Customs and Excise (Joint Border Management Information Sharing and Other Matters) Amendment Bill

on behalf of the Minister of Customs: I move, That the Customs and Excise (Joint Border Management Information Sharing and Other Matters) Amendment Bill be now read a second time. The bill was introduced to Parliament in September 2010 and had its first reading on 15 September 2010. It has been reported back from the Justice and Electoral Committee, and I would like to thank the members of the committee for the prompt attention they gave to this bill. This bill is an omnibus bill. It amends the Customs and Excise Act 1996 and the Biosecurity Act 1993. The amendments make important improvements to support the sharing of information across border sector agencies. These amendments will ensure the Customs Service and the Ministry of Agriculture and Forestry meet the Government’s priorities in relation to the delivery of the joint border management system and support an effective collaboration at the border. It also provides for improvements in the effectiveness of customs law enforcement. The amendments will restore the level of effectiveness to the administrative penalty and petty offence schemes that was intended when the Customs and Excise Act was passed in 1996. Finally, the bill addresses emerging customs and border management issues and provides clarity to existing legislative provisions to improve administration of the Customs and Excise Act.

The bill contains three categories of amendments. Firstly, there are amendments to provide for planned information-sharing by the Customs Service with the Ministry of Agriculture and Forestry and across a range of border agencies. Secondly, there are amendments to enhance the effectiveness of customs law enforcement mechanisms, and, thirdly, there are nine smaller amendments to clarify provisions within the Customs and Excise Act.

The identification and management of border risk requires information to be accessed and shared by border agencies. The Government has recently agreed to $75.9 million funding for the first tranche of a new border management system, which will provide the Customs Service and the Ministry of Agriculture and Forestry with access to information needed to identify border risks. The current statutory provision for information sharing allows for information to be shared on a case by case basis. This is not sufficient to cover the quantity of information and the process for information sharing between the Customs Service and the Ministry of Agriculture and Forestry.

The bill contains amendments to the Customs and Excise Act and the Biosecurity Act that are necessary to support shared access to information by the Customs Service and the Ministry of Agriculture and Forestry under the new joint border management system. They also provide a legal framework to support interim information-sharing projects between the Customs Service and the Ministry of Agriculture and Forestry until the joint border management system is established. Further, the Customs Service is involved with a number of centres that operate jointly with staff from different agencies, such as the Ministry of Agriculture and Forestry, the Immigration Service, the police, the Ministry of Defence, and others. These centres provide a mechanism for sharing staff and intelligence to ensure that border risks are identified and effectively managed. The existing statutory provisions relating to such information sharing are unnecessarily complex. Given the Customs Service’s range of agency interrelationships and connections, the amendments in the bill establish an information-sharing framework that will enable the Customs Service to manage the access to, and the sharing of, border information by the relevant agencies more efficiently and more effectively.

The Justice and Electoral Committee has proposed a series of amendments that clarify the information-sharing provisions in the bill. The committee’s proposal sets out criteria that the Minister of Customs must consider and consult on before recommending the making of regulations under the proposed information-sharing framework. The committee has also recommended that the public is notified of the intention to undertake consultation. These amendments will increase the rigour of the information-sharing regime and provide confidence to business and individuals about the way the information they entrust to the Government is being treated. In addition, the committee has proposed an amendment that any regulations made under the framework must be confirmed by Parliament. The Minister in charge of the bill is very happy to accept these amendments in order to provide assurance to members of the public and the trading community.

In terms of the enforcement and compliance provisions, the Customs Service’s assessment of risk relies heavily on the quality and accuracy of the information provided by importers. The administrative penalty scheme that operates under the Customs and Excise Act is no longer providing a sufficient incentive for compliance by the importing community. The existing provisions relating to the petty offences regime are very limited in their scope and reflect the circumstances that applied when the Customs and Excise Act was originally passed.

The Customs Service has identified amendments to restore the level of effectiveness intended when these schemes commenced. The second set of amendments will strengthen the administrative penalty regime by, first, increasing the minimum penalties to be applied as administrative penalties; secondly, increasing the minimum penalties that can be dealt with as administrative penalties; thirdly, adapting the penalty regime to reflect the degree of culpability; and, fourthly, including in the estimation of revenue avoided the GST that is otherwise payable. The amendments will also extend the range of provisions that can be dealt with as minor offences under the petty offences regime.

