House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Justice and Customs, Senator the Honourable Christopher Martin Ellison, MP)

Regulation impact statement

Proposal to amend the Customs Act 1901 to access information on arriving and departing passengers

1. Issue

1.1 The limitations of the passenger report

Subsection 64AC(2A) of the Customs Act 1901 (the Act) requires that the pilot or owner of an aircraft that is on a voyage to Australia provide Customs with the number of passengers and the full name and date of birth of each crew member who were or will be on board the aircraft at the time of the aircrafts arrival at the airport. The information must be provided at the time of arrival of the aircraft if provided electronically, or if the information is to be provided by document, not later than 3 hours after the arrival of the aircraft.

This basic information enables Customs to plan and allocate sufficient resources to clear the passengers on arrival. However such information is insufficient for Customs to be able to determine whether to examine the passenger or the passengers baggage in order to establish whether the passenger represents a risk to the border.

1.2 Acquiring additional passenger information from the airline

Under section 64AE of the Act a Customs officer has the power to request the airline to produce additional information about the passenger. The Customs officer will request such information from the airline to establish the veracity of the declaration and to assist the Customs officer to make a decision as to whether the passenger or the passengers baggage should be examined.

The information that the airline primarily provides is referred to as the Passenger Name Record (PNR). The PNR is derived from the airlines Computerised Reservation System (CRS). This system records the passengers booking and flight arrangements with an airline. All International air carriers operating scheduled passenger flights into and out of Australia use a Computerised Reservation System.

1.2.1 The significance of PNR information

The PNR is significant to a Customs officer because it contains information that assists the officer in making a correct risk assessment of the passenger. This information includes:

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Booking and itinerary details,

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Seating and baggage details;

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Form of ticket payment.

Such information can, together with the information on the passengers declaration form, assist to either allay or confirm the suspicion of a Customs officer as to whether a passenger represents a risk to border integrity.

PNR information is also valuable in identifying passengers who may present a security, quarantine, health or immigration risk. The PNR information would show for example, that a passenger had spent time in a country that has a foot and mouth outbreak. The PNR may also show credit card details which may reveal links between the passenger and, for example, a known terrorist. Evaluation of both the PNR and the passengers answers to questions would then enable a decision to be made regarding further examination.

1.2.2 When does Customs request PNR information?

Customs requests that airlines produce PNR information prior to the arrival of the aircraft. Pre-arrival screening enables Customs to target high risk travellers and expedite the clearance of the remaining passengers.

1.2.3 The effect of late receipt of PNR information

The late receipt of PNR information means that preliminary screening of passengers against profiles cannot be undertaken before their arrival. The result may be a delay in the Customs clearance process as the risk evaluation procedure then commences when the passenger presents to a Customs officer for clearance.

If PNR information is not available and evaluated before the arrival of the passenger, a Customs Officer may form a suspicion based on incomplete information, that the passenger may be carrying prohibited goods and consequently direct unnecessarily, a personal or baggage search.

1.2.4 The move to electronic ticketing

Developments in recent years have seen the major airlines move towards the use of electronic global on-line ticketing systems and the phasing out of printed tickets. Information on printed tickets is derived from the PNR for each passenger and stored within the airlines CRS.

These CRSs have the capacity to create a PNR up to 12 months in advance of the date of travel. PNR information is usually removed from the system within 48 hours of the completion of the travel. Under the proposed amendments Customs would have access to a PNR as soon as it is created, however, Customs interest is focused on those individuals who actually undertake the travel. In practice, this means looking at flights once they have closed off and are en-route to Australia.

Having PNR information on-line and available for a Customs officer to risk assess prior to arrival, can reduce the time to clear a passenger arriving in Australia. It enables a Customs officer to electronically screen the passenger information against electronic Customs profiles prior to arrival of the aircraft. This process eliminates the onerous task placed upon an airline of providing PNR information on passengers on arrival at the border. It alerts Customs to possible high risk passengers enabling Customs officers to prepare for their arrival. Further, it provides for a consistency in high risk passenger identification allowing much reduced intervention in the movement of legitimate low risk passengers.

1.2.5 Industry agreement to provide PNR information

The international airline industry is generally prepared to provide PNR information to border authorities on the basis that there is an advantage to their operations or customers or where their passengers can obtain some advantage (usually related to service standard). In recognition of the benefits to the airlines and in the context of supporting Customs community protection objectives, a number of airlines have already agreed to provide PNR information on a voluntary basis. These include both Australian and overseas airlines.

1.3 Compliance with privacy legislation

1.3.1 Domestic privacy issues

While airlines provide Customs with access to PNR information, consideration needs to be given to compliance with the Privacy Act 1988. The Privacy Amendment (Private Sector) Bill 2000 inserted section 273GAB in the Act. This provision enables an airline in Australia to provide PNR information to Customs.

Customs is obliged to handle personal information in accordance with The Privacy Act 1988. Section 16 of the Customs Administration Act 1985 also limits the recording and disclosure of information disclosed to an officer.

1.3.2 International privacy issues

However in some overseas States privacy legislation is making some airlines apprehensive about providing border authorities with PNR information. This applies particularly to airlines carrying passengers who come under the jurisdiction of the European Union.

