Statement of Intent 2006-2007 - New Zealand Customs Service

NEW ZEALAND CUSTOMS SERVICE
STATEMENT OF INTENT
2006–2007

Vision
Leadership and excellence in border
management that enhances the security and
prosperity of New Zealand.
Mission
Protecting New Zealand’s border and revenue in order that
New Zealanders may live in safety while actively participating in
the global community.
Values
Integrity
We are honest and trustworthy in everything
we do, and act with courage in pursuit of the
best possible outcomes for the community
and the Customs Service.
Respect
We are fair and just and always act with
respect for the law and the rights of others.
We value the views and contributions of
others and actively seek to engage and
collaborate for the benefi t of
New Zealand.
Commitment
We are proud to continue Customs long tradition
of service to the community. We willingly accept
the responsibility of helping to keep New Zealand
safe, secure and prosperous, and are dedicated
to working as One Service to achieve that.
Agility
We are open to new ideas and technologies,
responsive to changing needs, and innovative
in the way we respond. We work with energy
and enthusiasm to produce the best possible
outcomes for the community.

B.24 SOI (2006)
Table of Contents
Minister’s Foreword .............................................................................2
Comptroller’s Introduction ...................................................................3
PART A: STATEMENT OF INTENT ......................................................................4
Customs’ Role .....................................................................................5
Government Priorities and Outcomes for the Community...................6
Customs’ Operating Environment ......................................................10
Customs’ Capability ...........................................................................15
Customs’ Strategic Goals 2006-2010................................................18
Performance Measurement................................................................22
Risk Management .............................................................................25
Customs’ Organisational Structure ....................................................28
Highlights and Financial Summary ....................................................29
PART B: FORECAST DEPARTMENTAL FINANCIAL STATEMENTS AND
PERFORMANCE OBJECTIVES .........................................................30
Introduction ........................................................................................31
Statement of Responsibility ...............................................................32
Statement of Significant Underlying Assumptions ............................32
Statement of Significant Accounting Policies ....................................33
Forecast Financial Statements...........................................................34
Statement of Forecast Service Performance .....................................42
Glossary .............................................................................................51
NEW ZEALAND CUSTOMS SERVICE
STATEMENT OF INTENT 2006 – 2007
Presented to the House of Representatives
Pursuant to Section 39 of the Public Finance Act 1989
ISSN 1176-1857
1

Minister’s Foreword
I am pleased to present the
New Zealand Customs Service
Statement of Intent 2006–2007.
Government priorities for the next
decade focus on working to progress
our economic transformation,
providing support and choices
for our families, and maintaining
the pride of all New Zealanders
in our unique national identity.
As reflected in this Statement of
Intent, the New Zealand Customs
Service is fully committed to
working with other government
agencies here and overseas, and
with relevant industry groups in New
Zealand, to further these goals.
The Service recognises the
importance of maintaining New
Zealand’s competitiveness in
international trade and tourism, to
our prosperity as a nation. In line with
this commitment, work will continue
this year, with other border agencies
and with New Zealand industry,
to maximise efficiency in border
clearance, which will benefit all who
trade or travel across our borders.
The Service will also continue to
work with the Ministry of Foreign
Affairs and Trade and the Ministry
of Economic Development in the
negotiation and operation of trade
agreements, to ensure that trade
is both free and fairly conducted.
The implementation of tighter
control systems by New Zealand’s
major trading partners to prevent
international cargos being used for
terrorist purposes, also has an impact
on the Service’s work. This will see it
continue to work with our exporters
and overseas customs organisations
on control systems here that reduce
the risk of our exports being subject
to expensive compliance checks at
overseas borders. The Service is well
placed through its membership of
international customs organisations,
to influence the development of
standards for the efficient and safe
conduct of trade, and will seek to
extend that influence this year.
The safety and health of our
families, particularly our young
people, has been impacted by the
availability of methamphetamine and
other drugs. The Customs Service
is at the front line in the ongoing
battle against the importation of
methamphetamine and the chemicals
used to manufacture the drug in New
Zealand. The Service will continue to
work closely with the New Zealand
Police and the Ministry of Health
on strategies to reduce the supply
and demand for illegal drugs. The
Service will also this year enhance
its border intelligence capabilities
and strengthen its contacts with
overseas customs authorities, to
combat the involvement of offshore
criminal organisations in the
drug trade across our borders.
As New Zealanders, we are
justifiably proud of our unique
national identity, and while we enjoy
the advantages of freer trade and
travel, we want to protect our society,
environment and economy from
risk. The Customs Service provides
a range of integrated, intelligencebased
services to government in the
clearance of goods, people and craft
entering or leaving New Zealand.
These services enable Customs and
other agencies to intercept potential
risks at the border – including threats
to the environment and public
health, to conservation and heritage
values, and to national security
– while ensuring the facilitation
of legitimate trade and travel.
As the Minister responsible
for Customs, I confirm that the
information contained within this
Statement of Intent is consistent
with the policies and performance
expectations of this Government.
Nanaia Mahuta
Minister of Customs
2 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

Comptroller’s Introduction
The New Zealand Customs
Service (Customs) plays a vital role
in protecting and enhancing New
Zealand’s economic prosperity,
security, and unique way of life. We
understand that border management
has an effect on economic
performance and the well-being of
our community and we are committed
to ensuring that New Zealand’s
border management actively
supports government priorities.
In order to achieve our vision
of leadership and excellence in
border management, we have to
be ready for the future. We have
to be able to respond quickly and
effectively to unforeseen situations
and circumstances, and we have
to ensure the effective ongoing
provision of services. Our recent
organisational change programme
has been focused on improving
our ability to meet the challenges
of the future and is resulting in
increased strategic capacity and
operational synergies, ensuring that
we operate on a “whole of Customs,
one Service” basis. The changes
have enhanced our ability to use
the information we already have to
predict what may be coming next, as
we develop the systems and other
capabilities required to extract the
most value from that information.
We are constantly reviewing
our strategic direction in light of
developments in our operating
environment. Our vision, mission
and values are the centrepiece of
our strategic framework, and our
outcomes have been revised to
ensure that they accurately reflect
the difference that we make for
New Zealand. The four existing
outcomes have been refocused to
clearly represent their scope and
place in the broader government
and community context. A draft
multi-agency outcome provides a
frame of reference for the whole of
government policy aspect of border
management, and a new outcome
focusing on border management
assurance underpins the entire
framework and reflects our focus on
the effectiveness of Customs’ border
management system. As the next
step, we will be concentrating on
further developing our performance
measurement framework. We will
use the information we already have
and identify further information
required to build an evidence-based
understanding of our effectiveness
and results against outcomes, and
identify our priorities for the future.
Effective border management
is essential to a modern state’s
capability to safeguard its
sovereignty, secure its prosperity
and protect its citizens from threat.
As there are a number of agencies
involved in managing the New
Zealand border we need to ensure
they are properly “joined up” and
that there are no gaps, or unplanned
overlaps, in coverage. Initial work to
develop a common understanding
of the nature and role of border
management in a modern economy
will be pursued through further interagency
dialogue about how synergy
and synchronicity can be improved
across the government agencies
involved in border management.
In order to support a secure and
prosperous New Zealand, we will
continue to work in coordination
with other agencies, and maintain
our relationships with other customs
administrations, international
organisations and industry
stakeholders. We will continue
to deepen our understanding
of our partners’ priorities and to
ensure that we understand how
our objectives and those of our
partners in the public and private
sectors can best be aligned. We
will also continue to develop
effective multi-agency solutions and
strategic alliances with industry,
whilst building a unique skill set.
The Customs Service’s place
at the border provides us with an
invaluable opportunity to support New
Zealand’s economic transformation
and help maintain safe communities
and New Zealand’s unique identity.
The strategic agenda set out in this
Statement of Intent builds on the
changes implemented over the past
eighteen months to provide the
foundation for our contribution to
more future-focused and effective
border management in New Zealand.
Martyn Dunne
Comptroller of Customs
3

PART A: STATEMENT OF INTENT
4 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

Customs’
Role
Customs enhances the security and
prosperity of New Zealand by managing
security and community risks associated
with the flows of people, goods, and
craft in and out of New Zealand, and by
collecting customs and excise revenue.
A key means of managing these risks is
through effective control of the processes
used for clearing goods, people and craft
across the border at ports of entry and
departure. This approach allows Customs
to deal with a range of risks simultaneously,
providing government with an efficient
means of intervention at the border.
Customs is progressively implementing
strategies that will increase its ability to
meet threats to border security at their
point of origin by moving from reactive
enforcement at the border to proactive
prevention, investigation, and facilitation
further afield or earlier in the supply chain.
Post-border interventions, such as
the auditing of goods for tariff and other
forms of revenue, also provide an essential
check in a revenue system that is largely
based on voluntary compliance at the time
of entry. Customs also undertakes postborder
investigations of offences under the
Customs and Excise Act 1996 and other Acts
under which it has investigative powers.
PRE-BORDER
• Advance electronic information
• Risk profi ling and assessment
• Increased inter-agency cooperation,
domestically and overseas
• Partnerships to reduce risk
AT THE BORDER
• Risk profi ling and assessment
• Smart, targeted intervention
• Clearance
• Compliance checking
• Surveillance, search etc
POST-BORDER
• Revenue collection
• Trade Assurance audit
• Investigations
• Prosecutions
5

Government Priorities and
Outcomes for the Community
How Customs Contributes
to Government Priorities
The Government has identified its
priorities for the next decade as:
• Economic transformation
– working to progress New
Zealand’s economic transformation
to a high income, knowledge
based market economy
• Families – young and old – have
the support and choices they
need to be secure and able to
reach their full potential, and
• National identity – who we are;
what we do; where we live; how
we are seen by the world.
Customs is committed to
contributing to Government priorities
and outcomes for the community
as set out in the table opposite.
GOVERNMENT-
WIDE
INTERESTS
‘‘
GOVERNMENT GOALS, PRIORITIES AND HIGH LEVEL STRATEGIES TO SUPPORT
ECONOMIC TRANSFORMATION, FAMILIES – YOUNG AND OLD, AND NATIONAL IDENTITY
Customs is committed to
contributing to Government
priorities and outcomes...
’’
Revised
MULTI-AGENCY
FOCUS
The permeability of New Zealand’s border
is controlled to support the achievement of government goals and strategies
Draft
CUSTOMS’
FOCUS
BORDER
SECURITY
New Zealand is protected
from threats to national
security by Customs’
situational awareness &
readiness to respond
COMMUNITY
PROTECTION
New Zealand’s community,
economy & environment
are protected from harm
by effective & effi cient
border management
CUSTOMS
REVENUE
New Zealand’s economic,
social & environmental goals
are supported by the
effective & effi cient collection
of Customs revenue
TRADE &
TOURISM SUPPORT
Sustainable economic
growth is supported
through effective & effi cient
border management
Revised
BORDER MANAGEMENT ASSURANCE
New Zealand’s sovereign interests are protected through Customs’ management of New Zealand’s border
New
6 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

