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THE FUTURE IS DIGITAL Damage, Delays & Storms in Brisbane Melbourne Price Gouging Regime

Plus The IMO Candidacy


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December Edition

Welcome Message Welcome to the December Newsletter for the clients and friends of SCI Australia. This newsletter is designed to be an informative source about the company and the general industry and includes news, forthcoming events and the lighter side of the people who work for SCI. We hope that you find this newsletter beneficial and the information provided of great value and interest. We appreciate your suggestions and input for future issues.


Contents / Welcome


Eliminating De Minimis for GST on Imports


Expanded Rail Service to Help Earthquake Stricken Island


Rail’s Role in the Economy Set to Spark Debate in Adelaide


Damage Delays and Storms in Brisbane


Melbourne Regime To Prevent Price Gouging


Earthquake Blocks Cargo Movements at Lyttelton / Safer Heavy Vehicles To Boost Movements


The Future Is Digital


Australia Introduces IMO Candidacy



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Eliminating De Minimis for GST on Imports (Part 1)

Many readers would be aware that Australia has operated a "de minimis" threshold to liability for customs duty and GST so that consignments with a customs value below $1,000 were free from GST and customs duty and were also subject to a more limited reporting regime, often by way of "Self – Assessed Clearance Declaration" or, as it is more widely known a “SAC". This practice was consistent to international conventions that such "low value" transactions should not be subject to unnecessary intervention or cost, especially when so many of the transactions were undertaken by individual consumers. This practice was reflected in many FTAs were transactions below a prescribed "de minimis level" did not require the use of a certificate of origin or other declaration even where preferential rates under the FTA were being claimed. In Australia, the original "de minimis" level was consignments with a customs value below $250 which was subsequently increased to $1,000. Pressure to change our de minimis level However, for a number of years, concerns had been raised on this practice •    Australian retailers had complained that overseas vendors of goods enjoyed an unreasonable advantage over local businesses in that they did not pay for premises or staff here, did not pay associated business costs and were able to sell goods to Australian customers without GST on imports for consignments under $1,000 while Australian retailers were liable for all of those costs and were obliged to recover and remit GST on all sales. •    At the same time that Australian retailers were expressing their concerns on the disadvantage to their businesses, others were becoming concerned that the combination of the increase in purchases below the "de minimis" threshold and the ability for them to be conducted through e – commerce with more limited viability in Australia was a significant risk to the integrity of the GST system. •    The Australian Border Force (ABF) and other border agencies were concerned on "abuses" of the regime including deliberate under – declaring of the value of goods so that they came under the threshold – or their use for goods which should be accompanied by permits. As the quantum of goods purchased overseas through e-commerce platforms increased, the concerns of those affected increased as did the pressure to charge GST on all imports.  Even so, there were still a number of objections raised to the proposed removal of the threshold.  These objections included suggestions that the real harm to Australian retailers was due to reasons other than the $1,000 threshold, that the change would be inconsistent to overseas practice (which is raising not eliminating such de minimis thresholds) and that the cost to implement, administer and recover the GST on low value transactions would far exceed the revenue recovered or other benefits from removing the threshold.  Certainly a number of reports confirmed that the costs far exceeded benefits. The previous response to the increased pressure to remove the threshold from Government was that while the issue was under review on a regular basis there would be no movement until the overall cost and damage of the threshold exceeded the costs of removing the threshold. Government move on the change The pressure on Government and the perceived damage from the retention of the threshold at $1,000 must have reached critical mass in the run – up to the last Federal Budget delivered in May 2016.  As reported in my update at that time, the government announced its intention to amend the GST law so that the GST is payable on certain supplies of low value goods that are purchased by consumers and brought into Australia.  However the announced reforms went beyond that simple proposition and we have been awaiting details on what was being proposed and how it would be effected. First sight of the details of the change That detail was finally delivered on 4 November 2016 when the Treasury released exposure draft legislation (the Exposure Draft Bill) and associated explanatory material that would amend the GST law to give effect to the Budget decision to apply GST to low value goods imported by consumers.  According to paragraph 1.1 of the Exposure Draft Explanatory Materials  "The amendments make supplies of goods valued at $1,000 or less at the time of sale connected with Australia (known as the Indirect Tax Zone or ITZ) if the goods that are supplied are brought to the ITZ with the assistance of the supplier.  This ensures that such supplies are subject to GST, consistent with equivalent supplies made within Australia”.

