Statement of Intent 2011-2014 - New Zealand Customs Service

B.24 SOI (2011)NEW ZEALANDCUSTOMS SERVICESTATEMENT OF INTENT 2011–2014

B.24 SOI (2011)STATEMENT OF INTENT 2011–2014NEW ZEALAND CUSTOMS SERVICEPresented to the House of Representativespursuant to section 39 of the Public Finance Act 1989ISSN 1176 1857

CONTENTSMINISTER’S FOREWORD ................................................................................2COMPTROLLER’S INTRODUCTION .................................................................4NATURE AND SCOPE OF CUSTOMS’ FUNCTIONS .........................................6STRATEGIC DIRECTION ...................................................................................7CUSTOMS’ STRATEGIC FRAMEWORK ............................................................10CUSTOMS’ OPERATING ENVIRONMENT ........................................................12OUTCOME: PROTECTION ..............................................................................15Ministerial priority ......................................................................................15OUTCOME: TRADE ........................................................................................19Ministerial priority ......................................................................................19OUTCOME:TRAVEL ........................................................................................23Ministerial priority ......................................................................................23OUTCOME: REVENUE ...................................................................................26CUSTOMS’ ORGANISATIONAL HEALTH AND CAPABILITY ..........................28CAPITAL AND ASSET MANAGEMENT INTENTIONS ...................................33New Zealand Customs Service 1

MINISTER’S FOREWORDThe earthquakes in Japan and our own city, Christchurch, have sharpened the focus on a safe and secureNew Zealand, and the Government’s aim to build a brighter future for New Zealand.Customs facilitates tradeand travel, supportsNew Zealand’s access tooverseas markets, andpromotes secure andefficient trade.These broader aims are supportedby the Government’s two key goalsfor 2011 to:»»build the foundations for a strongereconomybuild better results from the publicservices New Zealanders rely on.Customs’ services and significantinfrastructure provide critical supportto New Zealand’s trade, tourism,and related safety and security; whilecollecting 15 percent of Crownrevenue. Customs facilitates trade andtravel, supports New Zealand’s accessto overseas markets, and promotessecure and efficient trade.To help the Government achieve itsgoals, I have agreed three priorities forCustoms from 2011/12, as follows:Streamlining and simplifyingtrade facilitation, and promotingsecure and efficient trade,particularly with Australia andChina aims to promote secure andefficient international supply chains,particularly to support New Zealandexporters. The aim is to increasebusiness confidence at the borderby delivering more reliable andpredictable border clearance processesfor New Zealand trade throughcustoms in New Zealand and overseas.Future work will enhance the progressalready made with Australia and China.The focus on developing andimplementing Stage 1 of the JointBorder Management System–TradeSingle Window (JBMS–TSW) with theMinistry of Agriculture and Forestrywill support this priority and Customs’activities. The TSW will make it easierfor New Zealand traders to completeborder requirements by providing asingle access point to border agencies.More efficient, streamlined, andsecure passenger facilitation,particularly for trans-Tasmanand Asia-Pacific travel is Customs’response to the expected increase intravel, particularly from Australia andthe Asia-Pacific. It aims to expand theprogramme for automated passengerclearance processes for trans-Tasmantravel; and provide more streamlinedand secure travel facilitation forarrivals from Australia, the Asia-Pacific, and other countries throughan improved approach to managingborder risks to New Zealand.Increase disruption of supply anddismantle criminal networks,particularly for illicit drugs andpeople smuggling, and maintainresponsiveness as risks changereflects this Government’s ongoingcommitment to disrupt the supplyof methamphetamine or ‘P’, and itsprecursors, the chemicals used to make‘P’. Last year Customs seized nearlya tonne of precursors. The aim is tocontinue targeted activity to disruptthe supply of ‘P’; and a focus ondisrupting criminal networks throughan improved investigations approach,made possible by implementing newadvanced technology.This Statement of Intent shows howCustoms intends to progress thesepriorities in the next three years, andits intended value to the Governmentand New Zealand’s trade and travel.2 Statement of Intent 2011–2014

MINISTER’S STATEMENT OF RESPONSIBILITYAs the Minister responsible for the New Zealand Customs Service, I am satisfied that the information on futureoperating intentions provided by my department in this Statement of Intent and the Information Supporting the Estimatesis in accordance with sections 38, 40, and 41 of the Public Finance Act 1989 and is consistent with the policies andperformance expectations of the Government.Hon Maurice WilliamsonMINISTER OF CUSTOMS19 May 2011New Zealand Customs Service 3

COMPTROLLER’S INTRODUCTIONNew Zealand’s economy continues to be fragile as it responds to a slow recovery in the global economy, risingoil prices and infl ation, and the impacts of the recent devastating earthquakes in Christchurch. The economicand social costs of the earthquakes, including the slow down in tourism to the South Island, add to the uncertaineconomic environment New Zealand faces in the short term.Customs’ priorities supportthe Government’s aim tobuild a stronger economyand provide a public servicethat delivers results andvalue for money.Customs will remain agile in ourresponse. We will do what is necessaryto support the earthquake recovery;and meet changing service demandsas economic conditions change.Based on our efforts in recent years,we expect to be well-placed to meetincreasing demands and risks inthe medium term as the economyimproves, and as efforts to rebuildChristchurch accelerate.The Minister of Customs has agreedmedium term priorities for Customsrelating to our services for Trade,Travel, and Protection. During the termof this Statement of Intent, Customswill give priority to delivering morestreamlined and simplified tradefacilitation, and more efficient andstreamlined passenger facilitation,particularly on trans-Tasman routes;while increasing disruption of thesupply of illicit drugs, particularlymethamphetamine or ‘P’ and itsprecursors, and managing otherborder risks.These priorities support theGovernment’s aim to build a strongereconomy and provide a public servicethat delivers results and value formoney, while managing withintight fiscal constraints. They alsosupport the shared commitmentwith Australia to accelerate effortstowards increasing economicintegration; the aspiration todouble trade with China by 2015;and the Government’s TacklingMethamphetamine: An Action Plan.Underpinning these priorities will besignificant changes in our operationalprocesses and the infrastructurethat supports them. These will bebased on efforts to further developand implement the Joint BorderManagement System–Trade SingleWindow; expand the SmartGateautomated processing system forpassengers on trans-Tasman routes;fully implement the IntegratedTargeting and Operations Centre;and implement advanced technologyto support our investigations. Wewill be a smarter and more efficientorganisation as a result, benefitingtraders and travellers.During the term of this Statementof Intent, we will continue our longtradition of service to New Zealand,and work to increase the value thatthe Government and New Zealandersreceive from our efforts.4 Statement of Intent 2011–2014

COMPTROLLER’S STATEMENT OF RESPONSIBILITYIn signing this statement, I acknowledge that I am responsible for the information contained in the New ZealandCustoms Service Statement of Intent 2011–2014. This information has been prepared in accordance with the PublicFinance Act 1989. It is also consistent with the proposed appropriations set out in the Appropriations (2011/12Estimates) Bill, as presented to the House of Representatives in accordance with section 13 of the Public FinanceAct 1989, and with existing appropriations and financial authorities.Martyn Dunne, CNZMComptroller of CustomsKevin MartinChief Financial OfficerNew Zealand Customs Service 5

NATURE AND SCOPEOF CUSTOMS’ FUNCTIONSCUSTOMS ENHANCESNEW ZEALAND’S PROSPERITYAND SECURITYThe New Zealand Customs Service(Customs) performs three broadfunctions to enhance New Zealand’sprosperity and security. We protectNew Zealand’s border, facilitatelegitimate trade and travel, and collectCrown revenue, while managingrelated risks.Customs’ functions are reflected inthe Customs and Excise Act 1996and related regulations. A further45 principal Acts and other borderlegislation underpin these functions.OUR SERVICESCustoms delivers a range of services,such as:» clearance and enforcementservices relating to people, goods,and craft crossing the border.Our services facilitate trade andtravel, and protect New Zealand’sinterests, where we:››clear people and theirpossessions through directinteraction or self-clearancetechnology, and collectinformationclear goods, and provide tradeand supply chain securityassurance»»information, intelligence, andrisk assessment services toexternal clients to protectNew Zealand’s security. Thisincludes the operation of theNational Maritime CoordinationCentre (NMCC), which supportsa whole-of-government effort toadvance New Zealand’s maritimeand marine interests. The NMCC’sservices include the tasking ofgovernment’s maritime assets forcivilian surveillance and response;and information and adviceto improve maritime domainawareness 1policy advice and internationalservices, obligations andassistance, and ministerial support.»››clear craft arriving in anddeparting from New Zealandapply a range of interventions,investigations, audits, andenforcement activities tomanage border and revenuerisksrevenue collection services, wherewe receipt and process revenuesowed to the Crown for Customsand other agencies; and providerevenue assurance, and credit anddebt managementAll functions are within the scopeof Vote Customs and defined withinthe output class descriptions detailedin the Information Supporting theEstimates for Budget 2011. In 2011/12,in delivering Customs’ services, weexpect to facilitate trade valued atmore than $85 billion; facilitate travelof more than 10 million people; andcollect over $10 billion, or 15 percentof Crown revenue. These functions,services, and Customs’ strategy forthe next three years are detailed in thefollowing pages.1 The NMCC is an operational unit within Customs, working on behalf of a number of government agencies with interests in maritime surveillance and response. The NMCC alsoprovides agencies with information and advice to improve maritime domain awareness.6 Statement of Intent 2011–2014

