This Output covers:

• the processing of passengers, crew, and aircraft arriving and departing Australia
• risk assessment of passengers, crew, baggage, craft, cargo and mail
• intelligence and targeting activities for the identification of people and goods of interest consistent with Customs, immigration, health, family law and other law enforcement and national security requirements
• law enforcement strategy and security and Customs counter-terrorism coordination and liaison.

PERFORMANCE AGAINST TARGETS

Figure 8: Performance against targets set in the 2006-07 Portfolio Budget Statements for Output 1

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

OUTPUT 1 AT A GLANCE

The following provides a brief summary of Customs performance against Output 1 for 2006-07.

• Customs risk assessed approximately 22.6m passengers, 8.1m air cargo consignments and 2.2m sea cargo consignments.
• Working collaboratively with our law enforcement partners we achieved a total of 1,615 detections, obtaining a total of 1,531.36kgs of the four main illicit drug types (cocaine, heroin, amphetamine-type stimulants, and MDMA).
• Customs played an integral role on the inter-departmental Passenger Facilitation Taskforce that recommended initiatives to ensure the government remains 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.
• Customs is ready to conduct associated border control processes for the implementation of the Maritime Crew Visa Program on 1 July 2007 as required by Government policy. This includes changes to business processes, amendments to computer systems and recruitment of additional staff to support its introduction.
• Implementation of internal mechanisms and organisational structure resulting from the review of Customs Intelligence and Passenger functions.
• Customs enhanced its counter-terrorism responsiveness incident response capability by working with national partner agencies, sharing information, participating in proliferation security initiative exercises and undertaking counter-terrorism training.

PASSENGER PROCESSING AT AIRPORTS

Growth in passenger numbers at major Australian airports continued during 2006-07. Record numbers of passengers, in excess of one million per month, were processed outwards in December 2006 and inwards in July, October and December 2006, and January 2007. Despite the increased pressure on processing demands, Customs continued to meet its facilitation
obligations in accordance with agreed government performance targets. We processed 96.5 per cent of incoming air passengers within 30 minutes of their joining the inwards queue. Despite increasing passenger loadings during peak arrival periods, this is the strongest facilitation rate recorded since 2000-01.

A total of 22.4m international air passengers were processed in 2006-07, compared with 21.4m in 2005-06. The increase of 4.7 per cent reflects the continued growth in the international aviation industry and tourism markets.

This upward trend did not extend to the international airports in Cairns and the Gold Coast where there were substantial decreases in passenger numbers. High travel costs for Japanese tourists travelling to Australia, due to the strength of the Australian dollar against the yen and the cessation of Australian Airline's operations, attributed to a 9.7 and 18.6 per cent downturn in passenger processing at Cairns and Gold Coast airports (respectively) in comparison to the 2005-06 figures.

Challenges in maintaining the processing rates in 2006-07 included:

• record passenger numbers placing significant strain on the infrastructure of many airports
• disruption caused by airport infrastructure expansion works at Melbourne Airport in preparation for larger capacity aircraft such as the Airbus A380
• off schedule arrival of aircraft, particularly during peak hours
• a growing trend in off-terminal clearance activity which diverted resources from the airport
  environment.

Throughout 2006-07, practices and processes were reviewed continually to maintain client service levels despite increasing numbers of passengers at most airports.

Specific initiatives progressed by Customs to address the increasing challenge of facilitating passengers at airports whilst maintaining a high standard of service included:

• the commencement of the peak load staffing project, designed to supplement staffing numbers during busy arrivals and departures periods at airports
• a review of the passenger function at international airports to assess our current service delivery and our impact on the traveller experience
• the further development of the SmartGate border processing technology and continuation of the SmartGate trial at Sydney and Melbourne airports.

MAJOR GOVERNMENT INITIATIVES

PASSENGER FACILITATION TASKFORCE

In March 2006, the former Minister for Justice and Customs, Senator the Hon Chris Ellison, established a senior level inter-departmental committee to examine passenger facilitation at international airports. The Passenger Facilitation Taskforce (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.

The Taskforce, together with aviation and tourism industry representatives, considered the implications of the projected growth in inbound tourism numbers over the next decade. Specific attention was given to ensuring that border security arrangements and elements of the service delivery chain over which the government has influence are able to accommodate growth in tourist numbers and the introduction of new wide-bodied aircraft.

The Taskforce submitted its initial findings and report to government in November 2006. Its report recommended whole-of-airport initiatives aimed at ensuring that government and industry remain active in planning for the growth in international passenger numbers. These initiatives contribute to the Taskforce objective of improving passenger facilitation and maximising airport capacity by minimising interaction with passengers through enhanced border protection capability and improved coordination with industry. They include:

• a performance model representing inbound and outbound passenger process flows
• a trial of an express path for defined (first class, business class and premium frequent flyers) passengers at Sydney, Melbourne and Brisbane international airports
• the re-development of outwards process at international airports to expedite and streamline the movement of passengers through departure points
• a trial of in-line x-ray technology was undertaken to screen baggage prior to its collection by the passenger to identify possible improvements in passenger flow in the secondary examination area.

The Taskforce is also working to develop an updated International Airport Operator's Guide that will incorporate all border agency accommodation requirements. This is being coordinated by Customs with input from the relevant border agencies.

MARITIME CREW VISA PROJECT

In December 2005 the government announced the introduction of a new Maritime Crew Visa (MCV) for foreign sea crew on non-military ships entering Australia.

