Federal Budget 2020 – some customs and trade issues

07 October 2020

On Tuesday 6 October 2020, the Federal Government released its proposed budget for 2020-21, together with forward estimates of future receipts and expenses. As usual, most of the details had previously been formally announced or “leaked” previously but it is worth paying attention to a few issues. In doing so I have borrowed shamelessly from the exact words from the relevant budget text to ensure accuracy and only added additional commentary when the issue warrants that additional attention.

As expected, most of the initiatives are for new funding to assist in the support of people and industry affected by COVID-19. However, this will be allocated through different programs, most of which are focussed on workplace relations and employment issues but there are other issues closer to our industry.

In general terms, the Government will provide $28.6 million over two years from 2020-21 to support initiatives to modernise Australia’s trade system and streamline border services to reduce administrative complexity and improve the efficiency of international trade. This measure includes:

  • $7.8 million in 2020-21 to reduce compliance complexity for Australian businesses;
  • $8.0 million over two years from 2020-21 to reform and strengthen arrangements for aviation and maritime identification card schemes;
  • $12.8 million over two years from 2020-21 to develop a new border intervention model for sea and air cargo; and
  • An extension of the Australian Trusted Traders program to enable accredited trusted traders to pay customs and anti-dumping duty on a deferred basis from 1 July 2021, resulting in reduced revenue of $7.5 million over three years from 2021-22.

As previously announced, the Government has extended the free rate of customs duty from 1 August 2020 to 31 December 2020 for certain hygiene or medical products imported to treat, diagnose or prevent the spread of COVID-19. Affected product types include face masks, gloves, disinfectant preparations (excluding hand sanitiser), soaps, COVID-19 test kits and reagents, and viral transport media. This measure is estimated to decrease receipts by $7.2 million over the forward estimates period. Details are contained here.

The Government will provide $6.6 million over three years from 2020-21 to implement and administer the Commonwealth’s commitment to ban the export of certain types of waste from 1 January 2021. The Department of Agriculture, Water and the Environment will administer a licensing and declaration scheme to enable the export of waste materials where it can be demonstrated that sufficient processing has occurred prior to export to prevent harm to the environment or human health overseas. This measure will be offset by redirecting funding from within the Agriculture, Water and the Environment portfolio.

The Government will provide $328.4 million over four years from 2020-21 for a package of measures to improve the ease of doing business for agricultural exporters. This includes:

  • $222.2 million over four years (and $22.3 million ongoing) for the first phase of modernising the ICT systems and business processes that support the improved delivery of export regulatory services to agricultural exporters, including: – simplifying interactions between farmers and exporters and the Department of Agriculture, Water and the Environment in the delivery of agricultural export assessment and certification services – reducing the regulatory burden on industry through streamlined and integrated systems that remove unnecessary costs and delays for exporters – protecting the value of agricultural exports by ensuring the integrity of systems by mitigating export system outages and improving the cyber security of information.
  • $71.1 million over three years from 2020-21 to improve the financial sustainability of export certification services by returning to full cost recovery of these services over time, while minimising the impost on industry as it recovers from the effects of the drought, bushfires and COVID-19.
  • $35.2 million over four years for targeted interventions and regulatory reforms in the meat, live animal, seafood, plant and plant product export sectors to get products to overseas markets faster and more reliably.
  • $17.9 million over three years from 2020-21 to modernise the Therapeutic Goods Administration (TGA) business systems to streamline processes for the medicines and medical devices industry. Improvements will be made to electronic systems associated with obtaining regular approvals including applications and payments as well as to provide functionality to track applications through the approval process. The cost of this component will be met from within the existing resources of the Department of Health. This will be needed as from 30 November 2020, certain sports supplements are to be considered as therapeutic goods requiring approval by the TGA.
  • $7.2 million over four years from 2020-21 to streamline the agricultural levy legislative framework to ensure the industry-driven system can meet and adapt to changing industry needs and address emerging priorities and risks.
  • $13.4 million over two years from 2020-21 to continue funding the Deregulation Taskforce to support and deliver the National Deregulation Agenda.
  • $6.9 million over two years from 2020-21 to support industry-led pilots to demonstrate the application of blockchain technology to reduce regulatory compliance costs and encourage broader take up of blockchain by Australian businesses. As readers would be aware, I have already worked with the IFCBAA on an industry white paper on the application of blockchain technology to the supply chain.

The Government will provide $6.6 million over four years from 2020-21 to assist the recovery of Australian businesses from the impacts of COVID-19 by increasing the share of two-way trade covered by free trade agreements and by expanding regional digital trade. This measure builds on the ongoing free trade agreement negotiations with key trading partners, including the European Union and the United Kingdom.

As with usual practice, I will provide details on these developments in future events. For further advice on any questions you may have, please contact our Customs & Trade team for further advice.

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