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Eliminating De Minimis for GST on Imports (Part 2)

This will mean that from 1 July 2017, the law will require overseas vendors, electronic distribution platforms and goods forwarders to account for GST on sales of low value goods to consumers in Australia if they have GST turnover of $75,000 or more. According to paragraph 1.16 of the Explanatory Materials 1.16    The reforms: •    make supplies of goods valued at $1,000 or less at the time of supply connected with the ITZ if the goods are, broadly, purchased by consumers and are brought to the ITZ with the assistance of the supplier; •    treat the operators of electronic distribution platforms as the suppliers of low value goods if the goods are purchased by consumers and brought to the ITZ through the platform; •    allow non-resident suppliers of low value goods that become connected with the ITZ because of these amendments to elect to be limited registration entities; and •    prevent double taxation by making importations of goods non-taxable importations if the supply of the goods is a taxable supply as a result of these amendments. Some preliminary observations So, there is now some detail on how the change is to be effected and without diminishing the need for full review of the changes and their consequences, the following preliminary observations can be made •    Treasury should be commended for the release of the Exposure Draft Bill and Explanatory Materials together with some preliminary Q & A together with the ability to make submissions (by 2 December). This can be contrasted to approaches to regulation adopted by other agencies when the first view of the regulation is often after the Bills have entered Parliament. •    It would be interesting to see the modelling on costs compared to benefits relating to the changes.  Previously it was estimated that the financial costs alone would far exceed financial receipts in implementing the changes – let alone the additional administrative costs. •    The change will put Australia at odds with many major trading partners who are looking to increase their "de minimis" levels as opposed to reducing or eliminating them.  It would also appear to be a move that is inconsistent to the push towards opening trade and trade facilitation. •    It may upset some of our counterparties to our FTAs who could see this as a regressive step and one inconsistent to the "no new import duties and taxes" themes behind our FTAs •    At the moment, many of our FTAs allow for imports at less than $1,000 to claim preferential treatment without CoOs or DoOs on the basis that no tax or duty was payable – will this now change that GST is payable on these transactions? •    It will significantly increase compliance and regulatory costs for those operating "electronic distribution platforms" who bring the goods to Australia through the platform as they will be required to charge and remit the GST on the transaction and register in our GST system •    It will also significantly increase compliance and regulatory changes for the express carriers bringing goods to Australia and for the reporting of the goods – they won't be able to nominate the Australian purchaser as the importer (presumably) and will need to secure authorities from the overseas suppliers themselves (presumably) to do the reporting and will probably need to complete forms different to SACs? •    It will place a premium on being the first to incorporate the necessary changes into their supply chains from ordering through transport to satisfaction of an order and then reporting the transaction and remitting the correct amounts of GST.  Of course all of these changes will attract the prospect of penalties for failure to comply – deliberately or inadvertently. •    I would also think that various advisers may be coming up with new models to try and minimise or eliminate the impact of the changes! Submissions and further developments There will no doubt need to be additional materials released to address the practical aspects of the changes. No doubt there will also be changes to the exposure draft material

