Taskforce activities to date

Assessment of current and future operating environment

• 
  the current and expected volumes and attributes of low value imports in Australia;²⁶
  
• 
  technological innovations with respect to parcel processing, tracking systems and import processing information management systems;
  
• 
  international initiatives being undertaken with respect to international mail processing, including:
  

• 
  Kahala Customs Working Group initiatives, which include a phased implementation of data capture protocols to allow for item level data transfer, through UPU recognised protocols. The information contained in the data transfer will allow for access to key data before the goods originating in Kahala member countries have entered Australia. The mail product range is currently limited to the EMS and parcels over 2kg categories and it is expected that this will be fully implemented for both products by the end of 2014 (for more details see Appendix C); and
  

• 
  WCO/UPU and IPC initiatives, such as the Medici project, with respect to electronic data interchange through the capture and electronically exchange of the data needed for mail to clear customs and for duty/tax to be assessed. The data for each mail item is intended to be exchanged between the participating origin and delivery posts, and shared with the respective customs authorities and other government bodies, as required for export, import and border security (for more details see Appendix C);
  

• 
  other international initiatives relating to low value imports including:
  

• 
  ongoing multilateral (e.g. WTO) and bilateral tariff reform processes which are being negotiated through Free Trade Agreements (FTA) and which may reduce the number of goods subject to duty. Current FTAs under negotiation are:
  

• 
  Australia-China FTA
  
• 
  Australia-Gulf Cooperation Council (GCC) FTA
  
• 
  Australia-India Comprehensive Economic Cooperation Agreement
  
• 
  Australia-Japan FTA
  
• 
  Australia-Korea FTA
  
• 
  Australia-Malaysia FTA
  
• 
  Indonesia-Australia Comprehensive Economic Partnership Agreement
  
• 
  Pacific Agreement on Closer Economic Relations (PACER) Plus
  
• 
  Trans-Pacific Partnership Agreement
  

• 
  the Asia-Pacific Economic Cooperation (APEC) Honolulu Declaration to ‘establish commercially useful de minimis values in our economies that will exempt low-value shipments from customs duties and streamline entry documentation requirements’.
  

Investigation of alternative approaches operating internationally

In developing options for reform, the Taskforce believes that it is important to have regard to alternative approaches operating internationally – both because these processes may be inherently more efficient, and also because the use of global standards may enable greater systems integration internationally, which would provide its own opportunities for efficiency improvements. Such investigations also provide the opportunity to have regard to lessons learned elsewhere, and to shed light on possible weaknesses of potential solutions.
To this end, the Taskforce has investigated alternative approaches for the handling and administering imports of low value goods operating internationally, including undertaking:

• 
  a desktop review of approaches undertaken in seven countries – the United Kingdom, Canada, Singapore, Korea, Japan, the United States and New Zealand; and
  
• 
  a study trip of Canada, United Kingdom and Singapore to meet with the designated postal operators and relevant border agencies in those countries to understand the logistics, revenue, reporting, compliance and cost recovery mechanisms in these jurisdictions for the processing of low value imports.
  

Brief details of the Taskforce’s desktop review of international regimes with respect to low value imports are set out at Appendix E. While all reasonable care has been taken with respect to preparing this information, the Taskforce notes that due to the timing of this Interim Report, necessary verification processes still need to be undertaken. Further details with respect to international consultation are set out below.

Domestic stakeholder consultation

Stakeholder consultation meetings were commenced as early as possible in the process to ensure that all relevant issues were captured. This process is ongoing. To date, these meetings have provided an opportunity for the Taskforce to be informed by representatives from government and industry, as well as other stakeholders, about key issues and challenges in the low parcel processing environment, both in the international mail stream and the air and sea cargo environment. The information gathered during these sessions is of considerable assistance in informing Taskforce activities and considerations.
The Taskforce conducted site visits to the two largest international mail gateways in Australia ­– Sydney and Melbourne – to gain a better understanding of the environment in which Australia Post is operating and the nature of the interactions between Australia Post and Australia’s border agencies. This has enabled the Taskforce to gain a considerable understanding of the impact any increase in volume would have on these operations, both in terms of physical infrastructure capacity and resourcing. In March, the Taskforce took the opportunity for a site visit to DHL Express Australia’s Sydney gateway site to enable it to make a comparison between the different operating models between the mail and air cargo environments.
Below is the list of stakeholders the Taskforce has met with to date. These stakeholders are either directly involved in low value parcel processing, including revenue collection, or impacted by these processes in some way:

