Budget ignores international trade: Hudson

The Federal Government’s budget focus on infrastructure has come at the expense of international trading agencies according to a Melbourne lawyer

Budget ignores international trade: Hudson
Budget ignores international trade: Hudson

By Anna Game-Lopata | May 13, 2011

Hunt and Hunt Transport lawyer Andrew Hudson says as far as the international supply chain goes there’s not a great deal in the budget to get excited about.

Notably, funding for Austrade, an agency which supports Australian exporters, has been cut and its focus restructured towards "growth and emerging markets that offer commercial potential and established markets such as the US and Northern Europe".

"The intention here is to attract inbound investment and to support the development of the education services industry," Hudson says.

"Presumably it will also include the government’s new engagement with Africa.

"The budget statement includes a reference to enhanced trade and investment representation in Mongolia, which I assume refers to major resource companies," he says.

"The whole approach begs the question of why such companies or indeed exporters to mature markets would need our government’s support."

Hudson points out that many pertinent international supply chain issues for traders still have no clarity in relation to government funding.

"For example, the budget made no reference to the Productivity Commission’s Anti-dumping and Countervailing Review, an issue which has the potential to significantly impact Australian industry.

"It affects the way the Customs duty system applies to ‘unreasonably’ low value goods imported or ‘dumped’ in Australia."

"Industry has been pushing for changes to be made to the ‘low value’ threshold for imports below which GST and customs duty is not payable."

Hudson says the government now says its response must await the outcome of the current Senate Inquiry into the two bills seeking to amend the legislation.

"I appeared before that Inquiry last week and it seems clear that the interests of its members and the ALP caucus are leaning towards a broader reform of the current system to better assist the Australian manufacturing industry," he says.

"So it’s an issue that will require a decision about the level of resources allocated by government."

In addition, Hudson says the budget lacks any substantive new initiatives to facilitate trade such as a ‘Trusted Trader’ or similar Authorised Economic Operator programs which would prioritise relationships with entities that have been certified according to a range of criteria.

"There continues to be engagement between Customs, AQIS and industry on the topic, although any change may need to await the next budget cycle especially if any new initiatives support the introduction of the deferral of customs duty payments," Hudson says.

As may be expected, the majority of new funding allocated for border authorities is given over to security issues such as measures against people smuggling and to provide the vessels used by the border protection agencies.

"In terms of expenses and revenue, there’s a slight reduction in funding for ‘trade facilitation’ activities at the same time as an expectation of a significant increase in revenues to be collected by Customs," Hudson says.

"Customs compliance teams have actually reduced in number and its systems have changed so there are fewer people on the ground."

Despite this, Customs’ budget statement includes increases in the reporting of import declarations, export declarations, air cargo consignments and sea cargo manifest lines for 2011-2012.

"Levels of inspection, examination and audit remain consistent to those set in the 2010-2011 budget except for a 50 percent reduction in the examination of mail items," Hudson says.

"The statement says the revision to mail inspection more accurately reflects the level of mail being utilised and the risks associated with it."

The good news is the budget includes a trade negotiating agenda for Australia which attempts to exploit current Free Trade Agreement opportunities set out in the Trade Policy Statement released in April, though Hudson says this is clearly still some time off.

"The establishment of a program to assist manufacturers to employ Australian suppliers, especially in the booming resources industry both here and overseas is another welcome addition," Hudson says.

"The concern is that some Australian suppliers are missing out on providing goods and services to major resource projects due to established global vendor lists and the trend towards pre-assembled modules."

However overall , Hudson says the approach to expediting trade is lacking in the budget.

"The reality is the border agencies facilitating the international supply chain could do with some more money and the Budget hasn’t addressed this."

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