Monday, 9 September 2019
Customs Amendment (Immediate Destruction of Illicit Tobacco) Bill 2019; Second Reading
I rise in support of the Customs Amendment (Immediate Destruction of Illicit Tobacco) Bill 2019 and move:
That all words after "That" be omitted with a view to substituting the following words:
"whilst not declining to give the bill a second reading, the House is of the opinion that the Government, by failing to bring forward the appropriate legislation in a timely manner, has undermined the bill’s objective of significantly reducing the operational burden on Australian Border Force of implementing the illicit tobacco reforms".
As members of this House will recall, the government announced in the 2018-19 budget that it would tighten tobacco border controls as part of the black economy package. A range of bills relating to the black economy package were passed during the previous parliament. As a result of that package of bills, tobacco importers are now required to pay customs duty on tobacco products upon importing them into Australia. In other words, there is no longer an option to import tobacco products and hold them in a licensed warehouse to defer the payment of duties.
From 1 July 2019, tobacco products became prohibited imports, and tobacco products can only be imported into Australia with a valid import permit. Tobacco products imported without a valid permit will be seized at the border. To ensure that efficient border operations can continue under these arrangements, additional amendments to the Customs Act are proposed in the bill currently before the House. The Customs Act currently requires seized prohibited imports to be stored for a minimum of 30 days before they can be disposed of. Managing tobacco products as a prohibited import will result in a demonstrable increase in work at the border that may impact the government's ability to effectively regulate tobacco permit conditions and other border operations. So this bill seeks to remedy that and allow for the timely destruction of seized tobacco. In fact, in the last parliament, this very same bill's explanatory memorandum stated that this bill:
… would empower the Comptroller-General of Customs to cause tobacco products seized as prohibited imports—
from 1 July 2019—
to be dealt with in a manner he or she considers appropriate, including the immediate destruction of the goods.
The explanatory memorandum also said that the bill would:
… significantly reduce the operational burden of implementing the illicit tobacco reforms.
Labor supports this bill. We support the effective disruption of illicit tobacco supply chains and efforts to deny criminal groups access to illicit profits that fund other criminal and black economy activities. And we support the important work of our border protection personnel. But it should not go unremarked by this House that we are well past 1 July and only now is the parliament dealing with legislation to allow the Comptroller-General of Customs to do their job effectively.
As I've said in the past, this is a government that finds itself completely surprised to be sitting where it is, and with no real idea what it's going to do. It's a government without an agenda and without a vision. And here we are today with another example of the government asleep at the wheel. Instead of ensuring that the necessary legislation was in place to reduce the operational burden on Australian Border Force from changes to illicit tobacco arrangements, the government dropped the ball. Instead of ensuring that this legislation was passed expeditiously by the previous parliament, the government let the bill lapse. Those opposite appear to have forgotten that the fundamentals of government are not about winning elections, not about scare campaigns and not about endless spin; the fundamentals are about actually governing, and that means competent management of basic legislative tasks—basic tasks that seem to be beyond this government.
What confidence can Australians have that this government is looking out for their interests when it seems incapable of managing these most basic tasks? While the government is asleep at the wheel, Australians are facing very real challenges: the cost of essentials is skyrocketing, electricity prices are increasing, child care has become unaffordable, working families are struggling and parts of this great country are living through the worst drought on record. And all of this is happening at a time when our economy is facing significant challenges, yet this government doesn't have a genuine plan to protect jobs, to stimulate the economy and to promote economic growth. It doesn't seem to understand that people are worried about their wages and their job security, and it doesn't even appear capable of effectively managing basic legislation through the parliament.
Mr Deputy Speaker, I rise on a point of order—on relevance. The shadow minister is straying way off the topic of the bill here in front of us at the moment. I ask that he return to the bill in front of us.
Australians deserve better than this, and it's high time this government got on with governing in the national interest and not its own interest.
Notwithstanding the government's tardy handling of this legislation, Labor will always work constructively on issues such as those contemplated in this bill. Disrupting illicit tobacco supply chains is unquestionably in the national interest, and it is critical that our border security officials have the powers they need to do the job we ask of them efficiently and effectively. That is why Labor supports this bill.
The original question was that this bill be now read a second time. To this, the honourable member for Corio has moved as an amendment that all words after 'that' be omitted with a view to substituting other words. The question now is that the amendment be agreed to.
I am pleased to rise this afternoon to speak on the Customs Amendment (Immediate Destruction of Illicit Tobacco) Bill 2019.
