Federal Budget 2023-24 — Overview of trade, logistics, manufacturing and biosecurity measures

On 9 May 2023, the Australian Federal Treasurer delivered the Australian Federal Budget for 2023-24 (Budget).

Below is a summary of the significant measures announced in relation to trade, biosecurity, logistics and manufacturing.

Trade

Resourcing for the Department of Foreign Affairs and Trade (DFAT)

The government has committed:

• $80 million over four years to enhance the strategic capability of the DFAT;
• $18.5 million in 2023–24 for border agencies to undertake design and planning work for operations; and
• almost $2 billion on improving relations with Pacific Island nations (on top of an extra $900 million in Pacific aid announced in the October budget). This will include $1.4 billion over the next four years to expand security infrastructure and criminal justice co-operation in the Pacific, as well as an increase in the numbers of Pacific islanders migrating to Australia.

Expansion of Emerging Markets Impact Investment Fund (EMIIF)

The government will provide $210 million over four years from 2023–24 to expand the EMIIF from $40 million to $250 million.

The EMIIF will continue to provide financing for small and medium enterprises operating in the Indo-Pacific and support the mobilisation of private and multilateral finance for development outcomes, including women’s economic empowerment and climate action.

However, the government has elected to cut the Export Markets Development Grants Scheme (EMDG) by $61 million to $554 million over the forward estimate period which will disappoint those who have used and intended the use the EMDG.

Indo-Pacific Economic Framework (IPEF)

The government will provide $31.9 million over four years from 2023–24 to deliver technical assistance and capacity building support to Indo-Pacific nations to participate in the IPEF.

The IPEF is a regional arrangement with Indo-Pacific members to build cooperation and economic integration in the Indo-Pacific region. The arrangement does not reduce tariffs or enhance market access outcomes but works on four main ‘pillars’ including facilitating trade and eliminate corruption

We also understand that the federal government will continue to provide funding and resources to support the implementation of the Australia-United Kingdom Free Trade Agreement (AUKFTA), which is due to come into effect on 31 May 2023.

The 2023–24 Budget estimates also continue to include provision for the Australia European Union Free Trade Agreement, which has not yet been finalised as negotiations with our European partners are ongoing.

Simplified trade system

The government will provide an additional $23.8 million in 2023–24 to continue initiatives to modernise and improve Australia’s international trade system, including delivering the simplified trade system reforms and continuation of the Trade Information Service.

National Centre for Asia Capability

Funding will be extended for the National Centre for Asia Capability (AsiaLink Business), to develop an Asia capable workforce and grow business in Asia. This measure will cost $14.7 million over the forward estimates.

Phase out of live sheep exports by sea

The government will provide $5.6 million over two years commencing from 2022–23 to establish a panel to undertake an independent assessment and consultation process to inform the phase out of live sheep exports by sea.

Funding for an Anti-slavery Commissioner

The government has committed $8 million over four years from 2023-24 to establish an Anti-slavery Commissioner. The Commissioner will work across government, industry and civil society to support compliance with the Modern Slavery Act 2018 (Cth), improve transparency in supply chains, and help address modern slavery in Australia and abroad.

Infrastructure and transport

The government will provide $1.8 billion over 10 years from 2023–24 for infrastructure priorities to support productivity and jobs.

This funding will include:

• $1.1 billion in 2032–33 to continue existing road maintenance and safety programs, with:
  • • $500 million for the Roads to Recovery Program;
    • $350 million for national road network maintenance;
    • $110 million for the Black Spot Program;
    • $85 million for the Bridges Renewal Program;
  • $65 million for the Heavy Vehicle Safety and Productivity Program;
  • $18.9 million for transport research organisations and innovation projects;
• $64.2 million over six years commencing from 2022–23 for the Department of Infrastructure, Transport, Regional Development, Communications and the Arts to enable the delivery of transport and infrastructure priorities, including $35.6 million for IT systems to support infrastructure investment and road vehicle safety regulation;
• $50 million over four years from 2023–24 under the Infrastructure Investment Program (IIP) for infrastructure projects in Central Australia;
• $13.5 million over three years from 2023–24 for an additional round of the Remote Airstrip Upgrade Program to support improved safety and access at remote airstrips and facilitate air connectivity and the delivery of goods and services to remote communities; and
• $1.2 million in 2023–24 to continue development of the Maritime Single Window project and deliver a business case to streamline reporting for Australian sea ports.

Review of IIP

The government has also announced an independent strategic review of the IIP to ensure the $120 billion funding over 10 years is fit for purpose.

Australian Infrastructure Financing Facility for the Pacific (AIFFP)

The government will provide a financing package to Sasape International Shipyard Limited (Sasape) in the Solomon Islands to support acquisition of land and capital upgrades to restore Sasape’s shipyard functionality.

The financing package includes a loan through the AIFFP for the Pacific complemented by grant funding which will be met from within Australia’s existing Official Development Assistance funding.

