Travel & Trade Industry Coalition
15 March 2004

[To all MPs]
(Title) (Christian Name)(Surname)
(Designation)
Parliament Buildings
WELLINGTON

Dear (Title) (Surname)

PROPOSED BORDER SECURITY TAX

I am writing to you on behalf of the Travel and Trade Industry Coalition, a broad-based group of 35 organisations strongly opposed to the Government’s proposed $20 million border security tax.

The Government Administration Select Committee has now reported the Border Security Bill back to the House. The Bill now includes two new clauses (clauses 7B and 8C) to enable the setting of regulations to recover the Customs Service’s costs relating to clearances of craft and the exportation of goods. These clauses will enable the implementation of the Minister of Customs’ proposed border security fee.

Members of the Travel and Trade Industry Coalition continue to strongly oppose this tax on trade. Border security is of high public good and there are sound economic and public policy reasons for the Government’s own costs for meeting its security obligations to be met out of general taxation. In support of its position the Coalition has provided the Minister of Customs and the Government Administration Select Committee with reports by NZIER and Capital Economics. We would be happy to provide you with copies of these papers on request.

Coalition members are particularly concerned about the impact the proposed border security fee would have in increasing costs and damaging New Zealand’s international competitiveness. Despite the concerns recently expressed by the Minister of Finance about the competitiveness of the productive sector, this proposed new tax sends an unfortunate signal that the Government is abrogating its responsibilities and is interested only in raising more and more revenue from exporters, importers, transport operators and the wider business community.

Coalition members have therefore been urging the Government to reconsider its position on this unprincipled and unjustifiable tax.

The Minister of Customs has been claiming since first proposing the new tax that the costs to be recovered are entirely a ‘private good’ in that the enhanced border and supply chain security will only benefit those engaged in international trade. However, at the same time he and his officials have cited a long list of public good rationale for the enhanced security, such as securing the safety of New Zealanders, clamping down on illegal activity, and protecting New Zealand’s international reputation.

In response to the Minister’s arguments, the Coalition provided the Select Committee with a ‘compromise clause’ based on a provision in the Fisheries Act. This was to add the following sub clause to clauses 7B and 8C of the Border Security Bill:

(1A) Costs and expenses incurred in the general public interest, rather than in the interest of an identifiable person or persons, may not be recovered under regulations made on the recommendation of the Minister under subsection (1).

While preferring that the clauses be deleted altogether, the Coalition is very disappointed that the Select Committee chose to ignore our effort to compromise. If the Government is truly convinced that border security is a private good, then surely there should have been no problem including the clause, particularly as it is based on what is already in existing legislation. To members of the Coalition the rejection of our clause signals that the Government is being close-minded and is not confident in the merits of its own arguments. We will continue to advocate the inclusion of this clause.

The Minister of Customs had promised us consultation on the public good/private good issue at the Select Committee stage. However, the Committee advised us that it was not in a position to consult on this matter and that its hearing process should not be considered a substitute for the Government’s consultation process.

Coalition members are also very frustrated that to date the Government has not released to us important Treasury advice made to the Minister of Customs and the Select Committee on the issue of public good/ private good despite numerous requests to the Ministers of Customs and Finance and the Select Committee. This is simply a continuation of what has been a very poor process and it is a measure of our intense frustration that Coalition members are now considering whether to take legal action.

I should reiterate that the Coalition is not opposed to the remainder of the Border Security Bill and we agree with the Government that improved border security is required in the face of heightened international concerns about terrorism. As a result, many members of the Coalition made supportive submissions on the substance of the Bill and the Secure Exports Partnership is supported despite it leading to the imposition of significant additional costs for those engaged in international trade. All we are asking for is the Government to meet its own costs.

The Coalition will continue to vigorously fight this unjustified and unprincipled tax on trade. We ask at the very least for your support for our ‘compromise clause’ and for your support for our wish to have the meaningful dialogue on the public good/private good issue required to meet the established legal test of consultation.
Yours sincerely

Stewart Milne
For the Travel and Trade Industry Coalition

Auckland International Airport Limited
Aviation Industry Association of NZ (Inc)
Board of Airline Representatives NZ (Inc)
Business New Zealand
Canterbury Employers Chamber of
Commerce
Canterbury Manufacturer Association
Christchurch International Airport Limite
Cruise New Zealand
Customs Brokers and Freight Forwarders
Federation of New Zealand Inc

Dunedin Airport Limited
Employers and
Manufacturers Association (Northern)
Employers and
Manufacturers Association (Central)

Export New Zealand
Federated Farmers of New Zealand (Inc)
Fonterra
Forest Industry Contractors Association
Horticulture Export Authority
Importers Institute
Logistics & Transport New Zealand
NZ Association of Shipping Agents
NZ Business Roundtable
NZ Footwear Industry Association
NZ Forest Owners Association
NZ Retailers Association
NZ Timber Industry Federation
Nursery & Garden Industry Association
Otago Southland Employers Association
Palmerston North Airport Limited
Queenstown Airport Corporation Limited
Shippers Council
Tourism Industry Association NZ
Travel Agents’ Association of NZ/
Inbound Tour Operator Council of NZ

Waikato Regional Airport Limited
Wellington International Airport Limited
Zespri International Limited

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