4 Risk assessment

AMSA has implemented internal controls to ensure costs recovered for regulatory charging activity outputs are measured correctly and are collected on time. In adherence with legislative obligations, an officer of Australian Border Force may detain a vessel at any Australian port for any unpaid and outstanding levies. The vessel can only be released after payment is received. This process ensures the existence of any unpaid levies are consistently at a very low level.

An assessment of regulatory charging activities was conducted using Department of Finance’s Charging Risk Assessment. AMSA considers the risk to remain low to medium, given no anticipated changes (other than indexation) to current activities in 2021-22. Identified risks, accompanying mitigation strategies and controls, are provided in Table 7 with additional details provided in AMSA’s Corporate Plan.

Table 7: Risks and mitigation strategies associated with regulatory charging

Risk identified	Inherent risk	Mitigation strategy and controls	Residual risk
Funding risk to levies Levies are collected based on tonnage proxies predominately from the number of arriving international commercial vessels, with the majority of levies (67%) sourced from iron ore and coal bulk cargo. Economic factors, such as COVID-19 disruptions or a trade dispute, may adversely reduce AMSA’s levy revenue as the number of international vessels arriving at Australian ports decrease. Tonnage (and revenue) may drop quickly in reaction to economic pressures. In the short-to-medium timeframe, our regulatory service delivery (and associated costs) will remain similar (sticky); as revenue decrease, it may not be enough to cover expenditure.	High	Capability to implement a range of efficiency measures within a medium timeframe to offset any potential reductions in levy revenue without need to adjust rates. Regularly compare regulatory charging costs against revenue and volumetric data to ensure unit costs are reflective of pricing within each tonnage bands. Review use of tonnage-based proxies for levies to enable charges to be more reflective and closely linked to level of effort – weighed up against ease of operation and associated costs to administer. Work with the Department of Infrastructure, Transport, Regional Development and Communications (Department of Infrastructure) and the Government to consider the appropriateness of levy rates.	Medium
Secure funding for National System National System regulatory-based activities are funded by a combination of government budget appropriations and jurisdiction contributions. Full government funding for functions (except fee-based activities) has been committed to 30 June 2022, with future arrangements expected to be considered through a government review of effectiveness in service delivery and cost efficiency. AMSA must work with the Department of Infrastructure and the Government to ensure sufficient funding for the National System regulatory activities to avoid shortfalls.	Severe	Engage early and regularly with government and industry groups (principle external stakeholders). Determine and segregate one-off developmental and transitional costs from business-as-usual costs associated with National System, with the former funded by retained earnings. Work with the Department of Infrastructure and Government to consider future funding models and arrangements for the National System following the government review.	Medium
Ensure regulated industry are operating to appropriate standards Failure as a regulator to prevent an incident or fatality in relation to compliance and enforcement arrangements.	High	Continue to review measures to minimise the risks of shipping and pollution incidents and maximise safety of people involved – including education and training. Ensure targets are being met for ship inspection programs, navigational services, and safety and regulatory, assessed on a risk-based approach, while implementing and applying lessons learnt.	Medium
Reserves not enough to fund a major pollution incident clean-up A major environmental emergency pollution incident resulting in clean-up costs exceeding retained earning reserves, damaging reputation, and forcing AMSA to seek special appropriation funding from government.	High	Implementation and maintenance of a pollution response reserve to fund any potential clean-up costs deemed appropriate for up to a 450-500 tonne oil spill. Should an extreme pollution incident occur, work with the Department of Infrastructure and the Government to consider a temporary increase in levy rates to fund any shortfall. Seek a drawdown for a special appropriation should an extreme pollution incident occur.	Low
Inflated or escalating costs Escalating costs to provide regulatory activities to principle stakeholders and costs that may be beyond that deemed efficient. Business processes may not be efficient or effective in the delivery of regulatory charging activities, with corporate overheads unnecessarily large. This may have negative long-term impacts on AMSA’s budget, or result in industry paying more in the recovery of costs than required – cost efficiency is an Australian Government cost recovery obligation.	High	Analyse direct costs, including staffing levels and classifications, average time in service delivery, ICT infrastructure (software) support, managerial engagement, and supplier (contractual) costs. • Business process map tasks in the delivery of regulatory services (direct tasks) and compare (benchmark) to other agencies providing similar services. • Review and analyse all corporate related costs (property, networking, ICT, and corporate support), benchmarking to similar agencies – incorporate some measurement into key performance indicator reporting.	Low
Key performance indicators Not effective in measuring progress of specific activities, not maintained as an ongoing and reportable measurement. Difficult to assess AMSA’s effectiveness in the delivery of services and progress achieving policy outcomes to acceptable standards of industry.	Medium	• Engage and agree KPIs with external stakeholders. • Report on KPIs in external published documents (e.g. annual report, PBS, and CRIS). • Use KPIs and costing model outputs to support strategic decisions.	Low