Customs is an Agency within the Attorney-General's portfolio, and is responsible to the Minister for Justice and Customs. Customs in fulfialling its responsibilities, administers legislation on behalf of other Commonwealth agencies in relation to the movement of people and goods across the Australian border. The Minister's Statement of Expectations for Customs, and Customs proposed activities and strategic measures to achieve these expectations were published on the Customs website during the year.
In 2006-07 a Strategic Statement was published to set out organisational roles, priorities and risks. Another initiative, program management, was adopted by Customs in place of matrix management to strengthen organisational design.
Customs complies with administrative laws and key legislation that applies to public sector agencies, including Administrative Appeals Tribunal Act 1975, Ombudsman Act 1976, Freedom of Information Act 1982 and Legislative Instruments Act 2003, the Public Service Act 1999 and the Financial Management and Accountability Act 1997.
Customs established a Practice Statement Initiative in 2006-07, which aims to review and update all policies and procedures to ensure national consistency in our operations. Practice Statements are endorsed corporate policies that are issued under the authority of the CEO and where appropriate will be made publicly available.
Customs key internal management committee meetings are the Customs Executive Management meeting and the Audit Committee meeting.
Customs Executive Management Meeting
The Customs Executive Management Meeting is held monthly to evaluate Customs performance in meeting its obligations to Government and to discuss major policy issues. This group comprises the Chief Executive Officer (CEO) and Deputy Chief Executive Officers (DCEOs). Senior Executive Service (SES) officers may be invited to attend meetings for specific items of discussion.
As the senior governance advisory body to the CEO this Committee meets quarterly to review progress in all matters required of Audit Committees as set out by the Financial Management and Accountability Act 1997 (FMA) and FMA Regulations and Orders. In addition, it undertakes a number of associated responsibilities for the CEO with the objective of preserving quality management in Customs by reviewing high-risk processes and monitoring the progress of significant systems development and associated change management processes. Examples of these responsibilities includes the IT Market Testing Project, Business Continuity Planning, Air Border Security initiatives and Customs implementation of the recommendations made by the Australian National Audit Office (ANAO) in relation to the Cargo Management Re-engineering (CMR) Project.
Members are appointed by the CEO and for 2006-07 included:
- Deputy Chief Executive Officers
- Chief Information Officer
- National Director Trade
- Regional Director Victoria
- an external member.
Senior ANAO representatives attend, and the Chief Financial Officer and National Manager of the International Division within Customs also attend as advisors. Other officers may be invited to attend meetings for specific items of discussion.
Internal consultation plays an important role in ensuring informed decision making takes place within Customs. Customs key methods of internal communication with staff includes:
- fortnightly electronic staff newspaper, CustomsNews
- management briefs
- 'all staff' messages circulated by email
- weekly section meetings
- the Customs intranet for corporate information such as legislation, policies, procedures, guidelines and advices (the Intranet is being upgraded to enhance content and usability)
- a weekly bulletin.
In 2006-07 Customs built on existing arrangements and established new committees and forums to facilitate internal consultation. Key committees and forums for internal consultation now include:
- Design Forums
- Dialogue Days for the executive and senior management
- Senior Executive Service (SES) and Regional Directors Conference
- Regional Directors Forum
- the Business Continuity Management Steering Committee
- the Customs Information Technology Transition Steering Committee.
In addition to key forums and committees, regional committees and project specific steering committees are established when necessary.
In 2006-07 plans were developed to strengthen the internal communication function to focus on internal client service and support. In the second half of 2007 new communication strategies and channels will be in place.
Dialogue days
Dialogue days were introduced in 2006-07 to provide a forum for discussions between managers about the issues confronting Customs. The issues focused on during these days may relate to how we are performing today or where we are heading in the future.
Design forums
Design Forums were introduced during 2006-07 to provide a formal mechanism for the Executive and senior management team to consider issues of significant importance to the operations and future direction of the organisation. There is no schedule set for these forums, and issues identified by the Executive as needing a focused discussion can be raised at any time. In June 2007 a Design Forum was held to discuss future directions and needs of our recruitment and training policies and strategies.
