Federal Budget 2022/23 : Implications to International Trade and Logistics

Trade and Logistics Issues

The Federal Budget sets out taxation aimed to provide relief to small businesses by providing a $120 tax deduction for every $100 they spent to train and upskill their employees. This deduction is also applicable if small business opt to investments in cloud computing, eInvoicing, cybersecurity and web design – up to a maximum of $100,000 per year.

Implications to International Trade and Logistics

Budget 2022/23 - Trade and logistics issues

"The 2022-23 budget had a huge customs headline, but not one that will impact many customs brokers. The temporary reductions in the excise equivalent customs duty on petrol is a very significant reduction in customs duty and is headline grabbing. Logistics professionals had to dig deeper in the budget to find other relevant announcements.

Excise system – The deregulation agenda is continuing in this budget with the focus being on fuel and alcohol producers, importers, and distributors through streamlining the excise system. The changes will begin in July 2023 and include quarterly reporting for smaller importers/producers and enable fuel and alcohol imported for further manufacture or distribution to have deferred payment of duty and the transfer the goods directly to an ATO warehouse. In respect of fuels there will be increased access to refunds and the removal of the requirement to pay and then claim fuel tax credits in respect of bunker fuels.

Road to rail - From a transport perspective the Government continues its push from road to rail. $3.1 billion has been set aside for the Melbourne Intermodal Terminal Package, including the delivery of the Beverage and Western Interstate Freight Terminals, and the Outer Metropolitan Ring Rail South in Victoria.

IFAM - Exporters may face higher export costs with the International Freight Assistance Mechanism (IFAM) program to be finalised in July 2022. With international travel still at much lower levels, global air freight markets remain very tight. The loss of IFAM will put pressure on already high international transport costs.

EU FTA - The Government is optimistic about the conclusion of the Australia – EU free trade agreement. While a date for finalisation of the trade agreement is not set, customs duty on passenger motor vehicles is expected to fall from $310 million in 22/23 to $90 million in 23/24. This suggests an expectation that the EU FTA will commence sometime in 2023.

India FTA - The other free trade agreement to receive a lot of budget attention is being negotiated with India. related to the potential trade agreement, the Government will invest $245 million over 5 years on initiatives to support the Comprehensive Strategic Partnership with India.

Customs Revenue - More generally general customs revenue (no excise equivalent) is expected to fall from $1.8 billion in 21/22 to $1.2 billion on 25/26. This fall is more significant when you consider the value of imports will rise over this period. This predicted reduction in duty likely reflects the increased use of free trade agreements. It is expected that as more trade is covered by free trade agreements, the ABF focus on free trade agreement compliance will increase.

Covid 19 Tariff Concession - The Government has announced that it will make permanent the temporary tariff concession that is in place of certain medical and hygiene products to treat, diagnose or prevent the spread of covid-19. The range of products to which the concession applies will be expanded. Further, the end-use restriction will also be removed. Presumably, this is a reference to the goods having to be used to treat covid-19. This change will apply from 1 July 2022.

DAWE - The Department of Agriculture, Water and the Environment is investing about $250 million to modernise Australia’s trade system with the goal of supporting exporters. About $50 million of this funding is to reduce the regulatory burden on exporters and identify opportunities for further reform. Much of this funding ties in with last year’s simplified trade systems funding, More information on this reform can be found here.

Anti-Dumping - Sometimes what is not said in a budget is as relevant as what is said. Last year’s budget contained a number of reforms to the anti-dumping system. Most of these proposed reforms are yet to progress. This year’s budget is very quiet on any additional funding for the anti-dumping system. Rather than boost protection via dumping duties, the focus seems to have shifted to improving the manufacturing capacity of the Australian industry. The budget includes various funding initiatives tied to the modern manufacturing strategy. Hopefully, these initiatives are not seen as subsidies by Australia’s trading partners." - Legal Counsel, Russell Wiese at CGT Law

Please contact Russ direct at rwiese@cgtlaw.com.au or on 03 9844 4328 if you wish to discuss these developments or other international trade issues. You may also reach an Image International Freight representative on, sales@imageinternational.com.au.