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Wednesday, 21 August 2002
Page: 5428


Mr MELHAM (10:08 AM) —The provisions of the Customs Legislation Amendment Bill (No. 1) 2002 are to amend customs offences to ensure consistency with the Criminal Code and consistency of financial penalties, to amend the valuation provisions in the Customs Act to ensure that the legislation is consistent with the agreement on the implementation of article 7 of the General Agreement on Tariffs and Trade 1994, to allow the seizure without warrant of special forfeited goods in the protected zone in certain circumstances, to make some minor amendments to the trade modernisation actand to the provisions which will be introduced by that act, to create a system under which remail reporters may be registered and may provide less information in respect of remail in their cargo reports and to clarify existing circumstances in which the passenger movement charge is not payable and include a new group of people who do not have to pay that charge. The opposition has no wish to impede this process. The purpose of the Import Processing Charges (Amendment and Repeal) Bill 2002 will ensure that the Import Processing Charges Act 1997 continues to apply after it is repealed.

One of the key purposes of this customs bill is to ensure that the various acts to which it refers are consistent with the Criminal Code. It is designed to ensure that financial penalties are consistent within the Customs Act. Section 1 deals with the issue of consistency of language in determining financial penalties. Current dollar amounts will be altered to reflect equivalent amounts in penalty units. Schedule 1 also deals with offences which are not explicitly expressed as strict liability offences but which are, however, regarded as strict liability. This will ensure that the principle of strict liability will apply, and that is appropriate.

There are also a number of offences that this bill will make strict liability offences and that deal primarily with reporting requirements or failure to comply with conditions. The penalties involved do not have imprisonment as a penalty, and almost all have a low pecuniary penalty. This schedule replaces the phrases `knowingly' or `recklessly' by `intentionally' to clarify the intent of the offences identified by the legislation and to ensure consistency with the Criminal Code. I am a great believer in consistency in the law and agree that these changes make the law simpler to implement from a judicial perspective.

Schedule 2 of the bill deals with what has become known colloquially as the Toyota case. Specifically, it deals with value unrelated matter. Item 3, subsection 154(1) of the Customs Act 1901 repeals the definition of `value unrelated matter' and replaces the words in the definition of `price' in the Customs Act with the word `rebates'. Under the valuation provisions in the Customs Act, components of the price of imported goods cannot be deducted from the customs value for duty purposes which are contrary to the Agreement on the Implementation of Article 7 of the General Agreement on Tariffs and Trade 1994. The opposition accepts the position taken by the Australian Customs Service that Australia, as a member of the World Trade Organisation, is obliged to ensure that its customs valuation legislation is consistent with the valuation agreement.

The genesis of this part of the bill lies in a decision by the full Federal Court in 2000. In CEO of Customs v. AMI Toyota Limited 2000, the court found that the warranty component of the price paid for imported motor vehicles should be deducted from the price paid and the customs value for duty purposes. The valuation agreement requires that the customs value of imported goods to be the total of payments made for the goods, with certain allowed adjustments such as rebates. It does not allow the deduction of warranty costs from the customs value. This part of the legislation will ensure that Australia conforms to its obligations, and it is appropriate that it does so. The bill will delete the whole definition of `value unrelated matter' to end the uncertainty on the valuation of goods imported with a price inclusive of warranty. Given the potential application of the valuation to a wide variety of goods, this step is entirely necessary. The government's failure to act on this sooner is costing Australian taxpayers an estimated $300,000 per month.

Schedule 3 provides amendments to the Customs Act 1901 dealing with provisions as they will be introduced or amended by the Trade Modernisation Act. It will repeal the Import Processing Charges Act 1997, which will be replaced by the Import Processing Charges Act 2001. Most of the amendments have not yet commenced.

Schedule 4 deals with matters relating to the rights and privileges of Torres Strait Islanders operating in the protected zone. Under the Customs Act, officers can only seize special forfeited goods without a warrant if those goods are at or in a container at a Customs place. Certain vessels operating in the protected zone are exempt from these provisions; these are the traditional inhabitants undertaking traditional activities. Thus the traditional inhabitants are able to move freely within the protected zone, which is the relevant part of the Torres Strait, Papua New Guinea and Australia. These vessels are not required to enter at an appointed port and are not required to have a certificate of clearance or be brought to a boarding station prior to departure. Customs officers are not able to search these types of vessels in an appointed port and thus are not able to seize special forfeited goods without a warrant, other than narcotics. Given the nature of these special forfeited goods, there is a belief that Customs officers' safety is at risk while they spend time telephoning for a warrant. The process of obtaining a warrant can, particularly in adverse weather conditions, take several hours. I am advised that the desire to ensure personal safety of both the Customs officers and the traditional inhabitants underpins this section of the bill.

These amendments will allow Customs officers to seize without a warrant special forfeited goods and evidential material on board exempt ships and in limited circumstances on land in the protected zone. The Attorney-General in his second reading speech noted that—and I quote:

Customs has consulted with and received support from the Torres Strait Regional Authority for this proposal.

I am pleased that consultation has occurred. The Torres Strait Regional Authority indicated that they also are concerned about the impact of the importation of special forfeited goods on the welfare of the people of the Torres Strait. It is vital that the government continue to consult with Indigenous people on such matters.

Schedule 5 of the customs bill deals with the issue of remail. Couriers or freight forwarders will import mail and then place it into the domestic mail system in Australia or deliver the mail articles themselves. Due to the nature of remail items, Customs considers it less likely that they will be imported in contravention of Commonwealth laws. The proposed amendments will allow registered remail reporters to provide Customs with less details in respect of remail items. The effect of clause 5 of the second bill, the Import Processing Charges (Amendment and Repeal) Bill 2002, is to continue the operation of the Import Processing Charges Act 1997 beyond the date on which it is repealed by the trade modernisation act. The continuation will be triggered if not all the import reporting and entry processes detailed in schedule 3 of the modernisation act have commenced, and will continue until all the import reporting entry processes amendments have commenced.

Clause 6 of the bill has the effect of continuing the operation of the Import Processing Charges Act 1997 for the purposes of charging the cargo report processing charge during the moratorium periods of up to two years after the new integrated cargo system is required. During this time, cargo reporters may continue to submit documentary cargo reports. Clause 7 imposes charges for clauses 5 and 6 of this bill. It was intended that the Import Processing Charges Act 1997 would be repealed at the same time that the trade modernisation act made substantial amendments to the import reporting and entry processes. It was also intended that the repeal of the new processes would commence on a day to be fixed by proclamation, and if the provisions were not proclaimed then they would commence automatically two years after the trade modernisation act received royal assent. The trade modernisation act received royal assent on 20 July 2001, so all provisions must commence by 21 July 2003.

According to the government, it has recently become apparent that the industry may not be ready to use the integrated cargo system by July 2003. As a result, and using the Customs Legislation Amendment Bill (No. 1) 2002, this date is to be extended until 21 July 2004. Many of the provisions of the trade modernisation act depend directly or indirectly on the introduction of Customs' new integrated cargo management system. It should be noted that the very fact that these bills are currently before the House could be seen to indicate that there has been insufficient planning for the implementation of a new computer system. This has implications not only internally for the Customs Service but for industry as a whole.

The timetable was questioned by industry in both the Senate committee hearing into the original legislation and a later Senate inquiry into the outsourcing of the Australian Customs Service's information technology. For example, Mr John Begley from Tradegate gave evidence to the Senate Legal and Constitutional References Committee inquiry into the outsourcing of the Australian Customs Service's information technology. Mr Begley said:

The other thing that has to be taken into consideration is that this industry—the Customs broking-freight hauling industry—is made up, to a great extent, of a lot of SMEs. To some extent, the viability of these SMEs is at risk if sufficient time is not given to incorporate a lot of the changes that have to take place. Customs have been extremely active and have generated interest in computer activities, and our industry has been fully supportive of that. The thing is, though, that the industry itself needs time to know about the changes. We have to work with our software providers, we have to integrate the changes within our systems and we have to train our own individual staff. That is not going to happen in five minutes. It will take some considerable time, and we also do not know the costs associated with doing all that extra activity. So that is a concern for industry out there.

The government and the Australian Customs Service indicate that the change to the timetable enacted by this bill is to assist industry. Mr Paul Zalai, of the Customs Brokers Council of Australia, is quoted in the Financial Review of April 30 2002 as saying:

The extension provides Customs and industry with a more realistic ability to adequately develop, test and implement the software and communication changes associated with the cargo management re-engineering initiatives.

This comment was made in the context of welcoming the new timetable and seems to imply that the initial time frame was not realistic. Ms Jenny Peachey from Customs is reported in the same Financial Review article on 30 April 2002 as saying that the extension has been sought to give industry more time to comply with the new cargo systems and not because of fears that Customs' system development would not be finished in time. Whichever explanation is the reality, it amazes me that appropriate consideration was not given to the extent and ramifications of a project of such magnitude, particularly in its implementation schedule. How is it that such a major change affecting a large government department and all the businesses which import and export into Australia cannot have been more thoroughly examined?

In his second reading speech, the Attorney-General stated that `industry would not be in a position to implement its computer system changes by July 2003'. While I applaud the concern for industry, it seems logical that industry could not be in a position to implement systems directly linked to Customs' computer system until the Customs system is up and running. As I intimated earlier, the opposition will support these bills.