SES and Regional Directors Conference
SES Officers and Regional Directors meet biannually to discuss national operational and financial performance, strategic management issues and future directions and plans. These conferences were held in December 2006 and June 2007.
Regional Directors Forum
Regional Directors meet with the Deputy Chief Executive Officers and National Directors three times a year to discuss the effectiveness of operations conducted in the regions. Consideration is given to possible improvements and/or service delivery of benefit to industry the community and the achievement of Customs overall objectives. It provides an opportunity to reflect on regional performance and effectiveness, stakeholder relationships and emerging issues and corporate well being.
Business Continuity Management Steering Committee
The Business Continuity Steering Committee sets and reviews Customs policy and procedures for business continuity and oversees IT disaster recovery and incident reporting. In doing so it, confirms which critical business functions require plan development, decides on priority areas for IT disaster recovery, ensures sound business continuity principles are met and are applied consistently, and provides ownership of the over-arching Business Continuity Plan.
Customs Information Technology (IT) Transition Steering Committee
Transition Steering Committee is the primary management and governance forum of the Customs IT Transition Program. The Committee is chaired by the Chief Information Officer and attended by the Customs IT National Managers, the Transition Program Manager and Account Executives from major IT service partners. The Committee meets weekly to monitor and lead the implementation of the transition of IT services as an outcome of the Customs IT Sourcing Strategy, and the structural, governance and organisational changes required to fulfill the Future IT Delivery model.
Customs consults at high levels with external organisations, government departments and related organisations to support its direction. In the past year, Customs was involved in the following key groups:
- Australian Crime Commission Board
- Cargo Processing Executive Steering Committee
- Customs National Consultative Committee
- Heads of Commonwealth Operational Law Enforcement Agencies
- Industry Action Group
- National Passenger Processing Committee
- Passenger Facilitation Taskforce.
Examples of other inter-agency committees Customs participated in during 2006-07 include the Joint Agencies Maritime Advisory Committee, National Counter Terrorism Committee, and Strategic Maritime Management Committee. Customs also sponsored industry forums with the Australian Tax Office such as the Alcohol Corporate Consultative Forum, Petroleum Corporate Consultative Forum and the Tobacco Industry Forum.
Australian Crime Commission Board
Customs Chief Executive Officer (CEO) contributes to the development of National Criminal Intelligence Priorities and the strategic direction of the Australian Crime Commission (ACC) through membership on the ACC Board.
The Board meets quarterly and considers numerous items out of session. Through the CEO's membership on the Board, our strategic issues are incorporated into the broader law enforcement agenda. In return, Customs is able to contribute resources and ideas to enable delivery of the ACC's agenda.
Cargo Processing Executive Steering Committee
Customs CEO chaired the inaugural meeting of the Cargo Processing Executive Steering Committee in August 2006. The committee is comprised of senior Customs and industry representatives. The committee met on five occasions in 2006-07. Its terms of reference are to:
- set strategic direction for the work program, with a focus on delivering benefits to industry and Customs
- define targeted outcomes for the work program to enable measurement of performance and tracking of benefits realisation
- track and evaluate overall progress of the program.
The key outcomes of the committee during 2006-07 included:
- initiation of a joint Customs and industry review to explore the feasibility of alternative approaches to cargo reporting
- establishment of a service level agreement that provides industry with certainty of the status of cargo within 24 hours of Customs having received accurate information
- continuing to oversee the body of work coming out of the Trade Facilitation Program.
CNCC was established in 1991 following the government's response to the House of Representatives Standing Committee on Finance and Public Administration's report A Tour of Duties.
The CNCC provides an opportunity, at national level, for discussion of policies, practices and procedures relevant to the trading community, and to work in partnership to resolve any difficulties. Representatives of the CNCC include Customs (as Chair) and the following organisations:
- Australian Air Transport Association
- Australian Chamber of Commerce and Industry
- Australian Exporters and Importers Association
- Australian Federation of International Forwarders
- Board of Airline Representatives of Australia
- Customs Brokers and Forwarders Council of Australia
- Institute of Chartered Accountants in Australia
- International Air Couriers Association of Australia
- Law Council of Australia
- Shipping Australia
- Stevedores.
