Low Value Parcel Processing Taskforce

Further work to be undertaken

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Further work to be undertaken

The Taskforce has mapped out the key activities that it will be undertaking over the coming months to enable it to provide the Government with a comprehensive blueprint for reform, with costed alternatives and an expeditious time frame for implementation, by July 2012.

Assessment of potential solutions

The Taskforce will finalise the first stage of its assessment of potential solutions, and in so doing determine which potential reforms will be subject to more detailed examination.
As noted previously, in undertaking this first stage of the assessment, the Taskforce recognises that potential reforms may not be mutually exclusively, and in some instances may be able to be undertaken contiguously and/or sequentially. Issues with respect to timing of potential solutions will be considered as the Taskforce develops its recommendations with respect to an implementation program for Government (see further below).
In determining the potential solutions to be subject to more detailed assessment (and in determining its final recommendations), the Taskforce will make particular reference to:

the broad range of issues raised during stakeholder consultations;
the information that has been provided to the Taskforce by the border agencies; and
the information that has been provided to the Taskforce with respect to alterative processes adopted internationally.

Detailed assessment of prospective solutions (including costings)

Following the first stage of the assessment, the Taskforce will undertake a detailed examination of the reforms that it considers are most prospective. This will include undertaking detailed costings with respect to the changes that will be required.
Potential solutions for reform include changes to administrative processes, information systems changes and new infrastructure. To the extent that any such changes may enable changes to existing threshold arrangements, the Taskforce again notes that any decisions with respect to this issue rest with the Government.
To assist in the determination of the functional specifications that may be required under any such reforms, as well as the costs associated with any changes, the Taskforce will engage such technical expertise as is required to ensure that expert knowledge and best practice informs the work of the Taskforce. To the extent feasible in the time frames available, the Taskforce will seek also to undertake cost-benefit analyses of the proposed reform solutions.

Consultation with stakeholders

In undertaking this detailed examination of the selected reform solutions, the Taskforce recognises that reforms may impact on the business processes of industry participants and on their customers. To ensure that any such benefits or costs are well understood prior to the making of any recommendations, the Taskforce will seek the views of key stakeholders with respect to those potential solutions which are being given more detailed consideration.
The Taskforce also notes that this ongoing consultation will not be limited to those groups with whom it has already had the opportunity to have initial discussions. For example, to date the Taskforce has not yet consulted with the States and Territories. However, any reforms that may have implications with respect to revenue collection associated with the GST will necessarily involve discussions with them because the States and Territories both receive the revenue collected from the GST, and are responsible for the costs associated with the Australian Tax Office’s (ATO) administration of that revenue base.

Development of reform implementation program

In determining its final recommendations, the Taskforce is required to develop an implementation program to be recommended to Government. This blueprint will encompass a proposed timetable for:

the Government’s assessment processes of the proposed recommendations;
legislative and/or regulatory changes that may be required;
the physical implementation of such reforms as may be proposed, including with respect to such of the following as may be required:
- introduction of new handling and management processes;
- construction of infrastructure;
- development of information systems;
- alignment of industry business systems with new handling and administration processes;
integration and testing between border agencies, industry participants and other stakeholders;
education and training; and
agency, industry and community engagement processes.

Appendix A: Terms of reference

The Low Value Parcel Processing Taskforce (the Taskforce) will undertake a comprehensive investigation of low value import processing, particularly for the international mail stream.

The Taskforce should be guided by recommendation 7.1 in the Productivity Commission report Economic Structure and Performance of the Australian Retail Industry that states there are strong in‑principle grounds to lower the low value threshold exemption for goods and service tax (GST) and duty on imported goods when it is cost-effective to do so.

