Customs and Other Legislation Amendment Bill 2016

Bills Digest no. 64, 2016–17

PDF version [627KB]

Paul Davidson
Economics Section
16 February 2017

Contents

Senate Legal and Constitutional Affairs Legislation Committee
Selection of Bills Committee
Senate Standing Committee for the Scrutiny of Bills

Policy position of non-government parties/independents

Position of major interest groups

Financial implications

Statement of Compatibility with Human Rights

Parliamentary Joint Committee on Human Rights

Key issues and provisions

Schedule 1—Prohibited exports

Schedule 2—Australian Trusted Trader Programme

Schedule 3—Import processing charges

Schedule 4—Permissions to move, alter or interfere with goods for export

Schedule 5—Tariff concession orders
Produced in Australia—current law and proposed amendment
Stakeholder views
Substitutable goods—current law and proposed amendment
Reason for change
Extension of timeframe—current law and proposed amendment
Effect of amendment
Stakeholder views

Schedule 6—Repeal of redundant provisions relating to the collection of duty on goods imported for a temporary purpose

Schedule 7—Trade descriptions
Effect of amendment

Schedule 8—Maritime powers

Schedule 9—Repeal of Acts

Date introduced: 30 November 2016
House: House of Representatives
Portfolio: Immigration and Border Protection
Commencement: Schedule 1 commences on the 28th day after the Act receives Royal Assent. Schedule 2 commences on a day to be fixed by proclamation or six months after Royal Assent, whichever occurs first. Schedules 3 to 9 commence the day after the Act receives Royal Assent.

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 Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at February 2017.

Purpose of the Bill

The purpose of the Customs and Other Legislation Amendment Bill 2016 [1] (‘the Bill’ or ‘the current Bill’) is to make a number of amendments to the Customs Act 1901 (Cth), the Commerce (Trade Descriptions) Act 1905 (Cth), and the Maritime Powers Act 2013 (Cth). The Bill also proposes to repeal both the Customs (Tariff Concession System Validations) Act 1999 (Cth) and the Import Processing Charges (Amendment and Repeal) Act 2002 (Cth) in full.

Structure of the Bill

The Bill comprises nine Schedules:

Schedules 1–6 amend the Customs Act and relate to prohibited exports; the Australian Trusted Trader Programme; import processing charges; permission to move, alter or interfere with goods for export; tariff concession orders; and the delivery of goods
Schedule 7 amends the Commerce (Trade Descriptions) Act to allow Regulations made under that Act to prescribe penalties for offences
Schedule 8 amends the Maritime Powers Act relating to the exercise of certain maritime powers and
Schedule 9 repeals the Customs (Tariff Concession System Validations) Act and the Import Processing Charges (Amendment and Repeal) Act.

History of the Bill

The Migration and Maritime Powers Amendment Bill (No. 1) 2015 (Cth)[2] (‘the Migration and Maritime Bill’) lapsed with the prorogation of the 44th Parliament on 15 April 2016. The amendments to the Maritime Powers Act contained in Schedule 4 to the Migration and Maritime Bill have been reflected in Schedule 8 of the Bill. The Migration and Maritime Bill was sent to Committee for inquiry and report (see below). A Bills Digest was prepared for the Migration and Maritime Bill.[3]

The Customs and Other Legislation Amendment Bill 2016 (Cth)[4] (‘the lapsed Bill’) was introduced in the 44th Parliament and lapsed with the prorogation of Parliament. The lapsed Bill contained six Schedules. Those six Schedules are reflected as Schedules 3–8 in the Bill. The lapsed Bill was sent to Committee for inquiry and report, but the inquiry itself lapsed with the prorogation of Parliament (see below).

Committee consideration

Senate Legal and Constitutional Affairs Legislation Committee

The Legal and Constitutional Affairs Senate Committee inquiry report recommended that the Migration and Maritime Bill be passed, subject to a clarification in the Explanatory Memorandum that is not relevant to the current Bill.[5]

The lapsed Bill was referred to the Senate Legal and Constitutional Affairs Legislation Committee for inquiry and report by 20 June 2016.[6] However, with the prorogation of Parliament on 15 April 2016 the inquiry lapsed.