GOVERNMENT PRIORITIES
Economic Transformation
CONTRIBUTING OUTCOMES
Trade and Tourism Support – supporting New Zealand as an internationally
competitive trading nation by assuring the safety and security of trade and
tourism channels, contributing to trade negotiations, and facilitating legitimate
trade and travel.
Community Protection – protecting the environment from potential harm from
restricted imports or illegal exports.
Customs Revenue – providing a significant contribution to the resource base
government needs to support economic transformation.
Border Management Assurance – maintaining a world-class border
management infrastructure.
Families – Young and Old
Border Security – protecting New Zealand’s unique way of life from threats
associated with terrorism, transnational organised crime and health pandemics.
Community Protection – protecting communities from harm caused by illicit
drugs, child pornography and other harmful items.
Customs Revenue – providing a significant contribution to the resource base
government needs to maintain safe and healthy communities.
Border Management Assurance – maintaining an effective border management
infrastructure as a means of managing threats to safe and healthy communities.
National Identity
Border Security – protecting New Zealand’s unique way of life and core values
from threats associated with terrorism, transnational organised crime and health
pandemics.
Community Protection – protecting communities from illicit drugs, child
pornography and other harmful items.
Customs Revenue – providing a significant contribution to the resource base
government applies to fostering national identity.
Trade and Tourism Support – ensuring New Zealand is seen as a safe place to
trade with and a welcoming place to travel to.
Border Management Assurance – maintaining an effective border management
infrastructure as a means of managing threats to national identity.
Customs’ Contribution
to Outcomes for
the Community
Customs contributes to four
outcomes for the community
– Border Security, Community
Protection, Customs Revenue
and Trade and Tourism Support.
These reflect the key areas
in which Customs is seeking
to have positive impacts for
Government and citizens, through
effective border management.
The community outcomes have
been refocused to provide better
linkages with the Government’s
priorities and to more clearly
represent their scope and links with
the relevant outcomes that are the
primary focus of other agencies.
Border Security:
New Zealand is protected from
threats to national security by
Customs’ situational awareness
and readiness to respond
A nation’s security influences
its ability to maintain its national
identity and unique quality of life.
A characteristic of national security is
the need to deal with potential threats,
where uncertainty is high, but the
potential impacts of an event are also
very high. This creates a need for:
• “situational awareness”, in
order to anticipate, assess
and prepare for threats of
national consequence
• risk assessment to understand
the level and potential
consequences of risk, and
• readiness, to respond
effectively if an event occurs.
The focus of Customs’ Border
Security outcome has been changed
to ensure that Customs’ strategies
for addressing potential and actual
threats to national security are
appropriately targeted and linked
with those of other agencies with
national security interests. Examples
7

of threats to national security being
addressed under the Border Security
outcome are terrorism, transnational
organised crime, pandemics
and national emergencies.
Other agencies that contribute
to Border Security include the New
Zealand Police (Police), the Ministry
of Foreign Affairs and Trade, the
Department of Labour, the Ministry
of Agriculture and Forestry, the New
Zealand Defence Force, the Ministry
of Health (Health), Aviation Security
Service, and Maritime New Zealand.
‘‘
Community Protection:
New Zealand’s community,
economy and environment are
protected from harm by effective
and efficient border management
This outcome covers a wide number
of policy objectives, encompassing
crime, personal health and safety, and
identity and values, that contribute
to the Government’s priorities.
Customs enforces border controls
on a range of illegal imports that
pose law and order risks to New
Zealand society, and works closely outcome. Other priorities include
with Police in limiting their entry objectionable material (such as child
into New Zealand as well as their pornography), illegal migrants and
transfer to other countries. Customs
trafficking in endangered species.
also implements policies designed
Other agencies that contribute to
to bring about consumer behaviour
Community Protection include Police,
change and enforces other agencies’
Health, the Department of Internal
technical regulations or standards
Affairs, the Department of Labour, the
for imported products that raise
consumer protection issues.
Ministry of Economic Development,
Minimising illegal drug importation the Ministry of Agriculture and Forestry,
to New Zealand will continue to be the Ministry for Culture and Heritage,
an area of primary focus under this and the Department of Conservation.
Customs enforces border
controls on a range of illegal
imports that pose law and order
’’
Customs Revenue:
New Zealand’s economic, social and
environmental goals are supported
by the effective and efficient
collection of Customs revenue
Customs revenue currently makes
up approximately 15 percent of total
Crown revenue. This represents
a significant contribution to the
resource base Government needs
to achieve its priorities for the next
decade. Government, therefore,
requires ongoing assurance that
risks to New Zealand society...
80
Number of Significant Drug Seizures
70
Cumulative Total
60
50
40
30
20
10
0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
New Zealand Customs Service
Since 2003, there has been
a substantial increase in the
number of drug seizures
involving a traffi ckable
quantity of the drug that
result in Police/Customs
operational activity
8 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

Customs revenue is correctly
assessed, efficiently collected, and
that evasion has been minimised.
Customs’ competence in
administering commodity taxation
systems provides government with a
revenue capability that can be used
to support social and environmental
goals, as well as for fiscal purposes.
Customs assesses and collects social
taxes, such as excise on tobacco
and alcohol, as well as “pure”
economic taxes such as goods and
services tax on imported goods.
Customs also provides a
convenient collection point for non-
Customs revenue, such as charges
collected for other agencies (eg, the
Accident Compensation Corporation
and the Alcohol Advisory Council).
Trade and Tourism Support:
Sustainable economic growth is
supported through effective and
efficient border management
Customs contributes to economic
transformation by assuring the
security of New Zealand’s trade
and travel supply chains so that
New Zealand is seen as a safe
place to trade with and travel to.
Customs also helps secure
access for New Zealand exports
to overseas markets by providing
technical input to trade negotiations
and the resolution of trade issues,
and through implementing,
monitoring and enforcing border
aspects of trade agreements.
Customs also works to impose the
least possible compliance cost on
traders and travellers. It does this by
facilitating legitimate trade and travel
and working with port and industry
stakeholders and other agencies
to ensure border management
processes and requirements are
harmonised to the greatest extent
possible between border agencies,
with industry and internationally.
Other agencies that contribute
to Trade and Tourism Support
include the Ministry of Economic
Development, the Ministry of Foreign
Affairs and Trade, New Zealand
Trade and Enterprise, the Ministry
$ (Millions)
12,000
10,000
8,000
6,000
4,000
2,000
0
of Agriculture and Forestry, and the
New Zealand Food Safety Authority.
Focus on Customs’
Effectiveness
1999/00 2001/02 2003/04 2005/06 est 2007/08 est 2009/10 est
Border Management Assurance:
New Zealand’s sovereign
interests are protected through
Customs’ management of
New Zealand’s border
A new intermediate outcome
has been defined to focus on the
effectiveness of Customs’ integrated
border management system,
which provides the foundation
for the achievement of the four
community-focused outcomes.
It is in New Zealand’s interests for
the Government to know about the
people, goods and craft crossing the
border, the interrelationships between
them, and the international context
within which they are moving, and
to be able to understand, anticipate
and respond to the resulting risks and
opportunities. This outcome focuses
on providing the Government with
assurance that the Customs integrated
border management system, which
includes a strong legislative framework
and international connections, is
capable of meeting these interests.
Working to Achieve
“Joined Up” Border Control
Many different agencies have
a role in providing advice to
Government about border controls,
Crown Revenue Collected
addressing a range of issues including
biosecurity, trade regulation, public
health protection and immigration
policy. There is a need to ensure
that they are sufficiently “joined
up” to provide assurance that
there are no significant gaps or
unplanned overlaps in coverage.
The Government’s collective interest
in border management needs to be
clearly represented in every border
agency’s approach. In 2005 Customs
commissioned the Institute of Policy
Studies to write a paper on border
concepts and they have subsequently
led multi-agency discussions on
the issues arising from this. These
discussions will be continuing over the
coming year with a view to progressing
the collective understanding of
New Zealand’s approach to border
management, and furthering collective
action based on that understanding.
As part of this process Customs
is discussing with other agencies
the development of a multi-agency
outcome that represents what
border agencies are collectively
seeking to achieve on behalf of
government and the community:
The permeability of New
Zealand’s border is controlled
to support the achievement of
Government goals and strategies
This is intended to provide a
frame of reference for inter-agency
efforts to improve New Zealand’s
system of border management.
Treasury
9

Customs’ Operating Environment
This section outlines Customs’
operating environment and discusses
what it means for Customs’
contribution to Government priorities
and outcomes for the community.
Long-Term Operating Environment
In developing this Statement of
Intent, Customs has taken a longerterm
view of its environment.
Looking ten years ahead there
are a number of emerging trends
that can be identified – such as an
increased emphasis on sustainability,
an increase in the level of intangible
trade, more pervasive technology,
and the need to increase New
Zealand’s competitiveness as a place
to work. The implications for border
management are unclear as the pace
of global economic, environmental
and social change is unpredictable.
While Customs cannot know for
certain what specific risks, threats, or
opportunities it will face in 2015, it has
identified four areas in which it must
excel if it is to be ready and prepared
for whatever the future may bring:
• Creating and utilising
knowledge.
• Connectedness, domestically
and internationally.
• Agility, including utilisation
of technologies that facilitate
more effective responses to
current and emerging issues.
• Providing value to
Government and citizens.
These themes align strongly
with the key strategies identified
in Customs’ Statement of Intent
2005-2006. This gives Customs
confidence that the organisation
development strategies identified
last year remain appropriate.
Short to Medium Term
Operating Environment
The outlook for the next three to
five years for border management
is expected to remain dynamic,
with many of the issues outlined
last year continuing to feature
strongly. These issues are discussed
below in terms of their impact on
Customs’ ability to contribute to the
Government’s priorities of economic
transformation, families – young
and old, and national identity.
Challenges to Achieving
Economic Transformation
Complexity
The trading environment has a
significant influence on New Zealand’s
ability to achieve economic
transformation. Border management
should contribute to making
New Zealand a competitive trading
nation. New Zealand is, and needs
to be seen as, a safe place to trade
– efficient and contemporary, and
free from corruption. Changing
international trading patterns will
continue to increase the complexity of
border management but this may be
balanced by the emerging emphasis
on standardisation of international
trade processes. Examples are the
recently agreed World Customs
Organisation (WCO) Framework
of Standards, the Harmonised
Commodity Description and Coding
System (the Harmonised System)
and the World Trade Organisation’s
Doha Trade Agenda, which may
offer potential for increased
synchronicity in border processes
internationally. As the development
of standards and conventions will
both affect Customs’ approach
to its international relations and
impact upon the way it does things
domestically, Customs will need to
maintain a strong interest in their
development and implementation.
The growing global trade in
pirated or counterfeit goods, which
accounts for as much as 10 percent
of world trade, is reflected in the
dramatic growth in the volume of
such goods intercepted by Customs
at the New Zealand border.
WCO INTEGRATED SUPPLY CHAIN
United States Container Security Initiative
Manufacturer/
Shipper
Forwarder/
Consolidator
Transport
Finance
Broker
Customs
Port Maritime Port
Operator Carrier Operator
Customs Transport Buyer
Finance
International Ship & Port Facility Security Code
South African Revenue Service
10 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

Volume Growth
The growth in global trade is
expected to continue as a result of
increasing trade liberalisation and
60,000
50,000
Export and Import of Merchandise Goods
new technologies. New Zealand’s
trade flows are expected to reflect
this growth over the medium-term.
Customs cleared a record number
of air passengers in 2004/05. While
growth in passenger numbers
has slowed in recent months, this
is expected to be a short-term
phenomenon with a return to higher
Value $NZ (Millions)
40,000
30,000
20,000
10,000
0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
For year ended February
2006
2007
2008
2009
2010
Statistics New Zealand
growth rates in the medium-term.
Customs’ Response
Trade Security Strategy
Security of the supply chain
will remain a key issue for
New Zealand, its trading partners
and the international community.
The challenge here is for customs
administrations to fully understand
industry processes so that they
are better able to use the supply
chain to achieve their regulatory
objectives while minimising potential
barriers to trade and travel. Customs
will continue to actively engage
in forums to develop security
standards for trade security and
to help build Pacific capability to
implement any resulting standards.
In the New Zealand context,
there are opportunities for Customs
to work with industry to develop
innovative solutions to supply chain
issues. Customs will therefore
continue to explore opportunities to
extend and enhance its trade security
strategy so that New Zealand traders
maintain access to key markets, even
at times of heightened security alert.
Trade Negotiations
The Government continues to
pursue a demanding programme
of trade negotiations. Working with
the Ministry of Foreign Affairs and
Trade and the Ministry of Economic
Development, Customs will continue
to make an important contribution to
these trade negotiations through
its policy advice on rules of origin
Millions
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
Actuals
and customs procedures, in order
to open up further opportunities
for New Zealand exporters.
Customs will also continue to
protect New Zealand industry from
unfair trade through enforcement
of the trade remedies regime.
Intellectual Property Rights
The growth in interceptions
of intellectual property rightinfringing
goods at the border
is expected to continue if the
underlying policy settings remain
unchanged. Customs is working
with the Ministry of Economic
Development, the lead policy agency,
to develop a whole of government,
sustainable solution to this issue.
Volume Growth
Increasing trade and travel
Overseas Visitor Arrivals
Forecasts
2003 2005 2007 2009 2011
Year Ended December
volumes will continue to present an
ongoing challenge in maintaining
appropriate controls over potential
risks while minimising the barriers
to trade and travel flows. Customs
will need to continue to seek costeffective
responses involving the
adoption and integration of new
technologies into existing structures
and processes, and increased
synergies between government
agencies and with the private sector.
Customs will continue working
with other government agencies to
implement the standard processing
time, and with infrastructure
providers to ensure that their future
development plans incorporate
sufficient facilities for border
processing requirements.
Statistics New Zealand
11

