Customs' Organisational Health and Capability

As at 30 December 2007, Customs had over 1200 staff in 16 locations in New Zealand and five locations overseas. Our extensive border presence and infrastructure means we have an important role in New Zealand’s border management. Approximately two-thirds of Customs’ expenditure relates to people capability, the significant majority relating to customs officers. It is essential that leadership, skills, processes, technology and relationships together utilise our staff productively.

We also have other significant investments, including risk screening technologies and the current border management Information Technology system, which processes high volumes of trade and travel transactions and other information, and supports other agencies in meeting various government objectives.

To ensure we remain well placed to manage the border effectively with other border sector agencies, faced with increasing trade and travel volumes, service delivery expectations, input costs and border risks, Customs needs to effectively respond to changes while keeping the growth in costs to government as low as possible.

Over the next three years, Customs will continue to consolidate the capability investments of previous years and build on this foundation to better enable us to meet current and future expectations of being an agile, knowledge-based organisation.

Customs has five long-term development priorities that are critical to our ability to maintain the required capacity and capability to deliver on Government’s objectives. These are:

• Border Policy and Regulation;
• Service Delivery Model;
• Information, Processes and Technology;
• People Capability; and
• Collaborative Relationships (detailed under the Relationships outcome).

Border Policy and Regulation and Service Delivery Model

Our capacity to ensure border policy and regulations continue to achieve the outcomes desired by government is facing ongoing pressure due to a number of factors. These include the complexity in international trade developments, the growing complexity in border offending, and the connectedness required between private sector stakeholders, agencies and organisations in New Zealand and internationally. There is a need to ensure Customs’ border policy and legislation remains relevant and is effectively coordinated with border sector agencies and other agencies’ policy objectives at the border.

To ensure our overall service delivery continues to be effective in the face of increasing demands, as reflected in ongoing increases in trade and travel volumes and the range of services undertaken at the border for other agencies, and rising costs, we will be undertaking work on two fronts. First, we will be investigating new business processes that utilise available technologies to provide more cost-effective border processing. This includes initiatives such as development of a Trade Single Window and the trial and potential rollout of automated and non-automated passenger processing initiatives. Second, we will be reviewing the strategy for funding Customs’ operations into the future, in order to ensure that government is in the best position to determine how costs should be apportioned between government, seaports, airports and the users of border services.

Over the next three years, we will continue to develop and review Customs’ policy and regulation and service delivery frameworks, to ensure these most effectively support achievement of government’s objectives.

Information, Processes and Technology

Our systems and processes enable Customs to provide services and deliver on strategy and policy, in order to achieve the outcomes we seek for government and the community. These systems and processes also enable Customs to support other agencies in meeting objectives for Government.

We need systems and processes that enable Customs to acquire, retain, process and disseminate information in the most timely and cost-effective manner possible. We have developed an Information Services Strategic Plan in order to meet current and future information and knowledge management requirements and, over the next three years, will continue to implement four key initiatives within the Plan:

• replacement of Customs’ border management Information Technology system;
• Knowledge Management;
• Information Services Architecture; and
• Information Services Capability.

We will also continue to improve relationships with stakeholders who rely on Customs’ information services. These include other agencies with interests at the border, and businesses and industry groups working in partnership with Customs in order to align systems and meet compliance obligations.

Customs secured additional funding from Government in 2006/07 to prepare a business case for replacement of the border management Information Technology system. This system is over 10 years old, and has become a major whole-of-government asset beyond its original design as a border management system, with nine other agencies across government currently using the system.

Increasing volumes of trade and travel transactions and other developments, such as the need to meet international requirements, have also placed pressure on the border management Information Technology system. While the system facilitates millions of trade, travel, risk and Customs revenue transactions, currently it does not provide assurance that increases in daily transactions will not cause a major systems outage. Customs is seeking to redevelop the current system to support harmonisation procedures within trade agreements, such as the data standards determined by the World Customs Organisation SAFE Framework (under development).

People Capability

A number of factors are creating recruitment and retention pressures for Customs. These include the need to respond to increasing volumes of trade and travel and increasingly complex border threats in a very competitive labour market.

In response to these pressures, Customs will continue to implement the Organisational Development Strategy. Customs recognises that if we are to attract, develop and retain quality staff, we need to continue to focus on recruitment, remuneration, development, rewards and recognition frameworks, training and career pathways, and leadership and management development.