The passage of the Migration Amendment (Maritime Crew) Act 2007 on 10 May 2007 enabled the introduction of the MCV which brings sea crew in line with visa arrangements for most other visitors to Australia.

The MCV, a joint initiative of the Department of Immigration and Citizenship and Customs, is part of a $100m Australian Government commitment to boost border security. In 2006-07 we made changes to business processes and computer systems to support its introduction.

Applications for the visa will be available from 1 July 2007, and a transition period will be in place for six months after which it will be mandatory for foreign sea crew who travel to Australia on commercial vessels to hold a MCV.

Further information on Customs business processes in relation to commercial vessels and the associated impacts of the MCV are outlined under Output 2.

APEC 2007 PASSENGER FACILITATION AND SECURITY

During 2007 Customs processed Asia Pacific Economic Cooperation (APEC) delegates and officials attending APEC forums around Australia in an efficient and streamlined manner. It is expected that approximately 11,500 passengers will visit Australia for APEC during the course of the 2007 calendar year.

Preparation and planning for increased passenger numbers was undertaken by providing staff resources to a number of working groups and meetings in various States. Working groups that Customs participated in at Sydney include:

• APEC Airport Working Group
• Facilitation Work Group
• Security Work Group
• Air Space Management and Capacity Work Group
• Ground Transport Work Group
• Contingency Planning Work Group.

We also provided staffing resources to the APEC Taskforce Team to assist in the development of APEC procedures to ensure customs, immigration and quarantine requirements were adhered to during this time.

Customs actively participated in a number of counter-terrorism exercises, with commonwealth, state and territory governments. The exercises ensured that APEC security stakeholders had the knowledge, skills and resources to ensure effective, efficient and appropriate provision of security for each APEC event. The exercises provided Customs with the opportunity to practice and validate tactical, operational and strategic level decision making. They also encouraged  coordination between participating governments and APEC operational structures.

For information on Customs involvement in APEC forums refer to Corporate Governance, Multilateral Forums.

SMARTGATE

As part of the government's phased introduction of biometric technology to improve identity management for border processing Customs has been developing an automated border processing solution using face recognition technology and ePassports to allow incoming international travellers the opportunity to self-process through Customs.

SmartGate was trialled at Sydney and Melbourne international airports from November 2002 to June 2005, initially for enrolled inbound travellers and then extended to holders of Australian ePassports.

The trial results provided Customs with confidence that face recognition technology can be used for identity verification purposes and that Australia's border security will not be compromised by the introduction of automated border processing.

Face recognition technology has improved significantly over recent years as evidenced in the National Institute of Standards and Technology face recognition tests conducted in 1997, 2002 and 2006. These tests have reported a significant reduction in error rates since 1997.

The new version of SmartGate involves the use of two pieces of equipment - a kiosk and an exit. The kiosk undertakes eligibility checks to ensure the traveller is eligible to self-process. The exit undertakes the face-to-passport match by comparing a live image of the traveller with the digital image in the ePassport. The primary driver for a two step process rather than a one-step process (as used during the trial) is the requirement to increase processing capacity within existing space constraints.

Installation of SmartGate kiosks and exits at Brisbane International Airport was completed in February 2007. A comprehensive testing program was developed to confirm that the solution is capable of supporting the large number of eligible travellers.

After the successful conclusion of the testing program, a public trial involving invited travellers with an Australian ePassport will be conducted as part of a wider evaluation program. The purpose of this evaluation is to confirm that the solution is capable of working effectively within the airport environment and to ensure that the traveller experience with SmartGate is positive.

Delays have been experienced with the implementation of SmartGate as a result of problems identified during testing, relating to hardware and software integration. However, these issues have since been resolved.

Initially, SmartGate will only be available to Australian ePassport holders aged 18 and over. It is anticipated, however, that foreign holders of International Civil Aviation Organisation compliant ePassports will be able to use SmartGate in the future and that New Zealand ePassport holders will be the first to become eligible.

Dates for implementation at other Australian airports will be confirmed following the complete implementation at Brisbane.

REVIEW OF CUSTOMS FUNCTIONS

REVIEW OF THE PASSENGER FUNCTION

In 2006-07 we undertook a review of the passenger function at international airports to assess our current service delivery and our impact on the traveller experience. A request for tender was issued in June 2006. The successful tenderer, Rehbein AOS, commenced the review in August 2006 and presented findings to Customs in December 2006.

The review produced a number of recommendations to improve the efficiency and consistency and the quality of the passenger's experience.

In response to the review Customs is coordinating a number of measures some of which have already commenced. Measures to enhance passenger functions include:

• improved resource planning and deployment at international airports during peak periods to minimise the impact of increasing passenger numbers
• long term planning in anticipation of varied passenger numbers and aircraft arrival times
• streamlining infrastructure and queue management in shared areas
• progressing effective coordination and information sharing with airport stakeholders and government agencies
• investigating additional performance measures whilst maintaining current passenger facilitation standards
• developing a policy to deliver information to passengers consistently and effectively at all international airports.

Customs will continue to work closely with airport stakeholders, both government and nongovernment, in developing processes and arrangements to implement the recommendations.

REVIEW OF INTELLIGENCE FUNCTIONS

Following a review of the implementation of Customs Integrated Cargo System completed in May 2006, by Booz Allen Hamilton, Customs initiated an external review of the Customs intelligence function.