STRATEGIC DIRECTIONTHE GOVERNMENT’S AIMSThe Government’s aim to build a brighter future for New Zealand is characterised by improvedemployment, incomes, living standards, and wellbeing.Two key goals for the Government in 2011 that support this aim are: build the foundations for a stronger economy,based on enduring growth and better results from the public services New Zealanders rely on, while deliveringvalue for money. Building a stronger economy involves three focus areas for 2011 — savings, investments, andexports; supported by economic conditions that help New Zealanders to save and foster their confidence to investin and create new businesses, and help exporters to compete internationally. It is also supported by a further focuson building stronger Government accounts through reduced debt and spending restraints, including within thepublic sector.CUSTOMS’ OUTCOMESAND PRIORITIESCustoms’ outcomes and priorities arealigned with the Government’s aims.To support our export economy, wewill work actively with industry andother agencies, both in New Zealandand internationally, to develop moreefficient and secure international tradeand travel supply chains, and morestreamlined processes.We will also continue to collect dueCrown revenue, a key contributorto the Government’s accounts.While doing this, we will continue toprotect New Zealand from the risksassociated with international trade andtravel, with a particular focus on illicitdrugs and people smuggling.We have revised Customs’ outcomesto reflect the impacts or effectswe seek for traders, travellers, andthe Government on behalf ofNew Zealand. Priorities relatingto the Protection, Trade, and Traveloutcomes have been agreed withthe Minister of Customs.From 2011/12, Customs will advanceNew Zealand’s prosperity and securityby focusing on the following outcomesand priorities:» Protection — New Zealand ismore safe and secure throughreduced risk to New Zealand’sinterests arising from internationaltrade and travelWe will give priority to increasingdisruption of supply and dismantlingcriminal networks, particularly forillicit drugs and people smuggling, andmaintaining responsiveness as riskschange» Trade — New Zealand’s tradeflows more freely throughimproved access to markets, andmore secure and efficient borderprocessesWe will give priority to streamliningand simplifying trade facilitation, andpromoting secure and efficient trade,particularly with Australia and China» Travel — Travel to and fromNew Zealand flows more freelythrough more secure and efficientborder processesWe will give priority to more efficient,streamlined, and secure passengerfacilitation, particularly for trans-Tasman and Asia-Pacific travelRevenue » — The rate of collectionof due Crown revenue ismaintained for New Zealand.New Zealand Customs Service 7

By focusing on these priorities,Customs seeks to deliver increasedvalue for the funding that theGovernment appropriates for borderservices. We are working to delivermore efficient and effective services,while leading work with border sectorcolleagues to improve border servicesand efficiency more broadly.We are adopting new approachesto service delivery. These involvestreamlining processes throughincreased integration with bordersector agencies and industry, andincreasing the use of modern andcapable technology. It also includesdeveloping a more integrated approachto managing border risk, which isexpected to improve the targeting ofborder risks, and increase efficienciesby improving resource allocation.The Government’s investments in theJoint Border Management System–Trade Single Window, the SmartGateautomated passenger processingsystem, and advanced technology tosupport our investigations approachare critical to improving our servicesand increasing our cost-effectiveness.COLLABORATIONCustoms collaborates with a rangeof others to achieve a variety ofoutcomes for New Zealand. We havethe most significant presence andinfrastructure at the border. We usethis to deliver services on behalf ofa wide range of agencies, therebyreducing the number of agenciesthat need to have a physical borderpresence. We work with a numberof government agencies to deliverprotection and facilitation services,while maintaining long-standingcollaborative partnerships.We are increasingly collaboratingwith industry to achieve more secureand efficient trade and travel, andimproved border services; and havesome significant partnerships inplace to achieve these ends. We alsowork closely with other governmentagencies and non-governmentorganisations overseas to advanceNew Zealand’s facilitation andsecurity interests.BORDER SECTORThe border sector was establishedby Cabinet in 2007/08. It comprisesagencies with responsibilities andinterests in New Zealand’s border. 2The governance structure for theborder sector promotes a wholeof-governmentview of bordermanagement. The Border SectorMinisterial Group is driving theborder sector work programmeto ensure it aligns with theGovernment’s economic agenda.Customs currently chairs theBorder Sector Governance Group,comprising chief executives ofmember agencies.The border sector work programmeaims to provide a more seamlessservice to traders and travellers, whileincreasing efficiency and effectivenessfor both industry and government.The work programme is guidedby the border sector performanceframework. The two end outcomesfor the border sector are:2 Agencies of the border sector are the Department of Labour, Ministry of Agriculture and Forestry, New Zealand Customs Service, Department of Internal Affairs, andMinistry of Transport.8 Statement of Intent 2011–2014

» Protection — New Zealand isprotected from people, goods, andorganisms that pose a risk to ourinterests» Facilitation — New Zealand’seconomic and social interestsare enhanced by facilitating thelegitimate flow of trade and travel.Border sector agencies also contributeto a number of shared intermediateoutcomes, which serve as buildingblocks to achieve these end outcomes.Customs’ outcomes of Protection,Trade, and Travel, and our impactsalign with the border sector endoutcomes. Our significant resourcesand presence at the border mean weare a key contributor to the bordersector outcomes, detailed below:OUTCOME INTERMEDIATE OUTCOME RELEVANT CUSTOMS’ IMPACTSProtection Deterrence » Maintained high levels of voluntary compliance» Increased disruption of illegal border activityInterceptionReducing harmIncreased disruption of illegal border activity» Reduced harm and potential harm from people and goods» Reduced risk from non-compliant travellers and goodsFacilitation Compliance costs Reduced compliance burden for tradersFacilitation of trade and travelReduced intervention with compliant traders, travellers, and goodsReputation See note below 33 Customs does not have an impact that relates directly to this intermediate outcome. However, trust and confidence in New Zealand’s border management system, the two keycomponents of reputation are measured for Customs’ Protection, Trade, and Travel outcomes.New Zealand Customs Service 9

CUSTOMS’ STRATEGIC FRAMEWORKVISION: Leadership and excellence in border managementthat enhances the prosperity and security of New ZealandMISSION: Protecting New Zealand’slive in safety, while actively participatingOUTPUT CLASSESIMPACTSInformationand intelligenceservicesPROTECTION» Reduced harm and potential harm from illicitpeople and goods» Increased disruption of illegal border activity» Maintained high levels of compliancePolicy advice andinternational servicesRevenue collectionREVENUE» Maintained and timely collection of due Crown revenue» Maintained high levels of voluntary compliance» Reduced intervention with compliant clients» Reduced risk from non-complianceClearance andenforcement servicesrelating to goodsTRADE» Increased access to overseas markets» Improved passage of New Zealand trade throughcustoms in New Zealand and overseas» Reduced compliance burden for traders» Maintained high levels of voluntary complianceClearance andenforcement servicesrelating to passengersand crewTRAVEL» Improved experiences for travellers throughborder processes» Maintained high levels of voluntary complianceClearance andenforcement servicesrelating to craftCAPABILITIESPeople Processes Information, Systems, and Technology10 Statement of Intent 2011–2014

order and revenue in order that New Zealanders mayin a global communityVALUES: » Integrity » Respect» Commitment » AgilityOUTCOMESPRIORITIESOPERATINGENVIRONMENTPROTECTIONNew Zealand is more safe andsecure through reduced risk toNew Zealand’s interests arisingfrom international trade and travelPROTECTIONIncrease disruption of supplyand dismantle criminalnetworks, particularly for illicitdrugs and people smuggling,and maintain responsivenessas risks changeThe Government’s aims» build the foundations for astronger economy» better results from the publicservices New Zealanders rely on,while delivering value for moneyREVENUEThe rate of collection of dueCrown revenue is maintainedfor New ZealandKEY TRENDS AND DRIVERSEconomic UncertaintyIncreasing Trade and TravelVolumes» Drive to increase trade with theAsia-Pacifi c region, particularlyChinaTRADENew Zealand’s trade fl owsmore freely through improvedaccess to markets, and moresecure and efficient borderprocessesTRADEStreamline and simplifytrade facilitation, andpromote secure andefficient trade, particularlywith Australia and ChinaIncreasing Risks andComplex Offending PatternsImproving the Environmentfor Business at the Border» Drive to progress a SingleEconomic Market with Australia» Drive for more secure andeffi cient global supply chainsTRAVELTravel to and from New Zealandfl ows more freely through moresecure and efficient borderprocessesTRAVELMore efficient, streamlinedand secure passengerfacilitation, particularly fortrans-Tasman and Asia-Pacific travelManaging Operational RisksRelationshipsNew Zealand Customs Service 11

