Sunday 18th Nov, 2018

INDUSTRY OPINION: Biosecurity cost recovery – will logic and fairness prevail?

Image: Shutterstock
Image: Shutterstock

AT A professional development event hosted by Freight & Trade Alliance (FTA) in Sydney on 10 April 2018, over 150 licenced customs brokers heard from the Department of Agriculture and Water Resources with a contingent questioning the fairness as to why small- to medium-sized businesses should pay the same “Approved Arrangement” flat fee as multi-national logistics service providers.

This same concern has been expressed by FTA in ongoing commentaries and formal submissions.

The department responded via their November 2017 industry notices by proposing a welcomed reduction to the annual fee from $2900 to $500 and in parallel, re-introducing a transactional entry fee.

While acknowledging this positive outcome, FTA responded with a further submission in January 2018 requesting:

  • A return to a historical cost recovery model whereby fees are collected on a Full Import Declaration (FID) basis i.e. removing all Approved Arrangement flat fees and recovery costs with a marginal increase against ALL sea import declarations – not only against Automatic Entry Processing for Commodities (AEPCOMM) entries: and
  • Using the above cost recovery mechanism, introduce a differential for non-broker approved arrangement fees reflecting a further reduction of costs for SME establishments.

Last Friday, 20 April 2018, FTA received a response stating that our recommendations do not meet the Australian Government Cost Recovery Guidelines noting “the cost of an activity should be recovered from the group that create the need for the activity” and that our proposal would introduce “an inappropriate cross subsidy”.

In a follow up submission lodged with the department over the week-end, FTA noted that the Guidelines state that it is appropriate to benchmark against similar government activities and brought the following examples to the department’s attention:

  • No IPC currently exists on exports with border costs cross-subsidised and paid by importers. We are not suggesting we change this as it is a sensible policy to support local industry. We do however question whether this meets the department’s cross-subsidisation argument and reference to the Guidelines;
  • No differential IPC on Container Examination Facility (CEF) targeted containers exists with a cross-subsidisation of costs across all sea cargo FIDs. We are not suggesting that we change this model, however we again question whether this meets the department’s cross-subsidisation argument and reference to the Guidelines; and
  • A flat fee IPC currently exists on all import consignments whether they are deemed high risk or low risk. Surely a “trusted trader” requires less intervention and should receive a lower IPC to meet the Guidelines and avoid inappropriate cross subsidisation.

FTA has argued precedent cross-subsidisation models exist where logic and sound policy prevails.

Furthermore, it is argued that our proposal on Approved Arrangements meet the Guidelines as it would directly “influence demand for government activities”, giving an incentive to encourage a greater uptake of Approved Arrangements to further support efficient departmental administration and better protect Australia from biosecurity threats.

We look forward to meaningful engagement with department to improve process efficiency, productivity and fairness in cost recovery administration in the lead up to the development of the Biosecurity Cost Recovery Implementation Statement (CRIS) and any associated legislative amendment.

Paul Zalai is director at Freight & Trade Alliance (FTA) and an advocate of the freight and trade sectors.

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