A Blueprint for the Reform of the Australian Customs and Border Protection Service – Australian Strategic Policy Institute, Sydney


A Blueprint for the Reform of the Australian Customs and Border Protection Service

Australian Strategic Policy Institute

3 July 2013



Thank you to the Australian Strategic Policy Institute for the invitation to talk to you today.

ASPI is one of Australia’s leading defence, security and strategic think tanks and I couldn’t think of a better forum to launch the reform of one of Australia’s most important security agencies – the Australian Customs and Border Protection Service.

I would like to acknowledge:

  • ASPI Chairman, Mr Stephen Loosely;
  • Mr Simon Carr, Vice President, Government Business, Hewlett Packard Enterprise Services;
  • One of the Members of the Customs Reform Board who is with us today, Ken Moroney;
  • The Chief Executive Officer of Customs and Border Protection, Mike Pezzullo; and
  • The head of the Australian Commission for Law Enforcement Integrity, Philip Moss.

Ladies and gentlemen.

Just before Christmas last year, Australia woke up to the news that four people, including a Customs officer, had been arrested for importing drugs.

That morning, a 20-year veteran of Customs went to the same coffee shop he visits most mornings wearing the same blue Customs uniform.

The only difference was, that day, he wore a jumper over his uniform.

He was that ashamed. He was that disgusted. And he rang my office to tell me.

Most of the people who work for Customs and Border Protection are good, honest, hard-working people.

They often tell me they bleed blue.

And no one was more hurt by the news that one of their own had betrayed their oath than they were.

It saps morale, destroys confidence and cripples teamwork.

And it’s not easy to fix. I know that from experience.

A long time ago I worked for the New South Wales Government on the implementation of the recommendations of the Wood Royal Commission into the New South Wales Police Force.

Reform is hard. It’s painful and it takes time to implement. But it has to happen.

I was briefed on what was happening at Sydney Airport in my first week in this job, 18 months ago.

I couldn’t tell anyone what was happening but I set about then on the first stage of reform to weed it out and stop it coming back.

And I used the work that Justice Wood had done as a guide.

Last year I introduced legislation to:

  • Conduct targeted integrity testing on officers suspected of corruption; and
  • Drug and alcohol testing of all staff.

The legislation also gives the CEO of Customs the power to make a declaration that an officer has been terminated for serious misconduct and issue orders that make it mandatory for all staff to report serious misconduct and corruption.

I also doubled the jurisdiction of the Commonwealth corruption watchdog, ACLEI. As of Monday, it not only oversights the AFP, Customs and the Australian Crime Commission, it also oversights CrimTrac, AUSTRAC and Biosecurity staff from the Department of Agriculture, Fisheries and Forestry (the former Quarantine Service).

I have also doubled the funding provided to ACLEI to oversight Customs and Border Protection.

All of this is just the start. There is lots more to do.

Customs requires major structural and cultural reform.

And that is much broader than just tackling corruption.

On that morning just before Christmas last year I announced the establishment of the Customs Reform Board.

The Board is comprised of three distinguished Australians:

  • The Honourable James Wood AO QC

Former Royal Commissioner of the NSW Royal Commission into the NSW Police Service;

  • Mr Ken Moroney AO APM

Former Commissioner of the NSW Police Force; and

  • Mr David Mortimer AO

Former CEO of TNT Limited, former Deputy Chairman of Ansett and former Chairman of Australia Post and Leightons Holdings.

Their task is to provide me with advice and recommendations to reform Customs and oversight its implementation and, today I am releasing their first report.

Here are the challenges we face.

In the next few years, the number of people and the amount of cargo crossing our border is going to increase dramatically.

The number of passengers flying in and out of Australia is expected to increase by about eight million in the next five years and air cargo is expected to more than triple – from 29 million consignments now to almost 95 million in 2017.

This creates big data challenges and more pressure to move people and goods quickly across our border.

It means we have to modernise our business systems, our processes and our intelligence capability so that they are fit for purpose.

The challenge is not just more work. The work Customs does will also get more complicated.

And that means we have to get our operating model right and make sure our people have got the right training and the right skills and abilities to do this important job.

We can also be sure of this – serious, organised criminals will continue to try to penetrate the border and the nature and type of commodities they seek to profit from will only expand, aided by the speed and complexity of new supply chains and travel routes.

They will also continue to try and infiltrate our border agencies and corrupt our officers.

How do we meet this challenge?

The Board’s report is very clear:

The Board recognises the need for Service-wide reform if the ACBPS is to keep pace with a rapidly evolving border environment, while meeting Government and community expectations around border management and protection. Meeting this challenge will require strong, effective and professional leadership at all levels and a commitment to ongoing staff engagement and effective change management.

