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Wednesday, 8 May 1985
Page: 1507

Senator PUPLICK(11.47) —It gives me a great deal of pleasure to speak on the Customs Administration Bill and the Customs Administration (Transitional Provisions and Consequential Amendments) Bill and to say something in support of the amendment moved by my Leader, Senator Chaney. Before I do so I indicate that during the previous three years I had the good fortune to be a consultant to a number of firms and organisations which had intimate dealings with the Customs Service both in Sydney and in Canberra. I want to go on record as saying that my experience in the course of those three years was that the people working in the Australian Customs Service were working under a great deal of strain because of a lack of resources, and in many cases because of a lack of necessary tools with which to go about their work.

The people with whom I was in frequent contact were public servants acting, I think, in the very best traditions of the Public Service, and trying to do a job under extreme difficulty. They were extremely decent and well-motivated people who deserved a great deal better than they got from the internal management arrangements of the Customs Service and indeed the then Department of Industry and Commerce in general. Therefore, to the extent that this legislation will allow the development of those management practices and services to give greater career stability and sensitivity within the Australian Customs Service, I greatly welcome it. I think it will be of considerable benefit to Customs operations and the Customs services in Australia.

The Australian Customs Service and Customs and excise legislation have always raised a significant proportion of Commonwealth revenue. At the moment, as indicated in the 1984-85 Budget, excise duties will yield about 14.1 per cent of total Commonwealth receipts; Customs duties about 4.9 per cent of total Commonwealth receipts and the figure one gets as a result of adding those figures-19 per cent-amounts to some $10,129m, a not insubstantial amount of the Commonwealth Budget. It is interesting to note that while Customs and excise duties raise 19 per cent of total Commonwealth receipts, in the first Federal Budget, brought down in 1902, total Commonwealth receipts were 11 1/2 million pounds of which 9 million pounds were raised by Customs and excise duties. The first Federal Budget must have been a very remarkable document because while total Commonwealth receipts were 11 1/2 million pounds, total Commonwealth expenditure was only 4 million pounds leaving 7 1/2 million pounds surplus. I doubt whether any Treasurer these days would be able to achieve anything akin to that. I think it is likely that revenue, from Customs and excise, as a proportion of total Commonwealth receipts, will increase in future years. It will increase, first, because of the indexation of excise arrangements on certain items. Secondly, it will increase because of increases which will undoubtedly take place as a result of changes in the crude oil levy scheme. It will also take place because of the undoubted general shift towards indirect taxation as a method of raising revenue.

However what I am concerned about-it is one of the points which I raise at an early stage in this debate-is that there are some problems on the revenue side for business arising from this legislation. Margaret Milne, who is a manager of one of the divisions of Arthur Anderson &Co. in Sydney, has written in an article in Australian Business on 1 May, stating:

The Australian Customs Office has long been recognised as a source of Federal Government revenue. But now it may be able to help lower the Budget deficit a little more by holding on to a large part of the $80 million paid out yearly in duty refunds.

After an analysis of that particular problem, she continued:

Accordingly, Australian businesses reliant on imported goods must seek greater control over Customs duty being paid because there will be little opportunity for turning back.

And while business faces additional burdens at its own peril, the government may in fact be overjoyed to find an additional source of income which should never have been there in the first place.

This illustrates one of the problems in Customs administration which has been the subject of some concern in the business community and the legal community in recent months. The exposure paper or draft paper regarding Customs duty refunds attracted a very considerable amount of public comment and criticism. The refunds which are payable under section 163 of the Customs Act have been a source of contention for the business community in Australia for quite some time. Recently, the Business Law Section of the Law Council of Australia has had some comments to make, particularly because it has become apparent that in recent years some of the rulings of the Customs Service have been based upon premises which the Administrative Appeals Tribunal have found to be unsound as a matter of law. The Business Law Section of the Law Council of Australia, in its report on the Discussion Paper issued as part of stage 2 of the Reference on Customs and Excise Appeals, made this comment:

Customs legislation is notable for the degree of discretionary powers, strict liability penalty provisions and a strong array of investigatory and remedial powers given to the Australian Customs Service, primarily intended to deal with the most serious type of criminal offences but actually available to be applied to all traders.

The Law Council's indication of concern was picked up in an article in the Australian Financial Review of 18 April this year. It stated:

The Law Council of Australia has called for the revision of the Customs Act to protect citizens' rights against the Federal Government's present approach on the administration of Federal customs law.

