Border Processing (Trade Single Window and Duties) Bill

I move, That the Border Processing (Trade Single Window and Duties) Bill be now read a second time. The bill was introduced to Parliament in July 2013 and had its first reading on 27 August last year. The bill is an omnibus bill. It amends the Customs and Excise Act 1996, the Biosecurity Act 1993, and other related border legislation. It has been reported back to this House from the Foreign Affairs, Defence and Trade Committee, and I would like to thank the members of that committee for the prompt attention they gave this bill. The committee received just three submissions on the bill—so I accept that it is not one that gets talked about around the breakfast table—including one accompanied by an oral submission.

The bill makes important amendments to existing legislation to underpin the implementation of the Trade Single Window component of the new Joint Border Management System. The Trade Single Window component of the system provides a single electronic gateway for industry to interact with Government agencies for customs and biosecurity requirements and filing. The Trade Single Window will promote more effective protection of New Zealand’s border and facilitate a smoother flow of legitimate trade, and is consistent with the Government’s priorities relating to the provision of more joined-up online services.

The bill contains three main categories of amendments that underpin the implementation of the Trade Single Window: registering users of the Joint Border Management System; providing information to, and receiving information from, the Trade Single Window; and consequential changes to offences. The bill also makes minor technical changes to the Customs and Excise Act 1996 to provide more clarity and improve the effectiveness of the Act to meet Government policy goals for border management.

The Customs and Excise Act 1996 requires that all goods imported or exported must be entered into the Customs Service computer system by individuals, these being importers, exporters, or their agents who are registered users of the system. The Trade Single Window will provide for a wider range of border requirements. For example, registered users will be able to provide and receive information on the movement of their goods, streamlining their supply chains. The bill amends several aspects of the Customs and Excise Act to ensure that there are appropriate registration mechanisms for access to and the use of the Joint Border Management System. The areas covered by the amendments include allowing companies to be registered users instead of only individuals. Specific grounds on which the Chief Executive of the Customs Service can refuse an application are included. It also allows the Chief Executive of the Customs Service to issue unique user identifiers for the Joint Border Management System that can be used with both the Customs Service and the Ministry for Primary Industries for border-related purposes. That is a big step forward.

The Trade Single Window will use the new international data model from World Customs Organization for lodgment messages, supporting access for our exporters and reducing compliance costs for the industry. The new lodgment messages will include customs, biosecurity, and food safety - related information, enabling the Customs Service and the Ministry for Primary Industries to receive more accurate and current information to better identify and target potential risks to New Zealand. Several amendments will assist in supporting how information is provided to the Trade Single Window. These amendments cover advance notices of arrival and departure for all goods and crafts crossing our border—inward and outward cargo reports—and establish a more effective trans-shipment process for the national movement of goods.

Additionally, the bill amends the Customs and Excise Act to provide the Chief Executive of the Customs Service with the ability to prescribe customs rules that reflect other border-related requirements such as health, biosecurity, and maritime safety. This will be done using a process agreed by the chief executives of those various agencies. This process will promote clarity and consistency in industry and reduce the administrative burden of maintaining multiple and often disparate requirements from the various Government agencies. Basically, it becomes a one-stop shop.

To enforce the amendments contained in the bill some consequential changes to offences are necessary. These amendments relate to advance notice of the arrival of goods and craft and of the departure of goods and craft. The bill makes a number of corresponding amendments to the Biosecurity Act 1993 to ensure its alignment with the Customs and Excise Act. The bill also makes consequential amendments to other related border legislation.

The bill includes some minor technical changes to provide more clarity and improve the effectiveness of the Customs and Excise Act to meet the Government’s policy goals. These amendments include updating the definition of “motor spirits” to reflect the 2012 changes to the excise and excise-equivalent duties table in the Act, and clarifying the duty calculation that may be used for goods re-imported into New Zealand. The change will allow the Customs Service to assess duty using a calculation approach that is set out in an international convention. The bill delegates the power to exempt certain international organisations from excise and excise-equivalent duty on alcohol and tobacco from the Minister of Customs to the Chief Executive of the Customs Service.

Finally, the bill enables regulations to be made that prescribe valuation methods and the value for an import consignment below which duty need not be collected by the Customs Service, known by most of us as the de minimis. This is intended to make it simpler to change the de minimis threshold in the future, should any future Government wish to do so. It is not intended to review the level of the de minimis in this bill, however.

I also acknowledge the contribution made by the Foreign Affairs, Defence and Trade Committee on this very difficult issue. The Foreign Affairs, Defence and Trade Committee has recommended the bill proceed with two amendments. The committee has proposed new clause 15 to address the submission made by the New Zealand Retailers Association. The clause makes consultation mandatory with representative groups whose interests are likely to be substantially affected by proposed changes to regulations governing the de minimis, and that would seem quite sensible. This amendment will increase the rigour of the minimum duty provisions and provide confidence to business and individuals about the way regulations are made for tax and duty-related matters. I am very happy to accept this amendment in order to provide assurance to members of the public and the trading community.

The committee, on the recommendation of the Ministry for Primary Industries and the Parliamentary Counsel Office, has also proposed an amendment to one of the levy provisions in the Biosecurity Act. This amendment will more avoid doubt by clearly providing for the making of biosecurity levy orders that enable the levy to be paid at more than one rate and that can set the actual levy rate or rates. The amendment aligns the provisions in the Biosecurity Act on biosecurity levy orders with other provisions in the legislation.

