Enabling Outputs - External Scrutiny

Freedom of Information

In 2005-06, 46 requests were made to Customs under section 15 of the Freedom of Information Act 1982 (FOI Act) which is an increase on numbers received from previous years. Some requests are complex and there have been delays in responding within required time frames.

Section 8 of the FOI Act requires us to publish details about certain agency functions and documents. This includes details about the way the agency is organised, functions, decision making powers, arrangements for public involvement in the work of the agency, documents held by the agency and the way in which members of the public may obtain access to these documents. This information is at Appendix B.

Figure 53: Requests made under the Freedom of Information Act

* A section 15 request is a request for access to information. A section 54 request is a request for a decision about a section 15 request to be reviewed by Customs (internal review). A section 55 request is a request for a decision about a section 15 request to be reviewed by the AAT (external review). Further information on these requests is available in the Freedom of Information Act 1982.
** Includes requests carried over from the previous financial year and requests still being processed at the end of the financial year.

Ministerial representations

The Minister for Justice and Customs received 2312 items of Customs related correspondence. We provided the Minister with advice and recommendations on the 1873 items that required a response. Major issues were:

• applications for permits to import goods
• information on import requirements
• issues relating to the implementation of the Integrated Cargo System (ICS)
• the payment of Customs duty and goods and services tax on imported goods anti-dumping investigations
• processing of passengers at airports
• changes to passenger concessions
• coastal surveillance matters
• changes to legislation and regulations administered by Customs.
• Customs also provided the Minister with 482 briefings on issues including:
• initiating anti-dumping investigations
• significant seizures of prohibited imports such as illicit drugs
• implementation of the ICS
• proposed changes to legislation and regulations administered by Customs
• other significant policy and procedural matters.

Figure 54: Ministerial correspondence and briefings

Questions on Notice

The Minister for Justice and Customs received 190 Questions on Notice directed to Customs or requiring an Agency response from Customs.

Questions on Notice were received from the House of Representatives (27) Senate (26) and Estimates Hearings (137). Major issues were:

• illegal foreign fishing activities, apprehension, and detection
• Customs staffing issues
• Integrated Cargo System
• Customs operations in the airport environment
• Coastwatch operational activities

Judicial decisions and decisions of administrative tribunals

Granite Arms (High Court)

This case involved proceedings arising out of the importation into Australia of 2 000 handguns from China by a licensed Victorian gun dealer (Granite Arms) who was acting as an agent for the owner of the guns - a licensed Queensland gun dealer.

Handguns will be prohibited imports upon importation (and therefore forfeited goods) if relevant criteria in the Customs (Prohibited Imports) Regulations 1956 (the Regulations) are not complied with. In respect of the handguns, the importer was required to satisfy the police authorisation test in paragraph 4.1 to Part 1 of Schedule 6 to the Regulations.

This test is satisfied by production of a police authorisation or B709 indicating that the importer holds a licence according to the laws of the relevant State or Territory to possess the firearm. In this case the B709 was held by the agent but not by the owner of the guns - the owner’s authorisation having been rescinded by the Queensland Police for modifying firearms in contravention of the State’s weapons legislation.

Customs seized the guns and applied to the Magistrate’s Court for a declaration that the guns were special forfeited goods and for an order that the guns be condemned as forfeited to the Crown. Granite Arms sought judicial review in the Federal Court and Customs cross-claimed for its applications to be granted. The Federal Court dismissed that cross-claim on finding that, for the purposes of the police authorisation test, Granite Arms as the agent was the ‘importer’ of the guns.

On appeal by us, the majority of the Full Federal Court decided that the guns were lawfully imported and that the police authorisation test did not require the importer of firearms to be the same person as the person who would maintain possession of the firearms following importation. The majority also held that the meaning of ‘importer’ in the context of the Regulations is not limited to the person who has paid for the goods being imported.

We sought and were granted special leave to appeal to the High Court. The High Court held that the guns were prohibited imports under the Customs Regulations and were therefore special forfeited goods. In this case the police authorisation test had not been satisfied because Granite Arms was not the ‘importer’ within the meaning of the Regulations. The subject, scope and purpose of those Regulations are the performance by the Commonwealth of its part in the national scheme of firearms control and public safety. In that context the notion of importation and the term ‘importer’ look to the possession of the firearms after importation.

H J Heinz (Full Federal Court)

This case was an appeal by H J Heinz from a decision of the Federal Court dismissing the company’s earlier appeal of an Administrative Appeals Tribunal decision that imported canned tuna products were classified as ‘fish in pieces, but not minced’ under the Customs Tariff Act 1995 as contended by Customs.

The Court at first instance held that the Tribunal did not make any errors of law. It was open to the Tribunal, on the evidence, to hold that the word ‘minced’ and the phrase ‘fish in pieces’ should be understood in their usual and ordinary meaning and to find, as a matter of fact, that the products were not minced. The Tribunal could readily recognise or identify that the goods had retained the textural and structural integrity of preserved tuna.

The Full Court held that neither the Tribunal nor the single judge made any errors of law. Rather, the classification of the goods first requires it to be asked whether the prepared fish is whole or in pieces. If it is in pieces, the question then arises whether it is minced. The Tribunal’s task was to decide, as a matter of fact, with reference to size and structural integrity, where on the continuum of ‘fish in pieces’ to ‘minced fish’, the tuna was to be placed.

Labrador Liquor (Supreme Court)

Labrador Liquor (a company with two sole directors/employees) operated a bond store or ‘licenced warehouse’ under the Customs Act 1901. Its licence entitled it to temporarily store alcohol and cigarettes that had been imported or manufactured in Australia, without paying customs and excise duty, otherwise payable on them. However in dealing with alcohol and cigarettes from its warehouse, either by exporting them or delivering them into home consumption, it was legally obliged to notify Customs.

