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Australian Federal Budget 2019 – released. Sort of.

Opinion – Andrew Hudson

The Federal Budget 2019 was formally released by the Federal Government on 2 April 2019. However, in an election year, the Federal Government took the unusual path of confirming that the government would not be seeking to pass new legislation implementing that Budget in the remaining Parliamentary sitting days. Instead, the Budget legislation would be left only to pass if the government is re-elected in the next Federal Election which is likely to take place in May 2019.
The Budget was largely positioned to appeal to business and individuals through additional funding, especially for infrastructure spending and additional income tax and other relief for low and middle-income earners. The Budget did not include a prediction of returning to surplus in the 2019-2020 financial year but foreshadowed a return to a budget surplus for the 2020-2021 financial year on the assumption that the current Federal Government is returned to office and that anticipated changes to economic conditions would enable the delivery of that surplus. Clearly, the Federal Government is claiming that it is the most responsible financial manager and that the only way that voters would be able to secure the promised advantages would be to re-elect the Federal Government.
Unfortunately, there was little of surprise in the Federal Budget in the international trade and customs sphere as many of the Budget initiatives had been released before last night’s announcement. However, it is worth reiterating a number of items that did appear in the Budget.

  • A reminder of the recent signing of the Australia-Hong Kong Free Trade Agreement (A-HKFTA) and the Indonesia-Australia Comprehensive Economic Partnership (IA-CEPA). The passage of the two Free Trade Agreements (FTA) (if they are passed by the new Parliament) would lead to some reductions in revenue collected from imports from those countries. It will be a real test of Parliament and its processes to see if these two FTA, together with the Peru Australia Free Trade Agreement, will move forward to commencement given the position of the opposition in relation to some provisions of those FTA.
  • There is welcome news for those involved in export with the confirmation of certain additional spending initiative as follows:
    • $68 million made available over three years from 2019/2020 to support exporters in particular additional funding for the Export Market Development Grant (EMDG) program. As readers would be aware I am a director of the Export Council of Australia and we have pressed Government on many occasions to increase this funding. This increase is welcomed and hopefully will lead towards additional funding for the program in future years in line with recommendations of Parliamentary committees.
    • $29.4 million over four years from 2019 to enhance agriculture, including work on the reduction of non-tariff barriers to trade, and assistance with technical market barriers in export destinations.
    • $66.9 million in funding over five years to enhance Australia’s engagement with near neighbours in the Indo-Pacific region of which a large amount is aimed at improving relationships with China on agriculture food safety and regulatory cooperation.
  • Confirmation that while government proposes to proceed with the biosecurity imports levy announced in the previous Budget, the date for implementation has been changed from 1 July 2019 to 1 September 2019. There is currently a review of the proposed levy being undertaken, but it would seem that government has assumed that levy in its current form (or similar) will proceed regardless of the current review and work of the Federal Government’s Steering Committee.
  • Significant increases in customs duty payable on tobacco imports. Readers would be aware of recent changes to proposed regulation for the taxation regime for tobacco including the requirements for permits to be secured before goods are imported and the requirements for import duty to be paid at the point of import. This removes the ability to place goods in bond and only pay customs duty once the goods are released from bond. This has been a contentious issue within industry and has been a subject of significant discussion during my recent forums with the Customs Brokers and Forwarders Council of Australia (CBFCA).
  • An anticipated reduction in customs duty from imports of motor vehicles given that motor vehicles from many of our Asian trading partners are already free from duty due to our existing FTAs. This announcement therefore seems to anticipate the likely completion of the FTA with the EU which, as a central inducement would remove customs duty payable on motor vehicles imported from Europe (and maybe even Luxury Car Tax).

There is no reference to any additional funding for implementing wider brown marmorated stink bugs (BMSB) measures even though the program will expand in the next season. Similarly, there is no additional funding for single-window or other trade facilitation initiatives which have been a key feature of collaborative work between agencies of the Federal Government and the private sector. There was no additional funding for the Anti-Dumping Commission so the promised ‘toughening’ of regulation regarding trade remedies from both the current Federal Government and the Opposition will need to be managed by the Anti-Dumping Commission (ADC) without any additional funding. This may exacerbate the current days and uncertainties associated with investigations through the ADC.
The Federal Budget makes no mention of other initiatives such as additional benefits through the Australian Trusted Trader Program although that may not be unexpected as financial aspects of the program such as the deferral of the payment of customs duty and the other initiatives had been funded in earlier Budget announcements.
It would appear that the Federal Government has taken the position that there are no significant political benefits to be gained by additional expenditure in the customs and international trade portfolio and through the operation of its agencies in that area. We await, with some interest, the response by the Federal Opposition to be delivered tonight and other announcements as to policies from both the Federal Government and the Opposition to be made in the movement towards our next Federal Election.
Andrew Hudson is the Customs & Trade Partner at Rigby Cook Lawyers. ©Rigby Cooke 2019. Reproduced with permission. All rights reserved. This article was first published as Australian Federal Budget 2019 – Released. Sort of. Dated 3 April 2019 on www.rigbycooke.com.au.