I once again want to say thank you to the members of the Foreign Affairs, Defence and Trade Committee for their work. They did it very quickly, they did it very thoroughly, and I am very delighted at the work that they produced back to this House. I recommend this bill to the House.

The Labour Party supports the second reading of the Border Processing (Trade Single Window and Duties) Bill. In fact, as the Minister of Customs might have noted—but I do not think that he did—this had its origins as a system under the last Labour Government. That is where the concepts and the issues were worked through. Of course the Labour Party will support the bill if it facilitates the movement of goods across the border, either as imports or exports, and does not diminish the necessary border protection—in particular, as we are a trading and agricultural country, the biosecurity provisions.

What this bill does is reasonably straightforward. It amends the Customs and Excise Act 1996 and also the Biosecurity Act 1993. We need it because it is required in order to implement the Trade Single Window component of the Joint Border Management System. In that one sentence alone, anybody listening to this debate would ask “What the hell are they talking about?”, so perhaps we should explain what that jargon means—

💬 Hon Maurice Williamson: No, they talk about it over the breakfast table every day.

—although the Minister of Customs is indicating that perhaps it is the Government’s policy to always keep the public in ignorance, as a preference. It is not the policy of the Labour Party to do that, however.

The name `”Joint Border Management System” basically indicates that it is a joint initiative between the Customs Service and the Ministry for Primary Industries. It replaces the current system of providing information about movement across the border, and it modernises and integrates border clearance processes for both people and goods on aircraft and ships that are arriving in and departing from New Zealand. The first stage of this, tranche one, has actually been implemented already in the last year.

I just want to ask the Minister a question about that and hope that he will come back in the Committee stage or that subsequent National speakers will give the answers to these questions. This is a computer system. It is IT based. We have had a lot of experience of implementing new computer systems in New Zealand. The Minister introducing the bill, the Minister of Customs, will remember INCIS. Interestingly, he says he does not. He has got a very selective memory, this Minister. INCIS was a total botch-up introduced under a National Government to try to upgrade the police information technology system. Interestingly, INCIS involved the same multinational computer company that is involved in this system, IBM.

I have heard, Minister, that there have been some problems with the information technology. The Government has been very quiet about it, possibly following the philosophy that the Minister has acknowledged on two occasions—a lack of transparency and not talking about things that might be uncomfortable. But I have heard that there are some difficulties. I would like to know from the Minister or from subsequent speakers from the National Government what those difficulties have been in the technology system, how big those problems have been, how we are seeking to address those problems, whether those problems have been resolved, and what the additional costs are that might have been incurred. It is really important that we know those things.

In fact, when this bill was introduced, it was introduced not by this Minister, Maurice Williamson, but by Craig Foss. Craig Foss was at that time, of course, the Associate Minister of Education who was in charge of Novopay. Well, 18 months out Novopay is still causing huge problems for the schools in my electorate. When I saw Craig Foss in the chair introducing this legislation, I thought “My God, it might have been Labour’s concept, but do I really trust the implementation of this system under Craig Foss and the National Government?”. The answer to that question is quite patently no. Why would you?

We have had experience of those costly failures, and I just think it is incumbent on the next National speaker to address the question of what difficulties have so far been incurred in implementing tranche one, which is covered by this legislation. If there are major problems, this House and New Zealanders need to know that. We have the right to know and the Government has the obligation to be upfront, open, and transparent about it. As I say those words, I feel a sense of naivety in expecting those things from a National Government, but I am asking for that. We are not dividing the House on this bill, as we are in support of the concepts, but we want to know that the Minister has implemented this properly and that the system is working.

I did say before that I would explain the other part of the jargon, the phrase “Trade Single Window”. It is a curious phrase, “Trade Single Window”, but what it essentially means is that there will be a single portal through which business and industry can meet the arrival and departure requirements of the Customs Service and the Ministry for Primary Industries. There are three changes needed that this legislation has to deal with in order for this new system to be introduced. One is to register the users of the Joint Border Management System, the second is to provide information for the Trade Single Window system, and the third is simply the consequential changes to offences that are created.

Registration is the most important part of this bill. It is about providing for all individuals and companies that interact with the Joint Border Management System to be registered with the Customs Service. It sets out the grounds on which registration might be refused by the Minister, it prescribes the form and the manner of the registration, and it allows for chief executives to issue joint unique user identifiers to access approved border information. So those things are necessary. I have got to say from a trade perspective, speaking as Labour’s spokesperson on trade, that this is a model that is compatible with the World Customs Organization. It means that we are using internationally comparable and compatible data, and it includes customs, biosecurity, and food safety - related information. That is an advantage of what the bill does. The information that has to be provided for the Trade Single Window by the users includes advance notice on the arrival and the departure of the craft that are carrying the goods and people. It also says who must provide cargo reports.

I want to come back to the fundamentals of this legislation and why Labour is supporting it. We are supporting it because as a trading nation we have to do everything we can to minimise the costs to those who are exporting from New Zealand. We have to be internationally competitive. Having a border system that is efficient and effective is fundamental to that. From the viewpoint of importing, it is about trying to minimise the costs that might be imposed on the consumer in New Zealand. So that is a fairly straightforward argument.