Selection of Bills Committee

On 9 February 2017, the Selection of Bills Committee decided not to refer the Bill to a Committee for inquiry and report.[7]

Senate Standing Committee for the Scrutiny of Bills

The Scrutiny of Bills Committee has sought advice from the Minister on item 4 of Schedule 7 to the Bill, which would amend the Commerce (Trade Descriptions) Act to allow Regulations made under that Act to prescribe penalties not exceeding 50 penalty units (currently $9,000[8]) for offences against the Regulations.[9] While noting that the proposed provision complies with the Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers,[10] the Committee reiterated its expectation that significant matters, such as the imposition of penalties, should usually be dealt with in primary legislation and that any provisions that propose to allow penalties of any level to be imposed through delegated legislation should be justified in the Explanatory Memorandum.[11]

The Committee made no comment on the lapsed Bill or on Schedule 4 of the Migration and Maritime Bill.[12]

Policy position of non-government parties/independents

The Australian Greens issued a Dissenting Report on the Senate inquiry into the Migration and Maritime Bill. The Greens expressed concern that the proposed amendments to the Maritime Powers Act in the Migration and Maritime Bill (which are replicated in Schedule 8 of the current Bill) ‘include[d] provisions in breach of international law and undermine[d] Australia's relationship with other states, by purporting to authorise the turn back of boats into another country’s territorial waters.’[13]

Position of major interest groups

Five submissions were received by the Senate Legal and Constitutional Affairs Legislation Committee as part of its (lapsed) inquiry into the lapsed Bill.[14] The submissions mainly related to the proposed amendments in Schedule 6 of the lapsed Bill, which sought to amend the Maritime Powers Act. (The amendments are replicated in Schedule 8 to the current Bill.) The views of submitters are set out below in the discussion of individual Schedules.

Financial implications

The Government considers that the Bill will have no financial impact.[15]

However, the proposed amendments in Schedule 3 which allow the exemption of specified persons, specified goods, or both, from the liability to pay the import declaration processing charge, may reduce future government revenues. Additionally, to the extent that any legislative instrument made (as a result of the proposed amendments) has retrospective effect on imported goods which are covered by the effect of the instrument, those persons who paid the liability will be entitled to a refund of the charge paid. To the extent that such a situation arises, government revenues will be reduced (see below). Import processing charges were estimated at $370.6 million of revenue in 2015–16.[16]

The proposed amendments in Schedule 5 may increase customs duties and hence government revenues. The amendments have the effect of lowering the threshold that Australian businesses need to meet to demonstrate that they are capable of producing substitutable goods which are the subject of a tariff concession order application. The effect of making it more difficult to grant a tariff concession order would mean that the imported good (assuming that the good is still imported) would be subject to a tariff rate (other than zero), rather than being imported duty-free under a tariff concession order (see below).

The proposed amendments under Schedule 7 may increase government revenue due to the significant increase in the value of fines for offences against the Commerce (Trade Descriptions) Act (see below).

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.[17]

Parliamentary Joint Committee on Human Rights

At the time of writing, the Parliamentary Joint Committee on Human Rights had not considered the current Bill. The Committee considered that the lapsed Bill did not raise human rights concerns.[18] The Committee raised a number of concerns in relation to the Migration and Maritime Bill, but not in respect of the amendments that are replicated in the current Bill.[19]

Key issues and provisions

Schedule 1—Prohibited exports

Section 112 of the Customs Act 1901 allows Regulations to be made to prohibit the exportation of specified goods from Australia. Those Regulations are the Customs (Prohibited Exports) Regulations 1958. Regulations made under section 112 may prohibit the export of goods:

in all circumstances
in certain circumstances
to a specified place or
unless specified conditions or restrictions are complied with.[20]

Without limiting the general power to make Regulations prohibiting the exportation of goods unless specified conditions or restrictions are complied with, subsection 112(2A) specifies certain issues that may be dealt with in the Regulations. Paragraph 112(2A)(b) provides that, in relation to licences or permissions granted under the Customs Act, the Regulations may make provision for and in relation to a number of circumstances, including the surrender or revocation of a licence or permission due to failure to comply with a condition or requirement.

Item 2 proposes to amend paragraph 112(2A)(b) of the Customs Act to explicitly provide that the Regulations may make provision for the revocation of an export licence or permission if the Defence Minister is satisfied that the exportation of the goods would prejudice the security, defence or international relations of Australia. Item 3 proposes to repeal subsections 112(2AB) to (2AD) which largely cover analogous existing provisions that permit the Defence Minister to revoke a licence or permission to export goods. Item 4 is an application provision and proposes that Regulations made under new subparagraph 112(2A)(b)(v) (inserted by item 2) apply to a licence or permission that is granted on or after the commencement of item 4 (which will be 28 days after Royal Assent), as well as applying to licences or permissions that have been granted and were currently in force immediately prior to the commencement of item 4.

