UPDATE - Biosecurity Imports Levy

Tuesday, July 10, 2018

In terms of collecting the $10.02 per TEU, the position from Freight & Trade Alliance (FTA) remains that alternate modelling is required rather than the DAWR proposal of collecting from stevedores. It is anticipated that stevedores will look to recover this cost via the Vehicle Booking System (VBS) used by transport companies to book time slots for the collection of import containers.

If this were to occur, it is again anticipated that transport operators would look to recover this cost with an additional administrative fee to address operational costs and offset negative cash flow implications. Likewise this cost and recovery is likely to cascade down the supply chain with importers ultimately paying an inflated price with additional impost and complexity of GST payments.
FTA recommends that the department consider two alternate models:
Levy collection on the Full Import Declaration (FID)
The FID is already a collection point for duty, GST, Import Processing Charges and other government imposed charges. It is recommended that the Integrated Cargo System (ICS) have code reinstated to calculate containers per FID to administer the new levy. The benefit of the FID is that costs are usually passed on from customs brokers to importers at a net rate as per costs displayed on the FID.
Levy collection charged against shipping lines
Charge the shipping line against manifested and confirmed discharged containers. Unlike the above FID proposal, this would capture both full and empty container to meet the intent of the budget announcement. On a commercial basis, shipping lines would most likely pass this onto customers (freight forwarders / importers) along with existing port service charges.

FTA also sought further information as to the rationale for the tax burden being focused on containerised and bulk sea cargo import consignments (as against other modes of transport and Biosecurity activities) - the DAWR response is below

Thank you for your participation at the meeting on Friday, and your suggestions for alternative collection methods. We will take those into consideration.
I note your questions requesting more information on the rationale for the tax burden being focussed on containerised and bulk sea cargo import consignments.
The 2017 Priorities for Australia's biosecurity system: an independent review of the capacity of the national biosecurity system and its underpinning intergovernmental agreement (the Review) found that every day Australians and agricultural industries overwhelmingly bear the costs associated with maintaining the biosecurity system and 100 per cent of the cost of responding to and managing pest and disease incursions. This includes the $761 million in tax payer money currently committed by Australian governments to eradicate a single Red Imported Fire Ant incursion in South East Queensland (suspected to have been introduced via sea containers) and the estimated $4 billion a year in control costs and production losses from weeds alone.
The review estimated that direct government expenditure on biosecurity in the 2015-16 financial year was $998 million, an increase of around 24 per cent from 2013-14. It found that demands on resourcing were also increasing due to the growth in volume and complexity of trade and travel and that certain system participants, including importers, were not covering the full cost of the risks they create. Specifically, the review stated that:

"Much of the material of concern to the national biosecurity system, including of environmental concern, arrives via vessels and containers—either in the contents of the container or on the external surfaces of the container itself. More than one-third of the pests and diseases included in the RRRA model have containers as a pathway. The panel is of the view that a broad-based levy on containers should be implemented to contribute towards a greater effort on environmental biosecurity and improved national monitoring and surveillance generally. The levy should be extended to non-containerised imports as well. (p. 120)"
To this end, recommendation 34 of the review recommended that funding for the national biosecurity system should be increased by implementing a per-container levy on incoming shipping containers of $10 per 20 foot equivalent unit and suggested that this be extended to non-containerised imports, if and when practical. As part of its initial commitment to responding to the review recommendations, the government announced in the 2018-19 Budget the introduction of the Biosecurity Imports Levy consistent with this.
Recommendation 34 also included recommendations to:

  • introduce a levy of $5 on incoming air containers;

  • increasing the Passenger Movement Charge (PMC) by $5 from 1 July 2022; and

  • more widespread implementation of state and territory land-based levies.

The review noted the difficulty with introducing a levy on incoming air containers due to data on air container numbers not being readily available and the limited revenue that this would raise (estimated to be approximately $2 million per annum) due to the relatively small volume of cargo imported by air. The review also acknowledged that the government has previously committed to not raising the PMC before 1 July 2022. The implementation of land-based levies is a matter for the state and territory governments.
The government has not yet finalised its response to the recommendations of the review. It is therefore premature to pre-empt the government's position on these other elements of recommendation 34. However, it is expected that a national response will be finalised in mid-2018, which will address this recommendation in full.