Challenges to National Identity
and Families - Young and Old
There are a number of potential
threats to the New Zealand way
of life. These could undermine
the safety of communities, the
health of New Zealand families
and New Zealand’s international
reputation as a safe, secure
democracy that plays its part as a
“responsible international citizen”.
Terrorism
Expanding trade and travel
networks increase the risk that
people and goods associated
with terrorism will be able to move
undetected between nations.
Countering this will continue
to be a focus of Customs’
attention for the foreseeable future.
As part of its response, Customs
will continue to work with other
agencies to implement the maritime
security framework set up by the
Maritime Security Act 2004.
Transnational Organised Crime
It is expected that New Zealand
will continue to see a steady growth
in the involvement of transnational
organised criminal syndicates in
a range of criminal activities that
impact on the border. These include
smuggling of illicit drugs, goods
infringing intellectual property rights
and stolen property, and other
activities such as illegal immigration,
money laundering and identity fraud.
Illicit Drugs
The 2005 Illicit Drug Monitoring
System Report describes a
dynamic drug environment in
New Zealand, with new licit and
illicit drug types emerging on the
market and methamphetamine well
established in the illicit drug market
place. Customs’ investigative and
enforcement resources are likely
to continue to face considerable
pressure and Customs will need
to ensure that its investigative
and enforcement resources are
appropriately directed to high priority
risks. The respective responsibilities
of Customs and the Police will be
reviewed as part of the review of
the memorandum of understanding
between the two organisations.
Customs’ Response
National Targeting Centre
A National Targeting Centre (NTC)
is being established that will bring
together Customs’ passenger and
trade targeting functions. The NTC
will play a pivotal role in determining
how Customs’ risk management
priorities are operationalised through
analysis and targeting. The NTC will
facilitate improved risk management
and operational performance and
advanced interoperability with
other agencies in New Zealand
and overseas, ensuring that the
border management system
responds rapidly and efficiently to
a wide range of border threats.
Customs’ Pacific Strategy
The Customs’ Pacific Strategy
will continue to play an important
role in contributing to the security
of the region. The strategy
informs Customs’ contribution to
WCO capacity building projects,
and Customs’ work with other
government agencies and Pacific
partners on initiatives to promote
effective border control in the
Pacific. Central to the strategy is
Customs’ contribution to the Oceania
Customs Organisation (OCO). In
addition, funding has been provided
from the Pacific Security Fund for
a one year trial of a Pacific attache
to facilitate further development
of Customs’ relationships with
customs administrations in the
Pacific, and development of
customs capability in the region.
Public Sector Management
In a tightening fiscal environment,
efforts to demonstrate and
improve cost-effectiveness
are increasingly important and
Customs is focusing on improving
the evidence-base relating to
its performance and impacts.
The Development Goals for the
State Services, launched in March
2005, provide a clear sense of the
broader state sector development
agenda. As the table opposite
shows, there is a strong alignment
between these goals and Customs’
capability goals for 2006-2010.
12 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT T 2006–2007
‘‘
There are a number
of potential threats
to the New Zealand
way of life.

STATE SECTOR
DEVELOPMENT GOALS
Employer of Choice
Excellent State Servants
Networked State Services
Coordinated State Agencies
Accessible State Services
Trusted State Services
What This Means for Customs
The environmental assessment
outlined on pages 10-12 poses
challenges for Customs in four
areas: knowledge, connectedness,
agility, and value.
Knowledge
Customs collects information
about all goods, craft and people
crossing the border. Customs
must use information effectively to
ensure it is able to fully contribute
to advancing government priorities.
To achieve this, Customs will need to:
• move from transaction
processing to information
systems that are able to
more effectively facilitate
the generation of knowledge
from information flows
• enhance the conversion of
advance information and
data into knowledge, to
achieve better targeting and
to improve the overall synergy
of whole of government
border management, and
• ensure its systems
development keeps pace
with demand and supports
operational solutions.
CUSTOMS’ CAPABILITY GOALS
2006-2010
People
People
Systems
Reputation (as well as Customs’
outcome goals for Border
Management Assurance, Border
Security and Community Protection)
Systems
People
Connectedness
Customs has strong connections
with its key stakeholders. Customs
must use these connections to increase
synergies in the border management
system domestically and internationally
so that risks are able to be managed
effectively over the long-term.
To achieve this, Customs will need to:
• further develop its relationships
with policy agencies, to
improve the synergy of border
interventions with domestic
intervention strategies
• deepen its relationships with
industry and infrastructure
providers in the trade and
tourism sectors in order
to better understand how
regulatory and industry interests
can be best aligned to ensure
that increasing complexity does
not result in increasing barriers
to international trade and travel
• streamline customs and business
practices through increased
utilisation of technology, and
• continue to influence
the development and
implementation of
standards for the border
management aspects of
global supply chains.
Agility
Customs must enhance its
ability to anticipate and respond
to changes at the right time
in order to be able to protect
New Zealand and its way of life
from new and emerging border
risks, and to take advantage of
opportunities that could help
New Zealand’s competitiveness
as a trading nation. To achieve
this, Customs will need to:
• be more proactive in risk
identification, thereby
strengthening its ability to
identify emerging trends
and to address border
risks at their source
• ensure that it has appropriate
powers to operate effectively
in a rapidly changing and
complex border environment
• further strengthen
international connections,
in order to enhance its
ability to exert influence
and to access timely and
accurate intelligence, and
• undertake research and
development to identify
and develop technologies
that facilitate more effective
responses to current
and emerging issues.
Value
Customs must also continue
to provide, and be able to
demonstrate, value to the
Government in whatever it does.
This means ensuring Customs’
work is focused on Government
needs and priorities, and requires
development of an evidencebased
understanding of the costeffectiveness
of Customs’ current
and proposed interventions.
Customs’ outcome and
capability goals for 2006-2010
address these challenges. The
goals provide a framework for
future planning in pursuit of
Customs’ vision of leadership and
excellence in border management.
13

14 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

Customs’
Capability
Capability is the mix of resources, skills,
systems, technologies and structures that
Customs needs to efficiently and effectively
deliver the outputs that contribute to the
achievement of Government priorities
and outcomes for the community.
Customs’ capability forms a significant
part of government’s border infrastructure
and, in line with the Government’s desire
to develop a world class infrastructure,
Customs is developing a longer-term focus
on capability. This will be reflected in more
formal long-term development planning,
and production of Customs’ Long-term
Development Plan to provide a consistent
capability development agenda over time.
The Government has made a
considerable investment in enhancing
Customs’ capabilities since 2002/03.
This investment has allowed Customs to:
• significantly increase its level of border
inspection resources and technology
• increase its ability to manage
volume growth and actual and
potential risks at airports, seaports,
and coastal areas, and
• implement an appropriate remuneration
policy, and to remunerate staff as they
perform and develop essential skills.
As described in the Statement of
Intent 2005-06, Customs has a ten-year
organisation development strategy to sustain
and enhance the investment already made
in Customs’ capability. In the last year,
the focus has been on the following:
• The realignment of head office and
operational functions to create
an organisational structure that is
integrated, better able to anticipate
and respond to changing needs,
and better able to support those
engaged in operational activity.
In 2006/07, the emphasis will be
on monitoring and evaluating the
effectiveness of the recent changes.
15

• The development of a national
training strategy to establish an
integrated, whole of Customs
approach to recruitment,
induction, and training.
In 2006/07, the emphasis will be
on the ongoing implementation
of key elements of the strategy,
with a particular emphasis on
leadership development to meet
future needs.
A number of key capability
issues remain:
• The enhancement of
relationships with a wide
range of stakeholders.
Customs already has strong
engagement with a wide
range of stakeholders at
the operational, policy,
national, and international
levels. Work is underway to
further develop integrated
situational awareness,
and a common operating
picture. This includes:
◦ the establishment of
the National Targeting
Centre (see page 21)
◦ enhancements to the
National Maritime
Coordination Centre (see
side bar opposite), and
◦ the development of
inshore, surface and aerial
surveillance capabilities.
• The enhancement of Customs’
capacity and capability to
respond to volume related law
enforcement and investigative
demands, with particular focus
on the steady growth in the
involvement of transnational
organised crime syndicates in
a range of criminal activities
that impact on the border.
• The re-establishment of
a strong “career Service”
culture alongside continued
investment in training and
leadership development.
A “career Service” is essential
to mitigate the risk that
recent capability gains are
undermined by high staff
turnover, and will help staff
gain the depth and breadth
of experience that is crucial
to Customs’ long-term
ability to effectively respond
to a more complex border
environment. Continued
investment in training and
leadership development
is critical to Customs
maintaining its ability to
achieve the outcomes it seeks
to deliver for the community
and the Government.
• Continued investment in
Customs’ core systems to
protect and future-proof
existing systems capability.
Customs’ integrated
information database (CusMod)
is almost ten years old,
and is facing substantially
increasing demands to
convert growing amounts
of border management
data into useful and timely
information and knowledge
that contributes to whole of
government outcomes.
• The further development of
Customs’ information and
knowledge management
capabilities to improve the
capture and timely and secure
transmission of information,
both within the organisation
and across government.
Effective border enforcement
requires the provision of
the right information to the
right people at the right
time, alongside improved
accessibility for approved
agencies to information and
knowledge held by Customs.
• The establishment of a
research and development
capability to identify and
develop technologies that
facilitate more effective
responses to current
and emerging issues.
• Ensuring Customs has
adequate capability to meet
the border management
requirements of the
Government’s maritime
enforcement goals.
• Ensuring that the provisions
of the Customs and Excise
Act 1996 remain relevant to
the present and future border
environment, and that Customs
is able to make full and effective
use of the powers available to it.
Number of Cases
800
700
600
500
400
300
200
100
0
Intellectual Property Right Cases Opened 1995 – 2005
1995 1997 1999 2001 2003 2005
The dramatic growth in the
volume of Intellectual Property
Right-infringing goods
intercepted by Customs at
the New Zealand border is
expected to continue if the
underlying policy settings
remain unchanged
16 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

Customs’ Organisation
Development Strategy is supported
by a set of five capability goals
– covering People, Resources,
Organisation, Systems and
Processes, and Reputation. These
goals provide a framework for future
planning in pursuit of the vision.
Pay and Employment Equity Review
Customs will commence the
work for a Pay and Employment
Equity Review in the second half
of the 2006/07 financial year.
A bid for funding support will
be lodged with the Department
of Labour Contestable Pay and
Employment Equity Fund prior to
the commencement of the review.
‘‘
Customs’ capability
’’
forms a
signifi cant part of government’s
border infrastructure...
The National Maritime Coordination Centre and Customs
National Maritime Coordination Centre (NMCC)
The NMCC is an independent unit tasked with coordinating the whole of government delivery of civil maritime
surveillance services based on intelligence-formed risk assessment. It is funded cooperatively by eight agencies
who use NMCC services and is overseen by the Officials Committee for Domestic and External Security
Coordination (ODESC).
The NMCC contributes to a wide number of Government outcomes by developing an effective understanding
of anything associated with the maritime environment that could impact on the security, safety, economy or
environment of New Zealand. It does this through providing an unclassified Maritime Intelligence Picture and
coordinated tasking of government’s maritime surveillance assets.
The work of the NMCC is set to become even more important over the next couple of years if the Government is
to leverage the full value from the additional maritime assets due to be delivered in 2007.
Customs’ Contribution to the NMCC
The Comptroller of Customs is currently the Chair of the Network of Chief Executives – a sub-committee of
ODESC that is the management board of the NMCC. As well as being a contributing agency for funding the
NMCC, Customs provides NMCC with personnel management and support on behalf of contributing agencies.
Customs also contributes its sea and air resources to the pool of government assets and there is a Customs
liaison officer located in the NMCC to help develop the maritime intelligence picture.
Benefits for Customs
The NMCC helps Customs achieve its Border Management Assurance, Border Security, Community Protection
and Customs Revenue outcomes by contributing to an increased level of situational awareness. As a result,
Customs is better able to identify, assess and respond to potential risks such as transnational drug trafficking
activity, mass illegal immigration by boat, or smuggling undertaken to export or import prohibited items or to
avoid the payment of excise.
17

