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The Customs Outcome

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

The goal of Customs is to provide the nation with effective border management in line with the Government’s commitments to increase border protection.

In 2004-05, Customs protects Australia’s interests by detecting, controlling and, where appropriate, preventing the entry and exit of individuals and goods that had the potential to adversely affect the safety or quality of life in Australia.

In addition, Customs protected Australia’s revenue base through effective collection of revenue and the administration of certain government industry schemes and trade measures.

Customs strengthened maritime security capability by:

• contributing to the Joint Offshore Protection Command
• increasing first port boarding
• increasing the operating hours and throughput of the Container Examination Facilities
• commencing the extension of the closed circuit television network to additional ports
• examining the development and implementation of a standardised data set for whole of government reporting. 

Following the successful Southern Ocean surveillance and enforcement program undertaken in 2003–04, the Government extended the interim program. In cooperation with the Australian Fisheries Management Authority and supported by Defence and the Australian Antarctic Division, Customs conducted surveillance and armed patrols for vessels engaged in illegal fishing. This also protects Australia’s sovereign interests in, and the environmental values of, the Southern Ocean.

Between November 2002 and November 2003, Customs established Container Examination Facilities at the ports of Sydney, Melbourne, Brisbane and Fremantle, with a smaller facility in Adelaide commencing operations in March 2005. The increased examination capacity is a core element of Australia’s border protection strategy under the Government’s Tough on Drugs and Protecting our Borders policies.

Customs, with the Department of Foreign Affairs and Trade and the Department of Immigration and Multicultural and Indigenous Affairs, expanded the trial of an automated biometric border-processing system. Customs received funding to upgrade and install an additional automated biometric border-processing transaction point with passport biometric chip-reading capacity.

Customs continued with the reengineering and integration of business processes for cargo management to improve service delivery to industry and to make greater use of technology. A consultative approach with industry is providing a smooth transition from the old to the new systems.

In 2004–05 Customs:

• cleared 5.5m air cargo consignments and 1.8m sea cargo consignments (5m air cargo and 1.7m sea cargo in 2003–04)
• processed over 20.9m people through international airports and seaports (18.8m in 2003–04)
• achieved a 99.4 per cent proportion of electronically lodged entries where an authority to deal is transmitted within 15 minutes of receipt of entry payment and finalisation of entry details (99 per cent in 2003–04)
• achieved a 95.1 per cent proportion of arriving international passengers processed through the entry control point within 30 minutes of arrival (target 95 per cent)
• conducted over 4400 surveillance flights over coastal and offshore areas, equating to a total area of about 140m square nautical miles (4500 surveillance flights over an area of 138m square nautical miles in 2003–04)
• seized 194kg of cocaine (131kg of cocaine in 2003–04), 2375kg of MDMA (ecstasy) (873 of MDMA in 2003–04), 151kg of amphetamine-type stimulants (6kg of amphetamine type stimulants in 2003–04), 177kg of heroin (62kg of heroin in 2003–04) and 5kg of cannabis (709kg of cannabis in 2003–04).

Customs duties collected amounted to over $5b in 2004–05 (over $5b in 2003–04). In addition, Customs administered $1366m of Government concessions including $548m under the Tariff Concession Scheme ($479m in 2003–04) and $121m in duty drawbacks to industry ($106m in 2003–04).

Customs measures performance against the Outcome and five Output targets set in 2004–05 Portfolio Budget Statements and Additional Estimates Statements. Targets include quantity and quality performance measures (for the Outputs) and effectiveness measures (for the Outcome).

Customs performance against the targets set at the beginning of the year are below.

Figure 3: Outcome performance against targets set in 2004–05 Portfolio Budget Statements

Effectiveness indicators	Measures	Target*	Actual
Minimum disruption to legitimate trade and travel
Cargo facilitation	Proportion of electronically lodged entries where an authority to deal is transmitted within 15 minutes of receipt of entry payment and finalisation of entry details	97%	99.4%
Passenger facilitation	National proportion of arriving international passengers processed through the entry control point within 30 minutes of arrival	95%	95.1%
Prevent illegal movement across the border
Illicit drugs	Trends in the number and weight of drug detections	**	See Figure 11 and Figure 12
Other prohibited goods	Trends in the number of detections and/or seizures of other prohibited imports and exports	**	See Figure 7 and Figure 8
Civil maritime surveillance	Undetected suspect illegal entry vessels (SIEVs) subsequently found to have breached the Australian border	**	See Figure 24
Raise revenue
Revenue collection	Significant revenues collected (including Customs duty, GST collected and Passenger Movement Charge)	$7 878m (net of GST deferred)	$7 892m#

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

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

# Revenue excludes the dollar value of Automotive Competitiveness and Investment Scheme (ACIS) credits acquitted (moneys forgone by Customs). ACIS Credit is a duty liability not paid but acquitted against a credit granted under the ACIS set out in the ACIS Administration Act 1999.