This view is shared by the Capability Review of Customs and Border Protection which I am also releasing today.

This work was led by Major-General Mark Evans (Retired) and conducted by a team over the last five months.

A capability review is a forward-looking, whole-of-agency review that assesses an agency’s ability to meet future objectives and challenges.

The work that Major-General Evans and his team have done has been very helpful.

It identifies the following areas that need critical attention: leadership, workforce, the business model and enabling technology and innovation.

It also makes the very important point that the key to reform is cultural change.

The Review notes that inculcating an ethos, values and culture of “one team” is a vital part of strengthening the workforce. This will require a robust change management strategy.

This is critical. Cultural change is the hardest thing to achieve – but everything else fails without it.

And it requires the hard work and support of everyone in this great organisation. All 5000 plus. From the newest recruit, to the CEO, to the 20-year veteran who bleeds blue and wants to believe again in that uniform he wears to the coffee shop every day.

Mike Pezzullo is the new CEO of Customs and Border Protection.

He is now almost five months into the job. And to meet the challenges I have talked about he has developed a Blueprint for Reform. The third document I am releasing today.

This is a very important document. It sets out a road map for reform for the next five years.

In it are the three major tracks of reform: integrity, people and modernisation.


First let me talk about integrity.

Two weeks ago, I announced more reforms to harden our airports in response to advice from ACLEI and the AFP. This includes:

A ban on personal mobile phones use in Customs-controlled areas, tighter control over access to staff rosters and tighter restrictions on access to control rooms.

This report is the next step. There are a number of reforms in it and I will mention a few today.

First, Customs will establish a Special Integrity Adviser.

This role will manage the investigation of complex and serious cases of misconduct, including those undertaken jointly with ACLEI.

The Special Integrity Adviser will also develop and implement integrity assurance arrangements and ensure that our anti-corruption processes and systems are fair.

Second, Customs will institute fixed tenure periods for staff to mitigate the risk of corruption.

Staying in the one job too long is a problem that was identified by the NSW Royal Commission and it has been identified here.

This change will apply to all Customs officers now with different time periods depending on the role they perform.

Third, Customs will tighten its secondary employment policy and its organisational suitability checking processes.

People and operating model:

The second reform track is Customs’ people and operating model.

First, Customs needs a new workforce model to provide a new career system that offers attractive and rewarding job choices. Career streams will be built around four specific people capabilities:

  • Trade and Customs;
  • A Border Force, focused on delivering border protection;
  • Intelligence; and
  • Support services.

All four capabilities need to be linked by a common culture and supported by strong leadership, structured career management and a national approach to learning and development.

Second, to more effectively manage and deploy officers and assets in an increasingly complex border environment, Customs will establish a Strategic Border Command, supported by Regional Commands.

The Strategic Border Command will manage the border through highly focussed and effective intervention based on advanced intelligence.

It will house the National Border Targeting Centre that I announced a few months ago.

It will also control and coordinate national specialised capabilities such as detector dogs, surveillance, advanced ship search and border technologies, including x-ray and trace detection, field communications and cyber-expertise.

Regional Commands will be predominantly staffed by Border Force officers who will be deployed in a regional and district command structure.

The Border Force will be the visible front-line of Customs—a uniformed and disciplined enforcement body undertaking functions across all border environments.

Border Force officers will be trained and equipped to perform a range of tasks across these environments. Cross-skilling will allow officers to be mobilised and deployed to routine or priority tasking, and to supplement and surge operations across the Customs.

Third, to enhance the fight against border crime, Customs will build a strategic partnership with the AFP.

As part of this, Customs and the AFP will trial a new model for undertaking border crime investigations.

The AFP currently investigates serious border crimes, including illegal imports of narcotic drugs and significant detections of precursor chemicals at the border.

Customs currently investigates both regulatory offences and Tier 1 and 2 offences under the Customs Act.

Under the trial, the two agencies will jointly triage and make decisions about investigative referrals for Tier 1 and 2 offences under the Customs Act.

Fourth, Customs needs to change the way it trains its workforce.

It will develop a standardised approach to training across the agency.

That includes structured pathways for learning that stretch from induction through to active career and continuous development to ensure officers have the right skills to do their job.

Customs will also look at the potential of establishing a formal Customs Training College.

These important changes to the structure of the workforce and how they will be trained will be developed in close consultation with staff and their representatives.


The third track of reform is modernisation.

This is a critical to Australia’s future economic prosperity.

