Bills Digest No. 174  1998-99 Customs Amendment Bill (No. 2) 1999


Numerical Index | Alphabetical Index

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer and Copyright Details

Passage History

Customs Amendment Bill (No. 2) 1999

Date Introduced: 25 March 1999

House: House of Representatives

Portfolio: Attorney-General

Commencement: The provisions are to commence on the same day as amendments to the Import Processing Charges Amendment Bill 1999 introducing the new screening charge, that is, on a date to be fixed by proclamation, or failing that, six months after the Bill receives Royal Assent.

Purpose

To amend the Customs Act 1901 to introduce a new registration and reporting scheme for bulk consignments of goods which are of low value.

Background

Section 64AB of the Customs Act 1901 requires masters, pilots or owners of ships or aircraft to provide the Australian Customs Service (ACS) with a cargo report containing information about each consignment of goods that will be unloaded at a port or airport. The ACS uses these reports to screen the cargo and to protect the Australian community from the importation of prohibited goods.

This Bill seeks to introduce a new reporting scheme for a particular type of bulk cargo which is of high volume but low value. Typically such cargo consists of bulk consignments of documents and consolidated mail orders which are valued at less than $250 per individual consignment and which are transported to Australia by specialist operators such as express couriers. According to the Attorney-General, Hon Daryl Williams, in his Second Reading Speech, approximately 120,000 consignments of documents and mail order goods arrive at Sydney Airport each week.(1)

Currently not all of these consignments are reported individually, although they are reported at a consolidated level. When goods are reported at a consolidated level, the ACS does not have sufficient information to screen the consignments properly, except by physical random checks. The new scheme will allow owners of ships and aircraft who are registered as 'special reporters' to report cargo at a consolidated level, provided that the ACS has access to their computer facilities where information relating to each individual consignment is stored and retained.

In 1997 the Government introduced charges for processing goods imported into Australia by air or sea. (2)This cost recovery measure applies to all ACS activities that are directly or indirectly required to process imports. At the time the new charges were introduced, the Government gave an undertaking that the costs to be recovered would not include export transaction costs, investigation costs or the costs of public benefit functions, such as cargo examinations for drug enforcement purposes.(3) In 1997-98 import processing charges raised $2.6m and were estimated to raise slightly more than $3m in 1998-99.(4) Of this amount, $1 m has been raised annually from screening charges.(5)

Section 64ABC of the Customs Act requires a person communicating a cargo report to the ACS to pay a screening charge. The amount of the screening charge is established by Section 7 of the Import Processing Charges Act 1997. Currently the screening charge is $2.40 for each line of a cargo report that relates to a consignment of goods valued at less than $250. According to the Explanatory Memorandum there are usually more than 300 individual consignments included in each cargo report, so the total screening charge payable on a cargo report could be at least $720.(6) The Government proposes to amend the Import Processing Charges Act 1997 to introduce a new charge of $45 per cargo report for consignments that are reported under the new scheme. The new charge apparently reflects the lesser cost to the ACS of screening all bulk documents and bulk mail order consignments under the new scheme.

The new reporting scheme is likely to result in lower screening charges for some users, particularly those reporting mail order consignments. However it is likely to be more expensive for express couriers who have not been paying screening charges for individual consignments of documents.(7)

As part of the National Illicit Drugs Strategy (NIDS), the Government has provided funds to develop a system that will enable the ACS to access electronically the consignment information held by express courier cargo reporters. A feasibility study was completed in 1997-98 and a number of companies in the air express courier industry have participated in the development and trialing of the system during the past year.(8)

The use of electronic cargo reporting is widespread in Australia. According to the latest Annual Report of the Australian Customs Service, 99% of air cargo and approximately 85% of sea cargo is now reported electronically.(9)

 

Main Provisions

The purpose of Item 1 is to make the definition of the expression 'insolvent under administration' applicable to all the provisions of the Customs Act 1901 (the Customs Act). At present the definition appears, in exactly the same words, in subsection 77F(1) of the Act. Item 13 repeals the definition in subsection 77F(1). The insertion of the definition of the expression in subsection 4(1) (Item 1 refers) would make that definition applicable to all provisions of the Act, including subsection 77F(1), except where there is a contrary intention in a particular provision.

Summary of proposed changes to the Customs Act to introduce the new registration and reporting system

Divisions 3 and 3A of Part IV of the Customs Act contain provisions relating to cargo reporting and the use of computers to report sea and air cargoes. The proposed amendments contained in items 4-12 are intended to restructure Divisions 3 and 3A by repealing the heading to Division 3A (item 10) and creating new Subdivisions A, B, C and D under Division 3.

  • Item 4 inserts new Subdivision A - General reporting requirements which contains the definitions of certain words and expressions used in Division 3.
  • Item 11 inserts new Subdivision B - the Use of computers in sea and air cargo automation systems
  • Item 12 inserts new Subdivisions C and D to establish the requirements of the new registration and reporting system for low value consignments, and the powers to monitor and audit the 'special reporters'.

Definitions

The expression 'low value cargo' is defined in new section 63A to cover certain types of consignments, namely:

  • cargo consigned from a mail order house, or
  • cargo comprising reportable documents, or
  • cargo comprising other goods of a kind prescribed by the regulations.

In addition, the cargo must

  • be consigned, other than by post, from one person to another, and
  • be transported to Australia all together in the same ship or aircraft, and
  • have a value not exceeding $250 or other prescribed amount, and
  • have a total liability for import duty and sales tax of less than $50 or other prescribed amount, not exceeding $75.

The expression 'low value cargo' is included in items 5 and 8 (see below).

A 'special reporter' is defined as a person or a partnership registered under Subdivision C to report low value cargo of a particular kind. In order to become a special reporter, the person or partnership must be already registered to communicate cargo reports under the Air Cargo Automation System or Sea Cargo Automation System. A special reporter is entitled to submit an abbreviated cargo report electronically to Customs and to pay a reduced screening fee. In return, a special reporter will be required to retain and store in his or her computer facilities, all the information relating to the consignment, in a manner which will allow the information to be accessed by the ACS. Amendments relating to this definition are found in items 5, 9 and 12 (see below).

The expression 'reportable document' is defined to cover materials such as company reports, financial statements, legal documents, manuals of instructions, and personal correspondence. The definition excludes advertising material and blank forms, blank diskettes and video tapes.

New reporting requirements for low value cargo

The purpose of item 5 is to insert new subsections in the Customs Act to provide for the proposed reporting requirements for low value cargo. New subsection 64AB(3B) requires a special reporter of low value cargo to transmit each cargo report to the ACS by computer. The amount of detail required under the new electronic reporting scheme is sufficient for the ACS to identify the bulk consignments, but not to identify individual consignments [new subsection 64AB(3D)].

The effect of item 6 is to apply the screening charges to cargo arriving by sea as well as to air cargo unloaded at a particular airport. Item 8 restricts the application of the screening charge to reports of low value cargo made by special reporters in accordance with the reporting requirements prescribed in new subsection 64AB(3B).

Registration, rights and obligations of special reporters

Item 12 inserts a new Subdivision C into the Customs Act. It contains new sections relating to the registration, rights and obligations of special reporters under the proposed electronic cargo reporting scheme. In order to be registered as a special reporter, a person or a partnership must:

  • be a registered user of the Air Cargo Automation System or the Sea Cargo Automation System [new paragraph 67EB(1)(a)]
  • regularly report large volumes of consignments (at least 1000 individual consignments of reportable documents or 5000 mail order consignments per month during the three months immediately before making an application as a special reporter) [new paragraphs 67EB(2)(a) and (b)]
  • have dedicated computer facilities compatible with the ACS, and
  • be a fit and proper person to participate in the scheme [new paragraph 67EB(1)(d)].

New subsections 67EB(3) and (4) set out the matters which the Chief Executive Officer of Customs must consider in deciding whether a person or a company is fit and proper to be registered as a special reporter.

