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Output 4 - Administration of Customs duty and indirect taxes, other border-related revenue collections, and import/export statistics

Cargo Management Reengineering

Trade modernisation legislation

The trade modernisation legislation, which supports the policy and technical initiatives for Cargo Management Reengineering (CMR), comprises three Acts:

• Customs Legislation Amendment and Repeal (International Trade Modernisation) Act 2001
• Import Processing Charges Act 2001
• Customs Depot Licensing Charges Amendment Act 2001.

In July 2004, a report on the implementation of the trade modernisation legislation was submitted to the Senate Legal and Constitutional Legislation Committee.

Import Processing Charges

Import processing charges have been updated to reflect the introduction of the imports component of the CMR project. The revised cost recovery regime is designed to provide greater transparency and certainty of costs. The charges have been restructured to recognise the cost differences between each mode of importation and will also incorporate the processing costs of low value goods not requiring an entry. 

The amendments are contained in the Import Processing Charges Amendment Act 2005 and the Customs Legislation Amendment (Import Processing Charges) Act 2005.

Accredited Client Program

Customs undertook further consultationwith industry on the proposed Accredited Client Program.

In May 2005, the Government announced that the Accredited Client Program would commence during 2005–06. This program is open to highly compliant companies andwill allow them to report their imports and exports monthly rather than reporting each and every consignment. 

The program provides a number of benefits to participating companies in return for a demonstrated commitment to achieve high levels of compliance with Customs requirements.

Benefits include:

• monthly declaration reporting arrangements
• improved supply chain security
• reduced levels of Customs intervention
• eligibility for account-based processes (as opposed to traditional transaction-based processes)
• improvements in Customs risk assessment analysis because of more timely and higher-quality information.

The Accredited Client Program will allow participating companies to make a mid-month payment of duty based on an estimate of imports, with a reconciliation payment in the middle of the following month.

The program will be rolled out in the first half of 2006, but some system changes may be required after CMR is more established.

Cargo Management Reengineering – Integrated Cargo System (ICS)

The CMR project team has achieved major milestones this year. The project involves the development of an ICS, combining into one coherent and technologically modern system, the numerous cargo systems that have been developed over the past 30 years.

The introduction of ICS will enhance controls over imports (as it has for exports) in many areas including:

• mandatory electronic vessel/aircraft/cargo reporting within prescribed timeframes
• in transit reporting
• a new requirement for declaration oflow-value imports to Customs.

These changes also support the Government’s enhanced security measures for import and export cargo.

The new system will increase the ability of Customs to assess the risks of individual cargo consignments, to quickly deliver low risk consignments, and to identify and examine suspect cargo. 

Extensive consultation with industry and with Customs staff for the ICS system included a comprehensive communications campaign. Practical information was provided on key aspects of CMR, such as the ICS test plans, dates for different phases of the ICS, information on software requirements and available training. Information products such as frequently asked questions, fact sheets, websites, reference manuals and quick reference guides were developed.

An important aspect of the successful collaboration with industry has been a program of regular meetings with stakeholders that helped to gauge industry reaction to the ICS and to resolve issues. Key forums include the Software Developers Forum with industry and their systems developers, and the Minister for Justice and Customs Round Table meetings with industry representatives and senior Customs staff.

The CMR project represents one of Australia’s largest public sector e-business projects. This means that Customs is at the forefront of the design, development and implementation of a system of this magnitude. Consequently, achieving operational capability in this fast changing environment has been complex, time-consuming and difficult. This translates into additional costs and timescale for the project.

By June 2005, Customs had spent close to $190m on the development and implementation of the CMR project.

ICS Exports release

The highlight in 2004–05 was the implementation of the CMR exports component. The exports component was initially made available on 1 August 2004 for entry of client information and then on 22 September for export messages relating to cargo being exported after 2am (AEST) on 6 October. The Customs Connect Facility as the secure gateway for electronically interacting with Customs applications was implemented at the same time.

Consultation included:

• around 12 months of industry test availability to test the integration of the software components required for the cargo supply chain
• information support products including fact sheets, reference guides, booklets, websites, CDROMs, information sessions and internet updates
• facilitation of business readiness simulations.

Over three million transactions were processed through the ICS exports system in the nine months to 30 June 2005.

Figure 31 shows that e-business (EDI) is the most used method of transacting business with Customs for organisations with a need to process large volumes of transactions. However, the online facility, Customs Interactive, is consistently used for servicing lower volume users over the Internet.

Figure 31: Number of successful EDI and Customs Interactive export transactions processed (1 October 2004 to 30 June 2005)

Figure 32 shows that the largest proportion of export transactions successfully submitted are Export Declarations at 43.9 per cent, and CTO (Cargo Terminal Operator—air, or Container Terminal Operator—sea) Receival Notices at 40.8 per cent.

Figure 32: Export transactions successfully processed by type (1 October 2004 to 30 June 2005)

ICS Imports release

Development of the imports component of the CMR application suite was completed in the latter part of 2004. Functionality was made available to industry and software developers from 1 November 2004. This enabled the testing of both Customs and industry systems and business processes. Customs worked closely with the industry software developers and major stakeholders in the import chain including importers, cargo carriers, depots, Customs brokers and freight forwarders.

Since the commencement of industry testing, activity has gradually increased. The consultative and support processes adopted for the release of the exports system and the lessons learned were useful to this phase. Additional information sessions were held and products were produced, incident resolution processes were implemented and regular consultative forums were held with key stakeholders.

Fine tuning of the software and upgradingthe information technology hardware to support the transaction loads for imports continued throughout the year. This resulted in significant performance improvements that will accommodate the anticipated message volume and import activity. Further system tuning and hardware upgrades will be undertaken in early 2005–06.

Building on the success of the collaborative exports business simulations, the imports business readiness simulation program commenced in June 2005. This program assists software developers and industry to interact with each other and Customs. It simulates the workings of the software, business processes for cargo movement, and compliance with the provisions of the trade modernisation legislation. The simulations focus on interfaces and functions that involve:

• reporting of cargo by industry
• clearance by Customs of cargo inwards and outwards
• revenue collection
• quarantine and community protection.

Customs is using this method of business simulation to train its own staff to use the system.

By the end of June, the testing had provided software developers with sufficient confidence to proceed to the next stage of implementation.

The program will continue up to the cutover date with more complex simulations for sea and air business scenarios.

Customs made significant progress on solutions to the incidents found during software testing and simulations. This assists industry to participate in the business readiness simulations.

Customs adopted a strategy to better manage the priority of incidents in conjunction with industry and government agency stakeholders. The priority reflected the importance for the business readiness simulation program, the first production transactions near to the cutover date and incidents not required until after the cutover date.

As with exports, there are key stakeholders ranging from other government agencies to individual members of the exports and imports communities. Having laid the foundations, Customs is building on the relationships with these agencies and their contribution to the exports system for the development and implementation of the imports system.

The system provides a more integrated approach to managing the risks for both Customs and the Australian Quarantine and Inspection Service (AQIS). The system allows early determination of high-risk cargo requiring further inspection and speedy movement of low risk cargo. The system will be integrated with AQIS entry management systems which have been upgraded or developed in line with ICS functions

Many other government agencies also provide information for the system. The Department of Industry, Tourism and Resources provides tariff concession information. Information about exports, imports and revenue collection is provided to other government agencies such as the Australian Bureau of Statistics and the Australian Taxation Office.

The challenge for 2005–06 will be the successful deployment of the ICS imports cargo system in late 2005 and bedding in of related business processes.

 

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