The Australian Customs Service will spend three months manually processing refund-related payments under the new GST regime after experiencing significant problems in getting its systems ready.
Chief executive Lionel Woodward has told the Senate Legal and Constitutional Legislation committee Customs is working intensively with EDS to develop its systems in time for the GST, but it's unlikely there will be an electronic system to replace the interim refund related payment system before September. EDS does all application development work for Customs.
The committee heard the new system for handling the GST would not be completely ready until three months after the tax was introduced on July 1.
Woodward told the committee that of "a couple of million entries" processed by Customs each year, some 8000 would be affected during the three-month period, with those entries requiring a manual workaround.
EDS had told Customs extra resources would not solve the problem, Woodward said.
The problem comes after a year's delay to another Customs system outsourced as a separate contract to EDS, the Passenger Analysis Clearance and Evaluation system (PACE), which has a contract price of $5.4 million. Customs officials told the hearings changes to the design of the system and delays in getting data from the Department of Immigration and Multicultural Affairs, as well as delays in the work done by EDS, had held up PACE. Both parties had incurred costs as a result of the delay and both were working to attribute ownership of those costs and responsibility for them, they said.
After reports of the problems with GST compliance hit the press Customs rushed into damage-control mode, issuing a press release to claim it will be ready to meet the GST deadline of July 1, 2000.
"We acknowledge there is one area where Customs will not be fully automated for GST by July 1. This relates to requests by importers for refunds of overpaid duty and GST on imported goods," Woodward said.
"Where importers are owed refunds, Customs will implement manual processing of those applications. It is Customs' intention to revert to automated processing arrangements of refund applications within three months.
"Customs will pay refunds of GST and advise the Australian Taxation Office of revised liability for GST to ensure that the importer's business activity statement accurately reflects any adjustment."
Woodward insisted the need to process refunds manually would not affect the timeframe in which Customs guarantees to process refund claims. Customs would deploy "whatever resources" necessary to satisfy the standards.
He told the Committee the area of GST work that would not be implemented by July 1 related to entries that might need amending where "something incorrect has been done to an application for refund of customs duty". Customs would be able to deal with those errors but to fix errors or deal with requests for amendment to entries would require very substantial technical changes to the system.
"EDS advised us that, because of the interaction between that IT development and what was going in the systems, they could not deliver that."
EDS director of communications and marketing Kerry Little said EDS was unable to comment as it had no authority to speak on behalf of its clients.