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Legal and Constitutional Affairs Legislation Committee - 16/10/2012 - Estimates - ATTORNEY-GENERAL PORTFOLIO - Australian Customs and Border Protection Service

Australian Customs and Border Protection Service

[12:19]

Senator Ludwig: Madam chair, you might note that to my left I no longer have Michael Carmody here—he has since departed—and we now have Mr Michael Pezzullo, the Acting Chief Executive Officer. However, I want to take the opportunity on behalf of the government to say 'thank you very much' for the work that Mr Carmody did. The government appreciates the long and outstanding service that he has provided to both this government and successive governments over his long and outstanding career. It stretches back from being not only in Customs and Border Protection but also in the Australian Taxation Office. I cannot do justice to all of the 45 years he has worked diligently for the government in many roles. I will ask Mr Pezzullo to try so that we may have it on the record.

In just making a brief statement I did not want to take up too much time of the committee, but I do think the committee should be aware that Mr Carmody, from the government's perspective, has played a long and very valuable role.

CHAIR: Thanks, Minister. We also place on record our acknowledgement and thanks to Mr Carmody for his work and diligence, particularly at our estimate process over successive years. Mr Pezzullo, welcome to you, as the Acting CEO. Do you have an opening statement that you wanted to provide us.

Mr Pezzullo : Yes, thank you very much. As the minister mentioned, I would, if I may, just very briefly on behalf of the Australian Customs and Border Protection Service place on the record our acknowledgement of Michael Carmody's service, and also just to explain the circumstances in which I appear here before you today. Senators may be aware that the former Chief Executive Officer of Customs and Border Protection, Mr Michael Carmody, retired from the Australian Public Service on 4 September 2012. I appear today before you in the capacity of Acting CEO, having been appointed to that position subsequent to Mr Carmody's retirement.

I would like to take this opportunity very briefly to recognise the significant contribution made by Mr Carmody during over 44 years of public service, six of those as head of this agency. Mr Carmody bought a wealth of experience to Customs and Border Protection after a very significant career in the Australian Tax Office, which included 13 years as the Commissioner of Taxation. His time at the helm of Customs and Border Protection coincided with a significant period in the agency's history. In particular, Mr Carmody played an integral role in transitioning the agency more fully into the border protection and national security domain following the announcement in the National Security Statement to that effect in December 2008, when the modern Australian Customs and Border Protection Service was created. Under Mr Carmody's leadership, the agency has adopted an intelligence-led, risk-based approach to border protection which involves focusing more specifically on the targeting of high risk passengers, goods and craft, and extensively working with our partner agencies ahead of and before the border. Mr Carmody was also very determined to introduce a more robust framework for integrity and professional standards into the agency. This culminated in our agency coming under the jurisdiction of the Australian Commission for Law Enforcement Integrity, in January 2011. It is going to be further enhanced through the integrity reforms that are currently before the parliament in the form of the integrity measures bill that is before this place. On behalf of the Australian Customs and Border Protection Service, we want to acknowledge and celebrate Mr Carmody's long career, both as an Australian public servant generally but specifically as the head of our agency up until recently. I thank you for your indulgence.

CHAIR: Thanks, Mr Pezzullo. Let us go to questions. Senator Humphries.

Senator HUMPHRIES: Thanks, Mr Pezzullo. Could I ask about the three maritime vessels that have been provided by the government to Indonesia to assist with border protection activities? When were these vessels provided?

Mr Pezzullo : I think the vessels that you have in mind might be the police interceptor craft that have been provided through a Federal Police administered program. I am generally aware of what they do, but I think those questions are better directed to my colleagues in the Federal Police.

Senator HUMPHRIES: Okay. I shall do that. Can I ask about some budget matters, particularly going to staffing establishment of the Customs and Border Protection Service. We have a question that was answered on notice, question No 78, which indicated how the staffing establishment of the service has declined for a number of years, going from 5,746 FTEs in 2007-08 to 5,225 FTEs for last financial year. Do we know what that figure is likely to fall to in 2012-13?

Mr Pezzullo : Yes. During the current financial year, that is 2012-13, we have budgeted for a planned workforce adjustment, a reduction of approximately 190 FTE. We are currently working through the precise details of how that will be broken down. Divisions have been given relevant guidance. They are working to that guidance. Obviously, we are looking wherever possible to achieve that through the natural attrition process.

Senator HUMPHRIES: Just over 5,000 people would be left in the organisation?

Mr Pezzullo : I might ask Ms Bridger to add to this answer. The current position is that we would see our FTE, in average staffing level terms, come down to 5,035 at the end of this financial year. How that precisely translates to FTE I might have to take on notice. The budget papers are expressed in both FTE and ASL terms. The figure I have given you is the ASL.

Senator HUMPHRIES: So we have taken staff from every program except for civil maritime surveillance and response. Is that correct?

Mr Pezzullo : I think that is right in terms of the break-up, but I will ask Ms Bridger to add to that answer if she can add anything.

Ms Bridger : No, that is correct.

Senator HUMPHRIES: How does that correlate with the increase in the number of unauthorised boat arrivals and the increase in cargo numbers, for which the service is responsible for screening? Obviously there is a divergence between the workload of the service and the resources available to meet that workload.

Mr Pezzullo : There are two different ideas at play in your question. On the one hand, the arrival of irregular maritime arrival vessels, or SIEVs—suspected irregular entry vessels—obviously is a challenge for us all. It requires a lot of dedicated effort by very hardworking staff, in our case principally through the work of Border Protection Command in terms of the interception process and then landing the IMAs principally at Christmas Island and occasionally at other places. I should point out that there are other staff involved in terms of intelligence, overseas liaison and the like. But, obviously, the heavy burden falls on Border Protection Command. You need boots on the ground for that work. That is a people-intensive effort for boarding parties, crews of vessels and the like. We have sought to preserve that workforce as much as we can, recognising both the work that they do and the tempo at which they have to do it.

You also asked about the cargo inspection work. As this committee has been previously advised, commencing in the year 2009-10 there has been the introduction progressively of a different model for cargo intervention whereby—notwithstanding the fact that in fewer instances is cargo being, as it were, interfered with either through inspections or examinations by applying that intelligence led model that I mentioned in my earlier remarks and by putting risk parameters around what high priority inspections and examinations should look like—we have gratifyingly over that time period maintained our level of detections and indeed in some years in some streams increased our level of detections.

Senator HUMPHRIES: Albeit that we are, according to the most recent Customs annual report, inspecting only 4.3 per cent of sea cargo and X-raying only 4.3 per cent of sea cargo and 0.06 per cent of sea cargo is physically examined? That is a very small proportion.

Mr Pezzullo : Those ratios sound about right, Senator. I am assuming that you are reading straight from the annual report—so those figures sound right.

Senator HUMPHRIES: You mentioned that there was a heavy emphasis on boots on the ground in this service. I assume with a higher workload and in most areas a reduction in the number of staff actually available to assist in dealing with those workloads that there would potentially be greater stress on staff. Has there been any increase in reports of stress leave or other stress related indicators within the service?

Mr Pezzullo : I see that data periodically, but I just cannot recall it off the top of my head. I might just take that on notice.

Senator HUMPHRIES: All right. Would you say that morale was good in Border Protection Command at the moment?

Mr Pezzullo : Given the challenges that they face and the heavy load that we are placing on Border Protection Command, I would say that the morale there is very good.

Senator HUMPHRIES: That is sort of a qualified answer.

Mr Pezzullo : Relative to the pressures that probably is true. They are working hard, Senator, and they know that they are doing a vitally important job in terms of protecting our border sovereignty. It is hard work. In any sphere of endeavour when you are working hard and you are tired it can focus the mind. But they are very resilient and we pay particular attention to the stresses and strains that they face. We will get the answer to you in terms of your previous question on any claims for stress or any instances of stress that they have provided. I would rather give you a fact based answer on that.