CUSTOMS’ OPERATING ENVIRONMENTECONOMIC UNCERTAINTYThe New Zealand economy continuesto be fragile. The lingering effectsof the global economic recoveryare likely to be compounded bythe effects of the devastatingChristchurch earthquakes, and risksassociated with rising internationaloil prices and inflation. The globaleconomic recovery, while solid overall,continues to be patchy across some ofNew Zealand’s trading partners.New Zealand expects to continue tobenefit from those performing well,particularly partners in Asia; whilemindful of the slow recovery forother trading partners, particularly inEurope and the United States, andthe reliance of New Zealand’s Asiantrading partners on those areas.New Zealand’s economic growthhas slowed in 2011, exacerbatedby the Christchurch earthquakein February. 4 However, economicgrowth is expected to improve inthe next three years, particularlyfrom 2012. This includes a boost ineconomic activity through rebuildingefforts in Christchurch.Government finances will facecontinuing pressure in the short tomedium term. The already tight fiscalenvironment is likely to be affectedin the short term by increased costsin response to the earthquakes, anda reduced tax take owing to lowereconomic activity. This meansthat Customs, along with othergovernment agencies, can expect tocontinue to operate within tight fiscalconstraints. These constraints will alsoimpact on Customs’ ability to respondto other trends and drivers below.INCREASING TRADE AND TRAVELVOLUMESTrade and travel volumes willcontinue to rise in the short term,but this may not be to the extentpreviously forecast owing to anuncertain global economy andthe impacts on travel and tourismfrom the earthquakes in Japan,and Christchurch, New Zealand.However, trade and travel volumesare expected to increase in the nextthree years, particularly from 2012.Previous forecasts expected tourismto increase from a range of existingmarkets, with numbers doubling fromChina, and increasing from othercountries in the Asia-Pacific, includingJapan. 5 A spike in visitor numbers isexpected in the months leading to,during, and immediately following the2011 Rugby World Cup. However,tourist numbers and travel associatedwith the export education sector arelikely to be affected, at least in theshort term.Against this backdrop, the driveto increase trade with the Asia-Pacific region, particularlyChina, is expected to contribute toa rise in trade and travel volumesin the medium term. Last year theGovernment announced its sharedaspiration to double trade with Chinain the next five years; with a focus onexports in particular.There is also increasing trade withrelatively new partners, such as Indiaand Viet Nam, and other partners,such as Korea, Japan, Malaysia, andSingapore; and interest from potentialpartners, such as Russia, Belarus, andKazakhstan; and Peru and the UnitedStates within the proposed expansionof the Trans-Tasman Pacific StrategicEconomic Partnership Agreement.INCREASING RISKS ANDCOMPLEX OFFENDING PATTERNSInternational trade and travel exposeNew Zealand to global threatsfrom trans-national organisedcrime, terrorism, weapons of massdestruction proliferation, and otherrisks. Changing trade and travelpatterns, particularly the increasedflows from countries that presenthigher levels of risk, need to bemanaged.4 The Treasury (2011). Monthly Economic Indicators. February. The Treasury: Wellington.5 Ministry of Tourism. (2010). New Zealand tourism forecasts 2010–2016: summary document. July. Ministry of Tourism: Wellington, p3.12 Statement of Intent 2011–2014

New Zealand expects continuedchallenges from trans-nationalorganised crime, in particular thosegroups profiting from trade in illicitdrugs, people smuggling, and otherprohibited goods. The make-up ofcriminal groups, and their activitiesand offending patterns are becomingincreasingly complex. This is makingit harder to detect crimes, identifysuspects, disrupt activities, andapprehend organisers behindcriminal networks.New technology is expected tosupport investigations of complexoffending more effectively. A focuson the finances of criminal groupsis also increasingly recognised as aneffective tool for disrupting illegalborder activity.IMPROVING THE ENVIRONMENTFOR BUSINESS AT THE BORDERThere is an ongoing drive toprogress a Single EconomicMarket with Australia. Australia isNew Zealand’s largest trading partnerand the bulk of our internationaltravellers fly on trans-Tasmanroutes. New Zealand and Australiaacknowledge the importance of thecloser economic relationship to ourrespective future prosperity. It isreflected in a shared commitmentto accelerate efforts towards greatertrans-Tasman economic integration,and includes continued progress ofthe Single Economic Market agenda.There is a continued need to improvefacilitation that recognises the benefitsof streamlined processes, supportedby modern technology to improveborder experiences for trans-Tasmantraders and travellers.Internationally, there is adrive for more secure andefficient global supply chains.While the need for effectivemanagement of trade security risksis recognised, it is also understoodthat unnecessary regulation andinefficient processes add to the costsof trade. New Zealand traders willsuffer competitive disadvantagesif they face a compliance burdenthat is higher than those of theircompetitors.To remain competitive, New Zealandmust continue work to improve thesecurity and efficiency of its borderprocesses, and the predictabilityof processes operated by otheradministrations.ENVIRONMENTAL SCANNINGCustoms works in a dynamicenvironment and needs to monitorchanges to the operating environmenton an ongoing basis. This is done in anumber of ways:»»»on a daily basis as part of routineoperational managementthrough our intelligence processesand international connectionsthrough regular and periodicinteractions with industry groups» by preparing a longer-termstrategic outlook on an annualbasis.ORGANISATIONAL RISKSThe key trends and drivers withinthe operating environment presentopportunities and challenges toCustoms. Failing to meet thempresents risks to Customs’ ability todeliver services effectively and achievethe impacts sought.We identify opportunities and risksduring our strategy developmentprocess. Organisational risks arefurther identified and refined inaccordance with Customs’ RiskManagement Framework, which setsout the procedures for managingorganisational risks and the standardsfor assessing risks. Our approachto risk also requires managers tocontinually identify, monitor, manage,and where necessary, report currentand emerging risks continually.The table over the page shows thelinks between the key trends anddrivers, opportunities and challengesfor Customs, organisational risks, andthe responses we propose to addressthem.New Zealand Customs Service 13

Key trends and drivers, opportunities and challenges, risks and our responseECONOMICUNCERTAINTYOPERATING ENVIRONMENT - KEY TRENDS AND DRIVERSINCREASING TRADE AND TRAVELVOLUMES» Drive to increase trade with theAsia-Pacific, particularly ChinaINCREASING RISKS ANDCOMPLEX OFFENDINGPATTERNSIMPROVING THE ENVIRONMENTFOR BUSINESS AT THE BORDER» Drive for more secure and efficient supply chains» Drive to progress a Single Economic Marketwith AustraliaOPPORTUNITIES AND CHALLENGES FOR CUSTOMSThe key trends and drivers create opportunities and challenges for Customs to improve our services.Provide coordinated borderservices to improve the tradeand travel fl ows throughcustoms in NZ and overseasProvide integrated processesand technology, and jointapproaches to risk withgovernment agencies andindustryProvide a moderncomputerised bordermanagement system, able tobe integrated with systemsoverseas to process trade andtravel efficiently, and assimilaterisk information quicklyTarget increasing risks fromtrade and travel, particularlyfrom countries that presenthigher risks, through moreintegrated intelligence andtargeting functionsInvestigate for longerand deeper into criminaloperations to unravel complexpatterns of offending, andbring the organisers behindnetworks to accountORGANISATIONAL RISKSThe following present a risk to our ability to respond, and are listed in the order according to Customs’ organisational risk profile.SYSTEMS, PROCESSES, PEOPLE ANDMANAGING OPERATIONAL RISKS» Fiscal pressures and increasing servicedemands mean we may not have the rightlevel of operations capability and capacityto deliver on large programmes of work,such as:› Joint Border Management System-TradeSingle Window› Increasing trade and travel, and related risks› Integrated intelligence and risk targetingthrough the Integrated Targeting andOperations Centre (ITOC)SYSTEMSThe prospect of notdelivering Stage 1of the Joint BorderManagementSystem programmein a cost-effectivemanner; andpotential failure ofthe current bordermanagement systemBORDER SECTORRELATIONSHIPSFailing to maintaineffective bordermanagementand stakeholderrelations to deliveron a sharedborder sector workprogrammeINFORMATIONThe possibility of notdelivering effectiveManagementInformationSystems, includingaccessible andtimely performanceinformation that tellsus how well we aredoing, and what weneed to improvePROCESSESThe prospectof not meetingincreasing demandfor automatedtrans-Tasman borderclearance fortravellers, therebyrelying on lessefficient manualprocesses to meetservice demandsINTERNATIONALRELATIONSHIPSFailing to developinternationalrelationshipsneeded to progressNew Zealand’sborder interests forprotection, trade,and travel, such asrelations with ChinaCustoms to disruptsupply of precursorsOUR RESPONSEOur response to the opportunities and challenges, and risks we face:OUR PEOPLEImprove workforcecapability by continuinga flexible approach tomanaging ports, andleadership developmentPROCESSESMore streamlined andintegrated processeswith border agenciesto improve services andachieve efficienciesINFORMATIONImprove service deliveryand efficiencies bystrengthening ourperformance informationmanagement systemMANAGINGOPERATIONAL RISKSImprove targeting ofresources through moreintegrated intelligencefunctions with theIntegrated Targetingand Operations Centre(ITOC); and improvedrisk assessmentcapability throughthe JBMSSYSTEMSContinue to develop the JBMS-TSW with MAF andother border agencies, and industry, to enable dataintegration across countries, agencies, and industry;and reduce the compliance burden for traders throughthe TSWImprove our investigations approach enabled byadvanced technology to disrupt smuggling of illicitgoods, dismantle criminal networks, and improveefficienciesContinue to streamline trans-Tasman border clearancefor travel with border sector agencies, including moreself-service kiosks (SmartGate) at key airports in NZRELATIONSHIPSWork closely, including in partnership with industry, and organisations and government agencies in New Zealandand overseas to progress New Zealand’s border interests14 Statement of Intent 2011–2014

