Originally published in Lloyd's List Australia - March 13, 2015
To paraphrase a cheesy pop song from the 80's, "It's raining reform" in the Customs world in Australia at the moment. This includes ongoing amendments to the Customs Act 1901 (Australian Act) to address concerns with criminal activity in the supply chain(the Organised Crime Act), the introduction of the Trusted Trader Programme (TTP) on 1 July 2015, the replacement of the Customs Regulations 1926 on 1 April 2015, lots of anti – dumping changes and, most significantly, the shift of Customs into the new Australian Border Force (ABF) on 1 July 2015 at which time Customs will disappear as a separate agency altogether. The last aspect is the subject of legislation recently introduced to Federal Parliament which has now been referred for review to the Senate Legal and Constitutional Affairs Committee. Customs has also issued a new "Plan for Integration" which is well worth a look.
The "disappearance" of Customs along with the Department of Immigration into the ABF is one of the most significant changes to policing of the border since Federation. To my mind, it warrants separate recognition within industry, potentially including some sort of Viking funeral with Customs paraphernalia being loaded onto a barge, set light and pushed out into Botany Bay as industry stands on the shore holding candles and consuming beverages. It's certainly a bit sad for me having grown up as a "Customs brat" as my Father worked there for 35 years including 3 years in the UK office so that his colleagues and their families became and remain part of my extended family.
At exactly the same time as there are these many significant changes to Customs and its legislation here, the daily Lloyds List DCN recently carried a story on the wholesale reform of New Zealand's Customs and Excise Act 1996 (NZ Act) with the intent to replace it with a new and modernised Act. The notion of wholesale replacement of old legislation is not alien to Australia – indeed the new package of Biosecurity Bills to replace the ageing Quarantine Act recently passed through the House of Representatives and is being reviewed by another Senate Committee with the intent that should it pass the Senate it would commence 12 months after receiving Royal Assent. However, for reasons which are not entirely clear, successive Federal Governments here have resisted the temptation to undertake a wholescale review and reform of the Australian Act.
So I thought it would be interesting to "compare and contrast" Australia and NZ in terms of reform of their prevailing Customs legislation, taking into account that good regulation presupposes that legislation and administration should be clear and that amendments to law and practice should ideally be the subject of comprehensive consultation before implementation.
- The Australian Act came into operation on 4 October 1901 as Act No 6 of the Commonwealth Parliament and was based on the 19th century UK legislation.
- The NZ Act (which is proposed to be replaced) came into force in 1996. It was based largely on a 1966 Act which, in turn was based on legislation from 1913.
- The Australian Act has been the subject of massive change over the years for a variety of legal, policy and political purposes. However those changes have been made by way of amendments to the Australian Act, which to my eye is literally bursting at the seams as the sections numbers becoming increasingly complex.
- There have been some proposals to replace the Australian Act altogether. For example, the (then) Law Reform Commission was requested in November 1987 to undertake a comprehensive review of the Australian Act. This resulted in Report No 60 (Customs and Excise) which included a proposed simplified Act. Clearly this was never acted upon.
- There have been a number of other proposed reforms to the Australian Act which have never been acted upon including recommendations from the Law Reform Commission in Report No 61 ("Administrative Penalties"), from the Australian Law Reform Commission in Report 95 ("Principled Regulation") in 2002 (where I was a member of the Advisory Committee) and from the House of Representatives Standing Committee on Legal and Constitutional Affairs Report on "Modern – day usage of averments in customs prosecutions" from May 2004. There have also been other recommendations arising from a number of Parliamentary Inquiries whether in relation to specific legislative amendments or into wider issues of policy.
- Engagement with industry and other affected parties on proposed changes to law and practice by Customs has been uneven, to say the least. While there have been regular meetings of the Industry Advisory Group for the TTP, meetings of the Customs and Border Protection National Consultative Committee and its subsidiary bodies became less regular over recent time and have effectively stopped. Hopefully they will be replaced. Similarly we look forward to follow up from the excellent Industry Forum conducted by Customs in 2014.