Senator HUMPHRIES: Sure. I would appreciate information for, say, the present financial year to date and the last two financial years.

Mr Pezzullo : We will take that on notice.

Senator HUMPHRIES: Thank you. How many Customs staff are currently based on Cocos Island and Christmas Island?

Mr Pezzullo : I might ask my colleague, Deputy CEO Marion Grant, to join me for that question. I will have to check the figure and if it needs to be varied I will do it in the very short period I have before lunch or immediately afterwards, I suspect. We have a dozen or so land based officers at Cocos Island. We do have an Australian Customs vessel, Hervey Bay, there as well with her complement. Ms Kelley will check those figures in a moment. On Christmas Island we have our standing district office. That is there as part of the management of Australia's border at Christmas Island. I might ask Ms Kelley to add to my answer.

Ms Kelley : On Cocos Island we currently deploy nine Customs officers on a weekly basis there for land based officers and then there are around 10 marine officers associated with the Customs vessel as well. There are three full-time officers posted to Christmas Island as part of the district office there and we have a suite of acting officers of Customs. So we have up to nine people who can assist them. To ensure that people are able to cope with the workload, we also supplement those people by flying in temporary officers to assist them as required.

Senator HUMPHRIES: Could you take on notice, Ms Kelley, to advise us how many officers there are in each of those categories at the moment on both of those islands and how that compares with the numbers last financial year? Could we also have details of those fly in officers as well and how many of those there were last financial year and how many there have been so far this financial year?

Ms Kelley : We can give you the comparison information for Christmas Island but the Cocos Island deployment has been for only this financial year.

Senator HUMPHRIES: Only this financial year?

Ms Kelley : Yes, since May.

Proceedings suspended from 12:32 to 13:35

CHAIR: Senator Humphries, we will continue with your questions.

Senator HUMPHRIES: I had been asking about staff based on Christmas Island and Cocos Island, and you also mentioned that there was a new boat based at Cocos Island called the Hervey Bay. Is that correct?

Mr Pezzullo : Yes. I would not call it necessarily a new boat. It is a vessel that has been positioned at Cocos Island for the past few months.

Senator HUMPHRIES: Why has it been felt necessary to base a boat at Cocos Island that was not previously there?

Mr Pezzullo : We are constantly reappraising Border Protection Command's posture. It is done on the basis of intelligence, various leading indicators, risk judgements that we make about where we need to deploy our assets. Several months ago—I would have to get Admiral Johnston to remind me of the precise date—we took a decision to place an Australian Customs vessel, the Hervey Bay, at Cocos Island to deal with the arrivals that have been occurring at Cocos Island in the past few months.

Senator HUMPHRIES: How many arrivals have there been at Cocos Island since the beginning of the year?

Mr Pezzullo : It is 53 since the start of the calendar year.

Senator HUMPHRIES: How many arrivals since the start of the calendar year at Christmas Island?

Mr Pezzullo : I would have to take that on notice, I think, because I do not know that I have got the breakdown. I know that the number of SIEVs that have arrived since 1 January are in the order of 158. Fifty-three have come in at Cocos, a number do go into Ashmore Island, but the majority would be Christmas Island. If we can do that calculation while we are appearing. The admiral has come to my assistance. As at today—this data is current as at 16 October—for the calendar year 2012 we have had 92 at Christmas Island, which is 49 per cent of the total number of arrivals.

Senator HUMPHRIES: How many did you say at Ashmore?

Mr Pezzullo : I did not say. I said a number would have gone into Ashmore. I have got it aggregated, so I will have to break it down further if you want to chase the details. The total number in the Ashmore region, which includes the Ashmore islands but also places slightly closer to Western Australia—I presume that would include places like Browse Island, et cetera—is 39. How many of those are in the Ashmore Island area, as opposed to areas closer to WA, I would have to take on notice. But the general number in that vicinity is 39.

Senator HUMPHRIES: It sort of leads to the question of where the resources for these sorts of commitments are coming from. The dollar allocation to the agency has reduced, the staffing allocation has reduced, the level of interaction with people smuggling is ramping up in places like Cocos Island and so on. Are resources being diverted from elsewhere to make these extra commitments, such as Hervey Bay, possible?

Mr Pezzullo : No, I would not characterise it in those terms. What I would say is that we have Customs and Border Protection vessels, so the Australian Customs vessel classed the Bay class, of which there are eight, a number of other, larger vessels that we have in our inventory, along with those vessels that are assigned to the Admiral's Command—and I will get Admiral Johnston, from the ADF, to speak in more detail in a moment—which tends to fluctuate depending on availability, but it tends to be in the region of five to six Armidales and then other, larger vessels. That entire class of assets or group of assets is treated as one force. Then based on intelligence assessments, strategic appreciations of all the various maritime risks, of which irregular maritime arrivals is but one, the admiral makes decisions under the joint supervision of me and Chief of the Defence Force as to how to best array his assets.

Senator HUMPHRIES: I appreciate that but obviously, given the very high level of demand that has to be satisfied of arrivals—IMAs that are impacting on that totality of a combined force—somebody has to lift our overall effort to meet that. I assume that your service, Mr Pezzullo, is among those who have to lift that performance but you have diminishing resources on which to deliver that kind of lift effort. What else is going on inside the service to provide for that diversion of resources onto that particular area of need?

Mr Pezzullo : If I could just reiterate, based on the comments I made before the lunch break, that we have sought to preserve as much capacity as we can within the Customs and Border Protection contribution to the Admiral's Command. The level of availability of our vessels tends to be quite high and that is split between the Bay class patrol vessels and the larger vessels that you sometimes see reference made to such as the Triton, the Ocean Protector and the like. Obviously, there are some natural limiting factors there, such as crew availability and the amount of work that you are trying to get out of each crew, so you have to manage and mitigate those issues. Obviously, we seek from Defence a fairly consistent flow of resources from them not only in terms of the Armidale fleet that they provide to the admiral, which are forces assigned directly to the admiral—and David can speak to the detail of that in a moment—but we also get supplemented with P3 surveillance flights, large fleet units that—

Senator HUMPHRIES: I do understand the array of resources we bring to bear here.

Mr Pezzullo : That has not diminished. You said that those resources have been cut and I am just saying to you that—

Senator HUMPHRIES: No, that is not what I said. I said that their budget had been cut and the staffing had been cut. You are obviously still putting in as much effort as before, if not more. My point is that, if you have fewer resources but greater demand on your services' capacity, you must logically be taking those resources from somewhere else to make that happen.

Mr Pezzullo : In the end, maritime surveillance and response is about the ability to surveil and then respond. You need assets to do that. The number of assets that we have been able to put on the maritime field has not markedly diminished over the last few years. It has remained relatively constant. Obviously, depending on the serviceability of particular warships or patrol vessels—and some have to go in for deeper maintenance and whatever—in Defence's case they will then swap out some of those assets such as hydrographic ships, for instance, and they will give us another asset. I am saying to you that the level of resources put into the maritime surveillance and response function has been largely constant for the last few years.

Senator HUMPHRIES: Are there other areas of the country where Border Protection Command operates vessels with a maritime surveillance capacity?

Mr Pezzullo : Border Protection Command is charged with managing and enforcing Australia's maritime sovereignty in the entirety of our exclusive economic zone where we have powers and privileges that arise, including all of our coastal areas, up until a certain point where the state police take over. So it is, if you like, a single universal construct that deals with the entirety of Australia's maritime domain.

Senator HUMPHRIES: So are we seeing deployment of assets, such as boats, in other parts of our area of maritime interest modified or reduced because of the higher level of demand for response in our north-western waters?

Mr Pezzullo : I think consistent with evidence we have given to this committee previously and I think also in response to questions on notice—I stand to be corrected—in some cases we have had to do things like curtail patrols, say, in the Southern Ocean in order to deploy the same vessel to the north. They have been judgements based on intelligence and risk decisions taken at the time.

Senator HUMPHRIES: Could you provide on notice details of what those decisions might be?

