Customs do have the right to strip search you, shove a finger up your jacksie, and go through your laptop/ mobile phone/ address book/ suitcase. They can also arrest you. (And making a false declaration is a crime. Bit like the US and "wire/mail fraud" - it is easy to proove, can carry swinging penalties, so is often used by authorities to "get" people (e.g. Al Capone and tax evasion))
All they need is "reasonable suspicion" BUT they do not need to tell you why they have suspicion, just that they have it. (normally a tip off). They should tell you what the suspicion is about if you ask. But if the suspicion is that you are (say) bringing in pirate DVD's, and they find drugs, but the DVD's are OK, they can still bust you for the drugs.
You can say no, and force them to bring in a magistrate to issue the warrant - but you will be detained until the duty magistrate can be found and the warrant typed up - probably a couple of hours. Once the warrant is issued, you have no right to refuse.