The review of Customs intelligence function was also undertaken by Booz Allen Hamilton and commenced on 21 August 2006. It examined whether existing intelligence structures, managerial arrangements, business practices, technology and systems support the efficient and effective delivery of Customs Outcome. The final report was delivered to Customs on 18 December 2006.

Review recommendations

The review acknowledged that Customs operates in a challenging environment, with an increased focus on national security and community protection. It identified a range of recommendations to better position Customs to meet its border security responsibilities. The recommendations included:

• elevation of Intelligence Branch functions to a national program at the divisional level
• redevelopment of intelligence and targeting functions into their own separate, yet closely aligned, work streams
• establishment of a Strategic Development function to coordinate professional development, business process development and technical infrastructure development required to support intelligence and targeting functions.

The realignment of activity will achieve benefits, including:

• improved communication between intelligence staff and internal clients
• development of a national program of targeting work that will operate across and between import and export streams
• improved liaison with external stakeholders including overseas administrations and Australian law enforcement agencies
• enhanced intelligence and targeting skills, processes and technologies
• implementation of an information infrastructure essential to high quality intelligence advice and targeting outcomes.

Implementation

In implementing the recommendations Customs has established Intelligence, Border Targeting and Strategic Development Branches under the new Intelligence and Targeting Division. The Intelligence and Targeting Division has developed a number of initiatives including Customs National Intelligence Priorities, National Analysis and Production Work Program, and a National Targeting Strategy.

Customs National Intelligence Priorities

The Customs National Intelligence Priorities were developed in April 2007 to provide national consistency for the allocation of Customs intelligence capability. Customs used the priorities to guide its intelligence analysis and collection activities, targeting areas where Customs has the prime carriage of responding to border risks. The priorities were used to guide our cooperative work with other agencies, including law enforcement agencies and the Australian intelligence community.

National Analysis and Production Work Program

This program ties Customs intelligence work to our National Intelligence Priorities. It implements a program of intelligence analysis, with intelligence analysts throughout Australia working within the context of the program. The program is focused on meeting the needs of Customs internal operational areas. It is expected that external partner agencies will also benefit from the program.

National Targeting Strategy

Customs developed a National Targeting Strategy to ensure consistent standards and coordinated national targeting. The strategy ensures border targeting activities operate smoothly across the import and export streams and focus targeting activities on high-risk entities. The National Targeting Strategy also aims to anticipate future targeting needs such as system functions, capability improvements and the broad application of best practice developments within the targeting field.

Improve Information Collection Capabilities

To support the information needs associated with the intelligence review, we implemented a framework to improve the collection and exchange of information between Customs and partner law enforcement and regulatory authorities. The framework maps and consolidates information requirements according to intelligence priorities and partner agency interests and information needs.

OPERATIONAL PERFORMANCE AND IMPROVEMENT INITIATIVES

PASSENGER ASSESSMENT AND RESPONSE

In response to the continued threat of terrorism, illicit drugs and other serious criminal activity, Customs has further expanded its ability to conduct pre-arrival screening of passengers arriving in and departing from Australia through its international airports. Customs conducts this initial assessment of passengers through analysis of a range of data including:

• advanced passenger information sourced from the Department of Immigration and Citizenship
• airline ticketing information obtained from international airlines.

Currently, Customs has access to 33 airline reservation and departure control systems representing approximately 95 per cent of all arriving passengers. With the increase in passenger numbers and international carriers to Australia, Customs will maintain and enhance its access to this vital data set in order to ensure effective protection of the border.

Airline data together with advanced passenger information provides Customs with the capability to conduct sophisticated risk assessment of travellers prior to arrival or departure. Pre-arrival screening not only enables the majority of passengers to be facilitated quickly across the border but also contributes significantly to Customs ability to maintain its border protection responsibilities.

Customs also undertakes risk identification to make best use of resources and focus on high-risk passengers.

We use available information and intelligence to identify passengers of interest at airports at the time of their arrival or departure.

Customs capabilities for traveller risk assessment includes a computer system called the Integrated Analysis Tool. In 2006, the Integrated Analysis Tool replaced an ageing legacy system. It has expanded Customs ability to better integrate and analyse a range of traveller movement information. It encompasses capabilities that enable both real-time and historical traveller identification and analysis. In January 2007 our Passenger Assessment team, which developed and implemented the system, won an Australia Day Council Award in recognition of this achievement.

BORDER TARGETING NATIONAL PROGRAM

In response to the external review of Customs intelligence functions, 2006-07 saw the creation of the Border Targeting National Program. Four complementary functional and support areas were established under the program: Targeting strategies, Targeting Systems, Target Development and Targeting Operations.

Our targeting activities are focused on the two functional areas: Target Development and Targeting Operations. 'Targets' are mainly suspicious consignments, entities or criminal networks that we identify as showing signs of being involved in criminal behaviour across the border. The Border Targeting National Program has established a set of strategic, operational and workflow management guidelines that coordinate a national-level work program. This program drives research into the behavioural patterns of criminal networks and initiates operational responses to intervene in their activities.

As a foundation for developing targets, Customs is building a comprehensive awareness of Australia's criminal environment for cross-border activities. Strategic assessments of Australia's border environment provide the foundation, on which target development teams carry out their analytical targeting efforts.