Mr Pezzullo : I will give you the answer on notice.

Senator HUMPHRIES: Can you perhaps take on notice how many Border Protection Command vessels as of today are operational and, if that is not sensitive, where they are located?

Mr Pezzullo : We might need to give a rather general answer. I am not sure how much detail we want to get into on tactical locations of vessels but I think we can give a general answer on notice.

Senator HUMPHRIES: Could you also indicate how many boats are currently being repaired and what the nature of their repairs might be?

Mr Pezzullo : I will see if Admiral Johnston has got any information to hand, including potentially in relation to your previous question, and to the extent we can dispose of those matters we will now. Otherwise we will take it on notice.

Rear Adm. Johnston : I can answer your question about the number of vessels that are available to me today. I have 16 vessels under my command. You might recall that the arrangements are that I have all of the Customs and Border Protection vessel capacity but Defence in-chops and out-chops vessels, so I only have them while I need to deploy them. Of that 16, seven are Defence, nine are Customs assets and all of them are variously spread from the Torres Strait in the east through to Cocos (Keeling) Islands through to the north-west. That is where the surface vessel disposition is across that north-western region.

Senator HUMPHRIES: So of those nine Customs assets, they are actually deployed or they are available and some are under repair?

Rear Adm. Johnston : They are all deployed for operations. Some of them are conducting logistic visits in ports, just normal fuel and food resupply, so not necessarily all at sea but all of them are assigned for operations.

Senator HUMPHRIES: So no vessels at the present time are being repaired.

Rear Adm. Johnston : Vessels may be under repair but they do not work for me during those periods.

Senator HUMPHRIES: Including Customs vessels.

Rear Adm. Johnston : Including Customs vessels, yes.

Senator HUMPHRIES: The question goes back to Mr Pezzullo. Presumably the vessels are yours when they are not Admiral Johnston's.

Mr Pezzullo : They are always vessels of the Customs Service.

Senator HUMPHRIES: Have you got any vessels that are being repaired?

Mr Pezzullo : We have just had the Ocean Protector come out of a maintenance period and I think we might have one going in. I will take advice. But the nine that are available to the admiral are ones that he can use on a day-to-day basis and then there might be one or two others that are under repair. I will check in the next few minutes.

Senator HUMPHRIES: Could we also get an update on the introduction of a new Cape class vessels, please?

Mr Pezzullo : Indeed. I might ask Mr Perry to join us at the table in case your questions go to a level of detail. He will also be able to brief the committee on any vessels that are currently undergoing repairs. The Cape class capability is currently contracted out for construction to the Austal company, which is based in WA. They are currently well into production of vessel No. 1 and we are in discussions with them about the ongoing production schedule. Nigel, could you also take the senator's question about vessels currently under repair.

Mr Perry : I manage the fleet and provide the assets to Commander Border Protection on behalf of Customs and Border Protection. The Cape class project is proceeding pretty much as planned. We have had a three-week slippage on the first vessel but our expectation is that we will get the first vessel handed over to us on 28 March next year. Then the final vessel will be delivered to us in late August or early September 2015. There is a spread of delivery throughout those years.

In the context of what vessels we have in maintenance at the moment, we have one of our Bay class patrol boats that completes its routine maintenance period, slipping period, tomorrow. And Triton, one of the contracted vessels, is in for its annual maintenance period at the moment. That is due out in two or three days, from memory. That is a pretty routine asset assignment to BPC. Typically of the Bay class there will be seven of the eight available to Commander Border Protection for operations at any given time.

Senator HUMPHRIES: That is all I wanted to ask about the boats you are using. I had a question about the purchase of shredders for Mr Pezzullo. I understand from a question that was taken on notice by you at the last estimates that the Customs and Border Protection Service has purchased 118 new shredders in the last 12 months, apparently at a cost of approximately $5,373 each. That is almost two-thirds of a million dollars spent on shredders. Without being cynical, what possible use could Customs and Border Protection have for that many brand new shredders?

Mr Pezzullo : I would have to refresh my memory of the detailed breakdown of the cost per unit. I remember the question you asked and the question-on-notice response that we provided. The short answer to your question is that we reviewed our protective security practice across a range of fronts—the wearing of people's security clearances on their passes, making sure that physical locking was in place and things of that nature. As part of that program we came to a view—and I do not know whether this answers the totality of the purchase of 118 shredders, and to the extent that I need to give you a further breakdown I will—that a number of those were purchased because they were of the appropriate grade to deal with the destruction of highly sensitive material. There is a particular specification about how you shred highly sensitive documents.

As Customs and Border Protection in the last four or five years has come into the high end of the intelligence community, the national security community and some of the more sensitive law enforcement work we are now involved in, the classification of documents has increased. They have to be disposed of through approved means, and sometimes that includes, after appropriate registration for archives purposes, the destruction of documents through industrial strength or appropriate strength shredders. Whether that explains the totality of that purchase or whether it is a subelement I will have to clarify.

Senator HUMPHRIES: I am puzzled because the Australian Security Intelligence Organisation, which presumably has at least the same level of requirement to shred documents securely, has been able to purchase shredders ranging in cost from as low as $353. I do not know whether you have different classifications of shredder depending on the confidentiality of the document.

Mr Pezzullo : I will have to take the per-unit issue on notice. I say this not flippantly but quite genuinely: ASIO has been dealing with, disposing of and shredding highly classified material in accordance with approved procedures since before I was born, going back to before Petrov. They have a stable regime. Maybe they have a stock that is appropriate and just needed a little bit of refreshing. We have gone through and renewed our stock completely.

Senator HUMPHRIES: You have 250 shredders in your organisation according to this answer that you provided. In how many physical locations does the Customs and Border Protection Service have offices where you would need a shredder? Presumably you do not have shredders on boats and things like that—you would have them in offices somewhere.

Mr Pezzullo : I would not jump to any conclusions about where the shredders are. Some of them might well be in field locations, although I suspect they would tend to be in office locations. Our principal national headquarters is in Canberra, and that is where most of the highly secure documentation I described earlier is held. As to where these shredders are located and how many are in Sydney, Brisbane, Melbourne or in regional offices et cetera, I will have to take that on notice.

Senator HUMPHRIES: But how many offices do you have? How many offices does the service have around the country?

Mr Pezzullo : Each capital city has an office. There is the national headquarters in Sydney and then there are 29 regional and district offices outside of the main capitals. There are the capital cities, in each of which there is normally a Customs house where the regional staff work. Then there are locations such as airports, seaports and the mail centres where our deployed staff are, and then there are 29 district offices outside those capital cities and large urban locations.

Senator HUMPHRIES: It sounds like you have got multiple shredders in most or a large number of those locations.

Mr Pezzullo : I do not know where they are. I would have to take that on notice.

Senator HUMPHRIES: Okay.

Mr Pezzullo : I am advised—and I am looking at the detail that was provided to you—that the shredders were indeed approximately in the cost range that you just described. We decided to rate them to be able to shred up to and including top secret. Without going into the technical details, that has a more detailed and more specific requirement built into it in terms of the destruction of the paper, basically.

Senator HUMPHRIES: Using those figures from ASIO that I quoted before, they have obviously graded the shredders according to how confidential the documents are that need to be shredded. You look as though you have purchased all of your shredders at the very high end of confidentiality. It sounds as if your shredders are all geared towards top-secret shredding.

Mr Pezzullo : I do not think that that follows, in the sense that the answer that we gave you related to the number of shredders that were purchased in a particular year. It might be that the stock that we have already got to deal with less than top secret or secret information is perfectly adequate and that what we did was stocked up for the number of shredders we needed to deal with that level of material. Therefore in that year, because we have to top up our stock, if you like, you have those purchase figures.

Senator HUMPHRIES: We are not planning a mass shredding before the next election, are we?