The second criterion that we would look at on this, because we are an agricultural exporting country—nearly two-thirds of our exports are primary sector based—is the need to have proper biosecurity protection. I do not think this bill does damage to that, but I want to see this bill in the context of what has already been done by the Government over recent times. I have got to say that I have concerns about what has been done, because in the Budget for 2013-14 there is $6 million cut out of biosecurity. I worry about that. Yes, I know the Government wants to make savings, but the savings are tiny in comparison with the costs if something goes wrong. And what better evidence of that do we need than the importation of the Psa disease into New Zealand, which is affecting horticulture and costing hundreds of millions of dollars? So I am really worried that this Government, in cutting back biosecurity, is going to incur huge costs for New Zealand. I also remember that back in 2009 when the Government made cuts to biosecurity 54 biosecurity officers were cut at that point.

We have been talking about importing biosecurity hazards, but what about the question of exporting? Today we almost had an urgent debate on the fact that the Government is deregulating the meat inspector regime, which, Mr Assistant Speaker Robertson, you and I are very familiar with. I worked for 7 years in the freezing works as a slaughterman. You, Mr Assistant Speaker Robertson, were equally closely involved in that. When you deregulate and you say that the company becomes the manager of the standards, you put those standards at risk because the company has a conflict of interest. We have seen that on seven occasions we did not meet the zero-tolerance requirements of the United States market for meat, which is worth $6 billion or more.

I am really worried that the cost-cutting mentality of this Government will put our exports at risk. We saw the disaster that was incurred in terms of the Chinese market with the botulism scare, with the dicyandiamide scare, and with other problems, all because the Government was penny-pinching. What I do not want to see in this legislation is the Government to be penny-pinching. I want to see proper biosecurity, and I also want to be sure that this IT system is working as intended. I want the next speaker from the Government to give an assurance to the House that the IT system is working as intended and there are no significant difficulties with it. With that, we support the bill, but obviously conditional on the Government giving that assurance.

I have got to say that it is quite difficult and a little awe-inspiring to come into this House and have to follow a man, Phil Goff, who has just admitted blood on his hands, having been a slaughterman for 7 years of his career. [Interruption] Well, I think it is the sort of occupation he will be looking to when he faces being in Opposition later on this year, because he has clearly got no other skills that are valuable. We are well served by Minister of Customs, Maurice Williamson, and I think that he is one of the most competent people in this Parliament to be dealing with IT issues. I had a call this afternoon—in fact, while I was sitting here in the House—from one Brother John McGeachie, who had just jetted in from Papua New Guinea, where he had been living. He rang to give me great compliments about the electronic passport system that Minister Williamson has been involved with putting in our airports. Any of us who travel know that that is a very good system and works without glitches.

I want to react to the very direct request made by the last speaker for a comment from a National speaker. He was trying to make allusions that this electronic system is not going to work. Well, I want to put categorically on record—

💬 Hon Phil Goff: I want your assurance that it is working now.

JOHN HAYES:—and I give him my personal assurance—that he needs to understand that this package of electronic componentry and system is massive, absolutely massive. I have got to tell you that it has taken 5 years to develop, and I have got to tell you that each module is tested and retested and retested before it is introduced, and when it is introduced, it is working perfectly. I categorically say to the House that this system is working well. There are inevitably little glitches here and there, but we are not dealing with the sort of package we inherited with Novopay—quite different.

This Border Processing (Trade Single Window and Duties) Bill makes an important amendment to existing legislation to underpin the implementation of the Trade Single Window component of the new $89 million Joint Border Management System. Can I just say that what we are talking about is amalgamating a range of services for people who are involved in bringing product into this country and giving them a one-stop shop. That means you send your documentation in one email to one address, and that is all you do. What I can say is that companies like FedEx that have been trialling this system are very, very pleased with it. It means that the Trade Single Window will promote more effective protection of New Zealand’s border, will facilitate a smoother flow of legitimate trade, and is consistent with the Government’s priorities relating to the provision of more joined-up, online services. The system will lower traders’ compliance costs over time—in fact, I think it should reduce their costs by about $450 million over 10 years. During the pilot with industry partners, Mondiale Freight Services achieved faster response times and savings on electronic data transmission costs.

Building a more productive and competitive economy is one of the Government’s priorities. The supply chain efficiency from this system, as I said, is estimated to deliver benefits of at least $450 million over the next 10 years. It has been a pleasure to have this legislation in front of the Foreign Affairs, Defence and Trade Committee, and I thank members from all sides of the House for the contributions they have made to progressing this legislation to this point today. Thank you.

Talofa lava. I am no longer on the Foreign Affairs, Defence and Trade Committee—that lot there booted me out—but I am happy to make a contribution on the Border Processing (Trade Single Window and Duties) Bill. I recall in its first reading the points made by my colleague the Hon Phil Goff. They were pretty valid then and they are still valid today. When Craig Foss began the first reading debate, there was genuine concern. We might have laughed about it in this House, but there was genuine concern given it was Craig Foss who was responsible for the Novopay mess, the numerous botch-ups, that teachers and principals in our schools the length and breadth of this country are still having to experience. Here is a quote: “The Novopay system continues to fail …”. Three hundred and fifty principals remain underpaid this year. There is a high error rate in the pay cycle this year, as compared with last year.

