Biosecurity Import Levy
Freight & Trade Alliance (FTA) and Australian Peak Shippers Association (APSA) members have understandably been seeking updates on the proposed Biosecurity Import Levy.
The concern from members and the wider industry is that depending on how the new levy is to be collected and passed on through the supply chain, adequate notice is required to allow industry participants to implement systems and to have discussions with customers about potential cost increases.
While we are unfortunately not in a position to provide definitive answers, we trust that the following provides useful background and the current status of this new levy.
Background
As members will recall, the Biosecurity Import Levy was announced in the 2018 Federal Budget with an aim to collect $325M over 3 years from a commencement date of 1 July 2019.
Since that time there has been significant controversy surrounding the implementation of the levy, ultimately leading to the former Minister for Agriculture and Water Resources announcing the formation of the Biosecurity Levy Steering Committee tasked with recommending the possible scope and design for a levy.
As outlined in previous member notices, I was privileged to be appointed by the Minister to participate with eight other industry representatives in the committee led by an independent chair (Mr David Trebeck) and supported by Pegasus Economics.
To allow the steering committee adequate time to report and as outlined in the last Federal Budget, the government announced a new proposed date of 1 September 2019 and a relatively small loss of revenue associated with this deferred commencement.
Current status
In line with the Steering Committee's responsibilities, a final report was provided to government on 31 May 2019.
There was an overwhelming message from industry (Steering Committee members AND respondents to our discussion paper) to move away from the models originally proposed by the Department of Agriculture to a simple administrative collection model against the Full Import Declaration (FID) receipt.
We understand that the quantum and collection mechanism remain subject to a cabinet discussion/decision.
Legislation will be required to support this measure (please note the levy is NOT a cost recovery mechanism). This entails legislative drafting (which we assume has commenced) and Parliamentary debate, including the potential of a Senate inquiry.
Further complicating matters is the need for enhancement to the Integrated Cargo System (ICS) to collect the levy across air and sea FIDs.
Commentary
The silence from government on this matter is alarming.
The government will clearly want this levy revenue but may have to concede to a delayed implementation beyond 1 September 2019 due to the above factors.
We know from experience over the last 14 years that any enhancement to the ICS takes considerable time to implement. We hope that the government accepts the steering committee's recommendations and uses the ICS / FID, even if it means a significantly extended timeframe before implementation.
The government may well be very tempted to go down the path of reverting back to its original models to collect the tax from stevedores and / or shipping lines leaving industry with the tax collection burden - this would be a disastrous result for importers who will undoubtedly wear the cascading costs of administrative fees through the supply chain.
Let's hope that common sense prevails and that the government takes the necessary steps and time to minimise the long-term impact on importers.
Our message to the department and the Minister's office has been consistent - if importers have to pay a new levy, they have the right to pay it a net rate - something that is best achieved via the FID process alongside the myriad of existing taxes, levies and Import Processing Charges.
Paul Zalai - FTA / APSA