Mr Pezzullo : No, Senator. We manage our documents in accordance with the Archives Act and various other records management requirements that the Commonwealth has, including compliance with the protective service security manual which is maintained by the Attorney-General's Department, and we have insisted on our staff and our processes being in strict conformance with that manual.

Senator HUMPHRIES: Could you please take on notice to tell us where each of those 250 shredders are.

Mr Pezzullo : Yes.

Senator HUMPHRIES: I do not need to know what floor and building they are in. If there are five in the Sydney office, just say five in Sydney.

Mr Pezzullo : We will provide what we can.

Senator HUMPHRIES: I assume there are no shredders on Cocos Island or Christmas Island?

Mr Pezzullo : I do not know. I would not care to speculate.

Senator HUMPHRIES: All right. I will now ask some questions about the number of IMAs so far this year. In 2012 so far, what is the latest figure for the number of IMAs?

Mr Pezzullo : For the calendar year?

Senator HUMPHRIES: Yes please.

Mr Pezzullo : Current as of today, 16 October, the number of irregular maritime arrivals is 12,328.

Senator HUMPHRIES: How many boats were they on?

Mr Pezzullo : In that same time period the number of SIEVS, or suspected irregular entry vessels, is 189.

Senator HUMPHRIES: Does that 12,328 figure include crew?

Mr Pezzullo : No. I will have to give you the crew numbers separately.

Senator HUMPHRIES: Okay, so it is 12,328 people plus crew.

Mr Pezzullo : Irregular maritime arrivals, yes.

Senator HUMPHRIES: Are you saying a crew member is not an IMA?

Mr Pezzullo : I just need to make sure. I think the data that I have is for people who are claiming asylum, but if that is incorrect and the crew is included in that I will tidy that up whilst we are still in session.

Senator HUMPHRIES: Could you take on notice for this calendar year so far what that equates to as the per-IMA cost to Customs and Border Protection Service.

Mr Pezzullo : We are not funded on a per-IMA cost.

Senator HUMPHRIES: I realise that, but you obviously are focused on delivering a service in terms of dealing with these arrivals.

Mr Pezzullo : It does not quite work like that, in the sense that Border Protection Command, where the majority of the cost falls, is tasked simultaneously to deliberate with a number of maritime security risks, which include irregular maritime arrivals which can be for whatever purpose but are predominantly, of course, for asylum seeking. The admiral manages an operational force, as we discussed before. Defence is funded for that through Operation Resolute, so part of the cost would be a Defence cost, and we are funded for that cost through the budget that Mr Perry—

Senator HUMPHRIES: Yes. I was not asking for their costs; I was asking for your costs, obviously.

Mr Pezzullo : I understand that, Senator. What I am saying is that the maritime force is funded through a budget allocation that is given to Mr Perry and his division, the maritime support division. We do not disaggregate how many hours of effort were devoted to IMAs as opposed to marine parks, offshore oil and gas installations or illegal fishing. The admiral manages all of those risks in a holistic way, and we do not disaggregate costs below that. Because I do not want to appear to be not answering your question, it is a different funding model from DIAC which has a degree of funding per arrival, a sort of base cost which has been discussed by Mr Bowles and Mr Metcalfe, and DIAC is funded according to variations. That is based on the flow of IMAs. We are funded to undertake maritime security on behalf of Australia and then we focus our efforts accordingly within that budget.

Senator HUMPHRIES: I turn to integrity breaches within the service which have been referred to the Australian Commission for Law Enforcement Integrity.

Mr Pezzullo : Before you ask, could I add to the answer about crew. I can confirm that the numbers that I gave you before were the potential irregular immigrants—that is, those who would claim asylum or seek to claim asylum. The crew are separate and the equivalent number of crew for that same time period is 265.

Senator HUMPHRIES: Thank you. I now turn to alleged integrity breaches which have been referred to ACLEI. A question was asked on notice by Senator Brandis in the last estimates with respect to 48 allegations referred to ACLEI of alleged integrity breaches. I think they all relate to staff of Customs and Border Protection Services. Of those 48, 17 individual staff have been named. Of those staff, two have been identified in allegations more than once, according to your answer. Please provide an update of the outcome of those investigation into those 48 staff and the nature of the offences that have been committed or alleged to have been committed.

Mr Pezzullo : I suspect I can do that in part. We will see how much my answer satisfies you, and if I have to take matters on notice and consult with the Integrity Commissioner I will. The number quoted in the answer has since 1 January 2011 increased and now stands at 55—so 55 matters have been referred to ACLEI. The significance of 1 January 2011 is that is the date at which point the service came under the jurisdiction of ACLEI; there was no jurisdiction coverage prior to that. Since 1 January 2011, there are 55 matters. I do not have to hand, and I apologise for this, all the outcomes. In some cases I know for a fact that some matters involve a number of officers and in some cases the same officer is potentially named across several matters. There is not a direct equivalence between 55 matters being notified and 55 officers, if you follow me. In terms of giving you an update, of those 55 matters, 10 are still pending assessment by the Australian Commission for Law Enforcement Integrity, so they are still on foot in various ways. I would prefer not to go to the nature of the matters. I am briefed on them, but because they relate to ongoing investigations and matters, I do not think it is appropriate for me to describe the matters in detail and in any event I would want to defer to the Integrity Commissioner for how much detail he felt is appropriate to place on the public record. Ten matters of the 55 are still ongoing. In the case of eight, it was determined by ACLEI that no action needed to be taken and those matters were referred back to our own internal integrity and professional standards unit. In those cases, final reports on those matters are either in preparation or have been finalised. In five cases, it was determined by ACLEI no action was required. In the eight cases, ACLEI sought our integrity and professional standards area to conduct further investigations itself but with a report back to ACLEI. In five cases, ACLEI recommended that a joint investigation proceed between ACLEI and our internal integrity and professional standards unit, and 19 matters are completely closed one way or the other. That is a breakdown of the 55.

CHAIR: Senator Humphries, How much longer do you think you need.

Senator HUMPHRIES: Probably 20 minutes or so. Can you give me an idea of the outcome of the investigation into the Sylvania Waters post office case, where illegal firearms were being smuggled into Australia?

Mr Pezzullo : To be clear, there is no question that I am aware of, and I have been briefed on this matter, of there being an integrity issue associated with that. That is a straight law enforcement matter. We are working very closely with the New South Wales Police Force under operation Maxworthy which has been the subject of advice to this committee previously. If your question goes to whether we are looking at issues of corruption in relation to that—

Senator HUMPHRIES: No, it is just the way these questions have been drafted. There is not necessarily any alleged connection.

Mr Pezzullo : I can give you a general update, but not from an integrity point of view.

Senator HUMPHRIES: Okay. Is that investigation still underway?

Mr Pezzullo : There is a New South Wales police investigation that we are assisting with. We have an embedded officer who works in Sydney. That operation is looking at that importation. Whilst it is commonly referred to as the Sylvania Waters post office importation, technically it did not come in through the post office there. It came in as air cargo through commercial air cargo providers. That is a matter that is being investigated.

Senator HUMPHRIES: Has Customs conducted any internal reports into that incident? By that I mean, did any issues arise from the facts that are already known about that matter which throw light on the way that Customs works?

Mr Pezzullo : I would not put it in quite those terms. In the lead-up to the resolution of the Maxworthy case where are our investigators worked very closely with colleagues from the New South Wales Police Force and got a speedy resolution once intelligence came to hand that these weapons were being imported via that method, in the immediate aftermath of that the then CEO, Mr Carmody, commissioned an internal intelligence review, as I would describe it. That review looked at the level of risk we are carrying in terms of firearms importation through sea cargo, air cargo, postal means and other means. That was worked very closely with the Australian Crime Commission. Before the break you heard Mr Lawler talking about a more strategic assessment that he did. Our more tactical work fed into the ACC's work and that was the subject of a briefing that ultimately occurred to the ACC board that Mr Lawler spoke of and also a briefing to the state and federal police and emergency management ministers who met in June of this year, as I recall. They were briefed on the findings that the Crime Commission had come to in relation to availability of firearms in Australia. Our internal intelligence work was a feeder into that study.

