining qualification criteria that apply to all trials are meant to be enduring while also retaining flexibility to be quickly modified to meet emerging compliance requirements as trials and customs practices evolve. As controlled trials become more complex, the qualification criteria will need to also be modified in a timely manner to ensure the suitability of participants. Placing qualification criteria in subordinate legislation increases transparency, certainty and consistency for current and future participants, but allows for timely updates to address emerging compliance concerns in a consistent way across all trials.[42] [emphasis added]

Key issue no. 3 – some decisions are not subject to merits review

Proposed section 179J (at item 4 of Schedule 1) establishes the Comptroller-General’s power to vary, suspend or revoke an entity’s approval to participate in a controlled trial. The decision of the Comptroller-General to refuse, vary, suspend or revoke an entity’s participation in a controlled trial is not subject to merits review.[43]

Although these decisions are not subject to merits review, the entities involved in a controlled trial must be given at least seven days’ written notice before a variation, suspension or termination takes effect (proposed subsection 179J(5)).

The Explanatory Memorandum argues that for the purpose of efficiency and flexibility, the decision of the Comptroller-General should not be subject to merits review:

Controlled trials are strictly time limited. This means that any requirements or benefits conferred are not enduring in nature. This can be distinguished from the Australian Trusted Trader Programme, whereby entities receive enduring benefits. On this basis, it would be inappropriate to subject the decision of the Comptroller-General of Customs to refuse to approve an entity’s participation in a controlled trial to merits review which typically would take many months or over a year to conduct.[44] [emphasis added]

Concluding comments for Schedule 1

Businesses that engage in international trade must confront the administrative complexity of trade regulation at various levels of governance. Schedule 1 of the Bill creates the framework for a ‘regulatory sandbox’ to help enable approved businesses to participate in controlled trials of new trade practices, thereby seeking to make cross-border trade more effective and efficient.

However, as with most government policies, the devil is likely to be in the detail. The effectiveness of a regulatory sandbox approach will likely depend on:

• who will be allowed to participate, against what criteria and on what ongoing basis, and
• which processes are intended to be tested in the controlled trials and how the results of those trials are to be incorporated back into the broader trade and customs system.

 

Schedule 2 (Other amendments)

Background

Tariff Proposal process

All goods (above a set minimum value) imported into Australia, whether by air, sea or post, must be cleared through Australian Customs/Border Force.[46] Tariffs are often levied on imported goods and are payable by importing businesses to the Australian Government as a rate/percentage of the total value of the imported goods.

Tariff rates typically range from 0% to 10%. Different goods are taxed at different tariff rates according to the Australian tariff classification system, which is codified in the Customs Tariff Act 1995 and the Excise Tariff Act 1921.

To propose new tariffs or change existing tariff rates, the Australian Government must introduce a Bill to amend the relevant Tariff Act. However, because of the time considerations in the drafting and passage of legislation, waiting for a Bill to be passed before applying the change is usually unsuitable ‘as it would permit importers and manufacturers to bring forward future importations or production in order to avoid the proposed increase’.[47]

When the Parliament is not sitting, section 273EA of the Customs Act allows the Minister to announce a new customs tariff measure, by publishing in the Government Gazette, a Notice of Intention to Propose Customs Tariff Alterations.[48] Subsection 273EA(2) provides that the Notice is to be treated as though it was proposed in Parliament, thereby allowing enforcement of the measure to commence immediately.[49]

Although section 273EA of the Customs Act specifies that a Notice of Intention to Propose Customs Tariff Alterations is to be published in the Gazette, section 56 of the Legislation Act 2003 provides that if an Act requires a legislative instrument to be published or notified in the Gazette, the requirement is taken to be satisfied if the instrument is registered as a legislative instrument.[50]  

Then, when the Parliament resumes sitting, the Minister must move a Customs Tariff Proposal as a motion in the House of Representatives, within seven sitting days of the notice being published in the Gazette (or, in accordance with section 56 of the Legislation Act, registered on the Federal Register of Legislation). Generally, these motions are not further debated and not resolved.[51]

