Vote Customs
Vote Customs
Overview of the Vote
The Minister of Customs is responsible for the efficient and timely collection of Crown revenue forecast to be $13,498 million in the2016/17 financial year.
The Minister of Customs is also responsible for the departmental appropriations in the Vote for the2016/17 financial year covering the following:
a total ofover$9 millionfor services relating to clearance of craft crossing the border and the protection of NewZealand (through interventions, investigations and enforcement) from risk arising from international craft movements
a total ofover$75 million for services relating to the facilitation andclearance of goodscrossing the border and the protection of NewZealand through (interventions, investigations and enforcement) from risk arising from international trade
a total ofover $68 million for services relating to the facilitation and clearance of passengers and crew crossing the border and the protection of NewZealand(through interventions, investigations and enforcement) from risk arriving from international travel
a total of over $13 million on information, intelligence and risk assessment services relating to people, goods and craft crossing the border, and goods that attract excise duties
a total ofover $9 million on representing NewZealand in the international customs environment and providing services and support to the Minister
a total ofnearly $5 million on policy advice to Ministers relating to border security, border management, and customs revenue
a total ofover$11 million on collecting revenue on behalf of the Crown, and
a total of $15 millionfor capital investment in departmental assets.
The Minister of Customs is also responsible for the non-departmental appropriations in the Vote for the 2016/17 financial year covering the following:
a total of $8million to provide for doubtful debts on revenue collected for theCrown, and
a total of $60,000 for payment of NewZealand's annual contribution to theWorld Customs Organization's operating budget.
Details of these appropriations are set out in Parts 2-4.
Details of Appropriations and Capital Injections
Annual and Permanent Appropriations
2015/16 / 2016/17Titles and Scopes of Appropriations by Appropriation Type / Final
Budgeted
$000 / Estimated
Actual
$000 / Budget
$000
Departmental Output Expenses
Clearance and Enforcement Services Related to Craft (M21)
This appropriation is limited to the provision of services relating to craft arriving in and departing from NewZealand, including clearance of craft, and protection of NewZealand's interests through interventions, investigations and enforcement. / 8,138 / 8,138 / 9,477
Clearance and Enforcement Services Related to Goods (M21)
This appropriation is limited to the provision of services relating to goods crossing the border, including clearance of goods, assessment and audit of revenue, trade compliance and supply chain security assurance, and protection of NewZealand's interests through interventions, audits, investigations and enforcement. / 70,082 / 70,082 / 75,156
Clearance and Enforcement Services Related to Passengers and Crew (M21)
This appropriation is limited to the provision of services relating to passengers and crew crossing the border, including collecting information, clearance of people and their possessions, and protection of NewZealand's interests through interventions, investigations and enforcement. / 61,246 / 61,246 / 68,164
Information and Intelligence Services (M21)
This appropriation is limited to the provision of information, intelligence and risk assessment services to external clients, and the operation of the National Maritime Coordination Centre. / 12,090 / 12,090 / 13,143
International Services and Ministerial Servicing (M21)
This appropriation is limited to the provision of international services, obligations, and assistance, and the provision of services to Ministers to enable them to discharge their portfolio (other than policy decision-making) responsibilities. / 9,115 / 9,115 / 9,232
Policy Advice (M21)
This appropriation is limited to the provision of advice (including second opinion advice and contributions to policy advice led by other agencies) to support decision-making by Ministers on government policy matters. / 4,545 / 4,545 / 4,791
Revenue Collection (M21)
This appropriation is limited to the provision of services relating to receipt and processing of revenues owing to the Crown and other agencies, revenue assurance, credit and debt management. / 8,332 / 8,332 / 11,001
Total Departmental Output Expenses / 173,548 / 173,548 / 190,964
Departmental Capital Expenditure