Senator HUMPHRIES: I am happy with that. I take it from an article that appeared in the Sunday Telegraph on 30 September that there appears to be evidence of a significant increase in the illegal importing or the smuggling of tobacco into Australia. What can you tell us about the incidence of the smuggling of tobacco?

Mr Pezzullo : I will ask Ms Grant, the deputy CEO responsible in the area, to provide you with more detail. It is certainly the case that there are, due to the way in which the excise works, attractions to criminal elements seeking to profit from the illicit importation of tobacco. That is one of our main areas of focus in the physical goods smuggling space. I will ask Ms Grant to add to that.

Ms Grant : The stats that we have are for the 2011-12 financial year. We made 46 seizures of smuggled tobacco products in sea cargo, which were 175 tonnes of tobacco and 122 million cigarette sticks. The stats for the first two months of the 2012-13 financial year show that we made 14 seizures of tobacco products, seven tonnes of tobacco and 29 million cigarette sticks. We would have to do the maths to do the pro rata to see whether or not we are ahead this financial year.

Senator HUMPHRIES: One would normally assume, though, that if you are seizing 29 million cigarettes in the space of three months that that is of course not the full extent of importation into Australia of illegal tobacco; you are only intercepting a proportion of it, probably a minority of all the tobacco being imported illegally into Australia?

Ms Grant : It is one of those questions where, because we do not know the actual size of the illegal market, it is hard to estimate the proportion that we are seizing. Sometimes you get anecdotal information from industry that we are making quite a sizeable impact. Other times we have no such intel.

Senator HUMPHRIES: So you have no information at all or no research anywhere you could point to that would suggest what the level of actual importation might be—whether you are intercepting 100 per cent or five per cent? We just do not know what that figure would be?

Ms Grant : No, we do not, because of the very nature of the illegality of that market. No, there is no way of estimating the size of the illegal market with any degree of reliability.

Senator HUMPHRIES: I am not asking for reliability. Estimates are made all the time. For example, estimates are made of the amount of drugs imported into many western countries and what proportion is and is not intercepted. Obviously, there must be some basis for that kind of assessment in other cases. You have not got any assessment in this case of what is going on generally with tobacco?

Mr Pezzullo : The answer is no. I am sorry, Ms Kelley might have something to add.

Ms Kelley : We have had some information from some non-government agencies who are interested in this area. They have indicated, again based on some of their information, that the illicit market is probably sitting at around two to three per cent.

Senator HUMPHRIES: As a proportion of the illicit market?

Ms Kelley : Yes.

Senator HUMPHRIES: But that does not answer my question; perhaps it does. What is the size of the licit market?

Ms Kelley : We would have to give you that on notice.

Senator HUMPHRIES: Is that two to three per cent that is being intercepted that is illicit or two to three per cent that is illicit, some of which is being intercepted?

Ms Kelley : The information that they have indicated to us is that it is two to three per cent of the illicit market, not linked to interceptions.

Senator HUMPHRIES: Two to three per cent of illicit market is being intercepted?

Ms Kelley : Two to three per cent of the tobacco entering into this country they view as being illicit.

Senator HUMPHRIES: Okay.

Ms Kelley : So the majority is licit—legitimate.

Senator HUMPHRIES: I understand.

Senator MARSHALL: Can I just clarify that. You said that is not your estimate, that it is someone else's estimate?

Ms Kelley : That is someone else's estimate; that is right.

Senator HUMPHRIES: So if we took 100 per cent of what is legally imported into this country and then took one fiftieth of it approximately, that would equate to the size of the illicitly imported market, as this source would suggest?

Mr Pezzullo : That is according to one or two non-government organisations. I have not looked at that study myself. I just note that Ms Kelley is right; that is what they state. I do not know what the reliability of those figures is.

Senator HUMPHRIES: But someone said to us that with the rise in excise on tobacco products or government taxes generally on tobacco products in recent years—and this article in the Sunday Telegraph suggests this—that imports of those things is now viewed as a high-return, low-risk alternative to hard drugs and that the issue is growing in significance.

In fact, this is supposedly a Customs document which has labelled the illegal importation of tobacco products an issue of growing significance. What was meant by that?

Mr Pezzullo : I have had a look at the article in question and I have taken some advice on the factual basis upon which those claims were made. There was certainly a significant release of documents. I have not looked at each of those documents. I note that some of them are actually quite old briefings, including old estimates briefings and drafts of media points and the like. But as to how the journalist has interpreted—and I am in no way going to the professionalism or skill that she applied in this particular case—I just have not compared, if you like, the stock of documents that she has had to work with, what she has quoted, whether it is a selective quote, whether there are counterbalancing quotes and whether other points were made in what is, I think Marion said, a large tranche of documents—some 400 documents that were identified by the decision maker as being within the scope of the release and with varying degrees of redactions. Until I take some advice from someone who has actually read all of the documents, I would not necessarily agree with the characterisation that the journalist has put into the article. I just do not know.

Senator HUMPHRIES: Sure. Could I turn to the issue of passenger processing at airports? This relates to tobacco as well. Of course, the allowance that each incoming passenger can bring into the country with respect to tobacco products has been reduced as of 1 September this year. Can you tell us what kind of education programs have been underway to advise travellers to Australia of what these new limits might be?

Mr Buckpitt : Following the announcement to change the tobacco concession we were to receive $1.5 million to undertake a range of measures to make the changes generally well known. Among those changes have been publications both online here in Australia and—

Senator HUMPHRIES: Publications?

Mr Buckpitt : Publications such as the Guide for travellers: know before you go brochure that Customs makes available both in hard copy and online. There have also been a range of other publications which generally are available through the aviation industry—for example, the publications that the major airlines put into their aircraft. We have had advertising both in Australia and overseas in travel/tourism type media. As I say, that is a total of $1.5 million, and publications will continue up until about March next year, which is the period in which most of the peak travel continues. It is our expectation that we will continue to reach out as far as possible. The success of it, though, has been very good inasmuch as we have seen a far lower level of excess tobacco than we had originally expected. Only about 1.6 per cent of travellers are bringing in excess tobacco.

Senator HUMPHRIES: Compared with what rate before, under the higher limit?

Mr Buckpitt : Under the original limit, it was certainly lower than that because it was generally well understood. I do not have a percentage but I could, for example, give you some comparisons to make about the number of interactions we have had with passengers regarding excess quantities of tobacco. Last financial year the amount of excess tobacco in the passenger environment was about 14 tonnes whereas this year we look like having about 72 tonnes of tobacco that is in excess. That is about a five-fold increase.

Senator HUMPHRIES: It would suggest, would it not, that lots of people either are not aware that they now have a lower limit or that they are aware but they still want to have a go at bringing it in and hope they can get away with it.

Mr Buckpitt : That is right. It is difficult to reach out to people who might be coming to Australia for the first time and are not aware of what our rules are in relation to tobacco concessions. There will always be some people in that situation.

Senator HUMPHRIES: I would have thought there were ways around it, like large prominent signage at the departure gates of every flight boarding for Australia. That is one way of doing it. You have not done that, I take it.

Mr Buckpitt : We have signage in all airports.

Senator HUMPHRIES: What, all airports where people fly to Australia?

Mr Buckpitt : I think we would have difficulty—even if we had the finances to do that—in getting permission.

Senator HUMPHRIES: I am sure, with the airlines you would have to negotiate with. What percentage of passengers who have excess tobacco and have been caught with the excess tobacco, have chosen to forfeit that tobacco? How many have chosen to pay the extra duty?

Mr Buckpitt : My understanding is that it is a split of 75 per cent to 25 per cent.

Senator HUMPHRIES: Seventy-five per cent are forfeiting the goods, did you say?

Mr Buckpitt : That is right. Seventy-five per cent are abandoning and 25 per cent are electing to pay the duty.