The House will recall that this Government, after the honourable Minister Craig Foss began the botch-up, then appointed the Hon Steven Joyce, who is well known around these corridors as “Mr Fix-it”. After his being on the job for a whole year, we are still none the wiser of when the Novopay debacle is going to be fixed. So there is genuine concern, despite the fact that we are supportive of this Trade Single Window. In fact, it was under the previous Labour Government that this idea of the Trade Single Window was first discussed, and the information, as the Hon Phil Goff has mentioned, came through that. In fact, the SmartGate system, which John Hayes lauds as being something that Maurice Williamson is credited for, did not begin with National; it started under the Labour Government. So although we are supporting this bill, there are these serious concerns that we need to be assured of in this House.

The Hon Phil Goff made mention of INCIS—a system that was instigated with the police force under a National Government. I understand that it cost $100 million, but that system failed. So the concerns we have about this Government being able to manage these systems are genuine and they are real. Although we support our borders being protected and well resourced, we note that under this Government there has been this consistent cutting of funding. I know that at one point in time the Hon Damien O’Connor raised the fact that this Government is responsible for cutting significant staff numbers, as well as money, from the customs budget when it first got into Government. And what we have seen under the presence of this Government in the last 6 years is the Psa fungus, which affected our kiwifruit. We have seen also the fungus in our rivers. In more recent times there has been a report of a fruit fly from Australia impacting on our orchards up north. So we are not making this up—that is the point.

That Government is a Government that this side of the House has serious concerns about when it has got its hands on this kind of system, given its track record. It has failed with Novopay, it has failed with INCIS, and we are still seeing fungus and other diseases impacting on our orchards under its particular watch. What this bill now does is it enables information to be shared between the Customs Service and the Ministry for Primary Industries. Here is a concern that still needs to be raised. The sharing of information is a concern, particularly when you are talking about business and the need for keeping some of that information confidential. If our business community does not feel confident about its information being made available and safeguarded by this Government, I am not sure whether this Government can put hand on heart and say that that is what it will be able to do. So there are concerns, and we want this Government to be able to give assurances to this House in so far as this bill is concerned.

I note that when this bill went out for consultation, only three submitters made a submission on the bill and only one was heard by the Foreign Affairs, Defence and Trade Committee. You know, our democratic system allows for—and I think we are probably the only one—a select committee process where the public are able to make submissions. I have noticed that there is a stark difference. Under Labour the opportunities for the public to participate and to air their views vigorously and robustly were made available to everyone, but I have noticed that this Government has cut short the period for public consultation. I notice that the bill went out to the committee at the end of August but submissions closed in the middle of September. Is that one of the reasons why we got only three submissions?

I have a concern that if the public are not given ample opportunity to air their views and to make submissions on this bill, then I am not sure whether we can fully trust this Government to be making the right decisions and to get things right. As I have said, and I hate to repeat myself for the sake of the House, the fact that the Novopay debacle has existed since 2011—or was it 2010? It just seems like it has existed ever since the beginning of this particular Government—

💬 Hon Peseta Sam Lotu-Iiga: I raise a point of order, Mr Speaker. I just want to help the member. The Government does not determine the consultation period; the select committee of each bill determines that. Thank you.

The ASSISTANT SPEAKER (H V Ross Robertson): Actually, that is a debatable motion, Mr Lotu-Iiga.

I raise a point of order, Mr Speaker.

The ASSISTANT SPEAKER (H V Ross Robertson): Are you sure? It is Thursday! The honourable member Su’a William Sio.

I recall that in past situations where a member has got up and given a frivolous point of order, they were usually kicked out of the House.

The ASSISTANT SPEAKER (H V Ross Robertson): Order! No, no, no. I know that it is Thursday—home time soon. We have had our fun. I call the honourable member Su’a William Sio.

I would like to repeat again for the sake of that member, who may not have listened, that the point we are making is that although this side of the House is supporting this bill at its second reading, there are serious concerns about the Government’s ability to be able to safeguard information under the system that has been proposed. Given the Government’s track record with Novopay and INCIS and its failure at the border on some occasions, I believe that it is going to be difficult for us to proceed further unless it can provide those particular assurances.

The fact that Novopay has existed for quite some time—even today reports are saying that Novopay continues to fail, that there are 350 principals that remain underpaid, and that the errors of its pay cycle are high compared with last year—does not give confidence to the New Zealand public that this is a Government that you can trust with the information that it will gather under the Trade Single Window.

I think that the trust factor is a huge factor in the minds of New Zealanders as we go into this year’s general election. I do not share the confidence of that Government in its Minister being able to completely bring this about and safely protect the information that would be gathered under this Trade Single Window.

I rise to speak to the Border Processing (Trade Single Window and Duties) Bill’s second reading. Back in September last year the Customs Service took us for a presentation over at its headquarters at the port there and went through this Joint Border Management System and where it was at. It was a very good, glossy, and smooth presentation. It was quite impressive, and we did not think there was too much untoward about its system. It was coming together, people were trialling it, and we were pretty well reassured that everything was happening well. But we heard before from Phil Goff that there were doubts about how the system was coming into play and maybe there were some hiccups along the way, so the Green Party also joins that call to ask the Minister of Customs and anyone from National what is going on, what the hold-ups are, and whether we are heading into another debacle in a systems way.