Specialised counter-terrorism, financial, online and criminal networks targeting teams have been established across the country. Each carries out analysis of identified risks to expand our knowledge of existing targets and identify new entities of interest. These new teams work closely with partner law enforcement agencies and contribute a unique perspective towards a national picture of criminal operations in Australia.

During the year the program built a model for the national management and coordination of targeting operations. This model is intended to facilitate national consistency and provide a national view of workload across the program. A new threat and risk assessment matrix was developed to ensure national consistency in the application of risk assessment practices. A work in progress system was introduced to facilitate a national view of research and analytical output.

As part of Customs Air Cargo Security Program, the Border Targeting Program established the National Export Air Cargo Targeting Cell in Melbourne. The cell became fully staffed and operational in April 2007. It provides 24 hours a day, seven days a week, identification of high-risk export cargo being transported on passenger aircraft.

TOURIST REFUND SCHEME AND DUTY FREE SHOPPING

The Tourist Refund Scheme enables travellers to claim a refund upon their departure from Australia, subject to certain conditions, of the goods and services tax and wine equalisation tax that they paid on goods purchased.

Customs provided input to the Review of the Administrative Arrangements for Tourist Shopping in Australia conducted by the Department of Treasury, the Prime Minister and Cabinet and the Department of Industry, Tourism and Resources. The review examined options for improving the delivery and administration of the scheme and made recommendations to government.

Customs has also implemented an initiative to increase awareness of the scheme's arrangements for obtaining a refund on oversized goods. Plans are also being made to remove the current duty free shopping restrictions on the range of goods available from duty-free stores in the arrivals area. It is anticipated that these changes will require amendment to the Customs Regulations 1926 in 2007-08.

We also supported the Department of Transport and Regional Service in the introduction of the government initiative to regulate the carriage of liquids, aerosols and gels taken on board aircraft in hand luggage. Customs worked to minimise disruption to eligible passengers wishing to make a Tourist Refund Scheme claim as a result of the introduction of the restrictions. Customs provided extra support to duty free operators and travellers at this time by rostering extra staff during the transition phase, as well as developing new pamphlets and revised operating procedures.

Figure 9: Summary of Tourist Refund System claims

ENHANCING THE FRONTLINE PROGRAM

Frontline is a cooperative program between Customs and industry groups involved in international trade and transport. It has been in operation since 1991. The program draws on the knowledge and expertise of people in industry to help prevent illegal activities.

In October 2006, the Chief Executive Officer approved a number of projects to enhance Customs response to the threat of drugs and precursors. The project included improvements to the Frontline Program to improve the flow and quality of industry based information to Customs, including:

• active and targeted recruitment of new Frontline members
• increasing training and awareness programs for Customs officers on the purpose and elements of Frontline.

The project was piloted in New South Wales, Victoria and Queensland from October 2006 to April 2007. Over this period, the monthly average of information reports received in the pilot regions increased more than 50 per cent compared with the 12 months preceding the pilot. There were also several significant Customs seizures as a result of information provided by industry during the pilot. The project will be implemented nationally from 1 July 2007.

ILLICIT DRUGS AND PRECURSOR CHEMICALS

Customs continued to protect the community through the detection of illicit drugs and precursors at the border. Customs activities to detect illicit drugs and precursors support the objectives of the Australian Government's National Drug Strategy.

In 2006-07 Customs undertook a number of initiatives to meet the challenges of a changing illicit drug and precursor market, including:

• joint target identification and operational activity with the Australian Federal Police and the Australian Crime Commission
• planning the expansion of overseas drug related intelligence by establishing overseas offices in Honolulu and London in 2007-08
• enhancing the community and industry engagement programs Frontline and Hotline
• enhancing container examination facility capability
• establishing multidisciplinary teams, such as Project Stridor and the Joint Target Generation Team, to target emerging threats, such as precursors.

Customs made a number of significant detections in 2006-07 and observed illicit drug and precursor trends as outlined in Figure 10.

Figure 10: Drug detections* by mode of importation

<sub>* Drug detections subject to ongoing investigation might not appear.
^ Weight shown may be the confirmed weight (if available) or the gross, net or estimated weight. Where weight of detections of amphetamine-type stimulants (ATS) and MDMA (ecstasy) was not available, an estimate of 0.29g per tablet was used. Estimated weight values for precursors, performance and image enhancing drugs (PIEDs) and 'Other' drugs are not shown as there is no consistent unit of measure available. Items in these categories can be measured in grams, volume, dose unit or capsules.
# Includes detections made from air cargo, sea cargo and international post.
+ Includes detections made from searches of sea passengers and crew, vessels and aircraft.
~ Amphetamine-type stimulants (ATS) includes methamphetamine and amphetamine but exclude MDMA (ecstasy).
## Precursor figures refer to detections of chemical substances that are prohibited imports/exports which may be used in the manufacture of illicit drugs. Some precursors detected were likely not intended for the manufacture of illicit drugs, but were active ingredients in health supplements, cold and flu preparations, herbal medicines and weight-loss products purchased on the Internet.
@ PIEDs refers to performance and image enhancing drugs. They include steroids, DHEA (dehydroepiandrosterone/ prasterone) and hormones.
** 'Other' drug detections refer to stimulants other than cocaine or amphetamine-type stimulants, narcotics/analgesics other than heroin, psychotropics/hallucinogens other than MDMA (ecstasy) or cannabis products, and all depressants and sedatives. They exclude precursors.</sub>

_{Figures may vary from those previously published due to adjustments arising from administrative corrections, subsequent chemical analysis and further information received from the Australian Federal Police. Also, detections subject to ongoing investigation (including controlled deliveries) might not appear.}

Precursors

Trends in the movement of drug precursors continued to evolve over the reporting period. Customs and other law enforcement agency intelligence capabilities have continued to focus on understanding these trends. In 2006-07 Customs detected imports of up to approximately 70kg of pseudoephedrine in air cargo articles and numerous attempts to import gammabutyrolactone (GBL) liquid in postal articles. GBL liquid is a precursor to the dangerous illicit drug gammahydroxybutyrate (GHB), also known as 'fantasy'. The appearance of new precursors, manufacturing techniques and importation methodologies continues.

In combating the illicit use of precursor chemicals, we continue to play an important role on the National Working Group to Prevent the Diversion of Precursor Chemicals into Illicit Drug Manufacture (the Precursor Working Group). The Precursor Working Group brings together representatives and members of law enforcement, health regulatory and industry bodies. In 2006-07 Customs contributed to a range of initiatives by the Precursor Working Group, including development of a precursor information resource for law enforcement officers.

In 2006-07 Customs delivered four domestic and three international precursor training courses. The courses enhance the capacity of Customs officers to detect and handle precursor chemicals and equipment imported for use in illicit drug manufacturing.

Customs is also represented on and provided the secretariat support to the Inter-Governmental Committee on Drugs Scheduling Working Party on Controlled Substances (the Working Party). The Working Party has developed model schedules and quantities for drugs, plants and precursors based on the Model Criminal Code Officers Committee offences. These model schedules were noted at the Ministerial Council on Drugs Strategy meeting in May 2007 and it was agreed that Australian Government and State and Territory jurisdictions may consider adopting them in the interests of national consistency.

Figure 11: Interceptions of precursor* type drugs

<sub>* Precursor figures refer to detections of chemical substances that are prohibited imports/exports which may be used in the manufacture of illicit drugs. Some of the precursors detected were likely not intended for the manufacture of illicit drugs, but were active ingredients in health supplements, cold and flu preparations, herbal medicines and weight-loss products purchased on the Internet.
^ Precursors for amphetamine-type stimulants include ephedrine, ma huang/ephedra, phenyl-2-propane (P-2-P), phenylactic acid, phenylpropanolamine/norephedrine, pseudoephedrine.
~ Precursors for LSD includes ergometrine and ergotamine.
+ Precursors for GHB (fantasy) include gammabutyrolactone (GBL). However, GBL is also subject to abuse in its own right, and is treated as a narcotic substance under Customs legislation.
< Precursors for MDMA (ecstasy) may also be precursors to related drugs such as MDA or MDEA, and includes piperonal, safrole, isosafrole, and methylenedioxyphenyl-2-propanone (3,4-MDP-2-P).
** Includes detections made from air cargo, sea cargo and international post.
^^ Includes detections made from searches of sea passengers and crew, vessels and aircraft.</sub>

_{Figures may vary from those previously published due to adjustments arising from administrative corrections, subsequent chemical analysis and further information received from the Australian Federal Police. Also, detections subject to ongoing investigation (including controlled deliveries) might not appear.}

Figure 12: Drug detections and significance of offence^@

<sub>@ Amendments were made to the Criminal Code in December 2005 that involved changes to the terminology of offence/ quantity categories, definitions of offences, penalties and some weight category thresholds. The drug detection data prior to December 2005 has been reclassified to reflect the new definitions to provide consistency when drawing comparisons and analysing trends with the 2006-07 data.
* Weight may be confirmed weight (if available) or gross, net or estimated weight. Where detections of amphetaminetype stimulants (ATS) and MDMA (ecstasy) were not available, an estimate of 0.29g per tablet was used.
^ Significance of offence is based on the classification used in the Customs Act 1901 and is summarised as:</sub>

_{** Amphetamine-type stimulants (ATS) includes methamphetamine and amphetamine but excludes MDMA (ecstasy). Commonwealth legislation specifying commercial quantities of amphetamine and methamphetamine (and other narcotic substances) took effect on 10 December 2004.}

_{Figures may vary from those previously published due to adjustments arising from administrative corrections, subsequent chemical analysis and further information received from the Australian Federal Police. Also, detections subject to ongoing investigation (including controlled deliveries) might not appear.}

Amphetamine-type stimulants

In 2006-07 amphetamine-type stimulant (ATS) interdiction continued to receive a high level of attention from Customs and other law enforcement agencies.

In 2006-07 there was a rise in the attempted importation of ATS in multiple small parcels. Intercepts were made in the postal system of importations using an orchestrated 'scatter' importation methodology. This involved a consignment to Australia of a large number of small quantities of drugs in postal articles and air cargo parcels, mainly to private mail boxes.

Crystalline methamphetamine hydrochloride, commonly referred to as 'ice', was detected in attempted importations in air cargo and postal articles. Customs continues to monitor importation trends to determine the extent of the threat that Australia faces from ATS importation.