In 2006-07 Customs agreed to consult with industry on its draft legislative program using CNCC as one of a number of consultative mechanisms.
Heads of Commonwealth Operational Law Enforcement Agencies
The Heads of Commonwealth Operational Law Enforcement Agencies (HOCOLEA) is the broad consultative mechanism for Commonwealth law enforcement policy. HOCOLEA meets biannually and is made up of agency heads from 11 Commonwealth law enforcement, taxation and regulatory departments and agencies. The CEO represents Customs at HOCOLEA and Customs also provides secretariat support for the group.
Industry Action Group
The Industry Action Group (IAG) met quarterly during 2006-07 to continue to monitor and suggest change to facilitate the import and export of cargo. Membership of the IAG consists of representatives from air and sea cargo industries including carriers, customs brokers, freight forwarders and cargo logistics operators.
During the last 12 months a number of improvements were introduced to the Integrated Cargo System (ICS) and business processes to improve cargo movement. These included:
- changes to cascade reporting rules to improve opportunities for matching sea freight
- a diagnostic facility enabling depots to search for sea cargo moving to and from their establishments
- an air cargo manifest search diagnostic facility
- simplifying the reporting and movement of part-shipped air cargo
- allowing import declaration details to override deficient consignee information on a manifest
- processes to provide industry with certainty of status
- processes for industry to request a screening period override for re-reported cargo.
National Passenger Processing Committee (NPPC)
The role of the NPPC is to develop whole-of-government policy approaches to processing international passengers and to coordinate the exercise of various statutory controls and responsibilities carried out by Commonwealth Authorities at airports. The NPPC meets twice yearly. This enables representatives of government and industry to liaise on issues of common interest. Customs chairs the NPPC with membership comprising senior representatives from:
- Department of Immigration and Citizenship
- Australian Quarantine and Inspection Service
- Department of Transport and Regional Services
- Attorney-General's Department
- Department of Industry, Tourism and Resources
- Department of Health and Ageing
- Australian Federal Police.
Passenger Facilitation Taskforce
Customs plays a central role on the Passenger Facilitation Taskforce (the Taskforce) that recommended initiatives aimed at ensuring the government remain active in planning for growth in international passenger numbers. This included establishing and participating in projects to streamline elements of the passenger service delivery chain over which Customs has influence.
The Taskforce is chaired by Customs, with representation from the Department of Immigration and Citizenship, the Australian Quarantine and Inspection Service, the Department of Transport and Regional Services, the Department of Industry, Tourism and Resources, the Department of the Prime Minister and Cabinet, the Department of Finance and Administration, and the Australian Federal Police.
We undertake international engagement as one strategy to achieve our border protection, trade facilitation and revenue collection objectives. Our international activity allows constructive engagement with overseas agencies and international bodies like the World Customs Organization.
A key focus for Customs in 2006-07 was enhancing our intelligence and targeting capabilities, including working cooperatively with other agencies. We have also focused on improving the consistency and efficiency of our operations through our international cooperation efforts. Key areas of focus included:
- the development of a policy framework for international engagement and cooperation
- our increased capacity building efforts in the Pacific region
- an increased Customs presence at international posts supporting the exchange of intelligence and operational information
- establishing new, and updating existing cooperative agreements with international partners and participation in trade agreement negotiations
- participation in bilateral discussions and multilateral forums
- commitment to international programs.
International strategy
Customs developed an international strategy in 2007 to provide a strategic framework to coordinate and deliver Customs international engagement policy. We consulted the Australian Federal Police, Australian Agency for International Development, the Department of Foreign Affairs and Trade and the Department of Immigration and Citizenship in developing the policy. At a high level our strategy is to maintain an active and targeted approach to international engagement and cooperation to assist Customs to meet our responsibilities and help ensure our ability to quickly identify and respond to changes in the risks we face in protecting Australia's border.
Capacity building in the Pacific
We continued our program of support to Papua New Guinea (PNG) Customs under the Australian Government's Enhanced Cooperation Program. Four Australian Customs officers are based with PNG Customs to assist with implementing reforms, including:
- launching a new corporate plan and corporate governance charter
- creation of a security committee and risk management strategy
- improving cargo processing and undertaking audits to reduce revenue leakage.