Customs’ recruitment focus aims to attract high quality talent for entry-level and specialist positions. Regardless of the labour market conditions, we will not compromise this high standard as we need to ensure we recruit staff of the highest integrity. Our focus on recruiting high calibre staff also enables us to anticipate high returns in productivity and other positive contributions to the Service.

Customs’ increased emphasis on training and development aims to strengthen performance and employee engagement, in order to minimise the cost of staff turnover. We aim to provide opportunities for training and career development through our National Training Strategy, with its focus on career pathways and training framework, supported with a rotation programme. This will enhance our technical capability to respond to increasingly complex border threats. We will also continue to implement and refine our Leadership Development Programme for managers, to build the skills and support required to utilise staff in the best possible way.

Equal Employment Opportunities
Customs’ focus on this area is guided by the State Services Commission’s EEO Policy to 2010 for the Public Sector.

In terms of ethnicity*, as at 31 December 2007, 8.5 percent of Customs employees were identified as M-aori, 7.9 percent as Pacific peoples, 9.7 percent as Asian, 60.1 percent as New Zealand European, and 13.9 percent as Other European. Customs has agreed on a target with the State Services Commission to increase M-aori employees to 12 percent and Pacific peoples employees to 10 percent by 2010.

* - Individuals can have up to two ethnicities recorded in the Employee Information database – this means that the numbers will not equate to 100 percent. This is in line with both the State Services Commission reporting criteria and Statistics New Zealand practice.

The proportion of female staff at 39 percent, as at 31 December 2007, is the same for the previous time last year, and continues to be below the 47 percent EEO target for the end of June 2010.

Over the next three years, Customs will continue to implement initiatives designed to recruit and retain staff. These include addressing recruitment, retention and remuneration, leadership development for managers, and continued support for managers to develop career pathways for staff. The continued efforts of our Career Development Board will also be a focus. The Board’s efforts include an awareness of ethnicity and gender issues related to career development, identifying leadership and technical ability, and providing support and encouragement to staff to further develop critical competencies.

Workplace relationships
Since 2005, Customs’ employer-employee relations have been founded on a multi-union collective agreement. This has meant Customs and the unions party to the collective agreement** have had to develop constructive working relationships capable of addressing issues and supporting the organisation to deliver government outcomes.

** - The unions party to the collective agreement are the Customs Officers Association, the Public Service Association (PSA), and the National Union of Public Employees (NUPE).

During the last three years, that working relationship has been formalised into a joint forum that supports both Partnership for Quality an agreement between Government and the PSA, and equally recognises that other unions involved in Customs also have an important interest in the development and support of a modern and innovative public service organisation.

In 2008, Customs will be renegotiating the terms and conditions of its collective agreement with the unions. This will provide Customs and the unions with a challenging opportunity to continue to work together, in partnership, to set an employment foundation that supports flexibility and innovation for the next three years.

How will we measure our success?

The key measures of Customs’ organisational health are set out in the following table:

Impacts	Indicators	Performance measured by:
People, leadership, culture	1. Workforce profiling. 2. Staff perceptions and satisfaction. 3. Operational productivity. 4. Organisational leadership and values. 5. Governance.	Patterns and trends in Human Resources (HR) information; Workplace surveys; Productivity measures; Government agencies’ trust and confidence surveys; Stakeholder surveys; and Office of the Auditor-General (OAG) Management letter and Treasury-led Departmental Internal Control Evaluation (DICE) trends.
Systems, technology, knowledge	1. Systems readiness and availability. 2. Systems capability. 3. Information, intelligence and interaction process capability.	Systems performance; Internal users’ surveys; Independent reviews; and Independent evaluations.
Relationships	1. Travellers’ satisfaction. 2. Stakeholders’ satisfaction. 3. Quality of Customs’ information for clients.	Stakeholder surveys.

Capital Intentions

Customs’ forecast capital expenditure for the three years from 1 July 2008 to 30 June 2011 is as follows:

Category	2008/09	2009/10	2010/11
	$000	$000	$000
Computer Equipment	955	500	1,500
Computer Software	2,815	500	1,500
Furniture and Fittings	300	300	300
Leasehold Improvements	3,595	8,450	1,750
Motor Vehicles	1,070	800	800
Office Equipment and Plant	1,170	1,150	650
Total	9,905	11,700	6,500

The forecast capital expenditure includes capital for new accommodation and passenger processing facilities along with the routine replacement and upgrade of Customs’ plant and equipment to enable Customs’ outcomes to be delivered in a cost-effective manner.

A capital injection of $4.7 million has been approved in 2009/10 as a contribution to the fit-out costs of the new Wellington Customhouse.