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Expanded Rail Service to Help Earthquake Stricken Island PORTS of Auckland and KiwiRail are teaming up to provide a daily rail link between the Auckland seaport and inland ports at Wiri, South Auckland and Longburn, Manawatu (near Palmerston North). This initiative is to increase freight capacity between Auckland and the lower North Island and help importers and exporters who are affected by the closure of Wellington’s CentrePort after Monday’s 7.8 magnitude earthquake. Ports of Auckland has the capacity to accommodate additional container volume, and two inland hubs are well-positioned to facilitate cargo distribution to the lower North island. Ports of Auckland chief executive Tony Gibson said: “We are pleased to be able to put on this service to fill the gap created as a result of the recent Kaikoura earthquake, and we will keep it running until CentrePort is able to get back on their feet.” In the meantime, CentrePort is still picking up the pieces after the earthquake. Some services are operating at the port, but infrastructure assessments are ongoing. In a sign that the port is returning to normal, a cruise ship is scheduled to call on Monday. CentrePort chief executive Derek Nind said the cruise berth was declared fit for operation. We’re looking forward to welcoming passengers and crew of the 219metre long Pacific Aria to our Harbourside Capital,” he said. “Cruise ships make a significant contribution to the regional economy, making the visit particularly welcome at this time.” Source: Lloyds List

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Rail’s Role in the Economy Set to Spark Debate in Adelaide

ALMOST 1000 rail professionals from 25 nations will converge on Adelaide on Tuesday and Wednesday to debate ‘rail’s role in moving the economy forward’ at AusRAIL, the largest rail conference and exhibition in the southern hemisphere. Australasian Railway Association (ARA) CEO Danny Broad said the conference would provide a broad, relevant variety of topics. “On Tuesday, Marion Terrill, transport program director of the Grattan Institute will discuss how we can priorities investment to meet the growth of our cities,” he said. “As a historically male-dominated industry, a Women in Rail panel session on Wednesday will discuss what the industry should be doing to improve the gender balance and be a workplace of choice for all genders.” The two-day event includes 75 local and overseas speakers who will cover a range of topics, from the Woolworths experience using rail freight to Hong Kong’s use of value capture to fund its metro. Sessions will also provide more technical advice and learnings on improving level crossing safety. Mr Broad said he was pleased the ARA was able to host such an allencompassing rail experience, with 112 organisations set to display the latest and greatest of all things rail in the Adelaide Exhibition Centre. The AusRAIL conference concludes Wednesday afternoon with a panel discussing technology, social media and big data. “Rail operators are increasingly turning to apps and digitalisation to improve the customer experience. This session will bring together industry leaders to discuss what is already being done and what the future holds for rail in this space,” Mr Broad said. Source: Lloyds List

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Damage, Delays and Storms in Brisbane NUMEROUS container stacks have blown over and flying debris has damaged cars in vehicle storage areas at the Port of Brisbane as a monster storm tore through the area on Sunday afternoon. Port chief operating officer Peter Keyte said the majority of the damaged containers were empty and there had been no reports of damage to full containers. Mr Keyte said the port remained open and work crews were cleaning up property damage caused by the storm. “No injuries have been reported and vessel movements have not been affected, although some unavoidable delays are expected,” he said. “Waterfront infrastructure including container cranes remain intact and operational. “Disruptions to landside services are expected at some locations due to repair work. Mr Keyte went on to say underground services were intact but were being checked for safety, and some hail netting in motor vehicle storage areas was damaged by flying debris. Bureau of Meteorology forecaster Michael Knepp said an initial storm went over Brisbane airport (close to Port of Brisbane) just after 15:00 Sunday, causing gusts up to 106 kilometres per hour, and a second storm passed over the airport at 17:30, bringing wind gusts of up to 158 kilometres per hour. Mr Knepp said the strongest winds would have only lasted a few minutes. The wild weather caused trouble for stevedores. DP World Australia's Brisbane terminal is not expected to be fully operational until tomorrow (November 15) afternoon. A statement from the stevedore said damaged containers in the old yard had been assessed and affected container operators had been informed accordingly. Outstanding export receivals for OOCL Le Havre, ANL Waratah and Nanchang are expected to be received earlier in the day tomorrow once more ASC modules become fully operational. Container stacks collapsed at DPWA’s old yard and in both ASC modules, with damage to some containers. Damage assessments are ongoing. DPWA ceased operations at 17:30 yesterday, with limited vessel operations starting this morning. The Patrick Terminal at the port also sustained damage. In a note to customers issued last night, the company said a “considerable” number of containers had been dislodged from the stacks and several had been damaged. The note also said Patrick was preparing lists of damaged containers for affected shipping lines and the terminal was working to restore operations. Lloyd’s List Australia has been advised that the Patrick yard has been re-opened and is servicing ships. Source: Lloyds List