• 
  Australia Post;
  
• 
  Australian Bureau of Statistics;
  
• 
  Australian Customs and Border Protection Service;
  
• 
  Australian Federation of International Freight Forwarders (AFIF);
  
• 
  Australian Music Association;
  
• 
  Australian National Retailers Association;
  
• 
  Australian Retailers Association;
  
• 
  Australian Taxation Office;
  
• 
  Bicycle Industries Australia;
  
• 
  Conference of Asia Pacific Express Carriers (CAPEC);
  
• 
  Customs and Border Protection National Consultative Committee;
  
• 
  Customs Brokers and Forwarders Council of Australia (CBFCA);
  
• 
  Department of Agriculture, Fisheries and Forestry (Biosecurity);
  
• 
  Department of Broadband, Communication and the Digital Economy;
  
• 
  eBay Australia & New Zealand;
  
• 
  Post Office Agents Association Limited;
  
• 
  Productivity Commission;
  
• 
  Retail Cycle Traders Australia;
  
• 
  Treasury; and
  
• 
  Visa.
  

These meetings have focussed on:

• 
  gathering information from these bodies of how the process operates in their respective environments;
  
• 
  any developments currently in train to improve low value import processing;
  
• 
  challenges and impacts, both positive and negative, with current processes. Issues raised in this context relate both directly to the efficiency of the current processes, and also to broader issues such as the general impact that the growth of e-commerce is having on Australian retailers, as well as other matters such as the risks associated with goods being imported that fail to meet Australian safety standards and the potential for under-declaration of values in an e-commerce environment;
  
• 
  seeking views on the impacts, in terms of profitability, resourcing and infrastructure capacity that would associated with the processing of substantially increased volumes of parcels for revenue collection purposes; and
  
• 
  seeking suggestions and views on where improvements could be made to achieve efficiencies.
  

International consultation

An important consideration for the Taskforce in undertaking a comprehensive investigation of low value import processing, particularly in the international mail stream, has been how overseas jurisdictions with large volumes of low value goods manage their processes and whether this is done in an efficient and cost-effective way. Consequently, the Taskforce conducted a series of meetings with relevant postal services and government bodies responsible for border protection and revenue collection in Canada, the United Kingdom and Singapore.
As well as representing jurisdictions that manage tax and duty processes associated with low thresholds, Canada and the United Kingdom respectively are at the forefront of the UPU and Kahala electronic postal information transfer initiatives. The potential for these initiatives to provide pre-arrival postal data and the capacity for Australia to integrate in future international developments will factor in the Taskforce’s considerations.
To further its understanding, the Taskforce undertook site visits of international mail gateways and express courier operations.
The focus of these visits was to gain an insight into the challenges faced by countries where there is a primary focus on revenue collection due, in large part, to the high volume of low value imported goods. Regard was also given to understanding how the different circumstances of each jurisdiction has affected processes and policy settings – including factors such as geography, transport systems, the nature of goods being imported and differing border security and revenue priorities.
The Taskforce met with the following agencies:

• 
  Canada – the Canada Border Services Agency, Canada Post and representatives from the Canadian Department of Finance;
  
• 
  United Kingdom – the UK Border Force, Her Majesty’s Revenue and Customs, Royal Mail and ParcelForce (the parcel arm of the Royal Mail); and
  
• 
  Singapore – Singapore Customs and Singapore Post.
  

