Mr PROSSER (Minister for Small Business and Consumer Affairs)(9.31 a.m.) —I move:

That the bill be now read a second time.

This bill is the first of three in the legislation package for the implementation of a cost recovery regime for import related services delivered by the Australian Customs Service, which was announced by the government in the 1996-97 budget.

The three bills in this legislation package provide the legislative authority for the imposition and collection of 13 charges and fees for import related services delivered by the Australian Customs Service. The 13 imposts are located in two new charges bills and this Customs Amendment Bill, and will apply full cost recovery for commercial customs activities directly and indirectly required to process imports. This measure is consistent with the general thrust of government policy which increasingly sees the closer alignment of service delivery costs with sectors of the community which generate the workload.

For instance, the user-pays system is already used in relation to the recovery of costs of processing passengers at international airports through the passenger movement charge. Similarly, the Australian Quarantine Inspection Service introduced cost recovery in the early 1990s for its work associated with the movement of international cargo. The services to be covered by the new charges in this legislative package are:

-   the processing of cargo reports (both sea and air),

-   import entry processing (sea, air and post), and

-   licensing of approved places for the examination of goods

To coincide with this measure, Customs has taken the opportunity to streamline elements of two existing fees. The first relates to refund of customs duty application fees and the second relates to administrative arrangements for the determination of costs associated with out of hours work by Customs officers or for work by Customs officers at locations where customs work is not usually performed.

This legislation package sees an extension of the current cost recovery regime for import related services. Customs currently recovers part of the cost of its electronic systems—amounting to approximately $18.5 million in 1995-96—through charges levied on importers for import entries. The extension of the charging arrangements, however, relates only to commercial import processing. It does not cover activity associated with Customs' community protection function relating to the detection and interception of prohibited imports and drugs. The government recognises Customs' important role in this area and has, in the budget, provided funds to Customs to significantly increase the use of sophisticated technology to maintain and enhance its community protection capability. Nor will charges apply to the processing of export transactions. The exemption of exports from the new user-pays system is a recognition of the key role export industries will play in improving Australia's trade balance, creating more jobs and reducing the federal deficit.

Customs has undertaken detailed activity based costing of its services to ensure that the costs recovered do not exceed the costs calculated to process import transactions. The cost model used in calculating the charges has been reviewed by two firms of external auditors. The charges are limited to the calculated costs of delivering the functions, and will be reviewed annually to ensure that they only reflect the actual costs of service delivery. Any efficiencies identified in service delivery will be passed on through lower charges.

One hundred and three thousand importers generated around 2.2 million customs import entries in 1995 containing 7.2 million entry lines. Ninety-eight per cent of these entries were lodged electronically with Customs. Based on the 1995 data, 95 per cent of entries have 10 lines or less and will incur the minimum charge. The new charges, for the majority of entries, will see the current electronic entry cost rise from $8.75 to $29.65 (sea) or $22.80 (air and post). The present charge of $8.75 only picks up some of the computer costs for entry processing and does not represent full cost recovery. Although the increase in entry costs is significant, in absolute terms the additional costs will be small for the majority of importers. For example, 65 per cent of importers make four or less entries per year and would incur a total cost increase of less than $85 per annum.

After the budget announcement, members of the Customs National Consultative Committee were briefed at a special meeting about the nature of the proposed charges. This committee comprises representatives from the Australian Air Transport Association, the Australian Chamber of Shipping, the Australian Federation of International Forwarders, the Customs Brokers Council of Australia, the International Air Couriers Association, the Australian Chamber of Commerce, the Law Council of Australia and the Institute of Chartered Accountants. Their feedback resulted in some changes being made to the charges for entry processing and the methods of collection. This committee met again in September where the charges were once more the subject of discussion.

Informal meetings have been held with various sectors of the importing community, such as the air express couriers, the cargo terminal operators and the Australian International Movers Association, in regard to establishing the most efficient collection methods for the charges. In meeting with a variety of industry sectors, Customs was made aware of some difficulties the collection of cargo reporting fees and screening fees would impose on cargo terminal operators and shipping companies for manual reporting charges and on air express couriers for screening charges. As a result, the legislation now provides that special arrangements may be entered into for the collection of these charges, including periodic settlement arrangements to coincide with the operating environment and billing cycles experienced by many of the firms in the importing community.

In addition to meetings called at the behest of industry, Customs has conducted a series of industry briefing sessions in all state and territory capital cities and in several regional centres. These sessions have provided an opportunity for Customs to explain details about the charges and how they will be collected. At the same time, the sessions have provided a valuable forum for feedback from all sectors of the importing community, much of which has influenced implementation decisions.

The three bills which comprise this legislation package will provide the legislative authority for the imposition and collection of the 13 charges and fees for the import related services delivered by Customs to which I have referred. In particular, this bill contains:

1.    the fees relating to the processing of those entries which are required to move imported goods out of a warehouse and into home consumption;

2.   the replacement fees currently contained in the Customs Act for the processing of applications for refund of customs duty and for the provision of officers' services either out of hours or at locations where such services are not usually provided;

3.   the administration provisions for the charges contained in the Import Processing Charges Bill; and

4.   the requirements of the new Customs depot licensing regime, whose related charges are contained in the Customs Depot Licensing Charges Bill.

I present the explanatory memorandum.

Debate (on motion by Mr Crean) adjourned.