Budget must focus on freight: ALC

The Australian Logistics Council (ALC) has released its 2019-20 Federal Budget submission, saying this year’s Budget must establish the right framework to support the implementation of an effective National Freight and Supply Chain Strategy.
“The Federal Budget in April will be the last one delivered prior to the release of the National Freight and Supply Chain Strategy,” said ALC CEO Kirk Coningham.
“The ALC has been a long-term advocate for this strategy. Our members understand that a national economy needs to adopt a consistent national approach to freight movement.
“However, the best Strategy in the world counts for little if there are insufficient resources in place to support its delivery.
“Accordingly, ALC’s submission encourages the Federal Government to use this year’s Budget to establish the right frameworks to support the delivery of a Strategy that will meet the needs of our industry and the Australian economy as a whole.
“To help achieve this, ALC makes 19 recommendations addressing two core objectives – ensuring those responsible for implementing the strategy have adequate resources, and supporting specific infrastructure, safety and regulatory initiatives that will improve the performance of our supply chains.
“These include recommendations to support key Federal agencies, as well as state and local governments, in delivering significant reforms around planning, corridor protection, road pricing and data collection that will allow us to better monitor performance and more effectively target infrastructure investment.
“Additionally, there are specific recommendations to support crucial infrastructure and regulatory initiatives, such as better freight rail linkages to ports, infrastructure to hasten uptake of electric vehicles in the freight sector, maintenance of the industry Master Code for heavy vehicle safety, and development of a National Rail Plan that will finally deliver the regulatory consistency the industry seeks.
“Implementing these recommendations as part of the 2019-20 Federal Budget will significantly improve the efficiency and safety of Australia’s supply chains, and contribute to the delivery of a more effective National Freight and Supply Chain Strategy,” Mr Coningham said.
 

Australian Government to support MEGATRANS2018

Federal Minister for Infrastructure and Transport Darren Chester has confirmed the Australian Government’s support of inaugural supply chain event, MEGATRANS2018.
In a letter confirming the Government’s support, Chester cited the event’s relevance for the national freight sector and supply chain.
“This inaugural conference will bring together participants from the logistics, materials handling and freight industries to consider key issues for the freight section,” said Chester.
“This conference complements the Government develop of a National Freight and Supply Chain Strategy for Australia’s future.
“The Government looks forward to working with the freight and supply chain industry to deliver future prosperity and competitiveness. This conference will be an important component toward shaping that outcome.”
The Australian Government joins the growing list of MEGATRANS0218 sponsors, which include the Victorian Government, the Port of Melbourne and Isuzu Trucks, to name a few.
Connecting the Australian and international supply chain, the three-day expo will bring together those who plan, implement and control the efficient and effective forward flow and storage of goods, services and related information between the point of origin and point of consumption.
MEGATRANS2018 will take place over the Melbourne Convention and Exhibition Centre’s30,000 square metres of space, 10-12 May 2018.

National transport reforms have led to some improvements in the rail regulatory regime, but much more needs to be done to achieve the full benefits of reform.

Inland Rail finds friends in Queensland

The Inland Rail project continues to advance, with ecological surveys beginning on the project in Queensland. Field studies for the Environmental Impact Statements for the Gowrie to Kagaru sections of Inland Rail in Queensland have begUn.
Minister for Infrastructure and Transport Darren Chester said the ecology surveys for the Inland Rail sections from Gowrie to Kagaru would see the collection of spring and summer seasonal data about the flora and fauna of the area.
“With the Inland Rail progressing, it is important to get these ecological surveys underway to inform the design and broader environmental assessment of this Inland Rail section,” Mr Chester said.
“The field studies and investigations will help identify and understand animal and plant species in the area including their habitats.”
The Gowrie to Kagaru sections are said to be the most technically complex, requiring major tunnelling through the Toowoomba ranges.
Queensland stands to benefit from the Inland Rail, with more than 50 per cent of the construction cost to be spent in the state.
Support is mutual
Shadow Assistant Minister For Infrastructure Pat Conroy MP talked at length about the Inland Rail in a recent speech.
“We were the first ever national government to commit to building the 1,700 km Inland Rail between Melbourne and Brisbane via regional Victoria and the NSW central west.
“In particular, we invested $600 million upgrading existing parts of the rail network that will form part of the line. And in the 2013 Budget, we allocated $300 million to complete the detailed planning and get the project under way.
“In Australia freight rail carries half of our domestic freight, up from 36 per cent in 2000. In 2013/14 freight rail carried 1.3 billion tonnes of freight and contributed $5.1 billion to the Australian economy. 98 per cent was bulk freight with the remaining 2 per cent intermodal or containerised freight.
“By 2040, rail freight is expected to increase above its 2010 level by 130 per cent mainly driven by mineral exports.”
The domestic freight task has grown by 50 per cent in the decade to 2016 and is forecast to grow by another 26 per cent by 2026. By 2050 almost 12 million tonnes of freight is expected to move between Melbourne and Brisbane each year – more than twice the current levels.
“This massive growth requires a Federal Government committed to supporting infrastructure investment,” Mr Conroy said.
 