Two Australian Customs officers are based in the Solomon Islands Division of Customs and Excise Division under the Regional Assistance Mission to the Solomon Islands. The Customs modernisation and reform program has assisted Solomon Islands Customs to:
- reduce and simplify customs duty rates and processes
- remove export tax exemptions for logging companies
- implement infrastructure improvements
- introduce information technology automation.
Australian Customs successfully completed a program of interim assistance to the Kingdom of Tonga. Under this program, Customs provided an officer to act as the interim head of Tongan Customs from October 2005 to December 2006. Success was achieved through restored operational functionality, improved revenue streams and enhanced anti-corruption efforts.
We hosted the 18th Customs International Executive Management Program (CIEMP) during October 2006, which is designed to improve management capacity in Asia-Pacific administrations. In parallel to CIEMP Customs launched its inaugural Pacific Customs Management Program. This Customs development initiative was tailored specifically for Pacific administrations. The program develops management skills of participants and establishes a network for regional cooperation. The program was highly successful and well received by regional administrations. For more information refer to the article 'Developing Leaders for the Pacific'.
In 2007-08 we will provide further capacity building assistance to enhance the facilitation of people and trade and improve border security in the Asia-Pacific region. Initiatives include leadership and management training, a regional work exchange program and provision of technical training for border enforcement, cargo management and passenger processing.
International posts
Customs work at the border is complemented by our close working relationships with other countries' customs administrations, law enforcement and intelligence agencies. We increased our international presence in 2006-07 with an additional Customs officer stationed in Jakarta focusing on illegal foreign fishing activities.
In 2007-08 Customs intends to place an officer in London to enhance information sharing efforts. A Customs officer will also be seconded to the Joint Inter Agency Task Force West in Honolulu. This task force focuses on facilitating the exchange of intelligence concerning trafficking of illicit drugs and precursors in the Asia-Pacific region.
Cooperative agreements
Customs signed a further three Memorandums of Understanding on Customs Cooperation and Mutual Administrative Assistance with Customs administrations of the Philippines, Maldives, and United Kingdom. Existing MOUs with New Zealand and Indonesia were also updated.
Customs supports the Department of Foreign Affairs and Trade (DFAT) in negotiating trade agreements by providing expert advice on Customs related issues. Particular areas of focus include:
- the simplification and harmonisation of customs procedures and customs cooperation
- rules of origin and valuation
- electronic commerce
- border enforcement of intellectual property rights.
For further information on the status of these agreements refer to the DFAT Annual Report 2006-07, accessible at www.dfat.gov.au.
Bilateral discussions
In 2006-07 Customs Chief Executive Officer (CEO) and selected executives participated in four formal bilateral discussions with China, Hong Kong China, New Zealand and Indonesia.
These bilateral discussions resulted in strengthening our cooperative relationship with international stakeholders, particularly in the area of information sharing. In a number of cases Customs undertook to provide technical assistance. We provided risk management assistance to the General Administration of China Customs and undertook to assist the Directorate General of Customs and Excise Indonesia with enhancing intelligence analyst capabilities through the development of planning documentation and delivery of training.
The Customs Executive also attended regular meetings of the Australia/New Zealand Customs High Level Steering Group to progress key pilot projects such as:
- supply chain security
- passenger reforms
- capacity building in the Pacific region
- cooperation on intelligence and investigation cases.
Multilateral forums
Key multilateral forums that Australian Customs regularly contributes to include Asia-Pacific Economic Cooperation, Oceania Customs Organization, World Trade Organization, World Customs Organization, and the United Nations Commission on Narcotic Drugs resolutions.
In 2007 the APEC forum was held in Australia, creating a significant focus for Australian Customs in 2006-07. We chaired the annual APEC Customs-Business Dialogue and two meetings of the Sub-Committee on Customs Procedures.
The APEC business dialogue, held in Sydney on 29 June, was attended by 140 delegates from international regional customs administrations and the business community. The central theme was the identification of future trade facilitation opportunities. Outcomes included support for an APEC initiative, led by Australian Customs, to assess mechanisms for tracking cross border shipments as a means to improve visibility of the supply chain. Australian Customs also announced its plans to conduct a time-release study during the second half of 2007. This study will measure the time taken from the arrival of the goods at a port until their release to an importer or third party. The results will be used to identify any impediments to trade and recommend potential actions to improve trade facilitation.