OUTCOME: PROTECTIONNew Zealand is more safe and secure through reduced risk to New Zealand’s interests arising frominternational trade and travelCustoms protects New Zealand at theborder from a range of threats andrisks relating to international trade andtravel. 6 We also protect New Zealandfrom global threats posed by transnationalorganised crime, and thesmuggling of people and prohibitedgoods. In doing so, we balance theProtection outcome with those soughtfor Trade and Travel, so that ourefforts to protect New Zealand donot unduly delay the majority oflegitimate trade and travel. Customsalso protects the Crown revenue baseby actively managing non-compliance.The Protection outcome underpins allthat we do.All of our operations rely on our riskapproach. This approach is supportedby significant intelligence, processes,technology, and systems with riskassessment capabilities. Specifically,our risk approach contributes to thefollowing impact: maintained high levelsof compliance, and additional impactsdetailed under the Ministerial prioritylater in this section.One of the ways that Customsmanages risks is through our presence.We maintain our preparedness andability to respond to risks throughroutine patrols and exercises withother agencies in New Zealand andoverseas. We seek to understandrisks through a presence in areas weeither know little about, or need toupdate what we know. This involvesengaging with traders, travellers, andother parties, including governmentagencies and non-governmentorganisations in New Zealand andoverseas, to inform our intelligence.Our understanding of the riskenvironment enables us to decidewhether or not we need to reduceour presence in areas of low risk; andmaintain or increase our presence toinfluence levels of risk by detectingand deterring illegal activities.Customs promotes compliance anddeters offending through directenforcement, investigations, andprosecutions. We deter offendingby applying sanctions that areproportionate to the scale ofoffending.The Protection outcome is deliveredthrough services across fiveoutput classes for Vote Customs. 7These involve managing risks toNew Zealand through clearingpeople, goods, and craft acrossthe border, while enforcing thelaw. We provide information andintelligence services to other agenciesthat contribute to New Zealand’ssecurity; and policy advice andinternational services to governmentagencies and non-governmentorganisations both in New Zealandand overseas.MINISTERIAL PRIORITYFrom 2011/12, Customs will givepriority to the following, as agreedwith the Minister of Customs:Increase disruption of supplyand dismantle criminalnetworks, particularly for illicitdrugs and people smuggling,and maintain responsiveness asrisks changeWe will deliver this priority throughtwo initiatives:» Disrupt supply of illicit drugs,particularly methamphetamineor ‘P’ and its precursors»Combat the risk of peoplesmuggling, and risks associatedwith major international events.6 Customs counters threats and risks that include: trans-national organised crime linked to international terrorism, weapons of mass destruction proliferation, and other threats; illicitdrug smuggling and smuggling of other prohibited goods, such as objectionable material, and wildlife; people smuggling; Intellectual Property Rights infringements; fraud; Crownrevenue evasion; pandemics; and the illegal removal of Māori tāonga (treasured items) and other cultural heritage items from New Zealand.7 Clearance and enforcement services relating to passengers, crew, and their possessions; Clearance and enforcement services relating to goods; Clearance and enforcementservices relating to craft; Information and intelligence services; and Policy advice and international services.New Zealand Customs Service 15

Disrupt supply of illicit drugs,particularly methamphetamineor ‘P’ and its precursorsIMPACTS AND OBJECTIVES WE SEEKTO ACHIEVE 8From 2011/12, we will seek to achievethe following impacts relating to thisinitiative:»»increased disruption of illegalborder activityreduced harm and potential harmfrom illicit people and goods.This initiative and related impactshelp us to deliver on our Protectionoutcome and to achieve saferNew Zealand communities.It contributes to the Government’sNational Drug Policy 2007–2012,to reduce the supply of illicit drugsto the community; and theGovernment’s TacklingMethamphetamine: An Action Plan,with New Zealand Police to disruptand close down New Zealand’s‘P’ trade. We also aim for moreefficient and effective investigationsby implementing advancedtechnology.WHAT WE WILL DO TO ACHIEVETHESE IMPACTS AND OBJECTIVESCustoms will continue targetedoperations and inspectionsexercises to disrupt the supplyof illicit drugs, particularlymethamphetamine or ‘P’ and itsprecursors, the chemicals used tomanufacture ‘P’. This initiative is basedon recent success. In 2010, targetedoperations continued to intercept highquantities of ‘P’ and its precursors.This included 18.5 kg of ‘P’ seizedbetween January and October 2010,7.5kg more than in the same periodthe year earlier; and nearly a tonne(967kg) of precursors, equating indollar terms from $79 million to $110million of avoided harm.Our investigations approach todisrupt illegal activities seeks a stepchange in outcome and efficiency,supported by advanced technology.The technology will enable moreeffective investigations for lengthierperiods and deeper into criminalnetworks, and alleviate pressure onresources. Pressure points include thecapacity to undertake more complexinvestigations, and enquiries intoresource flows of criminal operations.Combat the risk of peoplesmuggling, and risks associatedwith major international eventsIMPACTS AND OBJECTIVES WE SEEKTO ACHIEVEFrom 2011/12, we will seek to achievethe following impacts relating to thisinitiative:»»reduced harm and potential harmfrom illicit people and goodsincreased disruption of illegalborder activity.This priority and related impactsreflect the potential harm thatcould be caused to New Zealand’sreputation and economy by risksassociated with high-profile, one-offevents. The Government expectsagencies to be well prepared toidentify risks, and respond to themeffectively and efficiently. Thisincludes mounting a coordinatedcollective response to risks relatedto people smuggling, and majorinternational events such as theRugby World Cup.Over time, the investigationsapproach will apply to all prohibitedgoods, while recognising thatcriminal activities are often linkedand span across areas, such as moneylaundering, fraud, and the smugglingof weapons and illicit drugs. Wewill also investigate with a view todisrupting the financial flows ofcriminal operations.8 An impact is the direct societal, economic, or environmental change or effect made to an outcome by a specified set of outputs and/or actions.16 Statement of Intent 2011–2014

WHAT WE WILL DO TO ACHIEVETHESE IMPACTS AND OBJECTIVESDuring 2011, Customs will continuepreparedness exercises to respondto people smuggling, and potentialrisks relating to the Rugby WorldCup. In the medium term, Customswill continue to work with theDepartment of Labour and otheragencies in New Zealand and overseasto both monitor and prepareto respond to the risk of peoplesmuggling.From 2011/12, we will support theimpacts sought by improving Customs’risk approach, particularly the linksbetween intelligence functions, risktargeting, and operational planning andcoordination, to enable more efficientresource allocation through theIntegrated Targeting and OperationsCentre (ITOC). 9 Over the mediumterm, we will support these effortsthrough advanced risk assessmentcapability within the Joint BorderManagement System, once developed.New Zealand is relatively safe, butas for other countries there is a riskfrom those who seek to disrupt largegatherings at major internationalevents. Customs will thereforecontinue to engage in multi-agencyexercises led by the New ZealandPolice to respond to potential risksduring the 2011 Rugby World Cup.HOW WE WILL DEMONSTRATESUCCESSWe will demonstrate performancefor the Protection outcome as detailedbelow:Protection outcome measuresThe indicators demonstrate that New Zealand is well protected based on perceptions of New Zealand as a safe place.The second indicator reflects how Customs contributes to this perception.PROTECTIONOUTCOME STATEMENT INDICATOR MEASURE 10 BASELINENew Zealand ismore safe and securethrough reduced riskto New Zealand’sinterests arising frominternational tradeand travelNew Zealand’s rankingin international risksurveys is maintainedPublic perceptions ofborder security threatsand risks 13New Zealand’s ranking for risk ratings asmeasured by indicative country comparisonsfrom the Economist Intelligence Unit’s RiskBriefing 11Public confidence that Customs protectsNew Zealand from external threats asmeasured by Customs’ stakeholder surveyAmong 12 the top 15 (thirdequal in 2009, out of 172countries)47-70% confidenceacross six dimensions asmeasured by Customs’2010 stakeholder survey9 The Integrated Targeting and Operations Centre is a multi-agency border sector headquarters, led by Customs and located within Customs. Currently, participating agencies includethe Ministry of Agriculture and Forestry, Department of Labour (Immigration), and Maritime New Zealand.10 The performance measures and standards cover the period 2011-2014. Performance will be measured selectively in that period rather than annually.11 Country comparisons in international surveys and indices cover more than just customs activities.12 New Zealand is within a cluster of 15 countries that are rated as being of low security risk. The measure includes components around violent crime and organised crime –factors that are enabled by the availability of weapons, drug trafficking, and other organised crime.13 In the absence of frequent incidents, security is difficult to measure directly. Perceptions of security are included here because the survey draws on the knowledge of a largenumber of people about security in New Zealand.New Zealand Customs Service 17