The principle of this is very good. It tidies things up, it makes systems smoother and way more efficient, and it potentially cuts lots of cost. But there are issues of whether, of course, it will run smoothly. There are issues of whether there will be privacy concerns with the information that is shared. We have a lot of issues and we have had a lot of issues around privacy, with thousands upon thousands of people’s data, some exceptionally sensitive, being shared inappropriately through different services. In fact, the Customs Service not so long ago offered information on Kim Dotcom straight to the FBI without it even being asked for by the FBI. It was not legitimately being sought, but there was a customs officer who thought it was just the right thing to do to earn some brownie points through supplying a private individual’s—a New Zealander’s—information to the USA’s FBI.

💬 Hon Anne Tolley: He’s a crook. A real crook.

If there is anyone who is a crook, it should be dealt with through the appropriate system. I think it is inappropriate for anyone in this House to call someone a crook; they are innocent until proven guilty, if that was ever going to be the case.

What does the border system do now? The border system is broken up into the Customs Service and the Ministry for Primary Industries. The Customs Service has a range of different services it is doing, including clearance of all arriving and departing cargo and people, including risk assessment and targeting, duty, and GST collection. There is quite a lot: intervention, notification of cargo status to different ports, data going from the Customs Service to the Ministry for Primary Industries, and official trade statistics. There is a lot going on in terms of this data process. There is going to be a lot required of it. The Ministry for Primary Industries has got the issue of also being involved with clearance, particularly around biosecurity, of course. There is the clearance of certain imported foods—we have food safety issues there—and then there is export certification for animal and plant products to make sure that when our products do go overseas, they are in good condition and they have been certified, audited, and verified, whatever is required to make sure that our export markets have confidence in us, so it is very important to get that right. Of course, we have a big, big question as we speak around meat inspections in this country because of deregulation, which has allowed grotty, dirty meat to go off to the United States that then has to be turned back because we have allowed the companies to do their own inspections. There are some issues around policy there. But the Ministry for Primary Industries has a role in trying to make sure the paperwork and everything that follows those theoretically good inspections happen properly.

That is what the agencies are up to, but what this will do is consolidate some of those transactions, because the exporters and importers have had to go through both agencies and there is a lot more cost and there is a lot more paperwork. This is intended to be a good system. In 2012-13 there were over half a million transactions clearing 3.48 million export consignments—that is a lot of business—124,000 cargo reports for 2,300-odd commercial ships, 42,000 commercial aircraft arrivals and departures, and 50 million mail items each year. One of the beauties of the system, should it ever work properly, is that the public will be able to make use of it as well, whereas previously the systems have been geared only for commercial operators. So there is potential in this, but we have to question with the delays in the system whether there is another debacle coming to us. The agencies have got a range of clients. They have got some pilot programmes, and we heard about Mondiale Freight Services. In fact, their pilot partners while they were trialling it take up about two-thirds of the volume that is going through. So there are significant trials happening. Some have opted in but others have stayed with the old system, but why the whole thing is not working yet is a very valid question and we do wait for the answers to that. The current system is quite convoluted, as I was saying. There is a lot of toing and froing with material through a lot of data entry points, safety systems, biosecurity systems, third-party gateways, overseas Government agencies, and industry agencies. The new Trade Single Window will bring that way, way back in. There will be one electronic message that will be standard, and there are different connection options in that. We look forward to this system working properly—and very, very properly at that.

When we went to that presentation we were told where things were at to date with the Joint Border Management System, then we were told the next steps, and there was a big flag saying “On the way”. I think it is still there. It is very concerning that these systems are being delayed. It will be interesting to see what the costs involved in these delays are. There is a potential problem with information sharing, and we do want to know and be confident about that. When I asked the Customs Service on that day about whether things were private to New Zealand, I was told no, they were open to trading partners. I asked to what extent we were commercially vulnerable with this and I was told that New Zealand security is the best security in place. But we know that that is not working too well. We even heard today that the Government Communications Security Bureau could not even say how many warrants were issued—it was getting its figures mixed up. There have been a number of breaches around security. We need to be sure that this system will protect New Zealand exporters and private individuals to the absolute utmost. At the moment we have not got that confidence.

I want to finish on issues around biosecurity. I have just been pulling together a paper on a new pest that is around, which is called theileria. Biosecurity needs to be much better and this system will ideally make sure that it is. It will be another step to ensure that we have even fewer pests—rather than the direction that we have at the moment, which is of even more pests—coming into this country. We have got major ones that are costing this country millions of dollars in extra management costs, to producers in particular. Theileria is a cattle disease. It came in to this country only about 18 months ago. The Customs Service and the Ministry for Primary Industries have not been able to isolate how it came in. We should not be having that. As we speak, there has been another one that has come in: equine herpes. That is now in the horse industry. Again, how the hang did that get in to New Zealand? The great white butterfly is yet another one. We just need this system to be working at its utmost. We are looking forward to this system working, but we really need to know what the problems with it are. Thank you.

Kia ora. Te mea tuatahi, ka mihi au ki ngā tangata i tae mai nei i tēnei ata, ahakoa kāre au i konei, me mihi ki a rātau. Nō reira, tēnā koutou katoa.

[The first thing for me is to acknowledge the people who arrived here this morning, even though I was not here. I must applaud them. So greetings to you all.]

Speaking on the Border Processing (Trade Single Window and Duties) Bill, I do not want to say anything about that last speech from Steffan Browning or even about the fungus and diseases in the speech from my schoolmate William Sio. The bill amends the Customs and Excise Act 1996 and the Biosecurity Act 1993. It supports the implementation of a single trade window. It is part of a suite of ideas that has been around for as long as the Hon Phil Goff, and that is quite some time.

💬 Tim Macindoe: Oh no, that’s not possible.

It is possible. It is designed—

💬 Grant Robertson: At least he’s been here in only one party.

—I am the lucky one—to give the Customs Service and the Ministry for Primary Industries better information and also risk-assessment tools. The previous speaker, Steffan Browning, was right in saying that we actually had a demonstration of how this works. I for one asked questions about Novopay and INCIS and whether this system is any better than those two troublemakers. I was assured and the team was assured—and we were even shown how the system works, not only for our border security but also for our people in business. It makes it easier. It makes it a hell of a lot easier for them to go about their business.

Let us not forget that one of the main thrusts of this country is as a trading nation. I suppose we have got to be on our game to make sure that our systems are not only robust and safe but also very, very quick indeed. This bill enables businesses to complete border requirements for customs, food, and biosecurity purposes through transactions, and it makes the compliance issues easier for the trader—for the person who needs to get sign-off from our border security.

There is no doubt that a lot of work has gone into the ideas in this bill over a long period of time, and I for one am over the moon that our traders, our exporters, will have it a wee bit easier in getting their stuff to market, and vice versa in terms of getting imports into our markets. It will also be easier for our border security to make sure that New Zealand is safe. I am not sure about equine herpes or anything like that. That is the Green Party. Those members know all about that, and that is cool. I think that it is great that we have that sort of expertise in Parliament, which we can call on when we need to, or if we need to, so big ups to the Green Party for that expertise. Thank you very much.

I am pleased to rise on behalf of New Zealand First to take a call on the second reading of the Border Processing (Trade Single Window and Duties) Bill. New Zealand First supported this bill’s referral to the Foreign Affairs, Defence and Trade Committee in the first instance, although we had some concerns—not exactly misgivings as such, but some concerns—as to what course the Government might choose to take with regard to biosecurity, in particular, following the passing of this bill into law, should the House in its wisdom decide that that is, in fact, the appropriate course of action. However, in spite of those concerns, we supported the aims of the bill. We felt that it was well intentioned and that if it worked as advertised, it would be a beneficial thing for importers and exporters, travellers, and the Government alike. So we wanted to see what the select committee had to say about it and what the submitters had to say.

We note that the select committee has indeed recommended a number of changes. It has recommended that the bill should proceed with a number of amendments. We believe these are eminently sensible and that they will streamline and improve the bill and make it a better-functioning and a more well-oiled piece of legislation. So I am happy to report that New Zealand First will continue with our support for the bill, in line with the recommendations of the select committee.

The commentary on the bill says that the committee recommends the “amendment of clauses 2(5), 5, 36, and clause 1 of schedule 1”—which relate to the commencement of the Act—“to make it clear that the Act, other than those provisions relating to the Joint Border Management System, would come into force on the day immediately after the expiry of the 3-month period that begins on the date on which this Act receives the Royal assent.” This, we feel, is a very sound and sensible approach on the part of the select committee.

With regard to the requirement to consult industry groups, the committee recommended “inserting into clause 15 of the bill a further amendment to section 118 of the Customs and Excise Act 1996, which would make consultation mandatory with representatives of groups whose interests are likely to be substantially affected by proposed changes to regulations governing the minimum level of duty.” The advice to the select committee was that this would be consistent with the approach taken in other legislation. It would also make the bill “consistent with other Customs and Excise Act 1996 regulation-making provisions (for example, sections 34A, 40A, and 50A relating to fees and charges).” Consistency is a fine thing in legislation, and if there could be more of it, that would be a good thing. We commend the committee for this most sensible suggestion, which we wholeheartedly support.

More important still is the essence of the amendment that is to make consultation itself mandatory. Consultation lies at the heart of robust democracy, as is impressed upon us every day here in this House through the operation of the select committee process itself. Quite apart from the fundamental right of people to be at the very least informed and, for preference, consulted on matters of the State that may concern them, consultation with interest groups and interested parties frequently brings information and perspectives that Governments and their advisers may not have known or simply may not have thought of. It makes for better lawmaking. It makes for better laws and better regulations and a better-functioning Government within a better-functioning democracy. Again, we applaud the select committee for its foresight in this regard.

With regard to levy orders, the committee has recommended “inserting new clause 46A into the bill to amend section 140(1)(g) and (h) of the Biosecurity Act 1993 to provide more clearly for the making of levy orders to impose, or allow the imposing of, different levy rates for different services or functions under the Act, and to help make it clear that an order could set the rate or rates for a specified period (for example a levy year). This change would avoid doubt and would reflect the fact of the 2 current levy rates.” Flexibility is as important a factor in healthy legislation as consistency, and again it is a recommendation for an amendment with which we find ourselves in complete agreement.

