Chief Executive Officer’s review

Chief Executive Officer, Roman Quaedvlieg

Introduction

The 2014–15 year continued to be one of significant change for the Australian Customs and Border Protection Service (ACBPS, the Service). A major step towards the integration of ACBPS and the Department of Immigration and Border Protection (DIBP, the Department) occurred on 2 March 2015, when both entities began operating under an integrated structure.

The fully integrated Department became effective from 1 July 2015. It incorporates the functions and capabilities of the ACBPS and the Department. The single mission of the combined Portfolio will be to: protect Australia's border and manage the movement of people and goods across it.

The mission will be accomplished by the Portfolio providing a trusted secure gateway between Australia and the world that facilitates trade, travel and migration while protecting our border.

Going forward, our focus will be on the border as a strategic national asset, a complex continuum that encompasses the physical border as well as our overseas operations, and our activities in Australian water and airspace.

Through integration, the one Department will work with its people, the community, industry and domestic and international partners to implement the Government's vision for a secure border.

Key to this vision is the role of the newly created Australian Border Force (ABF) which was stood up on 1 July. Although outside of this reporting period, it is a culmination of intense effort and focus that characterised integration work across the Portfolio during much of the 2014–15 financial year. A border agency with statutory responsibilities, the ABF will be primarily responsible for achieving the integrated Department's mission. Its officers will include people protecting our borders at our air and sea ports, and those involved in detection, investigations, compliance and enforcement in relation to illicit goods and illegal visitors.

The ABF and the operational opportunities provided by having one integrated Department focussing on border protection will shape our nation into the future. It will provide greater ability to respond proactively to challenges across the border continuum in a changing global environment. This includes the management of immigration detention facilities and the removal of unlawful non-citizens who do not have a right to remain in Australia.

The ABF role also includes significant effort in the maritime area to identify and respond to illegal arrivals, and to conduct surveillance of our Exclusive Economic Zone (EEZ) for illegal fishing and other maritime threats.

The priorities specific to the ACBPS over the past year included the Government's announcement of $154 million in additional funding to boost our counter terrorism capacity to protect the community. This additional funding has helped us to identify and stop Australians who seek to travel overseas to participate in terrorist activities. It has also helped authorities manage those seeking to return to Australia from foreign conflicts.

New Counter Terrorism Units (CTUs) were established at our international airports in August 2014. Complementing these units has been the introduction of innovative technologies, including:

  • the deployment of next-generation automated departure SmartGates at each of Australia's eight major international airports from mid-2015
  • the expansion of our very successful SmartGate programme, which has proven extremely popular with arriving travellers
  • the expansion of Advanced Passenger Processing (APP) to departing passengers.

These systems will greatly improve our ability to verify identity prior to and on departure. APP, in particular, will free up our officers to focus on higher-risk travellers, intelligence gathering, enforcement and targeting activity.

Adding to our efficiency is the new and improved website that gives traders and travellers more direct access to relevant, easy-to-understand information. Whether it is an individual, a business or trade professional importing or exporting goods, a user can navigate according to whether they are travelling or conducting personal transactions to and from Australia.

Overview of performance

The 2014–15 year was characterised by continued pressure on facilitation and intervention at the border due to Australia's increasing integration with the global economy, the growth and diversification of organised criminal groups, and the increasing volume and complexity of travel and trade.

Volume of cargo

Global behaviours in trade and travel remain characterised by an increasing range of goods, biosecurity hazards and economic risks, presenting a number of threats and challenges to the facilitation of goods across our border. The growing complexity in the air and sea cargo environment is compounded by the significant upturn in cargo volume over the four years since 2010–11, with incoming air cargo increasing by 140 per cent, from approximately 14.0 million to 33.6 million consignments, and the number of imported sea cargo reports growing by 20 per cent from approximately 2.5 million to 3.0 million.

The Service is dedicated to tackling crime within the cargo environment, even though we are faced with continued growth in the volume of items being carried. We continue to adopt a risk-based, intelligence-led approach to ensure the efficient screening of all identified high-risk cargo while at the same time facilitating the seamless movement of legitimate cargo.