Figure 13: Amphetamine-type stimulants and crystalline methamphetamine detections by weight (kg)

_{* Weight shown in the above table is an estimation. Weight is calculated using 0.29 gm per tablet where a weight was not available. Some small quantity shipments of amphetamine-type stimulants do not have weight recorded, so these weight figures are a slight underestimate.
# Amphetamine-type stimulants include amphetamines and methamphetamines in liquid, capsule, paste, powder or tablet form. It does not include MDMA (ecstasy) or crystalline variety of methamphetamine called 'ice'.
^ Crystalline methamphetamine is shown separately, but would usually be included in figures for ATS.}

_{Figures may vary from those previously published due to adjustments arising from administrative corrections, subsequent chemical analysis and further information received from Australian Federal Police. Also, detections subject to ongoing investigation (including controlled deliveries) might not appear.}

Figure 14: Number and weight (kg) of amphetamine-type stimulants* detections

_{* Amphetamine-type stimulants do not include the crystalline variety of methamphetamine called 'ice' or MDMA (ecstasy).}

Figure 15: Number and weight (kg) of crystalline methamphetamine* detections

_{* Includes only the crystalline variety of methamphetamine called 'ice'. Excludes MDMA (ecstasy)}

MDMA (3,4-methylenedioxymethamphetamine)

While the number of 2006-07 detections of MDMA, also known as ecstasy, did not reach the record levels of 2004-05, they were nearly twice the weight of MDMA detected in 2005-06.

Figure 16: Number and weight (kg) of MDMA (ecstasy) detections

Heroin

There appears to be a trend towards smaller, more frequent attempts to import heroin through the post and incoming passengers. In 2006-07 Customs detected an increased number of passengers attempting to import heroin into Australia via internal concealment, with seven detections in 2005-06 weighing approximately 1.2kgs compared with 25 detections in 2006-07 weighing over 7.1kgs.

In response to this trend Customs together with the Australian Federal Police (AFP) established an overseas awareness campaign targeted at high-risk countries, including Vietnam and Cambodia. Customs and the AFP held a series of workshops in these countries for their police and customs administrations. The workshops focused on the issues Australia faced in relation to internal narcotic concealment, as well as highlighting the need for increased cooperation and information sharing between our countries to detect narcotics at the border.

Figure 17: Number and weight (kg) of heroin detections

Cocaine

In recent years smaller more frequent importations of cocaine have been detected in the postal, air/sea cargo and passenger streams. However, in 2006-07 there were a number of sizeable detections of cocaine, including 135kg in September 2006 in sea cargo and 141kg in March 2007 in air cargo.

Figure 18: Number and weight (kg) of cocaine detections

PERFORMANCE AND IMAGE ENHANCING DRUGS

Customs has key supply reduction responsibilities under the Australian Government's Tough on Drugs in Sport Strategy (TODIS). TODIS involves a range of regulatory, legislative, policy, research and educational anti-doping initiatives aimed at limiting the supply and use of performance and image enhancing drugs (PIEDs) within sport and the community.

We continue to produce supply reduction results under TODIS through the seizure and investigation of illegal PIED imports. Customs made 1,609 PIEDs seizures in 2006-07 and successfully prosecuted 23 cases involving the illegal importation of PIEDs. The penalties ranged from fines of up to $11,000, to good behaviour bonds and community service orders. A national investigation targeting smugglers of steroids, growth hormones and other illegal PIEDs commenced in this period, resulting in the identification and disruption of a number of criminal networks operating throughout Australia.

Customs seized approximately 40kgs of PIEDs in a consignment originating from China in March 2007 with an estimated street value in excess of $4m. This represents one of the largest ever seizures of PIEDs by Customs.

Figure 19: Interceptions of performance and image enhancing drugs

_{* Includes detections made from air cargo, sea cargo and international post.
^ Includes importations via sea passengers and crew, vessels, aircraft and detections arising from post-border operations.
~ DHEA is dehydroepiandrosterone/prasterone.
# Detections of EPO, Darbepoetin alpha and natural and manufactured gonadotrophins are included in the figures for hormones.}

OUR ROLE IN DRUG RESEARCH

Customs participates in drug law enforcement research through a number of forums to better inform policy decisions. Customs is on the Board of Management for the National Drug Law Enforcement Research Fund and also maintains strong relationships with peak research bodies such as the National Drug and Alcohol Research Centre and the Australian Institute of Criminology (AIC).

Customs provides statistics and analytical assistance for many annual reports on Australia's drug environment such as the Illicit Drug Reporting System and the Australian Crime Commission's Illicit Drug Data Report. In 2006-07 Customs commissioned the AIC to conduct research into the precursor chemical trade environment in the Oceania. This research will enhance our role as the Oceania Regional Focal Point under Project Prism, the International Narcotics Control Board's project addressing precursor diversion into synthetic drug manufacture.

PROHIBITED IMPORTS FROM AIR PASSENGERS (OTHER THAN ILLICIT DRUGS)

Detection and seizure of prohibited imports from air passengers remained strong in 2006-07. Customs recorded 11,748 incidences of non-compliance. These detections included significant instances of passengers carrying duty free goods that exceeded the passenger concession limits.

Wildlife detections increased by 42 per cent during 2006-07 and included goods such as ivory, birds, bird eggs, reptiles, shark fin and Chinese medicines containing wildlife extracts. Firearms and other weapons detections increased by approximately 23 and 62 per cent respectively and included goods such as electric fly swatters, throwing stars, soft air pistols, flick knives, and anti-personnel sprays (mace).

Customs also made 188 detections of people bringing in undeclared currency of $10,000 or more, which is in breach of the Financial Transactions Reports Act 1988. This represents a 25 per cent increase on figures from last year.