Key elements of the processes operating within these jurisdictions that the Taskforce examined include:

• 
  the physical sorting processes utilised for security and/or revenue purposes, including alternative infrastructure designs and layouts; a range of sorting, tracking and scanning equipment; and a variety of manual handling processes;
  
• 
  the nature and security of storage areas and facilities required for overflow goods awaiting revenue assessment (and the timeframes in which goods were cleared from these storage areas);
  
• 
  the software and information management systems utilised for the assessment of revenue liability (and the timeframes in which those assessment were made for duty and VAT/GST purposes);
  
• 
  the structure and operation of deferred payment schemes that enable goods to be cleared from mail gateways and cargo depots prior to revenue liabilities being paid by end-customers; and
  
• 
  a range of potential reforms currently being examined by mail and customs authorities that rely upon electronic data provision between postal partners, including enhanced risk assessment processes and streamlined revenue assessments.
  

In addition, the Taskforce briefly discussed a range of alternative technologies that may be utilised to improve the effectiveness of border security operations, such as ‘intelligent’ scanning software.

Reform development and assessment

The Taskforce has commenced developing solutions to reform the way in which low value parcel processing may be undertaken in Australia. All of these will undergo an initial assessment, with more detailed work to be undertaken on short-listed solutions (see further below).
The potential solutions that the Taskforce is developing will have regard to a variety of factors, including but not limited to, consideration of:

• 
  the existing parcel processes being undertaken by air and sea cargo operators, Australia Post and Australia’s government border agencies;
  
• 
  current regulatory arrangements, including Australian legislation and international treaty obligations;
  
• 
  alternative parcel processing systems that are operating internationally;
  
• 
  local and international developments already occurring with respect to parcel processes, including through the WCO/ UPU, the Kahala Group and Medici; and
  
• 
  the external environment in which this issue is being considered, including but not limited to the growth in international e-commerce and parcel processing generally, and the potential future border security risks.
  

These potential solutions include, but are not limited to:

• 
  infrastructure and/or information systems changes to streamline international mail gateway operations (with respect to both Australia Post and border agency activities);
  
• 
  process changes to streamline international mail gateway operations (with respect to both Australia Post and border agency activities);
  
• 
  simplification of duty and/or GST assessment and collection processes; and
  
• 
  alternate payment methods for duty and/or GST liability.
  

The Taskforce wishes to note that the potential range of reforms that it is considering focus upon improving the efficiency by which low value imports are handled and processed. It is not within the Taskforce’s Terms of Reference to specifically recommend the application of any particular threshold level. However, recognising the genesis of the Taskforce, the process that the Taskforce is undertaking will have regard to potential efficiency improvements based on expected parcel volumes under both existing and other potential threshold settings and arrangements for both duty and GST assessment and collection.

Assessment Process

Generally, in considering the range of potential solutions that may be available to improve the efficiency of the handling and administration of low value goods, the Taskforce’s recognises that some reforms rely upon being part of an integrated package, whereas others may be mutually exclusive. Further, there are likely to be material differences in the time frames in which particular reform solutions may be able to be implemented. A key consideration for the Taskforce is therefore to ensure that its recommendations enable coherent implementation over time – and that actions recommended to be undertaken in the short to medium term neither unduly inhibit or prevent desirable future reform, nor result in stranded assets and wasted investment in redundant equipment and technologies.
In considering the potential solutions that may fit within such an integrated package of reform, an initial assessment will be undertaken of potential reforms having regard to a set of standard criteria. The criteria are based on the Taskforce’s Terms of Reference, and include: cost, efficiency, implementation, competitive neutrality, risk, revenue and legislative impacts. Having regard to these assessments, and their relationship with other possible reforms, a determination will be made as to which of the potential solutions will be subject to further examination, including detailed costings. The key factors taken into consideration in making this initial assessment will be highlighted in the Taskforce’s Final Report.
These factors, together with i) detailed costings of the selected reform solutions, ii) the development of potential reform timelines and iii) a more detailed assessment of potential impacts in consultation with industry participants and stakeholders, will be used in determining the Taskforce’s final recommendations.

Download 0.49 Mb.

Share with your friends: