Border Processing (Trade Single Window and Duties) Bill

It is a pleasure to take a brief call on the Border Processing (Trade Single Window and Duties) Bill. This bill makes important amendments to existing—

💬 Gareth Hughes: I raise a point of order, Mr Speaker. I am terribly sorry to interrupt the member. It is just that the Minister of Health was making a statement from an official piece of paper, I presume. I wonder whether the Minister would be prepared to table that.

💬 Mr DEPUTY SPEAKER: No, I understand that he was taking it from notes that he had made.

This bill makes important amendments to existing legislation to underpin the implementation of the so-called Trade Single Window component of the new $89 million Joint Border Management System. This is a very, very important system that we are proposing here, so let us look at what it will actually do. It means that importers, exporters, their agents, and their brokers can now submit shipment details electronically to a single point of contact through this Trade Single Window of the Joint Border Management System rather than dealing separately with several Government agencies. As someone who has been an importer in the past, I can see the value of that. I am sure this will be welcomed, and that is the feedback we are getting. It can be seen, in the widespread support around the House, that this idea has a great deal of currency. It reduces the duplication of data to border agencies and will speed up the processing of all these documents and things. It speeds up the processing times significantly. Savings will be made by connecting directly and doing away with those irksome third-party transfers and charges that any businessman or businesswoman can recall having had levied upon them.

Changes are also being made to increase the effectiveness of the Customs and Excise Act and the Biosecurity Act, and the Trade Single Window component of the system provides that single electronic gateway to industry to interact, as I have said, with Government agencies for their customs and biosecurity arrangements. That, of course, as we know, is crucial. We have got to get biosecurity right, and that is something this Government takes extremely seriously. It will promote more effective protection of New Zealand’s borders and ensure a smoother flow of legitimate trade. I commend this bill to the House.

I am pleased to add my contribution to the second reading of this—

💬 Mr DEPUTY SPEAKER: I am sorry. I am informed that this is not a split call. Is that correct?

No, it is not.

💬 Mr DEPUTY SPEAKER: Thank you. Ten minutes.

I will give it a bit extra. As the speakers from this side of the House have said in this debate, we support the Border Processing (Trade Single Window and Duties) Bill. We supported it at the first reading. Indeed, the genesis of this IT system came about when we were last in Government, so we are supporting the bill.

It is an IT system. It is a very important IT system because it helps facilitate the trading of our goods in and out over our borders. That trade with our trading partners is the lifeblood, really, of our economy. It is a very important IT system, and we commend the Customs Service and the Ministry for Primary Industries for following through on this massive project. I say “massive” because that is the word that Mr Hayes used. It is a massive IT system roll-out. It is a bespoke system, so it is a tailor-made system that the Customs Service has spent the last 3 years—

💬 Iain Lees-Galloway: It’s custom made.

—custom made, absolutely—a custom, tailor-made, bespoke, made-to-measure IT border management system. And it comes with a hefty price tag. It is an $89 million system.

💬 Su’a William Sio: How much?

It is $89 million, but that was not the initial cost of the system. In, I believe, the 2010 Budget the initial estimated budget of this system was $76 million.

💬 Su’a William Sio: How much?

It was $76 million. What has happened over this 3-year period—and, granted, it is a massive made-to-measure system that has been built—is that the cost has actually blown out to close to $90 million. That is a significant cost blowout increase, where additional money had to be found by both the Customs Service and the Ministry for Primary Industries within their capital budget expenditures to actually meet that shortfall. The revised cost of this system is, in round figures, $90 million.

💬 Su’a William Sio: How does that compare to Novopay?

I do not know about Novopay, but I know that it is a dud. But in terms of this system, there is hope for this system, we on this side of the House hope—we do. It has had a 3-year development period. As Mr Browning mentioned, I had the pleasure of accompanying the members of the Foreign Affairs, Defence and Trade Committee to the Customs Service premises down on the waterfront, where we could get an actual real-time demonstration of how the system worked. It certainly was very glossy, it was very slick, and, by all accounts, it was doing a good job.