Customs’ Strategic Goals 2006-2010
Customs has a set of outcome and capability goals that provide a strong medium-term focus on how Customs
will progress towards the Government’s priorities and Customs’ vision and outcomes for the community.
Vision
ENHANCED SECURITY AND PROSPERITY FOR NEW ZEALAND
PEOPLE
Increased support for our people’s
performance and development
to enhance Customs’ contribution
to outcomes for the community
Capability Goals
RESOURCES
ORGANISATION
SYSTEMS & PROCESSES
REPUTATION
Increased synergy and
sophistication of Customs’
contribution to national security
BORDER SECURITY
Increased ability to anticipate
and respond to changing needs
Enhanced contribution to
community protection policy
objectives through betterfocused
border interventions
Increased profi le as thought
and operations leaders
COMMUNITY
PROTECTION
Sustainable capacity to
meet increasingly complex
requirements and expectations
Increased assurance over
the integrity of Customs’
revenue collection
Systems and processes that are
well aligned with current and
future needs
CUSTOMS REVENUE
Increased synergies with
industry; Increased connectivity
within the international
supply chain
TRADE &
TOURISM
SUPPORT
LEADERSHIP AND EXCELLENCE IN BORDER MANAGEMENT
Vision
BORDER MANAGEMENT ASSURANCE
Increased protection of New Zealand’s unique character and long-term sustainability
through enhanced effectiveness of the Customs border management system
Outcome Goals
18 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

The outcome goals 2006-2010
succeed the three-year strategic
goals contained in Customs’
Statement of Intent 2003-2006, and
reflect the revised outcome structure.
The capability goals were
developed in 2005 and cover People,
Resources, Organisation, Systems
and Processes, and Reputation.
Draft performance indicators
have been identified for each
outcome and capability goal. Further
work is necessary to confirm the
validity of these indicators and
define the associated measures
and this will be undertaken in
the context of the performance
measurement development process.
The diagram below shows the
relationship between the draft
indicators at the outcome-level and
goal-level, and the performance
measures at the output-level.
In 2006/07 Customs will undertake a
full review of its output class structure
and associated performance measures
and standards. A key objective of
the review will be the development
of enhanced output performance
measures that build on the progress
made to date in showing how the
outputs Customs delivers contribute
to its outcomes for the community.
Outcome Goals 2006-2010
Border Security
Increased synergy and
sophistication of Customs’
contribution to national security.
Customs will continue to
provide a strong and effective
contribution to national security and
in doing so will focus on Customs’
contribution to cross-agency
work in order to ensure “joined
up” preparedness and response,
and increased regional security.
Customs will:
• continue to work with
other agencies on New
Zealand’s preparedness for
national security incidents,
including terrorism
• continue development
of intelligence links with
other law enforcement
and customs agencies
• continue to contribute
towards the development of
customs capabilities in the
Asia-Pacific region, and
• contribute to a coordinated
response to threats from
transnational organised crime
in New Zealand, including
Asian organised crime.
Performance indicators:
• Level of Customs’
situational awareness
• Level of Customs’
response readiness
• Effectiveness of Customs’
contribution to the multiagency
response to
transnational organised crime.
Community Protection
Enhanced contribution to community
protection policy objectives through
better focused border interventions.
Customs will ensure that border
interventions are being used
appropriately and in the most effective
way to support prosperity and
ensure safe communities, health for
all, environmental sustainability and
national identity. Impacting on the
CAPABILITY GOALS
Draft Indicators
importation of illicit drugs will continue
to be a strong focus during this period.
OUTCOMES
Draft Indicators
OUTPUTS
Measures
Customs will:
• improve the alignment of
multi-agency risk management
strategies that include
border interventions, and
• increase the impact of Customs’
contribution to supply reduction
under the national drugs strategy
(including tobacco and alcohol).
Performance indicators:
• Assessed coherence of multiagency
intervention strategies
• Implementation of Customs’
Drug Strategy 2005-2010 Action
Point Delivery Programme.
Customs Revenue
Increased assurance over the integrity
of Customs’ revenue collection.
Customs’ revenue collection
rate against Treasury forecasts is
very high. To ensure this makes the
best contribution to Government’s
ability to achieve its priorities of
economic transformation, families
– young and old, and national
identity, Customs needs to further
develop its understanding of the
level of revenue leakage through a
focus on non-compliance, evasion
and illegal and illicit transactions.
Relationship between indicators and performance measures
OUTCOME GOALS
Draft Indicators
19

Customs will:
• maintain confidence in
the integrity of Customs’
revenue collection
systems and processes
• further develop understanding
of the business drivers
that may lead to revenue
leakage, and
• use that understanding to
target interventions aimed
at reducing leakage.
Performance indicators:
• Perceptions of the integrity of
Customs’ revenue collection
systems and processes
• Customs’ understanding
of business drivers of
revenue leakage.
Trade and Tourism Support
Increased synergies with industry;
increased connectivity within
the international supply chain.
The focus for this goal is on
ensuring Customs is constructively
working with key industry groups
and businesses to support economic
transformation in the trade and
tourism sectors, with a particular
emphasis on exports, protecting the
rights of intellectual property owners
and supporting trade agreements.
Customs will:
• increase the synchronicity of
border management and trade
and tourism industry processes
• contribute to the Government’s
export goals including
contributing to a multi-agency
approach to Export Year 2007
• contribute to the development
of a single economic
market with Australia
• continue to comply with the
requirements of the supply
chain security agreement
with the United States
• increase its use of technology
to enhance the welcome
to New Zealand while
maintaining border security
• improve the sustainability
of border interventions
required to enforce intellectual
property rights policy
• continue to contribute to
development and maintenance
of multilateral and bilateral
trade agreements, and
• extend its trade security
strategy to other trading
partners, including
Australia and Japan.
Performance indicators:
• Level of integration with the
international supply chain
• Effectiveness of Customs’
contribution to the multi-agency
approach to Export Year 2007
• Sustainability of the
intervention strategy for
managing border threats to
intellectual property rights
• Effectiveness of Customs’
support for Government’s
multilateral and bilateral
trade agreements
• Number of key trading
partners covered by trade
security agreements.
Border Management Assurance
Increased protection of New
Zealand’s unique quality of life
and long-term sustainability
through enhanced effectiveness
of the Customs border
management system.
This goal reflects a need to focus
on how knowledge about border
flows and controls can be used to
provide long-term assurance to
Government about the management
of New Zealand’s border.
Customs will:
• increase evidence-based
understanding of the
effectiveness of key aspects
of Customs’ system of
border assurance
• further develop operational
linkages with other agencies
involved in border management
• enhance its contribution to
the WCO, with a particular
focus upon influencing
the development and
implementation of WCO
initiatives, such as the
Framework of Standards,
through its participation on
the WCO Policy Commission
• review Customs’ legislative
framework, and
• leverage off border management
technology developments being
researched by larger developed
customs administrations.
Performance indicators:
• Increase in evidencebase
of effectiveness
• Number and nature of
operational linkages with
other border agencies
• Assessed effectiveness
of Customs’ contribution
to the WCO
• Progress of the review of
Customs’ legislative framework
• Uptake of technology
developments from other larger
customs administrations.
Capability Goals 2006-2010
People
Increased support for our people’s
performance and development to
enhance Customs’ contribution
to outcomes for the community.
This goal focuses on creating an
organisational environment in which:
• staff are committed to Customs’
mission and values, competent
and motivated to deliver on
requirements, and encouraged
to achieve their full potential, and
• the organisation is committed
to treating staff fairly and
with respect, and is able to
ensure continuity of capability
in critical positions.
Customs will:
• further develop leadership
capability at all levels
20 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

• further develop an integrated
career structure, and
• update human resource
tools and systems to
support the new structure.
Performance indicators:
• Alignment of staff behaviours
with Customs’ values
• Level of staff satisfaction
• Level of staff competence
• Number of critical
succession gaps.
Resources
Sustainable capacity to
meet increasingly complex
requirements and expectations.
This goal focuses on ensuring
Customs has the capability and
capacity necessary to maintain
required performance levels in the face
of increasing expectations, transaction
volumes, and work complexity.
Customs will:
• implement a long-term capability
and capacity planning process
• review the output
class structure and the
costing model, and
• maintain currency of
non-Information and
Communication Technology
tools and technologies.
Performance indicators:
• Stage of development
of long-term capability
and capacity planning
• Alignment of output
class structure and
the costing model with
organisational needs
• Technology uptake compared
to international best practice.
Organisation
Increased ability to anticipate and
respond to changing needs.
This goal focuses on
developing an agile Service that
is responsive to current demands
and anticipates future needs.
Customs will:
• continue implementing any
outstanding elements of the
organisation realignment
• review the impact of the
organisation realignment, and
• implement any changes
flowing out of the
above review.
Performance indicators:
• Status of implementation
of the realignment
• Degree to which the
organisation structure
facilitates:
◦ leadership, strategy and
policy development, and
◦ integrated operational
management and deployment.
Systems and Processes
Systems and processes that are wellaligned
with current and future needs.
Customs’ goal is to have systems
and processes that facilitate the
cost-effective acquisition, retention
and dissemination of the information
required for effective operation
and management, and for the
achievement of Customs’ goals.
Customs will:
• reduce the risk and
consequences of a major
systems outage
• improve its ability to target
border and revenue risks
through the National
Targeting Centre
• prepare for the replacement
of CusMod
• adopt the international
data standards set out in
the WCO data model
• improve and further develop
Customs’ information and
knowledge management to
meet future needs, and
• develop an integrated
planning and performance
measurement system.
Performance indicators:
• Level of preparedness for
a major systems outage
• Progress through the
replacement planning
cycle for CusMod
• Level of management
satisfaction with the
information available for
reporting and decision-making
• Ability to cost-effectively
generate knowledge from
the information flows
available to Customs
• Progress against
performance measurement
development programme.
Reputation
Increased profile as thought
and operations leaders.
The focus here is on building
Customs’ reputation for thought
and operational leadership in New
Zealand’s border management,
and for providing a proactive and
effective contribution to whole of
government activities and outcomes.
Customs will:
• facilitate the development
of a collective view of New
Zealand’s border management
system amongst key agencies
• deepen Customs’ engagement
with key stakeholders, and
• further develop and implement
strategies for engagement
with the WCO, APEC, OCO,
Australia, the Pacific, Asia,
the Americas and Europe to
increase influence in key areas.
Performance indicators:
• Progress of the multiagency
dialogue on
border management
• Stakeholder perceptions
of Customs’ engagement
with them
• Impact of revised strategies on
Customs’ ability to influence
in the international arena.
21