People movement

The number of international air and sea passengers has increased by more than 23 per cent in the past four years, from 28.4 million in 2010–11 to approximately 35.0 million in the 2014–15 financial year. The Service has continued to take advantage of technology at the border by introducing web and mobile applications for the Tourist Refund Scheme (TRS), as well as expanding APP to departing passengers. SmartGate also benefited from the implementation of multilingual capability in late 2014 as well as being extended to people holding Singaporean passports. Trials in additional countries are under way. In 2014–15, approximately 38 per cent of all travellers who arrived in Australia were cleared by automated systems.

Drugs

High demand and the profitability of the Australian domestic illicit drug market—relative to drug markets in the Asia-Pacific region—continues to drive domestic and transnational organised crime groups (OCGs) and the proliferation of online encrypted marketplaces ('darknets'). The Service's performance during the period under review led to 32,880 drug detections, of which 14,899 were of major illicit drugs and precursors with a total weight of approximately 7309 kg.

This marks a record for the quantity of major illicit drugs and precursors detected—two more tonnes than in the previous financial year and higher than the results for any of the past five years. This increase is attributed to a marked increase in the amount of MDMA (ecstasy) and amphetamine-type stimulants (ATS) detected, particularly crystallised methamphetamine (ice). These substances continue to be the illicit drugs most often detected at the Australian border, indicating their popularity among Australia's illicit drug consumers. To ensure that the campaign against ice is fought in a targeted and effective way, the Prime Minister announced the establishment of the National Ice Task Force on 8 April 2015.

The Service continued to work collaboratively with domestic and international law enforcement agencies to disrupt OCGs involved in importing illicit drugs. A leading example of this partnership was the multi-agency operation that led to the second-largest drug seizure in Australian history—2.8 tonnes of MDMA and crystal methamphetamine with a potential street value of $1.5 billion.

Firearms

Identifying and analysing the illicit firearm trafficking networks targeting the Australian border is a high priority for the Service.

On 23 February 2015 the Prime Minister accepted all the recommendations made by the Martin Place Siege Joint Commonwealth – New South Wales review. The Portfolio is working with Commonwealth, state and territory law enforcement agencies to implement these recommendations, as they relate to our business.

A number of initiatives were implemented in 2014–15 to enhance Australia's ability to detect firearms and firearm parts in cargo and international mail. They include the introduction of X-ray image analysis testing and an extension of the image libraries of firearms and firearm parts that are available to analysts. We also undertook comprehensive testing and training through organisations such as the United States Bureau of Alcohol, Tobacco, Firearms and Explosives. These initiatives enhanced the ability of the Service's officers to identify firearm markings, parts and components, and the methods that organised crime can use to conceal illicit importation of firearms.

During 2014–15 a total of 1775 undeclared firearms, firearm parts, accessories and magazines were detected at the border.

Tobacco

The Service targets illicit tobacco importation as a key operational priority due to its negative impact on Government revenue, and the involvement of serious and organised crime groups in its trade.

Tobacco and cigarette detections through the sea cargo environment have continued to account for the majority of tobacco detected by weight. However, we are now seeing increased activity in undeclared small consignments through the passenger, air cargo and mail streams, which indicates a shift in smuggling methodology. Strategies are in place and continually assessed to address the shifting smuggling methodologies.

During the 2014–15 financial year, there were 91 detections of illicit tobacco in the sea cargo environment, comprising 150 tonnes of loose leaf tobacco (including molasses tobacco) and 40 million tobacco sticks, with a total estimated revenue evasion of $103 million.

Significant issues and developments

In 2014–15 the Service introduced a range of initiatives to address significant threats to border protection and national security. We met the emerging challenges at the border by:

  • establishing a Strategic Border Command (SBC) to institute formal command and control of the border and improve the supporting capability to ensure systematic, informed and deliberate deployment of effort against risk
  • establishing the National Border Targeting Centre (NBTC) to enable participating agencies to use shared systems and information in ways that provide a nationally coordinated approach to managing the risk posed by travellers and goods, and that improve operational responses.

Another major border protection initiative was the creation of the Investigations Division, which comprises:

  • National Security Branch
  • Organised Crime Branch
  • Immigration and Customs Enforcement Branch
  • Support and Technical Branch.

