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Tuesday, 10 August 2004
Page: 26054

Senator MARK BISHOP (7:00 PM) —I rise tonight to outline several issues of concern in the Customs portfolio. I want to address the Howard government's abysmal report card on managing the financial resources available to Customs to fulfil its most important role. I will begin with an issue that has been well publicised in recent years. The import of freight via sea containers has increased the necessity for tighter border security measures. Despite this necessity, the Howard government continues to mislead Australians on the issue of sea container security. It is currently impossible to ascertain the amount of illicit cargo entering Australia via sea containers. Customs officers at Senate estimates conceded that a considerable amount of illegal imports are entering in this manner. This is supported by the fact that other entry mechanisms, such as air cargo and mail, are now highly scrutinised.

The evasion of duty through undeclared cargo is considered to be another major incentive for more container inspections. Global estimates suggest that trade fraud costs $US195 billion per year. Annual turnover for the illegal drug industry is about $US430 billion. Approximately 80 per cent of consignments from developing countries are misdeclared. Cargo theft is estimated to be in the order of $US54 billion per year.

The Howard government recently increased the number of containers inspected from 80,000 to 100,000 over the next four years. However, spread over the four ports with X-ray facilities it amounts to an extra 415 containers per month for each facility by 2008. Australian ports receive approximately 1.6 million loaded import containers and a quarter of a million imported empties per annum. This means the Howard government has increased the inspection rate on import containers by the great figure of one per cent.

Thankfully, though, people within the stevedoring industry are taking the issue seriously. Hong Kong's Modern Terminals Ltd is running a six-month pilot study to inspect every container that arrives. Importantly, the system will provide Customs in Hong Kong with comprehensive, integrated data on every export container. It is not expected that the system will cause any significant delays to cargo movement.

In Australia, the Port of Melbourne Corporation and Westgate Ports are jointly funding an $80 million cargo berth. Among many other initiatives, the new cargo berth will include high-speed container scanning for all containers. It is estimated that the port of Melbourne handles nearly $70 billion in annual trade. This contributes more than $5.4 billion to the state's economy each year. Eighty million dollars would appear to be a very sensible investment when providing protection for $70 billion in annual trade. Imagine the economic damage if a security failure closed the port of Melbourne for even a short period. Initiatives such as these must be applauded.

Container security in Australia is already the poor cousin internationally. It is now facing further embarrassment domestically. The recently announced Customs container examination facility for Adelaide will inspect around 1,300 containers each year. What the announcement does not say is that Adelaide imported in excess of 49,000 containers in 2002-03. This equates to an inspection rate of less than three per cent. Container inspection in the US is currently well in excess of 12 per cent. The recent increase in container inspection contradicts the Howard government's claims that approaching five per cent was adequate. Interestingly, this is a target they are yet to achieve. This is indeed a confession, 2½ years after 9-11, that the ongoing ALP criticism is justified. Australia's waterfront is wide open to terrorism simply through the 2½-plus million containers which are not inspected.

While on the issue of border security, it would be remiss of me not to mention the recent drugs debacle. The issue of performance-enhancing drugs has led to another embarrassing admission by the Minister for Justice and Customs. There were 1,269 seized illegal imports of prohibited performance-enhancing drugs in 2002-03. Only 376 were formally investigated. This resulted in the magnificent sum of 67 convictions. So the chances of someone importing illegal substances into Australia and escaping prosecution are very high indeed. It is important to note that the legislation provides for a fine of $100,000 and five years jail for such offences. Customs has long been struggling to perform its responsibilities, and now the cracks are wide open.

I move now to the issue of the Customs cargo management re-engineering project. It is likely that the enormous cost overrun of this project is responsible for many border security failures. The CMR project has the capacity to standardise and streamline reporting across Australia's borders—an eminently sensible goal. I quote the Minister for Justice and Customs, who said:

Once the Bill has been passed by the House of Representatives next week, the new system will be phased in over two years reflecting industry need for time to adapt to the new processes and information technology systems ...

Unfortunately for the import/export industry, the minister said this over three years ago. In May this year, the Australian's `IT Business' section had this to say:

Nightmares don't get much worse in the IT industry than the Australian Customs Service's Cargo Management Reengineering project. Long on promises and short on delivery, the CMR has been a horror show almost from day one. It has been years in the making and is $100 million over budget.

The significant delay and estimated cost overrun in excess of $150 million make this project an unmitigated disaster. The delay in delivery is indicative of the Howard government's failure to appropriately oversee such initiatives. Significantly, the cost overrun has been offset by cutting costs within other areas of Customs' responsibility and has also caused confusion and scepticism in the import and export marketplace.

A search on the Internet reveals outdated material and advice in relation to the release of the CMR. This should not be surprising—the continuing cost of updating this material would be a significant impost or cost to industry. The lack of updates on industry web sites indicates that they have adopted a wait-and-see attitude to the CMR delivery, and who could blame them. Initially, as the minister stated, the system was due to be phased in by mid-2003. The export component of the system is now due for launch in October this year, and the import component has been put back to mid-2005. That is a delay of at least two years. Going on the record thus far, it would be fair to say that further delays should not be ruled out.

In conclusion, there are many issues within the Australian Customs Service that highlight the Howard government's failures. This situation is not caused by the ineffectiveness of Customs officers, who provide a valuable service; it is brought about by the Howard government's failure to provide appropriate resources for a service that has had to adjust to rapid change in the requirements of border security. The Howard government should cease its reliance on publicity stunts to prop up its poor record on these issues. It needs to act immediately to repair the damage it has inflicted on the Australian Customs Service.