Performance Measurement
In the Statement of Intent 2005-2006,
Customs set out an outcomes
performance measurement framework
based on intervention logic and
indicated that further effort would
be put into developing the overall
measurement system.
Priority has been given to improving
the alignment and integration of head
office and operational functions.
As a result, Customs is now better
placed to advance its performance
measurement development
programme and increase its evidencebase
to support understanding of
the effectiveness of its interventions.
An overall measurement model has
been developed, and some progress
has been made in defining measures
and refining measurement systems.
Considerable development work is still
required before full measurement of
cost-effectiveness can be undertaken.
In this Statement of Intent
performance indicators or measures
have been identified for:
• impact on outcomes
(see table opposite)
• key outcome and capability
goals (see pages 18-21), and
• outputs (see pages 42-50).
The relationship between
these measures is shown in
the diagram on page 19.
Measurement Development
Programme
The ongoing development of the
performance measurement system
will be a priority in 2006/07 and
beyond. A development programme
has been defined to provide a
sustainable approach to improving
Customs’ performance measurement
system. This will encompass the use
of direct measurement and evaluative
activity to help build a comprehensive
picture of performance, impact,
and cost-effectiveness.
Evaluative Activity
Customs has undertaken a
range of evaluative activity that is
informing decision-making at both
strategic and operational levels.
The post-implementation review
of Customs’ trade security capability
funding found that trade security
standards had been successfully
integrated into existing trade
assurance regimes and in voluntary
arrangements with exporters to
reduce the overall cost and disruption
to the trading sector. This finding
confirmed that the trade security
strategy is a suitable model for wider
application. Customs is now focusing
on the trade security standards
being developed in the WCO and
is exploring the benefits of bilateral
trade security agreements with New
Zealand’s other major trading partners.
Customs has also evaluated the
effectiveness of the alignment of
its enhanced inspection resources
and capability. A key outcome of the
evaluation has been an increased
emphasis on forward planning of
inspections to enable better resource
utilisation. The review also highlighted
that there is a need for ongoing
evaluation of the non-invasive inspection
capability including its appropriateness,
its operation, and the various locations
in which it might be deployed.
An evaluation is currently underway and
its findings will be reported in Customs’
Annual Report 2005/06.
An evaluation schedule has been
developed to assess the effectiveness
of Customs’ realigned organisational
structure. Evaluative activity will be
undertaken over the next 18 months.
Customs’ participation in multi-agency
exercises provides the opportunity
for evaluative activity that enhances
Customs’ ability to respond to a range
of risks. Recent exercises have included
INPUTS
Are applied
through a
TRANSFORMATION
PROCESS
That
delivers
OUTPUTS
In order
to achieve
OUTCOMES
Resources
Capability
&
Capacity
Strategies
Processes
&
Activities
Outputs
Border
Assurance
Outcomes
Outcomes
for the
Community
22 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

simulated responses to mass illegal
migration, pandemic outbreaks, and
the proliferation of strategic goods.
Learnings from these activities are
incorporated in operational procedures.
Increased tasking of Customs
requires consideration of possible
responses and their resourcing
implications. Evaluative activity will
be used to help frame Customs’
response to new demands, including
resourcing implications, as they arise.
Indicators of Impact
Draft indicators of impact have
been identified for each of the
outcomes Government is seeking
from Customs. These are set
out in the table below. Further
work is necessary to confirm
the validity of these indicators
and define the associated
measures and measurement
systems and this work will be
undertaken in the context of
the performance measurement
development process.
OUTCOME
DRAFT INDICATORS OF
CUSTOMS’ IMPACT
PRINCIPAL CONTRIBUTING OUTPUTS
Border Security
New Zealand is protected from
threats to national security by
Customs’ situational awareness
and readiness to respond
• Level of situational awareness
• Level of response readiness
• Effectiveness of response
• Policy advice
• Intelligence and risk
assessment services
• Surveillance, search and containment
• Investigation of offences
Community Protection
New Zealand’s community,
economy and environment are
protected from harm by effective
and efficient border management
• The state of relevant
domestic markets
• Interceptions and seizure trends
• Level of compliance by risk type
• Most of Customs’ outputs make
an important contribution to this
outcome
Customs Revenue
New Zealand’s economic,
social and environmental goals
are supported by the effective
and efficient collection of
Customs revenue
• Collection against forecast
• Cost-effectiveness of collection
• Assessed level of leakage
• Policy advice
• Clearance of import, export, and
excise transactions
• Revenue collection, accounting,
and debt management
Trade and Tourism Support
Sustainable economic growth is
supported through effective and
efficient border management
• Level of export trade assured
• Level of import compliance
• Performance against international
standards for facilitation of goods
and people
• Level of integration with the
international supply chain
• Policy advice
• Clearance of international
passengers, crew, and craft
• Clearance of import, export, and
excise transactions
• Revenue collection, accounting,
and debt management
• Technical advisory services
Border Management
Assurance
New Zealand’s sovereign
interests are protected through
Customs’ management of New
Zealand’s border
See performance measurement
framework on inside back cover.
This is to be reviewed and further
developed.
This outcome links to all of Customs’
outputs, with a particular focus on:
• Policy advice
• Intelligence and risk assessment
services
• Clearance of international
passengers, crew, and craft
• Clearance of import, export,
and excise transactions
• Surveillance, search and
containment
23

24 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

Risk
Management
Customs regularly profiles the strategic
and operational risks that might prevent
it from achieving its vision, outcomes,
and medium-term strategies.
The risk profiling exercise:
• helps ensure that mitigation
strategies and plans are in place
for the key risks identified
• feeds information into Customs’
planning processes, and
• provides a focus for the work of
Customs’ Audit and Risk Committee
and the Audit and Risk unit.
The top eight strategic risks are:
Border management regimes are ineffective
for addressing Government priorities
This is the risk that Customs’ border
management regulations and strategies
are ineffective for achieving the outcomes
desired by the Government.
Customs seeks to mitigate this risk
in a number of ways such as:
• further developing its understanding
of the reasons for non-compliance
• further developing its evidencebased
understanding of the
effectiveness of its interventions
• reviewing the Customs
legislative framework
• producing a long term
development plan
• further developing linkages with
other agencies involved in border
management, both domestically
and internationally, and
• by improving the alignment
of whole of government risk
management strategies where border
interventions are just one of a range
of mechanisms that contribute to
an outcome (see pages 19-20).
25

Border management regimes are
not affordable or sustainable
The risk that border
management regimes become
unaffordable or are not
sustainable due to factors
such as increasing trade
and travel volumes.
Customs will mitigate
this risk by:
• leveraging off border
management technology
being researched by larger
customs administrations
• working with other
agencies and with industry
to improve the overall
synergy of the border
management system, and
• applying, within the
parameters of Government
policy, charges for activities
involving a degree of
club or private good.
Customs responds inappropriately
to Community Protection risks
Customs’ Community
Protection outcome covers
mitigation of risks to a wide
number of areas affecting the
Government’s priorities of safe
communities, health for all, and
national identity. This strategic
risk relates to the possibility that
Customs fails to detect, respond
or adapt to a change in the
nature or scope of a community
protection risk that warrants
a different approach or
change in priority.
Customs undertakes
regular updates to risk
profiles, including strategic risk
assessments, which then inform
planning at all levels to enable
appropriate action where possible
to mitigate risk. In addition,
Customs will undertake work
to improve the appropriateness
and effectiveness of border
interventions used in a range of
multi-agency risk management
strategies (see pages 19-20).
‘‘
...border interventions are just
one of a range of mechanisms
’’
that contribute to an outcome...
Inadequate management
of information, knowledge
and related systems
This is the risk that Customs
fails to safeguard its core
competency of information and
knowledge management. This is
particularly important in relation
to maintaining critical institutional
knowledge, providing management
information and maintaining the
technology needed to utilise
industry information flows and
support Customs’ and other
agencies’ information
requirements.
Customs will mitigate
this risk through:
• monitoring pertinent
global industry trends
and developments
• producing a long term
development plan
• continuing to develop an
integrated career structure
that provides continuity of
institutional knowledge, and
• developing a strong pathway
between data, information and
knowledge (see page 21).
Serious integrity failure
This is the risk that Customs
suffers a serious integrity failure,
both from people or systems.
For example, misrepresentation
in accountability documents,
criminal actions by staff, loss
of information in databases or
sharing of information that should
remain confidential and secure.
Customs mitigates the “people”
aspect of this risk through:
• its integrity programme
• its recruitment policies, and
• internal controls.
In addition, further development
of the integrated career structure
will enable the right culture and
values to be instilled and ingrained.
Customs mitigates the
“systems” aspect of this risk by:
• ensuring security elements
are built into system code
26 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

• maintaining regular systems
and systems back-up
testing and monitoring
• incorporating appropriate
levels of system
redundancy, and
• having independent as well
as internal audits of key
system performance.
Systems failure leading to noncontinuity
of service delivery
This is the risk that an outage
of a critical system, such as
CusMod, will result in Customs
being unable to provide continuity
of service delivery, for example
significantly affecting the ability to
immigrate passengers or release
goods within normal timeframes.
Customs mitigates
this risk through:
• regular systems
back-up testing
• incorporating appropriate
levels of system redundancy
• having independent as well
as internal audits of key
system performance, and
• maintaining up-to-date
business continuity
plans (see page 21).
Inadequate training or
succession planning
This is the risk that Customs
staff are deployed without adequate
training, potentially leading to
ineffectiveness, inefficiencies, or ultra
vires actions. A closely related risk is
that inadequate succession planning
leaves Customs unable to fill critical
positions with suitably qualified
and experienced replacements.
Customs will mitigate
this risk through:
• the use of sound human
resources planning processes
• implementation of the national
training strategy, and
• the development of an
integrated career structure
(see pages 20-21).
Failure to provide proper
leadership and management
Customs operates in an
environment where the velocity
and impacts of international travel,
trade and crime are increasing,
and how they happen and are
governed are changing. The
attendant risk is that indifferent
leadership or weak management
could allow Customs to become
irrelevant to the future needs of
Government or lose its credibility.
Customs mitigates the
irrelevance risk through:
• a future focus, keeping
its current and potential
leadership pool abreast
of international and
domestic developments
and opportunities, and
• through a national
training strategy that
has a strong focus on
leadership development
and management training.
It manages the credibility risk by:
• engaging supervisory and
management staff in control
checks and quality assurance
processes to make sure the
basics of law enforcement
are done superbly well, and
• by using a recently
upgraded formal governance
and management
committee system.
‘‘
travel, trade and crime are
’’
Customs operates in an
environment where the velocity
and impacts of international
increasing, and how they happen
and are governed are changing.
27

Customs’ Organisational Structure
The organisational structure is designed to ensure that Customs operates on a “whole of Customs, one Service”
basis, is clearly focused on strategy, policy and outcomes, and has an integrated approach to output delivery.
COMPTROLLER
Martyn Dunne
MANAGER
Audit & Risk
GROUP MANAGER
Strategic & Executive
Services
DEPUTY COMPTROLLER
Operations
Robert Lake
DEPUTY COMPTROLLER
Policy, People & Resources
John Secker
GROUP MANAGER
Intelligence, Planning
& Coordination
GROUP MANAGER
Organisation Development
& Human Resources
GROUP MANAGER
Trade & Marine
GROUP MANAGER
Policy
GROUP MANAGER
Investigations &
Response
GROUP MANAGER
Information
Services
GROUP MANAGER
Airports
CHIEF
FINANCE
OFFICER
LEGAL AND
ADVISORY
SERVICES
28 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

Highlights and Financial Summary
In 2006/07, Customs expects to:
• process 9.35 million
passengers and crew
arriving or departing by air
• welcome and inspect
6,250 ships
• process more than 48
million import transactions,
including mail
• clear at least 95 percent of
entries lodged electronically
within 30 minutes
• open a minimum of 1,800
investigation files, and
• initiate 150 operational
responses against a
perceived risk of threat.
During the 2006/07 financial year,
Customs expects to collect for the
Crown, GST, excise and customs
duty totalling $9.072 billion.
The increase in Revenue: Crown
in 2006/07 of $4.159 million
includes the increased transfer of
passenger cost recovery funding
of $1.000 million, additional
funding received of $2.947 million
for people capability and $0.098
million for the implementation of
a data-match for student loans.
The decrease in Revenue: Other in
2006/07 of $1.246 million relates to a
reduction in passenger cost recovery.
Appropriations for the purchase
of outputs increase by $2.927
million for 2006/07 relative to
2005/06. This relates to additional
funding outlined above.
Summary of Financial Information
2005/06
Budgeted
$000
2005/06
Estimated
Actual
$000
2006/07
Budgeted
$000
Revenue: Crown 71,063 71,063 75,222
Revenue: Department 2,273 2,273 2,287
Revenue: Other 33,649 33,649 32,403
Output expenses 106,985 106,985 109,912
Net Surplus/(Defi cit) 0 0 0
Taxpayers’ funds 40,292 40,292 40,292
GENERAL FINANCIAL SUMMARY
In 2006/07 Customs expects
to receive $75.222 million in
revenue from the Crown, $2.287
million from other Government
Departments and $32.403 million
from other purchasers of services
it will supply under the nine output
classes detailed in the Statement of
Objectives in this report. It expects
to incur expenses of $109.912
million in providing these services.
In addition, Customs
administers one non-departmental
appropriation of $44,000 for
New Zealand’s contribution to
the operation of the WCO.
Customs is responsible for making
payments for the non-departmental
appropriations and for ensuring
that all payments meet the criteria
according to relevant legislation
and regulations. The payment to the
WCO is a specified percentage of the
operating budget of this international
customs coordination body.
Details of what the nondepartmental
appropriations will
be spent on appear in parts B1
and D of Vote Customs in the
2006/07 Estimates (B. 5 Vol. I).
29

