COMMONWEALTH OF AUSTRALIA

PARLIAMENTARY DEBATES

SENATE

Official Committee Hansard

RURAL AND REGIONAL AFFAIRS AND TRANSPORT LEGISLATION COMMITTEE

(Consideration of Estimates)

WEDNESDAY, 11 JUNE 1997

BY AUTHORITY OF THE SENATE CANBERRA 1997 CONTENTS

WEDNESDAY, 11 JUNE

Department of Primary Industries and Energy— Program 1—Industries development— Subprogram 1.1—Livestock and pastoral ...... 309 Subprogram 1.2—Crops ...... 321 Subprogram 1.3—Natural resource management ...... 323 Subprogram 1.4 Other industry services ...... 377 Subprogram 1.5 Rural ...... 378 Subprogram 1.7—Fisheries ...... 389 Subprogram 1.8—Petroleum ...... 394 Subprogram 1.7—Fisheries ...... 405 Subprogram 1.9—Coal and minerals industries ...... 408 Subprogram 1.10—Energy ...... 417 Subprogram 1.11—Portfolio management and policy ...... 434 Subprogram 1.12—Geoscience research and mapping ...... 436 Subprogram 1.13—Agricultural resource economic research ..... 439 Subprogram 1.14—Resource sciences research ...... 441 Subprogram 1.6—Quarantine and inspection ...... 442 Wednesday, 11 June 1997 SENATE—Legislation RRA&T 299

SENATE Wednesday, 11 June 1997

RURAL AND REGIONAL AFFAIRS AND TRANSPORT LEGISLATION COMMITTEE

Portfolios: Primary Industries and Energy; Transport and Regional Development Members: Senator Crane (Chair), Senator Conroy (Deputy Chair), Senators Calvert, McGauran, O’Brien and Woodley Participating members: Senators Abetz, Boswell, Brown, Brownhill, Chapman, Bob Collins, Colston, Cook, Eggleston, Ferris, Forshaw, Gibbs, Harradine, Lundy, Ian Macdonald, Sandy Macdonald, Mackay, Margetts, Murphy, Murray, Neal, O’Brien, Schacht, Sherry, Tierney and West

The committee met at 9.03 a.m. DEPARTMENT OF PRIMARY INDUSTRIES AND ENERGY Proposed expenditure, $3,306,000 (Document A). Proposed provision, $364,380,000 (Document B). In Attendance Senator Parer, Minister for Resources and Energy Department of Primary Industries and Energy— Mr Paul Barratt, Secretary Agriculture and Forests Group Mr Alan Newton, Acting Executive Director Crops Division Mr David Mortimer, Assistant Secretary Mr Ray Jeffery, Assistant Secretary Mr Andrew Combe, Acting Assistant Secretary Land Resources Division Mr Mike Lee, Acting First Assistant Secretary Mr Peter Thomas, Assistant Secretary Mr Ross Walker, Assistant Secretary Mr Tony Byrne, Assistant Secretary Mr Alan Grant, Acting Assistant Secretary Mr Bob Schufft, Director Mr Steve O’Loughlin, Director Mr Michael Alder, Director

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Livestock and Pastoral Division Mr Tim Roseby, Acting First Assistant Secretary Australian Bureau of Agricultural and Resource Economics Dr Steve Beare, Acting Executive Director Mr David Banham, Acting Corporate Manager Australian Plague Locust Commission Mr Gordon Hooper, Director National Registration Authority Mr Greg Hooper, Acting Chief Executive Officer Australian Quarantine and Inspection Service Mr Paul Hickey, Executive Director Mr Digby Gascoine, Director Mr Brian Macdonald, Director Mr Denis Paterson, Director Mr Tim Carlton, Manager Mr Bill Roberts Mr Peter Buckland Mr David Wilson Mr John Cahill Mr Jack Haslam Mr Steve Bailey Mr Greg O’Connor Bureau of Resource Sciences Dr Peter O’Brien, Executive Director Dr Bill Gerring, Director Mr Bill Pahl, Assistant Secretary Australian Geological Survey Organisation Dr Neil Williams, Executive Director Dr Trevor Powell, Deputy Executive Director Mr Graham Brooks, Director Headquarters Group Parliamentary, Planning and Projects Division Ms Paulette Quang, Assistant Secretary Corporate Affairs Division Mr George Zuber, First Assistant Secretary Mr Martin Dolan, Assistant Secretary

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Corporate Policy Division Mr Ian Cronshaw, Assistant Secretary Mr Bruce O’Meagher, Assistant Secretary Mr Dennis Gebbie, Assistant Secretary HQ Group Support Mr Bob Gillingham, Group Administrator Rural Division Mr Bob Calder, Assistant Secretary Mr Jeff Harris, Acting Assistant Secretary, Structural Adjustment Branch Mr Doug Scott, Director, Rural Access and Communities Section Resources and Energy Group Coal and Minerals Division Mr Robin Bryant, Acting First Assistant Secretary Mr Robert Rawson, Assistant Secretary Project Facilitation Division Mr Mike Todd, Acting First Assistant Secretary Energy Division Mr Bob Alderson, First Assistant Secretary Mr Chris Hyman, Resource Manager Petroleum and Fisheries Division Ms Mary Harwood, Assistant Secretary Mr Rick Pickering, Assistant Secretary Mr John Kjar, Director Australian Fisheries Management Authority Mr Richard Stevens, Managing Director [9.03 a.m.] CHAIR—I declare open this public hearing of the Senate Rural and Regional Affairs and Transport Legislation Committee. I have a couple of housekeeping matters. We will go from 9 to 10.30 a.m. and then have a break for twenty minutes. We will then go from 10.55 a.m. to lunch time which will be from 1 to 2 p.m. We will go from 2 to 4.30 p.m. and then have a break for twenty minutes. We will break for dinner from 7 to 8 p.m. We will then go through from 8 to 11 p.m. Yesterday, we decided to look at things at 11 p.m. and if we only had about an hour to go we might consider finishing. Hopefully, we will be finished before 11 p.m. On 15 May 1997, the Senate referred to the committee the particulars of proposed expenditure in respect of the year ending 30 June 1998 for the following portfolio areas: transport and regional development and primary industries and energy. The committee will today consider the Department of Primary Industries and Energy and is required to report to the Senate by 19 June 1997. Answers to questions taken on notice and additional information should be received by the committee no later than Monday 14 July 1997.

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Committee members and participating members have been provided with portfolio budget statements and I propose to call on the estimates by program and subprogram as they appear in these statements. The committee has authorised the recording and re-broadcasting of its proceedings in accordance with the rules contained in the order of the Senate of 23 August 1990. The next portfolio to be considered is primary industries and energy with a proposed expenditure of $435,682,000 in Appropriation Bill (No. 1) 1997-98, document A, and $254,614,000 in Appropriation Bill (No. 2) 1997-98, document B. I welcome the Hon. Warwick Parer, Senate ministerial representative, and officers of the department and associated authorities. If anybody has to catch a plane by 5 o’clock, could you notify us at morning tea so we can deal with you in time for you to get away tonight. Minister, do you wish to make an opening statement? Senator Parer—No. [9.05 a.m.] Program 1—Industries development Senator O’BRIEN—I want to ask about the structure and objectives—the overview aspects. The portfolio program structure has been altered ‘after an extensive review’. The program and subprogram objectives have also been altered to ‘bring them into line with the corporate plan’. I would like to ascertain details of the review and changes. At whose direction was a review of the program structure and corporate plan carried out and what did the review entail? Mr Barratt—The review was conducted at my behest. We had a corporate planning exercise in the department last year and published a corporate plan. We felt that the previous program structure did not sit very comfortably with the structure of the corporate plan and so, basically, we did an internal analysis of the structure of the plan to produce something that we thought was easier to follow in relation to the corporate plan that we had. Senator O’BRIEN—Is that the extensive review that is talked about? Mr Barratt—There was quite a lot of process involved in looking at that, but yes. Senator O’BRIEN—Are there any specific matters that the review examined, or was it just the generality of the programs? Mr Barratt—It was only a review of the structure of the way that we present our programs. Senator O’BRIEN—You said you initiated it. Who carried it out? Mr Barratt—It was carried out amongst the senior staff of the department, so the people at deputy secretary level and division heads were involved in the process. It was basically a process of consultation around the department. Senator O’BRIEN—Did that review result in a written report recommendation? Mr Zuber—There was not a specific report as a consequence of the review. There were a number of papers during the conduct of the review which proposed, as I recall, three or four options for the setting out of the program structure. Those options were also discussed with officers from the Department of Finance who had undertaken a review of their program structure for ease of financial reporting and for transparency purposes. My recollection, though, is that those were working papers and that there was not a specific report at the end of the review summarising those outcomes, but rather the outcome was the strategic planning documentation. Senator O’BRIEN—So there were other options for alteration of the program and the corporate plan considered?

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Mr Zuber—Yes, there were. Senator O’BRIEN—Is it fair to say that the options that were considered are set out in the working papers that you talked about? Mr Zuber—Yes. Those could be made available. Senator O’BRIEN—I would appreciate it, if you could do that. That will identify those options that were not accepted. Is there any documentation of the reasons for rejecting any of the options? Mr Barratt—There was discussion of the options in the papers, so I guess the reasons can be deduced by inference. The problem that we were dealing with was that, for ease of reporting to the parliament and discussing estimates in a hearing like this, it is easiest and most straightforward to align the program structure with the functional units of the department. But the corporate plan is more aligned with the sort of results we are trying to achieve, so the different units of the department are represented in different activities under various headings in the corporate plan. That is why we ended up coming up with a single program with a series of subprograms that basically relate to functional units. Mr Zuber—If you look at page 7 of the portfolio budget statements there is a translational table which shows the previous plan. If I could just demonstrate: the previous program 2.3, quarantine inspection, is grouped under industry and community services, which is a proper description of that program. But, as will no doubt be evident today at these hearings, and has been the case previously, officers of AQIS are, in fact, involved in a range of other program matters, whether they be crops, livestock and so on. The representation there does not adequately reflect the way that the department’s business is carried out. Senator O’BRIEN—Yes, I had seen that chart and made a few of my own annotations on it, but I just had a few more questions on that. Did you consult outside the department in relation to this process, or is it purely an internal review? Mr Zuber—We did consult with the Department of Finance. Senator O’BRIEN—Sorry, you did tell me that. Mr Zuber—But not beyond that. Senator O’BRIEN—Is this just a presentational restructure, or does it have any effect on the working of the department? Mr Zuber—It is presentational in the sense that it more properly reflects the business and the organisational structures within the department, and allows a greater lineage between one and the other. It also reflects more easily, we believe, the funding arrangements through the appropriation acts which, at the previous arrangement program and subprogram levels, I do not think were as transparent as they now appear under 14 separate subprograms which I think give a greater transparency to the expenditures and, indeed, the objectives of those subprograms. Senator O’BRIEN—I am taking your explanation to mean that this restructure is following the structure of the department, so it has not affected any of the structure of the department and it, therefore, has not had any cost effect? Mr Zuber—No. Senator O’BRIEN—As part of the 1997-98 budget, Minister Parer announced the establishment of a project facilitation division of DPIE to strengthen the government’s emphasis on facilitating new minerals and energy projects. Very little detail of the proposed

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 304 SENATE—Legislation Wednesday, 11 June 1997 division is included in the budget papers. What is the rationale for the establishment of the project facilitation division? Senator Parer—I personally had substantial discussions with the industry about project facilitation. One of the comments made by industry almost across the board—and I spoke to individuals as well as to the industry organisations—was that they thought by far the most common problem was slowness of process. In this modern day and age, when it comes to investment decisions, national boundaries really no longer exist. We thought that a more efficient way of approaching this was to go down the track of what they call a project facilitation unit. This means we are working in conjunction, I might say, with DIST. Under the administrative orders, once things leave the mine gate, they no longer are in this portfolio; they, theoretically, transfer across to DIST. If you happen to be, say, an iron ore producer going into HBI, you see yourself as really being responsible to this department. Out of that developed discussions that I personally had with the Prime Minister and then with the head of the Prime Minister’s department. Senator O’BRIEN—Can I stop you there, Minister. Do you see the break of the linkage as a problem? Senator Parer—The industry felt that, the more they have a one-stop shop, the happier they are. So out of that came the appointment of Bob Mansfield into the Prime Minister’s office as a major project facilitator. But the aim of it, working in conjunction with DIST, is for us to provide the support, if required, to Bob Mansfield for major projects. This area is not just a major projects facilitation advance; it is a projects facilitation approach. That is the background to it. It is a much more efficient operation to work that way. Previously, it was a bit all over the place. Senator O’BRIEN—Was that simply in response to industry representations or was a review of some sort carried out? Senator Parer—It was a feeling that I had for some time myself before I ever came into this place. Senator O’BRIEN—It is your baby, Minister? Senator Parer—Basically, yes. It was something that was grabbed very rapidly not only by industry but also by the department. Senator O’BRIEN—When you say ‘it was grabbed very rapidly’, was there a process to assess it? Senator Parer—Yes, and perhaps Mr Barratt or Mr Zuber might like to talk about that. Senator O’BRIEN—I would appreciate it if you could tell us what formal procedures were followed to put this division into place. Mr Barratt—The formal procedures these days to actually establish the division are fairly straightforward. We created a new SES position to head that division. Then, for the most part, we reassigned people who were working on aspects of project approvals in other parts of the resources and energy group in the department and put them into a small team under that division head to carry out that work. So it was a fairly straightforward internal process.

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Senator O’BRIEN—I took the minister to be saying that the department took the minister’s raw idea and researched and developed it to the point of creating the division. Is that a fair summary of what happened? Mr Barratt—Yes. Senator O’BRIEN—So could you tell me about the process of how that took place? Mr Barratt—I am not quite sure what the thrust of the question is, but there was largely a question of defining functions of people who would be working in the new unit and people who had been working on similar functions in different work areas of the department before. Senator O’BRIEN—So it was not a review of the idea so much as implementation of the idea? Mr Barratt—Yes. Senator O’BRIEN—Who was charged with its implementation? Was there a team or an individual who was charged with that implementation? Mr Barratt—This was something that just happened in the ordinary course of business. I was involved, the head of resources and energy group was involved and Mr Zuber was involved in discussions within the department and discussions with the minister. Senator O’BRIEN—And you appointed a person to head the division? Mr Barratt—Interviews are being conducted for that position right now, so there is an acting head. Senator O’BRIEN—Is there something—and I will not use the term ‘mission statement’— that states the role of this division for the person who is being appointed or is it in the duty statement that is prepared? Mr Zuber—I am sorry, I cannot recall seeing either the document or the duty statement, which are usually generic for that level of position. Senator O’BRIEN—So is there something special that sets out to the person you are appointing what their role is or the role of the division is? Mr Barratt—There is certainly selection documentation stating the selection criteria for the position. We can make that available to you. Senator O’BRIEN—Thanks very much. Will that set out the aims of the division? Mr Zuber—It does not go into the detail of that. Senator O’BRIEN—Is there some other document that sets out the aims of the division? Mr Zuber—I can undertake to find whatever documentation there is—I am not aware of its form—and make it available to you. Senator O’BRIEN—I would appreciate it if you would make available documentation which gives some detail of the project facilitation division. I think the minister has said that he has had some consultation with industry about the idea of such a division and has indicated it was positive. Has there been any departmental consultation with industry? Senator Parer—Can I just say to you that it was not consultation about the idea. What the discussion involved was streamlining the process. It was as a result of that that I developed this idea and subsequently informed them of the direction we were going to take. Senator O’BRIEN—Minister, it may well be a very good idea. I am not seeking to do anything other than establish the process that has been followed to set the division up and the

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 306 SENATE—Legislation Wednesday, 11 June 1997 consultation process such as it might be with regard to its role, seeing as it seems it is to be an important facilitative role for industry. Senator Parer—I think what you are seeing in Australia—which is a very good thing, and I am sure you would applaud it—is growth mainly reflecting gas, but we are seeing a growth of downstream processing. The people who relate to this particular department are the same people who are moving into the downstream processing side. I will give you an example. We had a fairly major involvement and actually got Bob Mansfield involved in the discussions with both Comalco and Chevron on the marrying together of those two projects for the development of not only the gas pipeline into Queensland but also the alumina refinery. Senator O’BRIEN—Is there any element of picking winners in the role of this division? Senator Parer—No, I have a simple view on all of this. I take the view that, if there are no problems, we do not want to know about it. If there are hurdles in the road, we want to know about it, and then we can move in and do something about it. Senator O’BRIEN—It is a facilitation division, and you use the term one-stop shop. I took it as something which was to do with taking some of the lumps out of the process of getting a project up and running. Senator Parer—That is the idea. Even if you take, for example, the Chevron-Comalco project, that involved the Queensland government. It also involved the Commonwealth, because you have a pipeline that is coming through Commonwealth waters, and the companies. Senator O’BRIEN—So let me be a bit lateral about this. This division would then potentially deal with issues of native title as well as others? Senator Parer—Not particularly. Senator O’BRIEN—Has that been thought about? Mr Barratt—Can I illustrate, Senator, the kind of issue that the division and Bob Mansfield would deal with. With a major project of that kind, the sorts of time lines that the proponents of the project are seeking to follow bump up pretty hard against a gas reform timetable that is being carried out, and reviews are being carried out under the national competition policy. So in a sense those policy reviews involving all jurisdictions are being conducted in the abstract, not with regard to any particular project. What the facilitation unit does is look at the project as a system and say, ‘What are all the sorts of approvals that we need to get so that the project can be ticked off.’ They have to identify things that are not operating within the right sorts of time horizons for those approvals to see whether other processes can be accelerated so that the proponents know what policy framework and legal framework they are going to be working with over the long haul. Senator BOB COLLINS—I presume, Minister, that the office would be playing a similar role to the effective role that was played by the Office of Northern Development in facilitating major projects such as Mount Todd and McArthur River before you closed the office down, shortly after coming into government, having promised during the election that you would keep it open. I assume that is right, isn’t it? Senator Parer—Senator, I am not too sure what that office role was, but I know what my role was. Senator BOB COLLINS—It was to act as a facilitator on behalf of the Commonwealth government. It was, in fact, a one-stop shop for northern Australia. It was very effective. Senator Parer—Basically this is across the board.

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Senator BOB COLLINS—Yes, so it will play a similar role. Senator Parer—Across the board in areas where we have current responsibility and downstream effects that are now occurring. The downstream effects are very healthy stuff. Senator BOB COLLINS—I agree. I thought it was a shame you closed it down. It paid its way well and truly, I can assure you. Senator O’BRIEN—I want to go back to the process. The feeling I am getting is that this division does not have a very specific charter in writing anywhere. Is that a fair comment, or can you produce a specific charter that is in writing? Senator BOB COLLINS—Not easily, obviously. Mr Barratt—I am casting my mind back to the documentation but I must say that, when this was conceived of as a good idea, I used the powers that I have as secretary to create the position and get on with it. I do not recall writing copious documentation about it, but I will see what documentation there is. Senator BOB COLLINS—That is a dreadful admission from a bureaucrat, I must say. That is shocking. Mr Barratt—It is one I am prepared to make, Senator. Senator BOB COLLINS—Fair enough. So there is not a piece of paper? Mr Barratt—I am sure there are pieces of paper, but I cannot bring them vividly to mind. Senator BOB COLLINS—Not even a vision statement? Mr Barratt—We will produce documentation that is there. The position has been advertised in the press. It has been interviewed for. That is at an advanced stage, so I can assure you there is documentation. Senator BOB COLLINS—Have the advertisements appeared? Mr Barratt—Yes. It would have been an advertisement for several positions, because we are interviewing concurrently for three SES positions at that level. Senator O’BRIEN—I think you said that, apart from the SES position, you are taking staff from other divisions to staff this division. Presumably that means you are taking functions from those other divisions and allocating them to this division. Mr Barratt—Yes. Senator O’BRIEN—Can you tell us what functions have been taken from what divisions and allocated to this division? I accept that you might want to go away and bring that back to us in full. Mr Barratt—What I can tell you at this stage is that it is all within the resources and energy group of the department. It involved some reorganisation of that group to give a greater focus to the project facilitation function. Senator O’BRIEN—When you give us that information, can you tell us the number of staff that will be employed in the division, at what salary levels and the operating cost of the division? Mr Barratt—Yes. Senator O’BRIEN—Minister, when do you expect this division to be up and running and functioning? Senator Parer—It basically is now.

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Mr Barratt—There is an acting head there now. Senator O’BRIEN—So it is functioning now. Those transfers have been done? Mr Barratt—Yes. Senator O’BRIEN—And the last appointment is to be made? Mr Barratt—Yes. Senator O’BRIEN—How long has it been up and running? Mr Barratt—A matter of weeks. Senator O’BRIEN—So it is a May baby. Senator Parer—From a functional point of view, that is right. With the resources within the department, there was already quite a bit of work going on. Hence the involvement we had in discussions with Bob Mansfield on Comalco and Chevron. Senator O’BRIEN—I accept that you have transferred functions and this is pulling together functions into a one-stop shop which may or may not be novel in this area. Certainly there are other examples with this government with one-stop shops. It would be interesting to know, as Senator Collins has said, what the ultimate vision for this division is. The alternative is that this is like the jockey that goes out into a race with limited instructions. The instructions are to get the horse home, to get the result and to do it the best way they can. Senator Parer—I think Senator Collins gave a wise nod before when I mentioned that currently there is in excess of $40 billion worth of potential investment. I think it is over $46 billion in Australia. As I mentioned, if there are no particular problems, we really do not want to know about them much. It is when there are hurdles that we would like to know about them. If there are impediments in the way, we want to address those impediments. Senator BOB COLLINS—Who is the acting head? Mr Barratt—Don Banfield. I will ask Mr Alderson to talk about the resource transfers that have taken place, but the functions of the division have been built on an existing temporary structure of the electricity and gas reform task force. We see the completion of the electricity and gas reform process as a very important part of realising the investment proposals or as many of them that can be achieved that Senator Parer has just referred to. We have established a new branch in that area which deals with the project facilitation process. The head of the division sits over the top of those three processes in effect. I will ask Mr Alderson to talk about the resource transfer. Mr Alderson—The resources that have been transferred from within the group to this new branch come essentially from two areas: predominantly from within the coal and minerals division. They were staff who were dealing with the development of projects—for example, bringing together various interests to ensure that there was energy infrastructure in place and, from that, looking at potential downstream activities. In setting up the unit that the minister required, it was to bring a much sharper focus to that for the realisation of projects so that the various interest groups, the states, territories and business people were brought together to look at the opportunities and then identify any impediments. There were nine people transferred from the coal and minerals division doing similar type of work into this new unit. Senator O’BRIEN—Did you say to look at the opportunities? Mr Alderson—To examine opportunities for this. A number of exercises have been done in regional Australia where, if, for example, energy infrastructure is in place, be it gas pipelines

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 309 or small power stations, then mining activity can take place. Once mining activity takes place, you can look at the potential for some downstream processing in that regional area. There have been some sound examples of that. Some of those people were transferred into the new unit. Senator O’BRIEN—This is something akin to the MITI situation, only applied to the downstreaming of energy. Mr Alderson—It is a facilitating activity, essentially saying that, if we bring the interest groups together, we may be able to realise power infrastructure and investments that otherwise might not take place. It is serving as a catalyst. Activity of that type has been taken on, and now it has a higher focus. The staff were also transferred from the energy division into this new unit or the resourcing for staff as a consequence of adjustments within the energy division. That is essentially how the unit has been funded internally. In some cases we have had a transference of people, and in others we have had a transference of the funds for people where positions have been vacant. Senator O’BRIEN—I see, thanks. That is all I have on the project facilitation division at this stage. I look forward to that information that you are supplying me with and we will see how we go with it. That is all I have got on the overview. CHAIR—Thanks, Senator O’Brien. As there are no further questions on that matter, we will proceed to 1.1. Subprogram 1.1—Livestock and pastoral Senator BOB COLLINS—Talking about vision statements, the vision statement for the livestock and pastoral division is: maintenance and improvement of Australia’s access to markets and uptake of Australian produce; improving industry efficiency and competitiveness, including the operation of statutory marketing arrangements, and promoting equity and sustainable development; promoting innovation in production and processing techniques, value adding and the development of new products and markets; improving the capacity of industry to produce safe and quality food products; and enhancing Australia’s ability to combat exotic animal diseases and address animal welfare issues. Could you advise the committee in general terms as to how the division performed in 1996-97 against those criteria? I have always wanted to ask a question like that—I never have before. Mr Roseby—Thank you, Senator! I can go through and answer that. Looking at specific activities, I think, is the best way of doing it. If you look at the overall competitiveness of industry and the work that we have been doing with intensive livestock, the meat, wool and dairy industries are all about giving greater ownership to those industries in the management of their own affairs and getting government out of their activities to the extent that that is possible. It is about streamlining the structures of those industries to get a better return on the dollar invested by industry in their own operation. We are focusing very much on the supply chain and trying to improve the productivity and the operation of that supply chain. Of course, at the end of that chain we are focusing very much on markets as well to try to improve access to markets. Indeed, when we have access to markets there is a very important job to make sure that we develop the market to see if we can get to be the preferred supplier to the extent we can. That is a generalised statement applying to all those industries. I think you will find most of those objectives in one way or another fit into the overall activities. Senator BOB COLLINS—Would you like to highlight one major achievement of the livestock and pastoral division over the past year against the division statement? Anything that stands out?

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Mr Roseby—I can name a number for you. The government has taken a decision on the meat reform process and we now are in the process of implementing that reform. I am chairing a transition team for implementation, and the other members of the team are the six peak industry councils. The reform is orientated towards moving away from a statutory marketing authority to services being provided by a company limited by guarantee, which will be a service providing company. As far as the arrangements for funding that are concerned, the levies will continue from the producer side. That is what they requested and that is what we will continue to do. The processing industry and the livestock exporters have asked for cessa- tion of compulsory payments. They want to enter into what they call ‘willing partnerships’. We are looking at ways of achieving that so that they are funding activities which are of service generally and which they consider relevant to their own particular sectors. Senator BOB COLLINS—Sorry, before you go past that I am very interested to hear about willing partnerships. Does that mean that they can pick and choose what they pay the levies for? Mr Roseby—They have entered into a willing partnership on the basis that they will continue to agree to fund what we call core functions. Those core functions will be activities such as research and development, food safety and quality issues, emergency management, crisis management, market access and market intelligence. Senator BOB COLLINS—In terms of the fairness of the levy system and fairness to all the other contributors, what happens when they become unwilling partners? Mr Roseby—The minister has told the industry that the current levies will continue until such time as there is agreement between the producers and the processors on the core activities, what is going to be funded and the level of funding. If that is a satisfactory agreement then he will reduce the levy on the processors to zero. The levy will continue, but it will be set at zero. Senator BOB COLLINS—I saw a press statement from the minister saying—I think the impression he used was ‘come down on them’—if they did not pay the levies he would come down on them like a ton of bricks or something like that. Mr Roseby—The idea is that if they do not join in the willing partnerships, which they themselves asked for and said they would deliver on, then he will put the levy back on. Senator BOB COLLINS—It is a strange sort of voluntary system, I must say. It was a robust expression such as the one I have just said—it might not be the exact wording. I am intrigued by a willing partnership where people enter into this new voluntary arrangement entirely on the basis that if they do not they will get the old one imposed. Mr Roseby—The expression ‘willing partnership’ has come from the processors. The government is responding to what they requested. I think it is quite reasonable that, if they cannot deliver on what they said they would deliver, there will be a little bit of compulsion. Senator BOB COLLINS—Fine. So what you are saying is that in fairness to the other equity partners in this— Mr Roseby—Yes. Senator BOB COLLINS—and that is an important consideration. Mr Roseby—We are not going to let anyone walk away from this agreement. Senator BOB COLLINS—It is like the people who want to be exempted from AQIS charges, for example. It is not fair on everyone else who has to contribute.

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Mr Roseby—No. This industry— Senator BOB COLLINS—The bottom line is that at the end of the day if they are not willing partners the government will step in and— Mr Roseby—Reimpose the levy. Senator BOB COLLINS—Fine, that is what I thought. I just wanted to get confirmation. Thanks. Mr Zuber—Looking at this program and, indeed, any of the other programs, if you turn to page 34 of the documentation, what we have tried to do, given that the timing of these hearings and the production of our annual report—which, in fact states performance—are no longer aligned— Senator BOB COLLINS—That is right. Mr Zuber—We have tried to give a performance forecast—in other words, what the performance against those objectives will be over the 12 months. Of course, that will be confirmed in the annual report. So we have tried to do that for each of the programs because we understood that the annual report would not be available. Senator BOB COLLINS—Thank you, Mr Zuber. It is a problem, as you know, structurally, for all these committees in terms of it being out of kilter now—with the annual reports not being available as they used to be, which is not your fault. Mr Roseby—I can proceed with some other examples, if you would like them. Senator BOB COLLINS—No, that will do. Mr Roseby—Would you like to talk about emergency management or wool reforms? Senator BOB COLLINS—Not particularly. I really did want to know where the meat industry restructure was at, which I was going to move on to next, but you have essentially answered that. Can you tell me in a general sense: when does the department reasonably expect the process to be concluded? And if I could just tack on the other sub-parts to that question: where is the legislation at? Mr Roseby—With legislation, the drafting instructions are almost complete and we would expect the legislation to be passed in about October-November. The process for setting up the new service providing company is under way. There is a selection process going on for the board of that company. That board will then select a CEO. Red meat producers will incorporate, and there will necessarily be a reasonably lengthy period of time whereby the new company can work with the Meat Research Corporation and the Australian Meat and Livestock Corporation to make sure that there is a sensible and practical transition. We do not want to see the good work, the good programs and people of those organisations lost. I think it will be very important that they work in parallel for some time to make sure that that is handled properly. One could speculate about a start-up date of a transition by 1 January, but I suspect that it will go a little longer than that. Senator BOB COLLINS—Thanks. I was particularly interested in when the legislation was likely to come into the parliament. Where is global wool at? Mr Sutton—Global wool, as you know, is currently before the Australian Competition and Consumer Commission. There are ongoing consultations occurring, including this week, I understand. That is all the information we have at this point. Senator BOB COLLINS—I just found it difficult, I must say. I knew it would go into the competition commission, but the difficulty I had was seeing how it was going to get out in

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 312 SENATE—Legislation Wednesday, 11 June 1997 terms of some way of structuring it so that it did not offend those requirements. You do not know how that is progressing? Mr Sutton—As you know, there were some public statements several months ago which indicated that the basic proposal seemed to raise concerns for the commission in terms of the prospect of lessening competition. As I understand it, there have been exchanges between the commission and the proponents, and they are revisiting the proposal, perhaps restructuring elements of it and discussing with the commission what they might be able to do to make it more acceptable. I think there is also a very useful exchange occurring on both sides in terms of a better understanding of the industry, the competition and prospects for increased competition. Feedback we have from the proponents indicates that there were misconceptions perhaps on both sides, and that is being clarified at this point. Senator BOB COLLINS—Thanks very much. The dairy industry in Gippsland is in dire straits at the moment as a result of drought conditions. Has the department made any assessment of the impact of the drought on the industry in Victoria and the impact in particular on the export effort of the industry? Mr Roseby—I would have to ask someone who handles the drought side of the business, Senator. Drought comes under another program, as you are probably aware. Senator BOB COLLINS—It is one of these crossover things. I ask it in 1.1 purely because of the impact it is having on the dairy industry at the moment. But I am happy to leave it to 1.5, if you wish. CHAIR—We have Mr Calder here now. He might as well answer it. Mr Calder—The situation in relation to the drought in Gippsland is that the department has received an application for drought assistance from the Victorian government. That is currently being referred to RASAC for assessment. I understand that RASAC has visited or is in the process of visiting the Gippsland area to form an assessment. But an assessment has not yet been done. In terms of the specifics of your question about the impact on the dairy industry more broadly, I am not aware that any such study has been done at this time. Senator BOB COLLINS—I know there is an application in from Victoria for a special assistance package. Has the livestock and pastoral division of the department been engaged in any work in developing a response to that application? Mr Roseby—We do not deal in the livestock and pastoral division with RAS assessments or assessments of drought conditions. Senator BOB COLLINS—I understand that. I just wanted to clarify whether—it might be wrong—there was an application, basically outside that process, for a special package of assistance to be put together. You are not aware of that? Mr Roseby—No, not in my division. Senator BOB COLLINS—It may in fact not be correct. Mr Harris—I could just clarify first of all a comment by my colleague. Victoria has applied for exceptional circumstances support for the Gippsland area, as opposed to drought exceptional circumstances. Senator BOB COLLINS—I see.

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Mr Harris—RASAC are currently visiting the area today to do their on-site assessment. As the secretariat we have also sought advice for RASAC from ABARE and from the BRS on the industry itself. Senator BOB COLLINS—I see. Fine. That is the answer I was looking for. Thanks very much, Mr Harris. In terms of how these things move in cycles—they are going to stop the Earth one day and they disappear the next—can I go on to calicivirus. Can somebody tell us where all that is at? Mr Roseby—Dr Peter O’Brien, from BRS, is actually running the monitoring and surveillance program. Senator BOB COLLINS—Do you want me to leave this until we get to BORS? Mr Roseby—We can do it now. Senator BOB COLLINS—Thank you. Dr O’Brien—The rabbit calicivirus disease is now widespread through Australia. It is performing particularly well in the arid parts of the country where mortality is in excess of 65 per cent on most of the sites that are being monitored and exceeds 90 per cent on some of the sites being monitored. It seems to be performing less well in the temperate and wetter areas of Australia where mortality has been less than 50 per cent on some sites and not measured by spotlight counts on some other sites. We have established a two-year monitoring and surveillance program to try to understand why the performance is variable, looking at factors such as vectors and just the productivity of rabbit populations in different environments, but it is premature for me to be speculating on why its performance is variable. Senator BOB COLLINS—Shouldn’t there be a whole raft of PhDs able to be earned on this question? I am curious to know—if you could just advise the committee—what body of scientific effort is actually being put into examining all of the aspects of the impact of the virus on Australia during the course of its spread? Dr O’Brien—There is very considerable effort looking at the impact of the disease on rabbit populations but also the effect of the disease, through rabbit reductions, on agriculture and the environment. Senator BOB COLLINS—Yes, exactly. Dr O’Brien—So there is a coordinated program across ARMCANZ and ANZECC activities looking at agriculture and the environment. Senator BOB COLLINS—Is that principally at the moment restricted to the public sector in terms of that scientific study? Dr O’Brien—Yes. Senator BOB COLLINS—This obviously is a state department responsibility principally, but is there any examination or reporting at the moment on the degree to which the support mechanisms are being applied in terms of other control methods in addition to the virus to ensure that it is in fact the most effective? Is it known whether farmers are generally ripping burrows and doing all of the other things that are supposed to be done in order to support the virus? Dr O’Brien—The level of follow-up control is quite variable. You actually asked a similar question at our last estimates. Senator BOB COLLINS—That is right, and I will ask one at the next estimates, too.

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Dr O’Brien—On your behalf, we surveyed state agencies for a view about that and the view was that in most area follow-up control is not at the level that state agencies would regard as needed. Senator BOB COLLINS—Particularly in tight times. I just thought it was human nature that there would be an attitude that if there is a virus out there doing it, why should I spend $20,000 and a whole heap of time ripping burrows and things. That presumably is basically what is happening. Dr O’Brien—I think that is what is happening. Mr Roseby—Just on that point, there has been a lot of effort put in through the RCD management committee to provide information to people in the field—the farmers and others affected by rabbits—and all of those messages, including the messages that have been coming from the minister, are that there is a need to intensify efforts at this time when that virus is out there because, if you can get them down to controllable numbers, that is the best time to really get in and try to clean up to the extent that you can. As to the other part of your question, there is work going on with alternative baiting methods to make time to get the virus to have a more effective take. There is work looking at the interaction between the virus and myxomatosis. So there is quite a range of activities there trying to get the maximum benefit from this virus. Senator BOB COLLINS—I assume there is surveillance at a scientific level, obviously addressing the concerns about cross-species problems and so on. Is that going on as well? Dr O’Brien—Yes, that work is continuing. There are 10 intensive sites across Australia where there are routine spotlight counts and vegetation monitoring and monitoring of other animals. Senator BOB COLLINS—To this point in time—otherwise we would have been reading about it—I assume that there has been no indication at all that the virus is affecting any other animal except the target species. Is that so? Dr O’Brien—There has been no evidence of disease in any other animal. Senator BOB COLLINS—Thank you. What is the situation with the legal side of it, in terms of claims for compensation? Mr Roseby—There is a number of claims or people who have expressed interest in submitting claims for compensation. As you are aware, this is resulting from the escape of the virus from Wardang Island rather than following release under the Biological Control Act. At this point in time, for any person who wants to make a claim against the Commonwealth, it has been suggested that they lodge those claims with the Australia government solicitor in Melbourne, who has been instructed to assess those claims without prejudice. No instructions have been issued yet to that office as to whether or not there should be any attempt to settle the claims. The government is considering options at this point in time and I would expect those instructions to be issued shortly. No claimant has commenced any court action at this point in time that we are aware of. Basically, if a claim is made against the Commonwealth, the Commonwealth—as it would in most matters of this nature—would seek to settle claims if an effective cost-efficient method can be found to do so. Senator BOB COLLINS—What is the extent of the claims to this point in time? Mr Roseby—I can give you rough figures. As I understand, at last count there were about 23 claims and the order of magnitude was around about $7 million, but do not hold me to that, and bear in mind that there are some ambit claims in there, too.

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Senator BOB COLLINS—I am not looking for any more precise information than that. Thank you very much. Senator CALVERT—I wish to ask some questions on calicivirus. Is it true that Australia is the only country in the world promoting RHD and that all other countries are trying to eradicate it? Dr O’Brien—Almost. New Zealand is considering this disease for release as a biological control for their pest rabbits but, unlike Australia and New Zealand, in most other countries rabbits are seen as a desirable part of the fauna, either for hunting or just for their existence values. They are not a major pest elsewhere, which is why there is this difference of view about biological control of rabbits. Senator CALVERT—Are you aware of the concerns that have been flagged on the Internet by Professor Alvin Smith, from the laboratory for calicivirus in Oregon? Dr O’Brien—I am aware of them in some detail. They were, in fact, considered by the minister in deliberations under the Biological Control Act leading to a recommendation to declare RCD as an agent. Yes. CHAIR—I would like to follow up with a couple of questions with regard to the problem of the spread of it in the temperate or cooler areas. I declare a vested interest in this because the virus arrived at home and about six rabbits died and they are doing better than ever. Senator Parer—Did you do any ripping? Senator BOB COLLINS—That was a nasty comment. He wouldn’t have spent a dollar if he didn’t have to. CHAIR—It is nothing to do with ripping because our rabbits live on top of the ground. Senator BOB COLLINS—They what? In tents? CHAIR—They live on top of the ground. Senator CALVERT—In portable housing. CHAIR—Come down and have a look. Is there any clue at all as to whether it is a rainfall factor or a temperature factor that is interfering with the spread or making the virus non-active or whatever is happening? Dr O’Brien—We do not know the answer to that at this point. The evidence so far suggests that the disease is most active in spring and in autumn and much less so in winter and summer. That is a difference, but temperature is also a difference that explains the variation in performance between the arid and the moister areas. We do not know yet. Senator BOB COLLINS—Are you familiar with the species of rabbit known as Western australiensis which does not dig burrows? I am fascinated by this. It might be unknown to science. CHAIR—In the brush on the south coast 90 per cent of the rabbits live on top of the ground underneath the brush and they do not burrow. Senator BOB COLLINS—Thanks. I was just wondering whether the scientific community have been alerted to this. Dr O’Brien—I think the chairman’s observation is known to science. Senator BOB COLLINS—You learn some fascinating things at estimates committees. CHAIR—You do. Maybe you should listen a little more and you would learn a little more.

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What is the intensity of the research into what is occurring in these particular areas? The general immediate reaction to the calicivirus in the areas that I am talking about has been a lot of noise and hoo-ha but it is an absolute dead loss. Dr O’Brien—There are 10 intensively studied sites and 40 broad scale sites across the country. There is considerable effort going into understanding where and why this disease is producing high levels of mortality so that we can best use it. The reason I cannot tell you the answers is that that is work in progress. In terms of its impact, partly there is an issue of expectations. We never thought that this would be a disease that would eradicate rabbits. The hope was that, in addition to myxomatosis and other existing forms of control, it would produce a higher level of control on rabbits and thus reduce the damage that they are doing to agriculture and the environment. That is what it is doing—better in some places than in others. In arid and semi-arid areas in particular it is having a marked effect on rabbit density and there is evidence of responses in vegetation and in declines in rabbit predators, for example. In some other areas of the country, the moister areas, the mortality is much lower. CHAIR—I do not know anybody in the farming community who thought it was going to be 100 per cent wipe-out. But certainly there was a program run that said you could expect in excess of 90 per cent wipe-out. You had to follow up with ripping and baiting and what have you, which a lot of people have done. The net result of that baiting combined with the baiting of foxes is that we have significantly lowered the population of foxes, which has exacerbated the problem with rabbits. Could you notify the committee, please, of where this work is being done—the sites—and in particular in the area around a straight line south of Bunbury running across Western Australia? What work is being done there in assessing the apparent failure at this point in time in terms of the calicivirus? Dr O’Brien—Can I take that on notice? CHAIR—Certainly. Senator CALVERT—Did you say south of Bunbury? CHAIR—Yes. That is the area I am interested in. I have been out and seen where you cannot find a rabbit in some of the arid areas you are talking about. Senator BOB COLLINS—Despite the fact they all live above the ground. Have we finished with rabbits? CHAIR—Yes. Senator BOB COLLINS—Is it correct that government and industry have, between them, now spent around $850 million over the past 27 years in total on the eradication of brucellosis and tuberculosis? Mr Roseby—The figure is of that order of magnitude. Senator BOB COLLINS—Have the funding arrangements for that program been consistently industry 50 per cent, state 30 per cent and federal government 20 per cent? Mr Roseby—Yes. Senator BOB COLLINS—Is it possible for the department to state that this program has been a successful one by world standards? Mr Roseby—It is very hard to judge by world standards because we are not aware of any other program of this magnitude that has been carried out anywhere else in the world. As you know, we have freedom for brucellosis and we are now on pending freedom for tuberculosis.

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Senator BOB COLLINS—Is the target time for that still December this year? Mr Roseby—It is. There will be a follow-up program to that called TFAP, tuberculosis freedom assurance program, which will take over. That will be over a five-year monitoring period to assess the success of the campaign. We have an ongoing testing system looking at granulomas as they are submitted, as you know. We need to keep a very close eye on it given the vastness of Australia. It is always possible to miss pockets and we want to be in a position to pick those up quickly. Senator BOB COLLINS—We have moved into that five-year monitoring phase, haven’t we? Are we about to? Mr Roseby—Yes. The current BTEC program runs until the end of this year. Commencing 1 January 1998 the new program will come into place. Senator BOB COLLINS—Is it the intention of the federal government to continue to contribute on the same proportional basis to the monitoring program as it has to the program for 27 years? Mr Roseby—Funding arrangements will change. The exact proportion of that funding will depend on field activity and the number of breakdowns that occur. Under the new program, basically we are focusing each sector on those areas where we see primary interest and core responsibilities, as we call them. The Commonwealth will fund the national granuloma submission program, maintenance of the national breakdown register and also the Australian Reference Laboratory for Bovine Tuberculosis which is in Western Australia. Basically, the state governments are going to be responsible for field activities relating to the tracing back of TB breakdowns. Industry is expected to pick up on the costs of assistance to the affected producers. Senator BOB COLLINS—Having said all that, is it a fact that, after an investment of 27 years and in excess of $150 million, the Commonwealth is going to in fact reduce its contribution by about 40 per cent? Mr Roseby—There is a possibility that the Commonwealth contribution will reduce. I would not like to speculate on whether it is going to be 40 per cent or five per cent, Senator. We are going to a new phase of this program now, as I say, from active eradication into just a monitoring phase. Senator BOB COLLINS—But what is the basis of the Commonwealth’s decision not to continue to fund the all-important monitoring on the same basis as they have contributed to the scheme so successfully for the past 27 years? Mr Roseby—The fact of the matter is that the government will continue contributing. Senator BOB COLLINS—But not at the same level. Mr Roseby—If we are talking ratios again; as I said earlier, you cannot speculate about 50s, 30s, 20s because you do not know what is going to be spent by the industry on eradication. We know that the Commonwealth will have a constant dollar flow to run these laboratories and the submission program, et cetera. If you go through a year when you have one or two breakdowns rather than seven or eight, then it is pure speculation as to what those ratios will be. What we are trying to do with this program is focus those parties involved in the program on areas where they have as close to direct control over the activities as possible. We see that as being an efficient step.

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Senator BOB COLLINS—I understand that. It is essentially the same argument that was used to attempt to justify the reduction in Commonwealth expenditure on legal aid. I understand the rationale, but refresh my memory. Maybe I misheard you. I thought you said a minute or two ago that there would be a cut but it was speculation as to whether it would be five per cent or 40 per cent. Mr Roseby—I did say those words, Senator. Senator BOB COLLINS—Yes, I thought you did. Mr Roseby—But I did qualify it earlier by saying that, until we actually have the results in, it is speculation about what that ratio might be. Senator BOB COLLINS—I understand that the quantum is speculation but you were quite positive about the fact that there will be a reduction. The speculation was as to how much. What I want to ask is: what is the policy basis for the Commonwealth reducing its proportional expenditure at all? Mr Roseby—I thought I had explained that, in order to get greater efficiency from the program, the policy basis for the decision was to focus each party on the area that they have direct responsibility for. If they have to pay for those areas, then they are going to be a lot sharper in administering those areas. That is the rationale for it. Senator BOB COLLINS—That is the theory, yes. It does not actually work like that in practice, but it is a good argument. Mr Roseby—From a Commonwealth point of view, we will be making sure that the bits we pay for are run effectively because we do not want to not waste taxpayers’ money. Senator BOB COLLINS—It is only state governments that do that. Mr Roseby—It is up to the state governments to clamp down on their areas of depreciation. Senator BOB COLLINS—I appreciate that. Sure it is. What consultation has there been with the other partners in the process—that is, the states and industry—about the reduction in the Commonwealth’s contribution? Mr Roseby—There is extensive consultation with the Cattle Council of Australia, consultations through the BTEC committee, which I chair, and there has been consultation with the states through the SCARM-ARMCANZ process. Senator BOB COLLINS—Has the industry response to the proposed reduction in Commonwealth expenditure been a positive and supportive one? Mr Roseby—The industry has been arguing for maintenance of the status quo under the old program. But, at this point of time, they have accepted the Commonwealth’s position. I understand that they will be writing to the minister asking if the Commonwealth can, if there are an exceptional number of breakdowns which impose a cost of around 25 per cent higher than they estimate would need to be spent in any year, reconsider their funding position. Senator BOB COLLINS—In terms of the ballpark figures—that is what they are; I am sure you are aware of that—that have been done on what the likely expenditure of the Commonwealth is on those responsibilities you have delineated, being that it could well be a cut of 40 per cent, at this stage of the game it would be premature as far as you are concerned to say that it could be of that quantum? Mr Roseby—The estimate that we have at this point is for the expenditure of $3.06 million over the period 1 January 1998 extending out to the year 2001. It is a 3½-year period.