The Justice and Electoral Committee has proposed an amendment that makes it clear that all imports with a value of less than $1,000 fall within the administrative penalty regime. Again, the Minister in charge of the bill is happy to support this amendment. The bill also includes nine amendments that are required to either clarify existing provisions or address new situations that have emerged since the Act was passed in 1996. They clarify licensing and excise liability requirements for biofuels and biofuel blends, and reduce compliance costs for low-volume producers; allow the use of reasonable force within certain customs-controlled areas to detain people or compel unauthorised persons to leave; enable the Customs Service to prevent goods from entering New Zealand that have been designed, manufactured, or adapted to facilitate a crime of dishonesty—for example, card skimmers—create a specific offence for injuring or killing a customs dog; enable goods that must be imported in multiple shipments to be managed as if they were a single shipment; allow for the making of regulations to define the point at which an export entry is deemed to have been made; define when a postal article has been produced or delivered to a customs officer; and provide the specific method for calculating the value of temporarily imported goods at the time of exportation.

The Justice and Electoral Committee has proposed a number of amendments, including the insertion of definitions of “biofuel” and “biofuel blend” in the bill, and a clarification of when blending of biofuel for home consumption occurs. The amendments also enhance customs law enforcement, which is essential to ensure the Government can prevent the importation of drugs and precursors and prevent other illegal activity at the border, and can contribute to the prosperity of the country. Again, the Minister in charge of the bill thanks the Justice and Electoral Committee for completing its work on the bill in such a compressed time frame. I commend the Customs and Excise (Joint Border Management Information Sharing and Other Matters) Amendment Bill to the House.

That was a full and comprehensive speech from the Minister for Courts, and I think she summarised well the main points of the Customs and Excise (Joint Border Management Information Sharing and Other Matters) Amendment Bill after its report back to the House. I also thank the Justice and Electoral Committee, because in my reading of it, it has made a couple of changes here—

💬 Grant Robertson: Pretty fundamental.

—fundamental changes, which have made a huge difference to the bill.

The bill, which I made a brief speech on as it came through the House in its first reading, had not been properly scrutinised. I think we underestimated what it was possible to do in the bill. In the end it was kind of a classic Tory piece of legislation, really. On one hand, the Government had omitted the legal obligation for the Ministry of Agriculture and Forestry, in collecting information, to transfer it back to the Customs Service, but, on the other hand, it said that the objective of the whole bill was coordination, collaboration, and more effective border management. Well, if one leaves out something as basic as that, it raises the question as to how good the bill was when it was originally drafted, or what the intention was.

The other thing that was included in the bill—and the select committee has astutely changed this—was the provisions on information and information sharing. What Auckland International Airport did was to expose itself completely at the select committee, because if there is one organisation that is an absolute monopoly and that has abused that monopoly position time and time again—and, quite frankly, there does not seem to be any hope of anyone pulling it under control—then it is Auckland International Airport. Almost 80 percent of the people coming into this country—[Interruption] That is right; ask Air New Zealand what they think of Auckland International Airport. That is right. Well, Auckland International Airport said that it wanted the information from people coming in on the planes because it wanted to share that with the retailers.

💬 Hon Nanaia Mahuta: With the who?

The retailers. The retailers at the Auckland International Airport are a tightly controlled bunch, because, with the way it is set up, it is the biggest rort in the country. Good luck to them, but most would say that, under the Commerce Act and under the current arrangements in New Zealand, it is a bit of a rort.

💬 Hon Pete Hodgson: You have to walk through them to get to the customs.

In fact, it is almost impossible to get in and out of customs in New Zealand now without knocking over at least 10 bottles of gin, a carton of cigarettes, and all the perfume, because one is forced to go through the retail area. To be fair, it is a model used around the rest of the world, but we seem to be copying all the worst things. Anyway, the point is that this information, rather than being gathered for biosecurity reasons—[Interruption]; thank God I am deaf and I cannot hear Paul Quinn—and for true border security reasons, the priority was that it would be passed back to the retailers at Auckland International Airport so that they could make more bucks from people. The select committee—and I do not know whether that member was on it; probably not, because it made a good decision here—astutely said that that was going beyond the pale. That was going too far.