The good thing, I guess, in terms of how this 3-year project has been implemented is that it has been done in phases, or stages. There has been a lot of building of the system, I would imagine, testing it with major industry players, ironing out any bugs, and then moving it to the next level. Obviously, it is not perfect, because the actual public roll-out of the system was due to take place in April last year. But it did not happen, because the Customs Service felt that it needed an extra 3 months to iron out a few bugs and make sure that everything was just right before it actually went live, with registered importers and exporters interacting with the system. But the system has gradually been phased in in this implementation phase.

I guess the concerns from this side of the House that have come through in the contributions so far are how robust the system is, whether there are any problems with the system, and what assurances we can get from the Government that the system is fit for purpose and will not turn into another lemon like Novopay, which is just an ongoing saga, and the likes of INCIS. As I was saying, there has been this implementation of the system, and I guess the key to it will be in 3 months’ time, because in 3 months’ time we understand that, all going to plan, there will be an evaluation of the system and that evaluation will be presented to Cabinet. So we would hope, I would imagine, that that evaluation is probably going on right now, because the Customs Service wants to make sure that everything is OK and it is checking that. Remember that it is a $90 million system, so certainly we hope to get payback. We hope to get payback from the greater ease of business that our importers and exporters will be able to achieve through their use of the system and also the increased levies, hopefully, that will flow back to the Customs Service through businesses’ use of the system. But I think that the evaluation in 3 months’ time is going to be very important, and here on this side of the House we will be seeking more information around that evaluation.

I want to return to the point around the cost of this system. It is $90 million. That is not small change. That is a significant investment in an IT system, a border management system. I am always curious about the fact that budgets are set for these big projects and then the money is all spent. In this case it was overspent by $14 million. I do not come from the IT world, but $90 million is some serious dough. I came from—a few years back, anyway—a legal practice. In legal practices we were talking about maybe up to $1 million in terms of billings for a partner.

💬 Andrew Little: Really?

Around about that. This was a few years ago, I must say, but it was getting up there. Actually, it was a bit lower than that. However, $90 million—that is a lot of capital spend. Just looking at the actual list of companies that have received—basically eaten through—all of that money, the lion’s share of it has gone to IBM. Forty million dollars has gone to IBM in terms of the build of this system just in the past 2 years alone. That is one single company charging a huge amount of fees—a huge amount of fees—for the work that it is doing on the system. So we would hope that certainly the taxpayer, the Customs Service, and the Ministry for Primary Industries are absolutely getting the best value for money from that $90 million system.

We know that the costs have not stopped. We are into a new financial year and no doubt the Joint Border Management System is still going to be incurring more expense. So we hope that the implementation of this IT system and a successful evaluation will result in it, hopefully, being put up as best practice—best practice from among the Government sector on how to roll out an IT system, because we have certainly had some huge failures in the past.

That concludes my contribution. We support this bill but we will be keeping a very close eye on things and we will be asking to see what the evaluation of the service will be when it comes out in June.

I rise to support this Border Processing (Trade Single Window and Duties) Bill in its second reading. As the last speaker on a bill, often you have to think about what fresh things you might bring to the debate, because other members have actually traversed many things on this bill. I just want to comment that this bill makes important amendments to existing legislation to underpin the implementation of the Trade Single Window component of the new $89 million Joint Border Management System. In particular, the thing that I want to say is that it will also lower traders’ compliance costs over time. During the pilot with industry partners, faster response times were achieved and savings were made on electronic data transmission costs.

My learned colleague Dr Cam Calder mentioned his experience as an importer, and I just want to talk about my personal experience as well. Many years ago my parents set up an import business—the first ever Korean importers of Korean food products. Many years ago, back then, something like 26 years ago, it was very difficult to import foreign food products. They were never available in New Zealand, so the instant noodles that you find very frequently and easily at supermarkets now took $3,000 every time to test for—I do not know—bugs. My parents had to go through a lot of paperwork every time they had to bring in a container load of these things. There were so many papers that they had to fill in for different Government departments. So this, to me, will be fantastic for people who are actually venturing into new businesses that may not have happened in New Zealand before, like my parents did some 26 years ago.

Particularly for new migrants into this country, having the English language component of the business and dealing with Government departments is often difficult enough. Having so many departments that they have to deal with will be very difficult. So having one Government department, one portal, for them to deal with will make their lives so much better. I commend the Minister of Customs. As previous speakers have said, he is fantastic with IT and he is a frontrunner in everything that deals with technology. I commend this bill to the House.

Bill read a second time.