30 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

Introduction
This section of Customs’ Statement of
Intent 2006–2007 provides more detailed
performance information for the 2006-
07 financial year in the form of forecast
financial statements and statements
of forecast service performance.
The department is required to report to
Parliament on its performance against these
forecast statements in its Annual Report
at the end of the relevant financial year.
31

Statement of Responsibility
The statement of intent of the
New Zealand Customs Service
presented in this report for the
year ended 30 June 2007 has
been prepared in accordance
with sections 38 to 42 of the
Public Finance Act 1989.
The Chief Executive of the
New Zealand Customs Service
acknowledges, in signing
this statement, that he is
responsible for the information
contained in this report.
The financial performance forecast
to be achieved by the New Zealand
Customs Service for the year ended
30 June 2007 that is specified in
the statement of intent is as agreed
with the Minister of Customs, who
is the Minister responsible for
the financial performance of the
New Zealand Customs Service.
The performance for each class of
outputs forecast to be achieved by
the New Zealand Customs Service
for the year ended 30 June 2007
specified in the statement of intent
is as agreed with the Minister of
Customs, who is responsible for the
Votes administered by Customs.
We certify that the information
contained in this report is consistent
with the existing appropriations
and the appropriations contained
in the Estimates for the year
ending 30 June 2007 that are
being laid before the House of
Representatives under section 13
of the Public Finance Act 1989.
Martyn Dunne
Chief Executive
Date: 26 April 2006
Countersigned by:
John Kyne
Chief Financial Officer
Date: 26 April 2006
Statement of Signifi cant
Underlying Assumptions
These forecast financial statements have been compiled on the basis of Government policies and the New Zealand
Customs Service’s output plan with the Minister of Customs at the time the statements were finalised.
32 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

Statement of Signifi cant Accounting Policies
Reporting Entity
The New Zealand Customs
Service is a Government Department
as defined by section 2 of the
Public Finance Act 1989.
These are the forecast financial
statements of the New Zealand
Customs Service for the year
ended 30 June 2007 prepared
pursuant to section 34A of the
Public Finance Act 1989.
Measurement Base
The measurement base
applied is that of the forecast
value of actual transactions (the
historic cost method) adjusted for
revaluation of certain fixed assets.
Revenue
Revenue is recognised when
earned and is reported in the
financial period to which it relates.
Cost Allocation
The New Zealand Customs
Service has derived the cost of
outputs shown in these statements
using a cost allocation system.
Overhead costs are allocated
to output classes on the basis of
cost drivers that appropriately link
indirect costs to the output class.
The cost drivers include numbers
of staff employed and area
occupied. These are consistent
with those used in previous years.
Debtors and Receivables
Receivables are recorded
at estimated realisable value,
after providing for doubtful
and uncollectable debts.
Leases
The New Zealand Customs
Service leases office premises.
As all the risks and ownership
are retained by the lessor, these
leases are classified as operating
leases. Operating lease costs
are expensed in the period in
which they are incurred.
Fixed Assets
The initial cost of a fixed asset
is the value of the consideration
given to acquire or create the asset
and any directly attributable costs
of bringing the asset to working
condition for its intended use.
All fixed assets costing
individually more than $200 or
as a group of assets, more than
$10,000, are capitalised and
recorded at historical cost.
Depreciation
Depreciation of fixed assets is
provided on a straight line basis so
as to allocate the cost of assets,
less any estimated residual value,
over their useful lives. The estimated
economic useful lives are:
Furniture and offi ce 5 years
equipment
Plant and equipment 5 years
X-ray equipment 10 years
Computer hardware 4 years
Computer software 5 to 10 years
Motor vehicles 5 years
Launch and watercraft 4 to 10 years
The cost of leasehold
improvements is capitalised and
amortised over the unexpired
period of the lease or the estimated
remaining useful lives of the
improvements, whichever is shorter.
Employee Entitlements
Annual leave and time off in lieu
have been calculated on an actual
entitlement basis at current rates
of pay while the other provisions
have been calculated on an actuarial
basis based on the present value
of expected future entitlements.
Foreign Currency
Foreign currency transactions
are converted at the average New
Zealand dollar exchange rate at
the average rate of transaction
for the month. Where a forward
exchange contract has been used to
establish the price of a transaction,
the forward rate specified in that
foreign exchange contract is used
to convert that foreign exchange
contract into New Zealand dollars.
Consequently no exchange gain or
loss resulting from the difference
between the forward exchange rate
and the spot exchange rate on the
date of settlement is recognised.
Taxation
Government Departments are
exempt from the payment of income
tax in terms of the Income Tax Act
1994. Accordingly, no charge for
income tax has been provided for.
GST
The financial statements have
been prepared on a GST exclusive
basis except where stated.
Financial Instruments
Customs is party to financial
instruments as part of its normal
operations. These financial
instruments include bank accounts,
short-term deposits, debtors and
creditors, and forward exchange
contracts. Apart from forward
exchange contracts, all financial
instruments are recognised in the
forecast statement of financial
position and all revenues and
expenses in relation to all financial
instruments are recognised
in the forecast statement of
financial performance.
All financial instruments are
recognised in the statement of
forecast financial position.
Changes in Accounting Policies
There have been no changes
in accounting policy included in
these forecast financial statements
from that used in the prior period.
33

Forecast Financial Statements
FORECAST STATEMENT OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDING 30 JUNE 2007
2005/06
Budgeted
2005/06
Estimated
Actual
2006/07
Budgeted
$000 $000 $000
REVENUE
Crown 71,063 71,063 75,222
Departments 2,273 2,273 2,287
Other 33,649 33,649 32,403
Total Revenue 106,985 106,985 109,912
EXPENSES
Personnel costs 70,739 70,739 73,633
Operating costs 25,546 25,546 25,485
Depreciation 7,814 7,814 7,868
Capital charge 2,886 2,886 2,926
Total Output Expenses 106,985 106,985 109,912
Other Expenses 0 0 0
Total Expenses 106,985 106,985 109,912
Net Operating Surplus/(Defi cit) 0 0 0
FORECAST STATEMENT OF MOVEMENTS IN TAXPAYERS’ FUNDS
FOR THE YEAR ENDING 30 JUNE 2007
2005/06
Budgeted &
Estimated
Actual
2006/07
Budgeted
$000 $000
Taxpayers’ Funds at 1 July 35,756 40,292
Add/(deduct) net surplus/(defi cit) 0 0
Total recognised revenues and expenses for the year 0 0
Adjustments for fl ows to and from the Crown
Capital contributions from the Crown 4,536 0
Provision for payment of surplus to the Crown 0 0
Total Adjustments for fl ows to and from the Crown 4,536 0
Taxpayers’ Funds at 30 June 40,292 40,292
34 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

STATEMENT OF ESTIMATED FINANCIAL POSITION
AS AT 30 JUNE 2006 AND
FORECAST FINANCIAL POSITION
AS AT 30 JUNE 2007
Actual
Financial
Position as at
30 June 2005
Budgeted &
Estimated
Financial
Position as at
30 June 2006
Forecast
Financial
Position as at
30 June 2007
$000 $000 $000
ASSETS
Current Assets
Cash and bank balances 5,900 11,583 13,851
Prepayments 618 618 618
Receivables and advances 3,929 5,931 5,931
Total Current Assets 10,447 18,132 20,400
Non Current Assets
Fixed assets 37,022 33,858 32,190
Total Non Current Assets 37,022 33,858 32,190
Total Assets 47,469 51,990 52,590
LIABILITIES
Current Liabilities
Payables and provisions 4,143 4,254 4,854
Provision for payment of surplus 101 0 0
Employee entitlements 4,792 4,792 4,792
Other current liabilities 272 247 247
Total Current Liabilities 9,308 9,293 9,893
Term Liabilities
Provision for employee entitlements 2,405 2,405 2,405
Total Term Liabilities 2,405 2,405 2,405
Total Liabilities 11,713 11,698 12,298
TAXPAYERS’ FUNDS 35,756 40,292 40,292
Total Liabilities and Taxpayers’ Funds 47,469 51,990 52,590
35

FORECAST STATEMENT OF CASH FLOWS
FOR THE YEAR ENDING 30 JUNE 2007
2005/06
Budgeted
2005/06
Estimated
Actual
2006/07
Budgeted
$000 $000 $000
CASH FLOWS – OPERATING ACTIVITIES
Cash provided from
Supply of outputs to: Crown 71,063 71,063 75,222
Departments 2,273 2,273 2,287
Other 31,649 31,649 32,403
104,985 104,985 109,912
Cash disbursed to:
Cost of producing outputs:
Output expenses (96,201) (96,201) (98,518)
Capital charge (2,886) (2,886) (2,926)
Other 0 0 0
(99,087) (99,087) (101,444)
Net Cash Flows from Operating Activities 5,898 5,898 8,468
CASH FLOWS – INVESTING ACTIVITIES
Cash provided from:
Sale of fi xed assets 50 50 300
Cash disbursed to:
Purchase of fi xed assets (4,700) (4,700) (6,500)
Net Cash Flows from Investing Activities (4,650) (4,650) (6,200)
CASH FLOWS – FINANCING ACTIVITIES
Cash provided from:
Capital contributions 4,536 4,536 0
Cash disbursed to:
Payment of surplus to the Crown (101) (101) 0
Net Cash Flows from Financing Activities 4,435 4,435 0
Net Increase in Cash Held 5,683 5,683 2,268
Opening cash balances at 1 July 5,900 5,900 11,583
Closing Cash Balances at 30 June 11,583 11,583 13,851
36 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

RECONCILIATION OF NET CASH FLOWS FROM OPERATING ACTIVITIES TO NET
SURPLUS/(DEFICIT) IN THE FORECAST STATEMENT OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDING 30 JUNE 2007
2005/06
Budgeted
2005/06
Estimated
Actual
2006/07
Budgeted
$000 $000 $000
Operating Surplus/(Defi cit) 0 0 0
Add non-cash items
Depreciation 7,814 7,814 7,868
Total non-cash items 7,814 7,814 7,868
Working capital movements
(Increase)/decrease in receivables and advances (2,002) (2,002) 0
Increase/(decrease) in creditors and payable 86 86 600
Increase/(decrease) in other short-term liabilities 0 0 0
Total working capital movements (1,916) (1,916) 600
Net Cash Flows from Operating Activities 5,898 5,898 8,468
37

FORECAST DETAILS OF
FIXED ASSET BY CATEGORY
Actual Financial
Position as at
30 June 2005
Budgeted &
Estimated Financial
Position as at
30 June 2006
Forecast Financial
Position as at
30 June 2007
$000 $000 $000
COST OR VALUATION
Leasehold Improvements 5,268 5,868 6,168
Transport 5,016 5,166 5,267
Plant and Equipment 58,617 56,667 61,666
Furniture and Fittings 3,205 1,805 2,105
Total 72,106 69,506 75,206
Accumulated Depreciation
Leasehold Improvements 4,078 4,622 5,164
Transport 1,804 2,488 2,673
Plant and Equipment 26,899 27,428 33,761
Furniture and Fittings 2,303 1,110 1,418
Total 35,084 35,648 43,016
Book Value
Leasehold Improvements 1,190 1,246 1,004
Transport 3,212 2,678 2,594
Plant and Equipment 31,718 29,239 27,905
Furniture and Fittings 902 695 687
Total 37,022 33,858 32,190
DEPARTMENTAL CAPITAL EXPENDITURE
Actual
Actual
Actual
Actual
Budgeted &
Forecast
Financial
Financial
Financial
Financial
Estimated Financial
Financial
Position as at
Position as at
Position as at
Position as at
Position as at
Position as at
30 June 2002
30 June 2003
30 June 2004
30 June 2005
30 June 2006
30 June 2007
$000 $000 $000 $000 $000 $000
ADDITIONS
Leasehold Improvements 540 256 454 734 600 300
Transport 695 640 1,443 1,370 150 900
Plant and Equipment 1,209 1,866 1,655 21,082 600 500
Information Technology 1,783 3,434 1,325 2,936 3,250 4,500
Furniture and Fittings 261 365 272 592 100 300
Total 4,488 6,561 5,149 26,714 4,700 6,500
Forecast capital expenditure 2006/07 financial year routine replacements of furniture and fittings, information technology and plant
and equipment. There will be further capital investment in infrastructure and enhancing Customs capability programme.
38 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