I do not make these points to criticise in any way the Customs Service in the way in which it is operated; rather I simply indicate that this is an area in which clearly the lack of resources, constraints on resources and lack of particular expertise within the Customs Service have been identified. The Customs Service is clearly taking steps to overcome and rectify those deficiencies and it deserves to be commended for what it is doing in that regard. However, it lends strength to some of the points which Senator Chaney made about referring to the Senate Standing Committee on Finance and Government Operations a number of aspects which arise and, in particular, paragraph (b) of his amendment so that one can identify more clearly what advantages flow from the proposed changes.

The Customs Service has been looked at, probed, examined, turned upside down and inside out, shaken and rattled by more inquiries and more committees than just about any other part of the Federal Government in the last couple of years. In December 1979 the Australian Royal Commission of Inquiry into Drugs-that is the Williams Committee-made some significant recommendations about the way in which the Customs Service ought to be reorganised to deal with the drug trafficking problem. Recommendation 24 stated:

The resources of the Bureau of Customs should be upgraded for the purpose of fulfilling its re-stated role.

That was the fight against drug abuse in Australia. A Finance and Government Operations Committee inquiry would allow us to identify the extent to which that has been done.

The next report to which I refer is the report of the Auditor-General on an efficiency audit on the collection of excise duties and deferred Customs duties which was produced in March 1982. That report had some things to say, in particular, about bonded warehouses, an issue with which I am particularly familiar. For years the Auditor-General has been drawing attention to the financial implications of the bonded warehouse system and the need for appropriate fees and recoupment of costs involved in their administration and control. A study by the firm Price Waterhouse into the appropriate fees, setting of fees, and scales of the fees to be levied in the system of bonded warehouses is under way at the moment. That matter could equally be referred to the Finance and Government Operations Committee.

The third report I refer to is the Administrative Review Council report on the review of import control in Customs by-laws decisions. That was a report to the Attorney-General dealing with Customs (Import Licensing) Regulations. One is not altogether sure from reading through that report what the responses to it have been. The next report that touched on some of these matters was the report of the September 1982 Royal Commission into the Australian Meat Industry. Although the organisation criticised in that report was one within the Department of Primary Industry, there were implications for the Customs Service which again need some examination and report. The next report is that of the Stewart Royal Commission of Inquiry into Drug Trafficking of February 1983. I am curious to know whether all of its recommendations about the Customs Service have been picked up. For instance, it recommended a joint task force with elements from the Australian Customs Service, the Australian Federal Police and the Queensland Police to be based in Cairns to gather intelligence on allegations that fauna smuggling, drug smuggling and illegal immigration were organised activities in the north of Queensland. One ought to know what the Customs Service's response to this was. The report drew attention to a matter which, again, I think the Finance and Government Operations Committee could well have looked at when it dealt with the question of the current provisions in the Customs Act for attaching the profits derived from drug trafficking. One ought to be in a position to hear from the Government what the implications of this legislation are on that matter.

The next report to which I refer is that of the Mahony Review of Customs Administration and Procedures in New South Wales. The report, which was presented in April 1983, again drew attention to the resource difficulties of Customs. It said:

During visits to Customs and in discussions with officers, it was apparent that with present staff resources, Customs has been obliged to lower its standard of control in order to cope with its business and this was so despite Customs having upgraded equipment and having introduced many improved management practices--

The report indicated that restrictions on Customs were such that the capacity of Customs to carry out its statutory obligations had been severely limited. The Finance and Government Operations Committee could be informed by the Government whether the resources that were indicated as a result of the Mahony inquiry have been provided and what the implications would be if this were done through an independent Australian Customs Service. The next report was a report of the Auditor-General upon audits, examinations and inspections under the Audit Act and other Acts dated September 1984. That report had some comments, again touching on the matter of warehouses and control of administration within the former Department of Industry and Commerce. In terms of new systems to be introduced, the report said:

While acknowledging the short period during which the Department was required to introduce the new system in 1982 this Office--

that is, the Audit Office-

considers that progress since then has been slow in upgrading the level of investigations and rectifying deficiencies in the computer system.