Schedule 2—Australian Trusted Trader Programme

The Australian Trusted Trader Programme (the Programme) is a voluntary trade facilitation initiative that is open to Australian businesses with a secure supply chain and compliant trade practices.[21] The Programme promises benefits such as: priority service when requesting advanced rulings on tariffs, valuations, and origin; less extensive examinations of goods; and use of the Australian Trusted Trader logo.[22] The Comptroller-General of Customs is empowered to establish the Programme under Part XA of the Customs Act and may prescribe rules under section 179 of that Act. The relevant rules are the Customs (Australian Trusted Trader Programme) Rule 2015 (the Rule).

In order to become a Trusted Trader under the current provisions, an entity needs to nominate to participate in the Programme and the Comptroller-General must consider ‘that it is reasonably likely that the entity will satisfy the qualification criteria set out in the Rule’. If these requirements are satisfied the Comptroller-General may enter into an agreement with the entity. The agreement confers interim trusted trader status on the entity (section 176A of the Customs Act). Once the Comptroller-General is satisfied that the entity satisfies the qualification criteria set out in the Rule (through an on-site validation of the entity’s trade compliance and supply chain security measures[23]) he or she may vary the agreement to provide the entity with ongoing trusted trader status (section 177). In summary, the effect of the amendments under Schedule 2 of the Bill is to remove interim trusted trader status.

Item 2 will amend subsection 176A(1) of the Customs Act to remove the ability to confer interim trusted trader status on an entity that the Comptroller-General considers is ‘reasonably likely’ to satisfy the qualification criteria in the Rule. Instead, trusted trader status will be able to be conferred on entities that satisfy those qualification criteria.

Item 3 proposes to repeal and replace subsection 176A(3), which currently confers interim trusted trader status on an entity on entry to a trusted trader agreement. Proposed subsection 176A(3) will allow the Comptroller‑General of Customs to specify in a trusted trader agreement with an entity one or more obligations covered by subparagraphs 179(1)(d)(i)–(ii). Those subparagraphs relate to import and export obligations under Parts IV and VI of the Customs Act. The effect of item 3 is to allow the Comptroller-General of Customs to specify in a Trusted Trader Agreement that an entity is released from the obligations under Parts IV or VI, or that the entity may satisfy the obligations under Parts IV or VI in a different manner. In the latter case, the agreement will state the manner in which those obligations are to be satisfied.

Item 3 would also insert proposed subsection 176A(4),which would provide that an entity that is a party to a trusted trader agreement may receive benefits that are prescribed by the rules under existing paragraph 179(1)(e).

Items 4-6 propose minor consequential amendments, including the repeal of Subdivision B of Division 2 of Part XA of the Customs Act.

Currently a decision of the Comptroller-General of Customs to refuse to vary a trusted trader agreement under subsection 177(2) is reviewable by the Administrative Appeals Tribunal (AAT) (paragraph 273GA(1)(jd)). Subsection 177(2) relates to the Comptroller-General of Customs providing an entity special treatment in relation to that entity’s obligations under Parts IV and VI of the Customs Act. Item 7 proposes to remove this review right. This is consequential upon the repeal of section 177 by item 4. Administrative Appeals Tribunal review will continue to be available for a decision by the Comptroller-General not to enter into a trusted trader agreement with an entity (paragraph 273GA(1)(jc)).

Schedule 3—Import processing charges

When most goods are imported for home consumption or warehousing, the owner must make an import declaration or a warehousing declaration to the Department (section 68 of the Customs Act). For this the owner becomes liable to pay an import declaration processing charge (under section 71B of the Customs Act) or a warehouse declaration processing charge (under section 71DI of the Customs Act). If the goods fall within the broad description of goods to which the charges apply, there are no exemptions.

Item 1 of Schedule 3 amends section 71B of the Customs Act to allow the Minister to make a legislative instrument exempting specified persons, specified goods, or both, from the liability to pay an import declaration processing charge. It also expressly provides that a processing charge is a debt due to the Commonwealth. Item 1 also provides that where an import declaration processing charge has been paid by a person covered by the legislative instrument (after it has taken effect) they are entitled to a refund of the charge. Item 1 proposes to permit legislative instruments made under proposed subsection 71B(4) to possibly have retrospective effect and may have an impact on Commonwealth finances (see above).

