Speech to the 2014 World Customs Organisation IT Conference and Exhibition
05 May 2014
Michael Pezzullo
Chief Executive Officer, Australian Customs and Border Protection Service
E&OE
Welcome to the 2014 World Customs Organisation Information Technology Conference and Exhibition. This year the theme is “IT as a catalyst for economic competitiveness", with the subtheme of “innovation powering the facilitation of trade and tourism". Now, there are a lot of words in that theme, but if you break it up, each one of those words and those phrases is very, very important.
In an age when the global border protection environment and customs environment is transforming itself very rapidly and community expectations are also evolving at a similar rate in relation to trade and travel, this is a time for a very serious policy pursuit of innovative technology solutions to help us all face the challenges of the future.
This conference is not just about the global customs community coming together, as important as that is, under the auspices of the WCO, it is also about working with industry in partnership, and as I said in my opening remarks, we really do genuinely value the policy input from our industry partners.
Industry can not only provide the necessary tools, technologies and systems to improve border management, but can assist us in the thinking that's required to improve border management and we can learn a lot from working together. So I particularly welcome the 28 industry exhibitors and partners for this conference.
Now, as you've already heard this morning, alongside managing the challenges of our day-to-day operations, the Australian Customs and Border Protection Service is progressing a range of reform and modernisation measures which will ensure and guarantee our future ability to achieve common ambitions we all share. As this Service acknowledged last year with the release of a document known as the Blueprint for Reform 2013-2018, even with all of the pride, commitment and diligence in the world, we cannot hope to meet the challenges of the future by simply persisting with the same approach that we've relied upon in the past.
So our task as a modern Customs and Border Protection Service is to think more broadly, to find new and more-efficient ways of protecting our communities whilst fostering economic posterity. Technology is one of the keys to this and the mission that I've set forward for my people, from the most senior leadership to the most junior staff, is we need to be world-leading in so many different ways: the uptake of technology, the training of our people, the redesign of our business processes. We should imagine all of those things as if we were imagining them from the start. The world is so radically changing itself that nothing short of revolutionary thinking will do.
Now, as a Service, we have considered projected increases, the ones that Minister Cash spoke about this morning, and examined our organisation thoroughly. Over the past 12 months, we've emerged from a period of quite significant self-examination and one thing is clear: our technological environment and capability is at a critical stage. Frankly, it has become unwieldy and too complex to manage, costly, inefficient, and in some cases, a creator of risk rather than a mitigator of risk.
Many of our systems have reached or are rapidly approaching the end of their useful life or are dependent on very special individuals with skills that are becoming increasingly difficult to find, and in some cases the skills and the capacity to manage those technology leave when those individuals retire or leave employment. This has been compounded by the fact that over recent years, frankly, budget reductions have resulted in a serious lack of investment in critical maintenance and enhancement activities simply of our steady state business, let alone anything more. This has resulted in many of our systems being overstretched beyond their limits and has led to a technical environment that does not efficiently support our current business model, let alone any future aspiration.
The shift in our Service's philosophy and structure towards a law enforcement-style command and control model, which will further come into being on 1 July this year with the establishment of a vocational category within our Service known as the Border Force, is underpinned by our vision for a mobile and very technologically advanced Border Force workforce. We're building for that workforce a connected information environment where our officers will be supported by reliable, accessible and secure systems, with centralised rather than bespoke databases supporting streamlined data entry and access from the field. Putting the operator and the field officer at the centre of that process will be critical.
Work is also under way, of course, to ensure our future operating systems support our external clients. We're endeavouring to build a future where legitimate traders and travellers are unimpeded insofar as is possible by our border processes, allowing our field officers, our most valuable employees, to focus on areas of greater risk to our border security, to law enforcement interest, or, indeed, ultimately, to national security. We will achieve this through collaboration with partners in fellow agencies, with the WCO, and with industry partners, both vendors of products as well as those who live in the real world of customs, trade and travel here in Australia and internationally, and again technology will be critical to achieving this vision.