NewZealand Customs Service - Capital Expenditure PLA (M21)
This appropriation is limited to the purchase or development of assets by and for the use of the NewZealand Customs Service, as authorised by section 24(1) of the Public Finance Act 1989. / 25,000 / 25,000 / 15,000
Total Departmental Capital Expenditure / 25,000 / 25,000 / 15,000
Non-Departmental Other Expenses
Change in Doubtful Debt Provision (M21)
Provisioning of Doubtful Debts on Customs Crown Revenue. / 8,000 / 8,000 / 8,000
World Customs Organization (M21)
NewZealand's contribution to the operating budget of the WCO. / 58 / 58 / 60
Total Non-Departmental Other Expenses / 8,058 / 8,058 / 8,060
Total Annual and Permanent Appropriations / 206,606 / 206,606 / 214,024
Capital Injection Authorisations
2015/16 / 2016/17Final Budgeted
$000 / Estimated Actual
$000 / Budget
$000
NewZealand Customs Service - Capital Injection (M21) / 8,366 / 8,366 / 4,249
Supporting Information
Part 1 - Vote as a Whole
1.1 - New Policy Initiatives
Policy Initiative / Appropriation / 2015/16Final Budgeted
$000 / 2016/17
Budget
$000 / 2017/18
Estimated
$000 / 2018/19
Estimated
$000 / 2019/20
Estimated
$000
Improving the efficiency and effectiveness of the border sector / Clearance and Enforcement Services Related to Craft
Departmental Output Expenses / - / 454 / 389 / 371 / 371
Clearance and Enforcement Services Related to Goods
Departmental Output Expenses / - / 4,868 / 4,468 / 2,902 / 2,902
Clearance and Enforcement Services Related to Passengers and Crew
Departmental Output Expenses / - / 2,164 / 1,675 / 1,111 / 1,111
Information and Intelligence Services
Departmental Output Expenses / - / 81 / 24 / 6 / 6
International Services and Ministerial Servicing
Departmental Output Expenses / - / 73 / 21 / 5 / 5
Policy Advice
Departmental Output Expenses / - / 325 / 154 / 3 / 3
Revenue Collection
Departmental Output Expenses / - / 1,599 / 1,305 / 1,283 / 1,283
NewZealand Customs Service
Capital Injection / - / 1,520 / - / - / -
Modernising and transforming Customs' workforce / Clearance and Enforcement Services Related to Craft
Departmental Output Expenses / 139 / 841 / 841 / 841 / 841
Information and Intelligence Services
Departmental Output Expenses / 142 / 863 / 863 / 863 / 863
International Services and Ministerial Servicing
Departmental Output Expenses / 206 / 1,250 / 1,250 / 1,250 / 1,250
Policy Advice
Departmental Output Expenses / 133 / 808 / 808 / 808 / 808
Revenue Collection
Departmental Output Expenses / 164 / 996 / 996 / 996 / 996
Share of costs for Budget 2015 whole-of-government initiatives / Clearance and Enforcement Services Related to Craft
Departmental Output Expenses / (11) / (11) / (8) / (6) / (6)
Clearance and Enforcement Services Related to Goods
Departmental Output Expenses / (62) / (62) / (44) / (32) / (32)
Clearance and Enforcement Services Related to Passengers and Crew
Departmental Output Expenses / (83) / (83) / (59) / (44) / (44)
Information and Intelligence Services
Departmental Output Expenses / (9) / (9) / (6) / (4) / (4)
International Services and Ministerial Servicing
Departmental Output Expenses / (8) / (8) / (6) / (5) / (5)
Policy Advice
Departmental Output Expenses / (4) / (4) / (3) / (2) / (2)
Revenue Collection
Departmental Output Expenses / (11) / (11) / (8) / (6) / (6)
Total Initiatives / 596 / 15,654 / 12,606 / 10,340 / 10,340
THE ESTIMATES OF APPROPRIATIONS 2016/17 - EXTERNAL SECTOR B.5 Vol.4 1
1.2 - Trends in the Vote
Summary of Financial Activity
2011/12 / 2012/13 / 2013/14 / 2014/15 / 2015/16 / 2016/17 / 2017/18 / 2018/19 / 2019/20Actual
$000 / Actual
$000 / Actual
$000 / Actual
$000 / Final Budgeted
$000 / Estimated
Actual
$000 / Departmental
Transactions
Budget
$000 / Non-
Departmental
Transactions
Budget
$000 / Total
Budget
$000 / Estimated
$000 / Estimated
$000 / Estimated
$000
Appropriations
Output Expenses / 140,025 / 153,517 / 163,158 / 168,088 / 173,548 / 173,548 / 190,964 / - / 190,964 / 191,512 / 190,461 / 193,440
Benefits or Related Expenses / - / - / - / - / - / - / N/A / - / - / - / - / -
Borrowing Expenses / - / - / - / - / - / - / - / - / - / - / - / -
Other Expenses / 396 / 1,388 / 2,010 / 6,916 / 8,058 / 8,058 / - / 8,060 / 8,060 / 8,060 / 8,060 / 8,060
Capital Expenditure / 45,865 / 41,971 / 22,982 / 17,305 / 25,000 / 25,000 / 15,000 / - / 15,000 / 14,831 / 19,340 / 12,655
Intelligence and Security Department Expenses and Capital Expenditure / - / - / - / - / - / - / - / N/A / - / - / - / -
Multi-Category Expenses and Capital Expenditure (MCA)
Output Expenses / - / - / - / - / - / - / - / - / - / - / - / -
Other Expenses / - / - / - / - / - / - / - / - / - / - / - / -