We need this bill because we in this nation have decided, correctly, that we want to crack down and reduce the consumption of tobacco. We know of the adverse health effects that it has upon the Australian population and the costs that it puts on our hospital and medical system. What we've done, in a bipartisan policy from both sides of this House, is decide to increase the retail price of cigarettes through increasing the excise and the duty. So the price of cigarettes in Australia is now the dearest in the world.
As an example: a pack of 20 Marlboros in Australia costs $27. For a smoker who has one a day—one packet at a day, that is—that's a cost of close to $10,000. However, that exact same packet that costs $27 in Australia costs the equivalent of $16.67 in the UK and $9.51 in the USA. In Vietnam, the packet of cigarettes that retails for $27 in Australia is available retail for the equivalent of A$1.47.
Going down this track has been good news for the budget. We've had smokers add an extra $12.5 billion a year to our government's bottom line. But in doing so, our history tells us that whenever you put high rates of duty and high rates of tax on something—when the government steps in like that does—you create a dangerous black market. And that's, unfortunately, what has happened. But we knew that.
I have just a few recent examples. Last week, Australian Border Force officers intercepted 670 kilograms of tobacco illegally shipped from China. It was rough-cut tobacco that was found in a shipment of floor tiles in a container that arrived on 30 August. The Australian Border Force says that an examination of the consignment revealed that 672 kilograms of tobacco was 'hidden inside boxes between layers of tiles', representing 'more than $800,000 evaded in duty and GST'. So the more we put the price of cigarettes up with the taxes, the more incentives we give to the black market and we give to criminals to get involved in this illicit trade, so we have to have the response from the policing end, and there is a significant issue with this.
A recent story from the Australian Financial Review reads:
Illegal tobacco sales are flourishing in suburban and rural shopping centres, outraging retailers and frustrating renewed government efforts to crack down on a trade estimated to cost taxpayers up to $3.8 billion a year.
A Weekend AFR investigation reveals well-stocked retail outlets offering a wide range of cheap illegal Asian and Middle Eastern and untaxed popular brands, such as Marlboro, selling for a fraction of the price they would in legal outlets.
I can vouch that in my electorate, I think in almost any suburb, I could go and find a retailer that is selling illegal product, and I'm sure that most of those here in this chamber would be able to do exactly the same thing. That's why this legislation is necessary.
The Customs Act 1901 currently requires seized prohibited imports to be stored for a minimum of 30 days before destruction. This storage requirement, together with the legislative and administrative requirements for prohibited imports, impacts upon border operations and limits the ability of the government to regulate and manage illicit tobacco effectively. This bill will amend the Customs Act to empower the Comptroller-General of Customs to deal with seized tobacco in a manner that she or he considers appropriate, including immediate destruction of the goods. Similar controls already exist for other products, including seized psychoactive substances and prohibited serious drug alternatives. These amendments will improve the handling of seized illicit tobacco, resulting in effective regulation of tobacco permit conditions and enabling greater focus on targeting illicit tobacco. This bill will improve financial outcomes for the government and will enhance the implementation of new tobacco measures.
This simply can't be about revenue raising. The ultimate goal is to drive down the rates of smoking. Thankfully, we have the recent KPMG reports which show that under this government there has been a recent significant decline in smoking rates across the nation. The government is having success. Our policies are working, but we need to continue to look at the law-enforcement side to make sure we give our law-enforcement agencies the ability to crack down on these illegal syndicates that are continuing to exploit our laws, to exploit smokers and to engage in this illegal activity. Therefore I'm pleased to commend this bill to the House.
I rise to make a brief contribution to debate on the Customs Amendment (Immediate Destruction of Illicit Tobacco) Bill 2019, in support of the legislation but more particularly in support of the amendment moved by my colleague the Deputy Leader of the Opposition. The effect of the bill which is before the House would be to amend the Customs Act to enable the immediate destruction of illicit tobacco upon its seizure. I note that the provision is part of wider reforms, which were announced in the 2018-19 budget, to deal with the black economy and to combat illegal tobacco importing through introducing a prohibited report control for tobacco.
So it was intended, and indeed it is the case, that from 1 July this year tobacco products can only be imported with a valid import permit, subject to certain limited exceptions. However, the act presently provides that seized imported goods be stored for 30 days, during which period a claim may be made by the owner or purported owners for the return of these goods. This bill empowers the relevant Border Force officer, the Comptroller-General of Customs—a matter of great interest to the member for Greenway—to deal with such goods as he or she deems appropriate, including by destroying them, a measure and a power which are already in place for certain other prohibited substances.