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CHAIR—Mr Sutton, can you tell the committee what the likely first payout from S51 funds are going to be and when that is likely to be? Mr Sutton—Yes. The announcement by Wool International in recent days—I think at the Wool Council meeting on 29 May—was that they expected there would be $81 million in the so-called section 51 account as at 30 June this year. That would be available for payout. That would be paid as soon as possible after entitlements are granted to growers. The deadline for that is 1 September. Some time between 1 September and the end of the year the first payout by Wool International will be made. CHAIR—By when? Mr Sutton—The first payout will be made between 1 September and the end of December 1997. It is $81 million. CHAIR—Can you advise us what processes Wool International has put in place to physically carry out the process of the payments? Mr Sutton—Yes. As you would know, the Wool International Amendment Bill has been introduced and will be debated next week, I think. Hopefully, it will be through parliament by 30 June. That will provide for allocation of entitlements to growers of their shares of the surplus of Wool International. Those entitlements will be able to be traded by growers. They will be able to be used for securing loans. There will be a raft of other minor changes introduced in that bill to the Wool International Act to reduce Wool International’s functions, to reduce the size of the board and, eventually, to lead to liquidation of Wool International by the end of 2000. The payouts will be made progressively at the decision of the Wool International board between, as I said, the end of this year through to early 2000 when the final payment will be made. CHAIR—It has been alleged that Wool International, through the processes of its operations, can get better lending terms for farmers if borrowing against that entitlement. Can you explain how those better lending or borrowing terms for individual producers are obtained as against going straight to a commercial banking operation? Mr Sutton—Growers, of course, will be able to go to their local bank or other financial institutions to obtain loans, using as security their existing assets or their Wool International entitlements. But in addition to that, Wool International will be providing a service to growers whereby they will be putting out to tender, before the end of this year, to financial institutions and inviting those institutions to propose terms and conditions that they would extend to borrowers against, solely, the security of their entitlement. Through that mechanism, it is expected that there will be increased competition between financial institutions and, hopefully, more favourable borrowing conditions than would otherwise be available to growers. Wool International would not be directly involved in any way in the consummation of those arrangements; that would be purely between growers and their banks or the winning bank or banks. Wool International’s function would drop off completely as of 30 December this year; they would have no further role in that process. There would be a contractual arrangement between the financial institution and the growers. CHAIR—In terms of the actual repayments, the grower having borrowed the money through Wool International, would the repayments—as the payments became due from Wool International—automatically be paid to the lending institution, or would they have to go from Wool International to the grower and then to the lending institution?

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Mr Sutton—It could be any arrangement that is agreed to by the grower with the financial institution. Obviously, if a grower is in a position to repay the loan early, that could happen. But there will also be scope for growers to assign the actual distributions to the financial institution up to the level of the borrowings. Those borrowings are recorded, or will be recorded, on the register of entitlements. There will be liens or charges recorded, so that there can be no overclaiming, if you like, by institutions against a borrower’s entitlement. Wool International would pay out to the institution up to the extent of the loan, the balance would be paid to the grower, and there would be security arrangements whereby information would flow to all parties involved in the transactions. CHAIR—Will there be a similar facility to that which operates in the grain industry with the Wheat Board and, as is the case in Western Australia, with barley and other grains where there is early payout, which is a discounted payout? Will that operate in terms of Wool International; and, if not, why not? Mr Sutton—Are you referring to the prospects of trading of entitlements? CHAIR—No, this is what I am talking about: having equity in a wheat pool, for example, and having an offer come through whereby you can take out a payout—and I think it is done prior to, or just after, 30 June—at a discounted price. Will that facility be available? Mr Sutton—No, there will not be scope for that under the Wool International arrangements. But there will be, as I was alluding to, an opportunity for growers to sell their entitlements or to trade them generally whereby they could recoup, in advance of the actual distributions, a proportion of their likely entitlement, and the market would place some discount on that value, presumably. CHAIR—The first payout, as you said, will be from September through to some time in between— Mr Sutton—Christmas time, yes. CHAIR—In that period. Do you have any idea at all of what will be the likely schedule of payments, following that through to the year 2000 or 2001? Mr Sutton—No. It will be in the hands of the Wool International board. The board is required to manage the stockpile on a commercial basis and repay the debt. The second and subsequent distributions will be made after the debt is paid. The government set a target for the end of 1998 for retirement of the debt. It will be up to the board then to decide how many payments there will be. I would imagine that the board will take into account the interests of growers. There will be consultation with the Wool Council in terms of the timing of those distributions. Clearly, if there are advantages to growers in receiving distributions over a number of tax years, that will be a consideration for the board. There could be two or three more subsequent distributions. CHAIR—It has been reported in the press that the payout will be approximately $3,000 for every hundred bales, with a variance according to quality, et cetera. Is that a fair assessment of what the position is likely to be in terms of this first payout? Mr Sutton—That is a figure that Wool International indicated some time ago. More recent estimates indicate that it may be slightly lower than that—$2,800. But we are really talking about an average: a grower producing 100 bales over the reference period 1993 to 1996. But that is the ballpark figure.

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CHAIR—It is understood that the higher the quality, the greater your payout will be per bale. Please explain to the committee what Wool International’s responsibilities will be, following the downsizing of the board at the end of this year. Mr Sutton—Wool International’s responsibilities will be essentially related to the disposal management—disposal of the stockpile and the retirement of the debt. It will be giving up functions as of the end of the next financial year. After July 1998 it will be dropping out of market reporting and grower information education programs on forward trading, et cetera. Those functions will drop off. Wool International will also have removed through this amending legislation a general enabling power to do any services required by the wool industry. It will become much more focused on purely the stockpile management, liquidation and management of growers’ entitlements and distributions and those functions. CHAIR—Just coming to the proposed trust, which is included in the legislation, could you explain to the committee what the functions of that trust will be and, in particular, the limits of what it can do? It has been expressed, as I am sure you are aware, by some industry organisations and a number of growers that they are concerned that it might be Wool International disguised in another form? Mr Sutton—The trust will be purely a grower owned and controlled body. It will be initially established by Wool International in terms of the legal documentation and the searching out of a trust manager and those sorts of functions. As soon as the underwriting process has proceeded to a point whereby growers’ subscriptions meet a threshold, which I am not familiar with, when that viability level is achieved there would be an annual general meeting process or some sort of general meeting process whereby a new board would be appointed. The Wool International nominal appointees would be removed and it would be in the hands of the grower subscribers. The trust will not be able to be approved until after the global wool process is committed to by the commercial parties and approved by the ACCC. The minister is not allowed, in terms of the legislation being considered by the House next week, to approve the formal establishment of the trust until those processes have occurred. So there is a fail-safe mechanism there, that the trust is destined to be a participant in global wool. If global wool does not proceed there will be no trust, at least in terms of Wool International’s involvement. It is conceivable that growers generally could agree amongst themselves to establish a trust but there would be no linkage to Wool International in that eventuality. CHAIR—In terms of the legislation, it will have no function other than to receive funds voluntarily put in there by growers for the purpose of third equity in global wool. Mr Sutton—There is no reference to global wool in the legislation because there could be some other industry structure which may be put forward by the proponents and which may be approved through those processes that I mentioned. That is the intent, that it will only proceed if the enterprise directed at participating in greater pipeline efficiencies and trading in wool proceeds; otherwise it will not. Subprogram 1.2—Crops Senator BOB COLLINS—I wanted to ask some questions about peanuts and cadmium. In answer to questions that were asked during the last Senate estimates, the department provid- ed some data on cadmium levels in imported peanuts for the 1993-94 financial year. I just wanted to ask if that was the most up-to-date information on cadmium in imported peanuts available.

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Mr Jeffery—I will have to take that on notice. But it is my understanding that that is the most up-to-date information. Senator BOB COLLINS—1993-94? I just thought that was incredibly dated information, but you think that is the most recent. Mr Jeffery—As far as I know. We responded to a question on this in the last estimates. Senator BOB COLLINS—Would you mind checking that? Mr Jeffery—I will take that on notice. Senator BOB COLLINS—You would be aware, I am sure, of allegations made recently by the President of the Queensland Graingrowers Association in respect of information held by ANZFA about the level of cadmium found in peanuts imported from various sources. Specifically, as I am sure you are aware, Mr McFarlane claimed that data showed that 45 per cent of peanuts came from provinces in China where the levels were within the MPC, therefore negating the need to increase cadmium levels. The allegation was that that information was being withheld by ANZFA. Are you in a position to comment on those assertions? Mr Jeffery—I am not in a position to comment as to whether that information is being withheld or not. Senator BOB COLLINS—Can you find out if it is? Mr Jeffery—I can take it on notice. Senator BOB COLLINS—As you know, the allegations are serious ones and are causing a great deal of concern within the industry. I specifically ask you to take on notice those allegations and provide the committee with a response as to whether that data is in fact being held by ANZFA or not. As you know, there is a great deal of controversy about the proposal to increase the level of cadmium that we are prepared to accept in peanuts from the industry. If we have about half of our imported peanuts happily fitting within the MPC, as has been alleged, it seems to be a fairly dubious case to make on the face of it that we need to increase the levels of cadmium that we are prepared to accept. Mr Mortimer, are you still involved in the restructuring of the wheat board? Mr Mortimer—Yes, I am. Senator BOB COLLINS—Are you confident of completing it before you retire? CHAIR—I think I will rule that question out of order. Senator BOB COLLINS—Could you advise the committee where it is up to? Mr Mortimer—Yes, I certainly can. There was a proposal developed which was agreed within the GCA-AWB-DPIE working party and you are probably aware of the key outline of that. Senator BOB COLLINS—So you actually got an agreement? Mr Mortimer—Yes, indeed. Senator BOB COLLINS—Well done. Mr Mortimer—I thought you may have seen the minister’s speech or press release at Grains Week in April which set out the key elements of that. The government has considered that proposal and the key elements which it has settled are that there will be a company established under corporations law in 1999 to undertake the functions of the wheat board. That company will be a dual share class structured company embodying some elements of cooperative

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 323 principles. The wheat industry fund will be distributed in 1999 as what will be called B-class shares in that company to growers who currently hold the WIF entitlement. Sitting suspended from 10.30 a.m. to 11.00 a.m. CHAIR—There being no further questions on subprogram 1.2, we will go to subprogram 1.3. Subprogram 1.3—Natural resource management Senator BROWN—Firstly, I want to ask some questions about the East Gippsland forest agreement. It is a whole of government agreement, which was signed by the Prime Minister. It says in section 16 of attachment 2 that the agreement means the advice of the Australian Heritage Commission ‘will be sought in relation to proposed actions which might adversely affect national estate values in East Gippsland’, including for areas outside the reserve system. Minister, was your department notified of the logging of Goolengook national estate forest which began on World Environment Day last week? Mr Lee—The department was not notified. Goolengook is outside the comprehensive reserve system established in the East Gippsland regional forest agreement. Senator BROWN—Yes, but the agreement does not confine itself to the reserve system, does it? Mr Lee—There are many aspects of the agreement. Senator BROWN—The agreement does not confine itself to the reserve system; it is an agreement about the whole of East Gippsland, is it not? Mr Lee—It is a comprehensive agreement. Senator BROWN—Involving the whole of East Gippsland. Mr Lee—The whole forest estate of East Gippsland. Senator BROWN—Therefore, when logging began in Goolengook, which has known national estate values, why were you not involved? Mr Lee—I believe you are alluding to a particular interpretation of the agreement relating to national estate. If you wish to pursue that question line, you really should pursue it with the minister for the environment. Senator BROWN—No, I am pursuing it with Senator Parer because the agreement involves your department. It says that the Australian Heritage Commission will be involved in decisions affecting national estate values. That cannot be something that the minister for the environment simply does out of thin air. There has to be an approach made. I wonder what the relevance of section 16 of attachment 2 of the agreement is—that section says that the Australian Heritage Commission will be involved where national estate values are involved—if it is not involved in Goolengook, which has been described by at least one scientist as the most important part of the national estate in East Gippsland. Mr Lee—I am not competent to comment on the aspects of the regional forest agreement that relate to the national estate. Senator BROWN—Who is? Mr Lee—I am suggesting that it is a matter for a different portfolio. Senator BROWN—How does that portfolio become involved with national estate forests like Goolengook, which are being logged at the moment, if not through your department? Mr Lee—This department does not deal with national estate issues.

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Senator BROWN—Yes, but your department is in the key position for the oversight of the regional forest agreement. Is that not the case? Mr Lee—No, Senator, that is not correct. The party that is in a key position is the forest task force, which is housed in Prime Minister and Cabinet. That is a tripartite operation between Prime Minister and Cabinet, Environment Australia and Primary Industries and Energy. Senator BROWN—Can you tell me then, under that section that I have been referring to, how the message goes to the Australian Heritage Commission that its advice is being sought on an area with national estate values that is about to be logged? Mr Lee—All I can say is that I am not competent to answer questions in relation to the national estate. That is really not a matter for this portfolio. Senator BROWN—I am not asking a value question; I am asking about process. The government has signed an agreement with the Victorian government which concerns, amongst other things, national estate values. We know that the Australian Heritage Commission is seen as the expert to be able to assess those values, but I am not asking about that. I am asking how the Australian Heritage Commission becomes involved when national estate values are threatened by logging. Mr Lee—That question is prefaced on a particular section of the agreement which I am not competent to comment on. I suggest that, if there are central issues involved in the administration of the regional forest agreements, those questions should be directed in the first instance to the forest task force in the Department of Prime Minister and Cabinet. Senator MARGETTS—Who is the action minister in this instance? Mr Lee—The agreement was signed by the Prime Minister and the Premier of Victoria. Senator MARGETTS—In terms of logging, in terms of referrals in relation to resource extraction and referrals to the various bodies, who is the action minister? Mr Lee—My understanding is that there are no referrals. There is no requirement for woodchip licences. There is certainly no requirement for any action on the part of my department. Senator BROWN—It says in the agreement signed by the Prime Minister that the advice of the Australian Heritage Commissioner ‘will be sought in relation to proposed actions which might adversely affect national estate values in east Gippsland’. Senator BOB COLLINS—Sought by whom? Senator BROWN—Sought by whom? Mr Lee—I am not competent to give you an answer on that. I have given you the answer in relation to the responsibilities of the Department of Primary Industries and Energy. If you are essentially concerned with the operations of the regional forest agreement, you should direct those questions to the Department of the Prime Minister and Cabinet. Senator MARGETTS—So the Prime Minister is the action minister? Senator BROWN—So the Prime Minister is the action minister in this case? Senator MURPHY—No, no-one is. Senator MARGETTS—Are you saying that no-one is? Senator BROWN—There must be an action minister because there is an agreement between two governments.

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Mr Lee—It is an agreement between the state of Victoria and the Commonwealth, signed by the Prime Minister and the Premier. I presume in that sense the Prime Minister is, indeed, the action minister. Senator BROWN—Yes, thank you. So the Prime Minister has signed an agreement with Victoria saying that the advice of the Australian Heritage Commission will be sought in relation to logging in places like Goolengook, but that has not happened. Have you any explanation as to why the Prime Minister has defaulted on the terms of the agreement within months of this agreement being struck in so far as the responsibilities of the national government to the national estate are concerned? Mr Barratt—I do not think we can help you with this line of questioning. Our minister becomes an action minister if he has to make a decision. I am not aware that there was any decision on his plate in relation to Goolengook. Senator BROWN—No, but we have established that the Prime Minister had a decision on his plate. Mr Barratt—I am suggesting we cannot know that. Senator BROWN—What I am trying to find out is why it was not made. Senator BOB COLLINS—I am interested to hear he is the action minister, actually. Mr Lee—Senator Brown, you are making an assertion, with respect, based on your interpretation of that— Senator BROWN—You said a minute ago that, in so far as this agreement is concerned, the Prime Minister would be seen as the action minister because your minister is not. It is an agreement between the Prime Minister and the Premier of Victoria. I am now asking: why did the Prime Minister, why did the government, not invoke section 16, attachment 2 of that agreement? Does it not mean that, as far as the national estate values in forests around Australia are concerned—this is a precedent—the regional forest agreement which implied protection of national estate values is not worth the paper it is written on? Mr Lee—I cannot comment on that question. I have given all the information that I possess. Senator BROWN—What action can now be taken, as logging has been proceeding for a week? We know that a large number of citizens have been arrested trying to protect this area, we know it has national estate values, and your department knows that. What action can now be taken, seeing that I have drawn it to your attention and, apparently, the newspapers are not enough to involve the Australian Heritage Commission in the assessment of national estate values which are threatened by this logging that is proceeding in Goolengook? Mr Lee—My minister has no legal powers to take any action, to my knowledge. Senator BROWN—Who does? Who has that power? Mr Lee—If there is a breach of the regional forest agreement it would be a matter for discussion between the Commonwealth and the state. Senator BROWN—There is a prima facie breach occurring here, isn’t there? Mr Lee—You are making that assertion, yes. Senator BROWN—No, I am asking you: is that not the case? The agreement says that the advice of the Australian Heritage Commission will be sought—those are the words—but the advice of the Australian Heritage Commission has not been sought. There is a breach of the spirit and the word of that agreement there. There is a prima facie breach occurring there, isn’t there?

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Mr Lee—That is your assertion. Senator BROWN—It is my assertion, but have you got any information to the contrary? Mr Lee—I do not wish to express a view on it. I do not necessarily agree with your assertion or otherwise. Senator BROWN—Under the terms of that agreement—the minister might be able to enlighten us on this—who invokes, who calls for, the advice of the Australian Heritage Commission, or is that clause in there worthless? It is now being tested right up front. The advice of the Australian Heritage Commission has not been sought and national estate values are threatened. Logging is proceeding, it is in a prime area of East Gippsland which was not reserved under the RFA and yet the key environmental protection provision of that agreement has been ignored. Why? Mr Lee—With respect again, the key environmental protection provision is the establishment of the comprehensive reserve system. The values are protected there. With respect, if you are asserting that there is some fundamental flaw in the regional forest agreement then it should be taken up, I suggest, with the Department of the Prime Minister and Cabinet. Senator MARGETTS—If there is an Australian heritage act which has a requirement that they be involved or informed or that they put an opinion on such actions that involve areas that come under their bailiwick, are you suggesting that the Commonwealth has situated itself so that there is no action minister and, therefore, federal acts cannot be administered? Senator Parer—I think what the officer has said is that it is not the responsibility of Minister Anderson, and it therefore does not relate to this particular portfolio. Senator MARGETTS—I would like to follow that up a little bit. We have asked similar questions of Senator Hill. Funnily enough, he seemed to be directing them towards this portfolio. So, if Senator Hill believes it is this portfolio and you believe it is nobody— Senator Parer—We did not say that; we said that it is not in our portfolio. Senator MARGETTS—There seems to be a problem in the administration of your acts. Are you suggesting that the Commonwealth can get out of administering its own acts and that somehow you have got a legal situation? Mr Barratt—I do not think we are making any such suggestions. Let me say first that I am not an expert in the heritage act, but I believe it is triggered by actions or proposed decisions of federal ministers. All that we can say is that Minister Anderson did not have a decision to make in regard to logging of Goolengook, and so we are not involved in this process. Senator BROWN—But we have established that the Prime Minister did under section 16, attachment 2. I ask Senator Parer: will you advise the Prime Minister of section 16 and the logging that is occurring in Goolengook at the moment with the aim of getting the immediate advice of the Australian Heritage Commission and with a view to having logging stopped until that advice has been sought and analysed? Senator Parer—Senator, I do not know how often we have to say it. We are looking at the estimates of the Department of Primary Industries and Energy. This does not fall within the responsibilities of Mr Anderson—end of story. Senator BROWN—So you are refusing to advise the Prime Minister that the logging which is occurring in Goolengook—

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Senator Parer—I am not refusing anything. What I am saying to you is—this has been said to you by two officers in the department—that this did not require a decision by the minister, therefore it does not fall within his responsibilities. Senator BROWN—We have established that it requires a decision by the Prime Minister, but I am asking you— Senator Parer—‘We’ have not established anything; you have established something. ‘We’ have not established anything. Senator BROWN—I am asking if you will use your good offices to advise the Prime Minister that there is a need for action here? CHAIR—Can I just make an observation here. I think the position has been made quite clear by the minister and the officers at the table— Senator MARGETTS—No, it has not. CHAIR—Can I finish what I am saying, please. I have listened very carefully. The position has been established as to the responsibilities and that Mr Anderson had no role in this. What the commission can undertake to do is to refer the appropriate part of the question to Prime Minister and Cabinet, and it can refer the appropriate part of the question with regard to the Australian Heritage Commission, which falls under his purview, to Senator Hill. The committee would seek to obtain answers on notice for you, if those concerned desire to give them to this committee. We can take that action, which we do in a number of cases. But it is pointless pursuing the officers at the table on this aspect, because it is outside their purview or anything that Minister Anderson was involved in. Senator MURPHY—Mr Chairman, can I seek some clarification? CHAIR—You certainly can, but I must make that point particularly clear. The committee can do that and, what is more, we will do it. We have done it in a number of other cases. In every case that I am aware of the ministers outside this portfolio have been helpful in responding. Senator MURPHY—Minister, who is responsible for the comprehensive regional assessment program? Mr Lee—Senator, the comprehensive regional assessment program, which is part of developing these regional assessments in preparation for regional forest agreements, is a cooperative venture between the Department of the Prime Minister and Cabinet—which leads the forest task force—Environment Australia and this department. Senator MURPHY—So there are three groups, in effect? Mr Lee—That is correct. Senator MURPHY—Can you explain to me then the funding arrangements for that process. Mr Lee—Yes, Senator. The resourcing is essentially by appropriation to the two departments—Environment Australia and this department. The two departments provide funds and staff into a forest task force, and the Department of the Prime Minister and Cabinet provide some staffing resources into that task force as well. Senator MURPHY—Can you tell me what the funding allocations are for 1997-98 budget and where I might find them in the statements? Mr Lee—The funding is within the running cost appropriation for subprogram 1.3. It is not explicitly stated, but I can give you the running cost appropriations component for this within this department.

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Senator MURPHY—In terms of last year’s budget statement, the PBSs, under subprogram 2.1, Natural Resources Management, at the top of page 66 of the document for the 1996-97 year, say: REGIONAL FOREST AGREEMENTS—EXPEDITING THE TIMING OF THE COMPREHENSIVE REGIONAL ASSESSMENTS Then it goes to ‘Purpose’, ‘Implementation and Timing’, ‘Impact’, ‘Performance Information’ and ‘Financial Implications’. That is fairly extensive and would seem to give the DPIE forest division a fairly substantial involvement in that process. That was the case under the previous government. Mr Lee—That has continued, Senator. Senator MURPHY—I have also been trying to track down another area of funding, which relates to who is doing what in terms of the industry strategy, but I am just curious about who is ultimately responsible for the implementation of an RFA. You say that it is the Department of the Prime Minister and Cabinet, because the Prime Minister is the person who signs off, but who actually puts it all together? Does it not come via the comprehensive regional assessment? Mr Lee—Senator, the comprehensive regional assessment is the first stage, if you like. Senator MURPHY—But then it says that you go into a negotiation period, don’t you? Mr Lee—That is correct. Senator MURPHY—Who does that? Mr Lee—That again is a joint venture between officers of the three portfolios. Senator MURPHY—So you are involved in the process? Mr Lee—Yes, I am personally involved in the Tasmanian— Senator MURPHY—And you would be involved in negotiations with regard to areas to be protected and not to be protected, wouldn’t you? Mr Lee—That is correct, yes. Senator MURPHY—So you would have some understanding with regard to areas of suggested importance that have been put up and the reasons why? Mr Lee—Some understanding, but my particular role and the interest of this portfolio is in relation to the economic and social dimensions of the regional forest agreement. That is the particular work we do. Senator MURPHY—We will get to that shortly. Senator BOB COLLINS—Mr Lee, perhaps you can just clarify this for me. In real terms, that process arrangement of having a coordination task force involving the two action departments, if you like, under the coordination and leadership of the Prime Minister’s department is essentially the same structure that we had in place for the final stages of the woodchipping process, isn’t it? The actual process was managed in exactly that way, wasn’t it? Mr Lee—That is correct, Senator. It is the same structure. Senator BROWN—If I can— CHAIR—Can I just ask a question. In terms of the operation of the—

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Senator MARGETTS—Senator Brown was actually cut off in the middle of his questions before. CHAIR—Sorry, I will come to that in a minute. I am entitled to ask a question. Senator MARGETTS—But he is actually in the line of his questions, with all due respect. CHAIR—Sorry, he was not. But I will come to him in a moment. Does the operation of the Australian Heritage Commission come under the authority of the Minister for the Environment? Mr Barratt—Yes. Senator BROWN—What we have not clarified following the chair’s question there is who triggers the seeking of advice. Senator MARGETTS—Yes. Senator BROWN—What we have established here is that the only place where that can be triggered within government is the Prime Minister’s department because that is administering the RFA. We did establish, in questioning the Minister for the Environment last week, that he was now seeking legal advice as to the obligations of his department vis-a-vis the Australian Heritage Commission and East Gippsland. But what we have established here this morning is that the Prime Minister is responsible for the implementation of the regional forest agreement, and not least that section which draws in the Australian Heritage Commission. What I can tell the committee is that that action has not taken place. I also want to ask about section 61 of the agreement which says that the competition principles agreement applies to the pricing of woods from forests. Both Victoria and the Commonwealth are signatories to that. That draws up the question: does the national forest policy statement say that the price of wood from native forests ‘will be market based, at least cover the cost of efficient management (including regeneration) attributable to wood production, include a fair return on capital, and provide an adequate return to the community’? Is it a fact that current royalties in East Gippsland are 20c a tonne? Mr Lee—I do not know the answer to that question. Senator BROWN—In terms of the agreement demanding that it be market based and that it cover the return from the forests and recover at least the costs of efficient management, regeneration, wood production and also a fair return on capital, I can tell you that the 20c per tonne is the figure. At least in the Age this week, Mr Tom Brabin, of Brabin Timber Services, has endorsed that figure. Can you tell me what action is being taken to ensure that the woodchipping of these forests returns to the public a profit and at least covers the very considerable costs of management of the forests and the replanting of the forests that is involved in those operations? Mr Lee—With respect, I suggest that is a matter for Victoria, which is responsible for managing the forests. Secondly, the issues in relation to pricing and what have you are dealt with by national competition policy. Senator BROWN—Have you read the bit in Dickens about Spenlow and Jorkins? Mr Lee—No, I haven’t. Senator BROWN—I thought germane to this is how can it be a matter for Victoria when the Prime Minister is a signatory to this agreement, which says that competition principles, as very clearly outlined, will be adhered to? Does that mean that the Commonwealth then

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 330 SENATE—Legislation Wednesday, 11 June 1997 walks away and no longer feels a responsibility—the Prime Minister is no longer responsible— for what happens to the economic management of the forests that this RFA agreement—with his signature at the bottom—has implemented? Mr Lee—With respect, I think you are misquoting the particular clause in the agreement that relates to an obligation on Victoria to make a commitment in terms of a timetable to engage in the competition policy process. Senator BROWN—So that the Commonwealth takes no responsibility for ensuring that commitment by Victoria to competition policy is adhered to. Is that so? Mr Lee—In the regional forest agreement process, there is a commitment by both governments to review the workings of the agreement at five-yearly intervals and, at that stage, the Commonwealth would review whether Victoria had met the commitments it undertook and Victoria would review whether the Commonwealth met its commitments. If there were difficulties with the agreement, they would be considered by both governments at that stage. Senator BROWN—Are you aware that auditing of forestry commission activities in almost all states, including New South Wales, Victoria and Tasmania, would show that historically the forest authorities have sold the forests at a net loss to the state involved? Mr Lee—I find it difficult to deal with the question. It is more of an assertion, with respect. Senator BROWN—Is it wrong? Mr Lee—I do not know. Senator BROWN—I think you should know because there have been inquiries and they have been publicly canvassed. The very point of the insertions of the obligation on Victoria to adhere to a competition principles agreement, which is a Commonwealth-state agreement, is surely to put an end to the situation in which public forests around this country are being woodchipped at an expense to the owner of those forests, that is, the public. Mr Lee—If I just refer to my previous comment, I believe the undertaking by Victoria in the regional forests agreement is to actually make a commitment to a timetable to that process. Senator BROWN—It says that Victoria confirms it is committed to that agreement. That means it ought to be implemented. Are you saying that it will not be implemented for five years, or it will not be checked for five years? Mr Lee—There are no further steps to be taken by our department in relation to the regional forests agreement until the five-yearly review process. Senator BROWN—What about the Prime Minister’s department? Mr Lee—That is my understanding for the whole of government position. Senator BROWN—So, in other words, there is an agreement here that has been implemented to ensure economic management, with a return to the public of the public forests, as well as environmental management, but there is no overview of that agreement five years down the line, so that anything can happen in the meantime? Mr Lee—We will review the situation in five years time. In the meantime, we will be working to establish sustainability indicators and other indicators. Senator BROWN—How much was spent on the RFA agreement process? Mr Lee—For East Gippsland? Senator BROWN—Yes.

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Mr Lee—While I could give you figures for my portfolio, I could not give you figures for Environment Australia. Senator BROWN—Let us take your portfolio. Mr Lee—I do not have a dissection for the East Gippsland process but, on average, the regional forest agreements involve an investment of up to $3 million from this portfolio for each agreement. Senator BROWN—I think Senator Hill mentioned an overall figure of $80 million for the RFA process Australia-wide. Would that be right? Mr Lee—The appropriations for this department over the five-year period will total around $45 million. Senator MURPHY—Sorry, how much was that? Mr Lee—Forty-five million dollars. Senator BROWN—Is that for your department alone? Mr Lee—That is correct. Senator BROWN—But once the agreement is struck, there is no further allocation to see that it is implemented? Mr Lee—There will be a process in five years time in relation to East Gippsland to look at indicators and to look at the performance of the agreement. Senator BROWN—Senator Parer, you might be able to answer this. Isn’t there something inherently remiss in a process that spends tens of millions of dollars of taxpayers’ money reaching agreement but then spends nothing on policing that agreement afterwards when the forests are one of the most contentious issues on the political agenda in Australia? Senator Parer—This is an agreement between the Commonwealth and the states. You may not like this, but the states do have control of land management in their states. They have elected representatives. They are responsible to their own electors. If the states are remiss in some of the things they do, they are responsible to the people who elect them. Senator BROWN—Is Mr Howard’s signature at the bottom of this agreement? Senator Parer—Yes. Senator BROWN—So he is not responsible for— Senator Parer—I have answered your question—end of story, right? Senator BROWN—No. You have told me that Victoria is responsible, but he signed the agreement and my question is a legitimate one to you. Does Prime Minister Howard have no responsibility for the implementation of this agreement? Senator Parer—The states are responsible for land management. This is an agreement between the Commonwealth and the states. Senator BROWN—Let me say that that is an assertion by you which is not correct. Senator BOB COLLINS—Hundred bucks that it is! Senator Parer—Yes, at 10 to one! Senator BROWN—Senator Collins may come to your assistance but— Senator BOB COLLINS—No, I just want to make a bit on the side. Senator Parer—A thousand bucks it’s correct!

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Senator BROWN—As far as land management is concerned there are world heritage obligations, national estate obligations and licensing obligations, which you are divesting yourself of and which give the Commonwealth a very clear obligation for what goes on in land management. Senator BOB COLLINS—He will not put his money where his mouth is. Senator BROWN—Here you have an agreement— Senator BOB COLLINS—Then why don’t you take the bet? Senator BROWN—If you don’t mind, Senator Collins, here you have an agreement signed by the Prime Minister—Senator Collins might think that it is okay that there are no further obligations— Senator BOB COLLINS—I did not say that at all; I just said that state governments manage forests. That is correct. Senator BROWN—I am not questioning you; I am asking Senator Parer. Here you have an agreement signed by the Prime Minister, and what Senator Parer is telling the committee is that despite that there is no obligation to follow up this $45 million agreement— Mr Lee—Excuse me, Senator. As I mentioned before, there is a five-yearly review process in the agreement. Senator BROWN—But until next century there is no further Commonwealth involvement. The forests can go whatever way the states want them to go, and that includes economic management. There is written into the agreement, and I have read the clause, a requirement that the public does not continue to fund the logging of forests for woodchipping. It is signed by the Prime Minister but he has no obligation to carry through and see that that clause is implemented. That is the case, isn’t it? Senator Parer—I have answered your question, Senator. Senator BROWN—Yes, you have. Senator MARGETTS—It is interesting that we have had this statement in relation to land use, because I am going to ask about natural resource management, and that includes land use. There are ways and ways of answering and asking that question about who manages land. The Commonwealth are very happy to jump in where it suits them. I have received suggestions from landcare groups for tax incentives to reduce land degradation in Australia. One particular group has advised that an incentive can be implemented through minor changes to the Loan (Income Equalisation Deposits) Act and Income Tax Assessment Act. The changes to the Loan (Income Equalisation Deposits) Act would allow deposits that are used specifically for landcare purposes to be withdrawn earlier than is presently the case. The changes to the Income Tax Assessment Act would change section 75D so that instead of outright deductions tax credits at a rate of 50 per cent of each dollar spent would be given on expenditure and certain landcare measures. This expenditure qualifying for tax credits would have to be approved by the registered landcare group of the department of agriculture in writing. Can you advise us as to whether the government is looking at these kinds of tax incentive proposals? Do they see merit in these kinds of tax incentive proposals? Is there any indication that the government will take any action to implement them? Mr Byrne—The government is looking at the options for amending sections 75B and D against the background of the proposal that they could be extended to provide tax incentives

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 333 on the basis of credits or rebates. Minister Anderson has written to the Treasurer on the matter; it is part of the government’s election policy in relation to land management. Senator MARGETTS—The government has a land management policy, did you say? Mr Byrne—That is correct. Senator MARGETTS—Land management? Mr Byrne—Those proposals are under consideration at the moment. Senator MARGETTS—In relation to other aspects of natural resource management, I notice that various components of the Murray-Darling Basin work occur under a number of programs and subprograms, and have funding for both running and capital costs. For example, in this subprogram, 1.3, there is funding listed as coming from appropriation bills Nos 1 and 2 and as divisions 490.4.03, 930.2.01 and 931.2.06. It is also covered, for example, in the Department of Transport and Regional Development regional development program, the Department of Environment under DEST and the new Natural Heritage Trust. What is the total funding for the Murray-Darling Basin from all sources? How is total funding changing? Mr Walker—The Murray-Darling Basin initiative funding for this coming financial year from the principal funding portfolio, which is this one, is some $48.3 million. The expenditures to which the senator has referred in the transport and regional development portfolio, as I understand it, have come to an end. There are no specific initiatives targeted with an appropriation bill number from the Environment Australia portfolio, although the Environment Australia agency does commission certain of its activities with a specific focus on the Murray- Darling initiative. I cannot answer the detail of those. Senator MARGETTS—How is the distribution between the different areas changing? Is there any change in distribution? Mr Walker—In terms of our portfolio there are some lumps, if you want to use that phrase, of expenditure associated with remediation works at Hume dam and the Torrumbarry weir reconstruction. Murray-Darling 2001 will be coming on stream and that will significantly increase the Commonwealth’s overall contribution. Senator MARGETTS—On page 43 it notes that $6.9 million is cut from item 931.2.06 for the Murray-Darling Basin natural resource management strategy and will be transferred to the Natural Heritage Trust. I also note that the Murray-Darling 2001 contribution under 930.2.01 is only $4.5 million and is also ceasing this year—as does the contribution of $1.9 million to natural resources management under this line item and $2.5 million of the salinity mitigation works. Why is that, and how does this add up? Mr Walker—I will go through those items serially, Senator. The natural resource management strategy funding has totalled in the past several years $8.8 million from the Commonwealth. The cabinet authority for that particular funding runs out at the end of this current financial year. The government has taken a decision to subsume that program investment into its Murray-Darling 2001 investment framework. The $6.9 million is therefore definitely subsumed. Our minister has also agreed to approach the states with a view to continuing the strategic investigations and education activities—$1.9 million this year—into future years from other funding sources available to him. The states have agreed at this stage to, in fact, contribute in the standard matching formula for that particular investment. Was the other one you mentioned salinity? Is that right? Senator MARGETTS—Yes. It was in relation to the $2.5 million of the salinity mitigation works.

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Mr Walker—That would just be a normal variation. I am sorry, Senator. I need the page you are referring to. Senator MARGETTS—It is page 41. It is point 2.01 of division 930. I will have to check if it is not. Mr Walker—That basically reflects the completion of the Torrumbarry weir and other ons and offs associated with Hume dam variations. But the major drop off is basically Torrumbarry weir completion. In terms of your question about how this all ties together, if you look at page 102 of the statement you will see an explanation of why things drop out of our portfolio estimates and get subsumed into the overall Natural Heritage Trust estimates which are, at this stage, appropriated to the environment, sport and territories portfolio. Senator MARGETTS—Call me cynical, but when the Natural Heritage Trust finishes, does this mean that these programs will just drop off the planet? Mr Walker—Senator, I would suggest that that would be a decision for the government of the time. Senator MARGETTS—We will have to find something else to sell perhaps. Mr Walker—I cannot comment on that, Senator. Senator MARGETTS—No. In relation to the national landcare program on page 43, there is mention of reduced capital works activity and the already declining funding base. I would imagine farmers and landcare groups put whatever funds become available to good use. How is it possible that these reductions will not significantly affect community landcare activities? Is this as opposed to non-community activities which will be affected? Mr Walker—In future years, the national landcare funding program will be supported from two sources. There is an ongoing funding base which is a result of the original commitment to Commonwealth funding for the decade of landcare. That will be supplemented by extra funding coming from the resources from the Natural Heritage Trust. The reduction in the landcare funding base has been implemented by reducing our capital funding expenditure from the ongoing base. No doubt, as a result of heritage trust deliberations, we may be able enhance that particular investment depending on what assessment panels, the states and the Commonwealth want to actually fund as a result of negotiations. Senator MARGETTS—You say ‘no doubt’, but it is not because the government deems that landcare problems have been solved. Mr Walker—I could not answer that, Senator. Senator MARGETTS—Nobody here thinks landcare problems have been solved. So it is really left up in the air to a large extent. One would have to assume there is a fair amount of uncertainty created amongst landcare groups at this stage. Mr Walker—I would suggest that there is a fair amount of certainty at least until the Natural Heritage Trust funding ceases. After that, it is going to be a matter for the government of the day. Senator MARGETTS—Thank you. CHAIR—Now there is a lot of excitement amongst landcare groups. Senator BOB COLLINS—Good. Senator MARGETTS—I am excited.

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CHAIR—The issue of tax credits and rebates were raised earlier on. We got an answer to that. I think it is also worth pointing out at this stage that that issue, certainly in terms of drought and conservation matters, was the subject of recommendations of a report done by this committee in 1992 under the previous government and has been progressed. In addition to that, the current landcare program has had the same lack of evidence presented to them. I would not be very surprised if there was a unanimous decision by this committee to support that particular recommendation. Senator LIGHTFOOT—Minister, a natural part of natural resource management is the diesel fuel rebate and the cap that the government has put on that. I do not want to sound parochial or insular, but Western Australia boasts the biggest diamond mine, producing some 35 million carats of diamonds annually. We also boast the biggest iron ore mines in the world. We are the biggest exporter of alumina powder in the world. We are also internationally big players in gold, nickel and other commodities. Western Australia produces something like 30 per cent of the national export income with less than 10 per cent of the population. The mining industry and pastoral, grazing and farming industries have a tremendous amount to absorb in native title and in other areas. Is it not regressive to cap the diesel fuel rebate, notwithstanding information that I have had that suggests there is a slight downturn in the mining industry in gross dollar terms? It may not reach that figure of the cap this year but it will surely reach it in other years. Could there be some latitude shown with respect to the diesel fuel rebate in so far as it applies to the mining industry which is so important to Australia and the rural industry as well? Senator Parer—I am not sure whether that does come under this. I will answer the question, but you could have raised it right in the beginning. I will give you a response. It is a matter really for the Minister for Small Business and Consumer Affairs, Mr Prosser. But we have more than a passing interest in it from my particular portfolio area. This is what happened. Coming into government, of course, all programs were looked at. It was found that the estimates carried out by Finance and Customs into the growth of the diesel fuel rebate indicated growth of an exponential rate being greater than the growth of the industry and the CPI. A major reason for that was the existence of loopholes within the Customs Act on diesel fuel that were being exploited. In fact, companies were winning in both the AAT and the courts. I might tell you that this was a problem that was also had by the previous government. What we did was to meet with the industry, explain the position and put all the cards on the table. The representatives of the industry covered not just the mining council group but also the chairman of AMEC. When those cards were put on the table, the fact was accepted that there had to be some way to stop these loopholes and the exponential growth; in other words, the diesel was being paid to places where, and to people whom, it was never intended to be paid. CHAIR—You mean the rebate was being paid? Senator Parer—I mean the rebate. Senator BOB COLLINS—Including the residents of the ACT, I might add, for example, using diesel to heat their homes. Senator Parer—Basically, in the end agreement was reached with the industry group. They made certain proposals—and I suppose you could call them sacrifices, if you wish. They were aimed at closing off those loopholes. The other agreement reached between the government

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 336 SENATE—Legislation Wednesday, 11 June 1997 and the industry is that the industry would meet with the government to discuss the diesel fuel rebate in the context of future growth. That is still in place, and it will continue. The government then, based on those discussions, last year ran out the forward estimates, which has been termed ‘a cap’, which terminology I do not think is correct. It was a figure that the government and the industry aimed to achieve by mutual agreement. Where it sits at the moment is that the forward estimate figure is there. There will be discussions, involving me, between government and the industry to work out just where the projections are right now, and further discussions will be had in regard to industry growth. I agree entirely with you in respect of the importance of this industry, as I think do most other people, because it is an engine of investment growth in this country. I might say that it has been quite incorrectly termed in the past as being some sort of a subsidy—which it is not. It never has been a subsidy. It is an input cost. It is a material being used in areas where there are no alternates. These industries are, of course, diesel dependent. Where there are alternates—and I have seen a lot more than a little bit coming in Western Australia—they have switched to those alternate forms of energy. That is the position. Senator LIGHTFOOT—Minister, would you say then that there is broad consensus in the industry with respect to the government’s position? Senator Parer—There was agreement reached with the industry. I might tell you that it is vital that that bill currently before the Senate goes through as it is, because that represents the agreement with the industry. If it is in any way amended, it means that the diesel fuel rebate will be paid to operators where, with the agreement with the industry, they agreed it would not and, therefore, it will affect the outcome. Senator LIGHTFOOT—Is that cap we talk of in gross terms the one of $112.9 million? Senator Parer—No, it is $813 million for the mining industry. Senator LIGHTFOOT—Just the mining industry? Senator Parer—There is no talk of changing it for the primary producers or fishing. Senator O’BRIEN—I draw your attention to the portfolio objective statement at the beginning of subprogram 1.3, on page 40 of the portfolio budget statement, which has been altered this year from last year. I want to know how the alteration of the subprogram’s objectives affect the operation of the subprogram. Mr Byrne—The broad objectives of the subprogram reflect the particular priorities and issues that the subprogram is dealing with at the time. I am not sure which alteration you are referring to. But, essentially, it is reflecting the priorities for the year. Senator O’BRIEN—Let me say this: the objective last year was to enhance the efficient, sustainable and equitable management of the nation’s land, water and forest resources for the wellbeing of all Australians. The phrase ‘for the wellbeing of all Australians’ is omitted. There are other terms which are similar to the earlier part, but that term has been omitted. What is the significance of that? Mr Byrne—I think the sense of that is still in the term ‘sustainable’. Sustainability has both an economic and an environmental and social objective, and those objectives are understood in that term. Mr Barratt—Perhaps I can help you. Language of that kind was imported into the mission statement of the department in the corporate plan. So the thought was not dropped; it was just relocated into a more overarching statement.

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Senator O’BRIEN—There were no specific reviews conducted to replace this; it is just someone’s application of words from other places to this objective statement? Mr Barratt—The objective statements of the subprograms were part of the process of reorganising the program structure of the department. Senator O’BRIEN—Which you were describing when we first began this morning. Mr Barratt—Yes. Senator O’BRIEN—So this is a product of that process. Mr Barratt—Yes. Senator O’BRIEN—Is there any significance in using the word ‘productive’ in place of the word ‘efficient’, which was in the previous year’s objective? Mr Barratt—The word aligns better with wording used in the corporate planning document about departmental programs designed to enhance productivity. Senator O’BRIEN—It is not designed to make a change of any significance whatsoever. Mr Barratt—No deep significance. Senator O’BRIEN—I want to go on to the question of the wood and paper industry strategy. The budget papers point to delays in the comprehensive regional assessment process in some states. Can you tell me which states are experiencing delays and for what reason? Mr Lee—In Western Australia there has been a delay. There are a number of technical matters to be worked through between the Commonwealth and the state. There was a delay of several months, which does put the original completion date at some risk. That is under discussion currently between the Commonwealth and the state. Tasmania we believe is on target. East Gippsland was completed in February but the central highlands process is now due for completion in September-October, which is a little later than we originally had anticipated—that being that it would be completed by midyear rather than three or four months later. In New South Wales, the Eden management area was expected to be completed by midyear; it is now likely to be the end of the year. It is a very complex and difficult process. It has taken longer than originally anticipated at the start of the planning. Senator O’BRIEN—Is there any special program in place to seek to bring the time line for the completion of those assessments back or to minimise delay? Mr Lee—We are doing everything possible within the resources we have available to try to deliver on the originally planned time lines. There are also competing forces in terms of giving people time to react to the information that comes out of these processes and to respond and put views into the process. I guess the answer to that is that we are trying as hard as we can to meet the original time lines. In some cases it is not looking all that feasible. Senator O’BRIEN—The revised time lines that you just gave us—how firm do you think they would be? Mr Lee—I think we have a fairly good handle now. We have experienced one process in East Gippsland to completion. We are near completion in Tasmania. How these things actually work is much clearer now than it was right at the start. This is all breaking new ground. I think we are becoming more confident with the end dates that we are currently working on. There is some discussion still between the Commonwealth and the states both in New South Wales and Western Australia on what should be an appropriate end date for the process. Senator O’BRIEN—The end dates that you estimated are still subject to discussion.

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Mr Lee—They are in New South Wales, Western Australia and south-east Queensland. Senator O’BRIEN—I wonder whether you would mind giving us some written document which sets out the expectation of the time lines of these processes. Mr Lee—Yes, we can do that. Senator O’BRIEN—The budget papers point to a much higher forest industry structural adjustment payments to the states in 1997-98. Why does the department estimate the payment to be so much higher this year? Mr Lee—This reflects the adjustment task in New South Wales which we expected to be happening earlier than it currently is. There will be substantial adjustment in New South Wales in relation to business exits and also to industry development assistance. We are expecting to see in New South Wales a substantial increase in demands on FISAP funds. The program is demand driven. It is quite likely that there will be a greater draw-down this coming year. Senator O’BRIEN—So there will be a greater number of business exits? Mr Lee—Yes and also industry development assistance. Senator O’BRIEN—Do you have any specific details on the targeting for business exits? Mr Lee—We could assemble some text and figures on New South Wales, particularly FISAP, the assistance that has been provided already and what might be anticipated in the coming year. Senator O’BRIEN—Is New South Wales the only state? Mr Lee—There is activity in Victoria. We have completed adjustment to sustainable yield levels of production in the midlands forest management area with the buy-out of two businesses. In Tasmania there is activity in relation to rescheduling assistance for private land- holders who are unable to harvest timber because of the deferred forest process. Senator O’BRIEN—I would appreciate it if you can give us details of the proposals for expenditure of that program over the next financial year. Could you also give us a breakdown of last year’s FISAP payments? Mr Lee—Yes. Perhaps I could call forward one of my officers to give that detail. Senator O’BRIEN—You can, although it would be useful if you are going to give us one document to give us the same information on the same document. Mr Lee—We would be pleased to do that. Senator O’BRIEN—In the original wood and paper industry strategy a key element was to be the establishment of the Wood and Paper Industry Council, which was to be the driving force of the strategy and to encourage industry development, value adding and investment. The minister disbanded the original council and has only just agreed to re-establish it. In the absence of that council, what was the driving force of the wood and paper industry strategy? Mr Thomas—The wood and paper industry strategy consists of a large number of quite discrete elements. The Wood and Paper Industry Council is important but other elements of the program included the farm forestry program, some research that was undertaken on sustainability indicators—quite a list of initiatives. I expect the council to be quite important in plotting a way forward. The wood and paper industry strategy in itself was a strategy for future development. The council is a body that hopefully can pick up that strategy and move it forward.