Impacts for the Protection outcomePROTECTIONIMPACT 14 INDICATOR MEASURE AND TARGET BASELINEReduced harm andpotential harm fromillicit people andgoodsLevel of harm to the NewZealand communityand national intereststhat is avoided throughCustoms’ drug seizuresThe value of harm avoided through Customs’drug seizures, as measured by indicative datafrom the New Zealand Drug Harm Index 15$92.15 million in2008/09Increased disruptionof illegal borderactivityLevel of interdiction ofillicit drugsIllicit drugs with a significant imported contentare harder to obtain compared with 2010/11as measured by the availability score in theIllicit Drug Monitoring System (SHORE) 16Availability of majordrug groups in 2006:methamphetamine, 1.8;crystal methamphetamine,2.1; LSD, 2.4; and Ecstasy,2.1Level of economic losssuffered by importers ofillicit goodsImporters of illegal goods incur increasedlosses through seizure of illicit drugs, goodsinfringing Intellectual Property Rights (IPR)and other goods (loss in illegal gains basedon the estimated street value of drugs and theestimated market value of goods seized)To be establishedMaintained highlevels of complianceMaintained levels ofcompliance in areasthat currently have highcomplianceLevel of compliance found among small craft isat least 60%To be establishedMeasure of cost-effectiveness for the Protection outcomeDIMENSION MEASURE ESTIMATED BASELINEProtectionRatio of value of drug harm prevented as a percentage 74.29% in 2008/09of Vote Customs 1514 Inferences about impacts are based on the set of measures, rather than any single measure.15 Customs does not control the quantity of drugs and precursors that traffickers attempt to move across the border. There is currently no consensus on the volume of drugs inthe New Zealand market. Police estimates are an order of magnitude greater than epidemiological and economic estimates. Without such a consensus, Customs cannot provide acontext for this measure.16 SHORE is an acronym for the Centre for Social and Health Outcomes, Research and Evaluation, Massey University, Albany.18 Statement of Intent 2011–2014

OUTCOME: TRADENew Zealand’s trade fl ows more freely through improved access to markets, and more secure and efficientborder processesManaging the border effectivelyenhances New Zealand’s reputation asa secure and reliable country to tradewith. New Zealand’s reputation iscritical to our ability to compete withother countries for trade.Customs work with others to protectour reputation and trade interests byassuring partners that New Zealand’sexports pose low risks to theircountries, and New Zealand’s bordermanagement is reliable, trustworthy,and efficient.We facilitate trade to and fromNew Zealand, and seek to managerisks in ways that do not cause unduedelays or costs to traders. Customsalso supports New Zealand exportersto access overseas markets throughinput to New Zealand’s free tradeagreements, and by negotiatingcustoms partnerships with overseascounterparts.We implement and administer thecustoms aspects of these agreementsonce they are enacted or completed.Our agreements and relationshipshelp to improve the passage ofNew Zealand trade through customsin New Zealand and overseas, whilemaintaining appropriate levels ofsecurity.The Trade outcome is deliveredthrough services across three of thesix output classes for Vote Customs. 17Customs clears goods at the borderthrough electronic import andexport entries for goods, and directinteraction.We maintain security through ourenforcement mandate and riskapproach. This approach relieson information, and integratedintelligence with risk assessmentcapabilities that target resourcesto areas of higher risk. It enablesCustoms to clear the majority oflegitimate trade with little or nointervention at the border. Customs’policy and international servicesadvance New Zealand’s tradefacilitation and security interests.MINISTERIAL PRIORITYFrom 2011/12, we will give priorityto the following, as agreed with theMinister of Customs:Streamline and simplify tradefacilitation, and promote secureand efficient trade, particularlywith Australia and ChinaWe will deliver this priority throughtwo initiatives:»Progress New Zealand’s free tradeagreements agendaProgress New Zealand’s freetrade agreements agendaIMPACTS WE SEEK TO ACHIEVE 18From 2011/12, Customs will seek toachieve the following impacts relatingto this initiative:»increased access to overseasmarkets» improved passage of New Zealandtrade through customs inNew Zealand and overseas.These impacts contribute to theGovernment’s goal to build thefoundations for a stronger economy, andenduring growth, and its focus for2011 on New Zealand exports.The initiative recognises that freetrade agreements (FTAs) are animportant mechanism for enablingmarket access for New Zealandexporters; while recognising theongoing challenge for New Zealandto increase exports and ensure webenefit from increased trade.»Promote secure and efficientinternational supply chains.17 Clearance and enforcement services relating to goods; Information and intelligence services; and Policy advice and international services.18 An impact is the direct societal, economic, or environmental change or effect made to an outcome by a specified set of outputs and/or actions.New Zealand Customs Service 19

WHAT WE WILL DO TO ACHIEVETHESE IMPACTSFrom 2011/12, Customs willcontinue to negotiate procedureswithin New Zealand’s free tradeagreements (FTAs) to enabletransparent and prompt goodsclearance, and implement agreements,once in force, to improve the passageof trade. Customs is currentlysupporting the Ministry of ForeignAffairs and Trade (MFAT) in freetrade negotiations for the:» Expansion of the Trans-PacificStrategic Economic Partnership(TPP) 19»»»»Pacific Agreement on CloserEconomic Relations (PACER Plus)New Zealand-Korea FTANew Zealand-India FTANew Zealand-Russia-Belarus-Kazakhstan FTA.Customs plays a significant role inthe ongoing implementation anddelivery of benefits to New Zealand’seconomy under the free tradeagreements that have been signed inrecent years. From 2011/12, we willcontinue to work with China Customsto streamline trade between our twocountries under the New Zealand-China FTA; and respond to feedbackprovided by businesses in late 2010on the review of that FTA. Customswill also continue to work with MFATto review processes under the NewZealand-Australia-ASEAN FTA. 20Promote secure and efficientinternational supply chainsIMPACTS AND OBJECTIVES WE SEEKTO ACHIEVEFrom 2011/12, Customs will seek toachieve the following impacts:» improved passage of New Zealandtrade through customs inNew Zealand and overseas»»reduced compliance burden fortradersmaintained high levels ofvoluntary compliance.These impacts support theGovernment’s goal to build a strongereconomy, in particular its focus onexports, and will help exporters tocompete internationally.We will improve the environment forbusiness at the border by deliveringgreater reliability and predictability ofborder clearance processes for traders.We will also help to assure othercountries that New Zealand exportspresent a low risk to them, therebyfacilitating more predictable tradeclearance through customs in thosecountries; more streamlined tradeprocesses, improved trade security,and increased efficiencies for tradersand the Government.WHAT WE WILL DO TO ACHIEVETHESE IMPACTS AND OBJECTIVESFrom 2011/12, we will continueto develop customs-to-customsrelationships with key trading partnersthrough mutual recognition andcooperative arrangements, andmaintain existing arrangements.This includes preparing to progressa mutual recognition arrangementwith Korea.Customs will also develop a CargoManagement Strategy with theMinistry of Agriculture and Forestryfrom 2011/12, to be implemented inthe medium term. A critical elementof the Strategy involves maintainingtrade security, so that New Zealandcan continue to assure partners that19 Original parties to the TPP were Brunei Darussalam, Chile, Singapore, and New Zealand. The expansion of TPP include additional countries, such as the United States, Australia,Peru, Viet Nam, and Malaysia. PACER Plus includes countries belonging to the Pacific Islands Forum, such as Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Nauru,Niue, Palau, Papua New Guinea, Republic of Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu.20 ASEAN — stands for the Association of South East Asian Nations, and is comprised of Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines,Singapore, Thailand, and Viet Nam.20 Statement of Intent 2011–2014

our trade presents a low risk to theircountries. We will therefore continueto promote trade security amongNew Zealand traders; and secure thepassage of New Zealand exportsthrough customs domestically andoverseas, while maintaining ourvigilance of risks.Customs will also engage withtraders to improve their knowledgeof compliance requirements, anddevelop services with them thatbetter meet their needs and accountfor differing levels of risk.From 2011/12, Customs will continueto implement Stage 1 of the JointBorder Management System (JBMS)to achieve advances in automatedprocessing and efficiencies. Thisincludes its ability to assimilate dataquickly, and integrate with systemsfor industry, and other agencies inNew Zealand and overseas.We will work with industry to improvedata quality that will enable Customsto target resources to areas of higherrisk, and reduce intervention for themajority of compliant traders andgoods. Following the approvalof the primary vendor at the start of2011, Customs will also commencedeveloping the Trade SingleWindow (TSW), and completeimplementation during 2012/13.The TSW is a single electronic portallinking border sector agencies withindustry; making it easier for tradersto meet border requirements, whilereducing their bureaucracy andrelated costs.The JBMS–TSW will also supportMAF’s biosecurity risk managementthrough advanced risk assessmentcapability within the JBMS; andmore integrated intelligence and risktargeting through the IntegratedTargeting and Operations Centre.Customs will continue to developboth initiatives from 2011/12.Our risk approach will enableCustoms to facilitate the majorityof compliant trade, while limitinginterventions for traders and goodspresenting high risk.The Cargo Management Strategyand the JBMS–TSW will supportCustoms’ work with AustralianCustoms and Border Protection toimprove the trans-Tasman tradeenvironment and identify furtherareas of work that contribute to theSingle Economic Market agenda.HOW WE WILL DEMONSTRATESUCCESSWe will demonstrate performance forthe Trade outcome as detailed below:Trade outcome measuresThese indicators demonstrate how well New Zealand’s trade facilitation is regarded based on perceptions of tradecompliance costs and clearance services at the border.TRADEOUTCOME STATEMENT INDICATOR MEASURE BASELINENew Zealand’s tradefl ows more freelythrough improvedaccess to markets,and more secureand efficient borderprocessesCustoms’ relativerankings in domestic andinternational comparisonsare maintainedNew Zealand’s ranking for costs to import andexport goods as reported in the World Bank’sannual Doing Business SurveyNew Zealand’s ranking on the customssubscale in the World Bank’s LogisticsPerformance IndexRanked 46th of 181countries in costs to importand 33rd of 181 countriesin costs to export in 200918th of 146 countries in2007New Zealand’s ranking for border facilitationon the World Economic Forum Enabling TradeIndex Border Administration subscaleThird overall of 190countries in 2008New Zealand Customs Service 21