Item 2 of Schedule 3 amends section 71DI of the Customs Act to expressly provide that the amount of a warehouse declaration processing charge is a debt due to the Commonwealth.

Stated justification for the amendment

The Explanatory Memorandum to the Bill says that the exemption ‘allow[s] Australia to honour any international agreements that specifically exempt certain imports from payment of fees at the border.’[24]

Schedule 4—Permissions to move, alter or interfere with goods for export

The effect of Schedule 4 is to amend the Customs Act so as to expand the circumstances under which goods for export can be moved, altered or interfered with.

Section 96A of the Customs Act deals with goods sold at duty free shops. Subsection 96A(2) allows permission to be given for goods from duty free shops to be taken from Australia by individual travellers on an international flight without having been entered for export. Item 3 proposes to permit goods that are subject of a permission in force under subsection 96A(2) to be moved, altered or interfered with.

As noted in the Explanatory Memorandum to the Bill, since international gateway airports commenced security screening all liquids, aerosols and gels in 2014, the screening procedures have applied to, among other things, the duty-free ‘sealed bag scheme’. In the event that an alarm was triggered when items covered under the sealed bag scheme passed through a security scanner, the sealed bag was to be opened and the duty-free goods removed from it for checking. Currently, opening the sealed bag and tampering with the contents constitutes an offence under section 33 of the Customs Act, unless such interference is authorised.[25] The effect of item 3 is to authorise such interference, movement or alteration.

Item 3 makes consequential amendments and item 4 deals with the application of the new rules.

Schedule 5—Tariff concession orders

Schedule 5 proposes to amend the Customs Act in relation to tariff concession orders.

Tariffs are charges levied on imports. A dominant purpose of tariffs is to protect manufacturers of Australian‑made goods that are substitutes for particular imports. Where there are no Australian-made substitutes the case for tariffs on those imports is diminished. The mechanism in the Customs Act for exempting goods from tariffs is the tariff concession order. Tariff concession orders (TCOs) relate to the importation of goods where no substitutable Australian good is produced in Australia in the ordinary course of business. The effect of a TCO applying to a particular good is that that good is imported duty-free, rather than being subject to its applicable tariff rate.

Produced in Australia—current law and proposed amendment

Item 1 proposes to repeal and substitute subsection 269D(1) of the Customs Act, which defines the circumstances under which goods are deemed to have been produced in Australia. Essentially the definition currently provides that goods (other than unmanufactured raw products) are taken to be produced in Australia if:

the goods are wholly or partly manufactured in Australia and
not less than one quarter of the factory or work costs of the goods is represented by the sum of the values of Australian labour, Australian materials, and factory overhead expenses incurred in Australia in respect of the goods.

Item 1 proposes to remove the requirement that not less than one quarter of the factory or work costs of the goods be incurred in Australia. As noted in the Explanatory Memorandum to the Bill, satisfying this criterion requires detailed accounting evidence, which is costly for businesses to provide. The rationale for the amendment is to therefore lower the regulatory burden on these businesses by no longer requiring detailed accounting information.[26]

In its current form, subsection 269D(1) effectively provides an avenue for Australian businesses to stop or revoke a TCO. The effect of the amendment will make it easier for Australian businesses to demonstrate that they have produced goods in Australia for the purposes of a TCO application. In turn, that means that the person applying for a TCO will have more difficulty in demonstrating that there are no substitutable Australian goods, especially given the application of subsection 269D(2) in conjunction with the broad definition of substantial process in the manufacture of the goods in subsection 269D(3). By lowering the regulatory burden on Australian businesses that purport to be making substitutable Australian goods, the amendments have increased the regulatory burden on Australian businesses seeking to import goods duty-free under a TCO. By reducing the evidentiary burden on businesses contesting a TCO application, it may be that less TCO applications are granted and as a result, duties will continue to be paid on such goods that are the subject of such applications. In turn, tariff revenue for the government may increase.

Item 2 makes necessary consequential amendments to the Customs Act as a result of item 1.