One would want to know what progress has been made on that matter before it becomes entirely the responsibility of the independent Customs Service. I say in passing that I was interested in the comments that appear on page 112 of the report about the unsatisfactory nature of the location of the duty free premises at the Melbourne International Airport. We then had the Black Report on an Inquiry into the Circumstances Surrounding the Making of a Customs Declaration' which was presented in August 1984. Let me say immediately that the Black report concluded that there was no impropriety on the part of any officer of the Australian Customs Service and no breach of law. The report said that the officers of the Customs Service who were concerned in the matter performed their duties thoroughly and impartially. I only raise the Black inquiry because it indicates the amount of strain that exists on Customs resources, particularly at immediate points of entry.

There was then the 224th report by the Joint Parliamentary Committee of Public Accounts on the collection of excise and deferred Customs duties. That report again touched on the system of bonded warehouses and indicated that this was a matter which it believed should be referred to the Industries Assistance Commission for inquiry and report. Finally, the tenth report that I cite is the joint Commonwealth and New South Wales task force report on security of wharves and containers. Although I have only just had the opportunity to complete my reading of that report, I simply say that if the recommendations of that task force are to be adopted and implemented, the resource implications for the Customs Service will be enormous.

I turn to a couple of the specific matters to which the Australian Customs Service has to contribute to Australia's well-being. The first of those, as Senator Jack Evans has indicated clearly in his address, deals with the public concern over the narcotics smuggling and drug industry in general. I was alarmed to see in the Canberra Times of 27 February this year the following:

The future of the Australian Customs service, already under scrutiny in a wide-reaching Government review, has been further confused by the spectre of a new national strategy on drugs coming out of next month's drug ''summit'' meeting.

I think that we ought to have some clearer indication of how it is that the Customs Service intends to respond to what were the results of that drug summit and to have it clearly indicated that the Government is prepared to provide the necessary resources for the Customs Service to undertake the vital role that it has in dealing with the drug menace. I think that that indication could be clearly provided in an inquiry conducted by the Finance and Government Operations Committee. I believe these facts and figures should be immediately available to the Government. Thus it would not be an inquiry taking a year and it would not unnecessarily delay the passage of this piece of legislation.

I go on to mention what is one of my most favoured hobby horses, as my colleagues on this side of the chamber know, that is, the question of inward duty free shopping. I mention the matter only to indicate that having studied the submission of the Australian Customs Service to the Industries Assistance Commission's inquiry into passenger and crew concessions, which was presented to the IAC in April, one of the points that the Customs Service made was that it did not really care very much for inward duty free shopping. The Service stated that it would aggravate queueing; it would confuse the extent of concessions; it would cause amendments to baggage statements; it would make for some evidentiary problems if prosecutions arose; it would increase the revenue forgone; and would increase the processing time for passengers. The point it made at the end of that part of its submission was:

An additional problem is that IDFS staff would be located within the Customs area leading to an added risk of narcotics and message exchange. This would require additional Customs surveillance workload and increased manpower. The security screen would have to extend to checking IDFS staff each time they left the premises (e.g. lunch, visits to toilets, leaving work for the day). Monitoring would be required of deliveries to and from the IDFS and rubbish removal. There would be a requirement of police/character checks on IDFS staff.

Yet we see, despite all the comings and goings of the Government on the question of inward duty free shopping, that its own Customs Service is saying to it: 'This is an area which is fraught with difficulties, not just for passengers, Customs and revenue losses, but also significantly, for the possibility of additional avenues of drug smuggling'. Because there is an IAC inquiry, because we are now told that the Government intends to rush through inward duty free shopping legislation to have it in place by 1 July, and because the Customs Service says that it has real concerns about it, these matters ought to be addressed. If one looks at the other sorts of things with which the poor officers of Customs have to deal, one will see that this Parliament-I was glad to play some part in it some time ago-passed the Wildlife Protection (Regulation of Exports and Imports) Act 1982. This Act requires officers of the Customs Service to have some knowledge of taxonomy, what is on the Convention on International Trade in Endangered Species Schedule of protected flora and fauna, what it is prohibited to import and export in terms of endangered species and wildlife, and so on. Customs officers have to be capable of dealing with those matters. They have to be capable of dealing with other forms of exports. For instance, the Minister for Arts, Heritage and Environment, Mr Cohen, in a statement made on 23 April, said that legislation was to be introduced shortly to protect important items of Australia's cultural heritage from illegal export.