Capital Expenditure / - / - / - / - / - / - / N/A / - / - / - / - / -
Total Appropriations / 186,286 / 196,876 / 188,150 / 192,309 / 206,606 / 206,606 / 205,964 / 8,060 / 214,024 / 214,403 / 217,861 / 214,155
Crown Revenue and Capital Receipts
Tax Revenue / 11,346,026 / 11,239,156 / 11,846,511 / 12,485,685 / 12,969,000 / 13,183,000 / N/A / 13,498,000 / 13,498,000 / 14,275,000 / 14,905,000 / 15,504,000
Non-Tax Revenue / - / 1 / - / - / - / - / N/A / 80 / 80 / 80 / 80 / 80
Capital Receipts / - / - / - / - / - / - / N/A / - / - / - / - / -
Total Crown Revenue and Capital Receipts / 11,346,026 / 11,239,157 / 11,846,511 / 12,485,685 / 12,969,000 / 13,183,000 / N/A / 13,498,080 / 13,498,080 / 14,275,080 / 14,905,080 / 15,504,080
Note - where restructuring of the vote has occurred then, to the extent practicable, prior years information has been restated as if the restructuring had occurred before the beginning of the period covered. In this instance Total Appropriations for the Budgeted and Estimated Actual year may not equal Total Appropriations in the Details of Appropriations and Capital Injections.
Vote Customs
Adjustments to the Summary of Financial Activity Table Due to Vote Restructuring
There have been no restructuring adjustments to prior year information in the Summary of Financial Activity table.
1.3 - Analysis of Significant Trends
Significant changes in departmental appropriations in Vote Customs are discussed briefly below (there is no significant change in the non-departmental appropriations).
Departmental Output Expenses
Annual appropriations for the purchase of departmental outputs is a total of $190.964 million for 2016/17, an increase of $17.416 million compared with 2015/16. The net change in the total appropriation primarily relates to additional funding in Budget 2016for:
providing a world-class experience at the border (a suite of border sectorinitiatives in the BusinessGrowth Agenda Exports Markets work stream) - an increase (of $9.564 million) in the funding in 2016/17 compared to 2015/16
modernising and transforming the NewZealand Customs Service workforce- while funding (of $784,000) was provided for 2015/16, the total increases (by $3.974 million) from 2016/17.
That net change also includes additional funding in Budget 2015 for managing our border through:
the implementation and ongoing operation of next-generation SmartGate automated passenger processing technology - an increase(of $2.98 million) in the funding in 2016/17 compared to 2015/16
extended risk screening of departing passengers - an increase (of $674,000) in the funding in 2016/17 compared to 2015/16.
In the Clearance and Enforcement Services Related to Passengers and Crew appropriation, the mix of operational funding has changed. With the introduction of the passenger Border Clearance Levy (BCL) on 1 January 2016, the funding provided by the Crown will significantly decrease in 2016/17 (compared to prior years) as this funding is replaced by, and the appropriation transitions to, increased third party funding from the BCL. By 2018/19 this appropriation will be almost fully funded by the BCL.
Departmental output expenses are currently expected to increase to $193.440 million by 2019/20. From 2016/17, the total includes the additional funding provided in Budget 2016 for providing a world-class experience at the border (a suite of border sector initiatives in the Business Growth Agenda Export Markets work stream), and for modernising and transforming the NewZealand Customs Service workforce.
Over the last five years (comparing the total for 2011/12 and the total budgeted for 2015/16), the net funding for Vote Customs has increased by $33.523 million. This change primarily relates to an increase in the operational funding provided for the Joint Border Management System - an increase of $18.408 million (from $5.207 million to $23.615 million) over that five year period.
It also includes specific ongoing increases in operational funding provided in Budgets 2009, 2010 and 2011 for SmartGate (initially funded in Budget 2009, and then additional funding provided for increased capacity in Budget 2011), and disrupting 'P' supply and dismantling criminal networks through Digitally Enhanced Systems technology; in Budget 2014 for ongoing management of the changes to duty-free tobacco concessions; inBudget 2015 for Managing our Border through expanding SmartGate and extended risk screening of departing passengers, and Building Export Markets through growing secure exports (particularly to China and ASEAN); and in Budget 2016 for modernising and transforming the NewZealand Customs Service workforce.