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Melbourne Regime To Prevent Price Gouging

STATE politician Daniel Mulino says a stringent pricing regime will prevent price gouging by private operators at the Port of Melbourne. The matter came up for discussion at Freight Outlook 2016 this week, with VTA chief executive Peter Anderson posing the question as to a private operator could realistically retrieve $9.7bn in the space of 50 years. A private lease of the Port of Melbourne was announced in September, with the official exchange of funds occurring earlier this month. “I can fully understand concerns in the freight industry that a very high asset valuation might put pressure on the port to recoup that (money) from industry and in turn from society more generally,” Mr Mulino told the gathering. “This was a major issue under consideration, both in the select committee review but also in parliament more generally. “I would say that it is important to look at the pricing regulatory regime which was part of the legislation underpinning the transaction and the lease itself.” Mr Mulino said the Australian Competition and Consumer Commission said the pricing regime to be imposed at Port of Melbourne would be the strongest of any state. He said the Port of Melbourne regime would be similar to those imposed upon the electricity and gas sectors and more comprehensive than those in the northern states. “We really tried to learn a lesson that New South Wales and Queensland gave us,” he said. “We certainly didn’t want a transaction that pumped up the price through allowing a monopoly operator to extract higher fees down the track.” Mr Mulino argued the lease proceeds reflected several things, including low interest rates and Victoria’s economic prospects. “It also, I think, reflects a very strong vote of confidence by international capital markets in Victoria’s long term future,” he said. “The transaction was very important, not just from the point of view of raising money for the government for the purpose of helping fund the level crossing removals, but as is often the case with projects like that, it is an important catalyst for regulatory reform.” Source: Lloyds List

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Earthquake Blocks Cargo Movements at Lyttelton

WHARVES and cranes at Lyttelton Port of Christchurch are undergoing inspections following a 7.8 Magnitude earthquake that hit the South Island. According to a statement from Port authorities, operations are to recommence once the inspection process is completed and infrastructure declared safe. “The inspection will be completed later today,” authorities stated. “The Port will not be open for receiving or delivering freight and cargo until the Container Terminal building is inspected and cleared to re-open. “We are sending texts directly to truck drivers and trucking companies about progress.” Meanwhile MidlandPort and CityDepot remain open. The Lyttelton Road tunnel was reported to have been closed but is now open. The port incurred serious damage during the great earthquake of March 2011 and some infrastructure took several years to repair.

Safer, Productive Heavy Vehicles To Boost Freight Movements EXECUTIVE director of the National Heavy Vehicle Regulator (NHVR) Peter Caprioli said these Performance Based Standards (PBS) scheme vehicles would allow local road managers to better understand options to tackle their local freight task. The NHVR is Australia’s independent regulator for all vehicles over 4.5t gross vehicle mass. “The demonstration of heavy vehicles highlights the unprecedented productivity and safety benefits we are seeing in these modern heavy vehicles,” Mr Caprioli said. “The NHVR and industry are working closely with local governments across the country to inform them on the how high productivity heavy vehicles are safer and smarter and can help boost local productivity. “These vehicles deliver the same amount of freight for fewer trips with overall less impact on the environment and local infrastructure, whilst in many cases incorporating the latest safety technologies.” The heavy vehicles on show at the Toowoomba Showgrounds will include a 23m 5-axle truck and dog trailer combination, a 26m A-Double tanker combination, a 30m A-Double combination capable of transporting two 40ft shipping containers and one of the latest heavy vehicles being rolled out by the Australian Defence Force. Australian Local Government Association President Troy Pickard said it was an excellent opportunity for local government representatives to realise the potential these high-productivity vehicles could have for their local economies.

