Customs Legislation Amendment (Controlled Trials and Other Measures) Bill 2022 - Commentary on Ministerial Responses [2023] AUSStaCSBSD 83 (10 May 2023)

2.1 This chapter considers the responses of ministers to matters previously raised by the committee.

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Customs Legislation Amendment (Controlled Trials and Other Measures) Bill 2022^[1]

Purpose	This bill seeks to amend the Customs Act 1901 to facilitate time-limited trials with approved entities in a controlled regulatory environment.
Portfolio	Home Affairs
Introduced	House of Representatives on 30 November 2022
Bill status	Before the Senate

Significant matters in delegated legislation^[2]

2.2 The bill seeks to amend the Customs Act 1901 (the Act) to insert proposed Part XB. Part XB is intended to set up a framework to facilitate trials of new technology, business models and approaches in relation to Australian trade and customs practices, with a view to inform the policy development and evidence base for future regulatory reform.

2.3 The committee noted that proposed Part XB is characterised by the inclusion of 'framework provisions' which contain only the broad principles of a legislative scheme and rely heavily on delegated legislation to determine the scheme's scope and operation. The committee has longstanding concerns with framework provisions because they considerably limit the ability of Parliament to have appropriate oversight over new legislative schemes.

2.4 Many significant elements of the scope and operation of the approach that will be taken under the new time-limited trial scheme are left to delegated legislation.

2.5 In Scrutiny Digest 1 of 2023 the committee requested the minister's advice regarding:

2.6 The Minister for Home Affairs (the minister) advised that the use of delegated legislation within the bill is intended to ensure that the scheme is flexible enough to respond to rapid developments in international trade. The minister noted that this is necessary to support continued efforts under the Simplified Trade System agenda. The minister also advised that placing the framework for the establishment of trials in delegated legislation ensures that potential applicants are not accidentally or unreasonably excluded.

2.7 The minister considered that the framework provisions set out in Part XB of the bill provide necessary limits on the scope of how sandboxes are established and monitored and advised that it would not be reasonably possible nor practical to anticipate every possible future sandbox in primary legislation. The minister listed a number of these safeguards, including that the scope of the bill is intentionally contained to those areas in which Controlled Trials are considered appropriate. In particular, provisions that relate to prohibited imports and exports or international obligations have been specifically excluded, as any flexibility in the operation of these provisions may create unacceptable risk to the Australian community. The minister also noted that the Comptroller-General of Customs will approve the making of trial rules and that this power cannot be delegated.

2.8 The minister also noted that participation within the trial will take place on a voluntary basis.

2.10 The committee requests that an addendum to the explanatory memorandum containing the key information provided by the minister be tabled in the Parliament as soon as practicable, noting the importance of these explanatory materials as a point of access to understanding the law and, if needed, as extrinsic material to assist with interpretation (see section 15AB of the Acts Interpretation Act 1901).

2.11 In light of the information provided by the minister the committee makes no further comment on this issue.

Exemption from disallowance^[5]

2.12 Schedule 2 to the bill seeks to amend existing customs legislation to make a number of technical amendments, intended to align the Act with current legislative practice. Currently, subsection 273EA(1) of the Act allows the Minister to, by notice in the Gazette, announce an intention to propose in the Parliament a Customs Tariff or Customs Tariff alteration at any time when the Parliament is prorogued or the House of Representatives has expired by effluxion of time, has been dissolved or is adjourned otherwise than for a period not exceeding 7 days. Schedule 2 would amend section 273EA to clarify that notices of intention are legislative instruments.

2.13 Proposed subsection 273EA(3) to the bill seeks to amend the Act to provide that a legislative instrument made under subsection 273EA(1) is not subject to disallowance.

2.14 In Scrutiny Digest 1 of 2023 the committee requested the minister's detailed advice as to whether the bill could be amended to provide that legislative instruments made under subsection 273EA(1) of the Customs Act 1901 are subject to disallowance to ensure that they are subject to appropriate parliamentary oversight.^[6]

2.15 The Minister for Home Affairs (the minister) advised that Notices of Intention to Propose a Customs Tariff Alterations (a Notice) have not previously been subject to disallowance and are the first step in a process that is already subject to Parliamentary scrutiny. To this end, the minister advised that a Notice ceases unless the related Customs Tariff Proposal is tabled within seven sitting days of Parliament and, to be made permanent, Parliament must pass a bill within twelve months past the tabling of the related Customs Tariff Proposal.

