Estimates Debate — Vote Customs

My apologies, Mr Chairperson. I thought the call was going to be taken by the Minister, not by me.

💬 Hon Maurice Williamson: I wasn’t in the Chair.

No, I noticed that. I preface my comments by recalling to the Committee a very successful Comptroller of Customs, in the form of Martyn Dunne, who recently disappeared off to Canberra to be our high commissioner. I have to say, as a member of the Foreign Affairs and Trade Committee for the last 5 years, the Customs Service was outstanding in its presentations to that committee. I congratulate Martyn on that.

I think it is important to point out at the beginning of my comments that the National-led Government has a plan to take New Zealand forward by reducing our debt, getting back to surplus within 3 years, and building a faster-growing economy, because we want to take the country forward. So we are getting on top of our Government debt by keeping it below 30 percent of GDP. That means, by my calculation, we will be back in surplus by 2013, and certainly by 2014-15 at the very latest. Since National became the Government we have taken responsible decisions to restrict the build-up in Government debt and to get the Government’s spending and finances under control. In particular, we have turned back the 2008 forecast we inherited of never-ending deficits and soaring debt, by setting a path back to surplus. We have introduced the biggest reform of the tax system for 25 years, which rewards work and saving, discourages borrowing and consumption, and significantly tightens tax rules on property speculation without having a capital gains tax.

It is really important during these difficult economic times to take a stable, conservative approach to managing the economy, and, above all, to get us on a path to long-term, sustained growth. I make those points because this is where the very, very important impact of the Customs Service and its Minister, Maurice Williamson, performs three broad functions that will enhance New Zealand’s prosperity and security. First of all, the Customs Service protects our border. Second, it facilitates legitimate trade and travel. Third, it collects Crown revenue. The Customs Service is also responsible for trade and tourism support and community protection, such as by detecting and preventing the importation of illicit drugs, illegal weapons, and objectionable material.

Minister Williamson and his department have done an absolutely outstanding and vitally important job. The Customs Service collects 15 percent of the Government’s total revenue, and in 2009-10 collected $8.78 billion in customs revenue. I think people do not really understand the importance of this agency to the Government’s cash flow and to this economy. In my experience over the last 5 or 6 years, the Customs Service has consistently met its target to collect at least $15 million of additional revenue that traders perhaps under-declare. I noticed that a recent audit of the Customs Service and its revenue collection showed that in 2009-10 the department collected around $30 million above its target. That is an additional $65 million that it has contributed to our economy.

I reiterate my comments and say what a fine job this department does. It is critically important to our economy, and I congratulate the Minister on his leadership. Thank you.

I thank the member John Hayes, the previous speaker, for those comments. As Minister, I would like to make a few comments about Vote Customs in the estimates debate and talk about what I think are the three key priorities the Customs Service has set itself, or that I as Minister have set for it, and that it has delivered with fantastic results.

The first of the three priorities we set the Customs Service when we came into Government was to improve competitiveness, security, and productivity at the border. I guess, in a nutshell, it was to make sure that those goods we are trying to export can go out as freely and as quickly as we can get them out, and anything coming into New Zealand as an import can cross our border quickly, be processed, and get into the hands of those it is bound for. With regard to that, in the latest Budget there is the allocation of very large sums of money for what we call JBMS, the Joint Border Management System computer. The Customs Service has been running on a very, very old-fashioned computer system call CusMod for a long time, and the Joint Border Management System will make a huge difference to it. Part of the Joint Border Management System project is a thing called the Trade Single Window. I cannot emphasise more to members of this Committee how important the Trade Single Window module within the Joint Border Management System is. It will mean that all our exporting companies that are trading with the rest of the world will file their electronic papers once and only once. All of the necessary border agencies—the Food Safety Authority, the Ministry of Agriculture and Forestry, the Customs Service, maybe the Immigration Service, and a whole range of others—will have their databases populated automatically, and the productivity improvements that will come from that are huge.

For me, the second big issue for the Customs Service—and I promise that for me this is a passion—is the increased disruption of supply chains for illicit drugs entering New Zealand, particularly methamphetamine and its precursors, through targeted operational activities. I am happy to go on record as saying there is no more ghastly drug on this planet than P. The reason for that is it takes away from anybody who is using it the ability to think rationally and behave sensibly. I need only reference to this Committee people like Graeme Burton, who killed Karl Kuchenbecker, or William Bell at the Panmure RSA.

