Wednesday, 7 February 2007
Customs Legislation Amendment (Border Compliance and Other Measures) Bill 2006
At the outset, to take up Senator Murray’s last point: Treasury has policy responsibility for deferral of duty. It is a matter which goes to revenue and it is a Treasury decision. That has been fairly clear from the start. Industry wanted duty deferral. We went through all the issues with industry. The issues raised by Treasury were put to industry. This proposal is a compromise on that, if you like. I would also remind the Senate that this is only for highly compliant importers. It is not for small to medium enterprises. It is not for your average tradesmen. It is not for your average business. I have outlined to the Senate the 15 businesses which are mentioned in the act. I am talking about Myers, Target and Kmart. These are very big entities indeed, which Customs will work with on a one-to-one basis to ensure that not only do they get streamlined importation of goods but also this payment system works for them.
Customs will sit down with each one of these companies, and estimates of duty will be reached. An agreement with the importers will be based on historical data from importations in the same period in previous years, with allowances for changes, peaks, seasonal adjustments and other things. The amendments require Customs and the accredited client to agree, in the import information contract, on the method of calculating the duty estimate. Provided that the importer complies with the methodology, then it will not matter if the estimate is inaccurate.
So what we have here is a very small group of importers—15 in number, and it could grow, but I do not see it growing greatly. Certainly one would expect it to relate to the larger importers in Australia. I think, and I am open to correction on this, around 20 importers account for 80 per cent of imports of goods into this country. So what you are talking about is really the very big end of town. Let us get that very clear. This is not something which is going to fall upon the vast business community of Australia. It is in relation to a very small group indeed, and there will be that one-to-one basis between Customs and these businesses—to such an extent that the CEO of Customs will agree with them in the contract as to the methodology of assessment of duty.
Senator Ludwig has outlined the situation in relation to manner of payment, and that has been an accurate reflection of how it works. Of course, you have to have a period, a point of lodgement, and that is the seventh day of each month. You consolidate your imports for the previous month. Then on the 15th, eight days later, an assessment is made.
For each import there is an RCR, a request for cargo release. Every one of them has to have that. It is a very much smaller compliance in that it accompanies the import at the time, it relates to more border security issues and the information sought is much less in that RCR. So the participating company lodges a request for cargo release for each shipment; it makes a mid-month payment of duty based on an estimate of anticipated imports in that month; it lodges a periodic declaration on a monthly basis; and, in the following month, it makes a payment, either more or less, to reconcile, according to whether that estimate was correct or not.
The methodology I have mentioned will be agreed with each one of these companies. Their size and number is such that Customs will be able to deal with their particular situation. The government sees, as far as the red-tape aspect is concerned, that we can accommodate, within reason, the various requirements of those companies.
I stress this is a system which will not apply across the board. In fact, it will apply to a few companies—15 at the moment. We hope it will grow over time; a figure in excess of 50 has been mentioned in the past. I think that, as people get the benefit from this program—and they should get the benefit—others will want to join. The benefit for these large importers is the streamlined importation of their goods.
So that is the accredited client program. We believe that, in the absence of a duty deferral program, this is a compromise which can offer benefits to industry. As I said earlier, I will be watching it very closely. I only have to look at the 15 companies that we have at the moment—hopefully that will grow—so we will be able to get a very good grasp on how it is operating for those companies.
To use the analogies of the average tradesman and the average businessman I think misses the point that we are dealing with this on a one-to-one basis. It was always intended that it would only relate to those highly compliant and high-volume importers. And of course the vast majority of Australia’s imported goods are handled by, really, a handful of companies. Then, after that, you get your small and medium enterprises which pick up a much smaller percentage of Australia’s imports. So this is not something which is going to widely affect the importing community. It is very much a focused program and we believe that we will be able to pick up any reasonable adjustments for those companies involved.