Such airlines are required to comply with European Council Directive 95/46/EC. The central tenet of this Directive is the belief that data processing systems must respect the fundamental rights and freedoms of natural persons, notably the right to privacy. Article 7 allows personal information to be processed, if processing is necessary for compliance with a legal obligation.

1.4 Deficiency in Customs powers - gaining access to PNR information

Section 64AE of the Act requires the master or owner of an aircraft to answer questions about a passenger report. Under the provision there is a requirement for the airline to produce documents related to the report. However it is arguable whether this provision extends to providing Customs with the power to gain electronic access to the airlines PNR.

1.5 Application to departing passengers

For the same reasons, a Customs officer requires the power to access PNR information of an airline for passengers departing from Australia. The provision of PNR information prior to departure and subsequent screening against alerts allow Customs to identify passengers of interest to police and other related agencies. This is particularly useful, for example in child abduction matters, when advance warning as to an individuals movement is crucial.

2. Specification of desired objectives

2.1 Objective

The primary objective is to enable Customs to identify high risk passengers while, at the same time, processing and clearing arriving and departing low risk passengers expeditiously.

3. Identification of options

It is proposed to amend the Customs Act to require certain operators to permit Customs to access their computerised reservation systems. Customs may access the computerised reservation systems for the purposes of the Customs Act or any other law of the Commonwealth. The requirement is to apply to an operator who operates international passenger flights on scheduled routes into and out of Australia.

Under the proposal it will be an offence for an operator to refuse Customs access, with each refusal of access constituting an offence. The defence of a reasonable excuse is to be available. For example, where power disruptions prevent Customs from accessing the systems would constitute a reasonable excuse.

Airlines carrying passengers who fall within the jurisdiction of European Union Privacy legislation are concerned that they could be in breach of European Council Directive 95/46/EC relating to a persons right to privacy by providing Customs with access to PNR information.

The only way the airlines concern can be overcome is by inserting a statutory requirement in the Act to require airlines to provide Customs with access to such information.

4. Assessment of impact

4.1 Impact on airlines

4.1.1 Cost of providing electronic access to PNR information

To enable Customs to gain electronic access to PNR information requires the airlines to allow their CRS to recognise Customs as a systems user. For those airlines that have already agreed to provide access, Customs has agreed to cover the costs to the airline of providing this access. For those airlines required to allow access to their CRS as a result of this proposal, Customs will also cover the cost of providing access. This cost is not significant, possibly less than $5,000 per airline.

4.1.2 Improved passenger clearance service

The smooth and expeditious clearance of passengers is a major objective of the airline industry.

Access to electronic PNR information enables Customs to make a more accurate assessment of the risk a particular passenger represents prior to arrival at the border. With the major part of the assessment task already completed at the time the passenger presents to a Customs officer, the passenger experiences an expedited clearance process.

Access to airline PNR information on a voluntary basis has already significantly contributed to border integrity. Customs has used this information for the identification of narcotics couriers, Immigration turnarounds (more than 70 instances), quarantine goods, illegal currency movements, revenue offences and other prohibited goods offences.

In some cases the assessment made as a result of the PNR information will eliminate the need to conduct a search of a passenger who may otherwise be considered to be a suspect.

4.2 Impact on Customs

4.2.1 Cost of gaining electronic access to PNR information

There is a cost for the ongoing service fees associated with access to airline passenger information computer systems. The issue of supplementation is under consideration.

5. Consultation

5.1 Consultation with Airlines

The proposal has been presented to the following airline organisations:

1.

Board of Airline Representatives of Australia

2.

QANTAS Airways Limited

3.

United Airlines Inc.

4.

Air New Zealand

BARA and the airlines gave in principle support to the proposal. The voluntary participation to date is indicative of the airlines view of the enhanced border protection offered by the proposal. They also appreciate that mandating the provision of PNR information, affords the airlines legal protection particularly in countries other than Australia.

(a) Consultation with Government Agencies

Discussions have been held with the Attorney-Generals Department. It saw no impediment to the proposal.

6. Conclusion and recommendations

Access to PNR information is important to enable Customs to more effectively assess arriving and departing passengers, particularly in relation to high risk passengers and the carriage of prohibited goods, especially illicit drugs. It is equally important to airlines that Customs has access to such information in order that Customs can expeditiously clear passengers and to meet other objectives of the airlines.

The concerns of airlines about giving Customs access to PNR information on passengers who fall under the European Union Privacy Directive, can be resolved by amending the Act to require airlines to provide Customs with electronic access to such information.

7. Implementation and review

Customs currently has access to PNR information for a number of major airlines through Memoranda of Understanding. Other airlines will be gradually brought on stream as deemed necessary.

An implementation review will be conducted 12 months after implementation to provide industry with an opportunity to ensure access to PNR information is being conducted in a manner that fulfils its obligations under the European Unions privacy requirements.

While there has been good co-operation received to date from the airline industry in providing Customs with access to PNR information, it is proposed to insert penal provisions for non-compliance as part of the amendment.

To maintain border integrity and assist Customs in fulfilling its border responsibilities, the penalty needs to be significant. The proposal incorporates a penalty of $5500 for each flight for which PNR information was not available.