Lack of consultation and even more costs on freight supply chain critiqued
Biosecurity demands will grow with increasing trade
Manifest failures in policy and approach by federal and start governments have been put into sharp relief with the imposition of increased biosecurity charges for sea and air freight from January.
Both the Victorian Transport Association (VTA) and the Australian Logistics Council (ALC) slam the federal Department of Agriculture’s expansion of “cost-recovered import measures” that affects sea and air freight.
The VTA says the hike, aiming to support Australia’s biosecurity system, is “just the latest in a litany of fee increases the transport industry faces, which will inevitably lead to higher consumer”.
It notes the expansion amounts to an effective 15 per cent rise in biosecurity charges that sea and air freight operators will pay, “which, like most fees and charges, will inevitably be passed on through the supply chain to road and rail freight forwarders, and eventually consumers”.
Revised cost recovery fees and charges:
- Full Import Declaration charge for air from $33 to $38
- Full Import Declaration charge for sea from $42 to $49.
- Vessels greater than or equal to 25 metres – arrival charge from $920 to $1,054
- Vessels less than 25 metres – arrival charge from $100 to $120.
VTA CEO Peter Anderson says the higher fees, coming hot on the heels of an increase to infrastructure surcharges announced last week at Melbourne’s Webb Dock, is further evidence of the transport industry being beset by price hikes.
“It seems like rarely a week passes when statutory charges, fees and other costs transport operators have to pay aren’t increased, and typically exponentially higher than CPI,” Anderson argues.
“We’ve seen stevedore infrastructure surcharges increase at the Port of Melbourne by over 4,000 per cent and this latest increase in biosecurity charges will inevitably flow through the supply chain to road and rail freight forwarders, who we urge to pass it on to their customers, and eventually consumers.
“As we’ve long argued, transport operators cannot absorb higher supply chain costs because doing so makes it difficult to manage cash flow and stymies investment in people and equipment. “Ultimately, costs will be passed on and consumers will pay more at the till if increases in fees and charges continue to be the new norm.”
The department insists the hikes are also designed to address rising costs and an expected doubling of cargo volumes by 2030.
“The Department of Agriculture is working closely with industry to ensure the transition to the new charges is clearly understood and effectively implemented.
“Industry will be further consulted as part of a comprehensive review of biosecurity cost recovery arrangements to be undertaken in 2020, expanding on previous consultations.
“The government will also work with industry from early 2020 on the design of an alternative levy that will help ensure the system can be sustainably funded for the future.”
But this cut no ice with the ALC, which sees the confirmation representing “another failure by the Department of Agriculture to consult with industry before announcing cost imposts”.
“Earlier this year, the Department of Agriculture went to considerable lengths to review its flawed original proposal for a Biosecurity Imports Levy. One of the key findings from that review was that its consultation process with industry was poor,” ALC CEO Kirk Coningham says.
“So it is baffling to see that less than two weeks prior to Christmas, that same Department drops an announcement that biosecurity charges on air and sea cargo will increase by around 15 per cent from 1 January 2020, with no consultation or forewarning to industry.
“This is not the type of Christmas surprise any business wants or needs.
“As ALC and others have consistently noted, anything that increases the cost of freight movement ultimately increases the prices paid by Australian businesses and consumers for their goods.”
“ALC accepts that Australia’s biosecurity arrangements are vital to protecting producers and consumers, and we accept they must be placed on a financially sustainable footing.”
“However, any increases must be well-planned and discussed with industry well in advance of commencement – not simply dropped with no warning less than a month before their planned commencement date.”
“We note that today’s announcement includes a commitment to ‘work with industry from early 2020 on the design of an alternative levy that will help ensure the system can be sustainably funded for the future’.
“ALC sincerely hopes this commitment will actually be adhered to, and industry does not face another scenario whereby decisions are taken behind closed doors and imposed on industry with no warning.”
Anderson was also critical of the limited consultation by the Department with industry leading up to the announcement.
“It is disappointing that industry has been given only two weeks’ notice of these increases, and during the busiest time of the year for freight operators leading up to Christmas, severely limiting their ability to discuss the inevitable impacts higher prices will mean for their customers,” he says.
The department says the changes follow consideration of the report of the Biosecurity Imports Levy Industry Steering Committee.
“The committee supported increasing the breadth of activities the department can cost recover through fees and charges.
“This will help to ensure fairer and more sustainable funding into the future.
“The new cost-recovery activities will more accurately reflect the cost of import activities that underpin international trade, revising current tax-payer-funded arrangements.
“Cost-recovered activities will be expanded to include risk mitigation, analysis and biosecurity assurance activities.”
The department’s updated Biosecurity Cost Recovery Implementation Statement can be found here.