Funding for Outcome and Outputs

The prices for the Outcome and Outputs are calculated using activity-based costing information and attributed across the outputs to provide a complete picture, including for Enabling Outputs (see Figure 4).

Approximately 73 per cent of Customs costs can be directly attributed to an Output. For the remaining 27 per cent, the costing model allocates overhead expenses to Outputs on a staff full time equivalence (FTE) per Output basis.

Resources allocated for the Outcome

Figure 4: Resources allocated for the Customs Outcome 2004–05

	(1)	(2)	Variation
	Budget*	Actual results	(column 2 minus column 1)
	2004–05	2004–05
	$’000	$’000	$’000
Administered Expenses	255	4 612	4 357
(including third party outputs)
Total Administered Expenses	255	4 612	4 357
Price of Agency Outputs
Output 1 – Facilitation of the legitimate movement of goods across the border, while intercepting prohibited and restricted imports and exports	329 235	329 675	440
Output 2 – Facilitation of the legitimate movement of people across the border, while identifying illegal movements	107 926	117 899	9 973
Output 3 – Civil maritime surveillance and response#	317 531	306 953	-10 578
Output 4 – Administration of Customs duty and indirect taxes, other border-related revenue collections, and import/export statistics	190 964	162 790	-28 174
Output 5 – Anti-dumping and countervailing administration	5 283	7 816	2 533
Total Price of Outputs**	950 939	925 133	-25 806
Revenue from Government (Appropriation) for Agency Outputs	758 296	758 296	0
Revenue from other sources	192 643	203 918	11 275
Total revenue for Outputs	950 939	962 214	11 275
TOTAL PRICE FOR OUTCOME 1	951 194	929 745	-21 449
(Total Price of Outputs and Administered Expenses)
Total Revenue for Outcome 1	951 194	966 826	15 632
(Total Revenue for Outputs and Aministered expenses)
Average Staffing Level (Number)			2004–05
(full-time equivalents, including inoperatives)			4 686

* Full-year budget, including additional estimates.

** Total Price of Outputs and Total Revenue for Outputs compares the total of the prices derived from estimated revenue to the total of the prices derived from actual expenses. 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 Force.

Figure 5: Resources allocated for the Customs Outcome 2005-06

	Budget* 2005–06 $’000
Administered Expenses	280
(including third party outputs)
Total Administered Expenses	280
Price of Agency Outputs
Output 1 – Passenger movement and intelligence	261 600
Output 2 – Border compliance and enforcement	375 800
Output 3 – Cargo regulation, trade facilitation and revenue collection	104 400
Output 4 – Civil maritime surveillance and response#	236 600
Total Price of Outputs**	978 400
Revenue from Government (Appropriation) for Agency Outputs	783 265
Revenue from other sources	195 135
Total Price of Outputs	978 400
TOTAL FOR OUTCOME 1	978 680
(Total Price of Outputs and Administered Expenses)
Average Staffing Level (Number)	2005–06
(full-time equivalents, including inoperatives)	4 902

* Budget as announced in the Portfolio Budget Statements. Revised structure.

** 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 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 Force.
Portfolio Budget Statements

The total price of Outputs in the initial 2004–05 Portfolio Budget Statement was $879.900m, including an appropriation of $702.619m and revenue from other sources of $177.281m.

Customs was also appropriated an equity injection of $19.471m in 2004–05. This included the provision of capital funds associated with initiatives such as biometrics, Container Examination Facilities, enhanced security arrangements, the Neutron Scanner program and preparation for the Melbourne Commonwealth Games 2006.

Portfolio Additional Estimates Statements

After Portfolio Additional Estimates hearings, the total price of Outputs was revised to $950.939m (up $71.039m). This reflected an increase in funding for new Government initiatives and additional funding from the review of Customs financial position.

Actual expenditure

Details on the actual expenditure of Customs in 2004–05 are shown in Figure 4. Further information on this expenditure is available in the financial statements and accompanying notes.

Review of Customs financial health

An independent review of Customs financial position was conducted in 2004–05 to assess the future funding requirements of Customs. The review was contracted to Ernst and Young on behalf of Department of Finance and Administration and Customs. It was completed in October 2004 and included a comprehensive assessment of activities, costs and ways to improve Customs financial position. The government adopted the report which now also provides a workload measurement device for passenger processing.

Increased Quarantine Intervention

In 2001–02 the Government approved additional funding to strengthen Australia’s quarantine programs through the Increased Quarantine Intervention (IQI) initiative. This was in response to the outbreak of foot and mouth disease in the United Kingdom and Europe. As part of the initiative Customs committed to inspecting all high volume/low value (HVLV) consignments imported through air express couriers and screening all international mail. The Government has extended quarantine border security funding until at least 2008–09.

Customs achieved 100 per cent inspection of HVLV consignments and postal items in conjunction with the Australian Quarantine and Inspection Service. In addition to the interception of items presenting a quarantine risk, inspections also resulted in the detection of narcotics, weapons and other prohibited imports.

Proceeds of crime

As part of the Government’s proceeds of crime legislation, $885 314 was provided for enhanced closed circuit television monitoring at airports.

