House of Representatives

Second Reading Speech

Mr McCORMACK (Riverina Parliamentary Secretary to the Minister for Finance)

I move

That this bill be now read a second time.

The Customs Amendment (Australian Trusted Trader Programme) Bill 2015 establishes the Australian Trusted Trader Program, sets up the framework for the Australian Trusted Trader Program and enables trusted traders to benefit from streamlined customs procedures.

The Australian Trusted Trader Program which has been codesigned with industry stakeholders, partner agencies and international counterparts,is a trade facilitation initiative based on internationally recognised supply chain security and trade compliance principles which contribute to a holistic compliance framework.

The program provides an opportunity to reduce the regulation of our international traders and enhance supply chain security. Consistent with the World Customs Organization SAFE Framework of Standards to Secure and Facilitate Global Trade, the Australian Trusted Trader Program will introduce a differentiated trust based regulatory framework at the border for those entities that meet or exceed international supply chain security and trade compliance standards.

Entities meeting these standards will be assessed as low risk and benefit from reduced regulatory burden and streamlined customs procedures. This will alleviate a significant trade burden and enhance the competitiveness of Australian international businesses.

This approach, which is commonly known as the Authorized Economic Operator model, has been adopted by all of Australia's major trading partners over the last ten years. It is also consistent with the government's deregulation agenda and contributes to the Economic Action Strategy and is included in the Prime Minister's Industry Innovation and Competitiveness Agenda.

The approach is also a key component of the World Trade Organization's Agreement on Trade Facilitation and an integral part of the government's commitment to foster legitimate trade as outlined in the government's G20 Australia 2014 Comprehensive Growth Strategy.

The program will be an important element of a compliance continuum that will provide a better understanding of the entities moving goods across our borders. This strategy will work to 'shrink the haystack' by removing accredited entities from traditional transaction based border risk assessment. This reform is important for managing the increasing volume of trade growth and ensuring that resources can be diverted away from highly compliant traders to focus on risk and noncompliance.

The bill is intended to commence on 1 July 2015 for a period of 12 months, in line with the commencement of the pilot phase of the Australian Trusted Trader Program. The pilot phase will include a limited number of participants to test and refine processes and the design.

Firstly, the bill will amend the customs act to enable the Comptroller-General of Customs to establish the program in accordance with the framework set out in the bill. Participation in the program is voluntary and will allow entities such as importers, exporters, customs brokers, freight forwarders and transport companies to nominate themselves to participate in the program.

Secondly, the bill will amend the Customs Act to set up the framework for the program. There are three key powers under the framework:

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The first is the power of the Comptroller General of Customs to enter into a trusted trader agreement. Entering into a trusted trader agreement will confer an interim trusted trader status on the entity. An entity with interim trusted trader status may receive certain administrative benefits which will be prescribed in the rules. These kinds of benefits will provide a more streamlined experience to the trusted trader when interacting with the department.

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The second is the power of the Comptroller General of Customs to vary a trusted trader agreement following physical inspection and audit to confer an ongoing trusted trader status. An entity with an ongoing trusted trader status may receive additional benefits, including benefits that streamline procedures in relation to the reporting, movement and clearance of goods.

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The third power is the power of the Comptroller-General of Customs to vary, suspend or terminate a trusted trader agreement unilaterally if there are reasonable grounds to believe that the entity has not complied with, or is not complying with conditions prescribed by the rules or terms or conditions specified in the agreement. The first operational response to noncompliance with conditions prescribed by the rules or terms or conditions specified in the agreement will, in general, be engagement, education and training. This approach is consistent with the partnership ethos of the program. However, the nature of noncompliance may be such that it is necessary to vary, suspend or terminate a trusted trader agreement.

The bill amends the Customs Act to provide for the external merits review of decisions made by the Comptroller General of Customs in relation to these three powers. This will be in addition to an administrative internal review mechanism.

The bill will also amend the Customs Act to allow the Comptroller General of Customs to maintain a register, known as the Register of Trusted Trader Agreements. The register will demonstrate to the public that an entity has an agreement with the Comptroller General of Customs, and has demonstrated a satisfactory level of supply chain security and trade compliance standards in their international supply chain activities. This information may be necessary for other entities in the international supply chain to make an informed decision when they are choosing business partners and want to link with other trusted traders to ensure an end-to-end secure international supply chain.

Finally, the bill will amend the Customs Act to enable the Comptroller General of Customs, by legislative instrument, to make rules in relation to the operation of the program. Consistent with the codesign approach, consultation on the rules will be undertaken before the rules are made.

In summary, the reform delivered through this bill will support the government's priority of ensuring Australia's ongoing success as an open economy. This bill will enable the Australian Border Force and the Department of Immigration and Border Protection to create stronger borders and to manage the exponential growth in trade volume by diverting resources away from highly compliant traders to focus on risk and on compliance.

I commend the bill to the House.

Debate adjourned.