Impacts for the Trade outcomeTRADEIMPACT INDICATOR MEASURE AND TARGET BASELINEIncreased access tooverseas marketsBenefits realisedfollowing implementationof FTAReview of FTA implementation, including withother agencies as appropriateTo be confirmed. Thereview is likely to bequalitative, rather thanquantitativeImproved passage ofNew Zealand tradethrough customs inNew Zealand andoverseasInspection rate of goodsto the United States asthey leave New ZealandMaintained lower inspection rate for goods tothe United States for members in the SecureExports Scheme (SES)To be confirmedReduced complianceburden for tradersNumber of documentsrequired to completeborder processesReduction in the number of documents requiredfor imports and exports under JBMSBaseline to be establishedin 2010/11Cost to complete an entryReduction in the cost of preparing documentsrequired for imports and exports under JBMSBaseline to be establishedin 2010/11Maintained highlevels of voluntarycomplianceCommercial clients find iteasy to complyThe percentage of commercial clients that findit easy to comply as measured by the Customsstakeholder survey is at least as great in 200885% of commercial clientsfind it easy to comply(2008)Commercial clients trustCustomsThe percentage of commercial clients thattrust Customs as measured by the Customsstakeholder survey is at least as great in 200888% of commercial clientstrust Customs (2008)Compliance levels as measured in a randomsample of import and excise transactionsBaseline to be establishedin 2010/11Measure of cost-effectiveness for the Trade outcomeDIMENSION MEASURE ESTIMATED BASELINETrade Goods clearance cost as a percentage of the value of trade < 0.08% in 2008/0922 Statement of Intent 2011–2014

OUTCOME: TRAVELTravel to and from New Zealand fl ows more freely through more secure and efficient border processesNew Zealand competes with othercountries for tourists and trade.Managing the border effectivelyenhances New Zealand’s reputation asa safe and secure country to trade withand travel to, and is therefore criticalto our ability to compete for tourists.Customs facilitates internationaltravel, while maintaining safety andsecurity in ways that do not causeundue delay or costs to travellers.We aim to improve the travelexperience through New Zealand’sborder for legitimate travellers, whilemanaging risks. This involves workingwith other border sector agencies todeliver more integrated and seamlessborder services, supported by moderntechnology.The Travel outcome is deliveredthrough services across four of thesix output classes for Vote Customs. 21Customs facilitates the passage ofcraft, and people and their possessionsthrough direct interaction, and selfservicetechnology for some travellers.We maintain security through ourenforcement mandate and riskapproach. This approach relieson information, and integratedintelligence with risk assessmentcapabilities that target resources toareas of higher risk. This enablesCustoms to clear the majority oflegitimate travel with little or nointervention at the border. Customs’policy and international services seekto advance New Zealand’s travelfacilitation and security interests.MINISTERIAL PRIORITYFrom 2011/12, Customs will seek toachieve the following, as agreed withthe Minister of Customs:More efficient, streamlined, andsecure passenger facilitation,particularly for trans-Tasmanand Asia-Pacific travelWe will deliver this priority throughthe following initiative:Expand the SmartGateprogramme, trial SmartGateintegration with Australia, andimprove our risk approachto support rising travel fromAustralia and the Asia-PacificIMPACT AND OBJECTIVES WE SEEK TOACHIEVE 22From 2011/12 Customs seeks toachieve the following impacts:»»improved experiences for travellersthrough border processesmaintained high levels ofvoluntary compliance.These impacts support theGovernment’s goal to build astronger economy. In particular,it seeks to support New Zealand’stourism economy by improving theborder experience for complianttravellers, especially Australians andNew Zealanders, while continuing tomanage risks effectively.It will also enable Customs andother border agencies to deal withincreasing travel volumes and risksin the medium term, without acomparable increase in costs, whileachieving more efficient passengerprocesses.21 Clearance and enforcement services relating to passengers, crew, and their possessions; Clearance and enforcement services relating to goods; Information and intelligenceservices; and Policy advice and international services.22 An impact is the direct societal, economic, or environmental change or effect made to an outcome by a specified set of outputs and/or actions.New Zealand Customs Service 23

WHAT WE WILL DO TO ACHIEVE THISIMPACT AND OBJECTIVESFrom 2011/12, Customs will expandthe existing SmartGate programme toincrease the numbers of self-servicekiosks and gates in key New Zealandairports. We will also trial a SmartGateintegration initiative that creates a fullself-service arrivals and departuresexperience between Australia andNew Zealand.The expansion programme recognisesthe success of uptake since SmartGatewas introduced in December 2009. 23Around 50 percent of New Zealande-passport holders use SmartGate,and uptake in New Zealand isexpected to increase once thedepartures programme is completedduring 2011. By 2015, all Australianand New Zealand passport holdersare expected to have e-passports.We therefore expect user demandfor SmartGate in Australiaand New Zealand to rise in themedium term.Customs expects to respond toincreasing travel volumes from somecountries in either the Asia-Pacific orother regions presenting higher levelsof risk. The SmartGate expansionprogramme will relieve some pressureon manual processing from increasingtravel flows, and free up resourcesthat enable risks to be managedeffectively.Customs’ risk approach is criticalto more efficient, streamlined, andsecure travel facilitation for arrivalsfrom Australia, the Asia-Pacific, andother countries. From 2011/12, asmentioned for the Trade outcome,implementing the advanced riskassessment capability in the JointBorder Management System; and moreintegrated intelligence with targetingfunctions within the IntegratedTargeting and Operations Centre willbe critical to delivering the impactssought, while enabling more efficientresource allocation.These initiatives will also enableCustoms to facilitate the majority ofcompliant travellers, while limitinginterventions to travellers and theirpossessions presenting high risk,thereby reducing travel risks overall.HOW WE WILL DEMONSTRATESUCCESSWe will demonstrate performance forthe Travel outcome as follows:23 From December 2009 to mid-November 2010, more than half a million travellers used SmartGate in New Zealand. Nearly 85 percent of those surveyed in 2010 would like to useSmartGate “at every opportunity”.24 Statement of Intent 2011–2014

Travel outcome measuresThese indicators demonstrate how well New Zealand’s travel facilitation is regarded based on the perceptions of travellersusing Auckland Airport.TRAVELOUTCOME STATEMENT INDICATOR MEASURE BASELINETravel to and fromNew Zealand fl owsmore freely throughmore secure andefficient borderprocessesRating of immigrationprocess at AucklandAirportRanking of the airport immigration service atAuckland Airport, as measured by the SkytraxWorld Airport AwardsTo be determined in 2011Impacts for the Travel outcomeTRAVELIMPACT INDICATOR MEASURE AND TARGET BASELINEImproved experiencefor travellers throughborder processesTravellers are satisfiedwith their experience ofCustoms’ serviceThe percentage of travellers who rate theirexperience of immigration processing as goodor very goodTo be established in2011/12Maintained highlevels of voluntarycomplianceTravellers found to benon-compliantThe proportion of travellers found to be noncompliantTo be established in2011/12Travellers’ trust inCustomsThe percentage of travellers who trust Customsas measured by the Customs stakeholder surveyis at least as great as 200885% in 2008Helpfulness of informationprovided by CustomsThe percentage of travellers that find theinformation provided by Customs helpful, asmeasured by the Customs stakeholder survey isat least as great as in 200880% in 2008Measure of cost-effectiveness for the Travel outcomeDIMENSION MEASURE ESTIMATED BASELINETravel Cost per passenger processed < $5 in 2008/09New Zealand Customs Service 25

