05 February 2009

Briefing to Incoming Ministers

The Importers Institute provides a briefing to new Ministers Maurice Williamson (Customs) and David Carter (Bisosecurity).

The good news is that you have inherited a top-notch Customs department. That is not just flannel produced by the department's PR, it is a fact established by reputable international surveys and it is also our observation. Customs protects the border and collects duties efficiently and with minimum disruption to trade.

The bad news is that the Ministry of Agriculture and Forestry (MAF) continues to encroach on the border protection work of Customs. Other agencies, like Immigration, are quite happy to delegate front-line duties to border protection professionals. But not MAF.

Have you noticed that, these days, after going through the Customs queue and waiting for your baggage to come out of the belt, you have to go through another lengthy queue? You hand out a form to a MAF official who then decides, based largely on intuition, whether or not to screen you. The people from Customs upstairs, whose job is to detect drug smugglers and illegal immigrants are apparently not to be trusted with figuring out whether you are likely to be trying to smuggle apples.

When MAF officials find bugs in containers, they promise to stop every shipment for the importer in question (or for other companies importing from the same supplier) for the next five shipments or the next twelve months, whichever occurs first. These stops are to be accompanied by charges of $100 an hour and the intention appears to be clearly punitive. Notice that they are not punishing an accredited operator for failing to detect risks and to alert MAF, they are punishing importers whose suppliers may not have done the right thing.

In reality, this is not going to work. They just don't have the manpower to inspect so many low-risk containers - a typical case of bureaucratic over-reach. Some importers will be put through a lot of inconvenience and expense and MAF will, no doubt, be asking you for more 'resources' (a.k.a. Money). This tactic seemed to work a treat with the last government: just have a look at MAF staffing levels in 1999 and in 2009. We suspect that you and your colleagues aren't quite so gullible.

Now, this has been going on for a very long time. About twenty years ago, Sir Geoffrey Palmer asked Gerald Hensley to look at border protection agencies and he recommended setting up a single agency. Ten years later, a National government asked Sir Ron Carter to do a similar review and his recommendation was essentially the same: form a single border protection agency.

The government changed before a decision was made and the new Labour ministers, Phillida Bunkle and Marian Hobbs, dismissed the recommendation on the grounds that Labour had promised the Greens that it would maintain a border agency dedicated to 'biosecurity'. The Ministers said that they would get Customs and MAF to work better together.

Ten years on, the departments have come up with a proposal for something called a "Trade Single Window". All they need is $120 million, more or less. We consider this proposal to be an answer in search of a question. You really should dust up the old reports. A single organisation will, of necessity, provide a single window. Customs use a modern relational database and we see no need to spend huge amounts of money on another big computer project.

There is also some unfinished business that you may want to turn your attention to: (1) a Law Commission report to do away with excessive departmental powers of seizure was dismissed by the previous government on spurious grounds; (2) Customs gave a monopoly to an outfit called ECN to clip the ticket on every import and export and, despite Ministerial promises to the contrary, this profitable contract was never put up for public tender; and (3) New Zealand importers still have to go through the absurdity of paying GST to Customs only to claim it back from the Inland Revenue a month or two later, while in Australia they are treated as a simple balancing debit and credit on the same statement.

The current recession means that you need to raise the bar on the quality of government's spending. Importers expect our border protection agencies to continue to improve services and reduce red tape. The only significant change in this area that the last government managed to make during the nine years that it was in power was the creation of an import transaction tax. We expect much better from you. Let us know if we can help.