Customs is seeking new powers to allow it to make people disclose passwords for electronic items when coming into the country.
The border agency has released a discussion paper and is inviting comment on proposed changes to the Customs and Excise Act, saying a review is needed because it can no-longer respond efficiently to changes in technology, business practices and Government policy.
It says at present when Customs examines a person's electronic device, the owner is not legally obliged to provide a password or encryption key.
"We have found that it is relatively uncommon for someone to refuse to provide this, but if they do refuse it can mean we have no way of uncovering evidence of criminal offending even when we know the device does hold this evidence," the paper said.
It would become an offence to refuse the information request.
Being able to fully examine electronic goods would allow Customs to detect objectionable material, drug trafficking and to verify travel plans.
Customs said the changes would raise issues of individual privacy and the need for protection against unreasonable search.
"Those considerations need to be balanced against the need to protect the community from harm."
It was also investigating options for requiring people to empty their pockets.