OUTCOME: REVENUEThe rate of collection of due Crown revenue is maintained for New ZealandCustoms collects 15 percent ofCrown revenue from import duty,excise equivalent duty, goods andservices tax at the border, and exciseduty within New Zealand. Collectingdue Crown revenue effectively andefficiently is critical to supportingthe Government to meet its goals forNew Zealanders. 24Customs supports the integrityof the tax system by maintainingcompliance through fair and effectiveadministration that seeks to increasevoluntary compliance. This recognisesthat the majority of traders andtravellers aim to meet their revenueobligations on time. We seek toprovide credit and debt managementservices that are efficient, effective,and appropriate to the economicconditions facing New Zealandtraders. We discourage deliberate noncompliancethrough active monitoringand enforcement.IMPACTS AND OBJECTIVES WE SEEKTO ACHIEVE 26Customs seeks to achieve thefollowing impact: maintained andtimely collection of due Crownrevenue efficiently and effectively.This impact is assumed on the basisthat New Zealand’s economy willcontinue to improve despite thefragile global economic recovery;and that the forecast Crown revenuefor Customs to collect is consistentwith the Government’s economicand fiscal policies.Our compliance approach helpsCustoms to achieve three furtherimpacts: maintained high levelsof voluntary compliance; reducedintervention with compliantclients; and reduced risk fromnon-compliance; and deliver onthe Government’s aim to strengthenthe economy by building strongerGovernment accounts.Customs will continue to monitorand actively manage deliberate noncompliance,including fraud. This mayinvolve imposing sanctions on thesmall minority who defer paymentwithout formal arrangements, orevade their revenue obligations.We expect to continue to manage therisks of some traders not being ableto meet their revenue obligations ontime, as the slow global economicrecovery continues to impactnegatively on some sectors withinNew Zealand. We will thereforecontinue to manage our collectionand debt management services inappropriately responsive ways that donot place otherwise viable businessesat risk.HOW WE WILL DEMONSTRATESUCCESSWe will demonstrate performance forthe Revenue outcome as follows:The Revenue outcome is deliveredthrough services across three of thesix output classes for Vote Customs. 25These include: processing revenueowed to the Crown, and leviescollected for other agencies, suchas the Heavy Engineering ResearchAssociation (HERA); providingrevenue assurance through revenueaudits, managing credit and debt; andproviding policy advice on Crownrevenue, collection, and management.WHAT WE WILL DO TO ACHIEVETHESE IMPACTS AND OBJECTIVESFrom 2011/12, Customs will continueto promote high levels of voluntarycompliance by providing tradersand travellers with easy access toinformation about their revenueobligations that is timely and easy tofollow. Our declaration systems andprocesses will continue to be efficientand easy for traders to use. We willalso continue to work with industrysectors and individual traders on theirrevenue obligations, and the Crownrevenue liability relating to excise oninternational and domestic trade.24 Crown revenue supports other economic and social outcomes. Excise duties are levied for a number of reasons, including duties to reduce demand for goods, such as cigarettescontributing to social costs. Customs tariffs are collected on a small number of commodities to protect vulnerable industries in New Zealand from competing producers in lowercosteconomies.25 Revenue collection services; Clearance and enforcement services relating to goods; and Policy advice and international services.26 An impact is the direct societal, economic, or environmental change or effect made to an outcome by a specified set of outputs and/or actions.26 Statement of Intent 2011–2014

Impacts for the Revenue outcomeREVENUEIMPACT INDICATOR MEASURE AND TARGET BASELINEMaintained andtimely collection ofdue Crown revenueRevenue that is invoicedis collectedPercentage of revenue invoiced that is collectedis no less than 2010/11 levelsBaseline to be establishedin 2010/11Revenue that is not paidis followed upPercentage of total revenue collected that isdebt write-off is no more than 2008/09 levels< 0.02% in 2008/09Maintained highlevels of voluntarycomplianceRevenue compliancelevelsRisk-based compliance and assurance processesconfirm high levels of compliance by generatingassessed revenue (excluding penalties) that isless than 1% of total revenue collected0.49% in 2008/09Verification of compliance in a random sampleof import and excise transaction indicates highlevels of complianceBaseline to be establishedin 2010/11Reduced interventionwith compliant clientsRevenue is paid by thedue dateMaintained percentage of revenue that iscollected by the due date99.7%Reduced risk fromnon-complianceAdditional revenue foundfrom non-compliantentriesTotal revenue found in non-compliant entriesBaseline to be establishedin 2011/12Measure of cost-effectiveness for the Revenue outcomeDIMENSION MEASURE ESTIMATED BASELINERevenueRatio of the value of aged debt collected to the cost ofrunning the National Credit Control Unit8:1 in 2008/09New Zealand Customs Service 27

CUSTOMS’ ORGANISATIONALHEALTH AND CAPABILITYIn the next three years, Customs will need to manage increasing volumes of trade and travel, particularly fromAustralia, China, and other countries in the Asia-Pacific region. We also expect to manage related risks within anenvironment of fiscal constraint. Delivering on significant investments; and continuing an innovative and fl exibleapproach are critical to meeting our service demands and the Government’s expectations for the public sector,particularly to deliver value for money, and better results from the public services New Zealanders rely on.OUR PEOPLEAbout 70 percent of our 1,200 staffare frontline Customs officers. Theremainder are intelligence and otherspecialists who support Customs’operations, and Customs’ ability tohave influence in international anddomestic policy settings.Our people are critical toNew Zealand’s reputation as asafe and secure country, throughtheir delivery of reliable and effectiveborder management. Our staffintegrity is also critical to Customs’positive reputation, which contributesto why the majority of traders andtravellers continue to comply withborder requirements.From 2011/12, we will continue ourapproach to managing ports, whichrequires staff to work flexibly across arange of functions to deliver serviceseffectively. The approach enablesCustoms to meet service demandsfrom increasing trade and travel, andrelated risks, by moving staff to areasfacing increasing pressure.From a staff perspective, theapproach provides developmentopportunities, greater role variation,and increased job satisfaction,thereby supporting staff retention.Customs additionally benefits fromthe improved capability of frontlinestaff. Our approach to managing portsis critical to delivering better results fromthe public services New Zealanders relyon, and managing within tight fiscalconstraints.During the period of this Statement ofIntent we expect significant changes inour operational processes, facilitatedby the investments being made ininformation systems, automatedprocessing and other technologies.These changes are expected to enableus to meet increased trade and travelvolumes without a comparableincrease in staff, by deliveringefficiencies that will enable valuableofficer time to be redirected towork delivering higher value. Thisis likely to require additional staffdevelopment. It may also requireus to reconsider, over time, how weallocate staff across functions.The challenges facing Customs,and the public sector broadly, placeadditional demands on our leadersand managers. It is therefore criticalthat managers at all levels are wellequipped to demonstrate theirleadership across the organisation tomeet the challenges.Customs will continue to implementprogrammes that support managersto lead their staff effectively, whichinclude encouraging an innovativeapproach to service delivery andfacilitating learning and careerdevelopment.PROCESSES, INFORMATION,SYSTEMS, AND TECHNOLOGYCustoms will continue to respond tointernational and domestic demand formore integrated border systems andprocesses that help to secure supplychains, improve the border experiencefor traders and travellers, and provideefficiencies to both New Zealandindustry and the Government.Customs’ Trade priority to streamlineand simplify trade facilitation, andpromote secure and efficient trade,particularly with Australia andChina, detailed on page 19, continuesefforts to promote secure andefficient supply chains. This involvesbetter facilitation and trade securityand includes the following initiatives.» Customs will commenceimplementing Stage 1 of the JointBorder Management System–Trade Single Window (JBMS–TSW). From 2011/12, it involvescontinuing to build Stage 1 of theJBMS. It also includes preparinga business case for the Stage 228 Statement of Intent 2011–2014

development projects during2011/12, to secure additionalfunding to develop and implementthe remainder of the JBMS from2012/13.The JBMS–TSW will providesignificant infrastructure at theborder that supports New Zealand’strade, travel, protection, revenue,and other border interests.» Following the selection of theprimary vendor during 2010/11,Customs will commencebuilding the Trade SingleWindow (TSW) from 2011/12.It is expected to be implementedand operational in 2012/13through the JBMS and existingborder management system.Once implemented, the TSW willlink industry with multiple borderagencies via a single electronicportal, enabling it to meet borderrequirements with reducedbureaucracy and compliance costs.Customs’ Travel priority for moreefficient, streamlined, and securepassenger facilitation, particularlyfor trans-Tasman and Asia-Pacifictravel, detailed on page 23, continuescurrent efforts with border sectoragencies to further integrate borderprocesses, particularly for trans-Tasman travel. The priority supportsthe commitment by the Australianand New Zealand Governments toaccelerate efforts towards greatertrans-Tasman economic integration,and respond to increases in servicedemands.In the medium term, Customsseeks to expand the SmartGateprogramme to increase the numbersof self-service kiosks and gates forarrivals and departures in Auckland,Wellington, and Christchurch airports,and trial a SmartGate integrationinitiative with Australia.The expanded programme willsupport the expected increase intravel from Australia, and the uptakeof SmartGate by the increase inAustralians and New Zealanders whoare eligible to use SmartGate.The proof-of-concept integrationtrial will explore the potential for afull SmartGate self-service arrivalsand departures experience for trans-Tasman travel across key ports inNew Zealand and one in Australia.Customs’ Protection priority, on page15, to increase disruption of supplyand dismantle criminal networks,particularly for illicit drugs andpeople smuggling, and maintainresponsiveness as risks change,seeks a step change in Customs’investigations approach, enabledby advanced technology.From 2011/12, Customs will continueto develop and implement thetechnology, expected to be operatingduring 2012/13. It will enableinvestigations for lengthier periodsand deeper into criminal operationsto identify the organisers, and bringthem to account.MANAGING OPERATIONAL RISKSAs mentioned for each priority, onpages 15 to 23, we will improve ourrisk approach through the followingcapability initiatives.» From 2011/12, following theselection of the primary vendorduring 2010/11, Customs willcommence building advancedrisk assessment capabilitywithin the JBMS; expected to befully operating in 2012/13.It involves working with theMinistry of Agriculture andForestry to improve its approachto biosecurity risks; and with theDepartment of Labour (DoL) toensure the risk and intelligencecapability is interoperable withDoL’s new Immigration GlobalManagement System. Thecapability is critical to identifyingtravellers, traders, and goods withwhich Customs and other borderagencies need to interact directlywith, thereby enabling moreefficient targeting of resources.Customs will further» integrate itsintelligence functions with risktargeting within the IntegratedTargeting and OperationsCentre (ITOC) from 2011/12.This will achieve a more effectiveand timely use of intelligenceinformation to support targetingand resource decisions. We willalso improve the ITOC based onthe findings of a review completedat the end of 2010/11.New Zealand Customs Service 29

