ABF Commissioner Michael Outram APM Speech to the Trans-Tasman Business Circle

Speeches 13/07/2023
Investing in the border as a strategic asset

Good afternoon everyone, it's really terrific to be here with you at the Trans-Tasman Business Circle.​

Firstly, I do want to acknowledge the Ngunnawal and Ngambri peoples who are the traditional custodians of the land here in Canberra and its surrounds. I pay my respects to their elders past and present, and also extend that respect to all Aboriginal and Torres Strait Islander peoples who might be with us today.


I also want to thank the Trans-Tasman Business Circle, again, somebody asked me today "you know you spoke here two to three years ago, what did you say then?" and I said "I don't remember - haven't looked it up - so I hope this isn't a repeat of the same exercise' ​including its founder and managing director, of course, Johnny Weiss, and chief executive, Tanya Oziel for inviting me to speak here today.  


It's a big year for the organisation, of course, 30 years going. And of course a lot of you here were part of that journey


Sometimes the past three or four years have felt like 30 years to me, to be perfectly honest, and I'm sure it's the same for some of you from time to time. And of course, we just haven't magically emerged from the pandemic into a post-pandemic world where everything is working really well.


It might surprise you, but I'm not here though, to tell you today about how great the Australian Border Force is, although it is world-class. And we're among the best in the world, and I'm incredibly proud of what we achieve despite the very limited resources we have at our disposal to achieve it. But today I actually want to talk to you and try to change the way that perhaps you think about the international border and I'm on a bit of a mission to try and change the way that politicians think about our border, governments think about international borders. I want you to look at borders through a different lens hopefully by the end of my remarks this afternoon.


Australia's border is actually one of our nation's greatest assets, but we're just not making the most of it. I want to bring about reform of our border, and not just piecemeal reform. I want to overhaul the border and make it work for Australia the way I wholeheartedly believe that it can.


And there's never been a more pressing need, in my opinion than now. In your industries you will all be pushing against economic, severe sometimes, headwinds and disruptions in your supply chains and markets; of course for Government we look at our close region and we see some significant geostrategic uncertainty and shifts in our region and more than we've seen certainly in a generation. It's a challenging time for individuals, for businesses and for governments.


And of course, so many people of our country folk are doing it tough, trying to balance household budgets and keep up with the cost of living. If you're wondering what that has to do with the border, well the answer is: it's actually got quite a lot to do with the border. Because the border primarily is an economic asset. 


Our border and all its elements add up to nearly a TRILLION dollars in revenue, visitor spending and two-way trade each year. And about one in five Australian jobs is supported by trade.


So my job is about more than just security and border protection, it's also about economic productivity. In fact it might be primarily about supporting economic productivity and enhancing the wellbeing of Australians.


In other words, the ABF is, I'd say, stewards of the border. We have to balance the role of course that we have of enforcement with the role of driving more trade and better economic outcomes for our country.  


These roles aren't mutually exclusive, I often say they're opposite sides of the same coin. They're not mutually exclusive goals at all, quite on the contrary. And yes, we want stop anyone, of course, who wants to do Australia harm. But we also want to speed things up, we want to speed things up for legitimate businesses – we want to help you to do better, because that's good for our country, put simply. And if you want to help Australia, we want to help you. If someone wants to profit from crime, we want to stop them in their tracks. And we want to work with you people in this room to achieve that outcome.


Unfortunately, despite doubling our strike rate though in recent years in terms of the voluminous amount drugs we interdict through better technology, targeting and intelligence, we've double our strike rate. Wastewater testing tells us we are still seeing about 75 to 80 per cent of illicit drugs succeeding in getting around us at the border. In other words despite the literally thousands of tonnes of narcotics we're seizing through the great work that our people are doing, we're stopping, even on a good day we're stopping only about 20 to 25 per cent. So I'm not doing high fives, I'm not doing cartwheels, I'm not celebrating because we just have to do better. And we can do better.


At the same time, think about the next ten years, we're going to see over a 70 per cent increase in cargo imports in Australia over the next 10 years, which is great. But   the challenges and the logistics are going to be huge, and they're just going to continue to increase, as will the risks if we don't start to address them in a strategic way. Too many of our critical IT systems are dated, and too many of our methods are as well – in a lot of cases, we're still paper-based. How many of you are grabbing for the biro on the way back to Australia to fill out passenger cards still? Documentation for important border processes should be digital, in my view.


And the regulations are too complex for businesses to thrive, simply, especially small to medium enterprises. There are more than 200 cross-border trade regulations, and 145 cross-border trade systems, all administered by 29 Government agencies – which means that information duplication alone, just alone, costs Australia about $431 million a year.