Departmental capital expenditure
The total forecast capital expenditure for 2016/17 is $15 million, a decrease of $10 million from the estimated 2015/16 spend of $25 million. This decrease primarily relates to the timing and level of capital expenditure for projects. These projects include the Joint Border Management System, and the purchase of the next-generation technology SmartGates (for which capital funding was provided in Budget 2015 for 2015/16 and 2016/17).
Capital expenditure also includes the standard replacement of operational assets as required to maintain and increase capability, including upgrade of core business systems.
Crown revenue
Under Vote Customs, the NewZealand Customs Service collects revenue on behalf of the Crown by way of customs duty and GST on imports, together with excise duty on domestically manufactured alcohol, tobacco, and petroleum products, and excise equivalent duty on the same products imported into NewZealand.
Since 2011/12, Crown revenue collected by the NewZealand Customs Services has exceeded $11 million each year, and is forecast to steadily increase from the $12,486 million collected in 2014/15 to a total of$15,504 million in 2019/20.
The total Crown revenue forecast to be collected in 2016/17 is $13,498 million, an increase from the forecast total for 2015/16 of $12,947 million. That $13,498 million total is expected to be composed of $8,820 million in GST (65.3% of the total), $2,442 million in Customs duty (18.1% - including excise equivalent duty), and $2,236 million in excise duty (16.6%).
Part 2 - Details of Departmental Appropriations
2.1 - Departmental Output Expenses
Clearance and Enforcement Services Related to Craft (M21)
Scope of Appropriation
This appropriation is limited to the provision of services relating to craft arriving in and departing from NewZealand, including clearance of craft, and protection of NewZealand's interests through interventions, investigations and enforcement.
Expenses and Revenue
2015/16 / 2016/17Final Budgeted
$000 / Estimated Actual
$000 / Budget
$000
Total Appropriation / 8,138 / 8,138 / 9,477
Revenue from the Crown / 7,919 / 7,919 / 9,205
Revenue from Others / 219 / 219 / 272
What is Intended to be Achieved with this Appropriation
This appropriation isintended to achieve the operation of secure and efficient border processes in relation to craft so that NewZealand remains safe and secure from risk associated with international craft movements.
How Performance will be Assessed and End of Year Reporting Requirements
2015/16 / 2016/17Assessment of Performance / Final Budgeted
Standard / Estimated Actual / Budget
Standard
Craft output: Craft operators are encouraged to assist and comply
Percentage of small marine craft arriving (estimated 600-700 small craft) that are boarded as soon as practicable after arrival in a NewZealand port / 100% / 100% / 100%
Percentage of arriving commercial marine craft (including cruise ships) showing high risk or requiring administrative process (estimated 750-900 commercial craft) that are boarded while in a NewZealand port (see Note 1) / 100% / 100% / 100%
Craft output: Craft operators' compliance is monitored
Minimum percentage of all arriving commercial marine craft that are not assessed as high risk that will be subject to Customs secondary interaction (see Note 2) / 5% / 5.0% / 5%
Note 1 -Boarding will be required forcraft showing a high (Priority 1) risk, craft visiting NewZealand for the first time, craft where information is incomplete, and craft where a visit is needed to complete an administrative process (such as immigration or bonding ships stores).
Note 2 - Secondary interaction means any interaction undertakenover and above the initial boarding and clearance function and may range from talking to the crew to a full rummage. This output maintains high levels of compliance, and acts as a check on risk assessments.
End of Year Performance Reporting
Performance information for this appropriation will be reported bythe NewZealand Customs Servicein its annual report.
Current and Past Policy Initiatives
Policy Initiative / Year ofFirst
Impact / 2015/16
Final Budgeted
$000 / 2016/17
Budget
$000 / 2017/18
Estimated
$000 / 2018/19
Estimated
$000 / 2019/20
Estimated
$000
Improving the efficiency and effectiveness of the border sector / 2016/17 / - / 454 / 389 / 371 / 371
Modernising and transforming Customs' workforce / 2015/16 / 139 / 841 / 841 / 841 / 841
Managing our Border: Screening departing passengers / 2015/16 / 133 / 268 / 268 / 268 / 268
Building Export Markets: Growing secure exports to China and ASEAN / 2015/16 / 28 / 28 / 28 / 28 / 28
Share of costs forBudget 2015 whole-of-government initiatives / 2015/16 / (10) / (10) / (7) / (5) / (5)
Reasons for Change in Appropriation
Theincrease in this appropriation for 2016/17is due mainly to:
the increased funding of $702,000 for workforce modernisation and transformation
increased funding of $454,000 to improve the efficiency and effectiveness of the border sector.