The Taskforce will investigate new approaches for the handling and administration of low value imports of goods, including options for revenue collection. In particular, any proposed new system should:
1. allow for effective and efficient revenue collection processes that promote tax neutrality with other goods for consumption in Australia
2. streamline the assessment of customs duty;
3. minimise any processing and administration costs, delivery delays and other compliance costs;
4. pass appropriate collection costs onto the importer;
5. provide administrative and competitive neutrality between different import streams where appropriate;
6. not compromise border protection. The new system should support the Australian Customs and Border Protection Service and DAFF-Biosecurity in this role by:

allowing for risk based assessment;
minimising administrative touch points outside of the natural supply chain for movement and delivery; and
facilitating pre-arrival information through electronic data interchange where practical;

support Australia’s interaction with the digital economy by ensuring the system is user‑friendly, imposes no added barrier to trade and allows for the large expected increase in online retailing; and
have regard to Australia Post’s profitability in the international mail stream including impacts on capacity and technological change, and its universal service obligations.

Notwithstanding the requirements in 1, the Taskforce should consider:
1. the costs and volumes of goods associated with possible administrative thresholds, including the level at which GST or duty may be payable and the levels at which differing amounts of information are required;
2. the role of customs duty;
3. compliance measures required to identify and respond to attempts at avoiding or evading customs duty, GST or other tax or charges;
4. implications of the new approach for the management of other risks at the border, for example as a result of changed process or from an additional focus on revenue;
5. international developments and best practice, covering both policy trends, technological advancements and agreements through organisations such as the Universal Postal Union; and
6. alternative arrangements for revenue collection, including the parties responsible for revenue collection and the points in the supply chain at which revenue is collected.

Composition and Consultation

The Taskforce will be led by an independent expert panel made up of a Chair and two members with significant experience in logistics, supply chain management or other related fields. The Taskforce will be supported by a secretariat drawing on the skills of the relevant Government departments and agencies. The Review may also draw on external expertise where necessary.
The Taskforce will consult the views of expert stakeholders, including the Australian Customs and Border Protection Service, DAFF-Biosecurity; Australia Post; the Conference of Asia Pacific Express Couriers; and other stakeholders, including small business.

Timing

The Taskforce should release an interim report in three months from its establishment and provide a final report to Government no later than July 2012. The final report should include a comprehensive blueprint for reform, with costed alternatives and an expeditious time frame for implementation.

Productivity Commission Recommendations and Government Response

Appropriateness of current indirect tax arrangements

Recommendation 7.1 – There are strong in-principle grounds for the low value threshold (LVT) exemption for GST and duty on imported goods to be lowered significantly, to promote tax neutrality with domestic sales. However, the Government should not proceed to lower the LVT unless it can be demonstrated that it is cost-effective to do so. The cost of raising the additional revenue should be at least broadly comparable to the cost of raising other taxes, and ideally the efficiency gains from reducing the non-neutrality should outweigh the additional costs of revenue collection.
Response: Noted
The Government will reassess the appropriateness of the low value import threshold when it receives the report of the Low Value Parcel Processing Taskforce (see response to Recommendation 7.2).

Recommendation 7.2 – The Government should establish a taskforce charged with investigating new approaches to the processing of low value imported parcels, particularly those in the international mail stream, and recommending a new process which would deliver significant improvements and efficiencies in handling. The taskforce should comprise independent members, with the Australian Customs and Border Protection Service (Customs), the Australian Quarantine and Inspection Service (AQIS), Australia Post and the Conference of Asia Pacific Express Carriers providing advice. The terms of reference should outline the criteria that any new system must satisfy including: minimising the costs of processing and delivery delays, streamlining the assessment of Customs Duty, user pays, and without compromise to the border protection functions of Customs and AQIS. This review should report to Government in 2012 and propose an expeditious timeframe for its proposed changes.
Once an improved international parcels process has been designed, the Australian Government should reassess the extent to which the LVT could be lowered while still remaining cost-effective.

Response: Agreed
The Government will establish a Low Value Parcel Processing Taskforce to investigate new approaches to the processing of low value parcels, particularly in the international mail stream. The Taskforce will comprise at least three members, including members with logistics and supply chain or other relevant expertise, and will be asked to report to the Government within six months of receiving the Terms of Reference.
The Taskforce’s report will provide a comprehensive blueprint for reform of the low value import processing system, with costed alternatives, for the consideration of the Government.

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