Special reporters will require separate registrations to report on cargoes of documents, mail order consignments and cargoes of any other kind prescribed by regulations [new subsection 67EC(6)]. In addition, a person seeking registration as a special reporter for low value cargo consigned from more than one mail order house will be required to make a separate application for registration for each mail order house. The purpose of these requirements is to ensure that only the types of goods covered by the registrations are contained in the consignments. This will assist the ACS to screen these consignments.

Proposed new section 67EE sets out the basic conditions that must be complied with by a person registered as a special reporter. One of the requirements is notification of any changes in the staff who participate in the management or control of the special reporter's dedicated computer facilities [new paragraph 67EE(2)(b)].

New section 67EF sets out the conditions relating to the storage and maintenance of information and documents with which the special reporter must comply. In return for being able to submit an abbreviated cargo report, a person registered as a special reporter is required to store for two years the more detailed information, including documents, relating to individual consignments which they would otherwise be required to report to the ACS [paragraphs 67EF(1)(a) and (b)]. They must advise the ACS of the location of their premises in Australia and any intention to relocate [new subsections 67EF(2) and (3)]. The special reporter is required to provide the ACS with online access to the information stored in their dedicated computer facilities and with the capacity to download that information whenever it is required by Customs [new subsection 67EF(4)]. In addition, a special reporter must comply with a request from the ACS to electronically transfer the information [new subsection 67EF(5)].

Special reporters who are registered to report low value cargo from mail order houses are required to meet additional conditions. New section 67EG requires that a written agreement exist between a mail order house and the special reporter, setting out the arrangements for the consolidated shipment of low value goods from a single place of export outside Australia, and providing for the electronic transmission to the reporter of the full particulars of each consignment. This is referred to as a 'house agreement'.

Registration as a special reporter is to last for two years [new section 67EJ] and may be renewed [new section 67EK]. Registration may be cancelled if any of the conditions are breached or if the circumstances of the special reporter change [new section 67EM]. A person whose registration is cancelled may apply to the Administrative Appeals Tribunal for a merit review (Item 14).

Monitoring and auditing of special reporters

The purpose of new Subdivision D is to give powers to the ACS to ensure that special reporters comply with the conditions and requirements of Division 3. New section 67EN defines the expressions 'monitoring powers' and 'monitoring warrant' and provides authorised officers with powers to operate equipment on the premises of the special reporter in order to monitor information in the reporter's computer facilities. Provision is made for authorised officers to enter the premises of special reporters in order to exercise monitoring powers, either with the occupier's consent [new section 67EO] or under a monitoring warrant [new section 67EP]. The powers given to authorised officers to operate computer equipment on a special reporter's premises, to transfer information relating to individual consignments onto a disk, tape or other storage device, and to remove the storage device from the premises, appear to be comparable to powers already included in sections 198-202 of the Customs Act ('Search warrants in respect of things believed to be evidential material'). New section 67ES provides an authorised officer with the power to require an occupier or person apparently in charge of premises to answer questions or produce documents. Failure to do so constitutes a criminal offence. New section 67ET reflects section 202 of the Customs Act and makes it a criminal offence to fail to give assistance to an authorised officer on the reporter's premises.

 

Endnotes

  1. 'Second Reading Speech', Customs Amendment Bill (No. 2) 1999, Hon Daryl Williams MP, House of Representatives, Debates, 25 March 1999, p. 3669.

  2. Budget Statements 1996-97, Budget Paper No. 1, p. 4-24.

  3. ibid., p. 4-24.

  4. The Commonwealth Public Account 1998-99, Budget Paper No. 4, p. 35.

  5. Import Processing Charges Amendment Bill 1999, Explanatory Memorandum, p. 10.

  6. Customs Amendment Bill (No. 2) 1999, Explanatory Memorandum, p. 8-9.

  7. ibid., p 6-7.

  8. Australian Customs Service, Annual Report 1997-98, p. 48.

  9. ibid., p. 97.

 

Contact Officer and Copyright Details

Rosemary Bell
6 May 1999
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members
and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1999

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1999.

Back to top


Facebook LinkedIn Twitter Add | Email Print