STATEMENT OF OBJECTIVES SPECIFYING THE FORECAST
FINANCIAL PERFORMANCE FOR THE DEPARTMENT
FOR THE YEAR ENDING 30 JUNE 2007
PERFORMANCE INDICATORS:
2005/06 AND 2006/07
Unit 2005/06
Budgeted
2005/06
Estimated
Actual
2006/07
Budgeted
OPERATING RESULTS
Revenue: other $000 33,649 33,649 32,403
Output Expenses $000 106,985 106,985 109,912
Operating surplus/(defi cit) before
Capital charge $000 2,886 2,886 2,926
Net surplus/(defi cit) $000 0 0 0
WORKING CAPITAL
Net current assets $000 8,839 8,839 10,507
Liquid ratio % 257% 257% 272%
Current ratio % 195% 195% 206%
Average debtors outstanding days 50 50 62
Average creditors outstanding days 60 60 65
RESOURCE UTILISATION
Physical Assets:
Total physical assets at year end $000 33,858 33,858 32,190
Value per employee $000 29 28 26
Additions as % of physical assets % 14 14 20
Physical assets as % of total assets % 65 65 61
Taxpayers’ Funds:
Level at year end $000 40,292 40,292 40,292
Level per employee $000 35 33 33
FORECAST NET CASH FLOWS
Surplus/(defi cit) operating activities $000 5,898 5,898 8,468
Surplus/(defi cit) investing activities $000 (4,650) (4,650) (6,200)
Surplus/(defi cit) fi nancing activities $000 4,435 4,435 0
Net increase/(decrease) in cash held $000 5,683 5,683 2,268
HUMAN RESOURCES
Staff turnover % 9 8 8
Average length of service Years 11 10 10
Total staff (FTE) no. 1,166 1,216 1,216
39

STATEMENT OF OBJECTIVES SPECIFYING
THE FORECAST PERFORMANCE FOR EACH CLASS OF OUTPUTS
FOR THE YEAR ENDING 30 JUNE 2007
The New Zealand Customs Service is committed to provide output classes in 2006/07, which meet the requirements of
its Vote Minister and various purchasers in terms of their nature, timeliness, quality and quantity, specifications and cost.
SUMMARY OF DEPARTMENTAL OUTPUT CLASSES
Departmental output classes to be delivered by the New Zealand Customs Service, and
their associated revenue, expenses and surplus or deficit are summarised below:
OUTPUT STATEMENT OF FINANCIAL PERFORMANCES 2006/07
Departmental
Output Class
Description
Revenue
Crown
$000
Revenue
Dept
$000
Revenue
Other
$000
Total
Expenses
$000
Surplus/
(defi cit)
$000
VOTE CUSTOMS
Policy Advice
This includes the provision of
policy advice and related services
relating to border security, border
management and Customs
revenue.
4,356 795 119 5,270 0
Intelligence
and Risk
Assessment
Services
This includes the provision of
intelligence and risk assessments
that inform intervention strategies,
including alerts for goods, people
and craft crossing the border.
4,415 2 79 4,496 0
Clearance of
International
Passengers,
Crew and Craft
This includes the clearance of the
international passengers, crew and
craft arriving in and departing from
New Zealand.
34,874 195 521 35,590 0
Clearance of
Import, Export
and Excise
Transactions
This includes the validation,
checking inspection, clearance
and audit of all imports, exports
consignments and excise returns.
14,108 1,146 28,184 43,438 0
40 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

OUTPUT STATEMENT OF FINANCIAL PERFORMANCES 2005/06 (CONTINUED)
Departmental
Output Class
Description
Revenue
Crown
$000
Revenue
Dept
$000
Revenue
Other
$000
Total
Expenses
$000
Surplus/
(defi cit)
$000
Revenue
Collection,
Accounting and
Debt Management
This includes the receipts and
processing of revenues owing
from import tariffs, goods and
services tax and excise-equivalent
duties on imported goods and
excise duty on domestically
manufactured fuel, tobacco and
alcohol products.
1,380 60 1,315 2,755 0
Surveillance,
Search And
Containment
This includes the search and
containment of craft and
surveillance of airports, waterfronts
and coastlines.
6,083 18 471 6,572 0
Investigation of
Offences
This includes the proactive and
reactive investigation of serious
transnational crime, transnational
crime and other border offending.
8,741 6 245 8,992 0
Prosecutions and
Civil Proceedings
This includes the prosecution of
offences and civil proceedings
relating to the hearing of
applications for the release of
seized goods.
834 0 17 851 0
Technical Advisory
Services
This includes the Customs rulings
on tariff and excise classifi cations,
concession interpretations and
origin qualifi cation, and general
advice to business.
431 65 1,452 1,948 0
Total 75,222 2,287 32,403 109,912 0
41

Statement of Forecast
Service Performance
OUTPUT CLASS – POLICY ADVICE
Description
Under this output class the New Zealand Customs Service provides policy advice and related services in relation to border security, border
management and Customs revenue.
This includes analysis and advice to the Minister, Cabinet and cabinet committees, parliamentary select committees, inter-departmental
committees and other government agencies, as well as advice and assistance to overseas customs agencies and relevant international forums.
This output class makes a signifi cant contribution to the following outcome goals: Border Security; Community Protection; Customs
Revenue; Trade and Tourism Support; and Border Management Assurance.
Quantity
The Chief Executive estimates:
• the policy work programme will be advanced to the position agreed or subsequently amended by agreement between the Minister and
the Chief Executive
• the international work programme will be advanced to the position agreed or subsequently amended by agreement between the
Minister and the Chief Executive, and
• 150 – 180 draft responses to parliamentary questions and ministerial correspondence will be provided.
Quality
The Chief Executive expects:
• policy advice will conform to the quality characteristics outlined below, as assessed by the Minister’s satisfaction
Quality Characteristics:
Purpose The aim of the advice is clearly stated and it answers the questions set.
Logic The assumptions behind the advice are explicit and the argument is logical and supported by the facts.
Accuracy The facts in the papers are accurate and all material facts are included.
Evaluation Advice provided includes, where relevant, the outcomes to be achieved by the recommended course of action and the
means by which that achievement will be evaluated.
Options An adequate range of options is presented and the benefi ts, costs and consequences of each option to the
Government and the community are assessed.
Consultation Consultation has occurred with other government agencies and other affected parties and possible objections to
proposals were identifi ed.
Practicality The problems of implementation, technical feasibility, timing and consistency with other policies have been considered.
Presentation The format meets Cabinet Offi ce and ministerial requirements; the material is effectively, concisely and clearly
presented, has short sentences in plain English and is free of spelling or grammatical errors.
Timeliness Papers are provided in time to meet Cabinet Offi ce and ministerial requirements, or as otherwise agreed.
• 90% of draft replies to ministerial correspondence will be provided within 20 days of the time of receipt by Customs, and
• all relevant policy advice will be subject to formal peer review processes.
Cost
Outputs in this class will be provided within the appropriated sum of $5.270 million excluding GST, which will be funded by Revenue
Crown of $4.356 million and estimated revenue from third parties of $914,000.
42 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

OUTPUT CLASS – INTELLIGENCE AND RISK ASSESSMENT SERVICES
Description
Under this output class the New Zealand Customs Service provides intelligence and risk assessments that inform intervention strategies,
including alerts for goods, people and craft crossing the border.
This output class makes a signifi cant contribution to the following outcome goals: Border Security; Community Protection; and Border
Management Assurance.
Quantity
The Chief Executive estimates:
• 1,250 – 1,300 intelligence and operational risk products will be completed for external use, nationally and internationally
• 35,500 – 39,500 alerts will be created, and
• 16.5 – 19.5 million organisational transactions will be scanned across alerts managed.
Quality
The Chief Executive expects:
• a minimum 90% of intelligence and operational risk assessments to identify actual operational risk, and
• 80% of national and international clients to be satisfi ed with the intelligence and risk products.
Cost
Outputs in this class will be provided within the appropriated sum of $4.496 million excluding GST, which will be funded by Revenue Crown
of $4.415 million and estimated revenue from third parties of $81,000.
43

OUTPUT CLASS – CLEARANCE OF INTERNATIONAL PASSENGERS, CREW AND CRAFT
Description
Under this output class the New Zealand Customs Service produces services relating to the clearance of international passengers, crew
and craft arriving in and departing from New Zealand. This includes the profi ling of potential risks and applying any alert instructions that
might exist in respect of passengers and crew.
Services provided include ensuring that arriving and departing craft comply with the law, that passengers and crew comply with Customs,
Immigration, Police and national security requirements, and that the import and export of goods complies with the law. Particular attention
is paid to preventing the entry of controlled drugs and the illegal import or export of other controlled items.
This output class makes a signifi cant contribution to the following outcome goals: Community Protection; Trade and Tourism Support; and
Border Management Assurance.
Quantity
The Chief Executive estimates:
• 9.2 – 9.5 million air travellers will be cleared
• 4,750 – 5,100 marine craft, other than marine small craft, will be cleared, and
• 1,250 – 1,400 clearances of arriving or departing marine small craft will be undertaken.
Quality
The Chief Executive expects:
• 90% of arriving air passengers to exit Customs Control Points within 45 minutes of arrival
• 99.9% of air and marine travellers subject to an alert to be processed in accordance with the alert instruction
• 100% of commercial marine craft will be boarded at fi rst port of arrival
• 2.4 – 3.0% of arriving air and marine travellers will be referred for intervention
• 1.0 – 1.25% of arriving air and marine travellers will be subject to baggage searches, and
• the requirements set out in the Memorandum of Understanding between the New Zealand Customs Service and the New Zealand
Immigration Service (NZIS) to be complied with and any exceptions to be handled to the satisfaction of the NZIS.
Cost
Outputs in this class will be provided within the appropriated sum of $35.590 million excluding GST, which will be funded by Revenue
Crown of $34.874 million and estimated revenue from third parties of $716,000.
44 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

OUTPUT CLASS – CLEARANCE OF IMPORT, EXPORT AND EXCISE TRANSACTIONS
Description
Under this output class the New Zealand Customs Service provides services relating to the validation, checking, inspection, clearance and
audit of import and export consignments and excise returns. Services provided include the screening of import and export mail items.
This includes services relating to various levels of intervention to detect error or fraud, to ensure import and export control systems are
complied with, and to ensure that the correct classifi cation, origin and value are declared and appropriate duties and taxes are being paid,
and refunds, drawbacks and revenue foregone are correctly assessed.
This output class makes a signifi cant contribution to the following outcome goals: Community Protection; Customs Revenue; Trade and
Tourism Support; and Border Management Assurance.
Quantity
The Chief Executive estimates:
• 47.4 – 52.8 million import, including mail, transactions will be processed
• 26.5 – 33.2 million export, including mail, transactions will be processed
• 4,588 – 5,070 excise returns will be processed
• Secure Exports Scheme partners will represent 40 – 50% of container exports to the United States, and
• 1,200 – 1,600 trade assurance audits will be undertaken.
Quality
The Chief Executive expects:
• a minimum 95% of all import and export transactions (other than those referred for compliance checks) will be processed (including
assessment against business rules and intelligence alerts) within agreed timeframes
• the Secure Exports Scheme will continue to comply with the requirements of the Supply Chain Security Arrangement with the United
States, and
• a minimum of $15 million of revenue leakage will be prevented as a result of compliance checking.
Cost
Outputs in this class will be provided within the appropriated sum of $43.438 million excluding GST, which will be funded by Revenue
Crown of $14.108 million and estimated revenue from third parties of $29.330 million.
45

