Customs and Excise Bill

Right. Members, in the absence of any further debate, it’s my view it’s now reasonable to move on to the next debate, which is the debate on mechanics and miscellaneous, comprising Part 1 and schedules 1 and 2; Part 5, Subpart 1; and Part 6, Subparts 3, 4, and 5, and schedule 9.

Tēnā koe, Madam Chairperson Tolley. Thank you for the opportunity to speak on theme four: mechanics and miscellaneous.

I’ve got two particular clauses that I’d like to address in my contribution tonight. It really is the distinction between clause 250, which is an existing clause in the legislation, and the new clause 251. The emphasis on the new clause 251 is about authorising persons and specific class authorisations, and I particularly want to focus on the distinction between that clause and clause 250, which is about authorising individuals and authorising them for not more than three years. That is a very, I guess, strategic decision, and I see that a vocation that has been highlighted in that particular clause is a police officer, who actually may carry out the functions of a customs officer.

So I also thought it was interesting for the committee to actually look at the roles of the customs officer, and I’ve managed to find six specific roles. The first is intercepting contraband—so, illegal drugs—checking travellers, their baggage, cargo, and mail; assessing and collecting customs duties, excise tax, and GST on imports; protecting New Zealand against illegal trade; enforcing import and export restrictions and prohibitions; and collecting accurate import and export data. In the new clause 251, it also is about carrying out the functions of a customs officer, but it makes a requirement about a circumstance necessitating such action within the next 30 days. So the authorisation must not be for more than 30 days.

So I would like an explanation from the Minister about the differences between clause 250 and clause 251. I’m particularly interested in clause 251, and interested in who, in what circumstances—and, actually, why the 30 days? There must be a rationale, so it’d be quite good to hear from the Minister about that specific clause in the bill.

I’m also really interested in clause 416A. Clause 416A is the work of the select committee, and it is about customs appreciating recognised trusted traders. So this new clause requires the Customs Service, in their annual report, to cover initiatives to reduce compliance costs for businesses with a strong compliance record.

I find it really interesting that it’s made its way into the bill, because I was looking at the New Zealand Customs Service, and apparently we’re an incredibly efficient service. So, just for the committee’s information, we manage to clear product within a matter of hours. We were actually sixth out of 138 countries in the efficiency of border administration in the World Economic Forum’s enabling trade index 2014, we were sixth out of 160 countries for border facilitation in the World Bank’s Logistics Performance Index 2014, and we were 27th out of 189 countries for trading across borders in the World Bank’s Doing Business study in 2015.

So it seems that we have an incredibly efficient Customs Service, but the whole purpose about a trusted trader scheme is about facilitating trade, and that leading to increased productivity. So, in looking specifically at clause 416A, which the select committee recommended be inserted, I found in the bill’s commentary a reference to Australia, actually. It seems that the trusted trader scheme in Australia was reported, upon implementation, to increase productivity by $1.5 billion. So it would be quite good to know whether or not our Customs Service is anticipating increases in productivity and what the value of that productivity is, because I think then it will enable the House to understand why this clause has been added, and if it’s not about facilitating trade, what are the benefits?

Ernst & Young’s Tax Watch article on 7 August 2015 stated that it was about compliant importers leading to some sort of self-accreditation process, where they, through this trusted trader scheme, could prove that they had the systems and processes that would then provide “The ability for importers to provide assurance to Customs regarding compliance and security of [their] supply chains”. It was about an agreed audit programme, which meant there was less time spent by customs on those audits, which resulted in those particular products from those trusted traders having priority and being streamlined—the whole relationship between these trusted traders and customs. I think, overall, the net benefit for New Zealand was then about enabling customs to focus its resources on high-risk areas.

So it would be nice to know whether there’s been some economic modelling, and then what this freed-up resource will enable customs to do. But, overall, I think that this is an incredibly beneficial addition by the select committee, obviously supported by the officials. But it would be nice to hear from the Minister about her anticipated benefits and, possibly, the opportunities that now exist because of that specific clause. Thank you.

Thank you, Madam Chairperson Tolley. Before I start, I trust that Madam Chair would be kind and generous enough to allow me to step outside of the scope of the bill just a little bit, by acknowledging the Chinese New Year celebrations at Parliament last night, hosted by the Minister for Ethnic Communities, the Hon Jenny Salesa. The Chinese community members told me that they were very impressed with the speech by our Prime Minister, the Rt Hon Jacinda Ardern. Our Prime Minister emphasised that this is the House of Representatives, and this is our House. It is great for us to celebrate ethnic diversity and celebrate our multicultural New Zealand Aotearoa.

Back to this bill. Theme four is about mechanics and miscellaneous provisions. In terms of mechanics, the preliminary provisions include the definitions for the Act and its application to the mail and the military. It also provides for the transition between Acts. Part 6, Subpart 3, includes the general regulation- and rule-making powers, including the border processing levy, and provides for consequential repeals and amendments.