Figure 20: Number of detections/seizures of prohibited imports* for international air passengers other than illicit drugs

<sub>* A major find usually refers to an incident where a record of interview is conducted or prosecution action commenced. A minor find usually refers to an incident where a record of interview is not conducted or prosecution action not commenced.
^ Refers to quarantine related finds by Customs that result in prosecution action. The number of minor finds referred to the Australian Quarantine and Inspection Service is not shown.
+ Includes 'other' finds not classified above.</sub>

COUNTER-TERRORISM

Customs has continued to enhance its counter-terrorism responsiveness by working with national partner agencies, including the Protective Security Coordination Centre, Department of Foreign Affairs and Trade, Australian intelligence community and border agencies.

Customs also:

• implemented operational plans
• developed and maintained cooperative arrangements with key partner agencies such as
  the Australian Federal Police and Australian Security and Intelligence Organisation
• trained staff and improved technology to enhance its incident response capabilities.

Customs participated in multi-jurisdictional counter-terrorism exercises during 2006-07 and has undertaken planning for the Mercury 2008 exercise and quadrilateral Pacific Challenge international exercise.

INCIDENT RESPONSE COORDINATION

The Customs Incident Reporting Centre (CIRC) became fully functional during 2006-07. This corporate incident reporting capability provides Customs Executive with rapid and accurate briefings on security, emergency and crisis events that impact the organisation or have the potential to do so. The CIRC manages Customs involvement in whole-of-government committees responsible for formulating a coordinated response to emergency situations such as a disease pandemic, natural disaster or terrorist attack.

Since the CIRC's inception in October 2006 there have been a total of 610 incidents reported.

IDENTITY FRAUD

Customs is a member of the Commonwealth Reference Group on Identity Security, the key forum under the National Identity Security Strategy (the Strategy) responsible for coordinating the Australian Government's identity security initiatives. We actively participated in several working groups to take forward the following principle elements of the Strategy:

• develop a standard framework and security standards for proof of identity documents
• develop integrity and authentication standards for identity data
• develop and implement a national document verification service for use by Commonwealth agencies.

In the 2006-07 Budget the Australian Government allocated $28.3m for the implementation of the document verification service. Once fully implemented, the national document verification service will be a secure on-line system accessible to key Australian Government, State and Territory agencies. This service will allow authorised government agencies, including Customs, to check key identity documents presented by individuals applying for high value benefits and services. The system will strengthen the security of Customs working areas at ports and airports by providing an enhanced identification verification mechanism for the issuing of Aviation and Maritime Security Identification Cards.

Customs investigators were also seconded to three Identity Security Strike Teams, led by the Australian Federal Police. The teams are located in Melbourne, Brisbane and Perth.

The teams include representatives from Customs, the Australian Crime Commission and the Department of Immigration and Citizenship. They are designed to investigate cases of identity crimes detected at the border.

MONEY LAUNDERING

Customs is represented on the Australian Government's Anti-Money Laundering Committee, which comprises those Australian Government agencies with policy or operational responsibilities under the Financial Transaction Reports Act 1988 and the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

In December 2006, new cross-border reporting requirements commenced, which were included in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. International passengers are now required to disclose any bearer negotiable instruments, if asked to do so by Customs officers. Bearer negotiable instruments include cheques, travellers cheques, and money orders of any amount. Our enforcement officers at international airports were trained on procedures for implementing the new requirements. Training was undertaken with the assistance of the Australian Transaction Reports and Analysis Centre and the Commonwealth Director of Public Prosecutions.

Customs continues to contribute to the Australian Government's participation in the Financial Action Task Force, which is the body that sets the global standards for anti-money laundering efforts. We also contribute to the Asia Pacific Group on Money Laundering, which promotes implementation of the Financial Action Task Force recommendations on anti-money laundering and counter-terrorism financing efforts (such as the enforcement of the bearer negotiable instrument reporting requirement).

INITIATIVES AGAINST BRIBERY OF FOREIGN OFFICIALS

Customs is a member of the Australian Government's interdepartmental committee that oversees the response to the 2005 Organisation for Economic Cooperation and Development evaluation of Australia's compliance with the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. In 2006-07 we undertook a number of initiatives to raise awareness among Customs officers and stakeholders of Australia's laws against the bribery of foreign officials. Results of the evaluation are being fed into Customs review of its fraud control arrangements.

COOPERATION WITH KEY STAKEHOLDERS

INTERNATIONAL INTELLIGENCE PARTNERSHIPS

Customs has developed closer working relationships with other countries to further facilitate the exchange of intelligence. This has been achieved by placement of Australian Customs representatives in key geographic locations, implementation of communication and engagement strategies, attendance at law enforcement and customs conferences and developing information sharing agreements and protocols.

We continue to maintain a high level dialogue with New Zealand Customs focusing on shared strategic risks and opportunities for collaboration. On an operational level, we have cooperated with New Zealand Customs to examine the trans-Tasman environment as a potential trafficking route for synthetic drugs and precursor chemicals.

In March 2007 the seventh Customs-to-Customs bilateral discussions were held with Hong Kong and additional bilateral talks with China. A workshop is planned to continue cooperation and collaborative initiatives between the agencies, particularly to improve risk assessment and targeting in those countries.

Customs was represented at the Heads of Intelligence (HINT) meeting in March 2007 in Auckland, New Zealand. HINT comprises border agency intelligence leaders from the United Kingdom, the United States of America, Canada, New Zealand and Australia. This meeting focused on commissioning joint analytical projects on topics of mutual concern to the border agencies.