The objective of this legislation is to gather information so that we can improve the border management system in this country. The objective is not to improve the retail sales of Auckland International Airport. It is still possible for that to happen, if the Minister undertakes an extensive consultation process. At least the safeguards are there, and it is not the quick-fix solution that could have been possible had the bill passed through the system without amendment.

There are a couple of good things in the bill, and one of them concerns biofuels. The definition of biofuels was unclear for some people, such as fuel manufacturers, and the fact is that now people, if they are as innovative as we hope they will be in the future, are producing their own biofuels for their own use, and they will not get caught up in paying the excise on that. That is a very good incentive. As I was not a member of the committee, I would like someone to answer this question: did consideration of that exemption go to individual farmers who, in my view, in the very near future, through bio-digesters, will be producing their own biofuel to run their farming operations? There is a pig farmer in the country doing it now, but there will be dairy farmers doing it in the very near future. The question is: should the Government consider, or did the select committee consider, whether they too should have an exemption from the excise? I personally would support it. I think Labour would support that, because it really does start to make smart use of methane, which otherwise would be expelled into the atmosphere—

💬 Hon Pete Hodgson: Bio-diesel.

Bio-diesel—you name it.

I say there will be smart farmers who within 5 years will be completely self-sufficient in energy production and utilisation. Farmers have the ability to do that if they are given the right incentives. The select committee, in its wisdom, saw that incentives should be in place for domestic users and producers. The committee should perhaps have gone one step further, although perhaps its members had a directive from the Minister. The bringing in of some coordination at the border is something that the next Labour speaker, the Hon Nanaia Mahuta, initiated while she was Minister. I am privileged to be able to speak before her. She will give a far more interesting and informative speech than mine, but there are a couple of key points that I thought I should make.

She was the Minister when these things were initiated, and I am sure she will be pleased to speak on the bill. Coordination and collaboration is a must, in terms of joint border systems. I suspect that one of the things that might emerge from this in the not too distant future is payment by the tourism industry for some of the joint border management systems. Indeed it should not be forgotten that the previous National Government attempted to implement a border charge and failed, because it did not conduct a proper consultation. I put on record my assertion that the National Government will put up the proposal in the very near future that the tourism industry should indeed pay part of the joint management outcomes. I am not going to get into the debate here, but it should be ready for that coming down the track.

I will not say too much more, other than that Labour supports the bill coming back to the House. It is progress. It allows for better technology and better coordination of the joint border agencies. We should not forget that there are a number of them, such as the Ministry of Agriculture of Forestry, which, of course, runs Biosecurity New Zealand, the Aviation Security Service, which runs the security side of it, and the Customs Service, the Police, and the Immigration Service. The coordination has not always been what it should be. This bill will ensure that information is passed between those agencies, and the amendment that the select committee brought into place ensures that the information that the Ministry of Agriculture and Forestry gets goes back to the Customs Service. It was a more than minor omission, I would say, in the original drafting of the bill. I congratulate the select committee on doing that. I cannot help but applaud the committee for providing better incentives for biofuel production.

There is a whole list of little things that the bill also does, but I will not run through them all other than to say that Labour welcomes this bill back to the House.

I am happy to agree with the previous speaker, Damien O’Connor. This is a sterling piece of work from the Justice and Electoral Committee. There are six members in the House tonight who no doubt will take a short call at some stage. I thank the committee for its collaborative approach. The fact is that we do all our dirty washing behind closed doors. We set about giving some enhancement to this bill after it came before the House. There were some issues raised, not only by submitters but also some were dreamed up by the committee members themselves. The key messages, of course, are that National is focused on preventing the importation of drugs and precursors, and other illegal activity at the border. P is destroying families and communities in areas around New Zealand, and the people who import it must be stopped. Border management is dependent on the effective sharing of information among agencies operating at the border. I commend this bill to the House.

