Wagner NickyCUSTOMS AND EXCISE BILLFirst ReadingHon NICKY WAGNER (Minister of Customs): I move That the Customs and Excise Bill be now read a first time. At the appropriate time I intend to move that the Customs and Excise Bill be considered by the Foreign Affairs Defence and Trade Committee. This bill replaces the 1996 Customs and Excise Act which is over 20 years old. Some parts of it are 50 years old and others are over 100 years old. The current Act has been extensively amended which has created a complex piece of legislation that is difficult to use. The prescriptive style of the Act also means that frequent amendments would continue to be required. Modern legislation that is easy for people to use and understand and that can keep up with modern business practice and technology is long overdue. The aim in rewriting the Customs and Excise Act is to make it less prescriptive and more principles based and to give the flexibility needed for future technology or business practice changes.Customs provides a range of services to business and the quality and speed of the service makes a difference to businesses' ability to perform to grow and to export. The businesses and industry organisations that use and are regulated by this legislation have contributed to identifying what needs to change and they have also been extensively involved in the process of developing the new legislation. The bill enables Customs to deal with considerable growth in both trade and travel and with the security challenges that that growth brings. It represents the modern border environment and it is fit for purpose supporting economic growth by making it easier for traders to do business and by reducing the burden on businesses and compliance costs. Customs' core role is not changing. The bill supports the movement of legitimate travellers and goods across the border and provides the legal tools needed to protect New Zealand. The major change that this bill makes is to modernise the language and the structure of the Customs and Excise Act to make it simple to understand and to use. The bill also includes a number of policy changes. These include increasing transparency of the obligations for users of the Act reducing unnecessary processes an increasing efficiency and flexibility for traders and enabling some possible future changes in technology to be accommodated. In particular the bill increases efficiency and flexibility in the import and revenue collection system. Importers who bring goods into New Zealand when it is not possible to know the final value of the goods at the date of import will find it easy to comply by being allowed to declare a provisional value for imported goods and then providing Customs with the final value once it is known.The bill also gives Customs the ability to issue binding rulings—that is binding rulings on the valuation of imported goods. Valuing goods for the purpose of import can be complex and this provision will provide importers with more certainty over how much duty they owe and a new customs process for appeals over duty assessment which is cheaper and simpler will be available.The bill recognises that storing business records offshore or in the cloud is the way business is conducted today and by allowing this it will make compliance with customs rules a lot easier. Everyone who interacts with Customs is expected to comply with the rules and processes that are in place to protect New Zealand and to support the collection of Crown revenue. This bill makes it clear that those interacting with customs systems must meet high standards and provide timely information. For example those applying for a Customs-controlled area licence must meet certain criteria and excise manufacturers will be required to submit nil returns. For the small proportion of those who do not comply the bill updates and extends Customs sanctions so that they maintain relativity with sanctions added more recently to the Customs and Excise Act and also with comparable sanctions in other Acts.Administrative penalties will apply to all export entries to ensure that Customs has accurate information to give to our trading partners to give them assurance and to protect New Zealand's trading reputation. Trade Single Window users who persistently make errors when entering information can have their registration suspended or cancelled. The vast majority of users are responsible and accurate in their use of the system and this sanction will be a last resort for those who continue to make errors in spite of other penalties and interventions by Customs.The rules around locally grown tobacco will be tightened to reduce the potential for avoiding excise payments and for supplying tobacco illegally. The personal allowance will drop from 15 to 5 kilograms per annum and that is from about 100 to approximately 30 cigarettes a day. Also tobacco curing will be included in the definition of manufacture". An infringement notice scheme for minor offending will replace petty offences increasing the fairness and transparency of the system. The details of this scheme will be set by regulation.The bill confirms the majority of Customs' existing powers. The bill continues to recognise the balance needed between protecting privacy and ensuring that Customs can continue to protect our border. New mechanisms will enable customs officers to undertake controlled deliveries to investigate smuggling and to perform administrative functions offshore like the pre-clearance of cruise ship passengers.Public concerns about Customs' power to examine and access electronic devices have been addressed through a two-stage search threshold based on officers having reasonable suspicion or belief of offending. If a customs officer asks travellers crossing the border will be obliged to make all goods in their possession available for examination. If an officer has reasonable suspicion that an offence has occurred an electronic device is able to be examined. Where an officer has reasonable belief that an offence has occurred a fuller search of the device may be required. Searchers of e-devices are confined to information on those e-devices only and not information that is remotely accessed. If the officer has neither reasonable cause to suspect nor reasonable cause to believe that an offence has occurred the officer cannot search an electronic device. This is a reduction in the powers that a customs officer has now but the Government believes that this approach is a good balance between protecting people's privacy and providing Customs with the powers it needs to detect and prevent smuggling and to manage national security risks.The bill also facilitates greater information disclosure from Customs to other Government agencies for security law enforcement national security and a range of Government services. The way Customs uses and manages information will be made transparent in a framework that specifies the purpose for which information can be disclosed to and accessed by other Government agencies. Sensitive personal and commercial information will be protected in new provisions and the arrangements will be developed in consultation with the Privacy Commissioner.This bill balances the protection of New Zealanders with individual rights. It provides transparent and easy-to-use legislation that makes individual and business obligations clearer and improves assurance over the collection of revenue. It is flexible enough to enable Customs and businesses to adopt future technology and change the way they do business making it easier to do business which supports economic growth. The majority of the bill will come into force on 1 April 2018 or 6 months after the date of Royal assent whichever is later. This date has been chosen to avoid implementation during the busy summer season for traders and travellers. It gives me great pleasure to commend this bill to the House."