In May 2007 two Customs senior executive officers travelled to India to explore intelligence cooperation with the Directorate of Revenue Intelligence of Indian Customs. This link offers potential benefit for both parties in collaboration on risk management and on counter-drug operations.

In June 2007 we participated in a targeting and risk assessment workshop at the Asia Pacific Economic Cooperation (APEC) Sub-Committee on Customs Procedures held in Cairns. The workshop provided an opportunity for Customs to showcase our National Targeting Strategy and take steps to develop ties with APEC economies with whom we share strategic interests.

INTER-AGENCY SECURITY PARTNERSHIPS

We continue to work with other Australian government agencies at airports to strengthen aviation security. These joint efforts contribute to a whole-of-government approach to national security initiatives.

Through inter-agency relationships with key law enforcement agencies, Customs contributes to detailed assessments of criminal networks that operate in and around the Australian border.

Currently Customs is contributing to the national law enforcement effort through a variety of national and state based initiatives. On a national level these include the:

• Joint Airport Investigation Teams
• Joint Airport Intelligence Groups
• Joint Target Generation Teams
• Outlaw Motor Cycle Group Taskforce
• Australian Crime Commission (ACC) Crime in the Transport Sector Determination
• ACC Maritime Importation Methodologies Determination
• Financial Intelligence Assessment Team.

Aviation security

While not directly responsible for aviation security, Customs has expanded its role and adopted new functions to strengthen and support aviation security. In response to the terrorist attack on America's World Trade Centre in 2001 and the release of An Independent Review of Airport Security and Policing for the Government of Australia by Sir John Wheeler in 2005, Customs is more focused on meeting criminality and aviation security threats at airports. We continue to work closely with our partner government agencies and industry to ensure a secure airport environment.

We have increased our airside security presence through the enhancement of Air Border Security teams. Across eight Australian international airports (Sydney, Melbourne, Brisbane, Adelaide, Darwin, Perth, Cairns and Gold Coast), 162 Air Border Security officers are fully deployed. These teams provide a visible Customs presence in the airside aviation environment by conducting border control activities and intelligence collecting capabilities.

Joint Airport Investigation Teams, comprising Australian Federal Police, state and territory police and Customs, are established at five designated airports (Sydney, Brisbane, Melbourne, Perth and Adelaide) to investigate serious and organised crime within the airport precinct. Customs brings to these teams a wide range of powers and intelligence sources which assists in addressing border-related crime at airports. Our involvement produces a strengthened whole-of-government approach to investigating crime at airports. The teams have been responsible for effecting over 50 apprehensions and more than 260 charges. These relate to activities such as the importation of border controlled substances, specific threats to destroy aircraft, assaults against air crew, Australian Securities and Investment Commission related security breaches and identity related crime.

In the 2006-07 financial year Air Border Security teams nationally conducted 19,216 aircraft searches and 28,020 patrols of airports. These activities have assisted Air Border Security teams to collect intelligence, provide valuable knowledge about airside operations and employees, and identify criminal activity for investigation.

Joint Airport Intelligence Groups were also established in July 2006 at 11 Australian airports (Sydney, Brisbane, Melbourne, Adelaide, Perth, Cairns, Canberra, Darwin, Hobart, Gold Coast and Alice Springs). The groups are the primary intelligence cell in the airport environment. Customs outposted 12 intelligence officers to the groups. The groups comprise Customs, Australian Federal Police, the Department of Transport and Regional Services, the Department of Immigration and citizenship, the Australian Crime Commission, the Australian Quarantine and Inspection Service and the Australian Security Intelligence Organisation.

SUMMARY OF KEY LEGISLATIVE CHANGES

The following outlines key Customs related legislative amendments during 2006-07 for Output 1.

EXCLUSION FROM CUSTOMS CONTROLLED AREAS

The Customs Legislation Amendment (Border Compliance and Other Measures) Act 2007 contained amendments to allow Customs officers to exclude, by written notice, a person who is the holder of a security identification card from a Customs controlled area if the person is found to be in that area for purposes unrelated to their employment.

Previously, there were only two options for dealing with people who have unlawfully entered a Customs controlled area:

• direct the person to leave the area, or
• prosecute the person.

MONEY LAUNDERING

The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 received Royal Assent in December 2006. It contained new cross-border reporting requirements that commenced in December 2006. International passengers are now required to disclose any bearer negotiable instruments, if asked to do so by Customs officers. Bearer negotiable instruments include cheques, travellers cheques, and money orders.

BUILDING FOR THE FUTURE

The following provides a summary of Customs future plans for Output 1.

• Effectively manage the enforcement/facilitation tension and meeting performance standards at airports.
• Develop service delivery at airports with a focus on optimising the passenger experience and service improvement.
• Progress and support the activities and outcomes of the:
  • Passenger Facilitation Taskforce
  • Passenger Review
  • Airport Operations Effectiveness Strategy
  • Intelligence Review
• Further develop and deliver the following initiatives:
  • SmartGate full implementation
  • Maritime Crew Visa
  • Enhanced Passenger Assessment and Clearance
• Improve the operational delivery of intelligence to support frontline officers through a range of new and enhanced capabilities.
• Continue to play a leading role in the development of international counter terrorist training programs and engage in further exercises and planning to refine Customs counter-terrorism capabilities and processes.
• Working more closely with other law enforcement agencies to improve our response to threats posed at the border.