Challenges in our Environment

The external environment outlined in last year’s Statement of Intent remains fundamentally unchanged. There continues to be a worldwide consensus, reinforced by recent events in Spain, that terrorist-related threats are very real and that this situation will remain for the foreseeable future.

Although New Zealand is often perceived as being remote from the world’s terrorist hot-spots, the country cannot afford to be complacent. New Zealand’s economy, dependent as it is on participation in global trade, is not immune from terrorist activity and its impacts. New Zealand must act to maintain its low risk status, otherwise its trade may face increased delays and incur increased costs if world trade is severely disrupted by further terrorist incidents. Similarly, New Zealand’s tourism industry, which is dependent on the country’s “safe” reputation and the relative ease of travel in and out, would be jeopardised if New Zealand was perceived as providing a safe haven for terrorists.

Source: Statistics New Zealand 2003 calendar year trade statistics

In the past year, the expectations of the international community about how to achieve better border security have become clearer. The United States, New Zealand’s second largest export market with trade worth $4 billion annually to New Zealand, now requires every container entering there to be security screened and, where necessary, physically inspected. While Customs has traditionally focused on managing the flow of people and goods into New Zealand, it now must provide comprehensive coverage of incoming, outgoing, and in-transit people, craft, goods and crew.

In an environment where trade and security have become inseparable, Customs is expected to provide assurance across the breadth of the supply chain and travel experience, identifying potential risks long before they arrive at the borders of New Zealand’s trade and travel partners. This requires a whole-of-government approach. Customs must also balance the need for heightened security with the need to foster legitimate and compliant trade and travel by way of efficient regulation and minimum imposition.

The initial Statement of Intent also highlighted the significant challenges faced by Customs as a result of the increasing presence of organised transnational crime groups in New Zealand. Customs’ capability to combat this activity, particularly in relation to the importation of illicit drugs and the precursor chemicals used in their manufacture, was increased in the past year.

The dramatic rise in the level of trafficking in illicit drugs has tended, however, to overshadow significant increases in the detection of other aspects of transnational crime, including pirated and counterfeit goods and identity fraud. Combating transnational crime will remain a key priority for Customs in 2004/05.

Customs’ efforts to improve border security and combat transnational crime are occurring against a background of increasing volumes in cross-border transactions of passengers, goods and craft. The Government has moved to address current needs through additional capability funding, but these volume trends will continue to place pressure on border control infrastructure.

Widening Stakeholder Relationships

Internationally, progressive upgrading of security standards is underway, aimed specifically at preventing terrorists from using international trade and travel systems as a means to deliver an attack, to move materials around, or as targets themselves. “Low risk” countries such as New Zealand still need to ensure that they are not used by terrorists as a base for attacks off-shore. Access to advance passenger information for border management purposes and new standards for ship, port and airport security are two examples of this progressive security upgrade.

Customs has a key role in ensuring that a whole-of-government approach is taken on these issues in order to avoid duplication and to ensure effective coordination to produce the best outcomes. This has resulted in a considerable widening of Customs’ traditional stakeholder base, as well as the strengthening of existing stakeholder relationships.

Customs’ stakeholder relationships extend beyond government agencies, to encompass the private sector, especially industry, and other international customs and law enforcement bodies. This extension is evident in the growing interaction between Customs and exporters that developed out of the emerging need to provide assurance over the security of the New Zealand supply chain and international trade and is formally recognised in Customs’ Secure Exports Partnership Scheme.

Stakeholder relationships are also important in the facilitation of legitimate trade. The Secure Exports Partnership Scheme, for example, is designed to ensure that New Zealand’s exports enjoy continued access to the country’s key markets, even during times of heightened security alerts. During its tenure as the WCO Regional Vice Chair of the Asia Pacific Region, New Zealand Customs led ongoing efforts to standardise customs procedures throughout the region. In the long term this will help reduce the amount of red tape faced by exporters and has the potential to improve New Zealand penetration of overseas markets.

Organisational Culture and Development

The increased focus on security issues, together with the increased complexity and breadth of risks being managed by Customs, presents significant challenges:

• Staff numbers will grow substantially as a result of the Supply Chain Security and the Air and Marine initiatives. It is crucial that new staff share Customs’ core values such as Integrity, Professionalism and Service Ethos.
• The focus on border security reinforces the need for Customs officers to have the highest standards of behaviour with respect to security of information and will require some staff to develop new skills such as operating x-ray technology or dealing with exporters.
• In an environment of change and growth, the retention of experienced staff and institutional knowledge assumes added importance.
• The increasing reliance on data and information flows, and the increased focus on outcomes and performance analysis, means that an increase in analytical capability is required across all Customs’ outcomes.
• Customs’ management infrastructure needs to be developed further to cope with the increasing complexity of the business and to provide strong leadership for a substantially expanded workforce.

Faced with these challenges, a major focus for Customs in 2004/05 will be on ensuring that the strengths of the organisation’s culture are protected during a time of significant change and that Customs’ human resource capability is developed to cope with the requirements of the changed external environment. Strategies for achieving this are discussed under the heading Capability Challenges. Customs is confident in its ability to meet these challenges.