Cost recovery

Includes information on how cost recovery is implemented.

The Australian Government provides a diverse range of services, support and benefits to the Australian public to achieve its policy outcomes. A number of these activities are funded from different revenue sources which include general taxation, sale of public assets, investments, charging and other revenue measures. Cost recovery involves the Australian Government charging the non-government sector some or all of the efficient costs of a specific government regulatory activity. Our Department imposes charges based on cost recovery for all cargo and trade related activities and citizenship activities. These include import processing charges (IPCs), licensing charges and charges relating to the provision of citizenship services.

Cost Recovery Implementation Statements (CRIS), an explanatory document that provides key information on how cost recovery is implemented, have been prepared for cargo and trade related activites and citizenship activities. It reports how the activity is performing on an ongoing basis and are available by clicking on the links below.

Consultation

Stakeholder engagement is essential to best practice regulation. We are reviewing our cost recovery arrangements in line with the Australian Government Cost Recovery Guidelines, July 2014 (AGCRGs). We will involve clients and stakeholders in the review process using our existing communication and engagement channels in order to consider a wide range of views. We will use established consultative committees, industry meetings and this webpage to keep you informed and will alert you to targeted consultation opportunities in the future.

As a result of recommendations made by the Joint Review of Border Fees, Charges and taxes, a number of changes to charges were announced through the 2015-16 Commonwealth Budget.

Some of the changes are detailed below. Prior to the implementation of these changes, we held consultation sessions with key stakeholders for cargo and trade related activities. These were a valuable tool in understanding how pricing should be applied.

For citizenship related activities, an online submission form is available. This form seeks your feedback on issues and improvements to the current citizenship fee structure. More information on the citizenship consultation process is available.

Cargo and Trade

Charges relating to cargo and trade activities include Import Processing Charges (IPCs) and broker, depot and warehouse licensing charges. Charges are dependent on the value of the consignment, method of importation and type of licence.

Cost recovery of selected cargo and trade related activities was announced through the 1996-1997 Commonwealth Budget. The announcement indicated that cost recovery would be introduced for elements of customs processing of import transactions. Cost recovery charging for cargo and trade related activities commenced on 1 April 1997. A number of changes have occurred to the charges for cargo and trade related activities since their inception, with the most recent being announced through the 2015-16 Commonwealth Budget.

Changes to cargo and trade related activities will take effect from 1 January 2016 as announced through the 2015-16 Commonwealth budget. These changes include:

Import processing charges

  • A modest increase to the existing rates of IPCs for air cargo, with a small reduction of IPCs for sea cargo. This will contribute $106.4 million over four years to the proposed reform initiatives of more than $250 million.
  • Alignment of charges across air, post and sea cargo. This will better reflect the similarities in risk and volume profiles across the pathways and improve the consistency of cost sharing associated with processing imports.
  • The introduction of a consistent price differential between electronically and manually lodged declarations to reflect the additional work required to manually enter and process these documents.

More information on the changes to the IPCs is available.
See:Factsheet – Import processing charges (119KB PDF)

Licensing

We have three licence types of whose charges are currently misaligned. The Fees Review identified ways in which charges can be aligned across all licence types, including:

  • The introduction of an application charge for broker and warehouse licences, with a commensurate reduction in the licence grant fee for warehouse licences. This will reduce the cost burden on the current licensing program, by charging all applicants, regardless of the application process.
  • The introduction of a variation charge for warehouse licences.

In addition, as charges imposed on brokers do not recover adequate revenue to match the costs of delivery of the licensing program, there will be a modest increase to existing Broker licence charges. These increases will continue to only partially recover the costs associated with the administration of the licensing program to not present an impost to brokers.

More information about the changes to the licensing arrangements is available.
See: Factsheet – Licensing charges (83KB PDF).

Citizenship

The Australian Government encourages permanent residents of Australia to apply for Australian citizenship when they become eligible. We currently charge fees for submitting various citizenship application types. These fees currently operate on a full or partial cost recovery basis, whereby the costs of the Government delivering the service are recovered through the fees charged to applicants.

The cost of an application varies depending on an applicant’s eligibility and the activity requested. Fee exemptions and concessions exist for some applications (including family, pensioner and health card holders, among others). As the cost base for citizenship activities has not been reviewed for a number of years, the cost of processing these applications is not adequately recovered through the fees charged.

Charging for citizenship activities date back to 1948, with the last price adjustment to citizenship related charges occurring in 2009.

As a result of decisions made as part of the 2015-16 Commonwealth Budget, the cost of processing citizenship applications will shift to full cost recovery from 1 January 2016. Additionally, the costs associated with the Citizenship programme will be reviewed, which might alter prices associated with many of the current application fees.

Full details of the changes are available.
See: Fact sheet – Citizenship fees (80KB PDF)

An online submission was made available, where feedback was gathered from interested groups and members of the public regarding:

  • Current issues and experiences with current citizenship fees
  • Suggested improvements to the fee structure, including consideration of the appropriateness of concession rates and exemptions
  • Any further considerations for Government in establishing a revised fee structure in 2016.

This form closed on 31 August 2015. Thank you to all who made submissions, your feedback was invaluable and has been incorporated to ensure a fair and equitable fee structure will be implemented.

Other charges

In addition to cargo and trade and citizenship activities, we impose cost recovery charges on a number of other activities. These will be detailed in the coming months.