Customs initiated five new proceeds of crime investigations. As at 30 June 2005, six investigations had been concluded and 16 are under active investigation.

Customs contribution to other agencies

Customs provides a range of services to assist almost 100 Federal and State agencies to achieve their outcomes. Customs services provided to key agencies are detailed below. These services are normally governed by agency-to-agency Memorandums of Understanding and Service Level Agreements which are periodically reviewed.

Customs also administers legislation on behalf of these and other government agencies, especially in relation to the movement of goods and people across the Australian border.

Australian Federal Police	referrals at the border under criminal legislation, including drug detections, persons of interest, (for example criminal activity or potential terrorists) and undeclared excess currency civil maritime surveillance and response activities for people smuggling and remote area logistic support
Australian Fisheries Management Authority	regulation of the import/export of certain fish products civil maritime surveillance and response
Australian Quarantine and Inspection Service	assist in the delivery of quarantine inspection services for goods, people, ships and aircraft at the border and remote ports logistic support within the Torres Strait civil maritime surveillance and response
Australian Taxation Office	administration of revenue collection activity including Tourist Refund Scheme, the Passenger Movement Charge, Customs duty and indirect taxes, the goods and services tax, the luxury car tax and the wine equalisation tax
Department of Defence	resources, including surveillance and response assets, in support of Operation Relex II (people smuggling focus) assessment and clearance functions and referrals for restricted exports on the Defence and Strategic Goods List
Department of Health and Ageing	providing expertise and advice on the National Drug Strategy policy on import and export of substances identifying new substances which may require regulation at the border contributing to the whole-of-government position on licit and illicit drugs prohibiting the import of viable materials derived from human embryo clones prohibiting the import and export of human embryo clones regulating the movement of drugs and other substances
Department of Immigration and Multicultural and Indigenous Affairs	clearance functions for passengers and crew at international airports and seaports civil maritime surveillance and response
Department of the Environment and Heritage	assessment and clearance functions and referrals for restricted imports and exports, including endangered species (flora and fauna), ozone hazardous waste and cultural heritage provision of intelligence investigations into actual or suspected breaches of relevant Acts and/or Regulations examinations of cargo where there is a suspected or actual breach of a relevant Act or Regulation assistance in transportation, storage and disposal of hazardous waste and ozone depleting substances collection and provision of data in relation to illegal fishing and environmental information in the Southern Ocean assistance in environmental protection in the Ashmore Islands Nature Reserve civil maritime surveillance and response.

Other agencies contribution to Customs Outcome

Australian Federal Police	investigation of Commonwealth offences provision of intelligence information training support for investigations officers and training in use of force for National Marine Unit/Southern Oceans Maritime Patrol Response (SOMPR) officers
Australian Fisheries Management Authority	targeting information on threats in Australian Fishing Zone training of Customs officers on fisheries legislation and enforcement procedures support SOMPR with embarked fisheries officers
Australian Quarantine and Inspection Service	providing assistance to Customs during vessel inspections, clearance of passengers and crew and surveillance functions. This includes shared use of x-rays, CCTV and joint vessel patrols within Australian waters referral of animal or plant products (prohibited under the Environment Protection and Biodiversity Conservation Act 1999), narcotics, dutiable items, undeclared currency and community protection items (including weapons) that are detected during quarantine inspection of ships, aircraft, passengers and incoming international mail providing support to Customs in acheiving 100 per cent inspection of HVLV consignments
Australian Taxation Office	information as necessary and authorised by law and released under the Memorandum of Understanding between Customs and the Australian Taxation Office with particular reference to Schedule 2, Excise matters. These matters generally relate to industry information, and the exportation and importation of alcohol, tobacco and petroleum which may have revenue consequences for the payment of Excise duty
Department of Defence	resources in support of civil maritime surveillance and response secondment of staff to Coastwatch and the Joint Offshore Protection Command provision of intelligence scientific advice in relation to emerging technologies training and technical advice to assist in the identification of goods on the Defence and strategic goods list logistic and training support for arming Australian Customs Vessels with deck-mounted weapons systems
Department of Health and Ageing	providing expertise and advice on health related licit and illicit drug issues ensuring operational and policy responses reflect whole-of-government position on licit and illicit drugs regulating the movement of drugs and other substances
Department of Immigration and Multicultural and Indigenous Affairs	immigration clearance training decisions on entry clearance expert document examination
Department of the Environment and Heritage	assistance in assessment and clearance functions and referrals for restricted imports and exports, including endangered species (flora and fauna), ozone depleting substances, hazardous waste and cultural heritage provision of intelligence and expert technical advice providing appropriate training for Customs officers storage and security of ozone depleting substances assistance in respect of the transportation, storage and disposal of hazardous waste provision of comprehensive medical support and infrastructure for SOMPR medical and dental support for sOMPR policy advice on matters relating to the Commission for the Conservation of Antarctic Marine Living Resources for fisheries patrols.

 

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