ALC releases final submission for freight strategy Inquiry

The Australian Logistics Council (ALC) has released its final submission to the Inquiry into National Freight and Supply Chain Priorities: Freight Doesn’t Vote.
The submission makes 41 recommendations relating to all transport modes operating in the Australian freight logistics sector, as well as whole-of-industry issues.
“[The] ALC has long advocated for a National Freight and Supply Chain Strategy,” said Michael Kilgariff, Managing Director, ALC. “We are proud to release a comprehensive submission that clearly reflects industry’s priorities and offers practical suggestions for policy reform.
“The content of Freight Doesn’t Vote has been informed by an extensive process of industry engagement – including ALC Forum 2017 in March, dialogue with the Department of Infrastructure and Regional Development, and extensive consultations with members and the broader industry.
“The submission calls on the Commonwealth Government to play a greater role in protecting against urban encroachment and preserving critical freight transport corridors – a position that has also been endorsed by Infrastructure Australia (IA).
“It recommends reviewing a number of regulatory practices that inhibit the efficient movement of freight, such as curfews and bans on freight vehicles. It also identifies opportunities for the Federal Government to incentivise good planning practices and encourage the take-up of new technologies that can deliver better outcomes.
“The submission does not shy away from recommending initiatives that may be politically challenging – particularly around greater Commonwealth involvement in planning, as well as road pricing and investment reform.
“However, the reality is that Australia’s economy is being transformed by population growth, by technological change and by the changing behaviour of ever-more discerning and empowered consumers. Our supply chains must be equipped to deal with that reality.”
The full submission can be viewed on the ALC’s website.

When all things change, Customs stays the same

The Minister for Immigration and Border Protection, Peter Dutton used his opening address at the Department of Immigration and Border Protection (DIPB) Industry Summit on Monday morning (31 July 2017) to assure those in the private supply chain and their clients that the current work agenda would be maintained under the proposed Home Affairs department.
Along with the Acting Commissioner of the Australian Border Force (ABF), Minister Dutton reiterated that the ABF would continue in its traditional ‘Customs’ role and the ABF, as part of the DIBP, would also continue its vital engagement with industry and development of trade facilitation measures to assist in the legitimate trade in goods and movement in people.
At the time of the announcement of the creation of the new Department of Home Affairs (DHA), the focus of the commentary was on national and border security issues with no comment on the traditional ‘Customs’ role of the ABF or its ongoing engagement with industry and the facilitation of international trade at the border.
Naturally, there were some concerns that the failure to address these important roles could mean that the importance of those roles was being downgraded and that momentum on various initiatives here and overseas could be lost with an increased focus on security and intervention in trade.
Both speakers made the point that the involvement of the ABF with the DHA would allow the ABF to have access to additional information at an earlier stage than is presently the case, which would actually enhance the ability of the ABF to carry out its roles. These outcomes were all consistent with the theme of the industry summit being “Border Innovation: strengthening our nation’s economy, security and society.”
In terms of the work of the DIBP and the ABF in the engagement with industry in relation to the movement of goods, there was reference to recent achievements and future commitments with such initiatives as:

  • The creation of a ‘single window’ for trade such as in Singapore and New Zealand.
  • The expansion of the Australian Trusted Trader Program (ATTP).
  • The recent completion of four Mutual Recognition Agreements (MRA) with other customs services for those in the ATTP.
  • The promise of more MRA with customs services in other trading partners.
  • The development and implementation of Free Trade Agreements (FTA) to improve the use of those current and future FTAs by the adoption of robust Rules of Origin, enhanced border clearance facilitation.
  • The increased use of more advance technology and reporting systems.