Senator HUMPHRIES: I have a couple of questions on border protection-type issues—sorry to jump around a bit. I want to know whether there have been enhanced measures in which Customs and Border Protection services have been involved to mount search and rescue operations at sea, given a significant volume of IMAs and boats that we are seeing at the present time.

Mr Pezzullo : If I can clarify your question, whether there have been 'enhanced measures' put in place, we have our normal operating arrangements where we respond principally to requests for assistance from AMSA—the Australian Maritime Safety Agency—either directly when they are coordinating a safety-of-life-at-sea issue or, through them, Basarnas in Indonesia, which is their equivalent agency. I am trying to understand the point of the question in terms of 'enhanced measures'.

Senator HUMPHRIES: Because of the high volume of boats, presumably—without wishing harm to anybody—that increases the risk of boats getting into trouble at sea.

Mr Pezzullo : Yes.

Senator HUMPHRIES: In response to that, presumably they are at greater risk. Are there any special measures which are being employed to deal with that? I am thinking particularly of the meetings that Ministers Albanese and Clare had in Indonesia recently where I understand they discussed with Indonesian counterparts the increased risk of loss of life. Did that lead to any measures, for example?

Mr Pezzullo : Yes, Senator, indeed it did. Our operating procedures with AMSA are unchanged, and I can talk about that in more detail if you wish. In terms of future capability—and particularly with a view to enhancing the capability of the Indonesian agency that is the equivalent of AMSA—

Senator HUMPHRIES: I am not really referring to that. I was really referring to Australia's measures.

Mr Pezzullo : Understood, but the discussions in Jakarta revolved around precisely the question that you are going to and what it was that we could do in the area of technical capacity-building. Principally, this would be a matter that I would refer to department of transport and the operational agency, AMSA, but I can describe it in general terms. I was on that delegation and we provided assistance in the lead-up to that meeting, which was led by the defence minister and accompanied by the transport minister and the minister for home affairs. We agreed a series of capacity-building measures that will build over time, things in the nature of—and these were all publicly announced at the time—the secondment of operational liaison officers, better connectivity between the two relevant watch centres, or operational centres rather, assisting the Indonesians to increase their capability to task merchant vessels to respond where those are nearby, giving them better situational awareness of the merchant vessels that are nearby, and giving them better technical capability. It is things in that nature, which will be principally delivered by the Maritime Safety Agency, and you would have to ask them about the detail.

In a related matter, we have taken a decision internally to retrofit onto the Dash 8 maritime surveillance aircraft that we have directly working for Customs and Border Protection. We will retrofit air-operable search and rescue doors so that kit can be thrown into the sea—principally rafts but also other equipment, such as food, sustenance liquids, medical kits and the like. So that is currently a piece of work that is underway. And the ministers, I think you might recall, when they visited Jakarta also made the announcement that with their Indonesian counterparts we were going to look at how we might expedite the operational arrangements, including in the area of diplomatic clearances, such that search and rescue aircraft—be they ADF aircraft, our Customs border protection aircraft, or the chartered aircraft that AMSA also employ—might be able to land in Indonesia to conduct, if you like, a quick turnaround, so refuel on the ground and quickly get back out to a search area. So that suite of measures was agreed by the Australian and Indonesian ministers to augment, if you like, today's level of technical capacity. But in some of those cases it will take a period of time to bring those measures online.

Senator HUMPHRIES: Just finally, then, is the service aware of any evidence, say, since the beginning of this calendar year, of boats having set out from Indonesia but not having reached Australia's waters or having failed to reach Australia's mainland?

Mr Pezzullo : Yes, we are aware of some cases that fit that description. In several of those cases, and I just want to answer this fairly carefully and will probably therefore decide to take the detail on notice, we hold grave fears for what has happened to those vessels.

Senator HUMPHRIES: How many vessels are we talking about?

Mr Pezzullo : They would be in the single digits, but what I would prefer to do is just very carefully work my way through with other agencies that assist us with this analysis and assessment, and give you a considered answer on notice.

Senator HUMPHRIES: All right, thank you. That is all I have in Customs, thank you.

CHAIR: Senator Furner has got a few questions before we move on.

Senator FURNER: Thanks, Chair. Can I firstly take you to the illicit firearms importations. In particular, on 12 April this year New South Wales Police were involved in a seizure of some weapons. I understand Customs was involved in the same exercise, concerning some illegal imported weapons. What type of weapons were seized and when were they illegally imported into Australia?

Mr Pezzullo : I might ask to be joined by Ms Kelley and Mr Wall, who might be able to assist me. If that April seizure relates to the matter I mentioned earlier—the Sylvania Waters post office matter—if that is the one in question, then that was a New South Wales-led operation known as Operation Maxworthy. The weapons in question were Glock semi-automatic pistols. And as to when they were imported, I think it is fair to say—I will just check with Ms Kelley—that those investigations are still proceeding.

Senator FURNER: Is it possible to have some indication of how many Glocks were in that seizure, or is that subject to proceedings?

Mr Pezzullo : I might ask Ms Kelley to take that detailed question.

Ms Kelley : Senator, what date did you say?

Senator FURNER: The 12th of April this year.

Ms Kelley : I do not think it is that Maxworthy operation, and I am sorry but I do not have the detail around that 12 March job, so we might have to provide you with that information on notice.

Senator FURNER: If you could take that on notice.

Mr Pezzullo : The one I referred to was the Sylvania Waters matter that Senator Humphries that also raised. That was indeed March, so we will just have to look at what might have been announced in relation to April.

Senator FURNER: The Australian Crime Commission's investigation into the illicit firearms market has found that a majority of illegal firearms in Australia are those that were not imported but in fact were handed back after the gun buyback, or were stolen here. Did Customs have input into that report? And do you agree with the findings of that report?

Mr Pezzullo : Yes. As I indicated to Senator Humphries earlier, we did a thorough intelligence appraisal of this matter earlier this year, partly triggered by that Sylvania Waters post office matter but more generally, and we fed all of that information to the Australian Crime Commission. I heard Mr Lawler before the lunch break describing the findings of that report, as he felt he could in an unclassified environment. I am a member of the ACC board, so the document came to the board but we certainly have no difficulties with the conclusions that the ACC came to.

Senator FURNER: I understand Customs now has the use of an intelligent-led approach in detecting illicit items at borders. When did this approach come into place?

Mr Pezzullo : It has been gradually building over time. In the cargo environment it specifically manifested itself in the cargo intervention strategy, which is very much an intelligence-led risk based approach that I mentioned earlier—introduced under Mr Carmody's leadership. That formally came into being in 2009-10. There had been some precursor developments, better links to overseas law enforcement partners, better links within Australia amongst the jurisdictions, better access through better connectivity to intelligence, better use of analytics. It had been building up for a while, but in the cargo space, which is the import of your question, the formal bringing into being of the intelligence-led cargo intervention strategy was 2009-10.

Senator FURNER: Could you inform the committee of how many detections of undeclared firearms in air cargo Customs made in 2011-12?

Mr Pezzullo : I might ask Mr Wall to speak to those matters. Ms Kelley looks after post-border investigations and Mr Wall deals with our intelligence matters.

Mr Wall : From July 2011 to July 2012, we detected 1,344 undeclared firearms, firearms parts, accessories and magazines across all streams. That included 76 firearms, which of course is made up of handguns, rifles and shotguns; 748 conventional firearm magazines—the magazines are also for handguns, rifles and shotguns—and 520 items consisting of various parts and accessories. I can also say, for the new financial year up until 30 August, we have detected 146, comprised of eight firearms—the same sort of composition as I previously outlined; 36 conventional firearm magazines and 102 items consisting of various parts and accessories.

Senator FURNER: How do the detections of 2011-12 compare with the period, for instance, in 2007-08, if you have those figures handy?

Mr Wall : I only have from 2008-09.

Senator FURNER: Okay, I will put that on notice. What about other items, such as drugs? Are we seeing increased detections in that particular area?