I note that in the examination of the bill by the Senate Standing Committees on Legal and Constitutional Affairs some process concerns were put forward, in particular by the Queensland Law Society. I note also the committee's confidence that these matters can be addressed through the substantive provisions that are contained in the bill. However, more concerning to me is that these measures were introduced way back, well over a year ago, followed by an original bill that was introduced into this House on 14 February, which lapsed without being brought on for debate by the government. This failure—or delay—is really something that requires attention, and this is part of the issue which is really being put before the House by the second reading amendment moved by the member for Corio. It is more than something that is just disappointing. In this House, regularly, we see the government talk about setting tests for Labor. It is really all the Prime Minister wants to talk about. But here, this bit of legislation demonstrates that the government and this minister have failed a test of their own, and this failure is to all of our cost.
The original bill, of course, was intended to have been operational on 1 July this year. Indeed, the operative date is the only difference between the bill we are debating now and that which was introduced in February of this year. The original bill was intended to have been operational to match the other elements in the black economy package; this is now more than two months ago. In federal Labor we talk about hastening slowly, but this member for La Trobe, the assistant minister, is taking it a bit too far. We have before us the ludicrous proposition where a bill about streamlining a process has not exactly progressed at a pace consistent with its objects—the objects we in this place are fully supportive of. This has also had the effect of exacerbating, potentially, rather than relieving the operational burden on the ABF, which this act is intended in part to address, for no good reason at all, or really for one reason—the lack of attention to the Minister for Home Affairs to managing the demands of his portfolio, a portfolio that is so important to every Australian, to our security, to our wellbeing and to our confidence in the administration of government. Perhaps it shows that there is a big reason members of this government like talking about the Labor Party. It is because they have very little to talk about when it comes to their record in government, and the record of administration—or rather maladministration—in the Department of Home Affairs under this minister is quite shocking. It is overseeing a $300 million ABF budget blowout resulting in the ABF fleet being ordered to stop patrols to save money on fuel and putting the border at risk. My favourite is the $7 million wasted on what was referred to as a strategic review of the Department of Home Affairs that turned out to be one page only. And a series of ANAO reports highlight significant mismanagement and waste across the department.
So, in supporting the substance of this bill, I put again before the House the issues the deputy leader has put before it: why has it taken so long for this regime to be brought into effect? It is way past time for the government to get on with its job, its responsibility of governing. I call on members opposite to recognise this in supporting the second reading amendment by the member for Corio.
I would like to thank members for their contributions to the debate on the Customs Amendment (Immediate Destruction of Illicit Tobacco) Bill 2019. The black economy package combatting illicit tobacco introduced in the 2018-19 budget seeks to disrupt illicit tobacco supply chains and deny criminal groups access to illicit profits that fund criminal and black economy activities. As part of this package, from 1 July 2019 most tobacco products are a prohibited import. These products will only be allowed to enter Australia with a valid permit, with some limited exceptions such as for individual travellers who bring tobacco with them. Tobacco that is detected at the border without a valid permit will be seized.
The Customs Act 1901 currently requires goods that are seized as prohibited imports to be stored for a minimum of 30 days before destruction. This storage requirement, together with legislative and administrative requirements for prohibited imports, impacts upon border operations of the Australian Border Force, which serves as Australia's frontline customs service. While these existing arrangements are appropriate for the moderate volumes of most prohibited goods detected at our borders, they were not designed to manage high-volume commodities such as tobacco. Applying the storage and administrative requirements to seized prohibited tobacco limits the ability of government to regulate and manage illicit tobacco effectively.
The bill will amend the Customs Act to empower the Comptroller-General of Customs, who is the Commissioner of the Australian Border Force, to deal with seized tobacco products in an appropriate manner, including immediate destruction of the goods. Similar controls already exist for other prohibited imports, including psychoactive substances and prohibited serious drug alternatives. The bill will ensure the ABF is able to respond in a dynamic and timely manner to increasing volumes of tobacco and tobacco related seizures. It will improve outcomes for the government and enhance implementation of the new tobacco measures. Full details of the measures are included in the explanatory memorandum. I commend the bill to the House.
The original question was that this bill be now read a second time. To this the honourable member for Corio has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The immediate question is that the amendment moved by the member for Corio be agreed to.