But perhaps the most complex of the changes recommended by the committee concerns the de minimis provision for imports. The select committee considered the de minimis provision for import consignments and, particularly, how it affects our retail environment. The New Zealand Customs Service does not collect duty on parcels and consignments valued below the de minimis, which, we are advised, are currently those incurring less than $60 in duty—

💬 Dr David Clark: How much?

—$60—because the per transaction compliance and administrative costs of calculating, processing, and collecting the revenue are disproportionate to the Government revenue on the goods. Patently, this is unfair and makes very little sense. If a parcel or consignment attracts only the goods and services tax of 15 percent, it will be subject to the de minimis provision if it is valued at approximately $399 or less. If tariff duty is also payable, the de minimis will apply at a lower consignment value, which is entirely fair, in our view.

The committee accepted—and we share its view—that “the provision of an online customer purchase option promotes a competitive retail environment, encouraging retailers to become more efficient. The rapid growth in New Zealanders’ offshore purchasing of goods online costing less than $399 places many traditional retailers, who have to charge GST on their retail goods, at a disadvantage. The Retailers Association estimates that the de minimis provision results in forgone revenue that is estimated to be around $300 million annually. Many factors influence a consumer’s decision whether to shop in person or online, and the GST charged by a domestic retailer is only one of them.”

The committee observed that “Under current systems, if the de minimis exception were very low, monitoring incoming goods and collecting taxes due could require a large organisation costing more than any revenue collected.”—an organisation such as the Inland Revenue Department, perhaps. The committee was advised that “the current border technology cannot collect GST and tariff duty effectively on imports valued at less than $399, although there are various ways to monitor them, including random checks, which are being examined by an interdepartmental group. Under the current law, Customs relies upon an honest declaration of value to establish taxes due.”—perish the thought.

The committee said: “This is a complicated subject and we are aware that the Inland Revenue Department, Treasury, and Customs will soon be releasing a discussion paper on collecting GST on goods and services purchased online.” We look forward to reading and digesting that paper in the fullness of time. We are told that it will include “the revenue collection issues raised by the de minimis threshold, and distinguish sectors that are variously affected by online purchasing.”

In conclusion, although we are committed to remaining vigilant in so far as our scrutiny of this Government’s biosecurity operations are concerned, we are satisfied that this is a bill with which we are largely in agreement, and we are happy to support its passage through the House. Thank you.

It is a great pleasure to take a brief call on this Border Processing (Trade Single Window and Duties) Bill.

💬 Hon Members: Oh, come on.

Well, I could go on, if you really like. There is no doubt that the efficient running of our borders is vital for New Zealand’s economy and also for our biosecurity. The very good people of Hunua, the electorate that I am so proud to represent, are hugely interested in this. The farmers, the glasshouse runners, and the many others involved in agriculture and horticulture are hugely interested in having a highly efficient border management system.

There has been much discussion during this debate on previous border incursions. It was very salutary how well managed the fruit fly incursion was in Whangarei just a few short weeks ago. That was in sharp contrast to the bee varroa mite, which happened to come in under the previous Labour Government, and that Government did nothing for year after year after year.

There is no doubt that in the hands of the Hon Maurice Williamson there has been great care taken in looking at the computer and IT system development around this Joint Border Management System. I must say that the Hon Maurice Williamson has instructed his department to very cautiously and carefully go through trial mechanisms, to take as many of the bugs as possible out of the system before it even gets into running mode.

The Trade Single Window will promote more effective protection of New Zealand’s border, will facilitate a smoother flow of legitimate trade, and is consistent with the Government’s priorities relating to the provision of more joined-up online services. Building a more productive and competitive economy is one of the Government’s priorities this term. Its wonderful supply chain efficiencies from the Joint Border Management System are estimated to deliver benefits to the economy of at least $450 million over 10 years. I commend this bill to the House.

It is a pleasure to follow that well-enunciated speaker, Dr Hutchison. I rise to support the Border Processing (Trade Single Window and Duties) Bill, as my colleagues have done, recognising the work of the Customs Service and other border agencies on the frontline. Their contribution is a very important one to New Zealand. Of course, this initiative was conceived when Labour was in Government and Labour has continued to support the initiative since that time. We accept and acknowledge the importance of good border management, and a single trade window will create a hub for exchanging information.

Our real issue with this bill, and the concern that lies behind the questions that have been raised in the House today, is whether this Government is really up to the task of dealing with the security issues that are implicit in the bill. Dr Hutchison raised the issue of a dated computer system and the need for careful, cautious progress. Certainly in many areas his Government has been incredibly cautious, particularly in terms of reforms that would see our country better off. This particular instance does warrant further discussion because, of course, we immediately think of Novopay. The Novopay problem was something that the New Zealand public felt through seeing the teachers of this country who teach their children incredibly distracted and stressed because they could not pay their mortgages when payments did not go through.

I want to also credit the teaching profession for the amazing professionalism with which they have handled—for many, many, many months now—the disaster that the Government inflicted upon them in the Novopay system. Dr Hutchison rightfully says that this new customs system needs to be tested thoroughly for all bugs before it is made live. That was the very mistake that was made with Novopay. That was not done and teachers today are still dealing with the consequences.