Source: Lloyds List

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The Future is Digital

Recently in Atlanta, Georgia, was held the annual CSCMP (Council of Supply Management Professionals) conference in which dozens of CEOs, VPs, CDOs and many other supply chain experts gathered to discuss the future of their businesses. There seemed to be an overarching consensus among those present with a clear belief and continuous reiteration that the future is digital. Made particularly clear by GE's Chief Digital Officer, Seth Bodnar, who stated compared the current position of the digital supply chain to the beginning of Thomas Edison's industrial revolution, "today the software revolution is meeting the industrial revolution... we're moving from sledgehammers to digits, we're building the world's premiere digital industrial company". While, that belief in the supply chain community is almost in-doubtable, it is continued to be said as many are lagging behind. The digital future is not a one time movement to a better software, it's about continuously reviewing the state of your software and supply chain analytics to see how your company can be better positioned. The reality is - a reality which many people are oblivious to - is that technology is moving so fast that to ignore the most recent advancements has the same impact as ignoring a new client. Though, this sentiment of a digital future was marked by an obvious caution and reminder. The digital future is not perfect, it will not totally cease disruptions, but it will allow you - if you so choose to make the most of the data - to figure out alternatives to allow the best risk management for your company. This idea was wonderfully explained by Astronaut Scott Kelly, who explained a situation in which a rocket delivering supplies to the International Space Station exploded just after lift off. The rocket expedition was planned for more than a year in advance yet a quick change of strategy had to be put in place to allow the crew to continue their mission. Disruption should never be the thing that interrupts your supply chain, it should only ever cause a change from plan A to plan B. At the conference, an incredible statistic was revealed - that only 15% of companies have access to the majority of their extended supply chain data. In a conference where all there reaped the benefits of supply chain data, the data showed that many businesses have a long way to go if they are to transform their company into the 21st century. Source: SCI Australia

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Australia Introduces IMO Candidacy

AUSTRALIA is to stand for election to a senior role on the Council of the International Maritime Organization (IMO), with infrastructure and transport minister Darren Chester saying it reflects the nation’s seaborne trade connections. If successful, Australia will join Category B of the IMO Council in 2018-19. Historically, Australia has been represented in Category C as one of 20 nations with special maritime or navigation transport interests. Mr Chester said while this country had never successful contested Category B, election would more accurately reflect Australia’s significant role in maritime trade. “Australia is the world’s largest exporter of bulk commodities and 99 per cent of our international merchandise trade is carried by sea,” he said. “We receive nearly 29,000 ship visits every year and Australian ports handle 1.4 billion tonnes of cargo annually.” The Council elections are set for November 2017 at the 30th session of the IMO Assembly. Mr Chester said with such a prominent role in maritime trade and significant interests in protecting the marine environment, Australia had a strong interest in engaging at the highest levels and shaping the shipping world. “Australia is a foundation member of the IMO and has contributed as an IMO Council member for nearly 50 years,” he said. “In that time we have developed a reputation for working across the IMO to develop shipping standards, which are fair, effective and sustainable.”

Source: Lloyds List Australia

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1. a) b) c) d)

Which Painter started the impressionist movement? Salvador Dali Claude Monet Eugene Boudin Alfred Sisley

2. Who was the male lead in 1996 blockbuster “Independence Day”? a) Jeff Goldblum b) Bill Pullman c) Will Smith d) Bruce Willis 3. What was writer Eric Blair’s pen name? a) Ernest Hemingway b) Mark Twain c) William Faulkner d) George Orwell 4. What is the third element on the periodic table a) Hydrogen b) Lithium c) Helium d) Nitrogen

1) b

2) d

3) d

4) b

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Should you wish to discuss any of the issues contained in this newsletter please contact your CSO or any of the people listed below:

Mile’ Jurcic’ (Melbourne)

Mark Hingston (Brisbane)

Thank you for continued support. SCI Australia Pty Ltd


As this information originates from external sources, SCI Australia cannot be held liable for the accuracy of this information.

For More Articles Visit

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SCI Australia December 2016 Newsletter  

SCI Australia December 2016 Newsletter

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