I am pleased to take a call on the Customs and Excise (Joint Border Management Information Sharing and Other Matters) Amendment Bill. I listened very carefully to the Minister of Customs’ speech introducing the bill and tried to figure out what was urgent about it. If it was so urgent, we would be doing not only the second reading but we would be completing the final stages of the bill. So one has to wonder what the Government’s underlying agenda is, with specific regard to this bill.

I want to comment, also, on the fact that for all the bills that have been pushed through under this urgency motion, by the officials from the Customs Service being present in the House they have shown their diligence for ensuring that whatever they put their hand to, they will do good work on. My comments are regarding the sophisticated nature of the way in which the Customs Service is currently working at the border, but also in terms of the backroom functions. So the fact that the Government is continuing to pursue a joint border management system bodes well for an integrated at-border service of all our various agencies.

There are a number of issues that I want to bring to the attention of the House. In summary, they are aspects that, I think, are improvements. The point was made previously that Labour is happy to support the bill, with specific regard to information sharing at the border and the way in which the Customs Service and MAF Biosecurity New Zealand can work better together. I suspect that although it was an omission in previous legislation, the opportunity to strengthen information sharing between the Customs Service and MAF Biosecurity will lead to some operational efficiencies that can only improve risk profiling and identifying how at-border services can be conducted better.

I have a particular question on operational efficiency. New Zealand is in the position of the 100 percent X-raying of, for example, passenger luggage at airports. If that is to change, then it is absolutely necessary that the Customs Service and MAF Biosecurity are sharing information and identifying potential areas of risk, in terms of the origins of the passengers. It will require not only border agencies to share information but for them to have a better arrangement with airline companies, so that they are sharing their passenger records and more comprehensive risk profiling is able to be conducted. In my small time managing this portfolio we had some vociferous objections from some airline agencies about releasing the records and we went through quite a convoluted process. At the time it was still marginally unresolved. I highlight the point that although information sharing of the border agencies is necessary—absolutely necessary—a comprehensive risk profiling assessment has to include the airlines as well in order to make sure that that information is comprehensively included into an at-border strategy of this nature.

In the minor amendments, I noted about four particular amendments that would be useful to business. Firstly, the amendment outlined previously about no excise on domestic biofuel production, and clarifying that within the legislation, is very helpful. It is much the same type of clarification that exists in the way we treat tobacco for personal consumption, with no excise charged for that. I think the issue raised by my colleague Damien O’Connor is a very valid one, and, in terms of further policy work, it could be a useful approach to forecast where the opportunity could be in biofuel production for domestic use in farming operations. I think that is an absolutely valid point and should, at some point in this debate, at least be responded to or acknowledged.

The other technical amendment is the enabling of imported goods in multiple shipments to be managed as if they were a single shipment. That will be an improvement to the way in which things are accounted for now, and business will welcome that improvement. Another improvement will be allowing for the regulation to define the point at which an export entry is deemed to have been made, and providing the specific method for calculating the value of temporarily imported goods at the time of exportation. Those specific amendments, I can see, are very useful, and business will welcome that. With regard to the issue of improving administrative and petty offence provisions for the Customs and Excise Act, this legislation gives the chief executive powers to set penalties more in line with the times. I think that that, again, is a useful enhancement of the legislation. It also updates and modernises the penalty provisions to be in line with offences that are being caused. So those are very useful technical amendments there.

In my last point, I come back to the issue of information sharing at the border, because information sharing is as good as the systems we have in place. I am not on the Justice and Electoral Committee, and I have not been a part of the financial review, but I hope there will continue to be a strong platform to invest in the CusMod computer system that the Customs Service has, and also to invest in the interoperability of the Customs Service information technology systems, immigration system, and the other at-border agency systems, so those systems can at least talk to one another. It is one thing to share information, but interoperability of information technology systems is where it needs to get to, and that will be a real opportunity, especially with immigration, in the first instance.