There were similar references to commitments in the migration space as relating to the movement of persons.
The comments provide a degree of assurance to industry that the current work agenda would be maintained and developed and that the engagement with industry remained a priority. While the reference to the achievements and initiative represents only a reiteration of those developments currently known to industry, their clear support from the Federal Government filled in a gap in the story that arose with the announcements relating to the DHA.
Industry looks forward to continued engagement on these projects and its ongoing collaborative work with government, whether the DIBP, the ABF or other agencies that have a role at the border.
Andrew Hudson is Partner with Rigby Cooke Lawyers’ Litigation Team, specialising in all areas of trade including international trade conventions, dispute resolution and arbitration, trade financing options, commodity and freight contracts as well as dealing with regulation of the movement of goods at the border by all Government agencies.
He is also a member of many of the consultative bodies established by Government in the trade space, including the National Committee on Trade Facilitation convened by the Department of Immigration and Border Protection and the International Trade Remedies Forum convened by the Anti – Dumping Commission (ADC) as well as associated sub-committees. He is also a member of the board of directors of the Export Council of Australia (ECA) and the Food and Beverage Importers Association (FBIA) and works closely with other industry associations representing those in the supply chain.

More stringent air-side ID checks to come into force on 1 July

Thousands of Australians servicing aviation, including freight forwarders and airport staff, will soon be subject to federal background checks, with new laws covering US-bound cargo coming into effect on 1 July 2017.
Since 2005, individuals working unescorted in airport security zones have been required to obtain and display Aviation Security Identification Cards (ASIC) as proof of having undergone a valid background check.
New Federal laws coming into effect on 1 July will require many new classifications of workers supporting the aviation industry – such as freight forwarders and known consigners – to possess higher level security ID, if operations involve US-bound air cargo.
Australian technology company Veritas has received Federal Government authorisation to provide ASICs for individuals supporting the aviation sector.
Stephen Inouye, Managing Director, Veritas, said, “This milestone enables Veritas to extend our technology-enabled security registration services from the maritime and offshore sectors to the aviation sector, thereby helping companies achieve compliance with minimal impacts to operations.”
Inouye noted that from July, only white ASIC holders will be permitted to handle and screen Australian cargo bound for the US.
“Veritas has the systems in place ready to assist thousands of airport staff and freight contractors who, potentially, now need to urgently undertake background checks in order to receive their white ASIC to make sure freight is on planes bound for the US in time,” he said.
“The Office of Transport Security – administered by the Federal Government’s Department of Infrastructure and Regional Development – has identified 11,000 companies which could be impacted. Many Australian employees, particularly of logistics companies and transport operators, may now need white ASIC cards.”

Australia, NZ collaborate on positioning research worth $73bn

The Australian Government announced today that it will work with New Zealand on a project to improve positioning capability in the Australasia region.
The countries will work together to test instant, accurate and reliable positioning technology aimed at providing future safety, productivity, efficiency and environmental benefits across the region’s industries, including transport, agriculture, construction, and resource management.
Darren Chester, Federal Minister for Infrastructure and Transport, said he welcomed New
Zealand contributing an additional $2 million to the $12 million in project funding announced by the Australian Government in January 2017.
“The two-year project will test SBAS technology that has the potential to improve positioning accuracy in the region to less than five centimetres. Currently, positioning in Australasia is usually accurate to five to ten metres.
“Not only do we use positioning technology every day through apps like Google Maps, but it is essential to all four transport sectors – aviation, maritime, rail and road.
“Improving positioning technology has the potential to open up a whole range of new opportunities for transport sectors, including building on technological developments in maritime navigation and automated train management systems to a future that includes driverless and connected cars.”
Minister for Resources and Northern Australia Matt Canavan said research had shown that the widespread adoption of improved positioning technology has the potential to generate upwards of $73 billion of value to Australia by 2030.
“This technology has potential uses in a range of sectors, including agriculture and mining, which have always played an important role in our economy, and will also be at the heart of future growth in Northern Australia,” Canavan said.
The project will involve Geoscience Australia and the Cooperative Research Centre for Spatial Information (CRCSI) working closely with a number of New Zealand organisations, including Land Information New Zealand (LINZ), the New Zealand Transport Agency, the Ministry of Business, Innovation and Employment and the Ministry of Transport.
Earlier this month, technology companies GMV, Inmarsat and Lockheed Martin joined the project. The companies have been involved in implementing SBAS technology around the world, and will be involved in the technical components of the test-bed.
In March, the project will call for organisations from a number of industries including agriculture, aviation, construction, mining, maritime, road, spatial, and utilities to participate in the test-bed.

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