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Senator O’BRIEN—I guess the question was: what was the driving force? You have all of the elements of the strategy, but putting them together and moving them forward is another part of the package. So recognising that the elements are there the question was: what has been driving them for the period that the council has been wound up? Mr Thomas—Since the initiative was announced the minister for primary industries has made a decision on some $15 million in farm forestry grants. There has been a national conference held on criterion indicators for sustainable forest management. There are a series of workshops that are now about to be held to look at further developing those criterion indicators. The momentum for that work has come from the individual portfolios. It has come from the Department of Primary Industries and Energy, DIST—through the work they have been doing in looking at initiatives in manufacturing; I think the glass log project is one that has recently received funding—and other AusIndustry assistance programs. The push has come from within those portfolios. Senator O’BRIEN—In terms of identification of new market and investment opportunities, which arms of the strategy have been focusing on that in the absence of the council? Mr Thomas—I think to give you a complete answer to that question I would like to take it on notice and get back to you. There has been some work done, but I am not sure that I will be able to remember it all off the top of my head. Senator O’BRIEN—Why was the original Wood and Paper Industry Council abolished? Mr Thomas—That is a matter that I would have to refer back to the Minister for Industry, Science and Tourism. Senator O’BRIEN—Is it fair to say that it was at the minister’s direction? Mr Thomas—I have no knowledge of that decision. That is a matter that I would have to refer back to the other portfolio. Senator O’BRIEN—While you are doing that can you find out when it was decided to abolish it and what mechanism, if any, was put in place to replace the council? The minister has now announced that a new council will be up and running in July this year. On what date was the decision to reconvene the council made? Mr Thomas—These matters relate to the Department of Industry, Science and Tourism and the council falls within their province. Senator MURPHY—Senator Parer made the announcement in the Senate in response to a disallowance motion. Perhaps Senator Parer might be able to inform us of when— Senator Parer—I still think it is for DIST. Senator MURPHY—I understand that DIST has a responsibility for establishing the council, but you made an announcement that it would be up and running by mid-July. Senator Parer—Absolutely. That was the advice I had. Senator MURPHY—You ought to know when that decision was taken? Senator Parer—I have no idea. All I can say is that I was advised that that was the case and that is why I made that assertion on the disallowance motion. Senator O’BRIEN—Can we get that information from the minister and get details of what was in the minister’s mind that led him to changing his mind. You do not have to speculate on that, but I would like to hear about that from the minister’s point of view. CHAIR—We will follow our usual procedure and forward it on to the minister.

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Senator O’BRIEN—Minister, do you know what the precise make-up of the new council will be? Senator Parer—No, I do not. Mr Thomas—It is a matter for the Minister for Industry, Science and Tourism to decide. Discussions have been going on for quite some time on the composition of the council. Again, it is a matter that is more appropriately directed to the department responsible for the council. Senator O’BRIEN—Taking the chairman’s lead, I would ask you to convey some questions to the minister. What will the precise make-up of the new council be? How will it differ from the original council? What is the rationale for the change to the make-up of the council? Who decided the make-up of the council? CHAIR—Can I make one observation. It has been the practice of this committee in the time I have been on it, including under the previous government, that a general question that swayed off the theme of the discussion to another minister would be forwarded on, but I do not think we can turn this committee into a process where we start asking detailed questions such as who is going to be on a particular committee when it comes under another portfolio. That should be asked in the appropriate estimates. Having said that, we will forward those questions on. Can we stick to the program. Senator O’BRIEN—Yes. I want to ask a general question about the Murray-Darling Basin Commission. How will the inclusion of the natural resource management strategy in the Natural Heritage Trust affect the day-to-day management of the strategy? Mr Walker—The natural resource management strategy had a very general set of objectives. The Natural Heritage Trust Murray-Darling 2001 initiative has a more limited set of objectives and the focus will obviously be on the newer set of objectives. There will be a transition period where the old ones will need to be rolled into the new, as it were. Senator BOB COLLINS—I think it was part of your original question, but I may have misheard it. Under the new arrangement, what will be the role of DPIE in the Murray-Darling Basin arrangement? Will it still have the primary coordinating role of the council? Mr Walker—The department will still have that primary coordination role from the Commonwealth’s perspective. The current arrangements for the management of the natural resource management trust will be continued where the Murray-Darling Basin Commission and council have a major say in how the 2001 funds are spent as is currently the case. There will be some change in administrative arrangements in terms of the way in which the funds are delivered to the states for expenditure. Senator O’BRIEN—What landcare capital works projects have, or are to be, cancelled, or will the Commonwealth not participate in, in order to meet the reduction in funding to Landcare? Mr Walker—Could I answer that one. Mr Byrne may wish to follow up. As it turns out, I tabled a document—a fact sheet—when Senator Collins asked questions last year in relation to Commonwealth landcare funding expenditure. That now has to be updated because of extra funds being allocated in additional estimates. But, if you read that fact sheet, it indicates that several of the capital oriented programs and activities, or subprograms and activities, have in fact run their course. For the major elements of the 1992 prime ministerial environment statement, the funding has run its course. As a result there is no need to formally cut anything. Those particular issues had a specific time line. Senator O’BRIEN—Just interpreting your answer: no projects have, or are to be, cancelled?

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Mr Walker—At this stage, no. Senator O’BRIEN—There are no projects that the Commonwealth has decided not to participate in that were originally scheduled? Mr Walker—That depends on what comes forward from the states as a result of the current funding round. There will, no doubt, be decisions made as to whether the Commonwealth will or will not participate in certain activities, depending on what policy directions the government wishes to take. Senator O’BRIEN—Will that be subject to the financial constraints of the budget? Mr Walker—I think it would be more a constraint in terms of the potential precedents which might be established for the role of the Commonwealth being extended or not extended, depending on how it fits, in terms of where it shall fund infrastructure, for example. These are the other investment opportunities. Senator O’BRIEN—You talk about a process of discussions with the states. Have they begun? Mr Walker—Yes. Senator O’BRIEN—When do you expect that they would be concluded? Mr Walker—The intention is that partnership agreements, under which the heritage trust funding will be delivered—and the national landcare ongoing funding will be rolled into that process as well—will be completed as soon as possible. We have a target of the end of this month. That is looking overly optimistic as we get further into the process, but we are going flat out to try and get a set of agreements negotiated with the states which would then set the framework for working out what the Commonwealth will do vis-a-vis what the state will do, in terms of heritage trusts and other ongoing environmental and natural resources programs. Senator O’BRIEN—Do you know when it is expected that announcements would be made on those discussions? Mr Walker—The intention, at this stage, is that funding grants for the heritage trust, the national landcare program and so on will be announced at the end of August—perhaps early September. Around about that time, anyway. Senator O’BRIEN—We might be asking some more questions in mid-August. What is the current state of play in the implementation of the COAG water reform framework and what is the department’s current involvement in this? Mr Byrne—The COAG water reform framework is being implemented by the states and overseen by a task force which has as it membership the Commonwealth, the states, the Murray-Darling Basin Commission, and the water services association as an observer, along with the national competition commission as an observer. The task force has set a set of milestones which put into more operational form the fairly broad framework which the Commonwealth and states agreed to in the water reform framework. The task of the task force is to monitor progress against those milestones and provide a basis for the states to compare activities and particular approaches. One of the key things at the moment is to look at the issue of definition of assets to assist in a definition of full cost recovery, which is one of the key planks in the reform process. Senator BOB COLLINS—I have just one question on the same issue. In respect of one of the central and more difficult issues in that process, which I think is of great national importance, the process of water reform, what is the current state of play, as far as the states

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 342 SENATE—Legislation Wednesday, 11 June 1997 are concerned, in addressing that question of a real cost for the resource and the enormous gap that now exists in the price of water across state borders. Mr Byrne—I think a number of states have already moved to recover the full cost of providing services. There are still issues, as I mentioned, particularly the issue of asset valuation and the issue of determining the rates of return. So far as urban water is concerned, many of the states have moved now to full cost pricing and recovery of a rate of return. Senator BOB COLLINS—It was principally the non-urban supply that I was interested in. Mr Byrne—The objective is to have full cost pricing by the year 2001. The hurdle of determining asset valuations is a key one. Once that is done I think there will be faster progress. Senator BOB COLLINS—Thank you very much Senator BROWN—I would like to ask about the licence for degraded rainforest logging in northern Tasmania and at the outset draw the committee’s attention to this photograph of logging which is occurring, and forests targeted for logging, which is germane to this question. In the photograph is a rainforest south of Burnie, on the Surrey Hills estate, which North Forest Products is licensed to woodchip and therefore to convert into bare earth, as you can see on one side of the photograph as against the intact rainforest on the other side. I did ask the chair if it was possible to show a short video on these forests because it might have helped explain the situation, but the chair has sought advice on that and I have resorted to the photograph. CHAIR—Before we proceed, could I make a comment on that. As Senator Brown said, he did request to show a video. My initial reaction was that it was outside the procedures of the estimates committee process and would set a precedent. Nonetheless, I sought advice from the clerk, which confirmed my view. His advice was that, if this procedure were required at any time, it would require a full decision of the Senate. I table for the record the letter from the clerk regarding that particular matter. I have given a copy of the letter to the minister. Senator BROWN—I thank you, Mr Chairman. I have that video available if anybody would like to view it. To start at the beginning, in 1994 an approach was made to the previous government for a special licence which would allow North Broken Hill to log these rainforests and to export them as woodchips as a special concession outside the normal export woodchip licence limits. That was not agreed to. With the new government, in as early as April last year, a fresh approach was made by North Broken Hill to raze these rainforests and to export them as woodchips—a special licence for 450,000 tonnes of export woodchips per annum. They were more successful this time. Through quite rapid action, the government responded to the approach of North Broken Hill and introduced regulations which specifically allowed this anomaly, as North Broken Hill described it, for logging of rainforests and their export as woodchips to be licensed above and outside the then existing licensing system for export woodchips. That brings me to the question to get to the nub of the matter. Is it a fact that over 3,000 hectares of rainforest will be cleared and woodchipped by North Broken Hill as a result of the granting of what is called a degraded forest licence to North Forest Products, which I will call ‘North’ from here on in?

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Mr Thomas—North Forest Products have a licence to export 450,000 tonnes of woodchips. If in doing that it requires the harvesting of 3,000 hectares, then, yes, it is possible that that could happen. Senator BROWN—Who issued the licence? Mr Thomas—The licence was issued by the Minister for Primary Industries and Energy on 28 February. Senator BROWN—This year? Mr Thomas—This year. Senator BROWN—When was the approach made for that licence? Mr Thomas—There were several approaches. I am not sure that 1994 was the first approach; they may have prior to that— Senator BROWN—I mean during the time of this government? Mr Thomas—I cannot give you the date of the application. I am happy to come back to you on that. Senator BROWN—Thank you, if you would. Is there any similar application for the logging of pure rainforest for export as woodchips from anywhere else in the country? Mr Thomas—The Surrey Hills property is one that has been logged many times over the past couple of centuries. The licence that was issued restricted logging activities to those areas that had been subjected to a higher level of disturbance. By a condition in the licence, those areas of rainforest—or those areas of forest—within the Surrey Hills property that were relatively lightly disturbed have been set aside from export. Senator BROWN—Again I ask: whatever the quality of the forest, has there been any other licence issued for the logging of pure rainforest for export as woodchips? Senator Parer—I think the officer said to you that areas of rainforest were not being subject to logging. Then you used the term ‘other rainforest’. Did not the officer make it clear that rainforest was not included in this licence? Senator BROWN—So we have established now from you, Senator Parer— Senator Parer—I am just correcting a remark you made that was at odds with what the officer said. Senator BROWN—We will now have it from the officer. Is that what you said? Mr Thomas—There are rainforest species on this property; there is no question of that. It is a question of really what is a rainforest. There are rainforest species on Surrey Hills; that is a fact. Senator BROWN—I put it to you that the area I am talking about and as is pictured here is pure rainforest. Whatever the quality of it is, it is pure rainforest; is that not the case? Mr Thomas—I am not sure what the definition of ‘pure rainforest’ is. I think that varies from one person to another. Senator MURPHY—What is the definition being used in the comprehensive and representative reserve system? Mr Thomas—There are various forest types being used in the CRA reserve system. Senator MURPHY—But for rainforests?

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Mr Lee—There is a number of forest types—I do not have the detail—in the comprehen- sive— Senator MURPHY—I agree with you. I totally accept that. Mr Lee—And there are genus targets applying to rainforests, as to other forest community species—15 per cent of pre-1750— Senator MURPHY—There is a definition of rainforest in terms of that region? Senator BROWN—I have here page 9 of the Forest Practices Board report which shows the areas proposed for logging. It says under (ii) ‘myrtle forest’ and then gives an area of some thousands of hectares. Is ‘myrtle forest’ rainforest? Mr Thomas—Myrtle is a rainforest species, yes. Senator BROWN—I can tell you, because I have been there, that it is pure rainforest. Even in Tasmania where the definition of ‘pure rainforest’ is restricted by Forestry Tasmania to being more than 95 per cent forest canopy—in other words, if it is 94 per cent rainforest canopy and there are a few eucalypts sticking up, it is not classed as rainforest—this is pure rainforest, 100 per cent forest canopy. We are talking here about calindendrous—I will translate that for you; that is, cathedral-like—ancient rainforest which is pure in every sense of the word. I want to ask about the report I have just referred to, which is the Forest Practices Board report. Is it a fact that that report never described these forests which have been licensed for logging as degraded? Mr Thomas—Senator, I would have to check through the report, but that is possible. They were not asked to assess whether the forest was degraded or not; they were asked to provide a report on the state of the forest. They have focused in what they have done on the floristic composition and the level of disturbance. Whether or not they have used the specific term ‘degraded’, I do not know. I would have to go through the report. Senator BROWN—I can tell you it is not there. The word does not exist, and I will use your terminology now on floristic change. Is it a fact that the report from the Forest Practices Board says that no floristic change could be observed in ‘the remaining native forests at Surrey Hills’? Mr Thomas—It is a fact. That is what the report concluded. The report concluded that the floristic composition of the forest remained essentially the same but there had been a fairly significant change in the structural composition because of past logging. Senator BROWN—Moreover, on page 16 of that report, it says: Calindendrous rainforest— that is, cathedral-like rainforests— still occupies continuous tracts of more than 1000 ha in two patches in the north and west of the estate. That area has been licensed for logging. Mr Thomas—If those areas of forests are relatively lightly disturbed, then they would have been excluded from export by the minister’s licence, by conditions in the licence that were restricted only to those areas of forest that had been relatively highly disturbed. I would have expected those areas of forest to be excluded. Senator BROWN—I would have expected that, too, Mr Thomas. But the reality is that we are dealing with 1,000-hectare patches which are licensed for logging, which are described in that report—which has been in your hands for months now—as follows:

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Calindendrous rainforest still occupies continuous tracts of more than 1000 ha in two patches . . . of the estate. Mr Thomas—Senator, the report from the Forest Practices Board was produced prior to the minister making his decision, and the decision was made, in part, based on this report. So I would not expect the Forest Practices Board report to reflect what the minister decided after they reported. Senator BROWN—The Forest Practices Board said that very little change could be detected in these disturbed rainforests. Mr Thomas—In the floristic composition of those forests. Senator BROWN—That floristic composition that you referred to is very important because, as you know, the regulations which the minister got through the parliament make only one clear stipulation on the minister, and that is in regulation 14. The only clear stipulation is that the Minister must consider whether the floristic composition of the forest has been altered. Is that not the case? Mr Thomas—Regulation 14 requires: . . . the Minister must consider... (a) the general state of the forest, and, in particular, whether the floristic composition of the forest has been altered significantly by reason of disease, weed infestation, harvesting and other human activities, or other causes; and (b) any other relevant matter. Senator BROWN—Thank you. Is there any other consideration which the regulations say the minister must consider? Mr Thomas—It says ‘any other relevant matter’. Senator BROWN—Yes, but there is no specific other matter than the floristic composition of the forest which is referred to; that is, the make up of the plants and the trees in the forest? Mr Thomas—He looks at the general state of the forest, including— Senator BROWN—I am sorry, the regulations themselves do not state any other specifics. It just says ‘any other relevant matter’, so that is left to the minister. Mr Thomas—I would have thought that the term ‘any other relevant matter’ is a fairly broad expression. It allows the minister to look at the general state of the forest. It allows the minister to consider all matter. The clause, in fact, that you are looking at requires the minister to look at the general state of the forest and then mention specifically, in particular, whether the floristic composition of the forest has changed. The minister, in his decision, considered the general state of the forest. Senator BROWN—Yes, and the heart of this, the only specific in these regulations, is that he ‘must consider whether the floristic composition of the forest has been altered’. Isn’t it a fact that the Forest Practices Board, advising the minister, said that no floristic change could be observed in these forests? Mr Thomas—Whether the quote is correct, I am not sure, but that was the general conclusion of the report of the Tasmanian Forest Practices Board, yes. Senator BROWN—So we have the situation where the regulations say that the minister must have regard to the floristic composition of the forest and, as we have just heard, the general summing up of the Forest Practices Board advising the minister was that no floristic change could be observed. That, on the face of it, appears to be a strong injunction to the

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 346 SENATE—Legislation Wednesday, 11 June 1997 minister not to proceed with issuing a licence, but a licence was issued. Moreover, I note that, before the process of moving to issue the licence, the Minister for the Environment, Senator Hill, wrote to your minister, Mr Anderson, on 4 October last year. Senator Hill said that he was ‘aware of a view in the community that the board may be too closely associated with the industry’. Mr Thomas—Yes. Senator BROWN—Who in the community was expressing concern about that? Mr Thomas—You would need to ask Senator Hill that. I am not sure what it was that drove his particular response, but we agreed with Senator Hill’s portfolio at the end of the day that the Forest Practices Board was the most appropriate body to carry out the study. The Forest Practices Board operate as the forest police within Tasmania. They are responsible for ensuring the codes of practice and other controls on forest operations are adhered to. They have perhaps the best knowledge of any independent organisation of the state of the Surrey Hills forest. Senator BROWN—Thank you. But Minister Anderson wrote to Senator Hill on 24 September saying: During our discussions, you expressed concern when we proposed that the Forest Practices Board would be an appropriate independent assessor to examine our Surrey Hills Degraded Forest application. So Senator Hill expressed concern back in September. He has done it again in a letter. Surely the minister asked who was expressing the concern. Mr Thomas—I can take the matter on notice, but the matter must have been resolved. The Forest Practices Board was appointed as the body to do the report to the minister. Senator BROWN—I just want to clear this up, because we are also aware of a letter from the Hon. Chris Miles MHR, the member for Braddon, who wrote to Senator Hill. This was on 14 October, so it was at the same time. He said: I am writing to express my support for the suggestion that the Government engage the services of the Tasmanian Forest Practices Board for the purpose of assessing the accuracy of the classification of degraded forest for woodchip export licences. The Forest Practices Board is a responsive, balanced and competent body, and therefore one in which I would have complete confidence. We have the local member of the House of Representatives also writing to the minister to say that this is above board. Surely that did not come out of the blue. Mr Thomas—I cannot predict what generated the letter. Senator BROWN—Senator Hill is already expressing concern and his department is expressing concern that the forest practices board will not be seen as independent. Mr Thomas—What is your point? Senator Parer—You are making an assertion for whatever reason. It is the sort of question you should direct to Senator Hill. Senator BROWN—Senator Hill is making the assertion. Senator Parer—You should direct a question like that to Senator Hill. You asked the question as to who was responsible for getting Senator Hill the right letter. We have no idea. Senator BROWN—When Senator Hill gets a letter back from Mr Anderson—and you are representing him—saying that there is concern in the community about the independence of this board, do you not think it is reasonable that Senator Anderson knew what that concern was and where it was coming from?

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Senator Parer—Senator, you get lots of proposals made to you by a broad range of people, regardless of whether you are a senator or a member of the House of Representatives, from a ministerial point of view. If there are concerns being expressed that someone wants to express to a minister, people do it. I get them all the time. Senator Crane is a beauty. CHAIR—No, I do not do things like that. Senator BROWN—The point I am getting at is— Senator Parer—You are trying to run a line that says the Forest Practices Board is doubtful. I know it is doubtful because Senator Hill wrote to Minister Anderson and said, ‘I want to draw this to your attention.’ I know what you are doing. That is fine. Senator BROWN—The question I ask you is— Senator Parer—No, you were asking an officer for a view about who would have contacted Senator Hill that would have got him to write a letter to Mr Anderson. The answer is that we do not know. Senator BROWN—You do not know what the concern was in the community that the Forest Practices Board was not seen as independent? Senator Parer—If you want to put a bucket on the Forest Practices Board or try to raise doubts about their integrity, go right ahead. I presume Senator Hill had some reason for writing that letter. Senator BROWN—But you do not know what that reason is. Senator Parer—No, you should ask Senator Hill. Senator BROWN—I am asking you and I am not getting an answer. Senator Parer—No, you are not. You are not going to get one either. CHAIR—The officers have made it clear, as has the minister, that they do not know the answer to that question. Senator BROWN—Thank you, Chair. I am making the observation that it is most untoward that there are representations coming from the local minister in parliament to the minister for the environment. The minister for the environment is writing with concerns to the minister for forestry or resources. He is writing back to the minister. In all this correspondence there is concern being expressed about the perception that the Forest Practices Board is not independent, but nobody asked where this concern is coming from. I can tell you that the conservation movement was not aware of any of this correspondence. It is internal. I put it to you that that concern about the appearance of not being independent is coming from the industry itself. Senator Parer, you might answer this: are you aware that in 1994-95 the Forest Practices Board was given $61,000 by North Broken Hill, a woodchipping company applying for this licence? Senator Parer—No. Senator BOB COLLINS—For what, Senator Brown? Senator BROWN—That is a good question. For what? Senator BOB COLLINS—I do not know. Senator BROWN—I am not answering questions here, Senator Collins. Senator BOB COLLINS—With respect, there is no need to be aggressive about it. We are all involved in this process jointly. If we are all going to be intelligently involved in this

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 348 SENATE—Legislation Wednesday, 11 June 1997 discussion—and I have as much an interest in this as you have—it would be nice for all of us to know what the money was for. That is all. It is perfectly appropriate to ask that. Senator BROWN—Well, direct your questions to the panel we have here, Senator Collins. Senator BOB COLLINS—You are the one who has raised it. Senator BROWN—I will put Senator Collins’s question: why was $61,000 given by North Broken Hill in 1994-95 to the Forest Practices Board which, in turn, is being asked two years later to assess North Forest’s rainforests to see whether or not they should be allowed to be cut down and exported as woodchips? Mr Thomas—Senator Brown, you are asking an impossible question. You are asking me, as a Commonwealth official, about the performance of a state organisation many times removed from our knowledge or control. If you would like, I would be quite happy to write to the Forest Practices Board and ask them if they received such money and if they received it if they would be willing to tell us what it was for. That sort of question is not one that I would have a hope in hell of answering. Senator BROWN—Did Minister Anderson approve the Forest Practices Board to do this assessment? Mr Thomas—Yes, he did. Senator BROWN—Does clause 14 say that the minister may approve a person only if the person is, under section (b), independent of the applicant for the relevant licence? Mr Thomas—It does say that, but you are drawing a linkage between an alleged payment of money to the Forest Practices Board and their independence. It is possible they may have— as would any organisation—accepted that funding for some form of consultancy. Perhaps it was a fine for some breach of the forest practices code. Senator BROWN—I can tell you, because in the annual report of the Forest Practices Board 1994-95—and this came out in 1996—it stipulates that the source of funds was Common- wealth, state or North Forests and that, of the $560,000, $61,000—that is more than 10 per cent—came from this single woodchip company, which we are now finding is getting the services of this same board as an assessor of whether or not its forests should be logged. I put it to you, Senator Parer, is that not unsound? Has that not got the open possibility of corruption? Senator Parer—No, people make contributions for specific projects on a range of things. You are talking about an amount of money that relates to 1994-95. You are trying to hook that back in with a report done on Surrey Hills. One of the things I will bet—I do not know the answer, but I will bet if you are a betting man and want to put odds on it—is that it had nothing to do with the Surrey Hills forest. I will bet you. I do not know, but I will take that bet. It is not unusual for people with particular expertise to get certain amounts of funding for a specific job. The officer has said, ‘We’ll ask them where it came from and what it was for.’ They are happy to get a response. Senator BROWN—I submit that the department had that annual report at the time this decision was made. Certainly Senator Hill had it. I again take you to the regulations which say that Minister Anderson may only approve a person—that is, the Forest Practices Board—if the person is taken to be independent of an applicant for the licence or if the person is not in any way dependent upon or associated with the applicant. But here we have the applicant paying $61,000 to the Forest Practices Board and, in the consequent year— Senator BOB COLLINS—But for what?

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Senator BROWN—the various logging companies paying $200,000. We do not know how much of that came from— Senator Parer—Let me say to you that there is a range of organisations throughout this country that get funding from outside sources. This is not even a federal government authority; it is a state government authority. Would you say, for instance, that if a particular job were done by someone like AIMS, which is a well respected group, and they got outside funding to do a baseline study in a place like, for example, the Macarthur River they are no longer independent and we should not use them—or the Great Barrier Reef Marine Park Authority, for instance? CHAIR—Before we go any further, Senator Brown, I just make the observation that Mr Thomas has said that he will get in touch with them and that he will get the information. It could be an industry levy or something which we do not know about. Senator BOB COLLINS—It probably is. CHAIR—As Senator Bob Collins says, it probably is. You have made your point in terms of that. I do not think we can really progress this matter any further until Mr Thomas gets that reply from them and finds out precisely what the detail of that particular funding is. Senator BROWN—I put this question: you have now said, after the licence has been issued, that you are going to investigate. How come North Broken Hill gave $61,000 to the independent assessor which was involved in giving the minister the information upon which he gave this licence? Why did the minister not investigate that $61,000 donation to the Forest Practices Board, which quite clearly, on the face of it, compromises its independence as an assessor? CHAIR—We do not know that it was a donation. Senator Parer—You make an assertion about compromising. You cannot make that assertion. Senator BROWN—I am making it because the— Senator Parer—I know you are. Senator BROWN—report of the Forest Practices Board says explicitly that $61,0000 of its funding came from North. Senator Parer—It did not hide it, did it? Senator BROWN—No, it did not. Senator Parer—There is nothing awfully suspicious about this. Senator BOB COLLINS—Are you suggesting it was an improper payment? Senator BROWN—I am suggesting, without any cogent argument coming from Senator Parer, that it is improper that a Forest Practices Board which was substantially funded by North Broken Hill was used as the so-called independent assessor in giving North Broken Hill the breakthrough it wanted, that is, advice to the minister that these rainforests might be logged and exported as woodchips. But let me get back to that. When the Forest Practices Board did make the assessment, is it a fact that the assessment itself was done by the chief forest practices officer of that board, Mr Graeme Wilkinson? Mr Thomas—I believe that is the case. I have got a copy of the report here. The report was prepared by Graeme Wilkinson, Dennis Chester and Phil Barker. The minister, in fact, had approved—

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Senator BROWN—Graeme Wilkinson is the chief forest practices officer— Mr Thomas—I believe he is. Senator BROWN—of the board which is getting the funding from North Broken Hill? Mr Thomas—Yes, so I believe. Senator BROWN—The minister was concerned about the viability of the Forest Practices Board’s advice and he received advice that it might not stand alone. He sought further advice, didn’t he? Mr Thomas—That is not correct. When the minister received the advice from the Forest Practices Board he realised that this was a matter of considerable community concern and he then sent the report to a number of other bodies for comment. The Forest Practices Board report and the comments coming in from those other bodies formed part of his decision. The purpose was certainly not because he doubted the report of the Forest Practices Board; rather that, when he made his decision on this matter, he wished to be fully informed. Senator BROWN—Okay. Before we move off the Forest Practices Board, is it a fact that the three officers, including the chief forest practices officer, received $5,500 for that consultancy plus $1,000 as expenses from your department? Mr Thomas—It was paid for as a consultancy. I would have to check the exact sums. Whether the money went to the forest practices officer personally or whether it was paid into the Forest Practices Board I do not know. That would be a matter for the internal organisation of the Forest Practices Board itself. Senator MARGETTS—What process did the Commonwealth take to make sure that there was no real or perceived conflict of interest in relation to the bodies that were used for these purposes? Mr Thomas—In this case it was a matter of looking to find people who had the knowledge of the forest area and who could complete the report in a relatively short period of time. We were satisfied with the credentials of the Forest Practices Board and the people within the board— Senator MARGETTS—So you asked someone, ‘Can you do this report in this amount of time?’ and the people who could do it in that amount of time got the job? Mr Thomas—The nature of this exercise was that that was the way that we approached it. There are standard rules for these sorts of consultancy arrangements— Senator MARGETTS—Sorry, standard rules? Mr Thomas—Standard Audit Act, Public Service, Finance procedures. Senator BROWN—Was that money paid to the consultants, the Forest Practices Board, the only money the consultants got, and why is it that the government, not the company, is paying for this consultant. Mr Thomas—Well, I was tempted to— Senator Parer—If the company paid for it, Senator, you would have been complaining like hell. Senator MARGETTS—Oh, there would be perceived conflict of interest. Mr Thomas—I was inclined to mention that in the earlier discussion. The company is in fact paying for the report. They are paying us for the report and we are paying the Forest Practices Board. But the concern that we had was that if there was a direct payment from the

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 351 company to the Forest Practices Board, some sort of a relationship there, then it would be an apparent conflict of interest— Senator MARGETTS—So the government is acting as a broker, in fact? Senator BROWN—You see the payment to these officers of the board as an apparent conflict of interest; therefore it would be fair enough for me to say that— Mr Thomas—I did not say that, Senator. Senator BROWN—Well, you did. Mr Thomas—I think any payment from the company to the officers of the board for this consultancy may be perceived as a conflict of interest—for this particular consultancy. Senator BROWN—But therefore you would agree that the payment of $61,000 from the company to the board itself can be seen as a conflict in just the same terms? Mr Thomas—No. Mr Barratt—No. The way I would characterise this payment, Senator, is that we have said that we will ask the Forest Practices Board for their view, that that is for the purpose of our minister making a decision but that we will do it at their cost—the cost of the company. Senator MARGETTS—How much time was allowed for that consultancy? Mr Thomas—I would have to go back in time. I am not sure. It was a matter of months. It was a fairly short period of time. One of the reasons for selecting— Senator MARGETTS—Sorry, if you did take it on notice, could you also let me know how much time was allocated for the consultancy and at what time of the year, because it may affect whether or not people are willing to do a consultancy. Some people with ethics might say that, if you do not give enough time, ethically they cannot sign up to a consultancy. It is not a matter of their saying they won’t do it; it is a matter of their not being able to ethically sign off to a consultancy which actually does not provide them enough time to give accurate information. So at what time of the year was it, and how much time was allocated for a consultancy to assess the values of this piece of forest? Mr Thomas—Senator, we will do that but I can say at this stage that one of the main reasons that the Forest Practices Board was the preferred consultant in this study was the extent of experience that they had already had with the Surrey Hills property and the forests of the area in general. So we were really buying their past knowledge rather than looking to buy any large quantity of new fieldwork. Senator BROWN—That experience that they had had with this property of course involved North Broken Hill? Mr Thomas—As the owner, yes. Senator BROWN—In what capacity was that experience gained with the commitment of the owner? Mr Thomas—Again, as I said before, the Forest Practices Board can best be characterised as Tasmania’s forest police. Their knowledge and understanding of the forests throughout Tasmania are quite extensive. Senator BROWN—So you describe the Forest Practices Board as the forest police. The forest police are getting $61,000 from North Forests— Senator BOB COLLINS—But was the company compelled to make the payment? Senator BROWN—Then they are the advising the minister in a way which he takes—

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Senator BOB COLLINS—I will bet they were. Senator BROWN—to give him the go-ahead to give a licence for export woodchip of those very same rainforests. Can you tell me that that is not untoward? Can you tell me that this not unsound? Can you tell me that that has not got the potential for corruption? Mr Thomas—Senator, when we can establish the facts I think we can make an assessment. Senator BOB COLLINS—We make a charge for the assessment of the RFAs. And so we bloody should! Senator MARGETTS—On a point of order, I am just wondering who the chair is here? We are getting— CHAIR—I am the chair— Senator MARGETTS—Oh, good. CHAIR—And I ruled on this some time ago. I said that you cannot progress this matter any further until such time as we get the facts. It could well be an industry levy; it could well be— Senator MARGETTS—I am just wondering why Senator Collins— CHAIR—You have been interrupting as well. Senator BOB COLLINS—You are a latecomer to this committee. I have sat through it for many hours now, with respect, Senator Margetts. I make the same point I made before. I would like to assert my right to take an intelligent interest in the proceedings of this committee no matter who is asking questions. I know this fencing exercise. I have waited 30 minutes and it gets a bit hard trying to work around in the dark, Senator Margetts. If the payment was improperly made, and made as—as I suspect was not the case—to quote Senator Brown ‘a donation’ from the company to the forest board, then Senator Brown has a case, I think. If the payment was compelled to be made as part of some industry payment to the board to assist in the cost of policing the industry, it is a totally proper payment—which I suspect it is—and there is no case. Senator MARGETTS—My point of order is— Senator BOB COLLINS—That is my interest in the issue, Senator Margetts. Senator MARGETTS—My point of order is: where does it say in the standing orders that a member of the committee can continue to attack another member— Senator BOB COLLINS—I am not attacking him. Senator MARGETTS—I am sorry, but you are trying to undermine his line of questioning. Senator BOB COLLINS—Oh, bullshit! Senator MARGETTS—Excuse me! Mr Chair— CHAIR—No, I won’t excuse you. Senator BOB COLLINS—With respect, Senator Margetts, how about— Senator MARGETTS—With no respect at all. There is no respect in what you are saying. CHAIR—Order, please. Senator BOB COLLINS—I am sick of this. This has been going on for an hour now, as it always does. CHAIR—I made a ruling on this and I am going to enforce it now—that until such time as these officers at this table get the information required to establish what it is—

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Senator BOB COLLINS—That is right. It has been said four times by you. CHAIR—I will acknowledge that there have been interruptions. You have interrupted. Senator Collins has interrupted and others— Senator BOB COLLINS—Yes, how about you acknowledging the chair? CHAIR—Others have interrupted in these particular proceedings. We cannot pursue this matter any further until such time as we get the details which Mr Thomas said he would get— Senator BOB COLLINS—Or we qualify for our old age pension. Senator MARGETTS—I would actually like to state my point of order, Mr Chair. I have not had the chance to even— CHAIR—Please, please. Senator MARGETTS—No, I have a right as a committee member to state my point of order and you have not given me that chance. Senator BOB COLLINS—I did not know you raised a point of order. Senator MARGETTS—I did raise a point of order and I have not been given a chance to even state it. CHAIR—You will get your right, but I am not going to put up with stunts— Senator BOB COLLINS—Don’t have hysterics. CHAIR—in front of this committee. Senator MARGETTS—It is not a stunt. I am asking for my rights to state a point of order. CHAIR—You will get your right. I am asserting my authority here. I will finish my statement; then I will allow you to make your point of order. I have made my point. I have been over-lenient in allowing this to continue. Senator Margetts, what is your point of order? Senator MARGETTS—My point of order is: where in the standing orders is it that a member of the committee can continue to attack the line of questioning of another member? They can ask questions of the minister, but is undermining the questioning of another member allowable under the standing orders? That is my question under the point of order. Senator BOB COLLINS—Just very briefly, my frustration is because of respect for the chair’s rulings. With respect to this point of order that has been moved by Senator Margetts— and I support the ruling you made, Mr Chairman—perhaps Senator Margetts missed the fact that, to my certain knowledge, the chairman has now ruled four times that the officers and the minister have given the only answer that is possible at this stage, and we should move on. I would suggest that you respect the chair’s ruling, Senator Margetts. Senator BROWN—On the point of order, we can have a request from the chair but the chair cannot truncate debate and questioning on any matter that is important to members of this committee. We are here to be able to ask questions on relevant matters and to ask those questions to the satisfaction of the committee and the person asking them. There cannot be a guillotine from the chair—that is not available under standing orders. CHAIR—I will make some comments now on the point of order. In my view, under the standing orders, there is no procedure that allows people to interfere and interrupt, but a process that occurs in this place by most, if not all, is that from time to time they do interrupt. In saying that, I am not saying in any way that I believe Senator Collins has been unreasonable in terms of the propositions that he has put. But I am going to stick now to my previous ruling

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 354 SENATE—Legislation Wednesday, 11 June 1997 that, until such time as the officer at the table gets the points that he made clarified, it is pointless for us to continue this particular exercise. If necessary, the minister can rule that particular way until that particular information is there. He is at the table. That is part of the orders. Senator Brown, I would say in terms of this particular aspect of it—and I think I have been pretty lenient in allowing this to continue with the same question over and over again—that you have made your point in terms of that. Until it is established whether or not, in your assertion, there is a donation or whether it is a levy, a fee for service, or whatever it is, we as a committee or you cannot pursue this matter any further. Senator BROWN—I can help the committee there. I have got two further questions that will end that line for the moment. CHAIR—Please proceed with those questions. Thank you. Senator BROWN—I refer again to the report, Senator Parer, for the Forest Practices Board of 1994-95 which specifies a donation of $61,000 to the Forest Practices Board—the ‘forest police’ as Mr Thomas calls them—by North Forest Products. The footnote to that specific matter notes that this is a North Forest Products grant and it is a grant for research by officers of the board, which, I presume, includes Mr Wilkinson and the other people who were then engaged in the assessment of the rainforests given to the minister. So we have got here a very worrying set of circumstances where, whatever else can be said about it, the independence which the regulations demand—the minister must be satisfied—is under question. I would go further than that to say the independence was not established. The question that you ought to be able to answer here is why, given that this information was available to you and Mr Anderson, did you not pursue the nature of that donation to the Forest Practices Board, and how much of that was translating into the upkeep of officers on the board who were later specifically given the task of doing the assessment of this tract of rainforest for Mr Anderson? It is fine to go ahead and do it now. Why did you not do it at the time when you knew, and Mr Anderson knew and must have known, that the independence was under question—and, in fact, given that he said in a letter to Senator Hill that you raised the matter of public disquiet about it? Why was not an investigation undertaken then about this circle of money changing hands between the woodchip company, the assessor and the minister? Senator BOB COLLINS—And the minister? Senator Parer—This is an agent of the Tasmanian government. You have already said it is a research program. There is question that has been put on notice that the departmental officers said they would respond to. There is nothing unusual in research grants being made to any of these organisations, and I did quote AIMS before. I believe we have covered, and that covers, the chairman’s point of view. Senator BROWN—That is a totally unsatisfactory situation, but I will move next to the disquiet that the minister had about this situation which led departmental officers—I presume those sitting at the table now—to write to the minister in November last year saying that, in addition, ‘we propose that the Division of Wildlife and Ecology CSIRO provide an evaluation of the Forest Practices Board report for your consideration. Such an arrangement would ensure the scientific integrity of the report is not open to challenge.’ Senator PARER—Correct, and the report was provided to the CSIRO for comment. Senator BROWN—What was the comment from the CSIRO?

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Mr Thomas—The main comment that came back from the CSIRO that I presume is of relevance and of concern to you is that they did not believe that there was scientific evidence contained within the Forest Practices Board report that was sufficient to justify their conclusions. Senator BROWN—Yes. Mr Thomas—As for our response to that, we spoke to the Forest Practices Board, and it really comes back to comments that I have made to Senator Margetts earlier on. The Forest Practices Board is an organisation that has existed for quite some time. The nature of the consultancy we put to the Forest Practices Board was in essence to buy that experience, to buy that expertise, in producing this report. The comment coming back from CSIRO was not a surprise to us. The conclusions were supported not just by the information in the report, but by the expertise of the consultants who were appointed to make the report. Senator MARGETTS—To buy an opinion that was already had? Mr Thomas—No, not at all. Senator BROWN—This report from the CSIRO on this questionably independent Forest Practices Board assessment to the minister is nothing short of a damning indictment of that report. As you have said just now, the CSIRO said that the report was not justified in making the conclusion that these were— Mr Thomas—No, I did not say that. Senator BROWN—Let us hear again what you exactly said. Mr Thomas—That the CSIRO did not conclude that the conclusions in the Forest Practices Board report were not justified or were not correct. What they said was that there was not data within the report that supported the conclusions. I think that there is a very significant difference there. Senator MARGETTS—Of course there is a difference. CHAIR—Please let him finish his answer. Mr Thomas—The data and the information is contained within the Forest Practices Board report, within the knowledge of the experts that were appointed to write the report, and within the board itself. It was not contained within the pages of the report that was submitted to the minister. CHAIR—It is now one o’clock. We will break for lunch for one hour. Sitting suspended from 1.00 p.m. to 2.02 p.m. [2.02 p.m.] CHAIR—The committee is resumed. Senator Parer—The officer involved has had discussions with the Forest Practices Board in Tasmania in regard to that $61,000 and I think it is worthwhile him recounting the thrust of those discussions. Mr Thomas—The Tasmanian Forest Practices Board is first and foremost an authority of the Tasmanian government so our first presumption is that corruption or any such problem is unlikely within the organisation. The structure of the organisation is such that it provides two broad areas of service. It is engaged in a role that I characterised before as the forest police where it is policing, enforcing and reporting on any breaches of the Tasmanian forest practices code. Its second role is one of helping industry improve its self-regulation and its

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 356 SENATE—Legislation Wednesday, 11 June 1997 own forest practices, training people within companies, and offering advice to companies as to how they can better manage the forest with forest regeneration—the general forest practice issue. The first of the two functions, the policing role, is wholly funded by the Tasmanian government. That is money that comes to the board out of consolidated revenue. The Tasmanian government has determined that the second of the two functions should be fully cost recovered. The device that the Tasmanians chose was to apply a voluntary levy to industry to fund that activity. In part because it was voluntary it appears that many of the forest companies in Tasmania in the year we are referring to chose not to pay the levy. North Forest Products, it would appear, was the only good corporate citizen for that year and in line with the levy arrangements made a contribution of $61,000. By way of a footnote, the Tasmanian government has altered the arrangements for the collection of that levy and is now looking to the Forest Industries Association of Tasmania, the forest industry body, to collect the levy from the companies and to channel it through to the Forest Practices Board. I understand that the payment in 1995-96 from all companies through the Forest Industries Association of Tasmania was $229,000, an improvement on the $61,000 paid in the previous year. Senator BROWN—Can you say how much of that $229,000 came from North Forest Products? Mr Thomas—I cannot. I asked the Forest Practices Board that question and they said that the only information they had was that it was a payment from the Forest Industries Association of Tasmania. I am happy to press the question and come back to you if I can get an answer. Senator BROWN—What is the purpose of that money? Mr Thomas—It is to enable the Forest Practices Board to assist the companies in training, improved forest practices and self-regulation. In short, it is to keep the companies out of court. If the companies do not have good forest practices that are in accordance with the Tasmanian forest practices code then they are liable to find themselves in court. Senator BROWN—So it is essentially to set up a policing mechanism over the private activities of the companies? Mr Thomas—No, it is for coaching and assistance. The Forest Practices Board has two roles, like a parent. It punishes you if you misbehave but it is also there to coach. CHAIR—It is for training and education. Is that right? Mr Thomas—Yes. Senator BROWN—It may be for training and education but the report says it is for research. These things seem at odds to me. I think that the board, at least, should be much more explicit about where that money is going. What we have here is North paying substantial funds to the Forest Practices Board, who you describe as the forest police, who in turn have been engaged to advise the minister, who is arbiter, about whether that forest should be logged or not. You have a situation where the police who are advising the judge are getting funding from the executioner. That is an unsatisfactory situation. It must be seen as such. Mr Barratt—Senator, I think what the officer said was that the $61,000 was paid by North pursuant to an arrangement with the Tasmanian government for cost recovery of a service

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 357 provided by the Forest Practices Board to the industry and that North complied with that arrangement. It paid money that it was expected to pay. That is the basis of that payment. Senator BROWN—Yes. The point I am making is that Mr Thomas is saying that the money was for coaching of officers. The board’s report says it is for research. The fact is that this committee is left with no satisfactory explanation as to where that substantial money is going to. There is a contradiction in the evidence of Mr Thomas—which, I take in good faith, he got from the Forest Practices Board today and from what their own report says. Isn’t that the case? Senator Parer—Senator, I would have thought that you would have applauded a training and education program by the people who are responsible for policing forests so that those people working in the industry did not do things which were against the Forest Practices Board’s requirements. Mr Thomas pointed out very clearly that there were two roles. One was the first one; and the second one, which the Tasmanian government had decided, was going to be fully cost recovered by industry. That is exactly what is the case. I would have thought it is in the interests of not only people involved in forestry but also people such as yourself that those people were properly trained and educated in the proper management of forests. Senator BROWN—Through you, Chair, with best graces, what you think in this does not matter. It is what the facts are. The facts are that— Senator Parer—No. You are making assertions, Senator Brown. Senator BROWN—Please do not interrupt, Senator. I am putting to you some questions. I will carry the question through and then you can answer. The position is that, on the one hand, the report says that the $60,000 coming from North is for research purposes, but today North tells one of your officers that— Senator Parer—North did not tell one of the officers. Senator BROWN—Today North tells one of your officers that in fact it is for a coaching program. This has to be settled further down the line. The Forest Practices Board has got a case to answer there. The problem here is that the policing of North, who have asked the judge, Minister Anderson, for a licence to flatten extensive areas of pure rainforest, is being funded in part by the executioner of those forests, North Broken Hill. I put it to you, Minister, that that is untoward. It is not sound practice and it raises the spectre of potential corruption. Senator Parer—Senator, I say it is sound practice. I think we have answered your questions. Mr Thomas—I simply wanted to go on to draw an analogy that is not tight but can be made with how we manage our own woodchip export monitoring unit. The monitoring unit of the Commonwealth is in fact funded by an industry levy. The funding is collected by the Commonwealth and paid back to the unit. We certainly look to the industry to fund its own policing, if you like. I do not see any problem in principle with doing that. What you need to do is to make sure that you put in place systems that ensure that there is no room for corruption. I would be confident that that is the case here. It certainly is the case in the case of our own woodchip export monitoring unit where in fact industry funds its own policing. CHAIR—I would make the observation that almost every sector of primary industry, certainly the sectors that I am involved in, levy themselves to carry out certain functions where, if you want to draw lines in the sand, if you like, you could accuse or allege that there were conflicts of interest. One that immediately comes to mind is meat inspection, for example. But that is managed in a way to the benefit of the industry. If it was not funded by the industry, you would find you would have a substandard service.

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I think the officer has given us an explanation from the phone. He has undertaken to pursue the matter further in terms of getting the details of the breakdown. In terms of the annual report, which I am sure Senator Brown will give you a copy of, I would ask them, in relation to the footnote, what research is. Could that be done without any problem by the officer? Mr Thomas—Yes. CHAIR—It is also getting at a fairly arm’s length from the operations of this department. Nonetheless, we have gone down these routes before. No doubt we will go down them again. Senator Brown, have you got any further questions? Senator BROWN—Yes, I have. Mr Barratt—If I could just interrupt you there, Senator, in one of his comments, Senator Brown suggested that that information had come from North. The information came from the Forest Practices Board. I just wanted to make sure there was no misunderstanding. Senator BROWN—Which is funded by North. Mr Barratt—It is also funded by the Tasmanian government. CHAIR—I am sorry, Senator Brown. I must interject there. They gave $61,000 out of a significant budget in terms of the service that they provided. You cannot draw the conclusion then that— Mr Barratt—They simply provided what the Tasmanian government expected them to do. Senator BROWN—I would take the point that neither am I here to have a debate on opinion with you. I am really asking these gentlemen questions about the woodchipping of rainforests in northern Tasmania. The point that apparently escapes the chair as well as the minister is that this situation is different in that the minister was required to get an independent assessor, and to make his decision on that report coming from an independent assessor. We find in this situation that that assessor was being funded by the company that wanted to get the licence off the minister. What I would ask of the minister now is: who else was considered in this search for an independent assessor to advise the minister and give him the report on which he had to base his decision? Senator Parer—That question was answered before lunch. Senator BROWN—Could I have it again, please? Senator Parer—No. Senator BROWN—I ask you, Chair, for the officer to give that information again, because I do not accept it and it is not up to the minister to arbitrate on whether he has answered the question or not. I do not accept that it has been answered. I simply want an answer to the new question I put: who else was considered by the minister to draw up this independent report, besides the appointee, the Forest Practices Board of Tasmania? CHAIR—I would just make a comment or ruling on that. The minister has the power to say no in terms of this estimates process, and he has said no. Senator BROWN—Was anybody else considered? Senator Parer—Before lunchtime, the officers gave you a full background as to the choice of the Forest Practices Board in making this assessment and, as far as I am concerned, they have answered your questions.

