Senate Economics Legislation Committee
Introduction
Thank you for the opportunity to present to the Committee.
By way of background, Freight & Trade Alliance (FTA) is Australia's largest representative group of service providers, by that we refer to freight forwarders and customs brokerages, representing 268 businesses.
We also provide support services to this sector, particularly professional development training, including CAPEC members, DHL, Fedex and UPS. We would like to note that our submission does not represent their interests and we note that they have made independent representations before the committee.
With me today is Kai Lincoln who is FTA's Business Operations Advisor and also the Managing Director of SEKO Omni-Channel Logistics, who like many other FTA members, are responsible for the logistics and statutory reporting requirements for the international online retail sector. Kai has had many years of experience in this area in both postal and commercial services.
Before founding FTA in 2012, I worked both across government and commerce in the areas of international trade, including a 13 year stint with the then Australian Customs Service and several years contracted back to government as the Integrated Cargo System (ICS) User representative. I have had the opportunity to evolve with the changes in high volume low value transactions and was privileged to present to the Low Value Parcel Processing Taskforce in 2012.
In terms of the Taskforce, we note the detail of the 290 page report and in particular their 18 recommendations.
Below are some interesting points that have remain integral to our thinking:
- The Taskforce highlighted complexities in the postal environment as against the more sophisticated express courier arrangements. Longer term solutions will be monitored in terms international mail stream initiatives.
- It is quite possible that duty will not be collected on low value items. The Taskforce have highlighted the complexity in accurately classifying import consignments to determine appropriate duty collection and also justified this approach by noting "the trend for duty rates to be lowered and / or abolished in the future".
- The Taskforce is extremely mindful on the need to collect GST to support State and Territory revenue. In order to simplify the revenue collection process, it is quite possible that the value of taxable importation calculation will not include duty, freight or insurance components.
- The Taskforce has identified a range of potential revenue collection and cost recovery models. There is some doubt as to whether the ICS will be able to accommodate these changes or whether external ICT development will be required.
Based on the above, the government's proposed vendor collection model has considerable logic in that does not attempt to collect duty, it focusses on GST collection only and removes any further strain on the ICS.
While alternate models are worthy of further consideration, including a reduction of the threshold and development of simplified declarations at the border for GST collection, the FTA submissions to date have remained focussed on the draft Bill and operational implications.
As outlined in our formal submission, our position is very simple with three recommendations.
Recommendation 1. Defer implementation of the low value imported goods reforms to provide industry a minimum of 12 months for "go live" after the Bill receives Royal Assent.
Recommendation 2. Informed compliance measures be introduced to deter fraudulent activity and to ensure that postal and cargo handling services operate on a "level playing field"
Recommendation 3. We seek further engagement with compliance enforcement agencies to gain an understanding of potential implications to entities responsible for completing declarations at the border including international freight forwarders, express carriers and licensed customs brokers.
We support the intent of the bill to collect GST revenue and to provide a more equitable operating environment for Australian retailers. We trust that the committee will consider our recommendations and we look forward to sharing our experiences and knowledge as a part of your review.
Paul Zalai - FTA