Mr Pezzullo : It depends on what time period you are talking about, and whether you are talking about individual detections or weight and the like. I might ask Mr Wall to speak to that. You might want to put some parameters around the time period and whether you are talking about the number of detections, their type or their weight.

Senator FURNER: Let's look at the June 2011 to June 2012 period. I am not fussy about weight.

Mr Pezzullo : Thanks, Senator. I will ask Mr Wall to take that question.

Mr Wall : For 2011-12 we concluded the year with 6,886 detections of drugs and precursors. That represents a 42 per cent increase in the number of detections from the previous year. In 2010-11 we detected 4,827. It is interesting to note, though, that in 2011-12 the weight of all of those detections was 3,497.6 kilograms versus 4,756.1 kilograms in 2010-11. It is useful to point out that the detections and the stats that go with all of this are more sensitive to the numbers of detections. That is largely driven, particularly in recent years, by a large scatter importation methodology, which is lots of small shipments, particularly through the air stream. The weight tends to vary quite significantly and is quite sensitive to large detections that we get in an ad hoc way throughout the year.

Senator FURNER: So why are we seeing a greater detection rate? What is new that is happened in Customs?

Mr Wall : I think it goes to some of the points that Mr Pezzullo raised. We do have an intelligence led, risk based approach irrespective of what the commodity is that we are looking at. We have certainly done a lot more in the area of joint task forces. We work very closely with our partners in agencies such as the AFP, the ACC, state police forces and others. I guess it is fair to say that the sophistication that our analysts are able to apply in this space is also improving as they build more knowledge and as we have improved our analytical tool sets over time. I did omit a little earlier to share with you the first quarter results, if you are interested in those, for 2012-13.

Senator FURNER: Yes, sure.

Mr Wall : They are quite significant in that we have already 2,898 detections during that time, characterised also by some quite significant weights for a couple of large seizures that we have made.

Senator FURNER: How would you describe your practices? Would you determine them to be world best practice?

Mr Wall : I could not comment on whether it is world best practice. I think that would be extending the envelope slightly. I think it is fair to say that we work very closely with other Customs administrations around the world and particularly closely with what we call the B5—the USA, UK, Canada and New Zealand. To that end we look very closely at each other's approaches, methodologies, techniques and the kinds of systems that we use and employ to combat drug importation. I would suggest that world best practice would be a big call, but it is certainly what we aspire to do and we are certainly getting the sorts of results that would be comparable elsewhere in leading Customs administrations.

Mr Pezzullo : I will perhaps add to that answer. Mr Wall has been far too falsely modest. We are members of the World Customs Organisation, which is the multilateral body that deals with these matters. The group of countries that Mr Wall spoke of—the US, the UK, Canada, ourselves and the New Zealanders—certainly all employ a very similar model. It is very heavily intelligence led. I will have to look at the issues raised by Senator Humphries earlier. It is so intelligence led that we are perhaps getting far too many highly sensitive documents that we have to end up shredding. So I will have to look at the disposition of our shredders, for that reason. But the serious point there is that there is better collaboration in those joint task forces, better links to state and federal law enforcement, better data fusion, much more sophisticated use of data analytics and better connectivity with our overseas partners. For instance, we have much more routine and structured arrangements with, say, the Drug Enforcement Agency, the alcohol, tobacco and firearms agency in the United States—to pick two examples. Those arrangements give you the patterns, the outliers or the leads that lead to the big busts.

The fundamental point that I want to leave with the committee is that a broad based screening approach helps, because you have to maintain a degree of coverage of the various sectors of importation to make sure that your algorithms, your patterns and your profiles actually correspond with the truth, as it were, of what you are actually picking up through your coverage and sampling work. But the really big busts come from advanced law enforcement collaboration with other agencies both here and overseas and through the pervasive and advanced use of intelligence.

Senator FURNER: To reach that standard, has there been any necessity to upgrade any technology to interact with the other countries you have indicated?

Mr Pezzullo : We are always looking at how to improve our own connectivity within Australia—there are obviously interesting challenges when you work in the Federation. We are also increasingly looking at secure—indeed, highly secure—connectivity with a number of jurisdictions both domestically and overseas. As importantly, we are looking always through software upgrades and the like to give our analysts the sorts of tools they need to exploit all of that information.

The last thing you want to do is basically be a heavy-leaden presence at the border checking everything—which just slows everything up in a globalised world. What you really want to be doing is doing very, very advanced analytical and intelligence work, using the latest capabilities and systems, so that some of the areas of customs and border protection—as you would have inferred from my previous answer to Senator Humphries—actually look more like a modern intelligence agency than they do a traditional Public Service environment.

Senator FURNER: I want to move to the international mail detections. I would like you to explain to the committee how many detections were made in 2007-08 as opposed to 2011-12.

Mr Pezzullo : Detections in terms of drugs?

Senator FURNER: Overall detections in mail.

Mr Pezzullo : I will ask Mr Wall to answer as best he can. We may need a moment while we go from, if you like, a commodity view of what we find to a sectoral view.

Mr Wall : These are the only stats that I have available at the moment. Since the introduction of our risk based approach to inspection of international mail, our detections of prohibited goods have actually increased by 83 per cent. But that is our sort of cross-stream improvement stat.

I might take you, if you like, to another layer of granularity to give you a sense of the environment and volumes. In 2011-12 we had over 64 million mail articles—parcels, registered mail and express mail service parcels—imported into Australia. This was in addition to over 118 million letters and almost 183 million postal articles. Australia Post is projecting volume growth in that area of 15 to 18 per cent over the next three years. One of the limitations we have in that space is that we do not currently have advanced electronic reporting for our risk assessment process. So everything has to be done in real time. The intervention strategy that I mentioned earlier that has led to the 83 per cent increase across the streams started back in July 2009. If you are looking for a more detailed break-up we can certainly take that on notice.

Senator FURNER: Yes, if you could take that on notice. So the 83 per cent increase is from 2009?

Mr Wall : Correct; since then.

Senator FURNER: Could you also please provide the committee with some more information on the firearms and intelligence and targeting team? How many people are involved in that team? What is its role? Do we work with other countries mainly in the region or further afield?

Mr Wall : Sure.

Mr Pezzullo : Sorry, Senator; did you say that you want us to take it on notice?

Senator FURNER: No, if you can provide some feedback on notice on the previous question for those periods.

Mr Pezzullo : Sorry, Chair, my apologies. Just while Mr Wall gets his brief sorted, we set up the team following the matters that we described earlier in March and April, particularly with the Glock importation. It is a team of approximately six or thereabouts—Mr Wall will give you the detail—one of whom is permanently embedded in the New South Wales Police force. We maintain a particular level of detailed, everyday workings with the New South Wales Police Force. It is not just limited to the firearms work that that team does; the police commissioner up there—and I am very grateful to Commissioner Scipione for authorising this—has given that office a wide ranging access to their other investigations that relate to gangs and particularly to, as I related to, outlaw motorcycle gangs. That is a very rich frame of intelligence for us. I want to take the opportunity to thank the New South Wales Police Force, and particularly the commissioner, for enabling and indeed driving that very high level of collaboration.

Mr Wall : I will just give you a bit more detail around that. In April this year we established the Firearms Intelligence and Targeting Team. Its key aim was to fuse together all of the available intelligence from law enforcement agencies, with the aim to improve our ability to target illegal imports, leading to more seizures and arrests. The actual work for the team commenced in April this year and, to date, has actioned 77 cases.

As Mr Pezzullo outlined, we are working closely with state and federal partners and have raised what we call cargo passenger and postal profiles and alerts and have created a number of intelligence reports in targeting products, which have been widely disseminated by all the law enforcement agencies and stakeholders involved.

As Mr Pezzullo outlined, I can confirm there were in fact a core team of six intelligence and targeting officers assigned to this, but we do supplement that capability with appropriate internal and external subject matter experts as we require. We do have an outposted officer from that team—a senior intelligence analyst—to the New South Wales Police Force Firearms and Organised Crime Squad. That is aimed at enhancing the New South Wales Police Force's own access to border intelligence holdings present for both agencies and with an increased level of cooperation.

