House of Representatives

Customs Legislation Amendment and Repeal (International Trade Modernisation) Bill 2001

Second Reading Speech

Senator IAN CAMPBELL (Parliamentary Secretary to the Minister for Communications, Information Technology and the Arts)

I table a revised explanatory memorandum relating to the Customs Legislation Amendment and Repeal (International Trade Modernisation) Bill 2000 and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows-

This package of three bills, the Customs Legislation Amendment and Repeal (International Trade Modernisation) Bill 2000, the Import Processing Charges Bill 2000 and the Customs Depot Licensing Charges Amendment Bill 2000 provides a modern legal foundation for Customs management of import and export cargo.

It does so in four (4) ways:

by creating the legal framework for mandatory electronic reporting of cargo movements;
by making provision for compliance management that recognises the existing "one size fits all" approach is no longer appropriate to the many industry sectors which deal with Customs;
by improving controls over cargo and its movement; and
through creation of new cost recovery arrangements to support the changes to cargo processing.

Over the last five years, the volume of air cargo in Australia has grown by 59% and sea cargo by 48%.

This growth is forecast to continue.

In fact, industry predicts air cargo will increase by 37% and sea cargo by 18% over the next three years.

Accompanying this growth are new developments in cargo shipping and handling techniques to complement sophisticated supply chain management, including just-in-time processing demands.

International trade is harnessing the benefits of developments in information technology and so must Customs.

But, in facilitating the movement of international cargo, Customs cannot compromise its law enforcement role in relation to prohibited imports such as drugs and firearms, intellectual property rights and links with the role of the Australian Quarantine and Inspection Service (AQIS).

The Customs Legislation Amendment and Repeal (International Trade Modernisation) Bill is the principal bill in this package and will amend the Customs Act 1901 to allow for more contemporary methods of communication between Customs and the international trading community.

Use of open internet-based systems of communication with choice of interactive or EDI communication channels will be a feature of Customs new technology giving effect to this Government's commitment to the Information Economy.

For many traders, internet communication will be more cost-effective than using traditional EDI methods.

As I implied earlier, Customs will be employing a range of compliance management techniques.

The amount of information required, and the timing of receipt of the information, may be varied depending on the level of risk that a particular import or export consignment poses and a company's history of compliance in providing accurate information to Customs.

Such flexibility will save compliant importers and exporters both time and money.

This is reflected in reduced cost recovery charges that are outlined in the Import Processing Charges Bill 2000 and the Customs Depot Licensing Charges Amendment Bill 2000.

In relation to Customs community protection obligations to which I referred earlier, this package of bills establishes new reporting requirements for carriers bringing cargo into Australia.

Details of sea cargo must be electronically reported to Customs at least 24 hours prior to arrival in Australia and air cargo at least 2 hours prior to arrival.

Electronically reported pre-arrival cargo information provides Customs and AQIS with the ability to clear legitimate cargo quickly and stop high-risk cargo for closer inspection.

As a further protection against the importation of prohibited goods, those responsible for unloading ships or aircraft will be required to report what they have unloaded.

This information will be used to identify any surplus or missing cargo.

I'd now like to focus on new arrangements for the control and verification of export cargo that this bill will bring about.

Customs now has a greater role to play in the verification of cargo reported for export.

The reasons for this are three-fold.

First, exported goods are exempt from GST.

As such, it is necessary for information about exports to be provided accurately to Government so that appropriate input credits can be calculated.

Second, there is evidence that goods are being unlawfully diverted from export into domestic commerce as part of revenue fraud rackets.

Third, the export permits requirements of other Government agencies must be effectively administered.

Inaccurate export information or worse, no information at all, has the potential to encourage illegal activity and affects the accuracy of data being passed to the Australian Bureau of Statistics.

Material errors in trade data have consequential impacts on economic forecasting and Australia's international standing.

It is therefore in everyone's interest to improve the levels of compliance in relation to exports.

This bill introduces a number of measures that are aimed at achieving just that, including:

prohibiting licensees of Customs warehouses from releasing prescribed goods for export until they confirm with Customs that the goods have been entered for export and export approval has been given; and
a requirement that consolidations of certain goods for export (such as tobacco products and alcohol) must only be done at a prescribed place and that the operator of the prescribed place must confirm with Customs the arrival and departure of the goods.

To emphasise compliance with the new requirements for both imports and exports the bill introduces strict liability offences for breaches, with the option of issuing an infringement notice for an administrative penalty of 20% of the amount of the proposed maximum penalties.

The Government does not impose strict liability lightly.

Generally speaking, its imposition will involve consideration of whether a public welfare or public interest pertains.

In this case, the Government believes that it does for several reasons:

Firstly, there is a significant risk to revenue if imports or exports are inaccurately reported. For instance goods wrongly described, in type or quantity, may result in underpayment of correct duty and GST, and
There is a significant risk to our community if prohibited imports such as narcotics are not stopped at our border. Receipt of accurate and early reporting of cargo is essential for both Customs and Quarantine officers to better assess community protection risks and intercept high-risk cargo before goods move beyond border controls into domestic commerce.

The proposed controls and sanctions are designed around early identification and intervention of high-risk cargo. The vast majority of low-risk cargo will flow unimpeded.

The final element of this bill that I wish to emphasise is the revision of the powers of Customs officers to monitor compliance by industry.

These powers are a vital adjunct to the controls I have mentioned.

They have been drafted in accordance with the report of the Senate Standing Committee for the Scrutiny of Bills dated 6 April 2000 which examined entry and search provisions in Commonwealth legislation.

I stress that the audit powers set out in this bill can only be exercised with the consent of the occupier of premises and without that consent, only on the basis of a monitoring warrant issued by a Magistrate.

In concluding, I note that there has been a good deal of media comment in recent times suggesting that Australia is not encouraging the development of a knowledge-based economy or that it is falling behind others in its utilisation of information technology.

This bill further develops themes contained in the Electronic Transactions Act 1999 and provides a foundation for a new electronic era for managing cargo.

It demonstrates Australia's commitment to the innovative use of new technology to further Government objectives.

Debate (on motion by Senator O'Brien) adjourned.