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Thursday, 11 March 2004
Page: 21375

Senator MARK BISHOP (1:01 PM) —Today we are considering two bills cognately, the Import Processing Charges (Amendment and Repeal) Amendment Bill 2003 and the Customs Legislation Amendment (Application of International Trade Modernisation and Other Measures) Bill 2003. The first bill makes amendments to the Import Processing Charges (Amendment and Repeal) Act 2002. Its primary purpose is to extend certain charges in the Import Processing Charges Act 1997 during the switch-over between computer systems. The Australian Customs Service has been redeveloping its computer systems for the better management of its business. This is the cargo management re-engineering project, which has achieved much notoriety for its delay and extraordinary overspend. It is an overspend which has left Customs virtually bankrupt, and the receivers have now been called in.

This project and the authority needed for its operation have been authorised by the Customs Legislation Amendment (Application of International Trade Modernisation and Other Measures) Bill 2003. This bill contains provisions for the transition between systems so as to provide continuity of function, but authority for the collection of duty in that period is also required. Unfortunately this necessity has not been properly foreseen. In short, it has belatedly been realised that the old and the new systems will need to operate in tandem for a fixed period. This will enable industry to switch over and adapt its systems to the new framework established by Customs. It will also allow a period of grace in which the new system can be bedded down without risk of total failure in business transactions. That is very sensible. It is reassuring for industry, whose confidence in this project is of a very low order. So continuity for the authority to collect duty is needed for both systems. These are very practical propositions which the opposition supports.

The second bill, the Customs Legislation Amendment (Application of International Trade Modernisation and Other Measures) Bill 2003, is the fifth piece of legislation necessitated by the CMR project. I emphasise the point just made about the quality of the planning for this project going right back to its inception. We can have no doubt that it will not be the last amending bill brought before this chamber. This bill provides for the tandem operation of the systems described a moment ago. As with all changes to the system, there need to be provisions for transition. This is particularly the case for high-volume systems which operate 24 hours per day. Business in a pipeline for one system must clear, and new business must commence. There cannot be any down time. Industry users need that continuity and safeguard if something goes wrong. Of course, we sincerely hope that Customs gets it right and all the bugs are ironed out. We hope that when the new system goes live there will be no problems. That is why we are currently seeing extensive testing with industry. But, as we know, there is no test like that of the full load of normal daily traffic. Tandem operation is therefore essential for the time being but, as I said earlier, it is a pity that it was not anticipated and put into the planning process.

It must, however, be said that this is quite a complex project. Customs transactions are detailed with respect to manifest information and other processes. There is an enormous amount of data to be transmitted in line with very detailed legal requirements—hence, there are other provisions in this bill to clarify the communication of data. The bill also makes some changes to the importation of firearms. The minister is given additional powers in some circumstances to withhold such restricted imports. Provision is also made for the clarification of cargo reporting requirements and record retention. Added changes have been made with respect to impoundment. The bill also changes the means for the calculation of duty on imported alcoholic beverages. That has been necessitated by a number of successful appeals on the calculation of duty. Duty will be calculated not on the level stated on the label but as measured for actual content. None of these provisions are controversial, and they are therefore supported.

However, the introduction of these bills does provide an opportunity to draw attention to the parlous state of Customs operations. The management of the CMR project is symptomatic of this, but it also goes to the heart of the government's management of this very important portfolio. It is no news that the CMR project is overspent by $100 million. That in itself is, of course, an indictment. It means this project commenced without proper analysis and continued with inadequate planning. It has been undertaken without a clue as to actual cost.

The evidence is there before us. The Australian Customs Service, the collector of billions of dollars of revenue, is broke. What started as a good idea has become a monster, eating up $100 million of operational funding. No supplementation has been granted by the government by way of capital investment—until now. Customs has run up the white flag to the Department of Finance and Administration and the receivers have been called in. The current additional estimates provide for a capital injection of $43 million.

But it is only the start. Customs were forced to provide for an overspend of $30 million and must find another saving of $24 million before the financial year is out. No operational organisation can manage that task without seriously abandoning some of its operational responsibilities. In fact, we know that is already happening. Staff on the ground, who are already pressed, simply cannot fulfil their duties. It is apparent at airports where there are shortages of staff and rosters are therefore increasingly difficult to fill. There are restricted hours for the operation of X-ray facilities at the four major seaports where cargo flows 24 hours a day. Intakes of trainees are cut. Instructions sent out to regional staff to inspect more ships and ships crews' IDs are fulfilled by stopping other work. The fabric is stretched to the breaking point.

All of this is at a time of heightened security when it is expected that a frontline force like Customs would be fully funded. That is simply not the case. The admission is on the record. In fact we are looking forward to seeing the findings of the Finance investigation in due course. We look forward to seeing extra provision in the forthcoming budget by way of additional capital investment. What we do not look forward to though is seeing valuable Customs staff with lifelong experience leaving and not being replaced. The CEO of his own volition has admitted that he will have no choice but to tell the government that he cannot any longer carry out necessary and statutory tasks. That is on the record also. What is staggering about this serious predicament is that the minister is in total denial. All we hear from the minister are good news stories about the latest interception of a flick-knife or some narcotics. That is good stuff and we need to know. But what is not being done is the question. It is much more than a public relations task. Underneath, all industry knows there is a serious cancer growing. Customs is starved of operational funds.

Customs has long been the real force guarding Australia's borders. The sad state of its finances, however, prompts the question: how much longer can it manage under its current administration and with current levels of funding? How much longer will it be before we have a serious incident? We have already seen at Mascot over the New Year a person without a ticket get past the barrier to board an aircraft. Customs own premises were invaded in broad daylight and thieves removed computers, some still in boxes. The investigation took five months and the only report we have is the censored version. We know that very few containers are being inspected. Staff are repeatedly telling us they cannot cope. This is a very serious position Customs finds itself in. These bills today are just further indicators of the problem. The CMR project, despite all good intentions, has become a monster. It has consumed much of Customs capital, and industry is still distrustful and sceptical that the project will not work. We certainly hope that is not true. We support the bills.