Clause 380 covers regulations generally. This clause provides a general regulation-making power for the purposes of this Act. It also informs the interpretation of this and other regulation-making powers and the generous scope of those regulations. On the recommendation of the Regulations Review Committee, the select committee amended the clause to reflect modern drafting practice. A second amendment confirms that fees and charges are recoverable in court, as they are under the current Act. Supplementary Order Paper 12 would clarify that regulations could prescribe how rates of interest are to be determined, as well as prescribing the rate itself.

Part 5, Subpart 1 establishes the New Zealand Customs Service and stipulates who can exercise customs powers, and when. The Act will levy and enable the collection of duties and other revenue, and it will provide for border control, including setting out the obligations of travellers and traders and the powers of customs. I recall that as a young lawyer, or a younger lawyer—that’s before I entered into politics—I once served as a customs lawyer, on a pro bono basis. That role was of an on-call nature, and most of the time was spent advising international travellers of their duties and obligations, and, equally, the duties and obligations and powers of the New Zealand Customs Service.

The bill will facilitate the authorisation of classes of suitably trained people to exercise customs powers and functions in specific, limited circumstances. Currently, only specific people can be authorised. Also, certain clauses deal with the certificates of origin. Having said that, the bill clarifies that fish caught by a New Zealand - flag vessel outside of New Zealand’s territorial waters are deemed to be the produce of New Zealand. Fish caught by foreign-flag vessels take the country of origin of the vessel.

Part 6, Subpart 4, is a collection of disparate provisions that do not fit within any of the topic-based themes. Some deal with enforcement matters, such as giving notice and the burden of proof.

Thank you for the opportunity to stand and speak on theme four, regarding the Customs and Excise Bill—theme four being the mechanics and miscellaneous. The preliminary provisions include definitions for the bill and its application to the mail and the military, and it also provides for the transitions between the Acts. In particular, Part 6, Subpart 3, includes general regulation- and rule-making powers, and that includes the very important border processing levy. Part 5, Subpart 1, establishes the New Zealand Customs Service and states who can exercise customs powers and when they can do that.

I would like to look at, in particular, clause 250, which looks at “Authorised persons: individual authorisations” as a part in there. So while the mechanics cover that wider part, we also have miscellaneous. It’s always quite dangerous to give someone in this House the topic of miscellaneous to be able to speak to. So Part 6, Subpart 4, is a collection of disparate provisions that don’t really fit anywhere—there could be some strong correlation with some activities on the opposite side of the House, but we won’t go there right now.

💬 Hon Member: They’re here tonight.

Ha, ha! So all the bits that don’t really fit anywhere, that don’t have any real theme, is what we get to speak to, under miscellaneous. Those pieces are laid out quite clearly, in terms of the regulations at the end.

The bill will facilitate the authorisation of classes of suitably trained people to exercise customs powers and functions in specific limited circumstances. This is quite interesting in relation to clause 250, which actually enables a police officer to have the authorisation to act as a customs officer in certain circumstances. I guess this would be a very useful thing—having to act quickly and urgently if there are emergencies in terms of the contiguous zone—that police have seagoing vessels and are able to attend some kind of incursion and be able to respond quickly. So I see that as being an important area to enable the New Zealand Customs Service to be more flexible in responding to issues as they arise. But I’m interested to hear from the Minister in the chair, Meka Whaitiri, in terms of whether any additional training or requirements will be needed in order for that authorisation from the Comptroller of Customs to police officers acting in that capacity.

It’s interesting to look at the powers in the contiguous zone. The bill allows customs to exercise certain powers beyond the territorial sea and up to the outer limits of New Zealand’s contiguous zone, which is 12 to 24 nautical miles from the coast. It’s an interesting area to see how New Zealand’s powers are operating in that area in a time of increased international issues along the lines of methamphetamine and of bringing in contraband substances, and also in a time when we’re seeing an increase in human trafficking happening around the world. So looking at how our services here in New Zealand are working together more comprehensively to make sure that our border is secure and protected, and that we are aware of any issues happening in that area, will be important.

I would like to speak in particular also to clause 251, and this is a new provision. I note that the chief executive may authorise specific classes of persons who are suitably qualified and trained to carry out any functions of a customs officer if they consider that that is required, and that is within a 30-day period. I’m also interested to hear from the Minister if there’s any particular reason why there’s a 30-day cap on that. It would be interesting to know what the rationale was behind that particular period of time being tied in there. It says that the authorisation must specify that the incident and the relevant purposes and functions must not be, clearly, more than 30 days.

So in terms of an overall bill that enables New Zealand’s Customs Service to be modern, to be flexible, to move with the times, and to make sure that we know our border is special and that we are doing the best to protect New Zealand’s economy from the range of issues that are continuing to be of risk to New Zealand’s ongoing safety—those I’ve already outlined in terms of fishing, methamphetamine, and ongoing trade issues—we have a piece of legislation that fully equips our country to do so.