Stakeholder views

In its submission on the lapsed Bill, the Law Council of Australia submitted that the rationale for tariff concession orders is to remove an otherwise punitive tax on the operations of Australian businesses where there are no domestic substitutable goods produced. Since the effect of granting a tariff concession order is to reduce the tariff from its current rate to duty‑free, any amendment that makes it more difficult to achieve this outcome is a protectionist measure.[27] In relation to the amendment to subsection 269D(1) of the Customs Act proposed by item 1 of Schedule 5, the Law Council submitted that the current requirement to show that at least 25 per cent of the factory or works costs of producing a product are incurred in Australia causes an inconvenience to one firm, but that there are potentially thousands of importers who benefit from a tariff concession order being granted and receiving duty-free access to the good.[28]

Substitutable goods—current law and proposed amendment

Section 269C currently provides that a TCO application is taken to meet the core criteria if, on the day the TCO application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269E currently provides a definition of substitutable goods that were produced in the ordinary course of business. The substantive amendments proposed by item 3 are in relation to the capacity of an Australian producer to produce substitutable goods; and to extend the timeframe for producers to demonstrate that they have made goods requiring the same labour skills, technology and design expertise as the substitutable goods.

Reason for change

The first of the substantive amendments is based on a recent decision of the Administrative Appeals Tribunal (AAT), where it was held that in order for made-to-order capital equipment to be considered a substitutable good, it must have been previously produced in Australia. The AAT decided that section 269E requires consideration of:

... whether goods that are substitutable goods in relation to the goods that are the subject of a TCO application (TCO goods) have been produced in Australia in the ordinary course of business. They do not deem substitutable goods to have been produced in Australia in the ordinary course of business when there have been none.[29]

However, on appeal to the Full Federal Court the Tribunal’s decision was unanimously overturned.[30] An application to seek special leave to the High Court of the Full Federal Court’s decision was dismissed.[31] The amendment therefore provides additional legislative guidance consistent with the Full Federal Court’s decision. That is, the proposed amendments clarify that in order to be a substitutable good, made-to-order capital equipment does not need to have been produced in Australia in the past, but instead must be capable of being produced in Australia.

Extension of timeframe—current law and proposed amendment

The second proposed amendment relates to existing subparagraph 269E(2)(c)(i) which provides that made-to-order capital equipment that is a substitutable good is taken to be produced in Australia in the ordinary course of business if a producer in Australia has made goods requiring the same labour skills, technology and design expertise as the substitutable goods in the two years before the application was lodged. The amendment proposes to extend the timeframe to five years before the application was lodged.

Effect of amendment

The change allows Australian manufacturers a longer period to demonstrate that they have the capacity to produce substitutable goods in respect of goods that are the subject of a TCO application. It therefore also means that firms applying for TCOs will have a more onerous task as they are required to conduct inquiries to assist in establishing whether there were any Australian producers of substitutable goods.[32] Hence the amendment can be seen as a means of protecting domestic manufacturing.

Stakeholder views

In relation to proposed subsection 269E(2) of the Customs Act, at item 3, the Law Council of Australia submitted that the proposed amendments, by making it easier for Australian manufacturers to assert that they could hypothetically manufacture goods that are the subject of a tariff concession order application, would amount to a protectionist measure, and could create a risk that tariff concession orders are refused when it would be appropriate for them to be granted. The Law Council submitted that if this occurred, ‘it would impose higher costs on businesses that import made to order capital goods which costs would be passed on to other businesses and consumers downstream in the supply chain’.[33] The Law Council further submitted that new subsection 269E(2) could also expose existing tariff concession orders to challenge.

Schedule 6—Repeal of redundant provisions relating to the collection of duty on goods imported for a temporary purpose

Item 1 of Schedule 6 repeals subsection 162A(5A) which relates to duty not being payable on goods brought into Australia for a purpose covered by Regulation 125A of the Customs Regulation 1926 (Cth). Regulation 125A was originally made so as to allow goods to be temporarily imported for the Sydney 2000 Olympic Games and a number of related events.[34]

The Customs Regulations 1926 sunsetted on 1 April 2015 and Regulation 125A was not remade in the current Regulations, the Customs Regulation 2015.[35] Item 1 therefore repeals subsection 162A(5A) as it is redundant. Items 2 and 3 make necessary consequential amendments to the Customs Act (removing references to subsection 162A(5A)) as a result of item 1.