Customs representatives from 20 APEC member economies attended two four-day meetings of the Sub-Committee on Customs Procedures, one meeting held in Canberra in January and the second in Cairns in June. The sub-committee is well regarded within APEC as an active and cooperative forum, having achieved significant outcomes during its twelve-year history. APEC customs administrations contributed to the five percent reduction in trade transaction costs between 2001 and 2006 through streamlining, upgrading and harmonising their activities.
In 2007 we progressed international work relating to trade facilitation, secure trade, and intellectual property rights enforcement. One of the key trade facilitation outcomes for 2007 was successful conclusion of the Single Window Initiative led by Australian Customs. For more information refer to the article 'Customs Single Window Initiative'.
For more information on Customs involvement in APEC refer to Output 1, APEC 2007 Passenger Facilitation and Security.
Oceania Customs Organisation (OCO)
Customs is engaged with 23 Pacific island customs administrations through the OCO. In 2006-07, we supported initiatives with OCO members, including seminars on trade facilitation, intelligence sharing exercises, training in the use of the Asia Pacific secure customs information network and provision of a detector dog program to Samoan Customs and Police.
World Trade Organisation (WTO)
We supported the Department of Foreign Affairs and Trade (DFAT) input to trade facilitation negotiations at the WTO on customs issues to expedite the movement, release, and clearance of goods. For more information about the WTO Trade Facilitation negotiations and the broader Doha round of trade negotiations review the DFAT Annual Report 2006-07 at www.dfat.gov.au.
Customs also supported the 2006 WTO Trade Policy Review of Australia through providing information on Customs legislative amendments, statistics, policies and practices. Customs policies and practices were open to WTO member scrutiny throughout the review and received a positive assessment.
World Customs Organization (WCO)
Australian Customs works closely with other members of the WCO, especially in the Asia Pacific, to implement the WCO's key initiative to secure and facilitate world trade, known as the SAFE Framework. Some of our officers have become accredited WCO diagnostic facilitators to undertake diagnostic missions on SAFE Framework implementation.
We contributed to a regional pool of integrity experts, organised to deliver integrity related programs, a linchpin to effective customs administration. We contributed to the administration of the WCO Regional Office of Capacity Building in Bangkok, the coordinating body for broader WCO technical assistance and capacity building efforts in our region. Our assistance is demonstrated through our contribution to the development of the region's future Strategic and Work Action Plans. These plans are essential instruments channelling regional efforts on the key WCO issues. We also committed to the region's Sky Hole Patching Project, an initiative designed to tackle the illegal international movement of ozone depleting substances in the region through the sharing of intelligence and information.
United Nations Commission on Narcotic Drugs resolutions
Customs continued its contribution to the United Nations (UN) Commission on Narcotic Drugs (CND). CND is the central policy making body for drug-related matters in the UN. The CND analyses the world drug situation and develops proposals to strengthen international responses to drug issues.
Customs formed part of the Australian delegation that attended the 50th CND session in Vienna, held in March 2007. The session focused on new challenges for controlling precursor chemicals. The Australian delegation made a statement to the CND stressing the need for strong partnerships between agencies, nations and industry to control the flow of precursors. We emphasised the need to take into account the legitimate uses of many of the precursor chemicals and that Australia's approach focused on regulatory controls, intelligence sharing, specialised training and awareness raising, especially with industry, retail and the justice sectors. As a member of the Australian delegation, we supported the endorsement of a resolution promoting collaboration on the prevention of domestic precursor diversion, which was co-sponsored by Australia and Japan.
Improving border control in South East Asia
The international cooperation program is part of a cross-portfolio regional counter-terrorism initiative led by the Department of Foreign Affairs and Trade. Customs was provided with increased funding under the 2006 Budget to work with border agencies to improve border controls in South East Asian countries. A key region of focus during the year was the tri-border area in the Sulu and Celebes Seas and Thailand.