Customs will continue with a moreflexible enforcement approach thatrecognises the range of and mosteffective options available to Customsofficers for deterring potential noncompliance,and applying sanctionsfor deliberate non-compliance. Theapproach will make better use of newand existing border controls, therebyreducing pressure on Customs’investigations and prosecutionsresources. We will support thisapproach by implementingdevelopment programmes forfrontline staff.From 2011/12, we will also continueto progress a review of Customs’Management Information Systems.This will enable us to identifyand eventually provide managerswith information they require tomake effective decisions, monitorperformance, and plan and act toimprove performance, and report it.RELATIONSHIPSOur relationships with industry andgovernment agencies in New Zealandand overseas are critical to improvingthe business and travel environmentat the border; achieving theGovernment’s aim to build a brighterfuture for New Zealand; and deliveringon Customs’ impacts and priorities, asdetailed under Collaboration on page 8,and in other relevant sections.From 2011/12, Customs willcontinue to provide input tointernational and domestic policysettings, such as the World CustomsOrganization, and New Zealand’sexpanding free trade agreementsprogramme with the Ministry ofForeign Affairs and Trade, detailedon page 20. Our partnerships withcustoms counterparts overseas aimto ease the passage of New Zealand’strade and travel, while protecting ourinterests.We will continue to work withindustry and government agencies inNew Zealand and overseas to deliveron Customs’ priorities. This includesthe SmartGate expansion programmeand SmartGate integration trial withAustralian counterparts; and effortsto improve the trans-Tasman tradeenvironment, detailed on page 21.Improving coordination with bordersector agencies is critical to deliveringmore streamlined and efficientborder services. As mentionedearlier, we will work with MAFand DoL to implement the JointBorder Management System–TradeSingle Window to ensure the systemsupports each agency’s objectives.Customs will continue to workwith the Department of Labour(Immigration) and other agencies tocombat people smuggling; and theNew Zealand Police to combat threatsposed by major international events,and to disrupt the supply of illicitdrugs. We will also undertake jointtargeting of methamphetamine andits precursors with China Customs.This includes implementing theStatement of Cooperation betweenNew Zealand and China Customs,signed by Ministers for both countriesin 2010.From 2011/12, we will continueto promote secure and efficientsupply chains, which include engagingwith traders on ways to improveservices to meet their diverse needs,detailed on page 20; and partnershipswith exporters to promote securetrade through the Secure ExportsScheme to the United States.It also includes a continuedpartnership with New Zealand Postat the International Mail Centre,where processes help Customs todisrupt smuggling and the entryof harmful goods.30 Statement of Intent 2011–2014

Customs will continue to engage withdefence forces and New ZealandPolice to maintain vigilance, andrespond to risks; and a numberof agencies on information andintelligence. This includes the work ofthe National Maritime CoordinationCentre (NMCC) within Customs toprotect New Zealand’s interests withinour seas by prioritising and assigningcraft to civilian agencies according torisk, as required for surveillance andresponse. 27HOW WE WILL DEMONSTRATESUCCESSWe will demonstrate our progresstowards indicators of performanceas detailed below:PeopleINDICATOR MEASURE AND TARGET BASELINEClient and public perceptionsof the integrity, respect,commitment and agility ofCustomsInternational travellers andcommercial customers have thesame or greater satisfaction withstaff demonstration of Customs’core values» International travellers rating Customs as high or veryhigh in upholding its values: commitment, 83%; integrity,79%; respect, 78%, agility, 39% in 2008» Commercial stakeholders rating Customs as high or veryhigh in upholding its values: commitment, 92%; integrity,89%; respect, 82%; agility, 51% in 2008Customs’ staff engagementwith their workMore staff are engaged with theirwork, as measured by Customs’workplace surveyFewer staff are disengagedwith their work, as measured byCustoms’ workplace survey16% in 200815.7% in 200827 The NMCC is an operational unit within Customs, working on behalf of a number of government agencies with interests in maritime surveillance and response. The NMCC alsoprovides agencies with information and advice to improve maritime domain awareness.New Zealand Customs Service 31

Processes, systems, and technologyINDICATOR MEASURE AND TARGET BASELINEState of customs processescompared with internationalstandardsFunctionality of Customs’transaction processing systemReliability of Customs’transaction processing systemNew Zealand Customs’ processesmeet the requirements set out inthe World Customs OrganizationFramework of Standards to Secureand Facilitate Global TradeMeets the data standards of theWorld Customs Organizationdata model for a single windowenvironment99% availability on a 24 hours aday, seven days a week basisNoNoYesRisk of failure is low 15% probability of a failure of up to 48 hours, 5%probability of a failure of up to 10 working daysRelationshipsINDICATOR MEASURE AND TARGET BASELINECommercial clients’ ratings oftheir working relationships withCustomsBorder sector agency’s ratingsof their working relationshipswith CustomsCommercial clients rate theirworking relationships with Customsas good or better, as measured byCustoms’ stakeholder surveyBorder sector agencies rate theirworking relationships with Customsas good or better, as measured byCustoms’ stakeholder survey» 82% found the quality of Customs’ working relationshipwith their company as very good or good (2008)» 71% found Customs’ responsiveness to commercialcustomers’ needs very good or good (2008)Government agencies reported their relationships withCustoms as being extremely positive, productive, andvaluedOTHER INFORMATIONMeasures of cost-effectivenessCustoms operates within a changingoperating environment. We seek todeliver the right services effectivelyand efficiently. Customs’ costeffectivenessis assessed on the basisof the following:»»output measures outlined in theInformation Supporting the Estimatesoutcome and impact measuresoutlined in the document earlier» cost-efficiency measures shown foreach outcome of Protection, Trade,Travel, and Revenue, on pages 15,19, 23, and 26.Equal employment opportunitiesCustoms continues to recognise thevalue of a diverse mix of staff interms of cultural ethnicity and genderto ensure we are well placed to meetthe needs of our diverse client base. 28We also recognise the importantconstitutional relationship Māorihave with the Crown as partner tothe Treaty of Waitangi. We continueto collect and analyse information onethnicity and gender, to inform ourpeople capability strategy. 29We require our managers andleaders to maintain and build furtherawareness of ethnicity, gender,and disability issues relating torecruitment and career development.Our retention approach also requiresour managers to support careerdevelopment pathways and the CareerDevelopment Board processes.28 Customs’ focus on equal employment opportunities is informed by the State Services Commission’s Equality and Diversity: New Zealand Public Service Equal Opportunities Policy.29 In terms of ethnicity, as at 31 December 2010, 9 percent of Customs’ employees were identified as Māori, 7.8 percent as Pacific peoples, 10.3 percent as Asian, 60.1 percent asNew Zealand Pākehā (New Zealand European), and 15.8 percent as European (non-New Zealanders). The proportion of female staff was 39.6 percent as at 31 December 2010.32 Statement of Intent 2011–2014

CAPITAL AND ASSETMANAGEMENT INTENTIONSCustoms’ asset management plansupports the Government’s outcomes,and Customs’ priorities and newapproach to managing ports, detailedearlier in this document. The planincludes:» continuing to implement thefirst stage of the Joint BorderManagement System–Trade SingleWindow (JBMS–TSW)» completing the programme toinstall the self-service borderclearance technology, SmartGate,for eligible travellers flying trans-Tasman routes» advancing Customs’accommodation programmewith a focus on refurbishing theAuckland Customhouse. Thisfollows major accommodationprojects that have beensuccessfully undertaken atAuckland air and sea ports in thepast two financial years. The moveof the Wellington Customhouseto new premises was successfullyundertaken in September 2010.Border management systems arerequired to operate reliably andaccurately 24 hours a day seven days aweek both at the frontline and in theback office. Customs has reportingmechanisms and alert processes inplace that monitor availability andensure any unscheduled outages arepromptly addressed.Well designed and integratedsystems that support enhancedbusiness processes make a significantcontribution to the facilitation, riskmanagement and revenue outcomesthat Customs is charged withadvancing. In 2011/12, Customs’systems will facilitate trade valued atcirca $85 billion, process more than10 million travellers, and enable morethan $10 billion of Crown revenue tobe collected. These systems processconsiderable amounts of data quickly,accurately, and reliably and generateinformation on risks, clearances, andother issues that are able to be actedon by Customs and other agencieswith which information is shared.In addition, the forecast capitalexpenditure includes a provision forthe routine replacement and upgradeof Customs’ plant and equipment.This provision has been establishedto enable Customs’ outcomes to bedelivered in a safe and cost-effectivemanner.Customs’ forecast capital expenditurefrom 1 July 2011 to 30 June 2014 is asfollows:CATEGORY 2011/12$0002012/13$0002013/14$000Computer equipment 6,531 3,100 1,600Computer software 40,264 20,600 1,500Furniture and fittings 635 250 500Leasehold improvements 1,489 500 500Motor vehicles 500 500 500Office equipment and plant 8,826 750 1,000Total 58,245 25,700 5,600New Zealand Customs Service 33

34 Statement of Intent 2011–2014