Schedule 7—Trade descriptions

Schedule 7 amends the Commerce (Trade Descriptions) Act 1905. The Commerce (Trade Descriptions) Act deals with the import and export of goods without a prescribed trade description, and to the import and export of goods to which a false trade description has been applied.[36]

Item 1 proposes to amend subsection 5(1) which relates to the inspection of imports and exports. Currently the law provides that an officer may inspect and examine all prescribed goods which are imported or destined for export. This means that the officer’s power to inspect goods relies on whether the goods to be inspected are prescribed in Regulations. Item 1 amends subsection 5(1) to provide that goods can be inspected by an officer who knows or reasonably believes that those goods are prescribed in the Regulation. The Explanatory Memorandum states that this amendment ‘better reflects current drafting practice’.[37]

Sections 7 and 11 of the Commerce (Trade Descriptions) Act allows Regulations to be made to prohibit the import or export of goods without a trade description that meets prescribed requirements. Section 16 of the Commerce (Trade Descriptions) Act provides that if such Regulations are made, they must not prescribe a trade description which discloses trade secrets of manufacture or preparation, unless the Governor‑General considers that the disclosure of the trade secret is necessary for the protection of the health or welfare of the public. Item 2 replaces the reference to the Governor-General in section 16 with a reference to the Minister. As stated in the Explanatory Memorandum, this ‘recognises that the Minister is responsible for forming opinions and the Governor-General acts on the advice of the relevant Minister’.[38]

Item 4 amends section 17 of the Commerce (Trade Descriptions) Act which is a broad Regulation making power. Item 4 proposes to insert subsection 17(2) to allow Regulations which are made under section 17 to provide for penalties, not exceeding 50 penalty units, for offences against those Regulations. The relevant Regulations are the Commerce (Imports) Regulations 1940 (Cth). Currently Regulation 26 of those Regulations provides that the consequence for contravening any provision of the Regulations is a penalty of $40.

Effect of amendment

One penalty unit is currently $180.[39] If the maximum penalty were to be imposed on an offence against the Regulations, it would amount to $9,000. This provides for a potentially large increase in relevant penalties (up to 225 times the current penalty amount). As set out above, the Scrutiny of Bills Committee has sought a justification from the Minister on the prescription of penalties in delegated, rather than primary, legislation.[40]

Schedule 8—Maritime powers

Schedule 8 amends the Maritime Powers Act 2013 (Cth).[41] Section 40 of the Maritime Powers Act provides that the Act does not authorise the exercise of powers in another country except in certain prescribed circumstances (such as at the request or with the agreement of the other country).Section 8 of the Maritime Powers Act relevantly defines a ‘country’ to include the territorial sea and archipelagic waters of the country.

Proposed subsection 40(2), at item 2 of Schedule 8, provides that subsection 40(1) will not apply to an exercise of powers in the following circumstances:

the exercise of powers is part of a continuous exercise of powers that commenced in accordance with any applicable requirements of Part 2 (disregarding new subsection (2)) and
occurs in the course of passage of a vessel or aircraft through or above waters that are part of a country; and a relevant maritime officer, or the Minister, considers that the passage is in accordance with the 1982 United Nations Convention on the Law of the Sea.[42]

The rationale for this amendment is explained in the Explanatory Memorandum in the following terms:

The intention behind section 40 is to ensure that powers are exercised under the Maritime Powers Act in a manner consistent with the principle of territorial sovereignty at international law. Thus the use of enforcement powers within another country normally would require some form of agreement by that country. However, the section did not explicitly allow for the exercise of powers in the course of passage through and over waters within another country already permitted under international law, as reflected in the Convention. Examples of such passage include a vessel in the course of innocent passage, transit passage or archipelagic sea lanes passage. In those circumstances, under international law, no further agreement or approval by the coastal state is required...The purpose of the amendment is to confirm the operation of the Maritime Powers Act in circumstances where vessels and aircraft are considered to be exercising passage rights consistent with the Convention. [Emphasis added]^{^[43]}

The Andrew and Renata Kaldor Centre for International Refugee Law (Kaldor Centre) is of the view that this amendment is ‘intended to justify activities taking place in the territorial waters of other countries, such as Indonesia, pursuant to Operation Sovereign Borders’.[44] To this end, the Kaldor Centre notes that ‘turning back boats and patrolling for this purpose within the territorial waters of another State do not constitute innocent passage under the Convention ...’.[45]

Proposed subsection 40(3) preserves the lawfulness of the activity under domestic law in circumstances where there is a defective consideration of the Convention. The Kaldor Centre states that ‘the fact that a relevant maritime officer or the Minister mistakenly considers that the exercise of powers is consistent with the Convention cannot render the exercise of powers lawful as a matter of international law’.[46]

The Kaldor Centre considered that the amendments to section 40 appeared ‘to authorise the exercise of powers even in circumstances where this is contrary to Australia’s obligations’ under international law.[47] Similar concerns were expressed in a submission by the Refugee Council of Australia[48] and the Law Council of Australia.[49]