Through its four branches, the Investigations Division provides the Portfolio with a specialist investigation and enforcement capability that is deployed against individuals, organisations or networks that seek to harm the Australian community or economy through threats, crime and abuse of border law and systems.

In creating the ABF, the Service obtained from the Department of Infrastructure an exemption from airport security screening for some specialist officers. These officers will also be permitted to carry Personal Defensive Equipment, including firearms, while on duty at an airport. The purpose is to strengthen our ability to identify and address emerging threats to our border security.

Another initiative includes the delivery by the Australian shipbuilder Austal Limited of the sixth of eight Cape Class offshore patrol boats. The vessels will undertake surveillance response activities within Australia's Exclusive Economic Zone. They play a significant role in border security by maintaining a presence around Australia's coastline and responding to reported or suspected border incidents and illegal activity.

The ACBPS made a strong contribution to our national security during the year under review. Operation Sovereign Borders (OSB) is the whole-of-government effort to counter maritime people smuggling that takes place within a complex web of legal, diplomatic, security and humanitarian dimensions.

ACBPS has also worked with source countries and partners in our region to apply a wide range of complementary measures that:

  • deter, disrupt and prosecute smugglers
  • improve border control measures
  • inform potential illegal immigrants of both Australian policies and the dangers to which they expose themselves by doing business with people smugglers.

Our national security role was expanded through our establishment of CTUs at Australia's eight major international airports to combat the threat of home-grown terrorism. These units undertook approximately 135,000 traveller assessments which have resulted in more than 10,500 examinations. They also found evidence of movements or attempted movements of large sums of cash, as well as images and material of an extremist nature. Some cases have led to infringement notices being imposed, while others are the subject of ongoing investigations.

It is evident that the Service's expertise in border protection and national security will provide the integrated Department with a strong foundation on which to build these important initiatives.

Financial performance

In 2014–15 the Service incurred a gross operating loss of $29.7 million. While this result complies with Australian Accounting Standards and the Commonwealth reporting framework it does not reflect the underlying result of the ordinary operations of the Service for the financial year. When unfunded depreciation and amortisation expenses ($120.6 million) and changes in asset revaluations ($6.9 million) are excluded the Service's financial result is an operating surplus of $84.0 million. This result includes gains resulting from the receipt of the ADV Ocean Shield from the Department of Defence recognised at $98.9 million. If the gain associated with the ADV Ocean Shield is excluded the underlying result would be an operating loss of $14.9 million, which is a more conventional measure of the Service's operating result.

The operating loss has been impacted by the continuation of a tight fiscal environment, the high operational tempo in our enforcement and maritime activities to address the traffic of illegal entrants, and costs associated with preparing the Service for integration with DIBP from 1 July 2015.

Limiting the operational loss to the level identified above reflects the high level of scrutiny the Service applies to its financial management.

Looking to the future

As the new Department, through the ABF, will deliver an important law-enforcement and national security capability, a new college is being developed to ensure that our people have the necessary skills to operate an integrated border agency. All departmental staff will attend the ABF College during their career for induction, supervisory and leadership training.

The knowledge and training the college provides will bring the integrated Department into line with its international and national law enforcement partners with which officers will collaborate on border protection operations to achieve the best possible outcomes for Australians.

It is expected that the college will facilitate a new response to national security. ABF officers will be trained and equipped to perform a range of tasks across air, land and sea domains, and to deliver on border protection, law enforcement and national security priorities in both domestic and international settings.

We will support our technical and policy experts to build innovation, strategic insight, policy and programme design, and our intelligence staff to formulate evidence-based policy and intelligence products. These will include the incorporation and advancement of integrity and identity capabilities such as biometrics, document examination and identity. Additionally, our client services staff will be trained to ensure a high standard of integrity in assessing visas, citizenship, customs and trade applications.

These new capabilities will lay the foundation for the integrated Department in the years ahead. They will operationalise our mission through our effective management of Australia's immigration, humanitarian, citizenship, trade and customs, revenue collection, national security and border protection programmes.

Conclusion

This has been a challenging year for the Service—but we have risen to meet that challenge. With the hard work and professionalism of our dedicated staff in Australia and overseas, I am confident we are well positioned to meet the challenges of the year ahead.