In looking at how innovative technology can foster, encourage, and enhance international trade and travel, we have to consider who our clients are. Who are our customers? For too long, Government agencies have not asked that question. For too long, Government agencies have thought that this is a question for the private sector which thinks more instinctively and intuitively about the customer. Well, our customers are the international traders who want to operate their business in a digital-by-default environment, for instance, and increasingly, a paperless environment, without unnecessary red tape and paperwork, and need their exports and imports to be cleared quickly. Delays in processing border movements put pressure on infrastructure, airport and seaport, with flow-on effects for integrated logistics and supply chains.
In relation to the Australian economy alone - and this, I'm sure, applies to other economies as well - the Australian Logistics Council estimates savings of one and a half billion dollars per annum, annual, in associated costs for every one per cent increase in the efficiency of transport and logistics supply chains. That's real money in the pocket not just for businesses, but ultimately their consumers, their customers, and ultimately that means people like us, our families and our friends and our relatives.
Our clients, or our customers, are also the passengers who travel to and from Australia, who want a seamless travel experience, with minimal interference from a law enforcement officer, insofar as is possible. Travellers, frankly, do not want to wait while their traveller refund is being processed and they do not want to wait in a queue to have simple immigration, quarantine and customs formalities undertaken. And for those of us who have travelled, as we have, as a family with young children, that's particularly important, but so it is for business travellers - people who have come to this conference - people who travel a lot, but also people who are travelling as tourists for perhaps one of the few times in their lives. Their precious time should not be wasted by some officious public servant standing at a counter, delaying that travel experience. Ultimately, of course, our clients are also the people of our nation, Australia, here, who should have the confidence that their border protection agency is well-equipped to manage these responsibilities.
Now, we have worked over the past year or so, and continue to do so, with all of our customers to identify how we can continue to improve our processes and deliver on the expectations that the community holds of us. Realistic enhancements to our technologies will cover all manner of things, including non-intrusive inspection equipment, new drug detection technologies, Smart Boxes identification systems and custom duty stamps, as well as digital verification technology and facial recognition technology in the traveller space. Handheld devices for our officers, the Border Force officers that I spoke of before, will allow, for instance for real time passenger alerts and the expedited clearance of cargo to take place.
Now, the tools that we provide to improve our customers' experience of engaging with our borders should be seen as the outputs of our technology reform. We are not reforming technology for the sake of it. To ensure that we're able to provide the streamlined border environment that we envisage, however, it will be important to ensure that we get the inputs right, and this is the behind-the-scenes work that we're currently undertaking to make that we get this right. These inputs include examining and restructuring our workforce and operating model, having the right people in the right place at the right time. We are moving, for instance, internally, from having a traditional ICT organisation, or an ICT division, if you like - that is, focused primarily on capability delivery determined by the corporate parts of the agency, to focus more broadly on technology capability and delivering those capabilities to support our field officers in our field operations. They are the front line and our most valuable human resources.
Culture and behaviour, enhancing the strength of our Border Force through maintaining the integrity of collective units as well as each individual officer as part of a disciplined, uniformed, and increasingly armed organisation. A fast-moving border will require still the exercise of discretion and it's incredibly important that we have ethical, well-motivated officers who understand both the integrity in which they work and who can intuitively apply the rights decisions at the right time.
Centralised command and control.
We're moving from a model where internally our individual business lines independently manage their own business processes and technology capabilities to a command and control system that will be headed by a strategic border command, which will be established on 1 July this year and which will oversee a number of regions that will marry and tally with the Australian Federation of States and Territories. Within that system, we're developing a central technology division that will be established on 1 July under our CIOs leadership and that division will control our technological capability and its development across the Service.
Standardisation.
We will move from custom-built technology solutions, where customisation is not relevant or important but specific to each internal line of business, to increasingly the use of standard technologies for common business needs. We will only use a customised build as an approach where there is a specific, demonstrable and differentiated business need. Where common services have been identified, assessment on the technical approach will be performed at the portfolio level by the technology division and by the head of technology.