From my electorate, I want to give what I think is one of the most telling stories ever. A man walked into a Pakuranga pizza parlour, pointed a gun to the head of a young man called Marcus Doig, who was working through his university studies, and said “Give us the money.” Marcus Doig did what he should have. He cooperated fully and he handed over everything that was in the till to this P-crazed individual. Then, having cooperated fully, the man made Marcus Doig turn round and kneel down, and he shot him through the back of the head. Only 2 days later that same individual went out to the ASB in Māngere, pointed a gun at a man called John Vaughan, who again was doing his job at the counter like any normal human being would be doing in a day, and when he said “Give us the money.”, John Vaughan cooperated fully. I emphasise to this Committee again that because the individual was brain-crazed on P, he had no idea of the difference between right and wrong, and after John Vaughan had cooperated fully, he then shot him—a family man. That is a tragedy.

I make no apology to this Committee for giving the Customs Service an absolute directive about this stuff and about its precursors, ephedrine and pseudoephedrine. To my great delight, I am happy to report to this Committee that the interventions have been spectacular, and they have grown in numbers to the point where last year we reported that over a tonne of this stuff was intercepted at the border.

When I went to China in October I was able to meet with the Chinese customs Minister and persuade him that China was the main source of ephedrine and pseudoephedrine. This is an interesting story to share with the Committee, as well. I gained the impression after talking to the Chinese customs Minister for a while that he really did not quite get it, because it would be like another country’s Minister coming to New Zealand and saying to a Minister here “We want you to ban Vicks VapoRub.” I realised that because in China ephedrine and pseudoephedrine are perfectly legal and one can buy them in the street, he was looking at me with a sort of quizzical view as if to ask why we were so concerned about this product, which was legal. So I told him the stories about Karl Kuchenbecker and Graeme Burton, William Bell and the Panmure RSA, and Marcus Doig, and as I went through those stories, I could see he was visibly moved. He was quite taken by just how ghastly the products that ephedrine and pseudoephedrine were turned into here were, and he made a commitment, which the next day we signed as a memorandum of understanding between ourselves and the Chinese Government. We have a high level of cooperation now with the Chinese customs agency, including the training of dogs to be able to sniff stuff that they had never thought of before because it was not a problem. I will leave this Parliament one day very proud of the fact that our Customs Service has done the most amazing job of its interception of that product, which is the most evil product going.

The other item in Vote Customs, and there are many that I could spend a lot of time on in telling members how proud I am—the whip would not like it, but I will—is the movement of technology into the whole platform of the Customs Service. When I became the Minister of Customs, 75 percent of all of Vote Customs was personnel costs. I made it clear to the Customs Service that the world was changing and that technology was now coming, and coming at such a speed that we needed to gear up for it. One of those steps that I want to bring to members’ attention in the Chamber tonight is SmartGate. Over 50 percent of all New Zealand and Australian passport holders are now using SmartGate to enter our country. It means they walk up, they place their passport on a glass screen, they look at a camera, the camera says “Yes, that is you.”, and away they go. So far, from all our trials, we have never been able to get SmartGate to give a false positive. It has given some false negatives. It says “We do not think this is you.”, and after a bit of checking we found that the person had lost weight, or had a change of glasses maybe, or whatever. Every now and then we have even tried to fool it with identical twins who have swapped their passports, and it has never yet given a false positive. That is fantastic news for us.

It means that customs officers can be freed up to get on with the real hard yards of dealing with the nasties and the bad ones as they enter our border, and it lets the family who have been off to Movie World, or the businessman who has been across the Tasman for the day to do some work, just go through the gates, be processed, and come out the other side. It can be done just like that.

💬 Hon Christopher Finlayson: Even I can use it.

Even a member like Chris Finlayson, who does have some dodgy photos, can get through—I agree with that. I am proud of that. Over 50 percent of passport holders now use it, and, like Schumpeter’s S-curve always does, it is just heading to the sky.

As I said, when I first became the Minister 75 percent of Customs Service expenditure was on personnel costs—on staff. It is down to about two-thirds, and we expect that by the end of this first term, when SmartGate is rolled out for both departures and arrivals, our personnel costs will be just under 50 percent of the total budget. We already have departure gates at Auckland and we are rolling them out across Wellington and Christchurch, but here is the biggest, biggest leap forward: we are currently trialling a city pairing of Auckland with the Gold Coast. That means that, firstly, as people check out through Auckland, put their passport on to the plinth, and get their photo done, they get a card that clears them immediately for entry into Australia. Secondly, people can do the same from the Gold Coast. That is a city-pairing trial in which we are ironing out some bugs, and it is my goal by the end of this year to have both arrivals and departures linked in both directions and for us to get it as near domestic experience as we can.

Finally, one of the other big achievements: by using our secure export system that we have with companies like Fonterra, we have been able to persuade the Americans to give us special treatment in the United States. Our exports to the United States get special privileges and treatment, and we are the only country in the world to have such treatment.

Vote agreed to.

Vote Lands agreed to.

Vote Statistics agreed to.

Vote Internal Affairs