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Thursday, 14 November 2002
Page: 6408

Senator LUNDY (4:04 PM) —by leave—With regard to the government response to the report entitled Inquiry into the outsourcing of the Australian Customs Service's information technology, I move:

That the Senate take note of the document.

On 16 May 2002 the Senate Legal and Constitutional References Committee tabled its report, Inquiry into the outsourcing of the Australian Customs Service's information technology. The report focused on the Australian Customs Service's implementation of its cargo management re-engineering project, or CMR, and in particular on the information technology aspects of CMR. These involved the replacement of Customs' current range of cargo processing IT systems with an integrated system—the integrated cargo system, or ICS—and the introduction of a different IT platform that increased the role of the vendor, EDS, to replace Customs' current IT gateway, provided by a not-for-profit organisation called TradeGate. It is important to note that TradeGate has representatives from both Customs and industry on the board of that organisation. Also, it probably represented one of the earliest models in the world of an e-commerce hub. It achieved an extraordinarily high standard of e-commerce within that particular community—the import and export community—in relation to Customs.

The replacement gateway is known as the Customs connect facility, or CCF. The primary concern expressed through the inquiry was that changes would mean that the high-volume users of that facility would get lower costs. So many of the witnesses that appeared were arguing that the changes proposed through the CCF would in fact mean that customers of Customs—users of Customs services—that use the system on a high-volume basis would be given lower prices. This would unfairly disadvantage lower-volume customers or users of Customs services.

The resulting impact would mean that the big end of town would pay lower prices for those services but the smaller users—the Australian SMEs, exporters and so forth— would actually pay higher prices for those services. The inquiry traversed this issue at some length. There have certainly been denials by the Australian Customs Service that price inequities would be the result. As yet we do not know the outcome of that particular matter, but it will certainly be worth watching.

The report also focused on part of the procurement processes adopted by Customs for the development of the ICS and the CCF. Early development of both of these was conducted by EDS Australia, the IT outsourcing vendor, under its outsourcing contract with Customs. Clearly there were concerns that EDS were, for whatever reason, not best placed to provide such a solution; hence, during 2001, EDS and Customs agreed that an alternative provider for the ICS development should be sourced. A consortium led by Computer Associates won an open tender for the application development of the ICS and commenced development in February 2002.

Given the dependency of the ICS on the provision of the CCF, Customs ensured that they contracted directly with the firms that EDS had engaged to deliver the CCF: IBM, Baltimore and SecureNet. Again, I think this reflects a growing awareness within Customs that they ought not become captured by their IT outsourcing vendor, EDS, and can be interpreted as an attempt by Customs to regain some control of that process, particularly given the need to mesh the CCF development with the ICS and so forth. Responsibility for the CCF application development rests with IBM and SecureNet under contract to Customs, as opposed to EDS, which goes some way towards alleviating some of the concerns expressed by witnesses who provided evidence to the inquiry.

The good news is that the government has agreed to both recommendations put forward by the committee. The recommendations were supported by all members of the committee. The first related to the concern that the consultation process with regard to CMR, CCF, ICS and all of those acronyms that they use was not adequate, was not effective and had in fact put at a specific disadvantage many of the stakeholders at the time. The recommendation was that Customs undertake a review of its consultative processes with a view to developing a strategy for consultation processes for the rest of the ICS implementation phase.

The Senate needs to understand that this recommendation comes on the back of several years of concerns and complaints about inadequate consultation. The government response to this was that it would try to improve its consultation processes. Indeed, a strategy was discussed with industry stakeholders on 29 April this year and the published statement includes various times for phases of implementation of the ICS. I will not go into it because I know the minister has tabled the document.

Another recommendation in the report was:

In order to provide certainty for industry, the Committee recommends that, in the event that the Customs Connect Facility and the Integrated Cargo System—

the CCF and the ICS—

... are not in place on the date required by the Customs Legislation Amendment and Repeal (International Trade Modernisation) Act 2001, Customs invoke the procedures described in Section 126E of that Act.

That is a very technical way of saying that, if the new systems are not in place by the time they should be, industry stakeholders will not suffer any unfair penalty or loss or any new penalty under the proposed new system. At the time when this report was prepared there was speculation about whether or not those aspects of the CCF and ICS would be in place. The speculation proved to be correct, so the concerns of the industry were subsequently dealt with by the government, ensuring that no stakeholder in the sector would be adversely affected by delays caused by the inability of Customs to get the new systems operational during the interim phase and that the existing arrangements would apply. As I would like to be able to continue to reflect on this report and this issue, I seek leave to continue my remarks later.

Leave granted; debate adjourned.