A number of issues were brought up at the Justice and Electoral Committee. Damien highlighted one of them regarding the Minister being amenable to information being shared with, for example, an airport company. I have a concern about that. I am absolutely supportive of information being shared for the purposes of risk profiling and maintaining security of New Zealand’s interests at the border, but if it is for retail or commercial benefits to an airport company, I cannot quite see why the Minister would want information shared for that type of outcome. In whose interest is it? It is certainly not in the Minister’s interest to forward the financial or retail opportunities for any airport, for that matter. I have raised a concern on that front because it was also highlighted through the submission process.

The final point on the issue of information sharing is that in the bill there is a provision for the chief executive to review the way information sharing has been implemented after 5 years . That is useful, because we know with a service like the Customs Service that we should expect at least every couple of years it will need the Customs and Excise Act to continue to be updated and improved as operational efficiencies arise out of a joint border management system. So we can expect that the review will bring forward only further efficiencies and improvements to the way things are done at the border. Kia ora.

When Parliaments in the future look back at this Parliament, they will remember the Customs and Excise (Joint Border Management Information Sharing and Other Matters) Amendment Bill. This bill is to customs what custard is to crumble, what Barry White is to soul, and what John Boscawen is to the ACT Party. So it is with great pleasure and humility—

💬 Grant Robertson: A certain amount of humility.

—as much humility as I can muster—that I commend this great, historic bill.

💬 Hon Steve Chadwick: At this time of night?

Well, I want to talk a bit more. Why should one short-change oneself on a bill that is as good as this?

This bill is about border management, which, of course, is dependent, as the Hon Nanaia Mahuta said, on effective sharing of information. When we think about what the world needs more of, we know that it is effective sharing of information. We need to do that among agencies operating at the border. I can tell members, having gone down to the Port of Tauranga and talked with its customs officials, how important they say it is to make sure they are sharing information with the other ports all around the country, and just how important our borders are. We have seen that in so many areas recently, like P—

💬 Grant Robertson: This speech was good at the start. Is the end any good? The middle is not so good.

I will end where I started, actually, I tell Grant Robertson. I will get back to those sorts of Churchillian, big-picture themes. But I want to delve down into the detail, because I think that is something—

💬 Lynne Pillay: You’re a details person.

I am; we have talked about this before. I think we need to get into some things when we talk about customs. The first thing is border security, in terms of ensuring we do not have criminal activity coming through the ports. P has come through, and I have had a concern in the past about its coming through the borders; I think this bill goes towards doing something quite significant about that. That is why I said at the start of my speech that this bill is significant.

The other thing I wanted to say about this bill is what it will mean—actually, that thought has just gone from my head, so I think I will keep talking about P. The other thing I say is that National, when we think about this bill, is focused on preventing the importing of drugs and precursors, and other illegal activity at the border. We all know the devastating effect that P is having in communities. One of the things that concerned me when I went to the Port of Tauranga and I talked with the customs officials was the way in which stopping illegal activities coming through the borders is potentially hit and miss. They are not necessarily checking everything, and we can understand why they are not. Of course, it would be prohibitively expensive, and it would be impractical at many levels, so there is sort of a random process at best.

At the core of this very, very significant bill we are making sure that information is shared, that ports work together, and that customs officials work together. I will go through three categories of amendments that the bill deals with. Firstly, we are providing for planned information-sharing in the border sector and the implementation of the joint border management system. Secondly, we are enhancing the effectiveness of law enforcement. Thirdly, we are addressing emerging customs and border management issues, and providing clarity to existing legislative provisions.

Having moved from the big picture and the significant things this bill does, we then get to the detail: through information sharing, and many other things the bill does, we see that—

💬 Jacinda Ardern: Simon, that note says: “Sit down.”

That is right. I just return, though, to where I was at the start, which is saying that one day people will look back on these speeches. They will read this speech and it will read much, much better than it sounds right now—

💬 Hon Members: Ha, ha!

It will sound much, much better. They will remember this bill for all these amazing things that it is doing for the Customs Service and the great customs officials all around the country, and for life in the cosmos and the vibe in general. This is a very proud moment for this Parliament. I commend this bill to the House.