Biosecurity

The government will provide an additional $1 billion over four years from 2023–24 (and $268.1 million per year ongoing) to meet its election commitment to strengthen Australia’s biosecurity system. Government has indicated this additional funding is to address a significant under–investment in past years.

Increased biosecurity funding

The government has committed $845 million over four years from 2023–24 (and $255.3 million per year ongoing) to maintain biosecurity policy, operational and technical functions on a sustainable basis, including regulation, surveillance, domestic preparedness and response, and international engagement and capability development.

Modern digital systems

There will be $145.2 million over three years from 2023–24 dedicated to deliver modern digital systems in cargo pathways that are integrated with business systems, reduce and streamline regulation and enhance service delivery for importers.

Indigenous Ranger Biosecurity Program

In addition, $40.6 million over four years from 2023–24 (and $12 million per year ongoing) will go to continue the Indigenous Ranger Biosecurity Program to reduce biosecurity risks in northern Australia and provide social and economic benefits to First Nations, rural and remote communities.

Recovering the increased funding

The cost of these measures will be partially offset through introducing:

• Cost recovery arrangements for the clearance of low value ($1,000 or less) imported cargo, which is expected to raise $81.3 million over three years from 2024–25.

This charge will cover the cost of biosecurity clearance on low-value imported goods where there has not previously been cost recovery for biosecurity review of those goods.

For some time, industry has said that not having such a charge meant that those undertaking other imports effectively subsidised those importing low-value goods. The charge will be levied on Self-assessed Clearance (SAC) declarations, starting at 40 cents per SAC declaration but that charge may well increase.

• A biosecurity protection levy on Australian producers of agricultural, forestry and fishery products from 1 July 2024, set at a rate equivalent to 10 percent of the 2020–21 industry-led agricultural levies, which is estimated to increase receipts by $153 million over three years from 2024–25.

Manufacturing and Australian industry

Critical minerals

The government will support the development of the Australian critical minerals sector through a package of international commercial engagement and project facilitation. The measure is estimated to cost $80.5 million over the forward estimates and will be offset through redirecting funds from other DISER portfolio program.

Industry Growth Program (IGP) and Entrepreneurs’ Programme

The government will retire the Entrepreneurs’ Programme and replace it with a new IGP.

Administered by the Department of Industry, Science and Resources, it will employ commercialisation advisers to support the growth of small and medium business in areas of strategic policy focus. The intention is to get those businesses ready for participation in the National Reconstruction Fund.

Grants will be available to businesses participating in the IGP.

Hydrogen Headstart program

The government will provide $2 billion to accelerate development of Australia’s hydrogen industry, ‘catalyse’ clean energy industries, and help Australia connect to new global hydrogen supply chains.

Powering the Regions Fund

The government will allocate $1.3 billion over five years commencing from 2022–23 from $1.9 billion provided in the 2022–23 October Budget to support the decarbonisation of existing industries, develop new clean energy industries and support sovereign manufacturing capacity essential to the energy transition.

Excise

Tobacco excise

The government will increase tobacco excise and excise-equivalent customs duty by 5 percent per year for three years from 1 September 2023, in addition to the current indexation of those levies.

The government will also align the tax treatment of tobacco products subject to the per kilogram excise and excise-equivalent customs duty (such as roll-your-own tobacco) with the manufactured per-stick rate, by progressively lowering the ‘equivalisation weight’ from 0.7 to 0.6 grams. These progressive decreases will occur on 1 September each year from 2023, with the new weight coming fully into effect from 1 September 2026.

There are already significant levels of smuggling of tobacco and related products to avoid the existing levies and accordingly, the expectation is that such smuggling may increase.

Streamlining excise administration for fuel and alcohol

From 1 July 2024 (originally due to come into effect 1 July 2023 but now delayed for 12 months), the excise administration for fuel and alcohol will be reformed which will:

• streamline licence application and renewal requirements;
• remove regulatory barriers for excise and excise — equivalent customs goods (including lubricants, bunker fuels for commercial shipping industries, and vapour recovery units);
• relieve some of the current taxing arrangements so that the re-packaging of certain large beer packages into smaller packages will not be treated as ‘manufacturing’ requiring payment of excise and extending the period to pay excise owing under a ‘periodic settlement permission’ from one week to three months to align with other business payments; and
• require the ATO to publish on its website a public register of entities that hold excise licences to store or manufacture excise and excise-equivalent customs goods.

No explanation was provided for the deferral of these reforms which had been already included in Bills before the Federal Parliament. With other reforms also promised, the industry awaits with real interest for direction on the reforms from the government.

Engagement on the budget content

Rigby Cooke Lawyers will provide more details on these developments as more detail is provided, both through updates and through presentations at Continuing Professional Development and other seminars conducted by the International Forwarders and Customs Brokers Association of Australia and at industry forums.

Contact us

If you would like to discuss the announced trade, logistics, manufacturing and biosecurity measures in greater detail, please contact our Customs & Trade team.