Effective border management that, with minimal disruption to legitimate trade and travel, prevents illegal movement across the border, raises revenue and provides trade statistics

Customs outcome is comprised of five outputs. Performance for each of the outputs commences in the section Output 1.

Customs priorities for 1999-2000 included:

• implementing Tax Reform
• meeting the challenges of the Sydney 2000 Olympic and Paralympic Games
• more effective border management
• implementing the decisions arising from the Prime Minister's Task Force on Coastal Surveillance
• re-engineering our cargo management processes
• providing Customs assistance to East Timor
• managing our resources better
• planning our future workforce
• Year 2000 (Y2K) preparedness.

PERFORMANCE ASSESSMENT:

Output Pricing Review

The first phase of accrual budgeting implementation required agencies to determine a price for outputs for 1999-2000 and forward years. The Department of Finance and Administration (DOFA) and Customs jointly conducted an Output Pricing Review in August 1999-February 2000. The Review examined Customs output prices in terms of their contribution to overall funding for Customs.

The Output Pricing Review concluded that Customs provides `good value for money, and that its output prices are reasonable. Services are typically of high quality, but are increasingly stretched by workload growth'. It found that Customs delivers `wide-ranging and effective border control, consistent with current Government requirements'.

The Review recognised that Customs is implementing initiatives such as CMR, Advance Passenger Processing, upgraded intelligence systems, new marine vessels, modern drug detection technology, improved communication systems and strategic alliances with other law enforcement agencies to further improve the effectiveness and efficiency of services provided.

Customs has made good progress with workplace reforms. The Review reported that Customs has improved the allocation of resources between staffing and technology and has lifted productivity through revised working patterns and arrangements that better meet business outcomes.

Figure 7: Outcome Performance Against Targets set in the 1999-2000 Portfolio Budget Statements (PBS)

Quantity/Quality Performance Measures		Target*	Actual
Cargo Facilitation	Proportion of electronically lodged entries where advice that the entry is ready to pay is transmitted within 15 minutes of receipt of a complete and accurate entry	97%	98.3%
Passenger Facilitation	National proportion of arriving international passengers processed through the entry control point within 30 minutes of joining the queue (standard agreed with Government is 95%)	95%	96.9%
Illicit Drugs	Trends in the number and weight of drug seizures	**	See Figures 11,12&13
Other Prohibited Goods	Trends in number of detections and/or seizures of other prohibited imports and exports from international air passengers	**	See Figure 15
Coastal and Offshore Surveillance	Undetected vessels subsequently found to have breached the Australian border	**	See Figure 21
Revenue Collection	Total Duty and Sales Tax, and other significant revenues collected in total	$4 924 m	$5 048.5m
Revenue Compliance	Revenue adjustments as a result of compliance audit activity Recoveries	$20 m	$12.7 m
	Refunds	$2 m	$0.4 m
Industry Schemes	Total Duty forgone^ in respect of: Tariff Concession	$467 m	$365.5 m
	Cheese and Curd Quota	$10 m	$9.4 m
	Drawbacks	$80 m	$86.5 m
Customs Decisions	Rates of appeal against decisions where the original decision by Customs is upheld	**	See Appendix D

^* Targets may be performance targets, service level targets or workload estimates.

^** Performance targets cannot be estimated through any reliable statistical or other method.

^{^} Customs duty forgone as a result of other concessional arrangements available under a range of industry schemes is listed here.

Resources for Customs Outcome

Figure 8: Resources for Customs Outcome - Effective Border Management

	(1) Budget* 1999-2000 $'000	(2) Actual expenses 1999-2000 $'000	Variation (column 2 minus column 1)	Budget** 2000-2001 $'000
Administered Expenses (including third party outputs)	260	252	-8	260
Total Administered Expenses	260	252	-8	260
Price of Agency Outputs
Output 1 - Facilitation of the legitimate movement of goods across the border, while intercepting prohibited and restricted imports and exports	188 604	203 778	15 174	203 163
Output 2 - Facilitation of the legitimate movement of people across the border, while identifying illegal movements	64 830	65 205	375	69 598
Output 3 - Coastal and offshore surveillance and response#	186 030	179 307	-6 723	216 558
Output 4 - Administration of Customs duty and sales tax, other border-related revenue collections, and import/export statistics.	128 447	116 661	-11 786	150 385
Output 5 - Anti-dumping and countervailing administration	5 653	4 965	-688	5 998
Total Price of Outputs***	573 564	569 916	-3 648	645 702
Revenue from Government (Appropriation) for Agency Outputs	423 960	424 101	141	424 887
Revenue from other sources	149 604	156 648	7 044	220 815
Total Price of Outputs	573 564	580 749	7 185	645 702
TOTAL FOR OUTCOME 1 (Total Price of Outputs and Administered Expenses)	573 824	570 168	-3 656	645 962
			1999-2000	2000-2001
Average Staffing Level (Number)			3921	4 354

^* Full-year budget, including additional estimates. The total outcome price and the output prices vary from the published Portfolio Additional Estimates Statements. The total outcome price has been adjusted to reflect the increased resources received free of charge evident in the 1998-1999 financial statements. This information was not available when the Accrual Information Management System adjustments were made during additional estimates. The changed output prices reflect this additional resourcing and also take account of revisions made during the Output Pricing Review when activity costs and attribution to outputs were re-examined.

^** Budget prior to additional estimates. Prices shown do not reflect the remapping of marine activity. Output 1 will increase and Output 3 will decrease by approximately $10m when output prices are adjusted at additional estimates.

^*** Total Price of Outputs compares the total of the prices derived from estimated revenue to the total of the prices derived from actual expenses. The actual expenses include the Capital Use Charge. The difference between the actual total price of outputs and the actual total revenue for outputs reflects Customs operating surplus for the year.

# Price includes the resources received free of charge from the Australian Defence Forces.

Overall the price of delivering Customs Outputs was within one per cent of the budget estimate. Customs generated a small operating surplus because of a number of factors including increased revenue, a lower than expected depreciation expense due to the non completion of capital projects and a delay in expending funding provided for The New Tax System set-up.

Output prices varied from budget by between 8 per cent and -12.2 per cent. The variation for Output 2 was insignificant (0.6%). For the other outputs the
variance was mainly due to changes in the specific activities undertaken and a remapping of specific activities to outputs.

The cost of Output 1 was higher than estimated mainly due to a remapping of 59 per cent of the marine activity from Output 3 to Output1 following a reassessment of activity attribution to outputs. Increased activity in contraband targeting and examination as well as increased investigation of prohibited import offences such as performance enhancing drugs also added to the price.

The remapping of the marine activity from Output 3 to Output 1 reduced the price of Output 3.

The cost of Output 4 was lower than budgeted for a number of reasons. There were delays in of some of the set-up costs for the introduction of The New Tax System with expenditure being carried forward to 2000-2001, reduced expenses for goods classification activities, and a reduction in the cost of collecting revenue from air passengers.

The decrease in the estimated price for Output 5 was due to reduced expenses incurred in implementing new procedures for anti-dumping and countervailing activity resulting from amended legislation and a lower cost of investigation than anticipated.

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