I want to acknowledge the bravery and courage of the previous speaker, Simon Bridges. I think he spoke about 50 times as long as any other National member. That is utterly commendable. The whip has been on the phone, and I want to tell members something. Oops! Gerry Brownlee is here; Simon Bridges is in big trouble! But we will stick up for that member because he had the courage to talk in this Chamber, and that is really good. Simon Bridges said that the most important thing was information sharing, and I think he will nod when I say that it is about the importance of information sharing. If National had shared a bit of information over the last day or two, then the Parliament would not be in the shambles that it is in today. It is an utter shambles; it shows a lack of planning and information sharing. It is a big joke. I think we have a pretty good relationship on the Justice and Electoral Committee, and certainly compared with the committee run by Sandra Goudie. Simon Bridges has shown courage tonight. He felt passionate enough about the bill to baulk at, or disobey, the orders to make short speeches. He put hand on heart, was passionate about the bill, and was going to speak on it. It is not often I pay tribute to National members but I put on record tonight my acknowledgment of the utter courage of Simon Bridges, who spoke for probably 5 minutes—

💬 Hon Nanaia Mahuta: 5 minutes.

He spoke for at least 5 minutes or maybe even 6 minutes. Clearly, there was an instruction for Government members to speak for 30 seconds. His speech has called to the attention of a few of the big guns from National, if I can call them that—I think members know who I mean—that Simon Bridges has shown that courage. I think everyone, or certainly everyone on this side, will acknowledge that.

I return to the Customs and Excise (Joint Border Management Information Sharing and Others Matters) Amendment Bill. As others have said, I say that Labour supports this bill. As a member of the very hard-working Justice and Electoral Committee, I thank all the committee members. I specifically acknowledge Su’a William Sio, who voluntarily came on to the committee.

💬 Grant Robertson: That’s the kind of guy he is.

That is the sort of guy we are dealing with. He saw that this bill was really important. Jacinda Ardern was kind enough to step aside and allow Su´a William Sio—

💬 Grant Robertson: She was dragged aside.

There was a bit of a dust-up between Jacinda Ardern and me but in the end she stepped down, and Su´a William Sio was able to have input. If we look at the changes that happened during the select committee process, I think all members would acknowledge the role of Su´a William Sio, along with everybody else. We all know that the purpose of the bill is about information sharing, and that is something Simon Bridges spoke very much about. The bill improves the thresholds and processes for administrative and offence provisions of the Customs and Excise Act. Other minor amendments provide clarity to the existing provisions. Although it makes a number of minor changes, which I could go through—

💬 Grant Robertson: Go on.

I will go through them, if time permits. But there is just so much to go through. The substantive change, and the one the committee gave the most attention to, was around regulation-making powers. That section is not particularly comprehensive but after receiving submissions, giving them very careful consideration, and committee members putting on their thinking caps, we recognised that this was the most important part. I think that would be fair to say, and I look to Simon Bridges to acknowledge that that change was one of the most important ones. Previously, the section had just required that the Minister, before making regulations, would consult the Privacy Commissioner and some agencies that may be affected. But after consideration, and some very good advice, and points that were raised through the submission process, the committee decided to have a much more comprehensive process for recommending the making of regulations under that section. That was to make sure that there was consistency, for example, whether the regulations were consistent with the purpose, whether the border information to be made available to an accessing agency under the proposed regulations included personal information, whom the information was to be made available to, and the amount of information to be made available—whether it represented a significant proportion of border information, its sensitivity, and its level of accuracy, etc.

Part of that was because the primary purpose is about sharing information and the safety of the border—acknowledging that anything that comes into New Zealand is either by air or sea. So that is really important. Also it acknowledges the privacy rights of individuals. If that information is not essential for border control, then that information should not be shared around, willy-nilly. That was probably the most comprehensive part that the select committee gave its attention to. I see Mr Bridges nodding again, but that part was not the only part.

💬 Grant Robertson: Sagely.

Sagely nodding—

💬 Grant Robertson: Wisely.

And wisely nodding. There were other matters that were perhaps not quite as important but still were matters that improved the bill. There was the issue around biofuels—

💬 Mr DEPUTY SPEAKER: I am sorry to interrupt the honourable member but the time has come for me to leave the Chair.

Debate interrupted.

Sitting suspended from 12 midnight to 9 a.m. (Saturday)