And here's an eye-opening statistic, for those of you that are sort of slumbering off now after your lunch. From 2010 to 20, that's ten years, Australia's 'trading across border' ranking, that's done by the World Bank, we plunged from 25th to 106th in ten years, according to the World Bank. Imagine the outcry if our Education and Health sector dropped 80 places in world rankings. Imagine if the All Blacks went on a losing streak and New Zealand became a second tier rugby nation - It's unthinkable right?  


So it has never been more critical for us as a country and as a region to grow our productivity, our competitiveness and our resilience but, in Australia, at our border at least, we're going in the opposite direction. We're losing competitiveness, as that World Bank statistic showed. And we have some tough competition around the world and emerging competition - If we only stand still, we're going backwards, frankly.


There's an urgent need for border modernisation and investment in the border. I'm talking about financial investment here, and plenty of it, but I'm also talking about strategic investment, and planning and thinking – basically, I want people to think about the border differently, to reframe how we talk about it and how we make significant policy decisions about it.


We have to recognise that our international border is an incredibly important strategic asset that both drives and protects our economy, but it also requires strong foundations, of course, based on integrity and on security. Our reputation as a trading nation and partner, as a tourist destination and as a place to migrate to is also effected by the border.


What do I mean when I call the border a strategic asset?


Well, in good times, you can call these times the good times now, the border is of course an economic asset that should be used to leverage economic growth and productivity through trade and travel primarily. It can generate more money of course, through increased productivity and migration.


In times of crisis, the border is an asset that can protect our economic and national security. And border settings should be able to be adjusted by Government, in cooperation with industry, in a really fast and agile and nimble way to guard against risks, harness opportunities and enhance our overall resilience. And that did not happen in the pandemic, we weren't able to do it because we're still on a paper based systems.


The border has to be an efficient mechanism to ensure our economic security, protect our supply chains, of course, and protect our community during a crisis. And we all know from the pandemic, the thing about crises is we don't know when they're coming. But we know we have to prepare for more.


So I want to create a broader policy discussion around the border, and the way we look at it, more border as a system – not just a series of lines on a map or entry or exit points or new ports or new airports, cargo containers, passport checks. These shouldn't be thought of in a policy sense at all as separate or siloed – all the domains or functions that industry and governments sometimes think in terms of. The whole thing's interconnected and needs to be thought on in those terms, as being an interconnected system.


International borders, of course, also incorporate an amalgamation of legislative boundaries – we know that, we have our search and rescue region in Australia is only about ten million square kilometres of ocean that we have responsibility for – exclusive economic zones, territorial waters, three-mile limits and physical coastlines, these of course not only help define our border, but also our sovereignty and allow us to make laws and control who and what comes in and out of our country.


For Australia and New Zealand, if our international borders are well managed and invested in, we'll be able to make the most of our proximity to each other, and the great friendship that exists between our countries, to truly harness opportunities in the region and globally, build upon trust that we have between our two countries.


So the ABF's vision for the future border, and cross-border trade, is based on three pillars. The first which is 'Contactless and simple'.


Imagine boarding an international flight from the US to Australia. Just imagine this, at departure in LA your bag is checked in all the way, not just to Sydney, but to here in Canberra. Border agencies including my organisation will get your baggage X-Ray of your checked bag and your cabin bag from the US immediately after you check-in. We will be able to run our own algorithms over those images to clear the bag pre-arrival, and of course that bag could potentially go directly onto a domestic flight.

This is not some far off utopia I'm talking about. Two weeks ago I was in Brussels working with like-minded partners on the standardisation of images and data so these sorts of processes can exist in the future.  


And we're exploring the same kind of concept with cargo. Think of the benefits of real-time screening as cargo is brought on board ships and aircraft, or off for that matter. Time and money is going to be saved, and we would have a very high degree of confidence around what was originally loaded into a container and its chain of security all the way to the end customer. And that allows us to accommodate those greater volumes, to increase speed, to decrease risk.


Streamlining our regulations as well as our intervention and clearance processes is critical to realising this. And Trans-Tasman is actually where we've been starting to do things, make real progress with the 'contactless and simple' approaches. And we've been proud to work with our colleagues in the New Zealand Customs Service and Christine Stevens the controller over there, I know very, very well, and we've been proud to be working closely on the 'Secure Trade Lane' for example, or the STL as we call it, and it has been great to see the cooperation between our agencies. And we're now trying to bring Singapore into that conversation, to do three-way trials, to extend into our regional like-minded partners.


Under the STL, we've worked together on a range of trade modernisation trials, in partnership, importantly in partnership with industry participants and primarily with trusted traders, and we've been exploring our options for facilitation and regulatory enforcement. And if you put it simply, I think as a regulator, in the future we can't just bolt other regulatory apparatus to that of industry, we have to integrate. It's simple, and that means co-design and shifting the paradigm of trust.