In addition to that, as you may be aware, the USA is a key source country, if you like, for weapons. That has been quite consistent. Our outreach to the US is done primarily through our Customs counsellor based in Washington DC. They are currently focusing on expanding the range and depth of our partner agency stakeholder relationships in the USA for targeted engagement on illicit importation of firearms to Australia. Clearly, what we want to achieve out of that type of capability is to increase the flow of overseas entity and the thematic intelligence behind it. Thank you.

Senator FURNER: One last question on the SmartGate capacity that was announced in the recent budget. How is that progressing?

Mr Pezzullo : Very well. Someone who can answer even more amply than I just did will join me at the table. In fact, there he is: Mr Buckpitt.

Mr Buckpitt : We are currently installing five additional gates at Melbourne and expect to have that completed by the end of November. We will then have another four gates underway, pier C, Sydney Airport and then another four gates, pier B, Sydney Airport in the early part of next year. Our intention is that 13 out of 20 additional gates will be in place by the end of this financial year and the balance of the seven will go into other airports next financial year.

CHAIR: Senator Humphries, do you have a couple of questions that you want to go back to?

Senator HUMPHRIES: Chair, if I could ask just a few extra questions, I am sorry, about the ACV Hervey Bay. When was it first stationed at the Cocos Islands?

Mr Pezzullo : I might just ask Admiral Johnston to join me. It has been there for some three months or so. I want to give you a more precise answer to that and I will be able to in a moment.

Senator HUMPHRIES: Sure.

Rear Adm. Johnston : I believe the date is 23 July but I will need to check that.

Senator HUMPHRIES: Sure. You said that you and Mr Pezzullo made the decision jointly that it should be deployed there?

Mr Pezzullo : I think what I said was that under the direction of the previous CEO, Mr Carmody, we looked at the emerging threat picture. We worked to an intelligence-led approach and we decided that the best way to discharge our maritime security obligations—it is Australian territory—would be to place a vessel out there that had greater reach, greater coverage than the inshore vessels that are currently there, which are a mixture of commercial vessels leased to Regional Australia, the home department, as it were, that runs the territory function, as well as some AFP and Customs and Border Protection inshore RHIBs-rigid-hulled inflatable boats. We felt from the point of view of prudent risk management that a more capable patrol vessel would be more suited to the task.

Senator HUMPHRIES: Do we have to enhance facilities on Cocos Islands in order to allow that asset to be based there?

Mr Pezzullo : Subject to being advised to the contrary, we position the vessel there essentially because they are self-sustaining. Obviously we are rotating the crew; it has not been the same crew there for the best part of three months. They are supported to some extent from the land but they are essentially self-contained. If I need to modify that I will come back to you, Senator.

Senator HUMPHRIES: All right, but if there are any additional costs associated with basing the boat there, could I have you tell us what they are on notice.

Mr Pezzullo : I will take that on notice.

Senator HUMPHRIES: Thank you. In that period since 23 July—whatever the date is—how many boats has the Hervey Bay intercepted or assisted?

Mr Pezzullo : In the calendar year, as I think I said earlier, some 53 vessels have arrived at Cocos. I would say well over half-a significant majority of those-have arrived in the last three months. I will just have to get the breakdown of how many have arrived since Hervey Bay arrived and how many of those Hervey Bay intercepted. Some of them are able to be intercepted by other vessels that we have there—the inshore vessels I mentioned earlier. We might just take the detail of that on notice. But it would be a subset of the 53.

Senator HUMPHRIES: I understand. Have any Customs vessels intercepted or assisted boats arriving from Sri Lanka outside our territorial waters? If so, how many?

Mr Pezzullo : We would not intercept vessels outside of the Australian contiguous zone. It is not practised and indeed it is not consistent with our international legal obligations to do so. We might have rendered assistance at the request of the master and, more often than not, under AMSA tasking, outside of the contiguous zone. I might see if the admiral has got any details on that.

Rear Adm. Johnston : I do not have the exact numbers but in the two circumstances as Mr Pezzullo described, vessels from Sri Lanka proceed both to Cocos (Keeling) Island and Christmas Island. We do intercept inside the contiguous zone in both locations but also in both locations we have rendered assistance outside of Australian waters acting in support of AMSA.

Senator HUMPHRIES: Could you take on notice how many times that has occurred both inside and outside contiguous waters? Are you able to say, in the case of boats intercepted or assisted, whether they have departed from Sri Lanka or from India?

Mr Pezzullo : I have some information to hand. In some cases, through the debriefs of both crew and passengers we are able to ascertain that. In other cases it is through other corroborating information. I have figures in the case of Sri Lanka and India that go back to September 2008. I do not have a breakdown year by year.

Senator HUMPHRIES: That is alright.

Mr Pezzullo : Over that time period, since September 2008 when the current arrivals commenced, there have been, in our judgement, approximately 93 vessels that have originated from either Sri Lanka or India, but the vast majority of those-that is to say about 85-probably departed from Sri Lanka.

When I say 'probably', in some cases the debriefs themselves have to be corroborated with other information and that other information is ambiguous, so this is more in the nature of an assessment rather than hard and fast information.

Senator HUMPHRIES: I appreciate that. Have there been occasions where we have arranged, say, merchant vessels to pick up people outside our territorial waters, rather than have an Australian asset do that?

Mr Pezzullo : We do not enact those arrangements, but the Australian Maritime Safety Authority, which is in the infrastructure and transport portfolio, as the responsible agency under the SOLAS Convention that runs the Australian Rescue Coordination Centre, has so tasked merchant vessels operating in that part of the Indian Ocean. Under international legal obligations, merchant vessels are obligated to respond and, yes, there have been cases where that has occurred outside of the Australian contiguous zone, outside both the Cocos zone and Christmas Island.

Senator HUMPHRIES: Thank you.

Senator CASH: Are you aware of the efforts of the Sri Lankan government to return 22 vessels to Sri Lanka?

Mr Pezzullo : I am very familiar with what the Sri Lankans have been doing in their own coastal areas, yes.

Senator CASH: Are you briefed by Sri Lanka?

Mr Pezzullo : Yes.

Senator CASH: Do you brief the government on the efforts of the Sri Lankans in turning back the boats?

Mr Pezzullo : Yes.

Senator CASH: Are you also aware—

Mr Pezzullo : Sorry, Senator. I probably should be very precise in my answer. We have provided advice to the government based both on what the Sri Lankans have told us at a government-to-government level and on what our operational agencies pick up through their liaison of the work that the Sri Lankan navy, the Sri Lankan coastguard and the Sri Lankan police maritime unit do in terms of intercepting vessels under their flag under their jurisdictional arrangements. I heard you use the term 'turn back the boats'. I do not know, because I have not researched it myself, what the jurisdictional or legal basis is of those operations. I know that they are running a very effective maritime interception activity.

Senator CASH: Are you briefed in relation to the status of those on board those boats? For example, I understand that the majority of the approximately 3,500 people that were on those 22 vessels and were returned to Sri Lanka were middle-class economic migrants with no protection claims.

Mr Pezzullo : I have no idea of the nature of the people who have been—

Senator CASH: So that is not the extent of the briefings you get in relation to the Sri Lankans returning the boats?

Mr Pezzullo : We are a border protection agency. We are briefed by our counterparts in the Sri Lankan navy and the Sri Lankan security services as to what operations they conduct on the water in the maritime domain. We are maritime agencies in that sense. What the immigration issues or the refugee related issues are that pertain to those people, I do not have any information on.

Senator CASH: It is a separate issue, okay. Thank you very much.

CHAIR: Mr Pezzullo, I thank you and your officers from Customs and Border Protection Service. We will see you in February, no doubt. We will now move to the officers from the Australian Federal Police.