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Senator BROWN—So the minister refuses to answer that question; fine. I will make the assumption from that that nobody else was considered, and that we move further into the position of saying that the minister selectively took on the Forest Practices Board, which, in turn, was being, in part, funded by North Broken Hill. We have got to the position where North Forest Products— Senator Parer—Mr Chairman, can I just— Senator BROWN—Please do not interrupt me, Minister. You can speak after I have finished. Senator Parer—No. Mr Chairman, let me say that I have no problems with Senator Brown— Senator BROWN—We got to the position where we were then finding that— CHAIR—Senator Brown, please, just for a moment. Senator BROWN—Chair, hang on, I can finish my position; then the minister— Senator Parer—No, you will finish in five minutes. Senator BROWN—Chair, I am not going to be interrupted serially by this minister. I expect you to protect me from that. CHAIR—I will, but— Senator BOB COLLINS—You are a serial interrupter. Senator Parer—Mr Chairman, I would like to make this comment— CHAIR—Can we let the minister make his comment and then we will come back to you? Senator BROWN—No. Point of order, Chair: am I going to be interrupted by this minister— Senator BOB COLLINS—I do not know. Senator BROWN—or am I going to be able to put my point, ask the question and then have him answer? What is the situation? CHAIR—You have been making statement after statement. The minister wanted to make some contribution, which, in my view, may have been able to help you in that. Consistent with my past practices, I was going to allow him to make that, and then you could continue. Senator BROWN—But you are going to allow interruptions? CHAIR—No. Senator BROWN—Then let me continue, and he can finish afterwards. CHAIR—No. I will allow the minister in this case to say what he wants to say, and then I will come back to you. Senator BROWN—I will come back to the President afterwards about that ruling you have made. CHAIR—Fine. Senator Parer—Mr Chairman, I would just like to make this comment: we have no problems with anyone asking questions of officers of the department in this committee. What Senator Brown is doing is making assertions in long statements. I do not think it is the role of the committee to make those assertions. He knows that it will go on and on to the extent that we will not respond to them. Then he makes a further assertion. The role of those on this

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 360 SENATE—Legislation Wednesday, 11 June 1997 committee is to question me and officers of the department in regard to the estimates, not to make statements which may or may not be correct. CHAIR—Senator Brown. Senator BROWN—Thank you. I will determine my own role in this, Minister. My next question to you is: is it a fact that CSIRO was brought in to comment on the Forest Practices Board’s report for a number of reasons, including the fact that nowhere in that report could the minister find the necessary determination that these forests were degraded—and simply because they are not? Senator Parer—That is a statement, isn’t it. Senator BROWN—That being the case, is it not a fact that the CSIRO report is damning of the Forest Practices Board’s report, and that it is peppered with criticisms of that report to the minister? Senator Parer—Those questions were answered before lunchtime. Senator BROWN—Then I will ask you specifically: are you aware that the CSIRO report said, for example, in commenting on the Forest Practices Board’s report to the minister: No estimates of these sources are given. It is, in our view, reasonable to expect that at least some such estimates would be made as part of an application for degraded forest status, and that a detailed discussion be presented on how these conclusions are reached and showing calculations to illustrate how much of a fall in commercial value is likely. The CSIRO further goes on: It is surprising that the consultants— the Forest Practices Board— chose not to collect any data or do any analyses to this area, that its assumption— on another matter— is not necessarily valid, and that it is not made clear what ‘agreed forest types’ mean. It is surprising that the consultants did not consider at least some additional stratified sampling, and that there is no indication given of how much data— another part of the report— represented . . . A much more detailed discussion of the adequacy of the data should be undertaken . . . no details are given of who the experts were and what process was used to obtain these opinions... It goes on to say in section 622 of the Forest Practices Board report—this is the CSIRO: It is argued that the Surrey Hills Estate is highly fragmented and that the smaller fragments of forests may not be viable as stable units in the long term. These are very broad conclusions and should be backed up with the analysis of the degree of fragmentation and the size of distribution of remaining forest patches. If this is to be considered as an argument for the forest being degraded, then fragment sizes and arrangements need to be discussed in relation to ecological theory relating to the stability of plant communities. It goes on to say basically at the end: Given these considerations, we conclude that it would not be possible to have confidence in either a conclusion of altered or unaltered floristics from the data set as currently presented and analysed. In other words, the CSIRO is saying to the minister that it is not possible to have confidence in this report. The report itself did not say that the forests were degraded. But the CSIRO has said, ‘This is an inadequate report; it is not possible to have confidence in the outcome.’ Yet the minister went ahead and gave a licence. I ask you to explain that, Senator Parer.

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Senator Parer—That very matter was answered by officers before lunchtime. Mr Thomas—There are some points I can add. Many of the comments made by Senator Brown, I think, explain the reason why we selected the Forest Practices Board to do the report. The Forest Practices Board in fact had knowledge of the forests. Their work throughout the forests of Tasmania had given them a very solid background of information on which they could draw in writing the report. Had we employed CSIRO then I am quite sure CSIRO would have needed to have undertaken all of the research and all of the work that was referred to in the CSIRO analysis. The comments coming back to us from CSIRO as a scientific assessment of the Forest Practices Board report were anything but surprising. The other very important point that I am not sure Senator Brown mentioned in his comment was that my recollection of those statements is that they were made by CSIRO only in relation to the floristic composition of the forest. The Forest Practices Board were not asked to report on whether the forest was degraded or not. That was clearly not part of the terms of reference. That under the regulations is a judgment and a decision the minister must make. The Forest Practices Board was asked to report on the state of the forests, and that they did. I perhaps should add a quote of my own from the Forest Practices Board report. The report concluded that at least 90 per cent of the area proposed for future logging by North or for conversion has been subjected to some form of disturbance, with varying effects on the structural and floristic composition of the forest. I accept all of the comments that have been made by Senator Brown, but I am not at all moved to say that they are relevant to the minister’s decision. The comments made by the CSIRO relate to the floristic composition of the forest. The minister is required to look at the forest overall. The floristic composition is one aspect of the nature of the forest. Senator BROWN—Exactly. I am glad you accept my comments, but we get back to the regulations. We are dealing with the law. The minister under the regulations must consider whether the floristic composition of the forest has been altered. That is the only thing he must consider. Mr Thomas—That is not correct. Senator BROWN—It is the only specific in the regulations. If you can point to another one I would be happy to hear it. But it is correct, I tell you, Mr Thomas. What you are saying is that the Forest Practices Board was found out by CSIRO in that it did not conclude, and it could not conclude, that there had been an alteration to the floristic composition of the forest. In fact, it reported quite the reverse, that the floristic composition of these forests—their integrity as natural ecosystems in the spread of variety of plants—is intact. The one thing that the minister is specifically under these regulations obliged to ascertain before giving a licence for the destruction of the forests is the floristic integrity, and that has been found by the Forest Practices Board to be intact, even though it comes under criticism from the CSIRO which says that its evidence, in which it waffles on about other things, is not strong. The report did not have sufficient information to be a valid report. Then we read a summary from DEST in a submission to the minister. This is a government department summary of these two reports to Minister Anderson. It says: In particular, it is not possible to give an informed opinion as to whether the remaining native forest on the estate is degraded, to what extent it might be degraded or over what area it might be degraded. Senator Parer, did you know about that conclusion? Senator Parer—No, I did not. Of course I did not.

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Senator BROWN—Did Minister Anderson know about that conclusion? Senator Parer—I am sure he got the letter from Senator Hill. Senator BROWN—You are sure that he did know about it. I put it to you, Senator Parer, that the minister gave then a licence to log these cathedral like rainforests in the face of direct evidence that he had not got an opinion which showed they were degraded. In fact he did not have an informed opinion and he had fallen way short of the requirements under the law, under these regulations, in regard to this matter. What do you have to say to that? Senator Parer—I am glad you asked a question instead of making a bland assertion, Senator, which you are famous for—and in most cases you are wrong. Minister Anderson, in accordance with the requirements of the legislation, was satisfied from the evidence and advice provided to him that the forest was not likely to be required as a necessary component in the CAR national forest reserves. The forest to be harvested to produce woodchips to be exported under the degraded forest licence will be succeeded by the establishment of an equal area of plantation of Australian native hardwood species. Based on the evidence the minister had he made his decision. You have been through this over and over again with the officers. If you have any other questions to ask the officers which are sensible, ask them. Mr Thomas—If I may— Senator BROWN—On a point of order— CHAIR—Mr Thomas gave me a notion that he wanted to say something. Let him make a comment on your previous question and then you can ask your next question. Senator BROWN—On a point of order: I am not passing up the fact that the minister is selective as to what is a sensible question for me to ask. I will ask what questions I like and he will answer them the way he wants to. Now I will listen to Mr Thomas. CHAIR—I draw your attention to standing order 26, which says quite clearly: (4) When a committee hears evidence on the estimates, the chair shall, without motion, call on items of expenditure in the order decided upon and declare the proposed expenditure open for examination. (5) The committees may ask for explanations from ministers in the Senate, or officers, relating to the items of proposed expenditure. That is what we are allowed to do before this committee and any other committee. We have given a lot of latitude in allowing people to make statements with a very small question hooked on the tail of them. I think it is time we got to a little more of the question side of it and a little less of the statement side of it. Mr Thomas—I feel I am departing from your ruling, but I think that this is an important point. Embedded in the statement made by Senator Brown was a very strong implication that the one thing that the minister had to have regard to in making his decision on a degraded forest licence was the floristic composition of the forest. At the risk of being tedious I think I should repeat what the regulations state. They state: . . . before deciding whether to grant a degraded forest licence, the Minister should consider: (a) the general state of the forest and, in particular, whether the floristic composition of the forest has been altered significantly by reason of disease, weed infestation, harvesting and other human activities or other causes; and (b) any other relevant matter. The report from the Forest Practices Board stated that the floristic composition of the forest had not altered and the minister concluded that the floristic composition of the Surrey Hills property had not altered. The report from the Forest Practices Board concluded that the general

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 363 structure of the forest, the age structure, had altered quite significantly by successive periods of harvesting. In his overall judgment the minister then concluded that the forest was degraded. The implication behind the statement made by Senator Brown is that there really was just the one issue to consider. The minister did consider the issue of floristic composition and my recollection is that he concluded that it had not altered. But that is not the test. The test is the overall state of the forest—the general state of the forest—and any other relevant matter. Senator BROWN—I put it to the minister that he brought in CSIRO because, in his own words, there could be some question about the Forest Practices Board. CSIRO stated: We also note that the consultants were not asked explicitly to provide commentary on what degree of alteration to forest structure or floristics would continue degradation of these forests, although such advice would seem important for guiding a decision to grant a degraded forest licence. CSIRO is saying that the minister did need that information and that it was important. In summing up on CSIRO and the Forest Practices Board, the government’s own officer stated, ‘In particular, it is not possible to give an informed opinion as to whether the remaining native forest in the estate is degraded.’ In other words, they are saying that if the minister makes a decision here it is not going to be informed. I submit, as you have clearly made it out, that the minister was required to make an informed decision. Senator Parer, what can be done to get a reassessment of this forest in light of the CSIRO report and the government’s own officer’s contention that an informed decision has not been made here? Senator Parer—The officer has pointed out quite clearly that the minister made an informed decision and that decision is made. Senator BROWN—For the committee’s sake, I reiterate that you are flying in the face of what you said a little earlier, which was that the minister was aware of the advice in which he had been told that it is not possible to make an informed opinion in this situation. Senator Collins is a bit worried about my evidence here, so I will just ask a few more questions and we will conclude this section because it is not possible to get any further with it. CHAIR—How many questions do you have and how long are you going to be? You have been going for over an hour and I usually let things flow around. Senator BOB COLLINS—I just explain to Senator Brown that I am not in any way antagonistic to him, but I want to point out that I have a huge volume of questions on drought, the Murray-Darling Basin Commission and hours of questions on AQIS. I have not asked a question for close on two hours. I have been extraordinarily patient. I want to indicate that there are heaps more parts of this portfolio that have not yet been examined and I would like some indication as to when we are going to move on. Senator BROWN—I will not interrupt your questioning at all. Senator BOB COLLINS—I just want to know when I can start it, Senator Brown—be reasonable. Senator BROWN—I am saying to you that, unlike you, I am not going to interrupt you when you get to your questioning phase. You will be allowed, as far as I am concerned, full latitude. Senator BOB COLLINS—I give up. It is a waste of time trying to be reasonable with you, Senator Brown. CHAIR—Senator Brown, I asked how long you are going to be. If you are only going to be five or 10 minutes, I will let you continue; otherwise I will go back to my practice of sharing the questioning around.

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Senator BOB COLLINS—It is a hollow offer because the only time you come in is to talk about forestry. You have no interest in any other part of the portfolio. You are just a dilettante. Senator BROWN—I have a couple of other questions, but after that if you want to take it away from me I am quite happy. We are nearly concluded here. I asked the minister whether North said to the government in April last year that it should be treated as a special case because it was clearing so-called degraded forest on private land for eucalypt plantations. Mr Thomas—I have not got the letter in front of me. They may well have written something like that. I am not sure why that is relevant. It is then for the minister to make a judgment as to whether he accepts or rejects the statement. Senator BROWN—The government announced straight after that that it would give a degraded forest licence—and that is how these regulations came about. In their media release on 11 July, Minister Hill and Minister Anderson stated: The government had also decided to give consideration on a case by case basis to approving the export of woodchips generated from clearing of degraded privately owned native forests for the purposes of establishing native hardwood plantation—woodchips in this category will fall outside the ceilings. Is there some situation other than this one with North which you can cite which led to that policy being developed by the ministers or was that policy framed specifically because of the request from North Broken Hill to log these cathedral like rainforests in north-west Tasmania? Mr Thomas—That is not a question I have information on to answer, but I can tell you that we have received, I think, four applications for a degraded forest licence. North’s application is one. Senator BROWN—But you had not had any requests that you are aware of before the regulations went through? Mr Thomas—The concept was not there. Senator BROWN—Except in the letter from North Broken Hill? Mr Thomas—Except in the letter from North Broken Hill. The concept of a degraded forest licence was not there. How could there be any further application for something that did not exist. Senator BROWN—Thank you. The point I was developing there was that the concept came from North Broken Hill and was taken up by the government which then went through the process of issuing the licence to North Broken Hill. There was a circuit which is quite clearly identifiable there. Senator MURPHY—I want to ask one question with regard to the issue of scientific advice, with regard to the national forest policy statement and the wood and paper industry strategy. I am asking this question, Minister, on the basis of the assumption that the government committed itself to the same process that was outlined and set in place by the previous government. What has been the process to actually establish and monitor the impact of whether or not state government environmental codes are scientifically rigorous? You may take that on notice. If you want to give me an answer to that some time, I would appreciate it. Senator Parer—I think there might be an officer who can respond to that. Mr Lee—If I may. Part of the regional forest agreement process is looking at what we are calling ecologically sustainable forest management, which is an expert panel including independent state experts looking at the whole forest management system in each state. The protection for conservation values is not only given by reserve systems, but also by good forest

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 365 management practice. We have heard the senator here talk about how harvest forest values can be maintained in a potentially worked-through forest. That is his assertion and that— Senator MURPHY—I am not worried about his assertion; I am just worried in terms of the ongoing process—once we have got RFAs in place, in so far as the monitoring of the state’s practices are concerned and the codes of practice that they may adopt in the future—that the Commonwealth, in terms of establishing the whole process and then going on, does not just alleviate itself out of responsibility, because there is a fundamental link with the governments, that is, the state and Commonwealth governments, who reached agreement on certain things. There has to be a life after the RFA, in that responsibilities do go to that in some respect—understanding and accepting fully that the minister said that the state does have principal responsibility for land management decisions. But I would be interested to know, given the commitments in the papers, how you intend to maintain some sort of watching brief, if you like. Mr Lee—Yes. There are two aspects of that. One is that part of developing the regional forest agreement is a commitment to developing indicators of sustainability. We are doing research on that. Senator MURPHY—So CSIRO would be used to provide— Mr Lee—CSIRO has been involved and there has been budget funding for that course. But the other element is the five-yearly reviews where we are joining with the state to look at progress. Senator MURPHY—With regard to that particular degraded forest licence that was granted for Surrey Hills, do the same requirements, in terms of utilisation, apply to degraded forest licences that apply to normal export licences? If there is processable wood or millable wood coming out of the degraded forest area, so assessed, is there a requirement for that to be offered at least for processing at a domestic level, under the degraded licence. Mr Thomas—I have a copy of the degraded forest licence here. I would be quite happy to leave you with a copy. Senator MURPHY—I have a copy and I have read it. I could not really see where it said that. That is why I am asking you for an explanation, because I could not really understand it. I could not establish whether there was a requirement where there was millable wood, whether that millable wood ought to be made available to the domestic industry, let us say at international market prices. You can take that on notice. Mr Lee—I will take that on notice. Senator MURPHY—Can you inform me of this. In the negotiations or the discussions with the company before the minister granted the degraded forest licence for Surrey Hills, the company, as I understand it, advertised and called for tenders for the purchase of the wood. I assume it was certain minor species tonnages. Were there any discussions with the company about that tender? Had the company informed the department that it had received responses to its tender call? Did it actually sell any of the wood to the domestic industry for downstream processing? Mr Lee—I am not aware of any discussions. Senator MURPHY—If you could take those on notice. Mr Lee—I will come back to you.

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Senator MURPHY—In the appropriations of the PBS statement on page 42, would you explain this to me, please. On line 1, ‘Forest Industry structural adjustment package’ the budget (i) figure is $31,086,000 and you say that was presented in the 1996-97 budget documentation. Then we go to the figure in the revised appropriations (ii) column of $31,086,000. Regarding the next column, ‘Estimated Outcome (iii)’, can you explain to me whether that $2,038,000 was a saving? Mr Lee—That was the actual estimated outcome for the year. Senator MURPHY—So, of the $31 million, only $2 million were spent? I am just trying to understand. Mr Lee—That is correct. Senator Parer—Can I just interrupt there. I do not like interrupting, but I think this was well covered before in regard to New South Wales. The officers can go over it again, if you like. Senator MURPHY—Not if it has been covered. I was just curious about the $40 million. Senator Parer—Senator O’Brien asked the questions actually. Senator MURPHY—I am just trying to establish the link between the then $40,843,000 and on the opposite page, page 43, the program costs where we have the $38,805,000. Mr Lee—The story roughly is that there was a substantial appropriation last year and it became clear that the adjustment task was going to take much longer to get started than we thought. You can see the expenditure was relatively small in the year. The funds have been rolled forward into 1997-98 and the total on page 43 just reflects a difference, arithmetically, between the $40.8 million and the $2.0 million. Senator MURPHY—I refer to the industry council and the setting up of it, as I did the other week. I think when I asked about the setting up of the industry council, I was informed that that was in DIST. That is true. You were asked the question today and again you referred to DIST. Minister, the industry council was established very clearly under the national forest policy statement and, indeed, the wood and paper industry strategy. It was very clearly referred to and it very clearly and categorically outlined its membership. I can read it out to you, if you like. Senator Parer—That is fine. Senator MURPHY—I am sure the officers would have this document and they would be more than happy to refer to it. There seemed to be some conjecture about the information flow, which we discussed before, between DPIE and DIST with regard to the council’s development. Mr Thomas said on 9 May: There has been consultation between the two portfolios on the membership of the council. It is not for me to go into those. It is a matter really for the ministers to decide on. Minister, can you tell me whether or not the ministers have decided on the membership of the council, taking into account the very significant commitment in the wood and paper industry strategy document? Senator Parer—Again, I think that was responded to from Senator O’Brien, but go ahead. Mr Thomas—Again, it is very much a question that you ought to be directing to the ministers, rather than to me—to the Minister for Industry, Science and Tourism, with whom

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 367 the decision rests. There are discussions going on between the two portfolios, between the two ministers’ offices, at the moment. CHAIR—I make the observation that this matter did come up earlier on. I said that we would refer that on to the appropriate minister in this particular case. Then I went on to say, because it got into very detailed information about it, that there is a limit—and we have taken a fairly flexible attitude over the seven years I have been on this committee—to how far you can go into detail on something that should be before another committee. Senator MURPHY—Mr Chairman, I appreciate your advice. I do not disagree with you, but there is a linkage. CHAIR—I am not debating the issue. Senator MURPHY—No, I understand that. I have actually asked the Department of Industry, Science and Tourism the same questions and I got not dissimilar answers. That is why I am back here trying to establish who is doing what. I could say some other things, but I will not. I would like to know exactly where this thing is at and whether or not the government is committed to—as it said was both prior to and after the election—the national forest policy statement and the implementation to the letter of the wood and paper industry strategy. It seems that I am unable to get the answers from DIST, although I will go back there again in the not too distant future. Minister, the wood and paper industry strategy document refers to plantation investment in the section entitled ‘Resource development—plantations and farm forestry’ and states on page 14: . The Wood and Paper Industry Council will monitor the impact of removing export controls on domestic processors and identify strategies to maximise domestic processing opportunities. Do you agree with that? Senator Parer—Yes. That has not changed, has it? Mr Thomas—It is a reasonable role for the Wood and Paper Industry Council. But, again, really this is a matter for you to put to the Minister for Industry, Science and Tourism, who is sorting out the membership and the terms of reference. Senator MURPHY—You said on 9 May: We have been working with them, looking at projects that the Wood and Paper Industry Council may pick up. Do you think it is a reasonable thing to say? Mr Thomas—Yes. Senator MURPHY—So you think that is one? Mr Thomas—I am not willing to offer an opinion. It is a matter to be resolved between the two departments. Senator MURPHY—I am trying to understand and find out whether or not the government is committed to this process as outlined in the document. Either you are or you are not. I do not want to be difficult. Senator Parer—As far as I understand it, they are—that was reflected in the commitment that I made on that regulation debate in the Senate. Can I refer it back to the minister? Senator MURPHY—Are you talking about Minister Anderson or Minister Moore?

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Senator Parer—I will refer it to Minister Anderson, because they are conferring. If there is any change, we will advise you. Senator MURPHY—Throughout the document it is fairly clear that the responsibilities for the Wood and Paper Industry Council were spelled out. Indeed, back on page 25 there are the terms of reference for it. I would like to ask the minister whether the government remains committed to the terms of reference for the Wood and Paper Industry Council? Senator Parer—To my knowledge, yes. I will refer it to both ministers since you are coming back on DIST. Senator MURPHY—I would appreciate that. I asked Mr Croker from DIST: Was it also the intention that the council would have an overview and a role in assessing the effects of the removal of export controls on employment? And Mr Croker said: That is not meant to be part of the functions of this group. You might understand why I am getting conflicting messages in trying to understand exactly what the Wood and Paper Industry Council might do. Senator Parer—Senator, you are seeking clarification. We will seek it on your behalf. Senator MURPHY—I would appreciate that, because it would seem that there is some significant difference of opinion between Minister Anderson’s department and Minister Moore’s department. I also ask you about the council’s funding of $38 million. I asked this question of Mr Thomas before and he said the funding had been split. I think $5 million or thereabouts went to DIST— Mr Thomas—It was $4.7 million. Senator MURPHY—And $33 million remained with DPIE. In the wood and paper industry strategy document, there is a clear commitment with regard to funding the council and providing secretarial assistance to the council. I would like to know whether or not the government remains committed to that? Senator Parer—Is that a DIST document? Senator MURPHY—No, I am talking about this document, the wood and paper industry strategy. That is the same one that the now government gave a very substantial commitment to, both prior to and after the election. I think the Prime Minister said that the government would continue to implement this strategy—or the national forest policy statement, which the strategy is part of—in the same vein that the previous government had. Senator Parer—I think that is DIST, isn’t it? Mr Thomas—No, it was a document produced by the previous government, in fact. It was a whole of government document that had input from the industry department and from the primary industries department. That is why I am finding difficulty in providing you with answers on some of the elements. We really need to go back to the other department to find out what is going on with the Wood and Paper Industry Council. I cannot answer the question. Senator MURPHY—Can I just refresh your memory, because when I asked these questions last time you said that you would do that. This was back on 9 May. I know it is not too distant, but when the minister finally said—

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Mr Thomas—I thought that we had answered all of the questions on notice. If there are any missed, I apologise. We will get a response to you as soon as possible. Senator MURPHY—Mr Thomas, I have not got any answers back in relation to the issue I raised about the membership of the council and the responsibility of the council. Mr Thomas—They are questions that we would have referred to the industry people. Please, I will follow them up. Senator MURPHY—That will be interesting. Perhaps by the time that you follow it up, the Department of Industry, Science and Tourism will have worked out exactly what they are proposing to do, because on 3 June they did not know when I asked them the same question. That causes me some concern. Mr Thomas—We will need to follow it up again with them. Senator MURPHY—I would like to go back to the issue—and I asked the same questions of DIST on 3 June—about the funding for the council. I have some difficulty accepting what is being said because the government made a very public commitment to maintaining the process. Part of the process was to set up a Wood and Paper Industry Council and fund it. I would like to know if that still remains the government’s position, Minister. Senator Parer—Senator, during the debate on regulations, on advice received by me from the minister, I made the point that the Wood and Paper Industry Council would be established and up and running by mid-July. The government is committed to that. Senator MURPHY—I understand that. I know you made that commitment, but that does not solve much of a problem for me about questions that I asked DIST on 3 June about the funding for the council. Mr Croker said, in essence, that there was no funding for the council or to support voluntary and non-profit organisations and trade unions to participate in conducting their research and development and doing other work to allow them to adequately have input into what is a very important process. There is a figure that was mentioned in the document about how much money would be set aside for that purpose in providing the funding for the council. So, Minister, I would like to know—you can take it on notice—whether the government intends to provide the funding or not. Senator Parer—You cannot have a council without funding, Senator, but let me go back and get more details for you. Senator MURPHY—I am pleased that you said that, and I thank you for that, Minister. CHAIR—I will at this point advise that the secretariat has informed me that, in fact, we have received answers to questions that were asked on 19 May. They have been circulated to all committee members. Senator MURPHY—Yes, but not answers to some of those specific questions. I have checked them. I did not mean to say that we had not received any answers back. There were some answers that I received back, and the question related to, I think, the issue of the council and its membership. There are also a couple of questions I want to ask about tax, and these are not in any particular order. In so far as the tax arrangements are concerned, as I understand it there was to be a joint departmental committee that would liaise with other people as to the ongoing tax arrangements for plantation development. Do you have any information about that? You might have to take that on notice.

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Mr Thomas—Senator, I will have to come back to you on that, because there has been quite a bit of work done on tax over the past 12 months. Senator MURPHY—What work has been done on the certification and labelling and how has that progressed? I also want to ask a question with respect to the commitment that I assume the government maintained as a result of this document, the year 2000 target for the International Tropical Timber Organisation. We became a party to that agreement in 1994. I just wanted to get some information about what is happening there and how that is progressing in terms of the sustainable management of tropical timbers. Is the regional advisory management committee still in operation and, if so, what has it been doing? Mr Thomas—What committee was that, Senator? Senator MURPHY—The regional advisory management committee. Mr Thomas—What is the context there? Senator MURPHY—This may be covered under regional development. I just cannot find where it appeared in any other departmental budget. It was supposed to be set up in terms of the wood and paper industry strategy in looking at managing change at the regional level. It is referred to on page 22 of the wood and paper industry strategy document. It also had a role to play in working with the Wood and Paper Industry Council. I do not want to dwell those things for too much longer. I turn to the report that you provided in terms of the answers, which I might say I got only today, but I have had a look at those answers. I am grateful for the fact that you provided me with a copy of the 1995 report. With regard to the life of the woodchip export monitoring unit, is it intended that it continue at least until all RFAs have been completed? Mr Shufft—Yes. Senator MURPHY—With regard to the findings on page 13 of the report under item 4.2, relating to an investigation of whether or not whole logs were being chipped at Gunns Ltd in Waverley, you say: The Minister had not made a decision on WEMU’s recommendations by the end of 1995. Has a decision been made? Mr Shufft—Yes, a decision has been made, and it will be reported in the next report that is coming out, which I promised you last time I spoke to you. Senator MURPHY—I was somewhat surprised by item 4.1 on page 12 of the report dealing with North Ltd that related to incursions by their contractors. There were two incursions of receiving timber from areas from within the national estate that were not approved. Ultimately, I think you say in the report: Given the circumstances of the breaches and the action taken by the company and the State agencies, WEMU recommended that further action in relation to the breaches was not warranted. You basically accepted their word that it was not deliberate. With a company of this size, which is the largest woodchip exporter in Australia, I have a major difficulty with the third paragraph, where you say: In addition, Forestry Tasmania— this is the agency responsible for the management of the forests in the state— [said that] . . . it had inadvertently supplied North with a small tonnage of pulpwood from a non-approved National Estate area in State forest which adjoins the Douglas-Apsley National Park.

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I think that ought to have been of concern. I do not want to be overcritical, but given the very significant debate that has occurred over many years in the state, one would have to worry about that sort of action. I do not know that you should be too accepting of such explanations. Mr Shufft—There were mitigating circumstances to this one. I think you were referring to the elephant coupe in Douglas-Apsley National Park. There were problems about the delineation of the area. In fact, there was a problem about mapping. There were fairly significant circumstances. Forestry Tasmania and the company itself are in constant contact with the authority to actually determine where the boundaries are, because it was fairly ambiguous at the time. Senator MURPHY—Have there been other instances where other exporters or potential exporters have been confronted with breaches which could be explained away in a similar nature and that have suffered consequences much worse? Mr Shufft—There were two situations in this particular instance involving North Ltd. In one instance, the officer who actually did the timber harvesting plan at the time did not check whether it was in a national estate area, and that officer was in fact suspended by the Forest Practices Board at the time. The unit considered that that was sufficient punishment in this particular instance. In addition to that, the company has said to the minister that it had improved its practices as well. As a consequence, the minister has written to the companies saying, ‘Look here, at this time, we consider that this has not been a very good thing.’ He said that next time this sort of thing occurred, he would take tougher action on this matter. Senator O’BRIEN—How much money would the coupe have recovered for North, assuming they should not have taken it at all? Mr Shufft—I do not know. I cannot tell you. Senator O’BRIEN—So there is no ability to say you have got money from the coupe that you should never have got, so we will put that back into managing the forests or something like that? Mr Shufft—No, there are not any such regulations in place for that. Senator O’BRIEN—Are you saying that there is no ability to recover a penalty of that nature or to take that into account in setting penalties? Mr Shufft—The ultimate punishment that could happen to a company would be if the company were taken by the DPP to court. Under section 9 of the Export Control Act, the courts can impose fines for each breach of up to $50,000. CHAIR—Are you nearly finished? Senator MURPHY—Yes, sorry, Mr Chairman. I will try to be as quick as I can. With regard to the Harris Daishowa matter, you say that the inquiry was not complete at the end of 1995? Is the inquiry now complete? Mr Schufft—The inquiry was completed in September last year. The unit found that there were two breaches and the breaches were referred to our unit, which is called BISU. I can never remember the actual title. Business ethics— Mr Lee—Business investigation and security unit. Mr Schufft—It has been referred for further investigation. Senator BOB COLLINS—DPIE’s answer to ASIO. No? Not quite.

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Senator MURPHY—Would it be fair to say that, in terms of the breaches, one in particular—the purchase of wood from Victoria—is not something you could easily make a mistake on? There is a state boundary there. It is not like a contour boundary or something where you have got to go across a state border to get the wood out of Victoria. Mr Schufft—This was a matter on private property, in fact. We found that there was prima facie evidence that the company had not followed the procedures of the local council regulations. That was one breach; the other was that there were some breaches of the forest practices code that existed in Victoria at the time. Senator MURPHY—When do you expect a result from that? Mr Schufft—I cannot answer that. It is really in the hands of BISU. Mr Zuber—I have responsibility for that unit, but I cannot tell you. I will undertake to provide that. Senator MURPHY—Thank you. Finally, how do you intend to monitor such breaches in the future once RFAs are in place, outside having to accept monitoring by state authorities? Mr Lee—The Commonwealth’s involvement in the forests will be through the regional forest agreement. That involves setting aside forest reserves, and it allows for the Commonwealth to credit forest management systems. It places responsibility for the management of forests fairly and squarely where it constitutionally sits—with the state. Senator MURPHY—I understand that. Mr Lee—Our involvement will be to look at the adequacy of the operations by five-year reviews of the regional forest agreements. Senator MURPHY—I understand all that. I accept that the state has a responsibility, but I think there are some ongoing responsibilities for the Commonwealth to at least ensure things are happening and agreements are met. Mr Lee—They do not exist in law in relation to decisions to be taken by our minister. CHAIR—Are there any further questions on 1.3? Senator MARGETTS—What is the current status of the regional forest agreement process in Western Australia? Mr Lee—There has been a slower than originally anticipated process, but the comprehensive regional assessments are currently under way with the state. Discussions are taking place between the Commonwealth and the state about an end date, which is more likely to be the end of this year rather than the originally anticipated around now finish. The regional assessments are under way. Senator MARGETTS—Are you anticipating it being signed by the end of the year? Mr Lee—That is our expectation. I am sorry, could I correct that? It is September next year—my error. Senator MARGETTS—Are all consultancy contracts finalised? Mr Lee—A range of studies has not been finalised yet. All the studies are not completely scoped and contracts let. Senator MARGETTS—Can you provide a list of the consultancies indicating the names of the consultants, the values of the contracts and the nature of the research or consultancy? Mr Lee—We would have to take that on notice. It involves both our portfolio and Environment Australia.

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Senator MARGETTS—I would be happy for you to take that on notice, thank you. Are consultants paid or contracted direct or are they paid through the Department of Conservation and Land Management? Mr Lee—There is a mix as well. Generally the funds are being passed to Western Australia, and Western Australia, through the Department of Conservation and Land Management, is engaging the consultants. We have a financial arrangement with Western Australia. On the environment side there may be some direct consultancies being let from the Commonwealth. I would need to take that on notice as well. Senator MARGETTS—If you could, especially for the Commonwealth. But, as the Commonwealth signing is part of an agreement, could you tell me what the tendering and selection processes are for those consultancies? Mr Lee—Yes. Senator MARGETTS—Thank you. Are Department of Conservation and Land Management scientists doing any of the consultancies in house? Mr Lee—Yes, there is work going on in house, both in the Commonwealth and in the state. Senator MARGETTS—You will be able to indicate on those consultancies which ones? Mr Lee—Yes. Senator MARGETTS—Thank you very much. CHAIR—Senator Brown has handed me questions to put on notice. We will table them. Senator MURPHY—I have a question which I forgot to ask before. CHAIR—Okay, one more. Senator MURPHY—It relates to funding and the Wood and Paper Industry Council. I ask whether or not the funding outlined in the wood and paper industry strategy document will come from the $33 million that you have in your department? You can take that on notice. Mr Thomas—We will take it on notice and we will come back to you with the response on funding, but the answer is no; it is funding that must be with DIST. Senator MURPHY—They said they have not got any money. Mr Thomas—We will come back to you. Senator BOB COLLINS—I was just thinking of the beauty of that solution. I think you would get the committee’s support to put Forestry on last next time. I have some questions in general about Murray-Darling and the various other programs within the portfolio linked with programs in environment that are generically referred to as environmental programs—such as landcare and so on—just in terms of global funding. Is it a fact that a substantial part of the funding from the Natural Heritage Trust is being used to pay for programs which have been part of normal recurrent funding in the past in the primary industry budget—that have been funded off budget in past years and will now be funded out of proceeds from the heritage trust? Mr Walker—I will answer in respect of the Murray-Darling Basin. I do not know whether My Byrne wants to add any general comments. A situation has emerged in the Murray-Darling Basin, as I said before in answer to an earlier question, that natural resource management program funding has ceased. The cabinet authority for that finishes at the end of this financial year. Our minister has agreed to maintain the Commonwealth commitment to the investigations and education element of that—the sum of $1.9 million a year into the future.

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The $6.9 million, which is for natural resource management, integrated catchment management, has been subsumed into the new Murray-Darling 2001 program. Senator BOB COLLINS—The answer to the question, as far as the Murray-Darling Basin is concerned, is comprehensively yes. Mr Walker—The money has been subsumed. Senator BOB COLLINS—Yes, indeed. I can translate that into English. Does anybody want to add anything else? Mr Walker—In terms of the Commonwealth’s commitment to the initiative, the cash flow funding is in the following order: in 1995-96 it was $23.9 million; this current year it is $31.4 million; it goes up to $48.34 million. Senator BOB COLLINS—Mr Chairman, at the risk to my own sanity but for the benefit of the officers, could I ask out of courtesy to them if the whole question of forestry has been concluded? I am happy to defer to other senators if we want to complete this. Senator BROWN—I have one question. CHAIR—One more question on forestry. Senator BOB COLLINS—That is terrific, because I am happy to defer to you, Senator Brown, so that the officers can leave. Senator BROWN—Mr Lee said that the obligations of the Commonwealth regarding the forest no longer exist in law after the regional forest agreements— Mr Lee—In respect of decisions to be taken by my minister, the Minister for Primary Industries and Energy. Senator BROWN—I was going to ask you there whether you were aware that obligations under the Australian Heritage Commission legislation, world heritage and so on still exist in full. Mr Lee—That rider was in my original answer. CHAIR—We have now finished with officers involved in forestry. Senator BOB COLLINS—Does any other officer want to add to the answer given by Mr Walker? Mr Byrne—In terms of the other major programs within the DPIE portfolio that will be funded from the Natural Heritage Trust, there will be funding for the national landcare program but that will be in addition to the current forward estimates. The current forward estimates are of the order of $55 million, and the funding from the Natural Heritage Trust will be an additional $37 million on top of that. So there is an element from consolidated revenue and an element from the Natural Heritage Trust. Senator BOB COLLINS—Again, the lion’s share of that would be recurrent? Mr Byrne—The bulk of that is from consolidated revenue. A new program also will be funded from the Natural Heritage Trust, which is the new rivercare initiative. Senator BOB COLLINS—How much is that? Mr Byrne—I think that is $81 million over the life of the program. Mr Zuber—Senator, I could have a go globally at your question. Of the total amount made available for the Natural Heritage Trust, about $526 million is allocated to this portfolio over

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 375 a period of four years. We have attempted to be a little helpful on page 102 of the statements by giving a breakdown of that. You will find from that that there is a range of new initiatives, a range of programs, where funding in the forward estimates has ceased and the heritage trust provides a continuity of funding. There is a range of programs such as landcare where additional funding is provided to those programs on top of the base which exists in the forward estimates. So there is a mix of those initiatives. I think you are well aware, Senator, of the forward estimates that existed in those programs, so you can draw you own conclusions about the mix of those programs. Senator BOB COLLINS—I have. I will tell you what my conclusions are, Mr Zuber, and perhaps you could concur with them or disagree with them, as you wish. My conclusions are that, considering what the forward projections were, to describe this package, as the Prime Minister has, as ‘the world’s greatest environmental package’ is at best laughable or, more accurately, a complete deceit. Would you agree with that statement? Mr Zuber—I could not possibly comment on that, Senator. Senator BOB COLLINS—It was worth a go. I had not seen page 102, and can I thank you for the way that is laid out. I had not seen it and it is a very helpful breakdown of the programs. In respect of that assertion that I have just made, Mr Zuber, and considering the significant involvement of the department in both the funding and delivery of those funds on the ground, was your attention drawn to an article by Kenneth Davidson on this same issue. It was published in the Age on 29 May. it was headlined ‘Tricky figures in a political landscape’. The opening paragraph says: The National Heritage Trust is the biggest pea-and-thimble trick ever pulled by a national government on the Australian people in my experience. I might add that Mr Davidson’s experience is very long. Senator Parer—He is running true to form too. Senator BOB COLLINS—You will get your crack, Minister. The article continues: The piece de resistance of the coalition’s 1996 election campaign was John Howard’s promise that he would set aside $1.1 billion from the sale of Telstra to set up the trust and that the money would be spent on the environment over five years. I have to say that what he says in the next paragraph as his understanding is mine and that of everyone I know. He goes on to say: What I understood the promise to mean, and I think everyone else understood the promise to mean, was that there would be just over $200 million a year extra available for environmental projects. And this is what I would like you to comment on: So what has happened? According to the Budget papers, expenditure on the environment fell from $338 million in 1995-96—the last year of the Keating Government—to $259 million in 1996-97—the first full year of the Howard Government. On a conservative estimate, the Howard Government cut $79 million or 23 per cent from environment- related programs in its first full financial year in office. It cut $170 million or 41 per cent from environmental programs, broadly defined to include urban and regional programs. Whichever way you look at it, the environment took a far bigger hit than other expenditure programs. From your perspective as the department’s chief bean counter, do you agree with that analysis?

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Mr Zuber—I will leave the detailed program comments to others, as you know, but let me say that I do not agree with it and let me hypothesise why I do not. If you turn to page 22 of the document that you have before you, you will see the overall appropriation set-up across our programs. You will note that total outlays for the department next year are some $1.6 billion—the final figure being just under that. Senator BOB COLLINS—I have found that. Mr Zuber—You will be aware—and I actually do not have the figure in front of me—that for the previous year the figures, from my memory, total about $1.8 billion. Senator BOB COLLINS—Right. Mr Zuber—So you will deduce about a $200 million decrease in overall departmental funding. Senator BOB COLLINS—Yes. Mr Zuber—Now, none of the figures for the National Heritage Trust are included in those appropriations—in other words, they are appropriated to DIST and, as I said, funds of some $500 million-plus over four years will flow back to the department of primary industries towards those funds. So I am arguing globally that the overall reduction of funding has not impacted on the department and that, secondly, within the particular area that we are talking about there is significant ongoing funding associated with natural resource management. Right? Senator BOB COLLINS—Yes. Mr Zuber—Landcare, for instance, has a base which continues— Senator BOB COLLINS—As you know perfectly well, I will not have the slightest idea when you finish whether you are right or not. I will have to go and check it up carefully afterwards and come back. This is my worst subject—maths. Just in terms of landcare—and perhaps Mr Walker might like to comment—in terms of that funding break-up, what is the total amount to be allocated to Landcare over the next four years? So we have got that—it is 35 plus 63 plus 57 plus 54. And how did this compare with the same level of funding over the past four? Mr Walker—We will have to take that on notice, if we could. We can do an analysis. We have here the national Landcare program cash flow figures. Senator BOB COLLINS—I am happy for you to do it this way. I indicate that I will hand up to the secretary of the committee the detailed questions that I have got on this, and I will have you deal with them on notice. Mr Walker—That would be safest in terms of having correct information for you. Senator BOB COLLINS—I am happy to do that. Thank you. On page 241 of Budget Paper No. 4 and at the end of the previously funded programs for Murray-Darling, we have ‘Natural resource management strategy—$1.9 million and $6.9 million’ and ‘Murray-Darling 2001— $4.5 million’. What will be the ongoing funding arrangements for those specified programs that I have just named? In fact, just in terms of the time, do not worry about this, Mr Walker. I will put these on notice, too, because they are detailed budget related questions. I will move to the general questions and put all of that on notice. It will save a bit of time if the department will respond through questions on notice. In that case, Mr Chairman, I have finished with subprogram 1.3. CHAIR—There being no further questions, that finishes 1.3. We will have a change of guard and move to 1.4.

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Subprogram 1.4 Other industry services Senator BOB COLLINS—The only questions I have are related to the Australian Plague Locust Commission. Is the commission still working with the CRC for Tropical Pest Man- agement on the development of an insect development survival model for the Australian plague locust? Mr Gordon Hooper—Essentially we have finished now, but we spent some time with them modifying their generic model to suit the peculiarities of the Australian plague locust. Essen- tially that has been completed. We have also modified it to model spur throated locusts of northern Australian and migratory locusts in central Queensland. We have recently started to convert it to predict the mortality rate of the use of fungus for locust control. Senator BOB COLLINS—Can you tell us briefly what the remainder of this program will involve and how it is going to be progressed from now? Mr Gordon Hooper—For the last 10 or 15 years we have had a model we produced ourselves, which was fairly good. This one is a little more— Senator BOB COLLINS—And, from my experience, fairly accurate. Mr Gordon Hooper—Yes, it was fairly accurate except in spring and autumn when you get big changes in daily maximum and minimum temperatures. The new model is more robust and because it is generic you can add more things into it. As far as we are concerned, other than more precisely defining the inputs to the model with continued fieldwork in biology and ecology, it is completed and simply forms part of the whole decision support system for forecasting that we are well on our way to completing. Senator BOB COLLINS—Has the department had any role in the ongoing debate over the use of chemical sprays in the cotton industry that is still raging at the moment? Mr Newton—It is a policy issue that we do touch on, particularly through our agricultural and veterinary chemicals policy unit in the crops division. We also have an agricultural and veterinary chemicals committee under the SCARM format, which brings together the states and a number of other bodies and looks at these sorts of matters. In a generic sense it has been looking at spray drift for chemicals and has issued a consultancy to Gatton college in Queensland to look at development of a national code of practice for spray drift and chemical use. So in the generic sense we do get involved in it. Senator BOB COLLINS—The issue has taken centre stage in the minister’s own electorate. Is it possible to advise the committee where the New South Wales government is up to in revising its own state regulations that apply to this kind of spraying? Mr Newton—That is the sort of question that we would have to take on notice, Senator. We will investigate where our New South Wales colleagues are up to and advise you. Senator BOB COLLINS—I assume that the voluntary withdrawal by the industry of the chemical that caused the problem with the beef contamination is still in place. Is that right? Mr Newton—The helix chemical chlorfluazuron? Yes. Senator BOB COLLINS—Are there any ongoing advancements in discussions with some of our customer countries on the question of MRLs? I am interested in the question of the trade implications of those problems being taken directly into account in respect of avoiding the problems we had last time with countries that simply do not have any MRLs in place for the simple reason that they do not use it—not that the spray is horrible. Is work progressing on that?