Now, we are very serious about investing our time and resources to get the right inputs created for technology reform. Accordingly, the new technology division will have a much broader mandate than any previous ICT-focused organisation that has existed within our Service. This new division will manage all of our information and technology capabilities, with the exception of a few maritime capabilities. In other words, it won't build ships.
But short of that, it will be responsible for everything else, that is, everything that's technology-focused and is distributed across different business lines. These will all be integrated into the one division. Examples of such technology include CCTV, e-gates, including the automated gates of the future, biometrics, x-ray technology, forensics and examination equipment, and all the various office support technology, such as cameras, radios, and mobile devices.
Investing in the right inputs to build these systems now will be key to getting our inputs right. And the chief information officer who will lead this division will speak to you later during the course of the conference, in greater detail, about the work that he's undertaking in creating this new division. And I hope that you're able to stay for, and listen attentively to, his address.
It is no secret that the Service I lead today will not cope with the challenges of the future by simply scaling up our current business processes, and just simply doing more of what we do today. In part, this is because of the projected increases in volumes that were described earlier. But, in part, it's also the growing complexity of the environment in which we operate. And there are other areas that, quite simply, we need to improve.
When I took over the Service in the early part of 2013, in February '13, we laid out very clear direction in terms of our workforce culture, and dealing with certain corruption issues within the Service. Regrettably, due to ongoing investigations that are currently underway within the Service, it is likely that a number of other officers will soon feel the wrath of the law, either by way of being arrested for undertaking certain criminal activities, or for being knowingly associated with those activities, and they will be the subject of disciplinary proceedings.
I cannot state strongly enough, as the regional heads agreed last week in Port Douglas, the importance of marrying any change you make - whether it's technology and business process-aligned, or any other change - with cultural change. In the end, no matter how good your technology is, no matter how good your systems are, it's the individual officer or the small team on the front line that will ultimately make the most important decisions upon which your reputation will rest.
We responded to the challenges of volume, complexity, and corruption through a number of measures that, collectively, are described as our ongoing reform program. Fundamental to the design of the reform program, has been the principle that the vast majority of our officers are well-meaning, well-motivated, energetic, and simply want the right tools to get the job done. And it's my job, as the Chief Executive Officer, to deliver those tools to those well-motivated officers.
To those other officers, who are not motivated as they should be, your day is coming soon. Regrettably, I have to say that. And I will keep saying it, including in appearances before the Australian Parliament that I will shortly be making.
Now, through our reform process, we've not only looked at our workforce and culture issues, as well as our business systems issues and our operating model, and our various business processes, we've also looked at ourselves holistically, in an integrated fashion: what sort of an organisation should we become? What sort of an organisation need we become that pulls together workforce operating model, systems, business processes and technology?
Let me just highlight, as I conclude this address, a number of the key observations that have arisen through that process. The very significant emphasis that we all increasingly place on data, intelligence, and analytics. The best way you can help our officers, irrespective of the nature of your jurisdictional arrangements and irrespective of the type of agency you are, is to give them the best data processing, analytics, and targeting tools you can possibly afford. This is the key to dealing with volumes, complexity, and ultimately, of course, the attempts by illicit actors in our networks to circumvent our controls.
Now, with all the best intelligence and data in the world, you still need those well-motivated officers, who are ethical, who are well equipped with the technology of which I've spoken, to then conduct their day-to-day operations. Increasingly, we will move to a command control system that is flexible and agile, that devolves as much executive decision-making power to the front line as is possible, but within a transparent network of visibility.
As CEO, I want to be able to see what is happening with flows. I want to be able to see what is happening with patterns. I want to be able to see what is happening that is anomalous, as distinct from what is normal. And, as you can imagine, technology is central to all of these ambitions.
I should also make a few more remarks on the trusted trader approach that the Minister spoke of earlier. Of course, working under the WCO SAFE framework of standards, leading countries have already or are moving to introduce authorised economic operator schemes. And all of these systems, of course, rely on clearly mapped business processes, strong IT, and strong governance that suits both government and industry.