We prosecuted the company for the offences of evading customs and excise duty on liquor and/or cigarettes delivered into home consumption by falsely documenting that they were being exported; knowingly or recklessly making a statement to an officer that was false or misleading in a material particular; and moving, altering or interfering with goods which were subject to the control of Customs - the two directors being prosecuted as accessories for those same offences.

The onus was on us to prove beyond reasonable doubt that the goods were not exported. We pleaded and averred that the goods were not exported and mounted a substantial circumstantial case to demonstrate that the goods were not exported. The defendants pleaded that the goods were exported and in the alternative if the goods were not exported, that occurred without their knowledge or consent.

On the evidence the Supreme Court was satisfied beyond reasonable doubt that the goods were not exported with the only available inference being that the goods were delivered into home consumption. The Court convicted the defendants of the 45 offences under the Customs Act 1901 and the Excise Act 1901 and each received the maximum penalty of five times the amount of duty evaded - the fine amounting to $15.18m - with a term of imprisonment of four years and 345 days for each of the directors ordered by the Court in the event of default of payment of the penalty. The convictions and sentences are under appeal.

Privacy matters

There was one complaint to the Privacy Commissioner against Customs in 2005-06. This complaint remains open and is the subject of preliminary inquiries being conducted by the Office of the Privacy Commissioner.

Commonwealth Ombudsman matters

Figure 55 provides a summary of the number of approaches received by the Commonwealth Ombudsman in 2005-06 relating to Customs.

Figure 55: Issues raised with the Commonwealth Ombudsman

Auditor-General’s reports

The Australian National Audit Office (ANAO) audited the financial statements of Customs in accordance with its annual financial statements review of Commonwealth entities.

The ANAO conducted eight performance audits specific to Customs:

• ANAO Report No.11-2005-06 – The Senate Order for Departmental and Agency Contacts (Calendar Year 2004 Compliance)
• ANAO Report No.18-2005-06 – Customs Compliance Assurance Strategy for International Cargo
• ANAO Report No.21-2005-06 – Audit of Financial Statements of Australian Government Entities for the Period Ended 30 June 2005
• ANAO Report No.27-2005-06 – Reporting of Expenditure on Consultants
• ANAO Report No.28-2005-06 – Management of Net Appropriation Agreements
• ANAO Report No. 33-2005-06 – Administration of Petroleum and Tobacco Excise Collections-Follow-up
• ANAO Report No.34-2005-06 – Advance Passenger Processing
• ANAO Report No.45-2005-06 – Internet Security in Australian Government Agencies

The ANAO is in the process of completing the following review:

• Customs Cargo Management Reengineering project

Other reports relevant to Customs released in 2005-06 included:

• ANAO Report No.12-2005-06 – Review of the Evaluation Methods and Continuous Improvement Processes for Australia’s National Counter-Terrorism Coordination Arrangements
• ANAO Report No.16-2005-06 – The Management and Processing of Leave
• ANAO Report No. 19-2005-06 – Managing for Quarantine Effectiveness-Follow-up
• ANAO Report No.22-2005-06 – Cross Portfolio Audit of Green Office Procurement
• ANAO Report No.23-2005-06 – IT Security Management
• ANAO Report No.26-2005-06 – Forms for Individual Service Delivery
• ANAO Report No. 29-2005-06 – Integrity of Electronic Customer Records
• ANAO Report No. 32-2005-06 – Management of the Tender Process for the Detention Services Contract
• ANAO Report No.37-2005-06 – The Management of Infrastructure Plant and Equipment Assets
• ANAO Report No.48-2005-06 – Interim Phase of the Audit of Financial Statements of General Government Sector Entities for the Year Ending 30 June 2006

Our Audit Committee monitored the implementation of the recommendations arising from the Customs audits. The committee sought comments from line areas on recommendations that might have relevance to us. These responses were circulated to the Customs Executive.

The ANAO also issued Better Practice Guides for Preparation of Financial Statements by Public Sector Entities, Administration of Fringe Benefit Tax and User-Friendly Forms, Key Principles and Practices to Effectively Design and Communicate Australian Government Forms.

Further information on ANAO reports is available on the ANAO Internet site at www.anao.gov.au

Parliamentary Committee reports

Senate Legal and Constitutional Committee

Customs appeared before three Estimates hearings:

• Budget Supplementary Estimates – 31 October 2005
• Additional Estimates – 17 February 2006
• Budget Estimates – 25 May 2006

Senate Legal and Constitutional Legislation Committee

Customs provided submissions to the following Committee inquiries:

• inquiry into the provisions of the Law and Justice Legislation Amendment (Serious Drug Offences and Other Measures) Bill 2005
• inquiry into the provisions of the Telecommunications (Interception) Amendment Bill 2006
• inquiry into the provisions of the Customs Legislation Amendment (Border Compliance and Other Measures) Bill 2006

Senate Rural and Regional Affairs and Transport Legislation Committee

Customs provided a submission to the following Committee inquiry:

• inquiry into the regulatory framework under the Maritime Transport Security Amendment Act 2005

Parliamentary Joint Committee on the Australian Crime Commission

Customs provided a submission to the following Committee inquiry:

• inquiry into Amphetamines & Other Synthetic Drugs (AOSD)

Parliamentary Joint Committee of Public Accounts and Audit

Customs provided a submission to the following Committee inquiry:

• inquiry into developments in aviation security since the Committee’s June 2004 Report 400: Review of Aviation Security in Australia

Parliamentary Joint Standing Committee on Public Works

Customs provided a submission to the following Committee inquiry:

• fitout of New Leased Premises for Australian Customs Service at 1010 LaTrobe Street, Docklands, Melbourne, Vic.