The Australian Parliament passes Customs ‘Controlled Trials’ legislation — the ‘regulatory sandbox’ comes ever closer

06 September 2023

The Customs Legislation Amendment (Controlled Trials and Other Measures) Bill 2022 (The Bill) was passed by the Australian Parliament yesterday, which will now form part of the ‘Simplified Trade System’.

We have previously reported on a process by the Australian Border Force (ABF) to create a ‘Customs Regulatory Framework’ to allow for trials of new customs practices and technologies in a controlled regulatory environment where successful trials can then be implemented by formal legislative change.

That process is to be conducted, in part, under the framework established by the Bill. The framework is also described in the recent Simplified Trade System Taskforce publication entitled ‘Progress and Opportunities‘ as follows:

These time limited trials would address regulatory burden within the Customs framework, testing new technology and trade procedures, and is specifically designed to allow a modernised, best practice approach to legislative reform. The Customs Legislation Amendment (Controlled Trials and Other Measures) Bill 2022 is currently before the Senate. If passed it will establish the new regulatory framework for the Customs Regulatory Sandbox.

Unfortunately, there had been some difficulties in developing and passing the relevant legislation enabling the trials. A first version of the 2022 Bill was introduced into Parliament in 2021, however lapsed when Parliament was dissolved before the last election. The relevant Bill was re–introduced by the current federal government in largely the same form on 30 November 2022. After approval by the House of Representatives in February 2023, review by the Senate took some time — including a ‘Committee of the Whole’ debate on 4 September 2023 — and the Bill received final approval by the Senate on 5 September 2023.

The 2022 Bill also includes provisions around the ‘Notices of Intention to Propose Customs Tariff Alteration’ (Notice of Intention) process which allows the imposition of additional tariffs pending legislative implementation. That process will now provide that the Notice of Intention is not subject to disallowance (as occasionally been a concern) and must be published on the Federal Register of Legislation along with an Explanatory Statement at the time of introduction of the Notice of Intention.

The ‘Committee of the Whole’ approach may have been adopted as the ‘controlled trials’ part of the 2021 version of the Bill had already been considered by the Senate Scrutiny of Bills Committee and the Senate Legal and Constitutional Affairs Committee. In Scrutiny Digest 18 of 2021 the Scrutiny of Bills Committee raised the concern that ‘significant matters were to be specified in delegated legislation rather than primary legislation’ and found that the Explanatory Memorandum did not provide adequate reasons why the provisions were to be effected by delegated legislation as opposed to being included in primary legislation. The response from the (then) Coalition Government was that the nature of the short ‘trials’ of processes with ‘selected parties’ supported the use of delegated legislation rather than amendments to the Customs Act.1901. The 2021 Bill was then referred to the Senate Legal and Constitutional Affairs Committee in May 2022 which recommended the passage of the 2021 Bill, subject to some reservations on the use of delegated legislation.

Accordingly, the 2022 Bill did not go through any of the usual Committee reviews by the Senate. A second Explanatory Memorandum was issued by the federal government to address the concerns on the 2021 Bill.  In finally passing the 2022 Bill, the Senate declined to adopt an amendment proposed by one Senator to add a prohibition against imports the product of ‘forced labour’ which may lead to such legislation being subject to other debate and review.

The 2022 Bill (which will become a 2023 Act) is subject to extensive commentary in the Parliamentary Bills Digest. That Bills Digest summarised the process as follows:

Item 2 of Schedule 1 inserts definitions of ‘controlled trial’ and ‘controlled trial provision’ into the Customs Act. The definitions determine what kind of controlled trials Customs can establish and participants (approved entities) can take part in.

‘Controlled trial provision’ is defined as the following: (a) Part IV (importation of goods); other than Division 1 of that Part (which deals with prohibited imports) (b) Part IVA (depots) (c) Part V (warehouses) (d) Part VI (exportation of goods), other than Division 1 of that Part (which deals with prohibited exports) (e) Part VIA (electronic communications) (f) Part XI (agents and customs brokers) (g) Part XVA (tariff concession orders) (h) Regulations made for the purposes of a provision covered by paragraph (a), (b), (c), (d), (e), (f) or (g).

In addition to the limitation on parts of the Customs Act 1901 (Act), which will be subject to controlled trials, there are also limitations on the parties who will be allowed to be involved in the trails (presumably super Trusted Traders) and the trials can only be approved by the Comptroller–General of Customs and not by a delegate of the Comptroller–General. The Comptroller–General will also have powers to vary, suspend or revoke a party’s approval to participate in a controlled trial. Those decisions will not be subject to merits review so that any challenge will need to be made by judicial review.


We now await (with significant interest) on confirmation of Royal Assent and the commencement of the new Act. Even more interest will be around the subject of the controlled trials, how they will work and who will be permitted to engage in these trials within the ‘regulatory sandbox’. Hopefully these details will be subject to close engagement with the private sector and that no–one then throws their toys out of the box.