This is why, under our reform program, we will have a renewed focus over the next 12 months, in terms of focusing on the introduction of an Australian trusted trader program, to improve trade efficiency for Australian exporters and importers, and to build supply chain security, both in our region and globally. This program will take into account existing global standards, such as, of course, the WCO SAFE framework of standards, to secure and facilitate global trade, as well as other associated requirements from the WTO and other bodies as well.
We are currently assessing a range of trusted trader arrangements, looking both at examples from around the world, as well as trying to think from first principles ourselves, and obviously maintaining an active dialogue, both with like agencies, as well as academics, and industry partners. We are examining trusted technologies in the trace and track area. We're looking at public-private partnership arrangements, based on trust, with clear accountabilities being assigned and shared responsibilities being undertaken, which are, where appropriate, supported by trusted technology, such as, trace and track.
We have a completely open mind on these matters. And, as I said earlier, we are just as keen in talking with and speaking with our industry partners, be they vendors, industry sector representatives, those who have got particular expertise in the different part of the customs world, the logistics world, the shipping world, the logistics world, we're completely open minded, and we want to have a policy dialogue with you. Hence, my earlier remarks today, speak to me about the product in the box towards the end of the conversation. Give me your inspired policy thoughts on how you would design, with a public official, such a system.
Now, of course, we want to see a situation where legitimate traders will be able to see the clear value proposition, the benefits for them, for their own industry and business and commercial needs, in registering and enrolling in such a scheme, not just from the benefit of produce coming into Australia, but of course, ultimately, with exports going from Australia under a system of mutually recognised AVO schemes.
Finally, in the travel area. I will make my general address available. There's a lot of material here which Minister Cash has already covered, so I won't repeat it. I equally want to, though, stress to this forum our interest in a future travel system that equates to, in effect, a trusted trader system, where low-risk travellers, travellers who either we know because they're enrolled in some form of scheme, or who present low risk, have got a light touch intervention from us, not just at the physical border, but in the course of them preparing their travel arrangements, booking their tickets, arranging their flights, et cetera.
We want to have a light touch for several reasons. One is cost, to be frank. A one-size-fits-all intervention with each traveller is increasingly not viable in terms of cost pressures on all of our businesses. As the Secretary General said, with volumes going up, they have no agency representative in this room that similarly has a workforce and budget curve that looks the same. So just from the point of view of cost, we need to move to some sort of differentiated treatment of travellers.
Some of that might well involve a trusted traveller program of sorts, particularly for our own nationals. Some of it will involve the gradual rollout of more SmartGate arrangements that you heard the Minister speak about earlier today, where we have arrangements in place with our colleagues and friends from New Zealand, the United Kingdom and, as she announced this morning, now with the US. We want more countries involved in our SmartGate program.
But, ultimately, we want to move to a situation where we have automated inwards and outwards processing. My own personal aspiration, whether we can achieve it during my term in office or whether this is something which I need to bequeath to a successor, is, in fact, to have as the norm an automated entry process, where the arrival, or, indeed, the departure from a country, as closely mimics a domestic travel experience as is possibly able to be done.
Now, there are many issues to be addressed from an immigration point of view, customs point of view, and obviously, a quarantine point of view. But if we don't set ambitious goals, we will only ever incrementally chase the future. The trouble is, the future is running much, much further and faster ahead of us than we can possibly deal with through incremental change.
So whether it's through traveller programs, whether it's through trader programs, whether it's through the underlying technology associated with data, intelligence, and analytics, there is so much that this conference needs to focus on. So little time, in one sense, given each of those topics could probably generate a conference in and of its own right. So I very much wish every participant again, as I said this morning, my very best wishes for the entire conference. Regrettably, government business will see me having to return to Canberra in the next hour or so, and I need to make a flight to get back to Canberra.
I very much look forward to a debrief on your deliberations, and I wish you all the very best for this conference. Thank you very much.