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Mr Newton—We are involved in a wide range of countries, Senator, through a number of international committees that we are involved with, particularly through the codex range of committees and the OECD forums. There are ongoing discussions about that. We also deal bilaterally with a number of nations, as you would be aware. Senator BOB COLLINS—I understand that you have taken on notice that question on the New South Wales regs. Thank you. Subprogram 1.5 Rural Senator MARGETTS—Funding across the rural subprogram has declined markedly even with the addition of the new integrated rural program. In part this is because the new program is funded at a lower level than the old RAS, which is only one component of the new scheme. Have you any information on the new integrated program? How is ongoing information provided on this? Mr Calder—The details of the integrated rural package are currently being worked up in a consultative way with the states and other stakeholders. The final details of the package have not been finalised. There is an extensive consultation process which is under way. Last Friday there was a meeting of the ARMCANZ ministers at which the integrated rural package was discussed. There are some more formal meetings scheduled in July to be held with various stakeholders as well. The simple answer to your question is that the details of the package are expected to be announced later in the year, but there is still an extensive consultation process currently under way until it is finalised. Senator MARGETTS—A large part of the savings comes from a significant reduction in the drought payments—I believe they are down $123 million—as well as the elimination of the funding for the drought and climate research and development program, and that is $1.8 million. Yet CSIRO is saying that we are likely to have another El Nino effect, and certainly the likelihood of ongoing problems in connection with global warming must be of concern. What measures will be taken to research drought and patterns of climate change? Mr Calder—I will pass over part of that question to my colleague Mr Harris. As part of the development of the integrated rural package, such items as continuing drought research are also under consideration. Mr Harris—As regards the fall off in the DRP in estimates, the DRP, or drought relief payment, is a needs driven program. The fall off reflects our expectations at the time the estimates were made of the reduction in recipients for the DRP. If those numbers turn out to be different from that, the variation will be taken into account in additional estimates. Senator MARGETTS—What measures will the government take to ensure that farmers, especially farmers in marginal agricultural areas or farms which are currently economically marginal due to a variety of causes, including high levels of debt, can adapt successfully to present or future bad climatic outcomes? Mr Calder—Once again, Senator, the development of the integrated rural package is drawing heavily upon a number of reviews which have been undertaken over the last 12 months or so. This includes the mid-term review of RAS, the drought policy review, the special rural task force, et cetera. All of those reviews are being taken into account and a number of those reviews do touch on some of the matters which you have mentioned. Senator MARGETTS—What provisions will there be in the new integrated packages for things like counselling rural people? Can you outline the various types of counselling, for instance, financial, stress or marital? What funding is proposed and how will these services be delivered?

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Mr Calder—It is not possible to give you a definitive answer at this stage as the package is still under development. I do stress it is taking into account the outcomes of a number of these reviews which have been undertaken, including the review of the rural communities access program. Senator MARGETTS—Thank you. Senator BOB COLLINS—I just wanted to ask some questions about the government’s supermarket into Asia strategy or, more accurately, as someone in industry said to me recently, the mini-mart into Asia strategy. Even if you disagree with it, it wasn’t a bad line. The minister’s press release on budget night stated that funding for three years from 1996-97 is $11.8 million including $1.21 million in new funding for 1997-98. Can you clarify for me whether this is new funding on top of the forward estimates, as is inferred by the press release, or is it total funding for the program for this coming financial year? Mr Calder—In essence, it is new additional funding. The $1.2 million refers to $1 million for a one-off program which is called the delicatessen program. Senator BOB COLLINS—It is not, is it? Mr Calder—At this stage. Senator BOB COLLINS—Okay. Mr Calder—The other $200,000 is a contribution by the government towards a quality food program which is— Senator BOB COLLINS—What is that called? Mr Calder—It is called the food quality program at this stage. Senator MURPHY—It is Quality Food Australia. Mr Calder—Yes, Quality Food Australia. Senator BOB COLLINS—I hate to be picky about this, but is there any reason why you put the qualification in essence on that? Mr Calder—There was no particular reason, Senator. The full breakdown for 1997-98 is $2 million for AQIS market access and $0.9 million for secretariat and associated costs. There is an additional $0.5 million out of the DIST portfolio for consultancies. There is the $1 million for the delicatessen proposal and the $210,000 for Food Quality Australia. Senator BOB COLLINS—Is it possible to advise the committee how many companies are participating or have committed to participate in the strategy? Mr Calder—The strategy is such that companies are not required to commit formally to the strategy. Senator BOB COLLINS—Right. So you have no indication—again, I am simply relating it to the previous experience—in terms of some of our major exporters into that region as to what their approach is to the strategy? Mr Calder—The strategy as such is still under development. It is expected that there will be a commitment by the food industry towards the funding of various parts of a strategy once a strategy is fully developed. But, at this point, it is difficult to say the level of commitment that is going to flow. Senator MURPHY—Are you talking about the Quality Food Australia part? Mr Calder—Yes.

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Senator MURPHY—Page 53 of the PBS states: Seed funding to help the food industry establish improved marketing arrangements which target Asia. What has been the process of liaison with the potential participants? Mr Calder—Basically, that is a proposal which is being developed by the supermarket to Asia secretariat. They have deemed that one element of the future strategy should include assisting Australian exporters, with particular emphasis on SMEs to provide them with some support to export to Asia. The program is still being developed. It is expected that it will be other than the initial seed funding of the government, which in 1997-98 is $210,000. It is expected that it will be funded by industry. Its elements will include promotions in overseas countries, in stores, and providing services to companies who are wishing to export, particularly those who are wishing to export for the first time; in other words, helping them to get into the market. Senator MURPHY—How many companies are participating in the scheme so far? Mr Calder—This element is still being developed at the present point of time. But the indications we have received are that there is a high degree of interest in this program. Senator MURPHY—Then why in the performance information does it say that ‘the number of companies participating in the program will be a key performance indicator’? Mr Calder—We would expect that, once a program is up and fully running, the number of companies participating will be an indicator of how well it is received by industry. Senator MURPHY—How do you determine which companies will participate in the program? Is that just sort of a random pick? Mr Calder—For companies to be able to participate in this program, they will have to have an accredited quality assurance type scheme in place. Senator MURPHY—But $210,000 is not much if you are going to have, say, a promotion of Australian quality food in a number of Asian markets. Mr Calder—It is expected that this program will be funded by the companies participating. Senator MURPHY—In addition to? Mr Calder—In addition to the $210,000. Senator BOB COLLINS—How many staff in the department are involved in this strategy? Mr Calder—A ballpark figure? Senator BOB COLLINS—Yes, that will do. Mr Calder—There would be approximately two staff in the rural division. But the reality is that, throughout the department, there would be a need for other staff to be drawn upon in terms of some of the elements which will be developed. For instance, one of the key elements expected to be developed is a heightened emphasis on food safety and quality. That will obviously draw in staff of various types from other parts of the department. Senator BOB COLLINS—Is there a public relations budget for the strategy? Mr Calder—The secretariat, which is provided by an independent private company, has a budget, and that budget does include some funds for a communication program. Senator BOB COLLINS—Can you recall what level of funds? Mr Calder—Not offhand. Senator BOB COLLINS—Would you mind taking that on notice?

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Mr Calder—Right. Senator BOB COLLINS—Is the strategy targeting a specific range of countries? Mr Calder—The primary focus is on Asia. But, in terms of breaking that down and saying that Japan or Korea are the primary targets, the answer is no. Senator BOB COLLINS—Can you tell me what role the Department of Foreign Affairs and Trade is playing in the strategy? Mr Calder—The Department of Foreign Affairs and Trade is one of a number of departments which are actively involved in certain parts of the strategy. One of the working groups which has been established deals with market access, and they are heavily involved particularly in that working group. Senator BOB COLLINS—Is there a travel budget for the strategy? Mr Calder—There is no specific travel budget for the strategy within DPIE. Senator BOB COLLINS—As I am sure you will recall, food into Asia had a target figure for exports by the year 2000. Is there a target figure for this mini-mart in Asia strategy? Mr Calder—The supermarket to Asia strategy which is being developed has been looking at whether they will include a specific target figure. But the final decision on that has not been made in terms of whether that will be reflected in the objectives, et cetera. Senator BOB COLLINS—Thank you, Mr Chairman. I have some questions on the integrated rural package which I will ask, unless anyone has more questions on this topic. CHAIR—Any other questions on 1.5? Senator MURPHY—I do have some questions in regard to supermarket to Asia, the delicatessen program, $1 million for 1997-98. In terms of identifying or getting farmers to meet the Asian demand for high value and niche foodstuffs, how are you going to encourage the farmers to respond? Mr Calder—That program is currently being developed under the Supermarket to Asia Council. There is an SME working group. The program is being developed by DPIE, in conjunction with the SME working group. Some of the elements for this program, while they have not been ticked off on, which are being explored at the moment include looking at what information is currently available via R&D corporations, via Austrade, et cetera, on niche markets and niche products in Asia; tracking that, seeing how that information flows down to rural producers, if it does at all; and then looking at whether that information is in a form which rural producers can use in a positive way to change, for instance, or make them choose what products they should be growing. There is a view around that, while there is a lot of information around about particular products in Asia and the potential for these products, that information is not flowing back down through to rural producers in a form that they can actually use. For instance, it might just identify the fact that there is a market opportunity, but it does not go those extra few steps in terms of what growing conditions might be needed, what sort of profitability there is, how you might transport or even distribute those products, if you can grow them in Australia, into Asia. The delicatessen proposal is to look a bit more closely at those other issues as well. It then is expected that there will be some pilot projects of working with producers, growing some of these niche products to test how they can actually be got into those Asian markets. That is not finalised as yet, but that is the way it is being developed at the moment.

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Senator BOB COLLINS—Can the committee be advised as to precisely what programs are going to be incorporated into the integrated rural package? Mr Calder—As I mentioned earlier, the package is still under development and there is an extensive consultation process. I think it is fair to say though that there are some elements which are flowing, for instance, from the review of the rural adjustment scheme, a report which indicates that there should be a focusing on elements such as enhanced training, skill development of farmers, risk management, those elements are definitely under serious consideration as forming an integral part of a package. Senator BOB COLLINS—Am I correct in saying that whatever those new arrangements might be the one decision that has definitely been taken is that they will not include interest subsidies? Mr Calder—The minister has already announced that interest subsidies for normal RAS, that is, productivity improvements, will cease at 30 September. Senator BOB COLLINS—I assume there would have to be some transitional arrangements put into place to ensure that nobody is disadvantaged by that change. Is that correct? Mr Harris—Yes, that is correct. We have put in place that the date of receipt by the RAS authority of applications finishes on 30 September. Naturally enough there will be a pipeline and that pipeline will be processed. Senator BOB COLLINS—What is the consultative process that is actually being followed following the government’s consideration of the McColl report? Mr Calder—The McColl report is one of the major reviews which is being picked up and being considered as part of the development of the integrated rural package. There are a number of key elements in the consultative process. Last Friday there was a meeting of ARMCANZ ministers in Canberra. So that set the process in train for consultation with the states in terms of their views on the integrated rural package. There are also scheduled for July two meetings which are likely to be held in Canberra. One is basically a swot meeting, which will involve a wide range of industry people, seeking their views as to what should be key elements of an integrated rural package. There will also be a round table forum, which is scheduled to be held in July as well, which will have a number of representative organisations represented. Senator BOB COLLINS—Regardless of the proposed integrated rural package, is it a fact that there has been a cut of around $90 million in the actual funds made available for rural adjustment and drought relief in the budget? Mr Harris—All the forward estimates for RCAP and for normal RAS and for the RAS reserve and the underspend on normal RAS and the RAS reserve have been allocated to two things: the integrated rural package, plus commitments, that is through the transition. So there is no decline in that sense. There is, however, a decline in terms of DEC, because it is a needs driven program. There is a decline in the drought relief payment because it is a needs driven program. The minister has made clear that the drought aspects are separate from RAS and the integrated rural package. Senator BOB COLLINS—I am happy for you to take the next question on notice. I would like you to provide the committee with the level of expenditure by year on drought assistance for 1993-94 through until 1996-97 with an estimate for 1997-98. I would like that broken up by state and territory. If you can provide it now, fine. That will save a question on notice. Mr Harris—I do have it here. As you are saying, it is quite detailed.

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Senator BOB COLLINS—Don’t worry about it. Just take it on notice. The first drought package was put into place in 1994, wasn’t it? Mr Harris—Correct. Senator BOB COLLINS—The package, as I understand it, has now been extended by the minister. Is that correct? Mr Harris—The needs basis of the program has been maintained—that is for DEC and for DRP. However, the recovery period has been extended for an additional six months in November last year, bringing the recovery period to 12 months. In addition, earlier this month the government elected to extend the period for which DRP could be received by those recipients who were coming off DRP on 10 June. It extended that by three months to 30 September. Senator BOB COLLINS—Basically, who is currently still getting the exceptional circumstances and when are they going to drop off? Mr Harris—There are approximately 4,400 farmers who are receiving DEC support. That is not equally spread but the majority of those naturally are in Queensland and New South Wales. There are currently 8,400 recipients for drought relief payment. They will be progressively reduced as drought is revoked. That is the first part. Secondly, there is an autumn review of drought exceptional circumstances currently under way. The minister is considering a report by RASAC on that at the moment. Senator BOB COLLINS—Has the government—forgive me if they have and I have not noticed it—announced any proposals for changing the RASAC arrangements? Mr Harris—No. There is no policy to change the RASAC arrangements. If you were referring to RASAC itself as a body, then that body was a subject of comment by the RAS review, though those comments indicated that the committee should continue to be an advisory body on policy issues. As regards the RASAC processes for drought declaration, I suppose that is all part of the review of national drought policy. Senator BOB COLLINS—How precisely will the transition from the current system to the new system work for both RAS and exceptional circumstances RAS? Mr Harris—For exceptional circumstances RAS the minister has indicated that those recipients of drought support under the current arrangements for the current drought will continue. He emphasised that point in his press release on budget night. In the case of the transition from normal RAS to any new program, I guess all I can say is that, naturally enough, the minister is seeking a smooth transition. Senator BOB COLLINS—We are yet to find out whether the weather will allow him to do that. Mr Harris—Yes, and the RAS review puts a lot of comment to the government on different structures for how any replacement might be considered. But, at the moment, to assist that transition the minister has ceased interest rate subsidies, as we said earlier, only for productivity improvements under normal RAS from 30 September, allowing a transition there, and no decisions have been taken regarding re-establishment grants or training for individuals or groups or professional advice. Senator BOB COLLINS—If we have, for example, a worst case or even a moderately bad scenario we could have the old interest rate system running parallel with the new social welfare system for some considerable time, could we not?

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Mr Harris—If there were changes to the social welfare system there could still be interest rate subsidies for exceptional circumstances running parallel to that until those areas are revoked or the government took a specific decision to ease interest rate subsidies for those areas, which it could do. The same applies to the drought relief payment. Senator BOB COLLINS—Will the welfare component under these new arrangements be funded from the appropriation to the Department of Social Security? Mr Harris—Those issues have not been addressed. Senator BOB COLLINS—I would give 10 bucks to be in the room when they are, having been through it before. Is there any provision in the $200 million announced in the budget for ongoing drought? Mr Harris—The $200 million does not include the drought exceptional circumstances or the DRP. Senator BOB COLLINS—I did not think it did. Can you advise the committee precisely where the process of negotiation is up to on the new arrangements, specifically with regard to the state governments and territory governments? Mr Harris—I will answer that in two parts. Firstly, the RAS review, being a Commonwealth review, consulted extensively with the states and the state RAS authorities. So that was one round of consultation between the Commonwealth and the states. Secondly, as Bob Calder mentioned, there was a special ARMCANZ meeting last Friday. At that ARMCANZ meeting the Commonwealth minister discussed with his state colleagues the sort of canvas that might be considered for an integrated rural package and he invited them to come back to him in terms of comment by, I think, the end of this month. Senator BOB COLLINS—Can you advise the committee whether the level of funding provided for in the budget package is—and I know you have given some explanation of this a few minutes ago—equal to the forward estimates for the old RAS scheme in last year’s budget? After the other components of the new package—that is, after what is left of the rural communities access program—are taken out, how much money is left for son of RAS? Mr Calder—I think you are referring to the $198 million which has been designated for the integrated rural package. Senator BOB COLLINS—That is correct. Mr Calder—Basically, that is being funded from two primary sources. One is from the forward estimates of a former RAS program plus some savings from RCAP. So essentially there has been no reduction, but I am excluding what funding might be provided for drought. Senator BOB COLLINS—What is going to happen with the state contributions? Have you made any decisions about that? Mr Calder—In terms of the integrated rural package, that is an issue that has been raised with the states and we are awaiting the states’ responses. Senator BOB COLLINS—I guess they are falling all over themselves to nominate sums of money they are prepared to chuck in, are they? Mr Harris—To make the scheme more effective, yes I am sure. Senator BOB COLLINS—I am glad there is at least one optimist in the department. Will the same administrative arrangements be continued with these new schemes? Mr Harris—The administrative arrangements as proposed by the RAS review allow for three models to be considered. Those three models range from a continuation of the existing

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 385 arrangements, some continuation of delivery by the states but not necessarily the existing arrangements and another version which allows for delivery by different agencies and provision of services by a range of contestable providers. There is a wide menu. Senator BOB COLLINS—Will rainfall still continue to be the threshold criterion under the new assessment process and, if not, what will be—income? Mr Harris—The best way I could answer that is that there is no new process but under the current process it continues to be the threshold criteria. Senator BOB COLLINS—Are you still having to draw lines on maps? Mr Harris—Yes, we are. Senator BOB COLLINS—I am profoundly disappointed to hear that after 14 months of government. I thought one of the gilt edge promises of this new government was that they were going to magically introduce a system somehow that did not involve lines on maps. Do you recall that commitment? Look me in the eye and tell me you do not recall that commitment? Mr Harris—I think you are correct in your observation. Senator BOB COLLINS—Why has it not happened? Is this a profound failure on the part of the department to provide the appropriate policy advice to the minister? Mr Harris—I think I would have to refer you to my minister for that. Senator BOB COLLINS—Why haven’t the lines on the maps disappeared, Minister? Can you give me an absolute assurance that at least under the new system of drought relief that system will end once and for all the problems of drawing lines on maps? In other words, there will be no demarcation between the people who are getting it and the ones who are not getting it. That was a great commitment of this previous government—lines would just disappear across Australia whether they are on state boundaries, the property’s boundaries, regional boundaries—there will be no lines on maps. Mr Harris—That is a policy decision. Senator BOB COLLINS—Lines on maps is a policy decision. Mr Harris—A consideration of advice on how any— Senator BOB COLLINS—In fact, that is fine. That is okay. If the government simply announces as a new policy decision that there will no lines on maps, they will disappear? Can you envisage a system of drought relief which by definition only applies to people, hopefully, who are in drought circumstances which do not involve, somewhere or another, drawing a line on a map? Mr Harris—Certainly, as the Senator is implying, these are very difficult questions. Senator BOB COLLINS—Somehow or other they are always magically easy in opposition. I do not know why that is. I would like to talk about the dairy industry in Gippsland, which I raised earlier today. I am sure you— CHAIR—Can I just ask them about the drought? Senator BOB COLLINS—Yes, certainly. CHAIR—You would be aware, I know, that the application by the Western Australia government for exceptional circumstances on areas of the south coast was rejected. It received significant criticism by Minister Monty House, I believe with a lot of justification. Can you inform us whether or not RASAC did an on-the-ground assessment of the area that exceptional

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 386 SENATE—Legislation Wednesday, 11 June 1997 circumstances were claimed for? If so, how extensive was it, who was involved in it, and what other information can you give us? Mr Harris—RASAC was not asked to do an assessment of the submission by the Western Australia government for exceptional circumstances for the south coast area. The minister received advice from the department on the submission and made his decision in consideration of that advice. CHAIR—From the Western Australian department or from the department of primary industries here? Mr Harris—From the Department of Primary Industries and Energy. CHAIR—Would it possible for you to advise us whether or not any officers from the department inspected the area? Mr Harris—No officers from the department inspected that area as part of the application by Western Australia for exceptional circumstances. CHAIR—Then what were the grounds for the rejection, if there was no inspection made and RASAC did not look at it? I would have to say—and I live down there and I have declared an interest in this before—that it is the most devastating dry that I have ever seen in my life. That includes what I saw over here. I am just staggered in terms of what happened down there. Was there any assessment done in terms of the stock that were moved out of the area? I particularly refer to the area from Albany to Munginup. Mr Harris—As all exceptional circumstances reports are, it was based on the evidence of a demonstrated exceptional circumstance as made by the state government and the minister’s assessment of that case. CHAIR—You can take this on notice if you like. Can you give us a summary of the reasons why it was rejected? Mr Harris—That would be policy advice to the minister. Perhaps that issue could be deferred to the minister. Senator BOB COLLINS—Was it formally considered by RASAC? Mr Harris—It was not formally considered by RASAC. Under the current procedures as agreed by the Commonwealth and the states, the minister is not obliged to refer applications to RASAC, but he may refer applications to RASAC. In this instance, on the basis of the submission and of his assessment of whether the events were beyond the normal risk management capacities of those farmers in that region, he elected to decline the application for exceptional circumstances. Senator BOB COLLINS—If I had tried that I would have been beaten to death. CHAIR—I obviously can pursue this with the minister, but I must say I am incredibly disappointed to hear that. I am amazed to hear it. I just think I will leave my comments at that. But I think, in terms of that particular application, it fits into the same category as the applications did for the south Gascoyne. It is no wonder that Minister House comes out and makes such comments when we have one rule for the west of Australia and a different rule for the east of Australia. Senator BOB COLLINS—But the application— CHAIR—Pardon? Senator BOB COLLINS—Sorry, Mr Chairman, I was just asking if you had finished.

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CHAIR—Yes, I have finished. Senator BOB COLLINS—Thanks. On the same issue, I assume the application came from the government of Western Australia? Mr Harris—That is correct. Senator BOB COLLINS—Having received a state government application, the minister pre-emptively determined in his own portfolio not to refer the application to RASAC for assessment? Mr Harris—I think I would have to say that the minister elected to exercise his decision making ability to make a decision on the basis of the submission he received. Senator BOB COLLINS—Minister, I guess this is a more appropriate question for you: could you refer this matter to— Senator Parer—I will refer it. Senator BOB COLLINS—The question I would like to ask the minister is this: could the minister advise the committee, and obviously he will have to in writing, of the basis on which he determined that an application for drought assistance from a state government would not be referred to RASAC for its consideration and recommendation? The reason I ask the question specifically is that RASAC’s role, of course, is advisory only to the minister and it is open to the minister at the end of the day to accept, reject, amend or do anything he likes with the RASAC recommendation. Frankly, I must say I share Senator Crane’s astonishment. I did not know that. I had just assumed wrongly that there had been a RASAC consideration of the thing and, whatever the recommendation, the minister had then rejected it. But I was as astonished as Senator Crane, I must say, to know that the minister in fact determined the issue without referring it to RASAC. Mr Harris—Can I respond to one point on that. I may need to make a point of clarification on that. As I recall, the submission from Western Australia was not for DEC, it was for exceptional circumstances. CHAIR—That is correct. Senator BOB COLLINS—Sure, I am aware of that, thank you. The application from Victoria—who has made that application for assistance? Mr Harris—That application has been made by the Victorian state government. Senator BOB COLLINS—By the state government on behalf of— Mr Harris—Of the region, I suppose. Senator BOB COLLINS—And they have nominated the regions that they want? Mr Harris—Correct. Senator BOB COLLINS—Has that been referred to RASAC? Mr Harris—Correct, it has. Senator BOB COLLINS—It has? Mr Harris—Yes, it has. Senator BOB COLLINS—What is so dramatically different between Victoria and Western Australia? Mr Harris—The assessment of the minister as to the— Senator BOB COLLINS—That is self-evident, thanks. Good answer.

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CHAIR—In Victoria were there fences totally covered by sand, which stock could walk over, over thousands of acres? Senator BOB COLLINS—Not in any bit of Victoria I have ever seen. But, of course, they have got rabbits that burrow into the ground. CHAIR—Senator Collins, you just keep going. Senator BOB COLLINS—Goodness me, I didn’t know that. What process is generally in place to deal with submissions that might sit outside the normal EC process but present a strong case for assistance? Mr Harris—There is no unique process. We have had the submission that Senator Crane referred to. The minister has received the submission from the Victorian government concerning Gippsland. Both of those are different territory than we have dealt with for some time. As I said, there is no unique approach. Senator BOB COLLINS—In answer to a question that was placed on notice by Senator Murphy, you advised that there had not been a submission from the New South Wales government in respect of the difficult conditions that are currently facing the farm families that are living on the Monaro. Was there a submission from anyone else? Mr Harris—As I recall, the New South Wales Farmers Federation sent a letter or a submission to the minister indicating that they would support an application for DEC for the Monaro region. Senator BOB COLLINS—Sorry, to the federal minister or the state minister? Mr Harris—I think that was sent to the federal minister— Senator BOB COLLINS—But no such application was forthcoming? Mr Harris—No such application has yet been forthcoming from the New South Wales state government. Senator BOB COLLINS—Can you advise the committee of where the process of rural counselling is at? I assume it is all caught up in that same process, is it? Mr Calder—The rural counselling program was an element of the review of the rural communities access program. Senator BOB COLLINS—The number of rural counsellors has been cut back for this coming financial year; is that correct? Mr Scott—No, they have not been cut back this year. We are continuing to support the drought counsellors as well as the normal counselling operations. Senator BOB COLLINS—Sorry, the coming financial year? Mr Scott—In the coming financial year, we got that appropriation in the budget, you will see. Senator BOB COLLINS—So for 1997-98 there is no cutback? Mr Scott—There is no cutback. Senator BOB COLLINS—Does the department have a copy of the Attorney-General’s review of counselling services, which I understand has been done by A-G’s? Mr Scott—I am not aware of that one. It may be another counselling service that they refer to.

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Senator BOB COLLINS—Do not worry about it. I will pursue that with A-G’s. I was told there was one done. Has it been determined what role the Department of Primary Industries and Energy will have in the future delivery of counselling services? Mr Scott—The role that the counselling services in future will play is wrapped up in the integrated rural package. We are discussing that with the community groups at the present moment. CHAIR—That finishes questioning on subprogram 1.5. I thank the officers for their attendance. We now move to subprogram 1.7. Subprogram 1.7—Fisheries Senator O’BRIEN—In relation to the $9.75 million fisheries action program to help conserve and rebuild Australia’s fisheries resources, could you give me a bit of a run-down of that program and where the money will be expended? Ms Harwood—The program is based largely around spending at the community level and through matched grants in the states. So the bulk of the project money flows through the state assessment process and is geared towards community action for restoring fisheries habitat and improving the sustainability of fisheries. Senator O’BRIEN—What sorts of community actions? Ms Harwood—If you like, I could give you a list of examples of projects that are being funded under this year’s program. The precursor was the fishcare program. I could provide that to the committee. Senator O’BRIEN—Is the whole of the $9.75 million committed or have you just partly committed that? Will you be able to supply me with information on that part of the funding which is committed to particular programs? Ms Harwood—The granting process for the 1996-97 money is in train at the moment. A lot of the money has gone out for projects. Cheques have been sent out. We have just commenced the assessment process for next year’s moneys. Senator O’BRIEN—I see. Sorry, I misunderstood you. Perhaps you can supply me with the details of the 1996-97 expenditure and what it was expended on. You are telling me it is the same project, essentially, for 1997-98. Ms Harwood—The structure of the program is similar for 1997-98. The granting process is a little more complex because it goes through the Natural Heritage Trust one-stop shop process for granting. So the fishcare program for this year had a simpler assessment process. Senator O’BRIEN—Is the $9.75 million for last year or this year? Ms Harwood—That spans over the next year and the subsequent four years. Senator O’BRIEN—Is that going to be part of the Natural Heritage Trust program or under the control of DPIE? Ms Harwood—It is under the Natural Heritage Trust, but it is managed in DPIE. It is through both the coasts and clean seas and the rivercare parts of the trust. Senator O’BRIEN—How does that vary from projected expenditure on this program? Is there any increase in expenditure on this program projected from the 1996-97 budget? Ms Harwood—Yes, I think the commitments for the outyears really came through in this most recent budget. Senator O’BRIEN—The outyears were not previously committed?

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Ms Harwood—No. Senator O’BRIEN—Was there a commitment for 1997-98 in the 1996-97 budget? Ms Harwood—No, not to my knowledge. Senator O’BRIEN—The other program announced, particularly in relation to the oceans policy, was the $1 million to fund strategic ballast water research. Is that a recurring program or a new program for 1997-98? Ms Harwood—I think that is a one-off, and it is under the control of AQIS. Senator O’BRIEN—Sorry. I think I am relying in part on the minister’s departmental home page. CHAIR—You can ask that of AQIS. We have AQIS later on in the evening. Senator O’BRIEN—I certainly will, but it was under the heading on the minister’s home page under fisheries and aquaculture and the oceans policy. Ms Harwood—It was amongst the package of actions that was announced when Australia’s intention to have an oceans policy was announced. Senator O’BRIEN—I see. You have put it in the wrong place, Minister, have you? Mr Barratt—It is a cross-reference. Senator O’BRIEN—It is a cross-reference, is it? Mr Barratt—Yes. Senator O’BRIEN—That is all I have on that particular subprogram. Senator MURPHY—I want to ask a couple of questions about your April 1997 R&D News. Was there any reason for the funding shortfall of $3 million as a result of the lack of states and/or territory governments to collect industry funds? Was that just a downturn in the industry? What caused the funds not to be collected? Ms Harwood—It is a mixture of reasons, Senator. A substantial proportion of the industry contributions to FRDC are voluntary, and it depends on the levels that come through from the state managed fisheries. Senator MURPHY—But the levies at a Commonwealth level are compulsory? Ms Harwood—I will ask Mr Stevens to answer that. Mr Stevens—Yes, the levies for Commonwealth fishing concession holders are compulsory. They are not for states. Senator MURPHY—I wonder about the point being made in the report that there is $1.5 million assumed non-collected which would be matched dollar for dollar by the Common- wealth. Why isn’t there some agreement about the state levies being compulsory as well, if you are funding it dollar for dollar? Is it just an encouragement exercise? Mr Stevens—It is basically an encouragement exercise, but I think it is probably best that we take that question on notice as it is a Fisheries Research and Development Corporation matter rather than one we are specifically involved in. We will get a report from the executive director of the FRDC, if that will help. Senator MURPHY—Mr Nick Ruello made some comments in an article in R&D News. The article was about problems with the retailing side of seafood. He suggested that FRDC invest millions of dollars in R&D, which it obviously does in terms of preparatory work and

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 391 ensuring quality standards, et cetera. Is anything being looked at from the department’s point of view to see whether or not something can be done to overcome that problem? Ms Harwood—There is the SeaQual program, which commenced last year, which is an intention to raise awareness of quality assurance throughout the industry and to help industry build a stronger approach to quality assurance. Senator MURPHY—Are you talking about the retail side of it or just as a direct? Ms Harwood—It is throughout the industry from catching processing and sales. Senator MURPHY—What about the issue that goes to the seafood outlook about ABARE claiming that tight supplies will lead to higher prices? Can you give me any information about that? You might have to take it on notice. I am interested in the research they did on that. Ms Harwood—Yes, I will take that on notice. Senator MURPHY—How is the issue of the south-east fisheries adjustment package progressing, which I understand will commence on 1 July and be completed by 30 June, in terms of the initial discussions? Ms Harwood—We are looking at getting the precise amounts worked out of what it is that each of the potential applicants for adjustment assistance will receive. Basically, we are in the process of setting up the adjustment program and making sure that all the parameters are right for that to take place. Senator MURPHY—In terms of the overfishing problem and what would appear to be too many boats, have you identified what number of boats might need to be taken out of the industry? Has that been identified? Mr Stevens—The fishing itself is controlled by total allowable catches for the 16 major commercial species. There is not an overfishing problem as such, but there is a viability issue for the operators in the fishery. The report received by the government in relation to the SEF adjustment working group proposed that up to 50 permits of the 130 might be bought out through that buy-out. CHAIR—We will break now and resume at 10 to five. Sitting suspended from 4.31 p.m. to 4.53 p.m. CHAIR—The hearing has resumed. I call Senator Murphy to ask questions on subprogram 1.7. Senator MURPHY—I wish to ask a question in regard to the ICS agreements that have been signed off between the Commonwealth and Tasmania. The MOU, which details the responsibilities of each government, has not been signed off. Can you tell me where that is at, and if it has been signed off? Mr Stevens—It has not been signed off, but it is expected to be signed off by 30 June. There is a number of residual matters that have to be agreed between the Commonwealth and Tasmania, and there was a meeting held last Thursday and Friday to finalise those. The other aspect that needed to be finalised was the state crown solicitor’s endorsement of the wording of the MOU. Senator MURPHY—So there were not any significant problems? Mr Stevens—No.

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Senator MURPHY—I wish to go back to the question of the issue of the buy-out of the boats out of the south-east fishery. With the consideration of all of those matters, have the by- catch issues been taken into account in dealing with that in an overall sense? Mr Stevens—I guess that, in an overall sense, the Commonwealth is in the process of finalising a by-catch policy for all fisheries which it manages. In relation to the south-east fishery, we are in the process of incorporating a specific action plan for that fishery to deal with the by-catch issue. That is in its very early stages, however. Senator MURPHY—Would that not have a potential impact on the number of boats that you may ultimately have to take out of the system? Mr Stevens—No. In relation to the catches of the 16 major species, there is a total allowable catch for those species. When you have caught your individual catch, you have got to be able to either purchase or lease fish to make up any additional catch that you want to take. So the total allowable catch is the defining parameter for fish caught in the fishery. Individuals decide what their own level of take is going to be and, if they want to take 100 tonnes one season and 300 tonnes the next, they have got to purchase or lease the additional 200 tonnes to take what they want to take. Senator MURPHY—And they can spread that out over whatever period of the year they like? Mr Stevens—Yes, and that is the attraction of the total allowable catch. Senator MURPHY—Yes, I understand. Thank you. CHAIR—We will put on notice five questions from Senator Brown on fishing, subprogram 1.7. Senator CALVERT—Have you heard of the project to develop soft pellets for feeding the tuna in Port Lincoln? Ms Harwood—Yes. There has been a lot of work developing alternative feed for the tuna farms. Senator CALVERT—There is a particular company in Tasmania, Kenshaw, which has spent quite a deal of time developing a pellet and they have had assistance from AusIndustry. But I have found that SARDI—South Australian Regional Development Institute—seems to be repeating the same development and I believe it is being funded by FRDC. Why would anybody want to duplicate the particular work that has already been done if it is satisfactory? Ms Harwood—I am happy to follow up on it. I am not familiar with the detail of the two projects that you are referring to. There was a meeting about a month ago to rationalise the research on feeding and farming technologies to make sure that FRDC was getting the best value for the dollars it was investing in research at the farms, and that brought all the people working on feed research and farm research together. Hopefully, that has developed a program that removes any duplication. Senator CALVERT—Have you heard of Kenshaw? Ms Harwood—No, I have not heard of it personally. Senator CALVERT—They developed the pellets for the Atlantic salmon in Tasmania, and I believe they have now developed feed for abalone and for the proposed lobster fishery. They contacted me and queried the fact that, after all the money they had spent, we find another government agency funding another group to do exactly the same thing. I just felt it was a bit counterproductive.

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Mr Stevens—It is an interesting question because one of the members of the FRDC board is Mr Peter Shelley, who is very much involved in that. He was involved in the consideration of the projects that FRDC funded. Senator CALVERT—I find that unusual. I know that the minister was instrumental in ensuring that the very small Tasmanian tuna industry have now a little more area to fish. I think the limit has been pushed out from 12 miles to— Ms Harwood—It was moved from 12 nautical miles to 17 nautical miles off Tasmania. Senator CALVERT—Is it proposed that that be moved any further, do you think? Ms Harwood—The Japanese government is on notice that that is an issue for Australia and that we will be looking at how far offshore the fleet is moved, depending on developments in the domestic fishery. They are well aware that there is pressure to move them offshore. Senator CALVERT—Have you had any complaints from the Tasmanian based tuna industry about lack of quota? Mr Stevens—We have had no complaints that I am aware of. They are able to purchase quota if they wish from other quota holders. Senator CALVERT—Yes, I raised that with the minister’s office because I think the price may be a bit high for them, but it is there for anyone to purchase, I suspect. What about the state of the orange roughy industry? Is that still surviving? Mr Stevens—Yes, it is surviving. A much more rigorous compliance program has been applied over the last three or four years and a very rigorous stock assessment was done in 1992-93. The industry has accepted that the level of catch in that fishery has to go down, and it has decreased, I think, to 3,500 to 4,000 tonnes. Everyone is complying with the arrangements so it seems to have settled down. Senator MURPHY—What sort of decrease does that represent? Mr Stevens—The initial catches in the late 1980s were of the order of 42,000 tonnes. Senator MURPHY—I would like to ask a follow-up question to the question from Senator Calvert about the moving out of the boundary in the Tasmanian tuna fishery. Given the nature of the fish and their tendency to run up the shelf, why wouldn’t the boundary be moved out to at least there. Ms Harwood—To the edge of the shelf? Senator MURPHY—Yes. Senator CALVERT—Twelve miles is the end of the shelf. Senator MURPHY—Not all the time. Ms Harwood—It comes down to a commercial consideration in terms of when it loses value to the Japanese to take the fish that they are buying. If they are moved too far offshore the catch rates are not attractive to them. It is a balance between a deal that the Japanese are interested in buying and something that protects the interests of the domestic industry. CHAIR—Senator Calvert asked a question regarding fish feeding and you said that you would look at the two propositions. Could I also request that you look at the Hunts operation in Western Australia where they have developed, through a significant amount of research, both aquacultural feeding and offshore feeding? I think a lot of the work has been done.

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Senator CALVERT—If you are going to follow that question up for me, I believe that that was developed for a particular reason and that was to replace the import of pilchards because of the problems that arose. CHAIR—I thank the officers at the table. We will now move to 1.8 Subprogram 1.8—Petroleum Senator O’BRIEN—I was going to ask some questions about your policy objective in the program but I take it that the explanation for that change is the same as previously. Why are the running costs for 1997-98 reduced from the previous financial year by 28.9 per cent? How will these running cost reductions be met? Mr Pickering—You will notice that there is a significant increase between the budget figures for 1996-97 and the revised appropriation figures for the same year. I understand that that increase was a reflection of an error that was made in the compilation of those figures. To explain that: the petroleum subprogram consists of two elements. It consists of the work of the two petroleum branches and the petroleum and fisheries division, and the work of the gas reform unit in a separate part of the resources and energy group. When these figures were put together it was not the gas reform unit that was added in, it was the electricity unit. Once that mistake was recognised that was changed. That is the explanation for that big drop. Senator O’BRIEN—On page 69 in the first column ‘1996-97 budget’ you have $5.636 million. For the revised appropriation you have $6.893 million. The estimated outcome is the same figure and then there is this year’s budget figure. Which of those figures is wrong? Mr Pickering—The $6.893 million is too high. Senator O’BRIEN—In both cases? Mr Pickering—In both cases. The comparison should be between the $4.9 million and the $5.6 million. Senator O’BRIEN—So there is a reduction not of 28.9 per cent but about 12½ per cent? Mr Pickering—Of $700,000, yes, whatever that is. Senator O’BRIEN—Given that explanation, what would account for the reduction in the running costs that are reflected in those amended figures? Mr Pickering—Some of it would be accounted for by the termination of the ethanol bounty scheme administration. I am not sure how much of that, Senator. The rest of it would have been accounted for in terms of the general reduction of running costs to the division. Mr Zuber—Can I supplement that? Senator O’BRIEN—Yes please. Mr Zuber—This is speculative. I can come back and inform the committee. I have just noticed that, if you take within the R&E group this program and the two successive programs, which are coal and minerals and energy, if you look at the energy figure under 1.10, it cops quite an increase from the expected outcome. Now, I am wondering whether these variations in fact reflect the restructuring that we were talking about earlier in the new financial year between the three divisions and whether that is a major factor in the attribution, because, if you take the three items together, you will find that the movement is pretty flat. Senator O’BRIEN—Yes. I can understand that that might be the case. What I do not understand is, if that is the case, why there is not an annotation in the papers. They are not

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 395 easily understood by those people using them without some sort of annotation which would explain that. Mr Zuber—Yes, you are quite right. I do not know that to be the case. I am speculating that it is the case. If it is, we should put an addendum out. There should be a variation, as Mr Pickering has pointed out. My expectation is that there would have been a somewhat increased expenditure in this current financial year due to some payouts of a small number of redundancies and the like and some reductions due to program decreases next year. The variations just on line of sight are too large to explain that. I anticipate that what it is is the restructuring and the attribution of that restructuring across the programs. I do not know that to be the case. If my hunch is right, one way or the other I will come back to the committee. I am sorry I do not have the information in front of me at the moment. Senator O’BRIEN—Firstly, are you saying that the estimated outcome on page 69 is wrong? Mr Zuber—Yes. Senator O’BRIEN—That is the first point. When was it known that that was wrong? Mr Zuber—In my case, about two minutes ago. Senator O’BRIEN—I see. Does anyone else have an earlier estimate of when this problem was noticed? Mr Pickering—This was drawn to my attention a matter of only a day or so ago. Senator O’BRIEN—So this figure being incorrect will also influence other figures in the portfolio budget statement—that is, there is money here which should be somewhere else. Is that right? Mr Dolan—The error is essentially between this subprogram and the energy subprogram. It was just an incorrect attribution of one of the elements that goes up to make each of those subprograms. They were switched over. The error was discovered in the process of preparing ourselves for discussions at this committee. So we would have noticed it, I think, about 48 hours ago. CHAIR—Can I just clarify something there. If you transpose those figures back to where they belong, it makes no difference to the overall total figure? Mr Zuber—The overall departmental totals are absolute. CHAIR—Thank you. Senator O’BRIEN—Minister, can I ask then why an opening statement was not made about this error? Senator Parer—Senator, I heard about it one minute ago, the same as Mr Zuber. Mr Zuber—I guess, Senator, I will take responsibility for not understanding that before it was mentioned by you. Senator O’BRIEN—Just for my edification, what should the figure be in subprogram 1.10 so I do not make the same assumptions? That is the program where the error is. Mr Dolan—Senator, the correct outcome figure for subprogram 1.8 is $4.792 million. For subprogram 1.10, it is $9.749 million. Senator O’BRIEN—Which means that there is actually a minor increase in expenditure budgeted for in this program.

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Mr Dolan—That is correct. Senator O’BRIEN—From $4.792 million to $4.901 million. Mr Dolan—That is correct. Most of that is reflected in the fact that, as you can see, the estimated outcome is less than the actual appropriation for this year, so that is carried over into next year. CHAIR—What was the one on 1.10? Mr Dolan—It was $9.749 million. Senator O’BRIEN—So the difference between the revised appropriation and the estimated outcome will carry you over into 1997-98. Mr Dolan—Yes. Senator O’BRIEN—So, in addition to the $4.901 million— Mr Dolan—No, included in the $4.901 million is an estimate— Senator O’BRIEN—It is included in the $4.901 million. Mr Dolan—Of the effect of the carryover, as I understand it. I am sorry, as this was only drawn to my attention at a fairly late stage. But I should have been more prepared than I have indicated for this. CHAIR—Perhaps, for our records and when we give our report to the Senate, you could print up two revised pages for replacement purposes in the booklet, please. Mr Dolan—I am happy to do that, yes. Mr Zuber—There is a requirement on us to issue an erratum, anyway. Senator O’BRIEN—So there is no substantial change in the operating structure of this subprogram. Mr Pickering—That is correct. Senator O’BRIEN—How is it intended to improve the efficiency of the regulatory frameworks? Are any changes to the administration of offshore petroleum approvals for exploration and development foreshadowed? Mr Pickering—We are in the middle of conducting a quite extensive evaluation of the petroleum subprogram, and that includes the regulatory arrangements of the subprogram. That could well lead to changes which improve efficiency. That is the intention of the evaluation. Mr Kjar—I would add one point to that. We are also in the process of preparing some guidelines which will be provided to industry, and also to Commonwealth and state officials. The guidelines provide further information about what is required of companies, and the process by which government will proceed for reviewing those applications. That is intended and expected to help to improve both the timeliness of the process and the workload required for officials. Senator O’BRIEN—When you say that you are in the process, how far advanced is that process? Mr Kjar—We have completed one of the guidelines which is to do with the approvals for production licences. We are in the process of discussing with industry and the states an additional two guidelines which will be dealing with retention leases and pipeline licences. Then we will move on to operational approvals and abandonment.

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Senator O’BRIEN—You describe them as guidelines. Do you mean that they are separate guidelines which are distinct from the other groupings of guidelines, or are they a set of guidelines of which you have only done one? Mr Kjar—Yes, it will be a set of guidelines of which we have only done one so far. Senator O’BRIEN—Did you indicate how long you thought it would take to complete that process? Mr Kjar—We would like to have the guidelines for retention leases and pipelines completed by the end of this calendar year. We then would be seeking to proceed with the remaining two in a time frame yet to be determined. But that time frame will be determined very much by the speed at which we can complete the first two. Senator O’BRIEN—Would it be too preliminary to release the guideline that you have completed? Mr Kjar—It has been released. Senator O’BRIEN—Has it? Mr Kjar—Yes. Senator O’BRIEN—Where would I access it? Mr Kjar—We can provide you with a copy. Senator O’BRIEN—Thank you very much. What precise role will the department play in the oceans policy; and what is the timetable for the development of the oceans policy in this area? Mr Pickering—I might get my colleague Mary Harwood to answer that question, as she is part of the same division and it is her area. Ms Harwood—The oceans policy is being coordinated through Environment Australia, but our department is one of a core set of departments with a very active role in its development. The time lines for it, I gather, have just recently been stretched a little, and the expected production date for the policy—the sort of end of the process—is now July 1998. Senator O’BRIEN—How many departmental staff will be involved in this developmental program? Ms Harwood—There is input from a lot of areas in the department because it affects many areas of the department’s activity. I think I would have to take on notice the actual staff involved. It is mostly people flowing in when information or input is needed on particular issues. Senator O’BRIEN—Does your department have any role in consultations with industry and environmental agencies? Ms Harwood—There have already been some preliminary consultations with industry groups—and, yes, we attended those. I know from my area that we attended the ones with the fishing industry and the recreational sector. The consultative process is open to any of the Commonwealth agencies that wish to participate. Senator O’BRIEN—Does your department manage that, or does Environment Australia manage that? Ms Harwood—It is essentially coordinated from within Environment Australia, although we made the suggestions as to which industry associations and bodies needed to be engaged in that consultation process.

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Senator O’BRIEN—Is it possible to provide a list of the industry representatives and environmental agencies who have been involved in those consultations? Ms Harwood—Yes, I could get that. It has been prepared by Environment Australia, so it could either come from them or I could pass it through to you. Senator O’BRIEN—I am happy, whichever source it comes from. Ms Harwood—Okay. Senator O’BRIEN—There is talk of new objective based environmental regulations—and I think this is not so much connected with the oceans policy but generally. Why are these being developed? Was any review carried out? Mr Kjar—Please can you repeat the last part of the question? Senator O’BRIEN—There are new objective based environmental regulations being developed, as I understand it. Mr Kjar—Yes. Senator O’BRIEN—Why are these being developed? Was any review carried out? Mr Kjar—Already, under the Petroleum (Submerged Lands) Act and the directions issued under that act, there are a set of regulations. They are seen to be very prescriptive, rather than objective, in their setting. It has been the government policy to move, such as in relation to safety, towards objective setting regulations, rather than these prescriptive ones. The intention is for the environmental regulations to proceed along the same sorts of lines. Then, presumably, we will follow with other regulations, such as resource management; those regulations would be along similar lines. So it is reflecting the government’s policy of regulation. Senator O’BRIEN—It does not then arise from any particular review process. Mr Kjar—Not any particular review process, no. Senator O’BRIEN—Are there any reviews whose findings are important in the development of these new regulations? Mr Kjar—The findings from several reports will be certainly incorporated and taken into account in the setting of those regulations, yes. Senator O’BRIEN—Are they reports that have been conducted by the department? Mr Kjar—There have been several reports. For instance, there has been the State of the marine environment report, which was released in 1996. There has been an expert study commissioned by the Australian Petroleum Production and Exploration Association. I think that was in 1995. There have been quite a lot of reports which have been prepared by companies in relation to specific petroleum exploration activities and petroleum production activities. Plus we will be taking into account advice from the relevant environmental and other agencies. Senator O’BRIEN—Do you have a target group of industry groups and environmental agencies that you will be consulting about the development of these new regulations? Mr Kjar—There certainly has been consultation with those. We have brought in the Commonwealth Environment Australia plus representatives from the industry. If you wish, I am quite happy to arrange for a listing of those participants. Senator O’BRIEN—Yes, I would like that. Could you tell me what the timetable was for the completion of these new environmental regulations?