Thank you, Madam Chairperson Tolley. I just want to answer the two recent contributors in the debate, Virginia Andersen and Louisa Wall, particularly around clauses 250 and 251. Just in terms of clarification, clause 250 covers individuals who need long-term status—for example, police constables on the Chatham Islands. Clause 251 has a 30-day limit to ensure the chief executive cannot authorise classes for extended periods; it is a safeguard against the power being used too freely. An example is a crew of a navy vessel helping with drug interdiction—for example, boarding a craft. So, hopefully, that has addressed those two questions.

In terms of the question Louisa Wall raised around clause 416(A), I can confirm to the member that there’s no economic modelling being undertaken by the Customs Service at this point. However, customs is working with industry on initiatives to reduce compliance costs for them and, in particular, for compliant traders. A recent example is the excise regulations that came into effect in February 2017. These changes reduced compliance costs for alcohol manufacturers and were strongly supported by businesses.

Thank you, Madam Chairperson Tolley. This is just a short contribution. I’ve got a couple of miscellaneous points that I wish to talk to. The first point relates to clause 3B of schedule 1, which is around the—

💬 Hon Michael Woodhouse: Is that mechanical or miscellaneous?

—prohibition orders.

💬 Hon Michael Woodhouse: Mechanical or miscellaneous?

A bit of both. I just have a question for the Minister in the chair, Meka Whaitiri, because this relates to the continuation of prohibition orders that have been granted under the existing Act to continue in this bill. I just want to ask the Minister—because this bill is taking quite a long time to progress through the House, I’m interested in the prohibition orders that have lapsed while this bill has been on its way through the House, and what is the status of those prohibition orders?

I would hope that they would have been automatically renewed, assuming that they are very important orders. But I’m just curious, because this savings provision, or this one that carries them over under this new bill, only relates to those in force at the time that this bill is enacted, and so I just want to seek some clarity on that particular point. I understand that the prohibition that related to pounamu, which I was referring to earlier, actually expired last September, I believe. It begs the question: has that been continued pending the passing of this bill? If the Minister could clarify that, that would be much appreciated.

The other point I want to talk to is in relation to New Zealand - flag vessels fishing in international waters and that the catch of those vessels is then to be produce of New Zealand, which I think is commendable that we have New Zealand - flag vessels. I know this House did quite a lot of work in terms of stamping out the slavery practices that were being conducted by some appalling overseas operators that were operating in our waters. There has been a move to bring more operators under New Zealand flag conditions, so I do commend that, and I see the alignment between New Zealand - flag vessels fishing in international waters by claiming produce of New Zealand.

My question is in relation to the Conservation of Antarctic Marine Living Resources treaty, which allows New Zealand to participate in the fishing in Antarctic waters for Patagonian, or sub-Antarctic toothfish. My question relates to, is that convention area of fisheries subject to the provisions of this legislation—i.e., will the catch from New Zealand operators that fish in those waters, that are granted rights to fish in that area, are they subject to the provisions here—i.e., that the catch that is caught in those Antarctic waters is indeed defined to be produce of New Zealand? I’d like, I guess, some elucidation to the committee on whether that convention area is caught or whether international fisheries areas and the convention area are two separate fisheries for the purposes of that particular provision. So some explanation would be much appreciated. Thank you.

I just thank the learned member Rino Tirikatene for his very learned question. I think it’s really important that we respond to his question around prohibition orders in schedule 1, clause 3B. I can confirm for that member that no order has lapsed—the Customs Service is renewing orders under the existing Act. The pounamu order has been renewed and is located in the customs export prohibition order for 2017.

The question was put that the amendments set out on Supplementary Order Paper 12 in the name of the Hon Meka Whaitiri, and the following amendment in her name to schedule 9, be agreed to:

replace the items relating to regulations 19, 23, 27, and 33 of the United Nations Sanctions (Democratic People’s Republic of Korea) Regulations 2017 with:

replace regulation 21 with the following new regulation:

21 Restricted item: application of Customs and Excise Act 2016

The provisions of the Customs and Excise Act 2016 (except sections 365 and 366) apply in relation to a restricted item as if the restricted item were goods the importation of which is prohibited under section 96 of that Act.

replace regulation 34A with the following new regulation:

34A Specified petroleum product: application of Customs and Excise Act 2016

The provisions of the Customs and Excise Act 2016 (except sections 365 and 366) apply in relation to a specified petroleum product as if the specified petroleum product were goods the exportation of which is prohibited under section 96 of that Act if the specified petroleum product is intended—

(a) to be exported to DPRK; or

(b) for use in DPRK; or

(c) for the benefit of DPRK.

Amendments agreed to.

Parts 1 to 6, schedules 1 to 9, and clauses 1 and 2 as amended agreed to.

House resumed.

Bill reported with amendment.

Report adopted.