2.16 The minister advised that disallowance would not necessarily add an extra level of scrutiny as the House of Representatives can already consider and debate the related Customs Tariff Proposal, the timing of which would overlap with disallowance timeframes. The minister also noted that it would be open to the Scrutiny of Delegated Legislation Committee to ask questions about a Notice.

2.17 The minister advised that if a Notice is disallowed before the equivalent Customs Tariff Proposal could be moved in Parliament, the legislative intention of the process would be undermined. The minister further advised that because, in certain cases, these legislative instruments can enable measures to commence retrospectively by up to six months, disallowance may have a substantial impact on businesses and on the government's revenue collection processes. For instance, the minister considered that importers would be required to change their processes with little forewarning, as there would be little capacity to provide greater certainty through communication or to mitigate the impact on businesses.

2.18 Finally, the minister advised that the Notices are often used where the timing and requirements of drafting legislation and Parliamentary debate make the passage of legislation impractical, and therefore that disallowance could impose barriers in situations of emergency, for example in response to a global pandemic or an international conflict.

2.20 The committee welcomes the minister's additional information regarding the Customs Tariff Scheme. The committee also notes that Notices of Intention were previously not legislative instruments and that the effect of this bill therefore improves scrutiny over the instruments in some respects. However, the committee also notes its longstanding position that legislative instruments should be subject to disallowance unless exceptional circumstances are demonstrated. Given that the bill signals the government's intention that a Notice is considered to be of a legislative nature, it would therefore be appropriate to subject the Notice to disallowance unless there are exceptional circumstances.

2.21 The minister has advised that the legislative process underpinning a Notice provides some level of scrutiny, even without subjecting the Notice to disallowance. The minister has also noted the considerable regulatory impact that may occur should an instrument be disallowed. In this context, the committee reiterates its view that while the possibility of disallowance presents some degree of uncertainty, this level of uncertainty is in many ways inherent to lawmaking within Australia's system of representative government and applies equally to primary legislation which is subject at any time to amendment or repeal by the Parliament.

2.22 The minister's concerns in relation to uncertainty would seemingly also apply to the subsequent bill which the Customs Tariff Scheme mandates should be introduced within 12 months, should it be proposed that the Tariff proposal be made permanent. Although the minister has indicated that amendments to primary legislation occur with a greater degree of forewarning than would occur under the disallowance process, it is not clear to the committee why this would be the case.

2.23 In relation to the minister's advice regarding the level of scrutiny which already applies to Tariff Proposals, the committee welcomes this scrutiny. However, the committee notes that allowing review by the Senate, by subjecting the instruments to disallowance, would provide a greater degree of scrutiny than is currently the case.

2.24 The committee otherwise draws its scrutiny concerns to the attention of senators and leaves to the Senate as a whole the appropriateness of exempting legislative instruments made under proposed subsection 273EA(3) from disallowance.

[2] Schedule 1, proposed Part XB. The committee draws senators’ attention to these provisions pursuant to Senate standing order 24(1)(a)(iv).

[4] The minister responded to the committee's comments in a letter dated 30 March 2023. A copy of the letter is available on the committee's website: see correspondence relating to Scrutiny Digest 5 of 2023 available at: www.aph.gov.au/senate_scrutiny_digest .

[5] Schedule 2, item 10, proposed subsection 273EA(3). The committee draws senators’ attention to this provision pursuant to Senate standing order 24(1)(a)(v).

[7] The minister responded to the committee's comments in a letter dated 30 March 2023. A copy of the letter is available on the committee's website: see correspondence relating to Scrutiny Digest 5 of 2023 available at: www.aph.gov.au/senate_scrutiny_digest .

Australian Senate Standing Committee for the Scrutiny of Bills - Scrutiny Digests