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Mr Kjar—By June 1998. Senator O’BRIEN—The budget papers mention an evaluation for the petroleum program. When is it expected that the review will be completed? Mr Pickering—By September this year. Senator O’BRIEN—Who has been involved in that? Mr Pickering—There is a steering committee established. The chair is the executive director of the resources and energy group. It has an APPEA executive director on it. It has an industry representative on it. It has a senior person from the Department of Finance on it, and it has a state representative on it as well. Senator O’BRIEN—At whose request was the review commenced? Mr Pickering—That is a bit of history I am not familiar with. It was certainly planned, as I understand it, as part of a regular series of evaluations of important programs which the department performs. I would expect that it would have been initiated by the department as part of its ongoing efficiency drive. Senator O’BRIEN—Could you confirm that? Senator Parer—I discussed this with Russell Higgins before he became a mandarin. Senator O’BRIEN—If that adds to the answer, I am happy for that. Senator Parer—He discussed it with me. He went to take over control of DIST. Senator O’BRIEN—Minister, are you saying that Russell Higgins is the initiator? Senator Parer—Yes. Senator O’BRIEN—Are the terms of reference for the review in written form? Mr Pickering—Yes, they are. I do not have a copy with me but I can supply you with a copy. Senator O’BRIEN—Could you let me know what the current make-up of the National Oil and Gas Safety Advisory Committee is? Mr Pickering—In terms of the names of the people? Senator O’BRIEN—Yes. Mr Pickering—I think I can recall them all but it would be best if I gave you the list. Senator O’BRIEN—That is fine. I am happy with you supplying it in written form. Can you also let me know if there has been any change in the make-up since its establishment and, if so, what the changes were and why those changes took place? Mr Pickering—I know there has been one change. A Woodside representative left Woodside and was replaced with another industry representative. I can include that in the list of names for you. Senator O’BRIEN—Can you also tell me what activities have been undertaken by the National Oil and Gas Safety Advisory Committee since its establishment? Mr Pickering—Yes. The activities have been to monitor the work in safety, which has been progressed by the states, by industry and the work which Dr Barrell has undertaken in his 1996 report of oil and gas safety offshore. At least a couple of subcommittees have been established and they are in the process of developing performance measures of safety and revising the guidelines for the preparation and assessment of safety cases.

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Senator O’BRIEN—At this stage the guidelines or recommendations of that committee have not actually been considered by the department. Is that a fair comment? Mr Pickering—The committee is an ongoing committee which provides advice to the minister. It has met twice. The next meeting is on 25 July this year. Senator O’BRIEN—At this stage there have not been any recommendations which have developed to the point of going to the department. Mr Pickering—That is correct. Senator O’BRIEN—Are there any proposed or contemplated changes to the petroleum secondary taxation system under consideration? Mr Pickering—The petroleum secondary taxation system makes an important contribution to the revenue base, and stability is an important aspect of that. But at the same time the government has indicated that it is prepared to look at cases which the industry might make to address anomalies and, if appropriate, to streamline various aspects of that regime. Recently some streamlining aspects of the excise administration have passed through the parliament and hopefully will commence on 1 July. Senator O’BRIEN—Apart from that which has passed through the parliament, are there any other changes being examined or—if they are not being examined—that have been proposed for consideration by the department? Mr Pickering—Industry has made various cases at various times for changes to the petroleum resource rent tax arrangements. We understand that industry is in the process of making a further submission on that. Senator O’BRIEN—Are you saying that there are none currently before the department? Mr Pickering—We do not have that submission at the moment so we are not looking at it. We have looked at similar submissions in the past. Senator O’BRIEN—When you say there have been similar submissions, do you now know what their submission is going to be? Mr Pickering—We know of a general flavour or a general direction, but we do not know any of the specifics which the industry submission has in it. Senator O’BRIEN—You are making it sound like a merry-go-round submission you get every year, is that a fair way of categorising it? Mr Pickering—That was not the intention. I think industry has put a lot of effort into substantiating their case. We have not yet received it. Senator O’BRIEN—But it is the same submission? Mr Pickering—I do not think that is the case. As I have not seen it, it is difficult to say exactly what is in it. My understanding is that there is quite a degree of detail which APEA has put together. Senator O’BRIEN—That is what I am wondering. If you have not seen it how do you know what it is. Mr Pickering—Only because APEA officials tell us in the broad that they are working on the development of a submission. Senator O’BRIEN—Can you elaborate on what the submission is about? Senator Parer—If it follows the past approach it will relate to deep water.

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Senator O’BRIEN—You are leaving me in it with that answer. Can I have a bit more detail? Senator Parer—It is where they explore and look at the production of either gas or oil in deep water. It is in excess of 400 metres. Senator O’BRIEN—Without wanting to compromise anyone, could you supply me with details of similar proposals so I can get a more meaningful understanding of what the proposal is about. I know you do not have the current one, but are you saying that you expect it to be in a similar vein to that which you have received before? Mr Pickering—Some of the information will be commercial-in-confidence because it involves detailed costings of the activities that the companies undertake. Senator O’BRIEN—I am not asking for that, but there must be a proposal on the tax measure surely? Senator Parer—Someone has suggested—and I think it is a good idea—that, if you contact APEA, they will give you a briefing. Basically, we take the view that money spent on exploration of oil or gas in Australia compared to in other parts of the world should be competitive. No-one disagrees with that. If you are not, you are going to get a flight of dollars, particularly exploration dollars. Our view has certainly been that currently Australia is pretty competitive on a fiscal basis compared to most parts of the world. There are a few exceptions. One is the North Sea and the other is the Gulf of Mexico. Senator O’BRIEN—I think I understand the drift of what you are saying, Minister. For my own understanding I am happy to accept a subsequent briefing. If that is not satisfactory, I can always come back to you on this matter at the next round of estimates. Can you tell me what the current state of play is in terms of gas reform? What progress and outcomes have been made in the last 12 months and what is expected for the next 12 months? Mr Todd—The gas reform agenda has currently reached the position where the national third party access code is close to completion. We should see that completed by around the third quarter of this year. At that point we would move into the public consultation phase under the National Competition Council. In parallel with that there will be legislation. That is again approaching completion, and we would expect to see that introduced towards the end of this year. In parallel with that there will be an intergovernmental agreement giving the necessary commitments between governments as to how the arrangements would work. We would expect to see that legislation all passed by the end of the first quarter next year. At that point the national gas access arrangements would be in place. Senator O’BRIEN—In relation to that legislation are you saying that drafting instructions have been prepared and given to parliamentary council? Mr Todd—Correct. The Commonwealth and state parliamentary councils are currently working through that process. Senator O’BRIEN—Is there any special proposal for funding the public consultation phase? For example, would you be using any consultants to release any consultation documentation? Mr Todd—The Commonwealth-state consultation process is run under a gas reform implementation group. There is a sort of collective Commonwealth-state funding arrangement and that group does employ consultants from time to time and ensures that the necessary public information material is presented. One could expect that as the access code is released for public consultation the required information papers will go out with it. Commonly the Commonwealth funds a third of that.

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Senator O’BRIEN—What is the overall budget of that group? Mr Todd—The overall budget for the Commonwealth component, and that includes all funding, is approximately $1 million per year. Senator O’BRIEN—Does that mean the budget overall of that group is $3 million? Mr Todd—No, I would have to come back to you. I will have to take that figure on notice. Senator O’BRIEN—Could you also come back with details of the consultants that are used by that group, funded in part by the Commonwealth? Mr Todd—Certainly. Senator O’BRIEN—Thank you. It is a departmental officer group, is it? That is, there are departmental officers from the Commonwealth and from the state departments? Mr Todd—The gas reform implementation group includes both Commonwealth and state government officials and key industry organisation representatives. It is a broad ranging group that covers both industry stakeholders and the necessary Commonwealth and state officials. A recent key initiative has been the appointment by Senator Parer of an implementation leader, Mr Leigh Clifford from CRA, to push the process through to an early conclusion. Senator O’BRIEN—You said you were getting close to a public consultation phase. Is there documentation on the current state of play on this matter that can be supplied to the committee? Mr Todd—I can certainly take that question on notice and pull together a summary stocktake of where the reform process has reached. Senator O’BRIEN—Yes, I would appreciate that. Thanks very much. What impact is the capping of the diesel fuel rebate likely to have on the petroleum industry? Was the department consulted before the announced capping? Senator Parer—Senator, maybe you were not here. Senator O’BRIEN—I may not have been. Senator Parer—I do not think you were. We have done that one. Senator BOB COLLINS—Let’s go over it again. Senator Parer—I gave a very detailed answer to Senator Lightfoot. Senator O’BRIEN—Hopefully, we have not done this one. How many offshore areas have been released for exploration in 1996-97? How many exploration permits have been awarded over this year and what are the details of each of these? You may need to take that on notice. Mr Kjar—If we could take that on notice we will get you a full response. Senator O’BRIEN—I think it is the minister’s departmental home page that talks about there being possible up to 218 exploration wells this year in terms of petroleum; that is on page 3 of the printout of the minister’s departmental home page. Is that a fair description of the current state of play with exploration in Australia? I would be very interested if the department could provide statistics on that matter. Mr Kjar—If I could give a brief background to it. Those statistics are based on advice which we have received from APEA. APEA do a survey of their members on their expected levels of activity. The expected levels of activity really consist of a base level—a commitment they are required to carry out under the terms of their exploration permits—and over and above that there will be additional activity that they would wish to carry out. That is how you get that 217.

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In this case they have given us a range of estimates—I think something between 150 to 217 wells. I could be corrected, but it is that sort of range. That reflects very much the low level being near or at the level of commitment and the higher level being that which they might like to do, but they will no doubt be constrained by availability of drilling rigs and the actual exploration results obtained from wells in the adjacent area. Senator Parer—Just to give you a breakdown on this, I have got some figures on this, Senator. If you look at the wells drilled and the estimate given by APEA: onshore, 94 to 122; offshore, 65 to 96; with a total of 159 to 218. That compares with the previous year: onshore, 96; offshore, 47; and a total of 143. Senator O’BRIEN—Have you got those figures going back over more than two years? Senator Parer—Yes. Back to 1992, for instance, which I can give you. It is 80, 39 and 119. Senator O’BRIEN—That will save everyone’s time. And the range that APEA predict— Senator Parer—They are not all APEA predictions, some of them are actual results. It is the 1997 that is APEA. Senator O’BRIEN—With their range of predictions is there a history of accuracy—whether they are accurate at the lower or higher end of the range? The department may know the answer to that. Mr Kjar—I will have to take that one on notice. Senator O’BRIEN—To see how meaningful those assessments are, I suppose we can only test them against history. Minister, your home page reflects the upper level of the estimates— Senator Parer—I must look it up. I think it probably says ‘possible’. Is that right? Senator O’BRIEN—It says that up to 218 exploration wells are possible this year. Minister, I know you are interested in the matter of the termination of the ethanol bounty scheme. Again your home page says: The Government terminated the Scheme—saving taxpayers $21.3 million—after consideration of a portfolio evaluation which recommended that the scheme be discontinued. Would it be possible to receive a copy of that evaluation? Senator Parer—That has been provided in the past, but you are welcome to get another one, if you wish. Senator O’BRIEN—Thank you. Senator Parer—Also as a follow-up, a report was given to me by ERDC that recommended that the pilot plant not proceed until the additional R&D work was carried out, which is about 1999, I think. Senator O’BRIEN—I wanted to ask some questions about the infrastructure borrowings system that was announced in the budget. Was the department consulted on changes to the borrowings scheme announced in the budget? Particularly, what impact on the continued development of the gas industry does the department estimate the exclusion of energy projects from the scheme is likely to have? Mr Pickering—I think we would have to take that on notice, Senator. It is not something which I have information on here. Senator O’BRIEN—Minister, you were speaking this morning about the Chevron-Comalco deal and the Chevron pipeline. Is it fair to say that that project is not eligible under the infrastructure borrowings?

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Senator Parer—Under this current situation, correct. Senator O’BRIEN—Is it fair to say that the Dampier-Bunbury WA gas pipeline, the AGL central west New South Wales gas pipeline, the Bass Strait to Sydney eastern gas pipeline, and the duplication or looping of those are also excluded? Senator Parer—My understanding is, the development allowance has changed to the extent that it now applies to transport infrastructure. I am not sure what else, but I think that is it. Senator BOB COLLINS—I think that is about right. Senator Parer—There may be some projects that were on foot—if that is the best way to describe it—which I believe will be given consideration to. That is probably right. Senator O’BRIEN—Could you let us know what projects are on foot— Senator Parer—It is not our department. Mr Todd—We can give you a list of the eligible transition projects—those electricity and gas projects—that were in the pipeline, if you like, where a final decision had not been reached. About half the outstanding projects were electricity and gas and we can give you details of those, Senator. Senator O’BRIEN—Minister, you released the Australian Gas Association’s 1997 gas supply and demand study, I believe, not too long ago. I understand that study suggests that up to $14 billion of capital investment will be needed up to the year 2005 to meet the industry’s supply and demand needs. It predicts that gas will be Australia’s fastest growing energy source to the year 2030. When you are taking on notice the question of the impact of the infrastructure tax measure, I wonder whether the department could give me a view on what impact that will have on the capital investment needs of the gas industry as outlined in the Australian Gas Association’s 1997 supply and demand study. Senator Parer—We will do what we can, but I have got a feeling that it will not make any difference to their predictions. Senator O’BRIEN—You think it will have no effect? Senator Parer—That is an off the top of the head comment. I think those predictions—and I might be wrong—did not include the 18-month feasibility by Shell-Woodside for the $10 billion plant or gas field leading into Darwin. I do not think those figures included that, but we will check it. Senator O’BRIEN—The $14 billion figure? Senator Parer—Yes, I do not think it included the Woodside-Shell feasibility. Senator O’BRIEN—I am happy to wait on the response. I note your prediction, Minister. Senator Parer—Did I use the word ‘significant’? Senator O’BRIEN—I do not know, we will look at the Hansard. I think you took on notice the question of whether the department was consulted, but do you need to take that on notice? Can you tell me now whether the department was consulted about that? Mr Todd—The department was consulted through the process in terms of the changed infrastructure arrangements. Senator O’BRIEN—Did the department have time to put a view about that matter? Mr Todd—The department did express a view on the changed arrangements, Senator.

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Senator O’BRIEN—What was the department’s view? Mr Todd—The comment was made, as the earlier discussion has highlighted, that, with the changed arrangements that focused primarily on the transport area, there was an impact in terms of electricity and gas projects. At the same time, there has been a marked change across the electricity and gas industries over the last two to three years. A move to competitive market structures and open access has made it much easier for those projects to access the new market. That in some ways underpins why we are expecting increased use of gas as a fuel over the next decade or so and that mirrors the changes that have occurred overseas as one has moved to competitive market structures. Senator O’BRIEN—Has the department changed its view since it put a view about the implementation of the measure? The measure has now been included in the budget. I presume you were consulted before the budget was announced. Has there been a change in the department’s view or is that still the department’s view? Mr Todd—I would not comment on government policy as announced in the budget. Senator O’BRIEN—Was the department’s view communicated in writing? Mr Todd—I will take that question on notice. Senator Parer—It is part of the expenditure review process. Let me tell you that I would have personally written to the Treasurer on this matter as well. I think that is part of the budget process. Therefore, it is not the sort of documentation we would produce. Senator MARGETTS—I have one question. My ears pricked up when I heard the mention of the Barrell follow-up report from 1996. First, is it finished and, second, when will we see it tabled? Senator Parer—Senator, I understand that he expects to conclude on 17 June. You are aware of all the background to the circumstances, because I think he has had a briefing with you anyway. The date I have is that he expects to complete it on the 17th. Senator BOB COLLINS—That is the date that he gave me. Mr Pickering—It is in that week. I think he actually leaves the country on the 18th. Senator Parer—So, Senator Margetts, the question you were asking was: when will that be available? Senator MARGETTS—Yes. Senator Parer—That is the question I am asking. Mr Pickering—The intention is to have it ready for you, Minister, and ready for tabling in the final week of the sittings. That is going to be very tight, but that is what our intention is. CHAIR—That concludes this particular program. Minister, we had have a request to make. Senator Collins was not here during questioning on the previous program. He has five or six questions, which he believes will take 10 or 12 minutes. Ms Harwood is still here and, rather than put them on notice, do you mind if we go back to 1.7? Senator Parer—I am happy about that, Senator. Subprogram 1.7—Fisheries Senator BOB COLLINS—I wanted to ask some questions that are specifically related to the cuts in funding for fisheries research and development. My recollection is that the funding

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 406 SENATE—Legislation Wednesday, 11 June 1997 arrangements are 25 per cent in kind from industry, 25 per cent from states—which is levied anyway from industry—and 50 per cent from the Commonwealth. Is that right? Ms Harwood—It is 0.25 per cent from industry overall, which is matched by the Commonwealth, and then 0.5 per cent, which is unmatched as a Commonwealth contribution. Senator BOB COLLINS—I want you to take on notice these next two questions. I want you to provide the committee with the total expenditure by the FRDC for financial years 1994- 95, 1995-96, 1996-97 and the budget for 1997-98, and you could include in that answer how many projects the corporation had under management in those years. Ms Harwood—I will take that on notice. Senator BOB COLLINS—Yes. How much was cut from the FRDC in the last budget? Ms Harwood—It was $3.612 million. Senator BOB COLLINS—Can you advise the committee of the rationale for the cut? I know what it is, but I would like to hear your explanation. My advice is that in actual terms, in terms of what happened in the cabinet, the government is reducing payments to the FRDC fundamentally due to the FRDC’s prudent financial management over the past few years. Is that correct? Senator Parer—Senator, there was a surplus there. While the whole lot has gone back to consolidated revenue of that amount, we also have an amount back in the appropriations to assist in the south east fishery. Senator BOB COLLINS—That is correct. But, of course, it is only a proportion of the amount of money that was taken. Senator Parer—Yes, I am painfully aware of that, Senator. Senator BOB COLLINS—Indeed, I thought you might be. What is the legal and legislative situation of voluntary funding being skimmed off into consolidated revenue? Ms Harwood—It is the government’s contribution which is being reduced. It is not the matching part of the funding. Senator BOB COLLINS—No, you would understand that others do not quite see it in the same light, of course. Is there a requirement for enabling legislation to allow the government to reduce its contribution to the FRDC? Ms Harwood—Yes. Senator BOB COLLINS—Is the government concerned that voluntary contributions from the states will also be reduced in line with the federal government’s reduction and will put much needed research and development funds at risk? Have, in fact, any states advised that they plan to withhold funding as a result of these budget cuts? I am told that the figure that is being bruited around is that the states may withhold up to $6 million in funding. That is the story. Ms Harwood—My understanding is that one state has expressed concern to FRDC about the implications of the cuts, but I do not know what the tenor or the content of those concerns are in terms of prospective state playing. Senator BOB COLLINS—The tenor is that there is some suggestion that if the federal government reduces its contribution—and I might add from experience that I would not be in the least bit surprised, as the story sounded right to me, if the states were talking about reducing their funding—the states might withdraw up to $6 million as a result of the government’s cuts. That figure was a suggestion.

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I empathise with that. I personally place an extremely high value on the results of research and development. I think the runs are on the board there to amply demonstrate the return in the national interest of that relatively small amount of money. The attitude that is being put to me is that, if the Commonwealth is going to reduce their level of funding in this area, then others will as well. As I understand it, Minister, to go back to the answer you gave, the amount of money that was transferred to the south east fishery was $1½ million. Senator Parer—It is there in the papers. Senator BOB COLLINS—You took twice that amount away. What has been put to me— and I think reasonably—is that it is a pretty poor return for the FRDC, having been a very good financial manager and being prudent with its money. It is now being penalised in real terms for that. It is probably not a hell of a good incentive for other bodies to behave in a like fashion on the basis that, if they are silly enough to save it, they will lose it. Senator Parer—Yes. Senator BOB COLLINS—I am not expecting you to respond to that. As you have said, the balance of that sum has gone to consolidated revenue. The cut was a straight savings measure, was it not? There was no primary industry policy rationale for the cut, was there? It was a savings measure. Senator Parer—Only in respect of the build-up reserve. You are quite right about the management of FRDC. They do a fine job. I just make the comment; I do not make a judgment one way or another that, in the very heavy cuts that occurred in the budget last year, FRDC did escape, not that that is good or bad. Senator BOB COLLINS—I would not argue the truth of that. Who is the department member on the fisheries R&D board currently? Ms Harwood—That is me. Senator BOB COLLINS—Is it true that the FRDC has outstanding commitments of around $25 million for 1997-98? Is it correct that the rate on these reserves will result in some difficulty in the FRDC meeting these commitments? Ms Harwood—That is not my understanding of the situation. I am happy to take the question on notice. Senator BOB COLLINS—I wonder whether you could enlighten us as to what your understanding of the situation is. Ms Harwood—My understanding is that the reduction in the appropriation can be managed by FRDC and it does not create any financial difficulty for the corporation. Senator Parer—That is my understanding too. Senator BOB COLLINS—The reason I have raised this matter is that, when the minister first took over the job, he said in a media release—and I must say that I was encouraged to see it, but my hopes were dashed: We need research to find better ways of managing our fisheries sustainably. Senator WOODLEY—Hear, hear! Senator BOB COLLINS—He continues: We also need to add value to products to ensure the long-term viability of what is after all our fourth biggest rural exporter. Senator WOODLEY—Absolutely.

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Senator BOB COLLINS—The minister further said: This knowledge and understanding can only be gained through well directed and coordinated research. Amen. He was dead right. Minister, would you not say that, in respect of those laudable indications—to the industry, the country, me and everyone else—that came from the minister that these savings measures in research and development of fisheries referred to by the minister are completely contrary to that policy direction? Senator Parer—Not really. I think we had a fairly big job last year in addressing the budget deficit. This was followed up this year by another look at other programs, and it was the view of the government that these reserves that have been built up because of the good work done by FRDC— Senator BOB COLLINS—So you kill them. Senator Parer—would be part of the process. It is part of the budget process. Senator BOB COLLINS—So basically the minister got a hiding in the ERC. Senator Parer—Half of one. Senator BOB COLLINS—I see. This is a reference to the $1.5 million. I will leave it at that. Thank you for your indulgence, Minister. CHAIR—Thank you, Ms Harwood. 1.9—Coal and minerals industries CHAIR—Senator Woodley, we had a rather fiery session this morning through interjections by people when others were asking questions. So I ask you to resist from interfering with Senator Collins while he is asking questions. Senator WOODLEY—I am glad that I was here, because obviously I would not have been involved in that. CHAIR—You could have chosen your words a bit more carefully. Senator MARGETTS—I understand that a number of these questions will need to be taken on notice, but I will ask them anyway. How many potential uranium mines are there in Australia, in particular, in Western Australia? Can you name the mines and the stages of each mine in the federal and state approval processes along with the owners, parent and subsidiary companies? How many exploration or mining tenements are held over known uranium reserves in Australia, in particular, in Western Australia, and who are the owners and subsidiaries of those? Is the government aware that a claim exploration NL has put together a portfolio of 14 potential uranium mines in Western Australia? Mr Bryant—A lot of that information I will have to collect for you. We will take those questions on notice. Personally I am not aware of the claims portfolio at this stage. Senator MARGETTS—Does the government plan to allow all uranium mines to develop, or will it place any restrictions on new mines opening? Senator Parer—Incidentally, I did see that article in the paper. If someone wants to build up a portfolio of wish lists, I suppose they are entitled to do so. We took the view right from the word go that we were not about to go around picking winners. We lifted the three-mine policy and they had to go through the proper environmental procedures and find their own markets. When I see all the numbers in the paper—and I do read all the numbers in the same way that you do—there is no way on earth that all those particular projects are going to go, because the market is not there to absorb them.

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There certainly is a market out there, and that is because the stocks of uranium for generating electricity have fallen off in recent years. The departmental people probably have a better feel for this than I do, but the actual demand usage for uranium for electricity generation is lower than the production. It has been for a couple of years, but these stocks have been run down. I think they have just about run out. There is a market out there, but it is certainly not going to absorb all these particular projects that we read about. I think you are probably aware of the fact that those mines have been designated as proponents for environmental impact assessment, but we will give you those. I think I know them off by heart. I think there are only four. Mr Bryant—There are a couple of EISs being done at the moment— Senator Parer—Yes. Mr Bryant—and there are a couple of lines with guidelines either in the course of preparation or just about to be finalised. But beyond that there is obviously a range of companies that are starting to look around. We have not been approached formally by any more. Senator MARGETTS—Has any uranium mine ever been knocked back in the environmental approvals process? Mr Bryant—Knocked back? Senator MARGETTS—Knocked back. Mr Bryant—The companies make an application to us. If they have a process in mind to work towards an operational mine, then formal application leads to designation and, through the process, ultimately a decision about production. We have designated mines and expansions of mines in due course. Senator MARGETTS—Sorry? Mr Bryant—So there has been no knock-back at this stage. Senator MARGETTS—Is the federal government planning to abolish its export control powers for uranium? Senator Parer—No. Senator MARGETTS—Is that no this parliament? Senator Parer—No, definitely not, because of the international safeguard requirements. Senator MARGETTS—How soon will the government need to change its export quotas to allow for more uranium to be exported? Senator Parer—Sorry? Senator MARGETTS—Will there be any change to the current export quotas to allow for more uranium to be exported? Senator Parer—There are no export quotas. Mr Bryant—There is no quota. Senator MARGETTS—No quotas? Mr Bryant—It is a commercial decision by the company. Senator MARGETTS—There are no current quotas at all? Senator Parer—No. Senator MARGETTS—Is there any current guaranteed price?

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Mr Bryant—It is not something that we consider. Senator Parer—There are two prices: there is the long-term contract price and there are spot prices which have been going up in recent times. Senator MARGETTS—Is the government planning any changes to customs regulations in 1997-98 that affect the uranium industry? Senator Parer—No. Senator MARGETTS—Thank you. CHAIR—Are there any further questions on 1.9? Senator O’BRIEN—Has there been any change in responsibility for the department in the area of this subprogram? Has anything been handed off to another subprogram? Mr Bryant—The objectives are substantially the same as they were last time. There was mention this morning of a number of positions coming out of our division to go to the project facilitation area—effectively nothing. I would have to mention, of course, that export controls coming off has had an effect on the division. Senator O’BRIEN—Would that transfer of staff be the explanation for the four per cent in your operational budget for the year? Mr Bryant—That essentially relates to packages in the previous year. The transfer of funds has not been reflected in these figures yet. Senator O’BRIEN—I see. So the reduction is explained by—what did you say they are? Packages that have been offered? Mr Bryant—Redundancy payments— Senator O’BRIEN—Yes. Mr Bryant—to staff who left the Public Service. Senator O’BRIEN—Those who are leaving this financial year and who, therefore, will not be— Mr Bryant—They have been paid out. Mr Zuber—If I could perhaps explain—because it comes up in all the subprograms—that the Commonwealth budget is, of course, a cash based budget. In reducing our staffing numbers we have offered, over the past 12 months, a number of redundancy packages. Those redundancy packages include the accrued entitlements of staff and, in fact, bring forward in an accrued sense the accrued expenditures over forward years into a cash outlay into the current year. It is, if you like, an artificially high number in the current year. Senator O’BRIEN—Just so I am not confused, when you say the current year, do you mean 1996-97— Mr Zuber—Yes— Senator O’BRIEN—or 1997-98? Mr Zuber—because that figure includes entitlements which have accrued over time and are being cashed out in that year. Senator O’BRIEN—Looking at the 1997-98 budget figure, has any provision been allowed in that budget for the bringing forward of entitlements, the cashing out of entitlements and redundancies?

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Mr Zuber—We engaged in a fairly significant redundancy program in the past financial year. Whilst there are changes in the overall running costs, there is no intention to go through a redundancy program. In other words, the variation in staffing numbers over the next 12 months is not of a quantum that cannot be absorbed through normal sorts of processes; it is at the margin. In a couple of our areas in the previous 12 months, particularly the Geological Survey Organisation and ABARE, there was a significant reduction in numbers and so there were was a significant number of packages or inducements for voluntary redundancy offered to staff. I do not anticipate that will be the case in the forthcoming 12 months. Senator O’BRIEN—The expenditure on the baseline figure for the 1996-97 budget shows a growth of $348,000 on that baseline figure. Does that indicate that you are actually going to engage more staff? Mr Zuber—To be frank, the variation of about four per cent, given that we have a normal tolerance of about 10 per cent in budgets at a subprogram level, would not be significant. I cannot tell you from the figures in front there whether the normal base of subprogram 1.9 is about 7.6 or 8, but it is somewhere in that region. Very simply, retirements and that sort of thing, based on that staffing number, could be the explanation of the variation in four per cent. What I am saying is that it is not a significant number. Senator O’BRIEN—I am just looking at the figure on page 73 for staff years. The 1996-97 budget initially was 81.1, the revised appropriation was for a lesser figure, 78.8, and then the 1997-98 budget figure was 81.9. I am just wondering what the significance of that albeit minor fluctuation is. If you have paid money out for redundancies and you are ending up with a higher staff year figure for 1997-98, is there an explanation for that? Senator BOB COLLINS—I think Mr Bryant is looking to you for inspiration, Mr Zuber. Mr Bryant—I wasn’t sure whether Mr Zuber was continuing. Mr Zuber—I reckon a variation of two staff is swings and roundabouts. Senator O’BRIEN—I accept that, other than the fact that you just told me that you had paid money out for redundancies. Mr Zuber—Yes, what I will find for you to, if you like, support my thesis is that I would expect that the budget figure in the previous year would have been higher and we would have been paying out redundancies in the last year. So it is paying out of the finances of people who have left. A lot of people have a reason for leaving at about 30 June for taxation and other purposes. So you will get people who would have effectively left in the previous financial year but whose pay-out would have come in last financial year; therefore, they would not be reflected in a staffing figure, but the lump sum payment would have occurred in the current financial year. Senator O’BRIEN—I am afraid you have lost me, Mr Zuber. Senator BOB COLLINS—The best way to not get confused is to not ask George any questions. Mr Zuber—Thank you, Senator. Senator BOB COLLINS—That is okay. That is why we employ important people like you, Mr Zuber, because people like us cannot do this. Senator O’BRIEN—I would be interested in some more information about this because I am not satisfied with the answer that I am receiving at this point. If there is an explanation,

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 412 SENATE—Legislation Wednesday, 11 June 1997 having regard to the raw figures in item 1—running costs and the staff years figure—I would appreciate an accounting for it. But it seems to me that if you increase your expenditure in 1996-97 by around 10 per cent to account for redundancies and paying out of accumulated entitlements and you end up with a higher running costs figure and staff year figure for the following year, that takes some explanation. Mr Bryant—Senator, I would like to perhaps come back to you with more information on that, but the variation is very small. Whilst the gross amount decreases slightly, of course, the way we calculate figures and the way we take the staff in support areas into account may account for some of that variation as well. So I would like to provide an explanation. Senator O’BRIEN—I accept that it is a small aberration, but I would like it explained. I think you have already answered this, Mr Bryant, but are there any further changes proposed in the administration of the subprogram? Mr Bryant—No, Senator. Senator O’BRIEN—I understand that under this subprogram there is a responsibility for the preparation of a resources policy statement. Can you tell me when that will be completed? Mr Bryant—It is at the very early stages. It is a high priority of the minister’s and the division is currently putting the initial thinking into the process—what it should cover, how it should be developed and the consultation processes. I think it would be fair to say that we are looking towards the end of the year as the sort of time line for the development of this. Senator O’BRIEN—Is there a formal flow chart on this project? Mr Bryant—There are a number of ideas jelling, but there is not a formal chart in the form of a Gantt chart or the like. Senator O’BRIEN—Is there a plan for a consultation process? Mr Bryant—Certainly, consultation on a document of this nature needs to be fairly broad, within our portfolio, with other departments and, of course, with industry and other interested people. Senator O’BRIEN—Is there a formal plan for a consultation process as in saying how you will consult and whom you will consult? Mr Bryant—We are still very much in the early stages of the thinking on it. Senator O’BRIEN—So it is not formalised yet? Mr Bryant—No. Senator O’BRIEN—Who within the department will be responsible for the development of the statement? Mr Bryant—It is being handled within the coal and minerals industries division, and a number of staff will be involved in the process. Senator O’BRIEN—And who will oversee that process? Mr Bryant—Most likely, the division head. A number of other senior officers in the division, given its importance, will be very heavily involved. Senator O’BRIEN—Is there a scope or term of reference prepared for the statement? Mr Bryant—There is a document, and there have been discussions with the minister about what a minerals policy may cover to give it the appropriate priority. Beyond that, no. Senator O’BRIEN—Minister, is that document in the preparation stage?

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Senator Parer—Yes, it is only at an early stage. It is not the sort of document you would produce. Senator O’BRIEN—When do you believe that scope or reference document for the preparation of the statement will be completed? Senator Parer—I think that, as Mr Bryant said, what we are looking for is to come out with the document itself towards the end of the year. Senator O’BRIEN—I understand that you are going to come out with the completion of the policy statement itself, but do I take it that there will be some sort of scope instruction from you, Minister? Senator Parer—It will be done in conjunction and discussion with the department. Senator O’BRIEN—So it will be a fluid thing, the scope of the policy? Senator Parer—Yes. Senator O’BRIEN—Did you say, Mr Bryant, that the planning and preparation for the completion of that task is in its early stages? Mr Bryant—Correct. Senator O’BRIEN—Is it planned to have some formalised task plan for the completion of the policy statement? Mr Bryant—It depends upon what you define as a task plan. Certainly, the process of developing a document of this nature suggests that we set down areas that we need to cover, the means of collecting the information for that and the consultation that is necessary. In undertaking this task and bringing a number of people together to achieve the task, clearly we would go through a process of identifying where the priorities, the time lines and the responsibilities lay. That is not there yet. Senator O’BRIEN—When do you think that would be ready? Mr Bryant—I do not think you can really tie me down at this stage to a definite timetable— just say in the near future. Senator O’BRIEN—I would have thought that, if you have got a plan to complete by the end of the year, you would not want to be spending a lot of time developing the task plan. You would want to get on with the work, wouldn’t you? Mr Bryant—That is correct. Senator O’BRIEN—Would it be unfair of me to suggest that you would have it done within a month? Am I setting too hard a line for the department? Mr Bryant—I think that, given the priorities, that order of magnitude is right but a specific date certainly is not appropriate. Senator O’BRIEN—Thank you. That is all I have on the resources policy statement. Can you tell how the regional minerals program operates? When was it established? Mr Bryant—The regional minerals program is funded over a period of four years and it is basically designed to assist the Commonwealth operating with the states in focusing on identifying a coordinated regional approach to minerals development. There have been a couple of models that are already in operation—the Carpentaria-Mount Isa exercise and the Goldfields exercise. In the current frame there are three key projects—the Gawler Creighton, the western New South Wales and the Tasmanian projects. I have a brochure here that I could give you

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 414 SENATE—Legislation Wednesday, 11 June 1997 that explains both the aims of the project and how the department is going about achieving the objectives. Senator O’BRIEN—Does that brochure tell me how many staff are involved in the program and the costs involved in running it? Mr Bryant—No, it effectively involves one person at the moment in the division doing the major coordination of support from people as needed. Senator O’BRIEN—So there is one core person and staff are co-opted? Mr Bryant—Yes, there is support all around. Senator O’BRIEN—Are there any costs other than the staff costs in running the program? Mr Bryant—The funding goes towards assisting with consultancies and, of course, the whole project approach is designed to bring in funding from the states and from industry as well. Senator O’BRIEN—Is there available a break-down of the cost of running the program, including the costs of consultancies? Mr Bryant—I would have to take that one on notice. Senator O’BRIEN—Yes, if you would, please. Senator O’BRIEN—I understand that there is some intent to remove impediments and unnecessary duplication relating to the regional minerals program. I take it that would involve streamlining of the approval process. Can you give me any details on how that is being pursued? Senator Parer—Perhaps I should come in here. You asked when this program was started. It was started by the previous government as sort of an experiment. It turned out to be pretty successful. I see Senator Collins screwing up his nose. Senator BOB COLLINS—I am just in total disbelief that you would make that kind of concession after the 10 years that I have known you! Our 10th anniversary is arriving next month. You realise that, don’t you? Senator Parer—I know. But basically it works on the basis of contributions by the state governments involved and the industries around it. When you are talking about duplication and things like that, often you will get an area where a single mine, for instance, may want to put in its own infrastructure, whether it be roads, telecommunications, water or any of those infrastructure things. On its own, it can do it and it can take a dog in the manger approach if it likes and stop everyone else using the road, just as a little example, but I am sure they would not do that. When you coordinate it within a region, you get a sharing of that position so what may not be viable for one operator may be very viable for four, five or six once you coordinate that infrastructure development. Is that a fair summary? Mr Bryant—Yes. Senator BOB COLLINS—Does this duplicate the effort of the newly established facilitation division? Senator Parer—No. Senator BOB COLLINS—You would not want to set up a unit that avoids duplication that duplicates the effort of another. Senator Parer—No, it doesn’t. The cost involved is the work that is actually looking at the lack of infrastructure in a particular area. The Kalgoorlie area is a good example. The

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Carpentaria-Mount Isa one is a good example. Have you mentioned the ones that we have got this year, Mr Bryant? Mr Bryant—Yes. Senator Parer—Gawler Creighton and probably Surat Basin in Queensland. Senator O’BRIEN—So this program will remain within this subprogram area after the project facilitation division is established and staff are moved from this? Senator Parer—There is only one! Senator O’BRIEN—I understand that. I am just following up on Senator Collins’s question. Senator BOB COLLINS—I see, there is one. Senator O’BRIEN—There is one person involved in this project and there are eight or nine staff who are going out of this program area into the facilitation program. Is that the case? Mr Bryant—Nine come out of the division. There are alway qualifiers on the nine because there are a couple of part-time staff in there. It does not quite add up to nine in total. Senator O’BRIEN—I am advised that DPIE considers that it has a role in reducing sovereign risk. How does the department assist with ‘the implementation of reform in environmental land access and Aboriginal policies’? That comes from your report. Mr Rawson—There are a number of areas. Certainly in the native title area, for example, the Wik task force has a couple of DPIE officers, including someone from the coal and minerals division, who are providing factual information to that task force to help them come up with some practical solutions there. They are also looking at the Aboriginal land rights act in the NT. Senator BOB COLLINS—Ken Matthews actually chairs it, doesn’t he? Senator Parer—Yes, he does now. Mr Rawson—As part of the review of the roles and responsibilities of the Commonwealth and states on the environment, the coal and minerals industry division works with corporate policy division of the department to try to pull together a departmental position to enter into discussions and debate with Environment Australia. We play a role in that area. In any of these generic issues that can have an impact on the mining industry, the coal and minerals industry division plays an active role trying to assess what impacts and so on various options might have and trying to find ways forward to streamline operations. Basically what we are looking for is greater certainty, the removal of duplication and, to the maximum extent possible, the accrediting of state processes. Senator O’BRIEN—I would appreciate it if you would give me some examples—I am happy for you to take it on notice—of the state processes that you are involved in accrediting. Senator Parer—I can give you one example that would probably, now, end up in the other one—project facilitation. One that we put together—it did not turn out to be successful for other reasons—was the Century Zinc Project. To try to help the process we got the Queensland government, the company and a group called UGRAC, which we thought represented the Aboriginal groups in the Gulf at the time, to meet here for a couple of days. I was given the job of doing it but it was done through the department. We sat down with the UGRAC people, the United Gulf Regional Aboriginal Community, I think it was. They had their lawyers with them. They had some requirements on things like, for instance, genuine type training programs for people who could go and work in an

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 416 SENATE—Legislation Wednesday, 11 June 1997 organisation like Century or contract to Century. They wanted other things that related to environmental matters. We coordinated that and came up with a package that satisfied, at the time, all parties. For other reasons it went on its own course and came to a dead end and ended up down the native title path. Basically, I would have to say that it was a very successful operation. Mr Barratt—More generally, Senator, the reference to accrediting state processes was a reference to environmental processes. If a state government carries out an environmental impact study on a proposed mine, for example, can the Commonwealth rely on that study for its own purposes? That is a decision that belongs more properly with the Minister for the Environment. We are involved in discussions with Environment Australia about the framework within which we rely more heavily on state processes. Senator O’BRIEN—It sounds as though that might end up in your facilitation unit. Mr Barratt—The project facilitation unit has, as its name implies, a project focus. What the department is doing, and I am personally involved in aspects of this, is looking at the broader framework of federal processes within which project proponents have to get their approvals. Senator BOB COLLINS—That was very much an issue, for example, in the expansion of the Olympic Dam project in South Australia where the Commonwealth was prepared to accept the environmental procedures that had been put in place by the South Australian government. And we did, in that case. Senator O’BRIEN—When we started this morning we were talking about the project facilitation division and what I gathered was a fairly indefinite brief for that division. We are now talking about operations of the department outside that division. Even the minister has said that we have an example of this activity of the department in assisting with various matters that is likely to go to the facilitation unit. That is why I think we need some very clear understanding if there is to be a role of the department that is outside this unit, and a responsibility for this unit— Senator Parer—It is the same department. Senator O’BRIEN—I understand, but you have established a unit which is going to be funded from a number of the subprogram budgets, as I understand it, and it is going to have some responsibilities but they are very indefinite. We are just dealing with what is apparently a function of the department. If we are going to have any understanding of your budget and how that is applied we have to understand where the money is going to and what the responsibility of the particular program is and how it is funded. Mr Barratt—As a nutshell guide, Senator, if the focus is on the approval process, on shaking out approvals for a specific project, then that is the sort of work the project facilitation unit would do. If it is reviewing Commonwealth legislation or processes generically then that is something that would take place in the line areas of the department like the coal and minerals division or one of the central areas of the department. In other words, I would not expect the project facilitation unit to have as one of its core functions changing the framework within which project approvals are sought or initiating change to that process. Senator O’BRIEN—In relation to that, I think we were going to get some more detail about the project facilitation division, so I will not pursue that any further until we receive that. I was going to ask a question in relation to the likely impact of the diesel fuel rebate on the coal and minerals industries. I understand there has been an exchange about that.

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Senator Parer—Yes, there has. It is there. Senator O’BRIEN—If that is fully answered, I will not pursue that question. Minister, again going to your Internet report, and I think you will have to have a look at this— Senator BOB COLLINS—I think you would be really smart if you pulled the plug on it. Senator WOODLEY—I am cancelling mine. Senator O’BRIEN—You speak on page 2 in relation to gold, and I take it this is the point where we should be dealing with gold. Is that correct? CHAIR—Yes, gold and minerals. Senator O’BRIEN—In that, you say that Australia is the world’s largest exporter of coal. It continues by saying that we are the largest also for aluminium, diamonds, lead, zinc rutile and zirconia, the second largest for iron ore and uranium and the third largest for gold. It then goes on to say that production has surged from only 18 tonnes 15 years ago to around 300 tonnes now. Has the department broken down those figures annually over the period that you talk about—that is, 15 years ago and now? Mr Bryant—The export figures for gold? Senator O’BRIEN—The export figures, yes. Mr Bryant—I think we can get those out for you. Senator O’BRIEN—In relation to the current figure of 300 tonnes, can the department advise how many tonnes are produced in mines which commenced production since the election of this government? Mr Bryant—I think I would have to take that one on notice. Senator O’BRIEN—Thank you. Senator BOB COLLINS—If there are any, Senator Parer would have announced them in the Senate. You can believe that. Senator O’BRIEN—This is a good question. Are there any? Senator Parer—My modesty would prevent me from doing so. Mr Bryant—Senator, is that new mines since the election of the government? Senator O’BRIEN—If there are any new mines. Could you tell us that? I mean ones that are in production. I do not mean ones that are realising extra wealth on the share market but actually in production. That is all I have on subprogram 1.9 I think. If I have missed any, I will put them on notice. CHAIR—There being no further questions on subprogram 1.9, we will move to subprogram 1.10. Subprogram 1.10—Energy Senator MARGETTS—What measures other than the voluntary industry agreements are there in this subprogram for the conservation of energy? Mr Alderson—I assume the one you are talking about, Senator Margetts, is the greenhouse challenge program. Is that right? Are you referring to the government industry cooperative agreements program? Senator MARGETTS—I would like to know any that you have in your program under 1.10.