So the STL is about building foundations for a trade lane that will give us more streamlined, light-touch Trans-Tasman trade, at least. It will have an emphasis on trusted entities for low-risk cargo initially, of course, and build from there. While we still, will of course have to learn to balance border protection and trade facilitation. We'll build something much bigger together that we can grow as our systems and processes evolve. And it's obvious to me that we should do this across the Tasman first, because we do have that relationship and that trust.


And to really effect change we will need to bring in other agencies, of course. For us in Australia that will be my colleagues at the Department of Agriculture, Fisheries and Forestry, and perhaps the Ministry for Primary Industries in New Zealand, along with, of course, the big passenger and cargo companies, airports, seaports, operators, we need to all sit down around the table and to really start to think about how we can have truly contactless and simple trade across the ditch.


Customs agencies working closer with industry is not just something I talk about, I actually passionately believe in it. I am the current chair of the Asia/Pacific region for the World Customs Organisation two weeks ago in Brussels, I presented a Concept Note to the WCO on behalf of the Asia/Pacific region, that we developed in Australia, that looks specifically at how we can modernise customs relationships with industry and improve our resilience. It's proposing to examine elements of digitalisation, trust and data sharing.

And through that proposed approach, we're also exploring now the concept and feasibility of Trusted Trader 2.0, we already have a Trusted Trader program in Australia and in New Zealand that's similar. We have to now think about things like cyber security and sustainable green initiatives and elements along with our Australian Trusted Trader Program members. So 2.0 we think should look at a more tiered approach to trusted traders which better recognises what you might call the 'gold standard' traders as well as those that are still working towards achieving that outcome.


And that has to evolve to counter new risks and threats we're seeing – and will continue to see – in global supply chains, and of course at our borders.


A key priority for the Government, and of course for the ABF, is the Simplified Trade System, or STS (a different ST but with an S on the end this time, we like acronyms). It's an ambitious, multi-year, it's a microeconomic reform agenda across the whole of Government. And of course we have a representative here from the taskforce today.


It's aimed at creating a simpler and more efficient trade system that will deliver real and tangible benefits for Australian businesses.


Part of that is a paperless Trade Single Window, it's a key goal of the STS agenda, and will transform the import and export experience for traders. Along with much simpler rules and processes, it will include a digital gateway based on a 'tell us once' principle that will make trade, believe me, a lot easier and prone to less duplication.


I'll go onto the second pillar of our border vision, which is 'Digitalisation'. Now I've been cautioned a few times here, because digitalisation, of course, is not digitisation. Digitisation is just simply converting existing analogue data to the digital format. It's what we do now with the inbound passenger card you fill out. Somebody OCRs and then its digitalised, or digitised should I say. It's not really much use for real time data analytics and risk management and decision making.


Digitisation is transactional, but we see digitalisation as being transformational. A transformation that needs to occur at the border.


It's about embracing the ability of digital technology to collect data, establish trends and make much better and more rapid business decisions in real time or near real time. It is about reforming our processes, frankly, entirely.


So there has to be a technology and data uplift, it's that simple. There's lots of flinging bits of paper, we're not going to achieve that and if we have another pandemic tomorrow, believe me, we will repeat exercise. So there has to be uplift. We need to digitise and to automate, including the Integrated Cargo System, or ICS that some in this room will be all too familiar with. It's our core trade system, responsible for the clearance of cargo into and out of Australia. It is accessed by more than 40,000 industry users and 3000 government users and processors every year, and it processes over 1.2 billion transactions per year. It has served us well, it deserves a long service medal, it continues to serve us well but it was put in place nearly 20 years, and therefore it is an aging platform.


We are currently working through design concepts for a next-generation cargo system to eventually replace the ICS. We are also engaging with industry on how we modernise ICS through our 'Foundations for a Single Trade Environment' initiative'.


The third pillar of our vision for the future border is simply, what you call 'Secure'. And I see this having three primary components, or you could look at it as a Venn diagram.


Firstly, targeting. We want to use data, the new data sets that industries are acquiring in real time to identify and target risk, put simply – like we did recently with the WCO's Operation Tin Can, that we spearheaded in Australia. It was a multi-agency initiative which included our counterparts from New Zealand and we were getting real-time data from the shipping industry. This wasn't just spur of the minute, we had to do a lot of planning with the shipping industry. These were new data sets that we hadn't seen before, directly led to the seizure of 98 tonnes of cocaine offshore, within weeks – just weeks – of starting to look at this data for the very first time.