In effect, the Executive branch of government relies on the authority of Customs Tariff Proposals to collect tariffs, in anticipation of subsequent ratification by the Parliament authorising the tariff collection. The House of Representatives Practice confirms that:

The moving of a customs tariff (or excise tariff) proposal is normally treated as a formal procedure for the purpose of initiating the collection of the duty… Collection of duties is thus commenced on the authority of an unresolved motion, and this has been accepted as a convention.[52]

Under section 226 of the Customs Act and section 114 of the Excise Act, customs officers are provided protection to begin acting on a new tariff measure for a period of 12 months after the proposal is moved, or the end of the parliamentary session, whichever is earliest.[53]

After the Minister moves a Customs Tariff Proposal in the House of Representatives, then the practice is for the Government to introduce a Customs Tariff Amendment Bill prior to the end of the 12-month period for which customs officers are provided protection from legal actions.[54] The passage of the Customs Tariff Amendment Bill would retrospectively ratify or validate the outstanding Customs Tariff Proposal.

Figure 2: overview of the Tariff Proposal process

Source: Parliamentary Library.

What does the 2022 Bill intend to do?

Clarification of whether Notices of Intention are legislative instruments

Section 273EA of the Customs Act allows the Minister, when the Parliament is not sitting, to publish a Notice of Intention to Propose Customs Tariff Alterations. As discussed above, although section 273EA specifies that such a notice is to be published in the Government Gazette, the Government has recently relied on section 56 of the Legislation Act to fulfil the notification requirement by registering the notice as a legislative instrument on the Federal Register of Legislation.[55]

Although the Government has recently been registering the Notices as legislative instruments[56] and they therefore fall within the definition of legislative instrument in subsection 8(3) of the Legislation Act, the Customs Act does not currently specify whether or not these Notices of Intention are legislative instruments.[57] The Bill seeks to clarify this issue by specifying that notifications under section 273EA of the Customs Act are legislative instruments (item 5 of Schedule 2).

Some legislative instruments can be disallowed by the Parliament under section 42 of the Legislation Act 2003.

Between 2012 and 2021, it appears that all Notices of Intention to Propose Customs Tariff Alterations were made by way of publication in the Government Gazette.[58] A Notice of Intention in the form of a Gazette notice is not disallowable because it is not a legislative instrument.[59]

However, in 2022 the situation changed and, as set out above, Notices of Intention began to be made by legislative instrument. The explanatory statements to these instruments do not address whether they are disallowable. However, these instruments have been listed on the disallowable instruments lists for the Senate and the House of Representatives as disallowable.[60] Furthermore, they do not appear to come within the categories of instrument that are not subject to disallowance under the Legislation Act (section 44) or the Legislation (Exemptions and Other Matters) Regulation 2015.

Given the ambiguity in the current processes regarding Notices of Intention, Schedule 2 of the Bill seeks to formalise the legislative process by clarifying that Notices made under section 273EA of the Customs Act are legislative instruments (item 5 of Schedule 2), but are not subject to disallowance (item 10 of Schedule 2).

Clarification of whether Notices of Intention should be accompanied by Explanatory Statements

From taxpayers’ perspectives, it is important to be able to easily access Notices of intention and view the rationale behind a customs tariff measure. Under the current processes, if the Minister publishes a Notice of Intention in the Government Gazette, then that Notice typically does not have explanatory materials accompanying it.

However, if the Notice of Intention is registered as a legislative instrument, then that Notice must be accompanied by an Explanatory Statement explaining the Minister’s rationale to readers (see for example, the Explanatory Statement to the Notice of Intention to Propose Customs Tariff Alterations (No. 7) 2022).[61]

By clarifying that Notices of Intention are legislative instruments, Schedule 2 of the Bill also clarifies that Notices must be accompanied by Explanatory Statements.