Clearance and Enforcement Services Related to Goods (M21)
Scope of Appropriation
This appropriation is limited to the provision of services relating to goods crossing the border, including clearance of goods, assessment and audit of revenue, trade compliance and supply chain security assurance, and protection of NewZealand's interests through interventions, audits, investigations and enforcement.
Expenses and Revenue
2015/16 / 2016/17Final Budgeted
$000 / Estimated Actual
$000 / Budget
$000
Total Appropriation / 70,082 / 70,082 / 75,156
Revenue from the Crown / 9,249 / 9,249 / 17,393
Revenue from Others / 60,833 / 60,833 / 57,763
What is Intended to be Achieved with this Appropriation
This appropriation is intended to achieve theoperation of secure and efficient border processes in relation to goods so that NewZealand remains safe and secure from risk arising from international trade, while ensuring that NewZealand's trade flows freely and the due Crown revenue can be collected.
How Performance will be Assessed and End of Year Reporting Requirements
2015/16 / 2016/17Assessment of Performance / Final Budgeted
Standard / Estimated Actual / Budget
Standard
Trade
Trade intermediate outcome: Importers and exporters are satisfied with the quality of service delivery
Minimum percentage of importers and exporters satisfied or very satisfied with the overall quality of Customs' service delivery (as measured by Customs' stakeholder survey) (see Note 1) / 85% / 85.9% / 85%
Trade intermediate outcome: Importers and exporters feel encouraged and assisted to comply
Minimum percentage of importers and exporters that find it easy to comply with border agencies' requirements when lodging electronic documents or making payments (as measured by Customs' stakeholder survey) (see Note 1) / 80% / 80.4% / 80%
Maximum percentage of X-ray inspections undertaken on Secure Exports Scheme (SES) containers (see Note 2) / New measure / 0.005% / 0.05%
Minimum percentage of X-ray inspections undertaken on non-SES containers (see Note 2) / New measure / 0.727% / 0.5%
Goods processing output: Legitimate goods cross the border with minimal interaction
Minimum percentage of trade transactions (other than those referred for compliance checks) processed (including assessment against business rules and intelligence alerts) within 30 minutes (of an estimated between 7.5-8.5 million import transactions, 2.5-3.5 million export transactions, and 3,600-4,200 excise returns) / 95% / 99.7% / 95%
Minimum percentage of import transactions that are deemed compliant based on risk assessment and proceed without further intervention (see Notes 3 and 4) / 95% / 97.6% / 95%
Minimum percentage of export transactions that are deemed compliant based on risk assessment and proceed without further intervention (see Notes 3 and 4) / 99% / 99.7% / 99%
Goods processing output: Traders' compliance is monitored
Minimum percentage of a random sample of import entries that are found to be compliant through the transactional verification process / 90% / 90% / 90%
Minimum number of risk-based trade compliance audit activities undertaken (see Note 5) / 400 / 400 / 400
Protection (see Note 6)
Protection intermediate outcome: The NewZealand public is protected through the interception of harm and potential harm
The value of harm (NZ$) avoided through Customs' drug seizures, as measured by indicative data from the NewZealand Drug Harm Index (see Note 7) / $100 million-$200 million / $200 million / $100 million-$200 million
Minimum losses (NZ$) incurred by importers of illegal goods through seizure of illicit drugs, goods infringing intellectual property, and the associated proceeds of crime (see Note 7) / $10 million / $100 million / $10 million
Protection intermediate outcome: The NewZealand public is confident that Customs protects NewZealand through the interception of harm and potential harm
Minimum percentage of public confident that Customs protects NewZealand from external threats (see Note 8) / Revised measure / 40% / 40%
Goods processing output: Goods that show risk are subject to further intervention
Minimum percentage of total mail items that result in an enforcement consequence following risk assessment (see Note 9) / 0.02% / 0.03% / 0.02%
Investigations output: Goods that show risk are subject to further intervention
Minimum percentage of investigation cases (estimated between 400-600 cases) finalised within 12 months of commencement (see Note 10) / 90% / 96% / 90%
Minimum percentage of serious investigation cases (see Note11) that lead to punitive action (see Note 12) / 90% / 95% / 90%
Note 1 - Customs' stakeholder survey has a 4% to 5% margin of error at 95% confidence. A 90% result, for example,could arise when the true actual level is 85% and, if so, a different sample could have generated a result of 80%. Budget standards for survey results build in an allowance for this expected range of results.