When one thinks of the quite justifiable concern over the way in which the Strehlow collection was removed from Australia, one sees that the Customs Service is clearly to be required now to have some clear role in monitoring the possible illegal export of items of cultural heritage. One knows that the Customs Service has the responsibility for dealing with the importation of films and video material. It is surprising to see that Mr Peter Bennett, I think it was, in his evidence to the Senate Select Committee on Video Material said, to all intents and purposes, that Customs officers were under some sort of instruction to turn a blind eye to pornography if they saw it coming into the country; that there were no guidelines for Customs officers. A report in the Sydney Morning Herald of 24 January stated:

. . . Customs officers were told by senior officers to ''see it but don't see it'', the Customs Officers' Association told a Senate committee hearing yesterday.

Mr Cohen also announced on 6 November 1984 that:

The exportation of copies of films and sound recordings made in Australia or its territories 40 or more years ago, and which have been published in Australia or elsewhere, is prohibited from today without Commonwealth Government approval.

Presumably there has to be some capacity within the Customs Service to identify what are copies of film and sound recordings made more than 40 years ago and to see that they are not exported from Australia without specific permission. Sometimes Customs officers themselves have a little difficulty in regard to seizure, and I instance the temporary confiscation of Emeritus Professor Bruce Johnson's collection of Cuban subversive books, or revolutionary pamphlets, or the collected speeches of Fidel Castro, which I thought might have been imported into this country as a cure for insomnia rather than being regarded as a threat to national security. We have the situation of someone's books being seized when he enters the country because of difficulties and reference being made to the Attorney-General's Department about whether books of that nature can be seized, should be seized, or have to be let go without any comment.

One sees that the Customs Service is required to mount operations to track down various rackets. In July 1984 Customs investigators were involved in an inquiry into a tax evasion racket based on the illegal entry of very expensive motor vehicles. The value of the cars involved was something like $6.8m. The Acting Collector of Customs in Queensland indicated that the Customs Service had had to mount a nationwide investigation of this racket. At the same time, Customs officers have had to go on wild chases in Sydney's Chinatown to effect the seizure of 2,000 illegally imported T-shirts. That is certainly a correct and proper thing for the Customs Service to be doing. However, the point I make is that the necessary additional resource implications could well be profitably examined and scrutinised by the Senate Standing Committee on Finance and Government Operations in terms of the amendment moved by Senator Chaney to the second reading of the Bill.

It is true that there are ongoing problems with the regulation of Customs agents. There are some very unsatisfactory aspects of the way in which the operations of Customs agents are regulated in Australia. I hope that as an independent body the Customs Service and Mr Hayes, as the Comptroller-General of Customs, will have greater success than previous departmental attempts have had in providing some framework, hopefully based upon principles of self-regulation by the Customs agents themselves. That is something that will need to be addressed fairly promptly by the new Service.

The final point I make, and Senator Jack Evans mentioned it in the course of his remarks, is that we are constantly reading of a lack of morale within the Australian Customs Service. In fact, on 4 May the Sydney Morning Herald ran an article headed 'Bad morale lets drugs in, claim Customs officers'. I do not want to go into the details of that, but I have a feeling that there are some grounds for concern about morale within the Customs Service at the front line of operations. I also believe that having the Customs Service as an independent service in the way proposed by this Bill will be a very significant step in overcoming those concerns of morale. I believe the Service will have a capacity which it does not have within its existing legislative and administrative framework to deal with those matters within the framework of a professional career-oriented Customs Service. I believe the advantage of Senator Chaney's amendment would be to allow us to examine at least some of the clear areas of Customs difficulty and responsibility, which range from crude oil excises right through to illegally imported ocelot skins, subversive Cuban books, illegally imported Chinese T-shirts, or pornographic films. The Finance and Government Operations Committee could be told by the Government what resources are to be made available, what advantages flow from the proposed changes, how the Service becomes more accountable in terms of its responsibilities, not just to this Minister but to other Ministers whose Acts require some interface with the Customs Service, and indeed the cost of the changes, because that in itself is an important element. When one looks at the general exercise the Government is currently undertaking in terms of attempted expenditure control and reduction one sees that there are great advantages to be gained by the passage of Senator Chaney's amendment. However, regardless of the fate of that amendment the Opposition very clearly and very overtly welcomes the proposals contained in the Customs Administration Bill and hopes that the independent Customs Service will have a great deal of success and sufficient resources available to it to undertake the very significant job it performs, and by and large performs very well, on behalf of the people of Australia.