Committee consideration

At the time of writing, the 2022 Bill had not been considered by any Parliamentary committee.

Policy position of non-government parties/independents

At the time of writing, the positions of non-government parties and independents could not be identified.

Position of major interest groups

At the time of writing, no stakeholder comment on Schedule 2 of the Bill could be found.

Financial implications of Schedule 2

According to the Explanatory Memorandum to the 2022 Bill, there are no specific financial implications resulting from the Bill.[62]

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 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.[63]

Parliamentary Joint Committee on Human Rights

At the time of writing, the Parliamentary Joint Committee on Human Rights has not yet considered the Bill.[64]

Key issues and provisions for Schedule 2

Key issue no. 1 – Notices of Intention are legislative instruments, but they are not disallowable

As discussed in the ‘Background’ section, item 5 of Schedule 2 amends section 273EA of the Customs Act to specify that Notices of Intention are to be made by legislative instrument.[65]

Item 10 further clarifies that although Notices of Intention are to be made by legislative instruments, they are not disallowable under section 42 of the Legislation Act 2003.[66] The Explanatory Memorandum explains why Notices of Intention should not be subject to disallowance:

Application of the disallowance regime in the Legislation Act 2003 to a notice under subsection 273EA(1) [of the Customs Act] is not appropriate in the context of the broader scheme for Customs Tariff or Customs Tariff alteration proposals…

The potential for successful disallowance of customs tariff changes implemented though [sic] notice given under subsection 273EA(1) would affect business’ certainty in relation to the cost of importing goods. For example, an importer who relies on a tariff concession implemented through a tariff proposal notice and, accordingly, pays a reduced amount of customs duty could potentially face the prospect of being required to pay the relevant additional amount of duty if the notice were to be disallowed. They may have sold the goods at a lower price and would no longer have the opportunity to recoup the cost of the additional duty from the customer. Thus disallowance would place the direct burden of the additional duty on the importing business.[67] [emphasis added]

Key issue no. 2 – Notices of Intention must be made publicly available on the Federal Register of Legislation and must be accompanied by Explanatory Statements

As discussed in the ‘Background’ section, most Notices of Intention (prior to 2022) do not have explanatory materials accompanying them because they were published in the Government Gazette as notices.

Item 5 of Schedule 2 specifies that Notices of Intention are to be made by legislative instruments.[68] As legislative instruments, they must be made publicly available and registered on the Federal Register of Legislation.[69]

Furthermore, Notices of Intention in the form of legislative instruments must have accompanying Explanatory Statements which should help the general public understand why tariff rates need to be changed in a particular situation.

Under the current arrangements when a Notice is gazetted/published, the Minister has seven sitting days to move the associated Customs Tariff Proposal in the House of Representatives.

Items 6, 7, 8 and 9 of Schedule 2 specify that a Notice’s registration on the Federal Register of Legislation is now the event that anchors the time limit, instead of publication in the Government Gazette.[70]

The Figure below provides a summary of the existing legislative arrangements and the arrangements proposed by Schedule 2 of the Bill.

Figure 3: a comparison of the proposed new law and the existing law regarding Notices of Intention

	Proposed new law	Old law
Notices of Intention to Propose Customs Tariff Alterations	Notices of Intention must be made by legislative instruments, but they are not disallowable. Notices must be made publicly available and registered on the Federal Register of Legislation. Notices must have Explanatory Statements accompanying them.	Notices of Intention are required under the Customs Act to be published in the Government Gazette, these Notices do not have Explanatory Statements and they are not disallowable. By relying on section 56 of the Legislation Act, Notices can also be made as legislative instruments.

Source: Parliamentary Library.

Concluding comments for Schedule 2

Schedule 2 of the Bill formalises the legislative processes regarding Notices of Intention to Propose Customs Tariff Alterations which form part of the process of changing tariff rates in Australian law. The Bill clarifies Notices of Intention are legislative instruments not subject to disallowance.