Tin Can was a first of its kind. It brought together the commercial shipping industry and 58 border agencies from around the world who were proactively looking to tackle criminal infiltration of the maritime supply chain. It really demonstrated what could be achieved when the global customs community works together, and with industry.


And it couldn't have been done without data sharing and, of course, trust. Trust is so important – it isn't just something that you decide exists, it has to be worked on, institutionalised and built into the system with the shipping industry and MSC and some of those other shipping companies. We worked to build that trust in that operation and we ended up with real cooperation and co-design.


We're going to keep going. That was a proof of concept trial. What we're doing is we've now partnered again with the shipping industry and a fewer number of partner countries, especially with our Border Five – that's the Five Eyes and their border agencies, our counterparts in Australia, Canada, New Zealand, the UK and the US.


The second element of security is our operational presence. This is where we use intelligence and partnerships, frankly to step in and disrupt criminal activity in travel and trade and to make the case for legislative, regulatory and policy changes.


One of our key priorities is hardening our international cargo supply chain against criminal infiltration.


If you look at airports, seaports, cargo terminals, warehouses, customs brokerages, licenced depots, etc. there are many, many opportunities for criminal organisations to exploit and recruit workers, our employees –my organisation as well – to act as internal conspirators, or what we call trusted insiders.


To combat this, National Operation JARDENA was established in the ABF in November 2021, and we created Strike Teams across Australia.


We've got 90 officers currently dedicated to supply chain operations, working closely with federal and state police and other regulatory agencies, both here in Australia and overseas, to identify and disrupt border vulnerabilities that are being exploited.


This is another, hopefully eye opening statistic. We have identified more than 970 people and 95 businesses that operate in our supply chain in Australia that pose a threat to the integrity of our border. And that's just what we've found, so I suspect there's a lot more that we're not aware of yet. And of course we're getting busy, in terms of our powers under the customs act we've issued infringement notices, and we've issued financial penalties and cancelled a lot of licences we're trying to put a lot of these___ out of business frankly. But we're also building the case for regulatory and policy change so we can change the system here, without actually burdening you all with really clunky regulatory work


Thirdly, screening. We want to improve our screening technology to increase our coverage of cargo and luggage and improve our strike rate in detection. Eventually, I imagine a world with an environment that supports AI-assisted, 24/7, 365 real-time screening technologies, in air cargo and sea cargo and international mail, built into supply chains and travel pathways, so we can identify risk at greater volume and speed it all up at the same time. And the systems themselves, the way I see it is, every time we get a detection or a false positive, the intelligence will learn; and our strike rate improves and improves and improves and we network that with our like-minded partners. That's the world I see in the future, so we're starting to build for that now.


It's important for me to mention here that I certainly don't see security as something we do to industry or impose on industry, for me it's working with industry, something we do together. We've been working with our Customs Advisory Board, who are CEOs and senior executives from industry, for quite a few years now to, if you like, design a blue print to the Australian border, for the future for trade and travel separately. So we can work towards, cohesively, an outcome that is contactless, simple, whatever those principals may be. And that is work that's going on right now.


It's going to take an agile, responsive, skilled workforce to get it right – both in the ABF and our partner agencies in industry. Because it's not just going to be ABF officers and staff working on this, we have to co-design. We have to work together.


That's so important if we want to maximise opportunities, minimise risk and reduce costs. We're completely committed, I am completely committed to bringing industry, and many of you in this room, 'into that tent' for that conversation. Industry feedback will always be one of our best sources of information and insight, it's absolutely essential


Over the coming months and years, we're going to keep genuinely engaging with industry as we co-design that vision for trade and the future border. But it will require a shift in thinking on your part as well, I would suggest – people in industry have to as well view the border as an ecosystem, rather than just focusing on our little bits of the border.


So Australia has this incredible strategic asset, I would say, in the border. Even as it stands 'wearied' at the moment, it really drives our economy.


The border brings us more than $421 billion in imports, and nearly $400 billion in exports. We in the ABF collects more than $20 billion in revenue at and through the border, maybe a little 'finder's fee' would help? And it's estimated that by 2050, migration will be contributing $1.6 trillion to our GDP. These numbers are pretty huge. But if we don't invest in the border, like you would any other asset, it's going to depreciate.


So we have to do things today that will make the border work better for all Australians tomorrow and for our country. A lot of industry leaders have told me they want to see more money that's raised at the border spent on modernising the border, and I personally agree. If we systematically harvest today and reinvest in the future of the border, that's going to be the key with a strategy and investment plan


We absolutely have to make the most of our international connections in the region and globally. It will require new thinking in terms policy and regulation from all of us, but I'm genuinely excited about what we can achieve together.


Thank you.