- In terms of specific legislative amendments, Customs issued a Practice Statement in 2012 setting out aspirations for consultation with industry on new legislation including provision of Exposure Drafts of the relevant Bills, seeking commentary from industry, providing prescribed times for comments and otherwise working towards introduction of the Bills. That Practice Statement was, itself, supposed to have been reviewed last year which does not appear to have happened. That Practice Statement did reflect that some Bills would not be subject to Exposure Drafts before introduction to Parliament in various circumstances such as in the case of the Organised Crime Act which, while understandable was frustrating given the significance of the amendments. That same Act proceeded without a Regulatory Impact Statement which has required a Post Implementation Review which is currently being undertaken where Customs sought commentary and has promised to provide an interim report and recommendations to the CEO in May 2015. In some cases the recommended times for review and comment have not been observed. In other cases, comments have been sought but no response provided before changes were made. For example, Customs sought comment on the new Guide and Regulation associated with the revised Infringement Notice Scheme in late 2013. Submissions were made by interested parties in November 2013 to which no responses were received and the Guide and Regulations were introduced into law in February 2014. We were then reduced to "working backwards" from the final versions to try and work out any changes which had been made but without the benefit of explanation from Customs. In other cases comments are made by way of submissions to Parliamentary Inquiries into proposed legislation and while final reports of those inquiries may address some of the comments, there is no response to the comments from Customs. Further the "International Trade Remedies Forum" established by law to allow consultation on dumping and subsidies matters is now to be formally disbanded by legislation after few meetings in favour of "other engagement". Unless properly handled, that other engagement could be seen as selective and not transparent. However there have been welcome recent signs of the intent to adopt more comprehensive and transparent engagement on reform proposals which I hope survives the transition to the ABF.
- The example of development of the proposed new NZ Act has provided an interesting counterpoint with which I have been involved through working with New Zealand's Customs Brokers and Freight Forwarders Association (CBAFF). I will be discussing the proposed new NZ Act at CBAFF's national conference in Wellington in May 2015. The process has been extensive and exhaustive. NZ Customs had established a group of the main industry parties likely to be affected by the changes and convened meetings seeking comments on some of the fundamental proposed changes with clear feedback and appreciation for comments. NZ Customs has now issued a detailed Discussion Paper including 118 questions seeking comments on various issues associated with the new NZ Act. Comments are due by May (providing a decent period for consideration and response) and for a new NZ Act to be drafted in the second half of 2015 with a Bill to be introduced in 2016. While appreciating that such timing may not always be available there are no doubt opportunities for more transparent and comprehensive engagement with those affected along these lines.
- Late in 2014, the Federal Government released its new "Regulatory Performance Framework" which prescribed best practices and KPIs for regulators such as Customs. I would suggest that Customs has some work ahead to comply with the Framework with its own plan due in July 2015.
From my perspective I believe it is in everyone's interest for reform in Australia to be more comprehensive, transparent and engaged. Where opportunities are afforded for engagement, those affected do often reply constructively but even then there is rarely further communication on what will ultimately be done. The increased use of Regulations which are less visible also creates concerns. This can create apprehension and frustration and an environment where those affected by regulation believe that there legitimate commercial and legal interests are being changed without the involvement to which they should be entitled.
I look forward to details of the proposed new engagement proposals and a harmonious and constructive relationship between Customs, the ABF and industry. Number 1 on my legislative "wish list" would be total reform of the Australian Act to a more contemporary and ordered form. On the assumption that may not be forthcoming (even though previously recommended) then my target would be reform of the term "owner" in the Australian Act. At the moment it means that pretty much anyone in the supply chain (including financiers) could be construed as the "owner" and be liable for customs duty along with other obligations under the Australian Act. While flexible and comforting for Customs and the ABF, the uncertainty for others in the supply chain can be crippling, especially when added to the new and extended penalty and compliance regimes.