Where possible, this regional work is undertaken in partnership with agencies such as the Australian Federal Police, Australian Transaction Reports and Analysis Centre, the Department of Immigration and Citizenship, Department of Transport and Regional Services and the Department of Defence.
Through this program Customs has successfully implemented projects to:
- foster interagency communication and cooperation between border agencies with customs, immigration, transport security or border integrity functions in the Philippines and Indonesia
- deliver precursor (drugs and explosives) awareness courses to border agencies in Malaysia, the Philippines and Indonesia
- support the introduction of a coordinated civil and defence response capability to border protection and maritime security in the south of the Philippines
- provide border technology (x-ray and trace detection equipment) to the Royal Malaysian Police (Marine) Division
- deploy an Australian Customs officer to Jakarta to work with border control agencies in Indonesia, Philippines and Malaysia.
Customs Strategic Statement 2006-07 outlined Customs role as Australia's primary border protection agency. It indicated annual corporate and improvement priorities, and strategic risks for the year. A risk-based planning and performance framework translated the Strategic Statement's intent into business plans across the organisation.
We published a brochure describing the fundamental elements of Customs risk management framework. The brochure is prefaced with a message from Customs Chief Executive Officer explaining that risk management allows us to be responsible and accountable in achieving our outcomes, while providing a method for realising opportunities without exposing Customs to unidentified risks.
Customs participated in the Comcover 2006 Risk Management Benchmarking Program. We received an overall key result area score of 8.1 out of a possible 10, which places our overall performance rating at 'advanced'. As a result we have received an eight per cent discount on our insurance premium for 2006-07. This is an improvement on last year's score of 7.8. The improved performance related to risk management governance and business continuity management.
We developed a Customs contingency plan for influenza pandemic. The plan provides for a range of measures, including occupational health and safety actions such as:
- actions to meet whole-of-government requirements under the Commonwealth Government Action Plan for Influenza
- stockpiling personal protective equipment for Customs staff
- ensuring all business continuity plans include robust contingency arrangements to ensure the continuity of service and critical functions in the event of a pandemic.
Under the Deputy Secretaries Interdepartmental Committee on Influenza Pandemic Prevention and Preparedness, Customs chaired a working party to further develop a draft Northern Borders Response Strategy (NBRS). Through their engagement in this NBRS working group, Customs and Defence were able to agree to a mutually consistent and complementary approach in relation to the protection (from possible influenza pandemic) of personnel undertaking boarding activities.
Our Internal Audit Unit is co-sourced with PricewaterhouseCoopers. It facilitates a strong control environment through reviews of high risk areas, as well as regular audits of Customs functions.
The audit plan is developed and updated annually and approved by the Audit Committee. It is a risk-based program in line with Branch business plans and corporate strategic risks. This ensures that Customs core priorities and risks are addressed.
A total of 37 internal audits and reviews were scheduled and conducted during 2006-07, six more than 2005-06. Approximately 70 per cent of audits were a combination of performance, compliance, financial and IT audits with the remaining 30 per cent being system-underdevelopment reviews.
During 2006-07 the Audit Committee has focused on ensuring that high risk rated items are adequately addressed and significant progress has been made in the completion of the recommendations arising from the audit reports.
For information on progress of the Australian National Audit Office review of Customs Cargo Management Re-engineering Project, refer to Output 3, Review of Customs Functions.
Customs fraud control framework underpins the prevention, detection, investigation and appropriate response to fraud in the organisation. In Accordance with the Commonwealth Fraud Control Guidelines (2002), Customs collects comprehensive fraud data and reports it to the Attorney-General's Department annually.
Customs sourced an external company, ClientWise Pty Ltd, to conduct a Fraud Awareness Survey amongst Customs staff during financial year 2006-07. The survey was conducted as part of a comprehensive review of Customs fraud control arrangements. The findings from this survey have been used to enhance our fraud training and awareness strategies.
Our Fraud Control Plan complies with the Commonwealth Fraud Control Guidelines (2002). This plan incorporates a summary of our fraud risks and identifies strategies to address these risks. We have commenced updating our fraud risk assessment in preparation for implementation of a new Fraud Control Plan in 2007-08.