The Department of Immigration and Border Protection considers that the proposed amendments to section 40 provides clarification and remains consistent with Australia’s international obligations.[50]

Items 1 and 3 are consequential provisions. Item 3 provides that the amendments made by Schedule 8 apply in relation to an exercise of powers even if the authorisation for exercise of those powers was provided prior to the commencement of the amendments; or that the powers were exercised in the course of a continuous exercise of powers that started prior to the commencement of the amendments; or in relation to a person, vessel or aircraft who or that were detained or otherwise held prior to the commencement of the amendments; or in any situation in relation to which powers were (or could have been) exercised prior to the commencement of the amendments. Item 3 also provides that the amendments made by Schedule 8 have no effect on the interpretation of the Maritime Powers Act, prior to the commencement of the amendments, in relation to the exercise of powers before Schedule 8 commences.

Schedule 9—Repeal of Acts

Schedule 9 proposes to repeal the Customs (Tariff Concession System Validations) Act 1999 (Cth). The Customs (Tariff Concession System Validations) Act operated for a discrete period of time between 15 July 1996 and 31 May 1999, to validate decisions that had been made under defective delegations.[51] The Customs (Tariff Concession System Validations) Act is therefore largely redundant and item 1 proposes that the whole of the Act be repealed. The only part of the Customs (Tariff Concession System Validations) Act that is potentially not redundant relates to the validity of decisions made, acts and things done, in reliance on affected delegations under section 5 of that Act. Therefore item 3 is a proposed savings provision to ensure that actions taken in accordance with section 5 continue to be valid, notwithstanding the repeal of the Act by item 1.

Item 2 proposes to repeal the Import Processing Charges (Amendment and Repeal) Act 2002 (Cth). That Act imposed import processing charges until the Customs Legislation Amendment and Repeal (International Trader Modernisation) Act 2001 (Cth) took full effect in 2005 and the import processing charge regime was covered by the Import Processing Charges Act 2001 (Cth). According to the Explanatory Memorandum to the Bill, charges under the Import Processing Charges (Amendment and Repeal) Act ceased to be used from 3 February 2006 and as such the Act is obsolete.

[1]. Parliament of Australia, ‘Customs and Other Legislation Amendment Bill 2016 homepage’, Australian Parliament website.

[2]. Parliament of Australia, ‘Migration and Maritime Powers Amendment Bill (No. 1) 2015 homepage’, Australian Parliament website.

[3]. E Karlsen, Migration and Maritime Powers Amendment Bill (No. 1) 2015, Bills digest, 30, 2015–16, Parliamentary Library, Canberra, 2015.

[4]. Parliament of Australia, ‘Customs and Other Legislation Amendment Bill 2016 homepage’, op. cit.

[5]. Senate Legal and Constitutional Affairs Legislation Committee, Migration and Maritime Powers Amendment Bill (No. 1) 2015 [Provisions], The Senate, Canberra, November 2015.

[6]. Inquiry homepage, Senate Legal and Constitutional Affairs Legislation Committee, ‘Customs and Other Legislation Amendment Bill 2016 [Provisions]’.

[7]. Senate Standing Committee for Selection of Bills, Report, 1, 2017, The Senate, 9 February 2017.

[8]. A penalty unit is currently equivalent to $180. See section 4AA of the Crimes Act 1914 (Cth).

[9]. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 1, 2017, The Senate, Canberra, 8 February 2017, pp. 12–13.

[10]. Attorney-General’s Department, A guide to framing Commonwealth offences, infringement notices and enforcement powers, Canberra, 2011.

[11]. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 1, 2017, op. cit., pp. 12–13.

[12]. Senate Standing Committee for the Scrutiny of Bills, Alert digest, 5, 2016, The Senate, 3 May 2016; Senate Standing Committee for the Scrutiny of Bills, Alert digest, 11, 2015, The Senate, 14 October 2015.

[13]. Senate Legal and Constitutional Affairs Legislation Committee, Migration and Maritime Powers Amendment Bill (No. 1) 2015 [Provisions], op. cit., p. 23.

[14]. Senate Legal and Constitutional Affairs Legislation Committee, Inquiry into Customs and Other Legislation Amendment Bill 2016 [Provisions], Submissions, 2016.

[15]. Explanatory Memorandum, Customs and Other Legislation Amendment Bill 2016, p. 1.