OUTPUT CLASS – REVENUE COLLECTION, ACCOUNTING AND DEBT MANAGEMENT
Description
Under this output class the New Zealand Customs Service provides services relating to the receipt and processing of revenues owing from
import tariffs, goods and services tax and excise-equivalent duties on imported goods and excise duty on domestically manufactured fuel,
tobacco and alcohol products. This includes the cost of paying approved refunds and drawbacks of tariffs, excise and excise-equivalent duties.
Customs also provides services relating to credit control and the management of debt and the receipt and processing of fees and levies on
behalf of other agencies.
This output class makes a signifi cant contribution to the following outcome goals: Customs Revenue; and Trade and Tourism Support.
Quantity
The Chief Executive estimates:
• Crown Revenue to be collected this fi nancial year will be $9,072 million
• $204.3 million Agency levy payments will be made, and
• 550 – 700 new applications for Deferred Payment and Credit Facility for Broker accounts will be processed.
Quality
The Chief Executive expects:
• professional, best practice credit management that complies with Customs Credit Control and Debt Management policies and
procedures and is consistent with the Customs and Excise Act 1996 and related commercial legislation – eg, the Companies Act 1993
• effective and timely management of debt, with aged debt profi les to be trending downwards in volume and in dollars outstanding, and
debt write-offs to be no more than 0.01% of total Crown Revenue collected, and
• continued cost effi cient collection on $9,072 million of Crown Revenue within the output class funding allocated.
Cost
Outputs in this class will be provided within the appropriated sum of $2.755 million excluding GST, which will be funded by Revenue Crown
of $1.380 million and estimated revenue from third parties of $1.375 million.
46 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

OUTPUT CLASS – SURVEILLANCE, SEARCH AND CONTAINMENT
Description
Under this output class the New Zealand Customs Service provides services to control the risk of craft being used for the illegal entry or
removal of people and goods from New Zealand.
This output class makes a signifi cant contribution to the following outcome goals: Border Security; Community Protection; and
Border Management Assurance.
Quantity
The Chief Executive estimates:
• 10,000 – 12,500 offi cer hours will be applied to patrol and surveillance, and
• 135 – 165 targeted operational responses will be made.
Quality
The Chief Executive expects to:
• carry out a minimum 80% of the planned patrol and surveillance hours in accordance with the patrol and surveillance plans for each
location, and
• carry out a minimum 80% of the planned targeted responses in accordance with the operational response plans for each event.
Cost
Outputs in this class will be provided within the appropriated sum of $6.572 million excluding GST, which will be funded by Revenue Crown
of $6.083 million and estimated revenue from third parties of $489,000.
47

OUTPUT CLASS – INVESTIGATION OF OFFENCES
Description
Under this output class the New Zealand Customs Service provides proactive and reactive investigative responses to serious transnational
crime, transnational crime and other border offending and revenue offences.
This includes the investigation of specifi c offences, and/or information/intelligence held or received involving any known or suspected
border offending.
This output class makes a signifi cant contribution to the following outcome goals: Border Security; Community Protection; and` Trade and
Tourism Support.
Quantity
The Chief Executive estimates:
• a minimum of 1,800 investigation fi les will be opened, and
• a minimum of 800 investigation cases will be investigated to completion.
Quality
The Chief Executive expects:
• a minimum 80% of investigation fi les opened that meet the high and medium priority crime criteria will be investigated to completion
• case management and legal review procedures to be in place to minimise the Crown’s exposure to the risks of litigation, and
• a minimum 70% of investigation cases opened that meet the high and medium priority crime criteria will be fi nalised within 12 months
of commencement.
Cost
Outputs in this class will be provided within the appropriated sum of $8.992 million excluding GST, which will be funded by Revenue Crown
of $8.741 million and estimated revenue from third parties of $251,000.
48 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

OUTPUT CLASS – PROSECUTIONS AND CIVIL PROCEEDINGS
Description
Under this output class the New Zealand Customs Service provides services relating to the prosecution of offences under the Customs and
Excise Act 1996 and civil proceedings provided for under that Act relating to the hearing of applications for the release of seized goods.
This output class makes a signifi cant contribution to the following outcome goals: Community Protection; and Customs Revenue.
Quantity
The Chief Executive estimates:
• 35 – 45 prosecutions will be commenced.
Quality
The Chief Executive expects:
• a minimum 80% of prosecutions concluded will be successful, and
• a maximum 5% of cases lodged with the court will incur adverse judicial comment.
Cost
Outputs in this class will be provided within the appropriated sum of $851,000 excluding GST, which will be funded by Revenue Crown of
$834,000 and estimated revenue from third parties of $17,000.
49

OUTPUT CLASS – TECHNICAL ADVISORY SERVICES
Description
Under this output class the New Zealand Customs Service provides services relating to the supply of binding rulings to external clients
on tariff and excise classifi cation, the application of tariff concessions, eligibility under the rules of origin and the interpretation of rules of
origin. Customs also provides to external clients export classifi cations and general customs information.
This output class makes a signifi cant contribution to the Trade and Tourism Support outcome goal.
Quantity
The Chief Executive estimates:
• 240 binding rulings will be given.
Quality
The Chief Executive expects:
• a minimum 60% of rulings taken to appeal will be sustained, and
• a minimum 90% of classifi cation and concession rulings and export classifi cation opinions will be issued within 20 working days of
lodgement of all the necessary information.
Cost
Outputs in this class will be provided within the appropriated sum of $1.948 million excluding GST, which will be funded by Revenue Crown
of $431,000 and estimated revenue from third parties of $1.517 million.
50 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

Glossary
Adverse Judicial Comment
A comment made by a Judge
of a District or higher Court which
criticises Customs, or an officer in its
employ, in relation to the investigation
or presentation of a case made under
the Customs and Excise Act 1996.
Agreed Timeframes for Processing
Import and Export Transactions
The agreed timeframes
for processing import and
export transactions are:
i. electronically lodged
entries processed within
30 minutes, and
ii. manually lodged entries
processed within 24 hours.
Alerts
Targeted intervention of persons,
goods and craft considered to pose a
risk to border or revenue related issues.
Best Practice Credit Management
The following best practice
credit management procedures
have been established and
are followed by Customs:
i. Advising potential deferred
payment clients of the terms
and conditions of the Service’s
deferred payment scheme.
ii. Undertaking regular credit
assessments of all deferred
payment account holders.
iii. Follow-up policy and
procedures for those clients
who have overdue payments.
iv. Follow-up policy and
procedures for the
collection of bad debts.
CIF (Cost, Insurance, Freight)
The market value of the
imported goods plus the cost
of freight and insurance from
the source to destination.
Compliance Checks
The number of entries generated
from compliance alerts where
the entry status is cleared, ie, the
goods have been released from
Customs’ control. Also included is
the number of entries generated from
compliance alerts where the entry
status is held, ie, the goods are not
released from Customs’ control.
FOB (Free On Board)
The market value of the goods
at the New Zealand port of loading.
It includes all value added in
bringing the goods to the port of
loading but excludes international
freight and associated insurance.
Harmonised System
The International Convention
on the Harmonised Commodity
Description and Coding System
under which goods are classified
within the Tariff in accordance
with the General Rules for
Interpretation of the Tariff.
Intelligence Product
Intelligence products are
developed with a focus on tactical,
operational and strategic intelligence
and are completed for the purpose
of providing knowledge to decision
making. Intelligence products include
case analysis or assessments, risk
assessments, briefings, tactical
information reports, situation
reports, intelligence collection
plans, enquiry requests and reports,
the Intelligence Bulletin, the OCO
Bulletin and craft risk assessments.
Investigation Case Completed
An investigation case is
completed when all reasonable
and practicable avenues of
inquiry have been exhausted.
Investigation File
An investigation file is opened
when an offence has been
committed, or where information
suggests an offence has been or
may be committed, against the
Customs and Excise Act 1996 or
the Misuse of Drugs Act 1975.
An investigation file may be opened
as the result of information referred
to investigations or of proactive
investigative activity. An investigation
file becomes an investigation case
when resources are assigned to
investigate it to completion.
Merchandise Goods
(Exported or Imported)
Tangible, moveable goods crossing
the customs frontier. Excludes
services and goods being returned
after repair or modification in New
Zealand, goods on short-term loan
or lease, and service transactions eg,
computer data tapes and drawings.
Operational Response
This relates to the initiation
of an activity which requires the
mobilisation or deployment of
resources against a perceived
risk or threat. Operations can
involve targeted surveillance,
search or containment of risk
craft, together with searching of
persons associated with that craft.
Operational Risk Assessment
An operational risk assessment
focuses on the organisation’s policies,
practices and procedures and reviews
previous operational activity (whether
the subject of tactical, operational
or strategic intelligence or not). The
purpose is to identify from the previous
operational activity risk exposures
and to recommend risk treatment.
51

Outcomes
Outcomes are the results
experienced by the community
from a combination of government
interventions and external factors.
Outputs
Outputs are the goods or
services that are produced by
a government department.
Patrol and Surveillance
This covers all activities that
are considered to be routine and
pre-planned – ie, they are a part of
normal day-to-day activities. Routine
patrol and surveillance does not
include activities that have been
requested as a result of intelligence
or an operation. These fall under
targeted operational activity. Patrol
and surveillance at airports may be
conducted on the tarmac, runway,
in the passenger terminal, and
surrounding security areas. Patrol
and surveillance at seaports may
be conducted on the wharf, in the
areas used for loading and unloading
of international freight, on vessels
berthing, in areas used for the storing
of imported and/or exported goods
prior to clearance, in the passenger
terminal, and surrounding security
areas. The purpose of routine patrol
and surveillance activities is to
support the intelligence gathering
function and to mitigate the risk
of craft arriving in New Zealand’s
contiguous zone without warning.
Tariff Classification
The New Zealand Customs
Service Working Tariff Document
is a commodity coding system
used to identify and describe
goods. The structure of the tariff
is based on the WCO International
Convention on the Harmonised
Commodity Description and Coding
System (commonly referred to
as the Harmonised System).
Transnational Crime
An offence committed by the
importation or export of goods/
material across the border under any
regulatory framework. Transnational
crime is considered “serious” where
the offending seriously affects the
legitimate interests of New Zealand,
and includes: goods that may have a
military application; chemical, nuclear
or biological weapons, or goods that
may be used in the manufacture of
such weapons; import/export that
breaches UN sanctions; trafficking
of class A or B drugs for supply;
objectionable material, including child
pornography and material promoting
acts of terrorism; trafficking in
wildlife; and revenue evasion.
Targeted Operational Response
A targeted operational response
is carried out as a result of
intelligence, and is supported by
an operational response plan.
52 NEW ZEALAND CUSTOMS SERVICE – STATEMENT OF INTENT 2006–2007

CUSTOMS’ OUTCOMES PERFORMANCE MEASUREMENT FRAMEWORK
(TO BE REVIEWED)
COMMUNITY-
FOCUSED
OUTCOMES
Customs Revenue:
New Zealand’s economic,
social and environmental goals
are supported by the effective
and efficient collection of
Customs revenue
Community Protection:
New Zealand’s community,
economy and environment
are protected from harm by
effective and efficient border
management
Border Security:
New Zealand is protected from
threats to national security by
Customs’ situational awareness
and readiness to respond
Trade and Tourism Support:
Sustainable economic growth
is supported through effective
and efficient border
management
CUSTOMS'
INTERMEDIATE
OUTCOME
Border Management Assurance: New Zealand’s sovereign interests are protected through Customs’ management of New Zealand’s border
CUSTOMS'
INTERVENTION
LOGIC
Efficient
collection of
revenue due
Accurately
identified
liability
Acceptable
residual
risk
High stakeholder
confidence in NZ's
customs controls
Lowest possible
customs
compliance costs
Reduced
actual
risk
Successfully
controlled
risk
Fulfilment of
international
obligations
Alignment of NZ's
customs controls
and stakeholder
expectations
Harmonised
international
Customs
Regulatory system
High
voluntary
compliance
Appropriate
Intervention
Enforceable
international
agreements
Effective
education and
engagement
Effective
deterrence
Accurate risk
identification
Effective domestic and international influence
Accurate intelligence
Enforceable
domestic
policy
Accurate and timely information
KEY CAPABILITIES
Effective Intervention Capabilities
Efficient Reporting, Assessment and Collection Systems
Effective Relationships
MANDATE
Appropriate Customs Legislation and Powers
Public Policy Rationale and Mandate to Intervene

The Customhouse, 17-21 Whitmore Street, Box 2218, Wellington, New Zealand
Phone: +64-4-473 6099, Fax: +64-4-473 7370
www.customs.govt.nz