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Mr Alderson—Right. There are a number of areas that deal with efficiency. The first I would mention is the industry cooperative agreements program which operates in order to reduce greenhouse gas emissions. Senator MARGETTS—Is that the voluntary industry agreement? Mr Alderson—That is correct. Senator MARGETTS—The question was: what measures other than the voluntary industry agreements are there in the subprogram for the conservation of energy? Mr Alderson—Right. Under the national energy efficiency program, there are a range of activities aimed at conserving energy through improved energy efficiency activities. They fall into two areas. One is a raft of activity that operates in cooperation with the states and territories under the energy management task force of ANZMEC. That operates where a national approach is seen to be appropriate either in terms of effectiveness or in terms of removing duplication and reducing cost to business and industry. Senator MARGETTS—What is the funding of that one? Mr Alderson—The total energy efficiency program is now $1.8 million. That is, I think, reflected on page 77 of the budget papers. That funding embraces both the cooperative arrangements with states and territories and Commonwealth specific measures. For example, under the Commonwealth specific measure, we are currently working through, and the minister has agreed to a formulation to go to cabinet on, improving energy efficiency and Commonwealth operations—our own operations. It did cover and does cover at the moment the energy enterprise audit program. It covers operations such as the cadet system of the International Energy Agency. That is a technology transfer operation which allows for the two-way transfer of information on renewable efficiency technologies, et cetera. So that is a raft of Commonwealth specific programs. Senator MARGETTS—Apart from that $1.8 million, what other funding is there for these programs? Mr Alderson—For Australia per se, none within the Commonwealth operation. Senator MARGETTS—Under 1.1, your energy program— Mr Alderson—You have the 1.1, which is the cooperative agreements program, and you have the 1.8. But there are also some activities associated with efficiency through R&D—and, Senator, you would be aware of the ERDC decision. Senator MARGETTS—Yes. Mr Alderson—Something that is not obvious here is that, through the APEC energy working group, there is shared activity on research between the member economies of APEC. This is aimed at sharing and improving knowledge on energy end use practices and renewables; it involves training, and what have you. For example, under that program we have brought a group of people to Australia from APEC economies to look at renewable technologies, et cetera, from some of the developing country members of APEC. So, within the ordinary costs of running not identified as programs, there is an element of activity, but the total dollars are not big. Senator MARGETTS—For what period of time is the ANZMEC program due to run? Is that ongoing? Mr Alderson—It is ongoing. Projects come and go; when they are done, we move on to other projects. But funding is agreed annually under ANZMEC. The Commonwealth

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 419 contribution, which is backed up dollar for dollar with the states, comes out of the end use efficiency programs. Senator MARGETTS—It is pretty tiny. Mr Alderson—There is a lot of work being done individually by the states, and so the ANZMEC activity really is just the stuff of a national focus. Senator MARGETTS—Under the voluntary industry agreements on greenhouse gas reduction, what agreements has industry made so far? Mr Alderson—I will just pull out a couple of numbers for you, Senator, that will probably throw some light on this. Thirty-one companies have signed up, covering 370 major sites. Together they account for 15 per cent of Australia’s total greenhouse gas emissions—or, put in another context, 45 per cent of Australia’s greenhouse gas emissions in the mining, manufacturing and services sector. So the companies that have signed up account for a significant proportion of greenhouse gas emissions at the current time. The action plans that they have signed— Senator O’BRIEN—Can you repeat those figures, please? Mr Alderson—Certainly: 31 companies, covering 370 major sites; they account for 15 per cent of Australia’s total greenhouse gas emissions; and they account for 45 per cent of Australia’s greenhouse gas emissions in the mining, manufacturing and services sector. The action plans that they have signed onto under those agreements will result in a reduction in emissions of 60 million tonnes—or a reduction of 14 per cent by the year 2,000 of what would have happened under business as usual, if you like, or in the absence of those actual plans. Senator MARGETTS—I think that is the key term. How many of those 31 companies will actually be reducing their greenhouse gas from their current production figures? Will any of them be reducing their greenhouse gas production from their current figures? Mr Alderson—I cannot answer that; I genuinely do not know. Given that most of these companies are in an expansion phase, it would be a bit surprising if they were in absolute terms—but they may be. I really cannot answer that. Senator MARGETTS—But you have all these figures and you will be able to come back to us? Mr Alderson—I do have the figures. I would be happy to research that but without the company names attached, because the plans are commercial in confidence. But, as for providing you with an answer as to whether any of these companies expect reductions in absolute terms as distinct from, if you like, a static efficiency sense, I would be happy to take that on notice and advise you. Senator MARGETTS—Thank you. Are these agreements being monitored; and, if so, by whom? Mr Alderson—Yes, they are. Senator Parer—Strictly. Mr Alderson—The greenhouse challenge office comprises officers from three departments: Department of Primary Industries and Energy, the Department of the Environment and the industry, science and technology department. That office, in its activities, reports to three ministers: the Minister for Resources and Energy, Minister Parer, and also Ministers Hill and Moore. The agreements are signed at ministerial level and chief executive level. Before the arrangements go into effect, the companies are obliged to have undertaken an audit as to the

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 420 SENATE—Legislation Wednesday, 11 June 1997 potentialities for energy savings, to have developed an action plan for implementation to realise those savings, and to report the effect or impact of that implementation over time. The greenhouse challenge office has developed, in consultation with various interest groups and professionals, a set of performance indicators that are public. Over a period of time, the reports, which are subject to independent audit, will be examined by the greenhouse challenge office and reported to ministers. Bear in mind, Senator, that the program has not been going for that long. By the time you take a decision to invest to effect change, you then need to implement that and then see the impact of it. So my guess is that it would be probably another 18 months or so before we start to see specific gains coming out. But the answer to your question is: it will be monitored by the greenhouse challenge office, reported to ministers, and that monitoring will involve an independent audit element. Senator MARGETTS—What will happen if there is a breach of the agreement? Mr Alderson—If there is a breach of the agreement there would be discussions with the parties involved—with the company involved, with the chief executive involved—to get that company, that entity, back on board. Senator MARGETTS—Will we get regular reports on whether the agreements are being complied with? What kind of public reportage will there be? Mr Alderson—The greenhouse challenge will develop a report on how the program is performing against its performance indicators. I am not sure how often that will come out— perhaps every year once a program is rolling. Senator MARGETTS—What measures are proposed or in place to ensure the integrated grid system does not create an incentive to burn dirty brown coal in Victoria if burning brown coal is cheaper? Mr Alderson—The reality is: none. The idea of an integrated contestable market is to generate efficiencies. Under the national market conditions there is no specified fuel. I would add in that context that there is already some strong evidence of growing input from the gas sector of power generation of other alternative forms of energy. I might ask my colleague Mike Todd if he wants to add to that. Mr Todd—The move to a competitive market has provided open access for renewables— gas, hydro—and we are seeing increasing evidence of access from those fuel types. We are also, on the marketing side, seeing a number of distribution companies starting to market green energy and capitalise on the demand for those products. Recent initiatives have been in New South Wales, with wind power, for example, coming in as a market initiative through green energy. Senator MARGETTS—What are the kinds of measures proposed or in place to ensure that the integrated grid system includes renewables or even favours renewables? Mr Todd—The market is not one that favours one fuel type over another. By going to a market structure we have removed barriers in the past whereby with centralised decision making and vertical integrated systems there was a preponderance possibly towards coal-fired generation. With the move to market structures there are significant financial advantages from moving to gas—a lower capital cost—and some very obvious market opportunities on that front. That is why within Australia, but also evidenced overseas, there has been this so-called dash to gas. That just reflects the benefits of a market structure. It is not a question of favouring but just by having that opportunity, by having open access, one gets that expected move to gas and renewables.

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Senator MARGETTS—Are externalities to be factored into the pricing? Mr Todd—Externalities in some respects are picked up through regulatory controls that already exist. Mr Alderson—Those externalities that are dealt with through regulation clearly are internalised because of the costs involved in the regulation. The system itself does not impute a value for an externality that is added on in the form of a tax, no. Senator MARGETTS—I could put it to you that you could put a scrubber on a coal-fired power station which would remove a large amount of the carbon. It might put something like a 25 per cent increase on the price. That might in some people’s mind be the real price of producing electricity with coal. Would you care to comment on that kind of proposal? Mr Alderson—Certainly in some people’s mind it would be. Getting to the nub of the issue, to the best of my knowledge there is no nation that has totally internalised all of the environmental externalities. Senator MARGETTS—I am sure there have not, but there are some nations that are using scrubbers or other technologies or different fuel sources or at least factoring in some of those externalities. Mr Alderson—In Australia there is a raft of environmental regulations aimed at environmental protection which do involve that sort of protection. Senator MARGETTS—At the same time we are looking at a coal power station without a scrubber to be seen, as far as I know. Mr Alderson—I do not know. Senator MARGETTS—You said that there is not to be any measure to provide incentives for renewables or less polluting forms of electricity production. Did you say to basically remove disincentives? Mr Todd—Essentially by moving to a market one does take away a whole range of disincentives. That is why we are seeing over here, and we would expect to see over here as we have seen in Europe and elsewhere, a significant move to gas, for example. Mr Alderson—There is another point too—that is, by moving to the market based system some of the cross-subsidies that were entrenched within the networks before one could argue may have disadvantaged renewables in certain instances. That has been worked out through the market. In some cases, as those cross-subsidies are worked through through competition, I would argue that some of the impediments to renewables will be removed. Senator MARGETTS—When you say ‘moved to the market’ have you moved totally to the concept of least cost production of power? Mr Alderson—No. I meant that the impediments that derive from increased cost-subsidies— Senator MARGETTS—That was a question. Mr Alderson—No, I am not aware of the fact that all generators and distributors operate on a least cost basis in terms of their planning. Sitting suspended from 7.00 p.m. to 8.00 p.m. Senator O’BRIEN—I want to ask some questions about the Energy Research and Development Corporation. What was the rationale for its establishment? Senator Parer—My recollection is that it was established in 1989-90. Let me say from the outset that it was a successful operation. It facilitated, stimulated and managed investment in

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 422 SENATE—Legislation Wednesday, 11 June 1997 energy innovation and encouraged growth of the Australian industry to achieve sustainable growth. It also established a good foundation for industry to take a greater role in funding its own research in conjunction with other government assistance, including the tax concessions offered for company expenditure on R&D. Senator O’BRIEN—The establishment was, as you say, in response to a demonstrated need. Can you tell us how that need was identified? Was it through an industry submission? Senator Parer—I do not know. I cannot answer that for you because I was not there at the time. I have had discussions with the chairman about this in recent months. The view he took was that at that stage there was a lot of pent up demand for this sort of thing. He has also said to me in more recent years that it has not been as strong as it was then by a long shot and they have tended to have to look around a lot more for projects to go into. Senator O’BRIEN—Are you saying that the original need has now diminished? Senator Parer—There was certainly a pent up demand at the time and it served a very useful purpose. Senator O’BRIEN—How will that demand or need now be addressed? Senator Parer—There are a number of areas. Those projects that have been committed will continue. It is not being chopped off. Some $70 million has been provided by the Commonwealth government to five energy related cooperative research centres. Some $25 million has already been provided for five energy related projects under the R&D START program. It is worth mentioning too that the Australian CRC for renewable energy has a total budget of $64 million over seven years and it will focus on a number of sources of energy including photovoltaics, solar thermal, electric windows and wind. Senator O’BRIEN—Can you give us details of all ERDC projects past and present, with a state by state breakdown? Senator Parer—I think we can. I make that remark because I think a question on this was put on notice by Senator Brown and a response was made going back a number of years. It is a fairly thick document. We will get you a copy. Senator O’BRIEN—That can be brought up to date, can it? Senator Parer—It is up to date. Senator O’BRIEN—So it will include the details of the grant, who received it, what the project was for, the companies involved and that sort of data? Senator Parer—If my memory is correct, that is so. Senator O’BRIEN—Have any of the organisations involved in ERDC been consulted as to the effectiveness and the consequences of its abolition? Senator Parer—Certainly they have approached us about it. I think that the commitment we have made is that any projects that have been committed will be completed. Senator O’BRIEN—I understand that, but it is the future of the program that will not continue. Senator Parer—Yes. Senator O’BRIEN—What other consultation has been undertaken with industry concerning the abolition of ERDC? If there has been consultation, what was the response from industry?

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Senator Parer—Consultations would have occurred between ERDC and the people who were involved within the process. Personally I have had no consultation with any of the participants. ERDC, as you know, is set up separately with its own board. Senator O’BRIEN—You have not commissioned the department to consult about that? Senator Parer—The department might like to add to that, but I have not. Mr Alderson—In terms of the ERDC business it includes a number of implementing agreements under the International Energy Agency in addition to those contracts that Minister Parer referred to. Last week the board of ERDC met to commence consideration of how they might be managed in future looking at other industry stakeholders. So that consultation is in progress at the moment. Senator O’BRIEN—Is there any other investigation being undertaken by the department on the impact of the abolition of ERDC? Mr Alderson—There is not, no. Senator O’BRIEN—Can you tell the committee what industries were the key recipients of ERDC funding? Are there such things as key recipients? Senator Parer—There are quite a number. They may be people involved in the gas industry on gas flow meters. Off the top of my head, I am thinking of the projects that I know about. They included projects where windows were used to convert sun into electricity and those sorts of things. Mr Alderson—I can add to that. I will give a break down for 1995-96, which I am very happy to table if the committee would like. Out of a total of $14 million round figures, $4.7 million went into the electricity industry, $1.7 million went into transport, a little over $1 million went into buildings, $1.49 million went into applications and equipment, $1 million went into processes, $1.2 million went into gas and liquid fuels, $1.2 million went into ethanol and $1.6 million went into other. That is a rough breakdown in terms of the industry split. I am quite happy to leave that if the committee would like it. Senator O’BRIEN—I would appreciate that. Can you tell us what problems the department is aware of for those industries accessing funds now for research and development ventures? How would they access funds from other financial or other sorts of institutions? Mr Alderson—The department is not aware of any such problems. Senator O’BRIEN—That is, you do not know of anyone who has such a problem at the moment, but do you envisage any? Mr Alderson—Correct. Senator O’BRIEN—You do not envisage any such problems in the future? Mr Alderson—No, no, I am saying I am not aware of anyone that has problems at the moment. Senator O’BRIEN—How many claims did the department estimate it would receive in the next three financial years, that is 1997-98, 1998-99 and 1999-2000, if the ERDC was continued? Mr Alderson—That would be speculation on my part. I am really not sure how many new projects would come forward during that period and therefore it would just be guesswork. The decision taken in the terms of the ERDC, as the minister said, has been to provide funds to ensure that all existing contracts can be fully honoured. But in terms of new projects coming forward, I would simply make two observations. One, if the funding had continued at the

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 424 SENATE—Legislation Wednesday, 11 June 1997 current level then potentially that funding would have been absorbed in new projects. Two, as the Minister mentioned following discussions with the chairman of the ERDC, the ERDC board in fact started putting more effort into trying to generate those projects. It really would be just speculation on my part. They would be the two observations I would make in response to your question. Senator O’BRIEN—Could we speculate having regard to the experience of the past three years? Senator Parer—I do not think even ERDC could give you an accurate answer to that. Senator O’BRIEN—An estimate is probably not an accurate answer if you want to be accurate, but an estimate having regard to the experience of the past three financial years might give you some expectation of take-up, if there was any consistency in take-up. Mr Alderson—All I could do on that would be to refer to annual reports of the ERDC which would report the number of projects each year. Then one could take one’s own judgment as to whether in fact that level of uptake would have continued. We certainly could make available—it is on the public record—the projects taken up in each of the last three years. As to the future, as the minister said, it would just be speculation. Senator O’BRIEN—Has the department received any inquiries about the ERDC, and therefore the services it provides, since the announcement of its abolition? Mr Alderson—There have been a number of letters to the minister concerning the ERDC since its abolition, some of which—all of which—are in the process of being responded to. Senator O’BRIEN—Can you tell us how many have been received and by whom? Mr Alderson—I cannot, simply because I do not know. I can certainly take that on notice and let you know. Senator O’BRIEN—Yes, please. When was the most recent review of the ERDC undertaken? Tell us when it commenced and when it was completed. Mr Alderson—I do not have those details immediately to hand. I am very happy to take that on notice. It was a couple of years ago, but I cannot be more specific than that. Senator O’BRIEN—Can you also tell us the results of that review? You may be able to tell us now. Mr Alderson—I will include that in the response to you. Senator O’BRIEN—Was the review published and is a copy of it available? Mr Alderson—Right. Senator O’BRIEN—Thank you. What were the performance indicators for the ERDC scheme and what did those performance indicators say of the scheme’s performance in 1995-96 and 1996-97? Mr Alderson—The performance indicators were covered in the ERDC’s own operating plan and report. I have not got a copy with me, but certainly I can forward that to you also. Senator Parer—I might be able to give you a bit of an answer on that. One of the performance indicators was the leveraging of industry funds. ERDC had increased—I think its aim was one for two. Was that it? But it was doing better than that in more recent years. It was doing one to five in 1995-96. Mr Alderson—Just on that, Minister, if I may add something, it was one to five if we included the ERDC’s contribution to the cooperative research centre and the ceramic fuel cells

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 425 project. If we take those two contributions out the leverage was one to three—$1 ERDC to $3 industry. Senator O’BRIEN—With those in it, it was $1 to $5. Minister, it is fair to say that the maintenance of the ERDC was both a coalition and a personal election promise, wasn’t it? Senator Parer—Yes, it was. Senator BOB COLLINS—A non-core promise. The trick is working out which ones are which. You have to wait until after that election to find out. You will not be able to pull that a second time. Not even you lot. Senator O’BRIEN—In April this year, Minister, you lauded the ERDC over a feasibility study on the development of a commercial tidal energy demonstration plant in Western Australia. Did you know at that time that ERDC was to be wound up? Senator Parer—Let me say that the government took this decision within the budget context, which will not surprise you. Senator O’BRIEN—No. Senator Parer—The other thing I think you should recognise is that, when these decisions are made, every program is reviewed. I think right back at the beginning I gave the options that are available to these people who may in the future look to the ERDC. There are alternate options for them. I do not think you can assume that, once you have got a program going—and one that has been going now for eight years—it is embedded in concrete. These things are always subject to review and subject to budget funding. Senator BOB COLLINS—Minister, I am frankly astonished by that response when you consider the response you gave half a minute ago. I would agree with that in a general sense. If a political party goes to the election making absolutely no commitment whatsoever, then there should be no expectation by anybody for schemes that have been in place a long time. But, as you have just confirmed—and it is on the record; and I recall it only too well—one of the commitments which the coalition gave to the electorate prior to the election was that this program would be maintained. I might add, for all of those people who have got an intense interest in this area, it was a core promise indeed. It is extraordinary for you to now say—and it is no wonder people do get cynical about this business—that people should not expect these things to remain in place. Are you saying that coalition commitments made before the election were worth, in that sense, absolutely nothing? Senator Parer—On the basis of a balanced budget— Senator BOB COLLINS—Your Prime Minister gave a response to that, and you well know it, when asked a specific and not unreasonable question before the election. We have all had these problems of deficits; we had ours 10 times bigger than we expected, et cetera; people get pretty cynical about that line, too. He was asked, ‘What happens if the deficit is bigger, Prime Minister? Which is more important: bringing down the deficit or keeping all of the election commitments?’ He, unequivocally, as you know, nationally gave a commitment that the commitments you made, including this one, were more important than the size of the deficit. Senator Parer—The comment I am making is that we had something in place that had been there for eight years. The government decided in a budget context, in view of the fact that

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 426 SENATE—Legislation Wednesday, 11 June 1997 there are now other avenues open and the fact that the industry itself has developed fairly substantially—there are states doing certain things— Senator BOB COLLINS—This is all correct. Senator Parer—There are universities doing certain things— Senator BOB COLLINS—That is right; precisely. Why didn’t you say any of this before the election? Senator Parer—We have got CRCs for renewable energy, which I recounted earlier. So there are other options available. The point I am making, too, is that we have not chopped off the funding of those projects that have been committed. Senator BOB COLLINS—But you have closed down the ERDC and you said to the electorate before the election that you would not. Senator Parer—We have not chopped off funds to anyone who has got committed funds. Senator BOB COLLINS—It is no wonder we get the reputation that we have got; it is richly deserved. Senator O’BRIEN—Senator McGauran is on the record as having said that he was ashamed of the decision to wind up the ERDC and sorry that it had gone ahead. Do you share that view? Senator Parer—No, and neither does Senator McGauran. I might tell you the context in which that was said. It was sort of a jovial television debate between Senator Stott Despoja, Senator McGauran and others—I have forgotten who else was on it. A lot of the remarks made by all of those senators I would say were never meant to be taken in that context. Senator BOB COLLINS—I see, it was a joke in the same sense as the comment made by a Western Australian policeman recently that they had shared the $1,500 around. Senator Parer—I do not even know what you are talking about there, Senator. All I can say to you is that was an entirely different context. I am sure that even Senator Stott Despoja might not be impressed if you quote her. Senator BOB COLLINS—Where was it said? Senator MARGETTS—World Environment Day. Senator BOB COLLINS—I thought it must have been the comedy workshop in Melbourne or somewhere. It was said on World Environment Day and it was a joke? Senator O’BRIEN—Minister, you were saying the comments were not serious, that Senator McGauran resiles from them and you do not have any shame about the fact that you and your party made a specific promise about keeping that program—a program that, to all intents and purposes on the information that you have given this committee, was quite a satisfactory one; in fact, performing very well— Senator Parer—Don’t misquote me. I made the point that this program, when it got going, fulfilled a pent-up demand and it did a good job doing it, but things progress. They progressed to the stage where, in a budget context, it was decided that this program would cease— Senator BOB COLLINS—You mean things regressed. Senator Parer—But all commitments would be honoured. That is where it sits. Senator MARGETTS—I was in the process of asking about the understanding of least cost planning in relation to programs for electricity. What is happening in relation to least cost planning?

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Mr Alderson—The nature of the planning and the type of planning entities now do is a matter for the entities. There is no government requirement in a general sense for utilities or anyone else to engage in least cost planning. The reality is, with the growth of the commercial energy services sector in Australia, there is now far more of a service in looking at ways to conserve energy rather than simply flogging electricity. We now have in place a number of companies which are offering services—be it new equipment, renewables or other conservation measures—that will reduce the demand for electricity. They are making an income out of that as well as selling electricity. But there is no government policy or regulation applied across the nation that requires least cost planning. Senator MARGETTS—Is there anyone in the department or in the program these days who actually deals specifically with demand management? Mr Alderson—Demand management, essentially, comes into, if you like, some of the elements of the energy efficiency program where we—the ‘we’, if you like, being the royal ‘we’, the department—in conjunction with states and territories are looking at creating tools— the national housing energy rating scheme is one—that will enable practitioners to assess designs that require the least amount of energy. I cite that as an example of the creation of a tool by governments working with industry that will enable those sorts of decisions to be made. Senator MARGETTS—So is demand management seen to be a positive goal? Mr Alderson—It is a positive goal, yes. Senator MARGETTS—So it is back on the agenda, because I do clearly recall two years ago being told that it was a discredited concept by this department. Mr Alderson—I do not know who would have told you that, Senator. Senator MARGETTS—I think it was the chap who was in charge. Mr Alderson—I will not speculate on that. I think we would need to look at the Hansard. I would be amazed if anyone said that demand management was a discredited concept, but they may have. Senator MARGETTS—He said that there were articles written in the United States. He did offer to send them to me, but I never received them. Senator BOB COLLINS—Senator, I recall those estimates, but I do not recall that statement. Senator MARGETTS—We will look and find them in the Hansard. Mr Alderson—Demand management that makes economic sense is good management. Senator MARGETTS—That is what I believe, too. What measures are proposed or in place to ensure that the integrated grid system provides people with power under a pricing system which does not disadvantage rural people? Senator BOB COLLINS—Not putting a GST on electricity prices would be a hell of a good start. Senator Parer—You would have to talk to Michael Egan about that. Senator BOB COLLINS—For someone to pay $100 a year more in federal taxes in Darwin for using the same amount of power as someone in Sydney I do not regard as being a very good policy.

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Mr Todd—Essentially the processes that are in place to ensure that rural and remote communities are properly looked after in terms of a competitive market are basically through removing the inefficiencies that applied before, so significant price falls have been reflected through to all in the community, including rural and remote users. So, by going to more cost reflective and competitive pricing, all segments of the market have benefited. It is acknowledged that the greatest benefits have been gained, particularly by small business. Senator MARGETTS—Urban small business? Mr Todd—Urban small business or rural small business in terms of regional centres, but at the same time other categories, very much including rural and remote users, have also benefited. Senator MARGETTS—What measures are proposed or in place to ensure that the integrated grid system provides people in areas where the income from electricity sales is more expensive than the cost of maintaining a line to assist such people to purchase stand-alone renewable based generator systems? Mr Todd—In some ways the response to this is a point you raised earlier on in terms of saying, ‘Look, what are the advantages of going to a more competitive market for the renewables area?’ By going to the more cost reflective pricing, that does give the right sorts of incentives to remote area RAPS systems. So, rather than having subsidised prices, the more competitive market will encourage the development of those systems. In terms of particular initiatives, I would refer to Mr Alderson in terms of any energy efficiency programs that may have an impact on RAPS type systems. Senator MARGETTS—What sorts of assistance will there be in the start-up systems? Obviously the establishment would be quite expensive. Mr Alderson—Senator, there is no program specifically aimed at that. There is in place a fairly wide range of activity to give support to the renewables industry. Some of those programs operate out of the industry, science and technology portfolio that has funding for the development of the renewables industry. There is also, of course, continued support for R&D into the renewables sector, including through the cooperative research centres. Senator MARGETTS—I wanted to specifically talk about the issue of equity and the fact that, if there are greatly increased costs of providing electricity to remote and regional areas, the Commonwealth does not see a role to play in assisting with start-up costs. If your policy is specifically helping to change the price for delivery of electricity in those areas, are you not doing anything to address the equity of perhaps establishing stand-alone systems? Mr Alderson—As my colleague said, the pricing is now more cost reflecting pricing, sending better signals. In that context, that would mean that in some instances stand-alone power supply systems, in fact, would be more competitive. Senator MARGETTS—Sure. I understand that. We know that over time they will be, but we all know as well that setting them up is going to be a problem for a lot of people with the initial cost. Mr Alderson—There is now a Commonwealth program connected with, or for the purpose of, subsidising the establishment costs of stand-alone systems. Senator O’BRIEN—Mr Zuber, I want to go back to the portfolio budget statement. The figures that you have now amended in point 1 of the annual appropriations running costs show—and it may be because you did not choose to amend it, or there was an error in the revised appropriation—an initial appropriation of $9.627 million, a revised appropriation of

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$7.648 million, an estimated outcome which is now $9.749 million and a budget for this year of $8.768 million—a reduction of somewhere, I guess, in excess of 11 per cent. In this case, there is a reduction of some significance in staff years. Can you tell us what the effect of this approximate 11 per cent reduction in the running cost budget for this subprogram is? Mr Zuber—I will ask my colleague Mr Alderson. Mr Alderson—The reduction is minus 10.1 per cent based on that. I will clarify those numbers for you a little further. The running costs under subprogram 1.10 relate to two areas of the department: one is the energy division and the other is the electricity task force element of the project facilitation division. Out of that $8.76 million, $5.6 million relates to the energy division and $3.2 million relates to the electricity task force element of the project facilitation division. The consequence of a downturn in those numbers has been some reduction in staffing. Senator O’BRIEN—Which area has seen the reduction? Mr Alderson—The energy division. Senator O’BRIEN—So the electricity task force will remain at pre-budget staffing? Mr Alderson—Yes. Senator O’BRIEN—Can you tell us what will be the effect on staffing in the energy division? Mr Alderson—Certainly. At the bottom of page 77 you will see a reduction from 85 to 79.5. So it is a reduction of about five in number. Senator O’BRIEN—Can you break up the outcome for 1996-97 in terms of those two areas—the electricity task force and the energy division? Mr Alderson—There are 12 people in the electricity task force element of that division, so that makes 73 people in the energy division. Some of those numbers are an attribution from our group support unit. Group support is allocated to the different entities within the group. That is the break-up there. Senator O’BRIEN—I presume that the 1996-97 estimated outcome is somewhere in the vicinity of $3.2 million for the electricity task force and that the balance is for the energy division. Mr Alderson—That is right. The $5.6 million is for the energy division. Senator O’BRIEN—So about 5½ to six staff year positions are to be shed? Mr Alderson—They have been. I have worked on that already. Senator O’BRIEN—In terms of numbers of positions, if you were doing it halfway through the year, it would be double the number of positions. Mr Alderson—That equates to full-year figuring. Senator O’BRIEN—That is right. Do you know how many staff are going to go? Mr Alderson—Because we had some tightening up the year before, I did not fill some positions that became vacant. As a consequence, I really do not have bodies to get rid of. It is just that the money is no longer there to recruit bodies. Senator O’BRIEN—So there were positions last year that were funded for which you did not need the salaries?

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Mr Alderson—That is right. I took a conscious decision to save that money. Even in the absence of the budget that has just been brought down, the funding for the division, as is common in policy divisions as programs run their course, was reducing. Senator O’BRIEN—Have you carried money over? Mr Alderson—I did carry some money over. From memory, it was a couple of hundred thousand to cover the bite. Mr Zuber—Cash management principles in all Commonwealth departments allow us to carry over plus or minus 10 per cent. Senator O’BRIEN—I am just trying to get my head around the numbers. If the numbers are already down and you have saved money from last time, why did you need to spend $9.749 million last year—or whatever the equivalent for the energy division was—which is going to reduce by a million dollars when the bodies were gone this financial year? Mr Alderson—The running costs comprise quite a number of elements, not just salaries. Out of those running costs, for example, we spent from memory a couple of hundred thousand dollars or so—it might have been a bit more—to commission a consultancy report in preparation for the independent power project being run in connection with the APEC energy working group. You will find sums of money used for other administrative purposes that do not necessarily relate dollar for dollar to the number of staff. It is just normal running cost expenditure. Senator O’BRIEN—I will get a good handle on this in your annual report, will I? Mr Alderson—Yes. Senator O’BRIEN—When is that expected to be available? Senator Parer—I believe 31 October is the cut-off. Senator O’BRIEN—Sometimes there is an earlier draft available. I should not hold my breath; is that the message I am getting? Mr Zuber—There will be earlier drafts. The thing that always makes the annual report rather late—I do not think rather late but which takes time—is getting the financial figures which have to be audited by the Auditor-General and an audit certificate before the secretary and others can certify the departmental accounts. That simply takes two months. Senator O’BRIEN—My limited experience is that sometimes drafts are available earlier, and it may be that I do not see it any earlier than the end of October. I want to ask some questions about the national energy efficiency program. What activities under that program are occurring as a result of the energy market reforms? Senator Parer—Are not occurring? Senator O’BRIEN—Are occurring. Mr Alderson—I would like to turn that around a little bit if I could, but I am not trying to skirt your question. The sorts of activities that take place under the energy efficiency program break down into three. Firstly, there is a sort of information type program that relates to the dissemination of information so that practitioners can draw on that information to be better informed about their decisions—whether they are business decisions or government decisions. That is where we perceive there to be a market failure in terms of information. Secondly, there is the creation of systems that can be drawn on by people. I referred earlier on to the national housing energy rating scheme as one such system. Other systems are minimum energy performance standards and labelling. Those systems essentially say that the

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 431 manufacturers—and we work with industry to do this—can use this as a marketing tool to say, ‘But we’ve got more efficient gear.’ Of course, the consumers are better informed about what appliance—whether it is a refrigerator, an air conditioner or what have you—performs better in terms of efficiency. That is a second raft of activity which is a systems creation type stream. The third raft of activity would be something which I would call essentially a more proactive stance. That relates to the energy enterprise audit program where audits of companies are subsidised, partially offset, out of the energy efficiency program. There are things like our membership of the technology transfer operation under the International Energy Agency. You have to be a government to belong to that, so we pay the seed money to belong and then industry draws on that technology transfer. That is a third raft of stuff. The other element of that, of course, is the Commonwealth’s own operations in terms of efficiency there. A number of those programs were in place before the current market reforms were set in train or took effect. There has been reform of the electricity and gas industries in Australia in a more integrated market, privatisation in Victoria and corporatisation in New South—or going down that track. Eighteen months or two years ago we conducted a survey of the energy services industry and we are in the process of conducting another survey. What we found in Australia from the commercial sector itself was that there was far more delivery of what we would term energy service industries—auditors doing energy efficiency auditing, the furnishing of advisory services and knowledge of technologies. When we looked at core business and priorities, some of those programs had been terminated as a consequence of a reduction in funding. The enterprise audit program is one. Against that background now we really have a wealth of highly qualified auditors in Australia. Another thing is coming out, just to illustrate the point. Under this program the department ran annual energy efficiency award nights and we looked at best practice coming out of that. Under the greenhouse challenge program where we have companies signing up there are many examples of best practice that, in the context of that particular program, gain publicity at the time of signing. The objective was to encourage peers also to embark on best practice. That publicity is coming out in another way now. The things that we are currently focussing on are those things where government can play a pivotal role not done by the commercial sector and where we can drive a national focus. In the program we have continued working with the states and territories on an extension of the minimum energy performance standards and labelling type activity. We have redesigned but are continuing with a program to encourage more efficient commercial buildings through an extension of the industry’s benchmarking type system—I suppose that is the best way to cover that. With the states and territories we are also developing a national energies database so that we can get a better fix on best practice and benchmarking within various sectors within the Australian economy. That is pretty well related to enabling governments to be better informed on the impact of policy and the impact of programs so that down the track we can better analyse the performance of the programs in place. They are the sorts of things that we are doing now and the reasons for some of the variations that have taken place. Senator BOB COLLINS—Anything you want to add to that, Mr Zuber? Mr Zuber—No, thank you. Senator O’BRIEN—The questions that I have could probably be answered equally well on notice—I am just thinking of time and the like. I have got a few more questions on the national energy efficiency program that I will put on notice. I have also got some questions

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 432 SENATE—Legislation Wednesday, 11 June 1997 on the white paper on sustainable energy policy which I will put on notice. I want to ask some questions about the national greenhouse response strategy. We have already had some questions on that. CHAIR—You will pass those over in due course, will you? Senator O’BRIEN—Yes. Minister, going back to your Internet page, ‘Achievements in the resources and energy sector in the first year of government’, you said in March that there were 22 agreements with companies covering 250 major sites. Does that mean that since March there have been an additional nine companies or industry associations that have signed up— Senator Parer—Yes, Senator. Senator O’BRIEN—And those nine have covered 120 sites? Mr Alderson—Senator, if that is how the figures have come out, that is exactly what it means, because the figures I quoted earlier on this evening are accurate and the figures quoted at that time would have been accurate. Senator O’BRIEN—I hope so. And you said then: The agreements with individual companies cover some 46 per cent of Australia’s emission from the industrial sector. Then tonight— Mr Alderson—No, Senator, I didn’t. Sorry, are you talking about the old figures or the new— Senator O’BRIEN—These are the figures in the Internet print-out, and tonight you said: ‘45 per cent of the emissions from the mining, manufacturing and services sector’. What is the difference? Mr Alderson—Sorry, Senator. May I take that on notice, because I would need to look at the nature of the agreements that constituted the earlier advising. Senator O’BRIEN—We would like to look at the agreements too, but you have told us that they are commercial-in-confidence. Is it not possible that some companies or industry associations would want to use the fact that they have that agreement for publicity purposes? Senator Parer—They do, Senator. They are very proud of it. Senator O’BRIEN—Is it a specific term of the agreement that it is commercial-in- confidence? Mr Alderson—Senator, I can explain this. And if companies themselves want to use that information, then that is great; we are all for it. But some of the action plans put into place very much impact on their competitiveness, so they do not want to foreshadow or make public some of the details relating to their planned investments, because they really are competing with colleagues within Australia and in export markets. So part of the arrangement is that we will fully protect the commercial-in-confidence elements of the agreement, but we have said to every company, ‘If you yourselves wish to go out and advertise the good things you are doing, then we would very much welcome that.’ CHAIR—Can I just interrupt for a moment. Senator Margetts would like to table a document. Senator MARGETTS—Yes, I did promise that if I found it I would come back. It concerns a conversation two years ago between me and Mr Wicks. And no, I would not forget a thing like that. I am pleased to see the department now does believe in demand side management.

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CHAIR—Thank you. Senator BOB COLLINS—Is there somebody here who can answer the single, solitary question I have in this section on SMEC and its payment of $936 million—gratefully received, no doubt? Mr Todd—Yes. Senator BOB COLLINS—Thanks, Mr Todd. It is in Budget Paper No. 4 and it is a payment included in the revenue side of the budget of just a billion dollars from the Snowy Mountains Authority. I would just like the committee advised on what the nature of that payment is and the background to it. Mr Todd—Senator, the receipt is both an ingoing and an outgoing of $936.764 million in 1997-98. It is just a rationalisation of the debt arrangements with corporatisation. As we go into corporatisation we have this great schedule of debts that no company would want to take on board. So that is just going to be re-jigged as a single Commonwealth loan to the company—both the original loans and inscribed stock. So it is a zero sum gain. Senator BOB COLLINS—It is a book-keeping exercise essentially? Mr Todd—Yes. Senator O’BRIEN—Can you tell me what the current state of play is with the national greenhouse response review and what input has been made by the department and the minister? Mr Alderson—Certainly, Senator. You will be aware that there was a public review document circulated and submissions were made by a number of interested parties. There has been consultation between the Commonwealth and the states and there is ongoing consultation between different departments within the Commonwealth, with a view to preparing a final response document to put before the government. At this stage, that is still in the course of preparation. It is not finalised. Consultations and drafting are ongoing. Senator O’BRIEN—When do you expect that you will have completed that consultation and drafting process and that the review will be in the minister’s hands? Mr Alderson—I will say that it is probably something in the order of a month, but of course I am not master of my own destiny here; it depends on all other portfolios’ involvement. Senator O’BRIEN—Minister, I think the point has been made in the Senate about comments that you made, according to the Sydney Morning Herald, about the greenhouse effect and your comparing it with the ‘club of Rome’. Do you believe that that creates any problems for you in representing this aspect of your portfolio—that is, having in some senses pooh-poohed the concept of the greenhouse effect, talking up a strategy response for the greenhouse effect? Senator Parer—That is the way the newspaper article read, but it should have been put into context. I also made the point that we accepted the fact that there was probably human effect in respect of global warming and that we had a responsibility to address it; but that we would address it—and I think this is the point being made not only by Senator Hill but also by the Prime Minister and others—in a fair and equitable way and that we believe that fixed targets legally binding are not a fair and equitable response from Australia at all and would be to the detriment of this country and to our economic interests. Senator O’BRIEN—So you accept, Minister, that there is such a thing as the greenhouse effect? Senator Parer—Yes, I have always accepted that.

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Senator O’BRIEN—I am sorry, but the reported comments do not lead one to that view. Senator Parer—The context of it was—I do not know if you are aware of what the club of Rome was, but there were some pretty wild comments made back in the 1970s about the club of Rome—about people running out of resources, world wars being started and all these sorts of things. You can compare that with some of the more bizarre sorts of claims that are being made in some of the projections on greenhouse, which we are not absolutely sure about. But we agree with the fact that there is an effect and that we should address it. Senator O’BRIEN—I am pleased to hear that, Minister. Hopefully, if that is disseminated you will have fewer problems in being accepted at face value in terms of a greenhouse strategy response. The other questions I have on subprogram 1.10 I will put on notice. CHAIR—That being the case, and with no more questions on subprogram 1.10, we now move to subprogram 1.11. I thank the officers at the table and request that the officers for 1.11 come to the table. Subprogram 1.11—Portfolio management and policy Senator BOB COLLINS—I have a number of questions on subprogram 1.11 and I intend to place them all on notice, considering the hour. Senator O’BRIEN—The only question I have—and I would be satisfied if the department were to come back to me—is for it to explain the effect of what the Portfolio Budget Statement says will be a 45.3 per cent reduction in the running costs whilst showing an almost negligible reduction in the staff-year component. Mr Zuber—I am happy to explain that to you now or to give you a very broad response and supplement it later—however you want to do it in terms of the committee’s time. Senator BOB COLLINS—Is there a long answer and a short answer? Mr Zuber—I can give you a fairly short answer. CHAIR—We will give it a try. Mr Zuber—This item comprises a number of specific elements. It deals with three divisions of the department—the corporate policy division, the corporate affairs division, the planning performance and parliamentary division, and also a services unit. So it meets the finances of those divisions and the services unit. In addition to that, it funds two corporate accounts that are not attributed to the other subprogram elements of the department. The largest of those accounts by far is the property operating expense account, and for all of the subprograms the costs of property are not hypothecated other than for AQIS, ABARE and AGSO, which have their own property expenses. For all the other subprograms, property expenses are shown in here. There is also a further account, an efficiency measures account, which meets a number of capital or other investment items for the department. To demonstrate this, it meets the redundancy overheads under the redundancy program, for instance. You will see that one of the initiatives—the very bottom one on page 85—was a leadership program for managers within the department that met the seeding costs of that particular item. That is by way of background, and I will now answer the question directly. The base of this expenditure moves in fact from some $32 million to what will be around $29 million, I predict, in next year. So in fact the reduction is only about $3 million. The reason that the variation shows a $42 million expenditure as an outcome in this year, and only a $23 million expenditure, is that a number of expenditures are brought forward. The principal

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 435 component of that is shown on the following page under ‘running costs’—that is, an amount of just under $6 million for the refurbishment of John Curtin House, which is our principal accommodation in Canberra. In other words, we spent about $6 million refurbishing. The impact of that was to allow two parts of our department, which were in two other bits of accommodation—John Curtin House and Bligh House, to move into the department. The refurbishment, in effect, reduced our officers’ space by some 25 per cent, but did so in a very ergonomically efficient way. So we invested $6 million and brought forward expenditure for that amount and that is why I am saying it would go back to $29 million next year because we brought forward that. The savings in rentals by our doing so are something well in excess of $2 million a year. So we will recover the refurbishment expenditure within three years and avail ourselves of savings in under three years and avail ourselves of savings after that time. In these times of stringency that is not a bad outcome. The second component of that expenditure was a one-off payment, or amount available, from the Department of Finance for extending the rental in Edmund Barton Building because we required funds beyond our property agreement. The third component was the use of redundancy amounts. I have explained that, in various subprograms, those program items met the accrued expenses. That is, if I want to retire, I would have certain entitlements of accumulated rec. leave, long service leave and the like. If I retire, also I would receive a voluntary severance component of two weeks pay for every year of service and that was funded from a corporate account—from the efficiency measures account—and it was funded in that one year. In other words, it was brought forward into that one year. So the consequence of those three items was for 1996 to inflate the expenditure by $10 million and certainly the forward borrowing for property was simply treated by the Department of Finance as a reduction in our next year’s amount. We will expend more that $23 million to do our business. We will expend $29 million and that will be handled under the borrowing rules that I referred to until a profit is generated from the refurbishment and the accommoda- tion consolidation. That is the response to it. Senator O’BRIEN—There is only one question that arises and I accept that you would have to take it on notice. You have reduced your staff and you have reduced the space that is occupied in Canberra—I presume that that would be true nationally— Mr Zuber—Yes. Senator O’BRIEN—Can you give me the details of the number of staff before and after and the area in square metres occupied before and after, please? Mr Zuber—Yes, in fact we have those figures because we supplied them to Senator Collins a number of weeks ago. Senator BOB COLLINS—If I cannot get them from Senator Collins I will— Mr Zuber—No, we will get them to you. Senator BOB COLLINS—You can get them from me; I believe in open government now I am in opposition. Senator O’BRIEN—Open opposition. CHAIR—Thank you. That finishes subprogram 1.11. We will move to subprogram 1.12. Senator BOB COLLINS—Mr Chairman, I do not want to delay the committee any longer than is necessary but I certainly want this placed on the public record for the benefit of the department. The officers themselves have been sensible enough to go home.

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Senator Margetts just tabled a Hansard extract which was supposed to indicate that a departmental officer had told this committee several years ago, in 1995, that demand management was a complete waste of time, or words to that effect. Having had the opportunity to read the Hansard I simply want to alert the committee and anyone interested in this matter to the fact that the Hansard extract that has been tabled demonstrates nothing of the sort. It does not even come close. I am dreadfully sorry that she has left. CHAIR—I have no doubt that the committee will make a response to the tabling of that document. There is no doubt about that at all. Subprogram 1.12—Geoscience research and mapping Senator O’BRIEN—What was the rationale for the establishment of the continental margins program? Dr Williams—That program was long before my time, but my understanding is that it was begun in the mid-1980s and the purpose of the program was to undertake a comprehensive survey of our continental margins using a vessel, the Rig Seismic, to delineate the architecture of the sedimentary basins in that offshore area and to provide some assessment of their poten- tial for petroleum as a pre-competitive activity to support petroleum exploration offshore. Senator O’BRIEN—To your knowledge, was that in response to a demonstrated need? Was there industry pressure for that measure? Dr Williams—Again my understanding is that the drive really came from the geoscientists within what was then the Bureau of Mineral Resources who had argued, from the limited data that was available, that there would be considerable petroleum potential offshore but we would never know that until we went out and did the surveying. It is an exercise that typically an oil explorer would not undertake—that degree of regional activity in open water with no tenement coverage whatever. An oil explorer would rather, as is the case with petroleum exploration worldwide, utilise whatever publicly available data there are to target their programs. Senator O’BRIEN—I presume that there was a series of projects conducted under this program. There was not just an ongoing search and discover brief, was there? Dr Williams—Delving way back into the past, the old BMR had undertaken a survey under contract, I think, in the 1970s where they shot very broad based coverage right around the entire continent that gave us clues as to where the most promising areas would be for more detailed follow-up work. It was that original 1970s survey that then provided the framework for going out and filling in in more detail those areas where it was clear that there were large sedimentary sequences. Senator O’BRIEN—I understand that the continental margins program is being abolished and replaced by the Australian ocean territory mapping program. Was there any consultation with industry about the abolition of the continental margins program? Dr Powell—There was extensive consultation with industry in the sense that the types of activities that were undertaken under the CMP fell into three broad categories: studies in frontier regions to attract petroleum exploration into new regions; studies into basins that had received some attention from petroleum exploration but that had waned, and they were designed to rejuvenate interest; and, studies in existing exploration regions which were designed to improve the efficiency through provision of regional geological information. In the transition from the continental margins program to the Australian ocean territory mapping program, there was one major change in the environment, and that was the ratification

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 437 of the law of the sea which gave Australia, along with many other countries, 10 years to delineate its ocean boundary. Under the continental margins program, the law of the sea was a very minor component of the work. But, in the Australian ocean territory mapping program, because of this national interest, it is the predominant responsibility of the program to do that boundary delineation work. That is the change in the nature of the program. Senator O’BRIEN—What is the difference in cost of funding the two programs—CMP versus the AOTMP? Dr Powell—The essential cost to government of the program is slightly higher in the AOT mapping program. Under the continental margins program, there was a significant component of cost recovery from industry because the data that was acquired by Rig Seismic was sold to interested companies and the surplus capacity of Rig Seismic was also marketed. Under the Australian ocean territory mapping program, because the data is being collected in what we would consider, from a petroleum exploration point of view, far frontiers, the capacity to sell the information to the petroleum companies is no longer there. Therefore, the cost to government is slightly higher than under the previous program. Senator O’BRIEN—I understand that there was a bill before the parliament to fund half the operating cost of the continental margins program. I understand that did not pass the Senate because it was passing on costs to industry. Is that right? Is that a fair reflection of what occurred? Dr Powell—Yes. That proposal was put forward under the previous government and was defeated in the Senate. The then government renewed the funding for that component that was to be paid for by industry. It was the termination of that funding that led to the installation of the Australian ocean territory mapping program. Senator O’BRIEN—But the AOT mapping program which, to all intents and purposes, replaces the continental margins program has a higher budget cost? Dr Powell—Yes, because the recoveries from industry are lower because of the higher content of public good, if you like, in the survey work. Senator O’BRIEN—And there is no commercial good in the survey work? Dr Powell—We still do work in support of petroleum exploration, but the balance of the program is predominantly for law of the sea under the present arrangements. Senator O’BRIEN—Are you saying that the work that you do is not saleable any more? I think that is what you have said. Dr Powell—Certain parts of it because, to delineate Australia’s ocean territory, we are presently going far beyond the limits of commercial petroleum exploration at the present time. In so doing, we are delineating the ocean territory for Australia forever. Hence, although these areas may become sites for petroleum exploration in the distant future, they are not currently so. Senator O’BRIEN—There is no prospect for any cost recovery then as there was under the continental margins program? Dr Powell—There is some cost recovery still because we still do some petroleum surveys. Out of five surveys of the vessel, previously four would be for petroleum work and one for law of the sea. Under the present arrangements, it is the reverse. It is four for law of the sea purposes and one for petroleum.

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Senator O’BRIEN—I wanted to touch on the national geoscience mapping accord. The performance forecast for this program on page 90 states: AGSO will maintain a program of geoscience mapping and research activities in cooperation with State/Northern Territory geological surveys under the National Geoscience Mapping Accord. However, on page 89, it says that funding for the mapping accord will cease. Can you explain that? Dr Powell—In relation to the funding for the mapping accord ceasing, that is a result of a termination of a program that has been running for some three years whereby the funds that were spent on the NGMA have been supplemented and increased. What is happening is that we are reverting to a base level of activity under the NGMA, but that program is still continuing. Senator O’BRIEN—So the words ‘the cessation of funding for the National Geoscience Mapping Accord (-$3.0m)’ do not mean that there will be no money to fund geological surveys in cooperation with the states and the Northern Territory? Dr Powell—That is correct. Senator O’BRIEN—Does that mean that the states and territories will provide the funds? Dr Williams—If the word ‘additional’ funding from a previous decision had been inserted there, that would make better sense of that clause. In 1992 when the government rearranged some of the activities in DPIE and part of the former Bureau of Mineral Resources was moved to the Bureau of Rural Resources to make the Bureau of Resource Sciences, a major review chaired by Dr Max Richards was undertaken of AGSO on its roles and functions. As a result of government response to that review, additional money was made available to AGSO to undertake an accelerated program of national geoscience mapping accord work. The comment reported in there is ‘the end of that additional funding’. Senator O’BRIEN—Do you mean on page 89? Dr Williams—Yes. Senator O’BRIEN—So it should say ‘the cessation of additional funding’. Is that what you mean? Dr Williams—Yes, that the word ‘additional’ should have been in there. But the program will still be— Senator O’BRIEN—How much funding will the program receive then? Dr Powell—We can give you the exact number later, but it is approximately $10 million. Senator O’BRIEN—Are there performance indicators for the national geoscience mapping accord scheme? Dr Williams—There are a range of indicators on page 90 which we use to monitor and judge the success of the national geoscience mapping accord; they are the dash points there. Senator O’BRIEN—Can you tell us—and you may need to take this on notice—what those performance indicators would say of the scheme’s performance in 1995-96 and 1996-97? Dr Williams—Could I take that on notice? Senator O’BRIEN—Yes, you certainly may. Dr Williams—There is certainly a great volume of material that we would provide there. Senator O’BRIEN—When was the most recent review undertaken of the national geoscience mapping accord review?