We also remember the cases of ACC breaches of privacy, and there were many. There were many at the ACC. Perhaps members opposite would like to talk a little bit about them, because they have not mentioned those breaches in their speeches—if I can get poetic, I sound like the Sneetches. This is a serious issue though, because it is of concern. The Inland Revenue Department’s computer system, which is, of course, about 24 years old now or thereabouts, is the one that I wish to talk a little bit about. The computer system in the Customs Service that is being replaced is 15 years old. There appears to be a National Party member coming close by, in the form of this fly.

It is important to recognise that the Government has a terrible track record on this. The person now responsible for overseeing data security in the Government is the person who will not deny that he made the Kitteridge report available to a Fairfax journalist, and that is Peter Dunne. So these concerns are very real. The Government’s track record on data security is abominable. There is seldom a better word that could more accurately describe its track record on data security than “abominable”. The ACC and Novopay breaches were terrible.

I was particularly concerned about the breaches that were revealed in the Inland Revenue Department when I was the Opposition spokesperson on revenue. In 2012 there were 32 separate incidents and over 5,000 victims of data breaches in the Inland Revenue Department. The Inland Revenue Department, as we know, holds our most sensitive information. Taxpayers hand over their bank details, their IRD numbers, their addresses, their names, and all other kinds of things that make them vulnerable to digital incidents. The Inland Revenue Department released information on 638 people in 2012, and that was considered so serious that it had to put security measures in place to prevent identity theft. That was 2012.

We learnt subsequently, via the Official Information Act, what the Inland Revenue Department was doing: “The Inland Revenue Department is implementing a system that will detect when an email or its attachment includes one or more IRD numbers or other types of taxpayer personal information. The tool will then prompt the user to determine if the action is intended, or block the email being sent if necessary.” This information is contained in some advice to the Minister on how to respond to the bad publicity around the security breaches in 2012.

We can only assume that that system was either ineffectually implemented or that it was spin from the Government and that it came out of one of the Minister’s offices. What we now know is that the following year the number of data breaches went up over 400 percent—over 400 percent—at the Inland Revenue Department. This most special and sacred information that we hand over to them—and they said they would implement a system to fix the data breaches—got 400 percent worse the next year.

Viewers at home may or may not be able to see this graph—probably it is too small—but it indicates over a period of time, month by month, how many data breaches there are at the Inland Revenue Department. What it clearly illustrates, when one looks at it close up, is that the little houses at the bottom of this graph, the things that look like single or double-storey buildings, represent 2012 and the things that look like skyscrapers represent 2013. These are the breaches at the Inland Revenue Department. Who knows? If it continues at this rate—if it keeps increasing at a 400 percent rate—every New Zealander will have their data live on the internet within a few years. Everybody, of course, will have their personal information out there and we will all be at risk of security breaches.

That is the record of this Government. It is not just ACC. It is not just Novopay. It is the Inland Revenue Department as well. The person who was overseeing the Inland Revenue Department computer rebuild, although we confess there has been precious little progress on that, is now in charge of data security for the whole Government. That person is Peter Dunne, who was sacked as a Minister last year. But Mr Key says that that was last year and it is this year now, and all leaks and breaches and so on are forgiven. His Government needs propping up and he is happy to have Mr Dunne back in his Cabinet.

So what is the Government doing in that instance—because that will be illustrative. The computer system that is going to be fixed in this bill is 15 years old. The other one in the Inland Revenue Department is 24 years old. Well, they have spent $50 million to tell them that in principle it needs to be fixed. That is an outrage, in my view. The briefing to the incoming Minister told them that already, 5 years ago. Peter Dunne was told 7 years that that system was on its last legs and nothing has happened to fix it. So that is why we have legitimate concerns on this side of the House about whether the Government will be able to implement this kind of sophisticated computer software that will enable border agencies to identify relationships between people and goods by linking travel and trade data. That is proposed in this bill before us now.

Labour, of course, substantially boosted New Zealand’s border security capacity when it was in office. Scientific and operational systems were changed to more effectively investigate, eradicate, or manage biological threats. Labour set up Biosecurity New Zealand to coordinate the agencies that manage and protect our country against these threats. We developed a comprehensive biosecurity strategy, applying to all of New Zealand’s environments—land, freshwater, and marine, and indigenous and introduced flora and fauna. These are important things for New Zealand’s agricultural export industry.

We know there have been other breaches this year. Down my way, down in Pukeuri in Ōāmaru, there have been meat processes that have failed to be able to be introduced to China because practices were not followed as accurately and correctly as they should have to comply with the Chinese expectations of biosecurity, meat processing, and the like. This Government has overseen those poor, poor decisions that were made. What it has done in the meantime is not strengthen biosecurity. It has not made the systems changes that would prevent that, because we see time and time again things going wrong in our biosecurity system.

This Government has a poor track record. We commend the intention to improve our border processing. It is essential that we have efficient and effective systems at our border. It is in our national interest to have effective and efficient systems at our border. We are a trading nation. It is not only desirable, it is absolutely essential. So we support this bill. We support the intention. We raise the concerns about whether it will really be able to be implemented. And we welcome also the Government’s consultation on whether GST should be collected at the border in the way that it is currently with the de minimis approach. I have heard personally from many retailers in Dunedin, in my neck of the woods, who are struggling because the Government has not looked at this issue thoroughly yet.

Debate interrupted.