[16]. Australian Government, Portfolio budget statements 2015–16: budget related paper no. 1.11: Immigration and Border Protection Portfolio, p. 82.

[17]. The Statement of Compatibility with Human Rights can be found at page 22 of the Explanatory Memorandum to the Bill.

[18]. Parliamentary Joint Committee on Human Rights, Thirty-seventh report of the 44th Parliament, 2 May 2016, p. 1.

[19]. Parliamentary Joint Committee on Human Rights, Thirtieth report of the 44th Parliament, 10 November 2015, pp. 28–52.

[20]. Subsection 112(2) of the Customs Act 1901.

[21]. Department of Immigration and Border Protection (DIBP), ‘Australian Trusted Trader’, DIBP website.

[22]. DIBP, ‘Benefits of Australian Trusted Trader’, DIBP website.

[23]. Department of Immigration and Border Protection (DIBP), ‘Verification through on-site validation’, DIBP website.

[24]. Explanatory Memorandum, Customs and Other Legislation Amendment Bill 2016, op. cit., p. 8.

[25]. Ibid., p. 10.

[26]. Ibid., p. 12.

[27]. Law Council of Australia, Submission to Senate Standing Committees on Legal and Constitutional Affairs, Inquiry into Customs and Other Legislation Amendment Bill 2016 [Provisions], submission no. 5, 29 April 2016, pp. 6–7.

[28]. Ibid., p. 7.

[29]. Vestas—Australian Wind Technology Pty Limited and Chief Executive Officer of Customs, [2015] AATA 348 at [3] (Member Ermert).

[30]. Comptroller-General of Customs v Vestas—Australian Wind Technology Pty Ltd, [2015] FCAFC 185.

[31]. Vestas—Australian Wind Technology Pty Limited v Comptroller-General of Customs, [2016] HCASL 85.

[32]. Customs Act 1901 (Cth), paragraph 269F(3)(d).

[33]. Law Council of Australia, Submission to Senate Legal and Constitutional Affairs Legislation Committee, op. cit., submission no. 5, 29 April 2016, p. 9.

[34]. Explanatory Memorandum, Customs and Other Legislation Amendment Bill 2016, op. cit., p. 16.

[35]. Customs Regulations 1926.

[36]. Explanatory Memorandum, Customs and Other Legislation Amendment Bill 2016, op. cit., p. 17.

[37]. Ibid.

[38]. Ibid.

[39]. Crimes Act 1914 (Cth), section 4AA(1).

[40]. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 1, 2017, op. cit., p. 13.

[41]. The information in this part of the Digest is taken from E Karlsen, Migration and Maritime Powers Amendment Bill (No. 1) 2015, Bills digest, 30, 2015–16, Parliamentary Library, Canberra, 2015.

[42]. United Nations Convention on the Law of the Sea, done in Montego Bay on 10 December 1982, [1994] ATS 31 (entered into force for Australia and generally 16 November 1994).

[43]. Explanatory Memorandum, Customs and Other Legislation Amendment Bill 2016, op. cit., pp. 19–20.

[44]. Andrew and Renata Kaldor Centre for International Refugee Law, Submission to Senate Legal and Constitutional Affairs Legislation Committee, Inquiry into Migration and Maritime Powers Amendment Bill (No. 1) 2015, submission no. 1, 6 October 2015.

[45]. Ibid.

[46]. Ibid.

[47]. Andrew and Renata Kaldor Centre for International Refugee Law, Submission to Senate Legal and Constitutional Affairs Legislation Committee, Inquiry into Customs and Other Legislation Amendment Bill 2016 [Provisions], op. cit., 8 April 2016, submission no. 1, p. 2.

[48]. Refugee Council of Australia, Submission to Senate Legal and Constitutional Affairs Legislation Committee, Inquiry into Customs and Other Legislation Amendment Bill 2016 [Provisions], 2016, submission no. 2.

[49]. Law Council of Australia, Submission to Senate Legal and Constitutional Affairs Legislation Committee, Inquiry into Customs and Other Legislation Amendment Bill 2016 [Provisions], 29 April 2016, submission no. 5, p. 5.

[50]. Department of Immigration and Border Protection, Submission to Senate Legal and Constitutional Affairs Legislation Committee, Inquiry into Customs and Other Legislation Amendment Bill 2016 [Provisions], April 2016, submission no. 4, p.4.

[51]. Explanatory Memorandum, Customs and Other Legislation Amendment Bill 2016, op. cit., p. 22.

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