I made the point earlier about the massive increase predicted in cargo and passengers.

A lot of this is driven by the rise of Asia and changes in e-commerce.

To meet this challenge, we need to modernise and automate.

First, Customs also needs more beyond a one-size-fits-all, transaction-based model and explore a variety of appropriate models of integration with traders including direct access to some traders’ logistics systems for streamlined profiling and intervention.

Ultimately, Customs needs full electronic data reporting for all goods arriving and departing our borders.

Customs will also work with industry to provide trusted and compliant traders with expedited border clearance where they have strong security and integrity practices.

Second, Customs needs to transform its intelligence capability.

I have made the point countless times that intelligence is the key to catching criminals and seizing illicit goods at the border.

85 per cent of the drugs Customs seize at the border is because of the intelligence they receive. The more intelligence we’ve got, the more we seize.

That’s why I announced the establishment of a $30 million National Border Targeting Centre a few months ago. It’s based on a model I have seen in the United States.

Its job is to fuse together intelligence from a number of agencies including:

  • Australian Customs and Border Protection Service;
  • Australian Federal Police;
  • Australian Security Intelligence Organisation;
  • Australian Crime Commission;
  • Department of Foreign Affairs’ Passports Office;
  • Department of Agriculture, Fisheries and Forestry; and
  • Office of Transport Security.

This is an important reform. In addition to that, Customs will develop a new intelligence framework, a new connected information environment and a new skills program to strengthen the capabilities of our intelligence officers.

Thirdly, we need to modernise the way we process passengers at the border.

This is not just a challenge we face. It is a challenge for a lot of countries.

By the end of this decade there will be 100 million Chinese international travellers.

This creates enormous opportunities. But our border agencies have to be up to the challenge.

A big part of that is automation.

Anyone who has been to one of our international airports in the last few years would have seen SmartGates.

They allow you to scan your passport and go, rather than wait in line for it to be stamped.

Australians and New Zealanders over 16 year of age can currently use it.

The next step is to expand it to citizens from other countries.

Plans are also currently being developed to extend the use of SmartGate to other e-passport holders, including the United States and United Kingdom and China.

We also need to automate the process for people departing the country.

In February, I announced a trial of automated technology to streamline departures between Australia and New Zealand.

It will involve a lab test of the selected technology and a live trial at one of Australia’s airports over the next two years.

Beyond this, we need to investigate the use of next generation e-Gates and mobile e-Gates.

This includes looking at future technologies, such as ‘face on the move’ and ‘face in the crowd’.

This is a big reform program and will require funding to be sought though the normal Budget processes.

As part of this I have asked Customs to prepare a two-pass business case for the consideration of Government ahead of the 2014-15 Budget.

It will take more than five years to do everything that needs to be done but the urgency of purpose that we bring to this task must begin now and must be long-lasting.

There will be the need for more reform. I think that ultimately includes one badge at the border – a seamless, integrated border with all roles and responsibilities vested in one agency.

There are things we can learn from the UK, US and other countries here. But the first step is the implementation of this reform program.

As big as it is, this is just one part of a bigger reform program.

This week, the new National Anti-Gang Taskforce began work – with an intelligence team in Canberra. Officers are also in Sydney, Melbourne and Brisbane to set up State-based Strike Teams.

Next week, I will also officially open the new Australian Anti-Dumping Commission, that I have driven through the Australian Parliament.

In a fortnight, I will head to the United States for the first meeting of the ‘Five-Eyes’ Homeland Security Ministers with our partners – the United States, the United Kingdom, Canada and New Zealand – a forum I have worked with Janet Napolitano, the US Secretary for Homeland Security, over the last twelve months to establish.

The terrifying events of Boston and London remind us how important establishing a forum like this will be for Australia.

I am also continuing the campaign for national unexplained wealth laws to give our police more powers to seize the assets of serious criminals.

There is a lot to do.

The challenge we face in this area of national security is always changing.

Organised criminals are always trying to find new ways to make money, new ways to penetrate the border, and new vulnerabilities in the system.

We have to be up to the challenge. That is why the reforms I have announced today are so important.

I would like to finish with a few thanks:

  • Firstly, to the Members of the Customs Reform Board for their report and the work they have done to date;
  • The Chief Executive Officer of Customs and Border Protection, Mike Pezzullo, and his team for all the work they have done in developing this Blueprint for Reform;
  • Philip Moss and Tony Negus and their teams for the outstanding work they have done, and continue to do, to find corruption and weed it out.

And my thanks to ASPI for the opportunity to release the details of this important reform program here today.

Thank you.