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Dr Powell—In 1995 the national geoscience mapping accord was carried out under the auspices of ANZMEC. That was administered by the chief government geologists group of the states and the Commonwealth. In 1995, ANZMEC looked at the progress and renewed the program. That was the last collective review. The Commonwealth component is due for review next year. Senator O’BRIEN—Do I take it that the details of that review have been published somewhere? Dr Powell—There was an announcement made at the time of the ANZMEC conference, but it was not a public review in that sense. The last formally published review was the Richards review of AGSO in 1992, which included consideration of the NGMA. Senator O’BRIEN—Can you supply the 1995 review to the committee? Mr Williams—I would be uncertain as to the status of the ministerial council papers. Certainly from AGSO’s point of view, there is no problem with making that available. But, as I say, I do not know what the rules and regulations governing those sorts of internal reports are. Senator O’BRIEN—If it is all right with the minister— Senator Parer—We will check the niceties of it. Senator O’BRIEN—You were saying that there is a review due imminently? Dr Powell—As part of the normal departmental evaluation program, the NGMA is scheduled for evaluation next year. Senator O’BRIEN—Thank you very much. That is all I have on 1.12. Senator BOB COLLINS—I just have a few questions for ABARE on 1.13. But I also have some questions about RIRDC, the Rural Industry Research Development Corporation. What is the right spot to ask RIRDC questions? Mr Barratt—Under 1.11. Senator BOB COLLINS—Are there officers here who can answer questions about RIRDC? Mr Zuber—I think they have absconded, actually. We will just check whether they are here. Senator BOB COLLINS—Thank you. In the meantime, perhaps I could ask the ABARE questions. CHAIR—We will go to 1.13. Subprogram 1.13—Agricultural resource economic research Senator BOB COLLINS—The cut in funding for ABARE, as I understand it, in broad terms is from $22 million to $15 million. Is that correct? Dr Beare—Last year our appropriation based funding was reduced by 10 per cent. I believe that was made up, in part, by an increase in our external revenue to approximately 36 per cent. This year, basically we have held our appropriation funding, less the dividends, at $15 million. Senator BOB COLLINS—Fundamentally then, the rationale behind those reductions was as a savings measure; there was no policy rationale for it. Dr Beare—Not as I far as understand it. It was just a pure savings measure. Senator BOB COLLINS—Policy or restructuring rationale, it was a savings measure. Dr Beare—Yes.

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Senator BOB COLLINS—Is the organisation planning any changes to its charging regime for users as a result of the cuts or, indeed, at all? Dr Beare—At present we have reviewed our charging routines. In some cases, for example, with our surveys, the data is essentially provided in cooperation with industry as well as government, and we do not think it serves industry to try to additionally recover on that—for example, to recover from the surveys. So we charge those at the marginal costs of the data extraction. In some cases where we are putting a fairly substantial investment into it, we try to recover the costs of those investments if it is possible, even though they might be in the past. So we use a flexible approach, because basically we are getting to be a very commercial organisation. Senator BOB COLLINS—What about publications? Dr Beare—What we have been looking at with publications is some experimentation with where things are. For example, take publications such as the Australian minerals statistics; it is sold basically to merchant banks and merchants who we figure have the ability to pay. With something like the farms surveys report, having general access, we try to keep the prices pretty close to what it costs us to publish. We try to be responsible, I guess. Senator BOB COLLINS—It is a fairly sensitive approach to charging. What I would like for the committee is the ABARE outlook for wool, wheat and beef in terms of production levels and market conditions. I also want a breakdown of the value, volume and destination of our meat exports for 1994-95 and 1996. I would be quite happy if you responded to that request by providing me with the appropriate ABARE publications. Dr Beare—In terms of the volume, value and destinations, would you prefer that for Australia or by state and territory? Senator BOB COLLINS—I would, if you can break it down to that extent without dying in a ditch on it. Dr Beare—We will not die in a ditch on it. We have ready access. In terms of our forecasts for the commodities, I believe next Tuesday the AC will be published and we are happy to forward a copy to your office. Senator BOB COLLINS—That is a timely request in that case. If you can provide me with the appropriate ABARE publications I would be grateful. Dr Beare—Just a point of clarification on what commodities you wanted coverage. Senator BOB COLLINS—Wool, wheat and beef. Mr Zuber—Senator Collins indicated he had questions on RIRDC. If it goes to the funding variation that is shown on page 83 we can answer that. If it goes beyond that the officers are not here and we would have to take it on notice. Senator BOB COLLINS—I will tell you specifically what it involves. The issue I want to pursue involves cashews principally. RIRDC will know precisely what I am talking about— cashews in respect of RIRDC’s involvement in the Northern Territory. That is what I want to ask questions about. We do want to finish tonight if we can at 11 o’clock, but we have to sit tomorrow in any case for Transport. If the officers are Canberra based, which I suspect they are, it might be possible with little inconvenience to them to come back at some time during tomorrow—I imagine it would take no longer than half an hour—I indicate that I would be very happy with that arrangement. CHAIR—It would be somewhere around 11.30 a.m. or 12 o’clock.

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Senator O’BRIEN—There was an article in the Australian Financial Review of 17 December under the heading ‘Greenhouse gas sums don’t add up’. It is written by Professor John Quiggin of James Cook University. I make the presumption that the article is known to officers. Is there a written response to the article? I am sure you are aware of it. If there is, can it be supplied to the committee? If not, are you prepared to take the article on notice and give a response? Dr Beare—I would have to check to see whether there was a specific written response to that article in particular. I would be surprised if there was not, but we will provide you a copy of the content of the response. Senator O’BRIEN—I will table the article. Dr Beare—I take the opportunity to table the most recent work from that on climate change. There have been a considerable number of advancements there. There were questions raised by Senator Margetts and a few others about landcare tax options, credits and rebates. Some work has been done and I would like to table that as well. I thought there were some questions about aquiculture. We have just completed a review of essentially the prospects for 17 different species of aquiculture and what the impediments and needs are for these industries. I table a copy of that. If senators would like copies sent to their offices, please tell us. Senator BOB COLLINS—You guys are worth more money. Senator Parer—The secretary would like to make some comment about this piece of paper that was tabled by Senator Margetts. Senator BOB COLLINS—Indeed, considering the assertion Senator Margetts made of what the department’s view allegedly was two years ago and the dramatic shifts since then. Mr Barratt—My recollection is that Senator Margetts said in her commentary that the department had said two years ago that demand side management was a discredited concept. Senator BOB COLLINS—That is correct. Mr Barratt—I have studied the document that was tabled by Senator Margetts and I can nowhere find that statement by a departmental officer. We will respond to this document when we study the transcript of Senator Margetts’s comments. We will provide a response in writing. I would like to provide a careful response. I simply wanted to foreshadow tonight that I do not think this document supports the claims made by Senator Margetts. CHAIR—We look forward to that response. Subprogram 1.14—Resource sciences research Senator O’BRIEN—It will not surprise you if I ask you to give me an explanation of the effect of the 11.4 per cent apparent reduction in your running cost budget for the coming financial year. Mr Pahl—The variation is due in large part to the way in which the CRA work of the bureau is funded. Funds for the CRA work come to us via subprogram 1.3. If you look at the documentation from the additional estimates hearings you will see that there is a $3.3 million adjustment. We would expect that next year we would, in the same process, pick up a similar amount. The lion’s share of it is the way in which we go about funding our comprehensive regional assessment work. Senator O’BRIEN—Does that mean there is no real change in the resourcing or staffing of the division? Mr Pahl—There is a slight increase in the overall resource base.

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Senator O’BRIEN—Can you tell me what the current state of play is on sustainable land use information systems? Dr O’Brien—Sustainable land use information system is seeking beyond meteorological measures of climate variability and rainfall deficits by coupling meteorological measures with soil moisture models and eventually with plant production models so that we will be in a position to provide descriptions and forecasts of the impact of climate on plant and animal production. Where we are up to now is that the work on coupling meteorological data with soil moisture data is completed and we are moving to connect that in a spatial way with plant production models. It is work in progress. Senator O’BRIEN—I assume—and correct me if I am wrong—that there will be some further information about that matter in the annual report? Dr O’Brien—There will, and I am happy to take that on notice and provide you with more detail. Senator O’BRIEN—If you would I would appreciate that. CHAIR—I thank the officers from subprogram 1.14. Subprogram 1.6—Quarantine and inspection CHAIR—I welcome the officers to the table, particularly Paul Hickey and his team. Could I just say, before we start, that I know that Senator Collins has questions so I will apply the 15-minute rule. Senator WOODLEY—My first lot of questions relate to fire blight. Is AQIS aware how many times scientists Chris Hale and Richard Ivess from New Zealand have visited Australia in recent years? Mr Hickey—The minister has initiated an investigation of circumstances surrounding the discovery of this organism which looks like fire blight. As part of that investigation we have some information on trips by those two scientists. At the moment they are the subject of advisings to the minister. Senator WOODLEY—Obviously a lot of speculation went on in the media on various programs so I am trying to tease out some of that to find out whether any of the issues have been established or whether they remain speculation. One of them is the assertion that they were looking for fire blight. Have you been able to ascertain their intention? In the case of the scientist who visited the Adelaide botanical gardens he had indicated to AQIS what he was doing, had he not? Senator BOB COLLINS—He was quoted in the newspapers saying he did go there looking for fire blight. I do not know whether or not it is accurate. Mr Hickey—He contacted AQIS after he had been to the botanic gardens. I cannot ascribe motives to New Zealand officials. Senator WOODLEY—It is difficult. A number of politicians and media programs certainly have ascribed motives to them. Do you have any opinion about the possibility that those scientists were visiting Australia for the purpose of showing up AQIS and discovering fire blight? Mr Hickey—I do not have an opinion about it. Senator WOODLEY—You do not want to express an opinion on that. Then we will continue to speculate I am sure. CHAIR—I do not think it is a very fair question.

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Senator WOODLEY—You can always try them, Chair. I found very disturbing the report that the New Zealand government released to our trading partners on Mr Hale’s alleged discovery of fire blight in Australia—24 hours before the Australian government released its statement. Is that correct? Mr Roberts—There were two sets of information that New Zealand had on suspected fire blight in Australia. One was about the first set of samples that were taken without our knowledge and tested. New Zealand supplied the results of that testing to us and that was certainly not released out of New Zealand. The second set of information relates to a set of samples that were taken from the Melbourne botanic gardens and split into three portions. One portion went to New Zealand for further testing. The results of the New Zealand tests on that material were leaked in some way prior to any official announcement from Australia on the results of the Australian testing on that same set of samples. We understand from discussions with New Zealand officials that it was certainly not an official release of information but, nevertheless, it was leaked in some way. Senator WOODLEY—Have you received a new submission from the New Zealand government in relation to its application to import apples into Australia? I understand it is in the form of an appeal against the original— Mr Roberts—No, we have not received anything to date. Senator WOODLEY—Then I cannot ask you anything about it. I might add that I have spoken to the New Zealand High Commissioner about this issue, but I do not know that I advanced my knowledge very much in doing that. He was very kind and I think quite frank, but obviously there were a lot of things that he was not able to answer or willing to answer. I understand there is an independent investigation of the fire blight outbreak that the department or the minister has ordered. Can you give us some outline of what kinds of things the minister is seeking to get answers to in terms of that inquiry? CHAIR—Senator Woodley, before that is answered, I do not know whether you heard Senator Calvert. He put the word ‘alleged’ in there. Senator WOODLEY—Alleged. I am happy to put the word ‘alleged’ in. Mr Hickey—We have been asked by the minister to look at all of the possible entry routes for fire blight. That involves us in examining the potential for the introduction of this organism through legal importation processes which would have involved some period of quarantine of any host material in our post-entry plant quarantine stations. We will be examining records of any such material passing through those stations over the past five years. We are preparing a document on the possibilities of transmission of the organism inadvertently, either on clothing, or on hands, or on equipment such as secateurs, et cetera. To the extent that it is possible, we will be looking at possible illegal means of introduction and that might include the smuggling of prohibited material. All we can do there is point to instances where we are aware from previous investigations and prosecutions that such instances, unfortunately, are not unknown. To the extent that it is possible from this end of the business, we would look at the allegations about potential sabotage. Senator WOODLEY—So AQIS is doing that investigation? Mr Hickey—Yes. Senator WOODLEY—Will you be questioning the two scientists, Hale and Ivess?

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Mr Hickey—Any matters that involve New Zealand officials would be matters that we would have to deal with through the New Zealand government. Senator WOODLEY—The question I asked before about a new submission I probably did not explain properly. I understand it is actually a submission to the WTO as an appeal against the decision of the minister not to import— Mr Roberts—A couple of points. There is no decision taken not to import. It is still out as a draft pest risk analysis document, so we have not reached that stage. The second point is that we are certainly not aware of any approach to the WTO on this issue. Senator WOODLEY—I got the information from the New Zealand High Commissioner. That is why I was interested. It might be useful information. Mr Hickey—There has been speculation about formal processes being initiated through the WTO, but we have had no official contact from the New Zealand government on that matter. Senator WOODLEY—I hope I am not telling tales out of school, but he volunteered the information to me. Are you able to give the committee any information about how far your independent investigation has gone? Do you have any information yet that confirms, one way or another, the whole issue of fire blight? I understand actually that tests that we did here really put a question mark over whether or not it is a virulent form of fire blight at all. Mr Hickey—That really is the central question. Just what the organism is that has been detected, how widespread it is, and therefore, to some extent, how long it has been in the country, are critical bits of information that really determine how other aspects of the breadth of that investigation that I referred to are carried on. Until we get a clearer handle on the precise nature of this organism—you would be aware of the work that has been commissioned with a German laboratory, and further work that is being done in the Australian laboratories, and proposals that we have developed for some collaborative work with the New Zealand laboratories to try to get to the bottom of the different interpretations of the test results—until we get all of that information and the technical experts can make some decisions or judgments on the matter, it is very difficult to find an end to that process of inquiry. Senator WOODLEY—Is there any date for the completion of those studies? Mr Roberts—The laboratory testing, the work being done in the German laboratory, is being done at the moment. We get reasonably frequent updates on that. We are hoping that work will be completed perhaps towards the end of next week. Really it is not possible to be much more definite about that. Certainly, Professor Geider, the person involved, is expected to come to Australia to do some follow-up work about the end of this month. Senator WOODLEY—Will the findings be made public? I presume they will because the minister will want to announce that. Will the report be made public? Mr Roberts—There are two things. There is the scientific investigation, and certainly the results of that will be made public. The other one is the investigation into the circumstances or possible mode of entry. I am not certain of the status of that. Mr Hickey—It is subject to the findings of the source. The findings would certainly be, but some of the detail may not be. Senator WOODLEY—I know it depends on the minister, but, obviously, quite a lot of people would be very interested in those results. Have you estimated the cost to the apple and pear industry in Australia since the fire blight scare? The cost, I guess, is mainly to Victorian

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 445 and South Australian growers. Have you been able to do any estimate? There are a lot of figures floating around that vary pretty wildly. Mr Roberts—We have not got any firm estimates of costs. The main cost to industry is fruit that is caught in cool stores at the moment. Presumably, when interstate bans are lifted, a least some of the money tied up in those stores of apples will be realised. Until that is done, the overall costs are difficult to calculate. There are obviously also quite significant costs involved in the scientific testing and the surveys. We are in the process of getting together the sort of state component of costs as well as part of an overall package. We will seek information from the industry, but at the moment I cannot give you any detail. Senator WOODLEY—If it is possible, could the committee have those figures when they are available? Mr Roberts—Certainly. Senator WOODLEY—I understand that there was also some link to the Japanese continuing a ban on a particular species of Tasmanian apple. Senator O’BRIEN—Fuji—that is a Japanese apple grown in Tasmania. Senator WOODLEY—Tasmanians know about it. Was the media report correct that the continuation of the ban by Japan was linked to the particular fire blight scare that we have had? Mr Roberts—That is substantially correct. The situation was that Japan was just completing the final stages of assessment of our access bid for Tasmanian fuji apples into Japan. In fact, they were just doing the public hearing when we first learnt about this from New Zealand. Japan have taken a fairly cautious approach and have not finalised conditions. They are seeking additional information on this from Australia before finalising conditions. But we did not have access before. What has happened is that they have suspended finalisation of our access proposal until the position is clarified. Senator WOODLEY—This question has been partly answered. If I could ask it specifically, it would be helpful. I know there were media reports that the minister said shortly after the fire blight outbreak that he would take up at the highest level allegations of illegal action by the New Zealand scientist. Do you know if that did happen and if there was any outcome? Mr Hickey—The minister did speak with his New Zealand counterpart, Minister Lockwood Smith, as the minister has said I think in some of his press releases and press statements. The New Zealand minister apologised for the manner in which the detection of this material had been handled. The matter certainly has been raised by the minister in discussions with Lockwood Smith. Senator BOB COLLINS—For the advice of the committee and everyone else, I have got a very large number of questions for AQIS, which I am sure Mr Hickey probably anticipated. They are generated mainly because of the production of two major reports into AQIS—the Nairn report and the fish and fish products report. I just wanted to indicate, Mr Chairman, that there is no hope of us finishing before midnight in terms of pushing on past the hour, so I do not see much point in the committee continuing past 11 o’clock. That is subject to the views of others, of course. Senator WOODLEY—Sounds like a good idea to me. Senator BOB COLLINS—Did Senator Eggleston have some questions he wanted to ask?

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Senator CALVERT—No, he was looking for someone else. Senator BOB COLLINS—I thought he may have come in to table some questions on behalf of Senator Coonan. CHAIR—The thing we have to consider about whether we go beyond 11 o’clock tonight is that Senator Parer is only available from 9 a.m. to 12 a.m. tomorrow, which is the advice we were given. We will not have a minister, as I understand it, after that. Senator BOB COLLINS—I think that is a significant advantage. CHAIR—Other members of the committee have indicated that they have approximately 2½ hours of questioning on transport. So if we start at 9 a.m., that would take us to 10.30 a.m. before we could get on to anything from primary industries. Senator BOB COLLINS—So what you are saying, Mr Chairman, in effect, is that we have to conclude by lunchtime tomorrow? CHAIR—Yes. Mr Hickey—Could I just offer a comment on those two reports that you referred to. We will be somewhat constrained in discussing the detail of those because, I think, as you know, in the budget the government announced the package response, including the funding response, to those two reports, but is yet to release the details of its response to individual recommenda- tions, which will be done by 30 June. So there are some limits on that. Senator BOB COLLINS—Mr Hickey, I am sure you will have no difficulty in being constrained when I put the questions to you. I intend to give you the opportunity to show just how constrained you can be. CHAIR—We have one hour and 10 minutes before 11 o’clock, why don’t we see how we are positioned at 11 o’clock? Senator BOB COLLINS—Okay, Mr Chairman. I think we might have a problem with tomorrow in that case. In respect of the fire blight issue—and this may have been answered when I was briefly in next door and, if so, I apologise—I would like to know the extent of AQIS’s knowledge of the actual incident itself in Melbourne in terms of what happened and in particular the nature of the material which was removed. I would also like to know, if AQIS knows—I do not want speculation on it; I am just curious and I have not had time to check with the Victorian authorities—whether the removal of plant material, diseased or otherwise, constitutes an offence under the state law in Victoria. I would also like to know whether the actions of this scientist and, indeed, the other one in Adelaide—particularly the one in Melbourne—constituted prima facie any breach of AQIS’s own legislation or customs legislation in removing the material from Australia. Mr Roberts—I will try to deal with those in order. I think I can remember them. With respect to the Melbourne incident, my office received a call followed up by a fax on 2 May with information that samples had been removed on, I think, Sunday, 21 April and taken back to New Zealand for testing by the scientist Chris Hale and that some of this material had turned out positive in their tests for fire blight. So that is how we learnt about the incident, and that is our understanding. The material taken was Cotoneaster, Sorbus, Pyrus and Crataegus from the Melbourne botanic gardens. Senator BOB COLLINS—Were they twigs or leaf material?

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Mr Roberts—Twigs. They were twigs with disease symptoms on them. They were taken back. In terms of breaking of law in taking samples, I understand there are some botanic gardens regulations. I am not certain of the exact status in terms of the various levels of legal powers, but there are botanic gardens regulations that prohibit the removal of material from botanic gardens. Senator BOB COLLINS—I just assumed there would be in a botanical garden. Mr Roberts—Yes. They are done under Victorian legislation, obviously. If you are interested, we could perhaps get details for that. Senator BOB COLLINS—If you would not mind just confirming that, you could take that on notice. Mr Roberts—Yes. In terms of whether there is any illegality of taking material out of Australia, as far as I am aware, there is none. Certainly under AQIS’s powers, there is nothing. They do not come under the Export Control Act, for example, so, as far as we know, there is no constraint on taking that sort of material out of Australia. Senator BOB COLLINS—That would also be the extent of your knowledge, including any potential breach of customs regulations as well? Mr Roberts—I am certainly not aware of any customs regulations that could apply in those conditions. Senator BOB COLLINS—In terms of this paper trail—and, again, I only ask you if you have first-hand knowledge of this and not otherwise—are you aware of what happened when the material was actually taken into New Zealand? Was the material actually declared, as I am sure it would have to have been, at the New Zealand end? Mr Roberts—Our understanding is that it went through the New Zealand quarantine system. Senator BOB COLLINS—It did? Mr Roberts—Yes. Senator BOB COLLINS—After the material was discovered and the Australian authorities—botanical gardens authorities included—were alerted to the fact, what was the first response in terms of an investigation of the actual tree or shrub from which the material had been removed? Mr Roberts—As I said, we got knowledge of it on 2 May, which was a Friday. I contacted Victorian officials that same afternoon. It was early afternoon. I think they had people in the gardens that afternoon as well, but then they followed up with a lot more staff surveying on the Saturday, the next day. In fact, tests had commenced and been completed by Saturday night. They were able to trace the plants actually sampled by Chris Hale. They found evidence of the removal of twigs, which they assumed were the material removed by Chris Hale. They certainly had a good enough description and a sketched map of the location of those plants. Senator BOB COLLINS—What was the extent of the potentially suspicious material in respect of potential fire blight that they discovered in the gardens in addition to that particular shrub or plant? Mr Roberts—There were a number of Cotoneasters and a Crataegus and a Pyrus that showed symptoms that could be consistent with fire blight in the gardens. I think in total that might have been in further surveys, not that first Saturday survey. In further surveys I think they identified approximately eight plants that had symptoms that could be consistent with fire blight.

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Senator BOB COLLINS—Without repeating all the questions on the Adelaide experience, which was to some extent different, I saw reports in respect of the question Senator Woodley asked at least purporting to quote the scientist himself saying that he had, as a result of the Melbourne experience, deliberately gone out into the garden looking for fire blight. Do you know if that is correct? Mr Roberts—That was a different person in Adelaide from the person in Melbourne. Senator BOB COLLINS—That is right, yes. But the person concerned was actually quoted in Australian newspapers saying that the reason it happened was that he knew about the previous incident and had deliberately gone to the botanical gardens in Adelaide just to have a look around to see if he could find fire blight there. Mr Roberts—That could be, but I cannot ascribe motives. Senator BOB COLLINS—No, I was not talking about motive in that sense. I was talking about whether, to the extent of your knowledge, the Australian newspaper reports were accurate that his purpose in going to the botanical gardens, according to what were alleged to be quotes from him, was to specifically look for material that might have been affected with fire blight? Mr Roberts—I have no knowledge of that. All I know is he did contact us while he was still in Adelaide. He met some of the South Australian department of agriculture staff in the gardens. Senator BOB COLLINS—So, to that extent, from an AQIS perspective that scientist behaved in a great deal more responsible manner than his colleague had in Melbourne? Mr Roberts—Certainly his action in Adelaide was quite responsible. Senator O’BRIEN—With respect to the 2 May contact, who were you in contact with? Mr Roberts—Effectively my equivalent in New Zealand, Richard Ivess, chief plants officer, MAF. Senator O’BRIEN—So the first knowledge you had of it was direct from the New Zealand equivalent authority? Mr Roberts—Yes. Senator O’BRIEN—When were you first briefed by the Victorian authorities about the alleged outbreak in the Melbourne botanical gardens? Mr Roberts—It happened the other way around. We were informed by New Zealand. I informed the Victorian authorities on 2 May. Senator O’BRIEN—What other immediate action did you take with regard to the alleged outbreak? Mr Roberts—The survey programs got under way to a reasonable degree the next day. There were people in the gardens the very day that I reported to the Victorian authorities. Work has been ongoing at a very high pace ever since, including surveys through, in fact, the whole of Australia. Senator O’BRIEN—Can you tell us how many properties have been subject to testing or follow-up testing with regard to that survey program? Mr Roberts—I cannot. I can take that on notice and give you totals for each state. They are still ongoing in some states, and other states have almost completed them.

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Senator O’BRIEN—To the extent that you have already done it, I would appreciate knowing it. To the extent that you plan it, I would appreciate knowing about the plan. Mr Roberts—The surveys are done by state governments. I will obtain details of those and give them to you. Senator O’BRIEN—Can you tell us what discussions AQIS have had with their New Zealand counterpart as a consequence of New Zealand scientists’ allocations as to the existence of fire blight in Australia? Mr Roberts—We have had some informal contact over the phone over this issue a number of times. The scientists concerned and the chief plants officer, Richard Ivess, was visiting us the week after the report on another matter. We had some discussions again on this particular issue face to face. We have received two final reports that provide details of the New Zealand testing for both the first set of samples that were taken without our knowledge and the second set of samples that were taken with our knowledge. Senator O’BRIEN—Where was the second set taken from? Mr Roberts—Melbourne botanic gardens. The second report also picks up the Adelaide material, but it is mainly on the second set from the Melbourne botanic gardens. Senator O’BRIEN—I presume that you have had contact with South Australian authorities about the alleged existence of fire blight in South Australia? Mr Roberts—Yes. Again, that report came directly to me initially by the chief plants officer, who was in Adelaide. That was relayed immediately to the South Australian authorities. They were able to meet Richard Ivess on the day that he was on the way to the airport to New Zealand. He was able to meet and discuss the findings. Senator O’BRIEN—Have the Australian Federal Police in any way been involved in discussions about this matter? Mr Hickey—No. Senator O’BRIEN—Are any special precautions being taken at the moment in relation to the protection of Australia’s apple and pear industry? Mr Roberts—There are interstate restrictions by some states imposed on the movement of any host material. We still have our normal very strict quarantine measures directed at the possibility of entry of fire blight from overseas. None of that has changed. Senator BOB COLLINS—Mr Hickey, am I correct in saying that the $76 million over four years that has been referred to is to fund the implementation of the recommendations of both the Nairn report and the national task force on imported fish and fish products? Mr Hickey—Yes. Senator BOB COLLINS—The portfolio budget statement refers to the gross outlays for the next four financial years being in addition to the current forward estimates. Can you provide the committee with the forward estimates? I am happy for you to do that on notice. Mr Hickey—Forward estimates for quarantine programs? Senator BOB COLLINS—Yes. Mr Hickey—Yes. Senator BOB COLLINS—When the papers refer to the current forward estimates, I assume that they mean the numbers in the budget. Mr Hickey—Yes.

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Senator BOB COLLINS—Have those estimates varied from the forward estimates used in the 1996-97 budget substantially? Mr Hickey—I do not believe so. The measures that were taken in the 1996-97 budget would have been reflected in the forward estimates, and they have not changed other than for the specific $76 million decisions that we have had now. The only other possible changes to them would be activity levels under existing programs and price adjustments. But there have been no other decisions that would vary the overall quantum of our effort. Senator BOB COLLINS—Is it possible for you to advise the committee of the number of additional staff positions that may flow from the funding boost from the $76 million that you have just confirmed to implement the recommendations of the report into imported fish and fish products and the Nairn report? Mr Hickey—In approximate terms and subject to the detail— Senator BOB COLLINS—Can I just explain the question. The budget papers, as you know, identify the areas in broad terms that are to get a boost—quarantine awareness, border activities, et cetera. Mr Hickey—In the order of 200 additional staff for our quarantine programs. Senator BOB COLLINS—So the amount of money to address the problems identified in those reports in broad terms, considering the staff allocation and the areas that have been specifically outlined, have been identified to this point? Mr Hickey—They are still in the process of being finalised, but they have almost taken the final shape. The final clearance processes are still under way. Senator BOB COLLINS—Is it possible for you now, in terms of those heads that were laid out in the budget papers, to expand to some degree on how these activities will be expanded and how, again in broad terms, the 200 additional staff will be employed? Mr Hickey—Not in terms of specifics. Senator BOB COLLINS—No. Mr Hickey—The major areas of emphasis that were contained in the Nairn report were on substantial improvements to the risk assessment process. So there are resource increases in the technical policy and scientific capacity of AQIS in the assessment areas, such as Mr Roberts’s branch and the animal quarantine policy branch. There is also a significant emphasis in the Nairn report on border control activities. A significant number of activities are made about our airports program and our import clearance program—the clearance of containers and the like. So, not unexpectedly, a significant part of the resources goes into those areas. Senator BOB COLLINS—Thanks. I asked some questions on notice about the resources available for the imported food inspection program. I was advised that the number of field officers declined from 36 in 1994 to 31 in 1996. It was not possible to provide a figure for 1997. Your answer told me that the program had been incorporated into the quarantine import clearance program. Can you again provide the committee with details of this program in terms of what it does and how it fits in with the old imported food inspection program? Mr Hickey—In a sense there has been no change. The imported foods inspection program is the delivery arm for the human health policies that ANZFA determines and AQIS officers intercept cargo to the rates prescribed by ANZFA for inspection. The integration of the import

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 451 clearance program and the imported foods inspection program was necessary as a result of some historical factors in the past. The import clearance program in the major states had been delivered by state governments under agency arrangements with us, whereas the imported foods inspection program had been delivered by Commonwealth employed officers. When we resumed responsibility in the four main states for the delivery of the quarantine function it made no sense to continue to run two separate programs because often we were assigning inspectors from both areas to inspect the same cargo. What has happened now is that the two program delivery areas have been integrated. At the moment the staff are being trained in the other area so that, in the future, imported foods program inspectors will also be able to do import clearance work and vice versa. At a point in time we will cease being able to give you figures of staff employed; rather we will continue to be able to give you figures of consignments inspected. Senator WOODLEY—I want to ask a few questions about chicken meat. The Senate Rural and Regional Affairs and Transport Committee report on the importation of cooked chicken meat had quite a number of recommendations. The minister has made some response to those. Is AQIS itself expecting to make a response to that Senate report or would that be through the minister? Mr Hickey—That would be through the minister. Senator WOODLEY—Has any response that you are making been completed from your point of view? Mr Hickey—There were some specific recommendations about matters specifically to do with chicken meat importation, and there were some more general recommendations, including about who the decision maker in quarantine issues should be. So, in terms of the formalities of completing a response to each of the individual recommendations of the committee, I think there are still some outstanding matters. When the government’s final statement on the Nairn and fish reports is produced by 30 June I assume that that will then be attended to. Senator WOODLEY—The work done by Dr Alexander in looking at protocols, et cetera: has that been completed yet? Has a report been received? Mr Hickey—No, it has not. We are getting towards the final stages of that. The testing has taken a little longer than we had originally anticipated because there have been some newcastle disease outbreaks in the United Kingdom that the laboratory has been involved in investigating. But we expect the report shortly. Senator WOODLEY—Right. I saw the reports in Great Britain. I think it was particularly in Ireland that there were some significant outbreaks. Have there been outbreaks in the countries seeking to import into Australia recently? Mr Hickey—Dr Wilson might have some information. Dr Wilson—There have been some outbreaks in some of the member states of the European Union. Denmark had two outbreaks last year—one was in a backyard flock and another one was in an egg producing flock. There have also been a couple of outbreaks in the USA. But, once again, in both cases the outbreaks were stamped out and the status reverted to the original. Senator WOODLEY—So those outbreaks are not likely to affect the applications from these countries to import chicken meat into Australia?

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Dr Wilson—No, flocks which are involved in such outbreaks would not be available to supply meat for export to Australia. Amongst the certification we require is that the birds be clinically healthy and have no signs of disease. They are subject to ante-mortem and post- mortem inspection. Senator WOODLEY—Has the department considered varying the protocol so that source chickens to Australia as cooked chicken meat come only from regions certified free of the diseases—not just newcastle disease, but the other significant poultry diseases? Dr Wilson—That was considered. We consider that sort of certification more appropriate to uncooked chicken meat. The idea of the cooking process is to eliminate pathogens in the meat; hence that is the way in which we are addressing disease risk. Senator WOODLEY—Right. I have got a couple of other questions on anthracnose and a couple of general ones so, if there is more on chicken meat, I— CHAIR—Senator Bob Collins had not finished his line, so we will go to him. Before we do, I have just had a word with the minister. Standing orders say that committees may ask for explanations from ministers in the Senate or officers relating to the items of the proposed expenditure. So, if everybody is happy, rather than continue on all night tonight or whenever we will recommence what we do not finish tonight on AQIS at approximately 12 o’clock tomorrow. Senator BOB COLLINS—Thank you for that. I will behave myself, I promise. Senator Parer—Put that in writing. CHAIR—It is in the Hansard. Okay then, Senator Collins. We will get as much done as we can tonight. Senator WOODLEY—I have still got some others, but we will give him a bat for a while. Senator BOB COLLINS—I have only a few questions on chicken meat, and I will get rid of them now. We can lay that to rest. The antibiotics gentomycin and enrofloxacin have been restricted in Australia to use only in non-food animal species on the advice of the national health and research council. The problem is, as I am advised, that the use of those antibiotics could potentially lead to the transfer of resistance from animals to humans. Can you confirm that the use of such products is banned outright from use in food animals rather than having a process whereby the animal cannot be slaughtered for a certain period, say 40 days, after the antibiotic has been administered—as happens elsewhere, I am told? I am assuming that that is just a belt and braces arrangement; that is, that Australian health authorities consider the risk not worth taking. I would just like a confirmation or rebuttal of that from AQIS. The reason that I want the questions answered is that, as I understand it, both these antibiotics are used in poultry overseas, and I would like to know how this will impact on the government’s approach to importing poultry products from countries such as the United States that use these antibiotics in poultry production. Mr Gascoine—If you would not mind, we will take that question on notice. It would allow us to check into the facts about the status of these substances in Australia and the other countries from which we are considering importation. Mr Hickey—They would be matters that we would need to talk to the Australia New Zealand Food Authority about in the first instance. Senator BOB COLLINS—Fine. Thank you. Mr Hickey, was there any particular reason as to why the number of food inspection officers could not be identified for this year? We

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Wednesday, 11 June 1997 SENATE—Legislation RRA&T 453 were talking about responses I got to questions on notice. I have the figures of 36 for 1994, 31 for 1996 and no response to the figure for 1997. Nothing hangs on it. I am just wondering if there was any particular reason why the number of food officers for this year could not be given? Mr Hickey—These are food services officers, are they? Senator BOB COLLINS—Yes. Mr Hickey—FSOs? Senator BOB COLLINS—Correct. Mr Hickey—We can provide you with that data. I do not have that here, but we can certainly get you that information. Senator BOB COLLINS—Yes, I just assumed you could. Could you just fill in that gap? Mr Macdonald—Senator Collins, I thought we did answer that question. At the time you asked us the question we gave you an answer ‘as at pay 18’, which was the closest date to the time of your question. Senator BOB COLLINS—That is probably the reason I did not remember it. Mr Macdonald—And there were 774. Senator BOB COLLINS—It’s okay. People like Mr Zuber understand these esoteric expressions; I don’t. When I leave Canberra I will be as ignorant about them as the day that I came, I am pleased to say. Pay 18! Can I just say again that nothing hangs on this. If you have given me that information, thank you. But if you haven’t— Mr Hickey—It has been provided on notice. It was 774 as at 5 March. We employ FSOs in a number of programs: the meat program, the fish program, the dairy program; we used to employ them in the imported foods program but now they are clerical staff— Senator BOB COLLINS—In the answers that were provided were those categories broken down? Mr Hickey—No. Senator BOB COLLINS—I didn’t think so. Would you mind doing that? You have volunteered, Mr Hickey. It would be helpful. I won’t make the mistake again if you do that for me. Thanks. While you are breaking that down, could you actually break the program down for me into subprograms and provide details for the resources available for each of the subprograms? Mr Hickey—Our expenditure levels for each of those programs? Senator BOB COLLINS—Correct. It is probably not too much additional work. Mr Hickey—You want this for 1996-97 and 1997-98? Senator BOB COLLINS—Yes, thanks. As I indicated earlier, I want to ask some questions about the national task force report on imported fish and fish products. The report found that the total value of imported product in 1994-95 was $666 million—the mark of the beast. Is there a more contemporary figure than that now available? Can you check? Mr Hickey—We can provide that. Senator BOB COLLINS—The task force found that the domestic aquaculture industry is now heavily dependent on this imported product and, as I understand it, there is no domestic substitute available at this time, although there is a lot of research being done on it. That is,

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 454 SENATE—Legislation Wednesday, 11 June 1997 it found that these are essential inputs into the production process for an increasingly valuable industry, of course. So is it not a fact—as disagreeable as we may find it—that we are faced with a situation where there are thousands of tonnes of product being imported into Australia and we do not at this point in time have an effective quarantine regime in place to deal with it? Mr Hickey—That report identified and put in some priority order the particular categories of imports that they thought should be subject to some ‘short-term risk minimisation processes’, I think they called them, and then to a full import risk assessment. The response that the government is providing will provide the resources to enable us to initiate all of that work. Senator BOB COLLINS—So that is in fact the situation. Am I also correct in saying that the principal reason for that situation coming about is that the demand for this product has grown very quickly in line with what has been a very rapid, quite recent expansion of the industry that consumes it? Mr Hickey—That is correct—emerging industries using often low value products on which little research has been done internationally. Awareness about risks and the science of that is growing from a very low base. Senator BOB COLLINS—As I understand it, the progressive risk minimisation strategy you have just referred to is to be implemented by September this year and an import risk analysis is to be completed within two years. I understand that is to be based on voluntary industry self-regulation once industry has been fully informed of disease concerns that are related to its imports. Is that basically correct? Mr Hickey—I could not answer yes or no to that directly. There are areas where we will have to implement regulatory controls, and indeed some of that action has already been taken in relation to prawn imports and freshwater crayfish. There may well be other aspects where the industries themselves may decide to use other sources and other materials that will help alleviate the problems while we go through the risk assessment process. So I would expect that there will be a combination of both. Senator BOB COLLINS—Thank you. Can you explain where the negotiations with the various affected industries are up to? Mr Hickey—We can give you some information on progress with the initial two risk assessments that were instigated. Dr Wilson—We have started risk assessments on prawns, freshwater crayfish and ornamental fish, and we hope to start one on baitfish towards the end of next financial year. In each case, we are either producing or are about to produce a paper detailing some of the technical issues. Then, depending on the process chosen, we will be consulting industry on those issues. In almost all cases, we will be using consultants or some technical working groups which will involve industry—technical people. Senator BOB COLLINS—I refer to the routine sampling of pilchards which, from memory, was being done by the Animal Health Laboratories. Is that still in place? Is that still being done? Mr Hickey—Yes. Senator BOB COLLINS—Thank you. I think I can assume the answer to my next question; otherwise I would have read about it: is the regime of restricting the imports of pilchards to what are considered to be the lowest risk sources also still the case?

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Mr Hickey—We had better check on that and advise you. Senator BOB COLLINS—Fine. The second part of that question is: am I correct in assuming that routine sampling and examination by the Animal Health Laboratories has not detected organisms in respect of those pilchards that have raised major quarantine concerns to this point? Mr Hickey—Certainly. They have not been raised with me. None of the officers here are aware. Senator BOB COLLINS—Thank you. I noted that there are seven identified current imports—the pilchards, which we have just talked about, for tuna food; ornamental fish; prawns for recreational bait; rock lobster bait; whole fish for human consumption; prawnmeal and whole molluscs. According to the report, all of these are considered to be in quarantine terms of high risk and warrant immediate action to reduce the risk associated with their usage and, of course, some of them present a risk to human health as well. Is ANZFA running a concurrent operation in respect of this report and particularly in respect of risk analysis? Do you know? Mr Gascoine—Not to my knowledge. Senator BOB COLLINS—In terms of the human health implications? Mr Gascoine—No. It is the responsibility of the Australia New Zealand Food Authority to categorise risks under the imported food inspection program. To my knowledge, there has been no amendment to the categorisation of seafood as a consequence of this report although there were certain categories of seafood which were already listed as high risk under that program. Senator BOB COLLINS—Thank you. The estimated time frame from the report is 18 months. Is that right? Mr Hickey—That may have been for the initiation of some of these import risk assessments— Senator BOB COLLINS—Sorry, they were the two categories I mentioned earlier—the risk assessment processes and the interim processes. Eighteen months to two years, as I understood it. The reason I raise that is that I want to know if it is on track as far as AQIS is concerned. Mr Hickey—As Dr Wilson has indicated, we have initiated the risk assessment processes to the extent that current resources up until now are committed. With the government’s announcement, we will be reviewing all the work that needs to be done—appointing the staff, allocating the tasks and setting the time frames accordingly. Senator BOB COLLINS—Thank you. I understand from the report that AQIS is following the OIE guidelines in respect of this matter, which include peer review. Is that correct? Mr Hickey—For the risk assessment process itself? Senator BOB COLLINS—Yes. Mr Hickey—Again, the nature of the risk assessment process for the future is one of the issues on which Nairn made a series of recommendations. So also did that task force report and that is a matter that the government will be making announcements on. Senator BOB COLLINS—In terms of the area of significant concern, which is not, of course, uniquely Australia’s responsibility or concern, I refer to the profound lack of scientific knowledge about organisms and that degree of research—understandably enough—being

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 456 SENATE—Legislation Wednesday, 11 June 1997 confined to the high value species. The report notes that, and it says that there is a need to develop a guide to diseases of concern, particularly in relation to that profound lack of baseline knowledge. Can you tell me what AQIS proposes to do in responding to that concern—the guide for diseases of concern—raised by the report? Mr Hickey—There will be an number of measures announced by the government which will include a strengthening of the fish health infrastructure systems in the country. One of the observations made by both those reports was that in the plant and fish areas the extent of that infrastructure was not as strong as it is in the animal health area. The government has already said that there will be specific measures announced to strengthen that. Senator BOB COLLINS—I will finish on this question, Mr Hickey, because the chairman has pointed out that I have to swap over at this time. I understand that the actual job of preparing such a guide is in scientific terms a very complex one that will involve a lot of interaction with the state authorities and all the rest of it and is likely to take some significant time. Is that correct? Mr Hickey—The salmon import risk analysis alone identified 24 diseases of concern for one species of fish from one particular geographic area. Senator BOB COLLINS—I think that answers the question, thank you. Senator WOODLEY—I have one more question about chicken meat. I noticed in some recent media reports that two macaws contracted a disease but it was not discovered for some time because there is no visible evidence of it. I understand it was a disease similar to herpes. In relation to the diseases that we are more concerned about, and newcastle disease is the one I can pronounce—some of the others I am not sure of— Senator BOB COLLINS—Actually, the jury is still out on that. Queenslanders! CHAIR—Infectious bursal disease is the other one. Senator BOB COLLINS—I actually come from Newcastle so I consider myself to be an authority. I even own an FJ Holden. Senator WOODLEY—I will ignore all that. What I am interested in is that I understand that the more virulent diseases that we are concerned about—I will avoid pronouncing any of them—are much more easily identifiable than the other disease I was talking about. Dr Wilson—With the macaw disease—internal papillomatosis—they do not know yet whether it is caused by a virus or whether there is some other reason. One of the problems is that it is difficult to identify the clinical signs without, for example, putting the birds under anaesthetic and it is also difficult to know whether a bird has recovered permanently or not, because the symptoms can come and go over years. Since macaws can live over 100 years this disease might disappear for some years and then come back briefly and so on. It also appears to be quite difficult to give it to other birds, so for long-term purposes you have not got a real good handle on the disease. The other ones which we are primarily concerned about, avian influenza and newcastle disease, are diseases which are very contagious. They will go through a flock very quickly causing high mortality or a high level of sickness so there is quite a distinction between the two. We are far more concerned with the newcastle disease type of infection. Senator WOODLEY—Here are a couple for the chair. Is the program of managing anthracnose affecting lupins in Western Australia progressing well? What is the assessment?

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Mr Roberts—I understand that it is progressing well. It is a program that is going to use clean seed sources and rotations through crops that are not hosts for the disease, and certain areas that have had anthracnose disease will stay out of lupins for period of time. My understanding is that that program is progressing well. CHAIR—Has it been established whether it was spread by the budworm moth? Mr Roberts—Not that I am aware of. The anthracnose disease has been found in almost every state of Australia. It has obviously been here for a very long time. The early reports go back to the 1940s. CHAIR—It did follow the budworm path in practice. Whether it was connected or not or whether it was a coincidence I do not know. Senator WOODLEY—Is there an estimate of the costs of damage to lupin crops from this outbreak? Mr Roberts—Not that I am aware of. I will endeavour to get some information for you. Senator WOODLEY—It would be good if we could have it. My final question is very general. Are you aware of applications from countries wishing to import products into Australia which we ought to signal may require quarantine consideration? Mr Roberts—People who want to import material into Australia have to get an import permit unless it is a commodity that has already been assessed for quarantine action. In processing that import permit the conditions that are required are checked. If there are no conditions then that commodity has to go into a pest risk analysis process and a decision made on what conditions need to be managed. Every product that could carry pests and diseases goes through this process. That is the normal way of operating. Mr Hickey—We have an ongoing volume of business comprised of new requests for either new products to enter the country or products which have previously entered but from other countries where the disease status will differ. At any one time there are some hundreds of such requests on our agenda. Senator WOODLEY—Thank you. Senator BOB COLLINS—I want to move to imported Canadian pig meat. By the way, Mr Hickey, I noticed that a number of AQIS officers received medals, orders of Australia I think they were, for the work that they did on the chicken meat risk analysis. Is that correct? Mr Hickey—It wasn’t quite the Order of Australia. They received an Australia day medal, which are awards handed out within departments for staff who have been involved in long, arduous and difficult work. Senator BOB COLLINS—Is that an Australian Public Service award? Mr Hickey—Yes. There are a number of awards made available to each department. Each department in turn selects the staff. Senator BOB COLLINS—I am sorry I got that confused. I did not realise that there was a system of recognition like that in place. Do they wear them on Anzac Day or Senate estimates, which is the only equivalent of Anzac Day for public servants? Thanks for that. In relation to imported Canadian pig meat, I want to ask some questions about animal quarantine policy memorandum 1997/16. Am I correct in saying that the quarantine risk assessment work had largely been carried out on the importation of pig meat when the uncooked product was considered? Dr Wilson—That is correct.

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Senator BOB COLLINS—My understanding is that the import risk assessment follows a set course in terms of process. There is a draft report which is released for public consideration and consultation. I understand that AQIS now also, as a matter of routine, seeks a peer review of the assessment as well. Is it correct that that has now become part of the process? Dr Wilson—We have always done that, Senator. By ‘peer review’, I mean that we show it to a scientist in Australia for their comment. That has always been routine. Senator BOB COLLINS—It has, has it? And all of that feedback is then taken on board by AQIS and a final report is produced? Dr Wilson—That is right. Senator BOB COLLINS—In terms of any more medals that may be awarded, may I say that that process was followed in a very professional and thorough way in relation to the application for the importation of salmon. I would like to ask some questions about the public health risk assessment. That work was subcontracted—I cannot think of a better word for it—to the Australia New Zealand Food Authority. Can you advise me when that task was sent off to ANZFA in relation to pig meat? Dr Wilson—We would have to take that on notice. Senator BOB COLLINS—That is fine. Dr Wilson—Our branch does the animal quarantine aspects of the import. We send the public health aspects to ANZFA for review. Senator BOB COLLINS—The memorandum that I have referred to states: The Australia New Zealand Food Authority, ANZFA, has provided a full risk assessment on public health issues. ANZFA approved the importation of the product based on, as I understand it, certain conditions being met. Can you advise the committee of when AQIS received the ANZFA report? Again, if you have not got that information, I am happy for you to take it on notice. Dr Wilson—We will take it on notice. Senator BOB COLLINS—What did AQIS do to satisfy itself that the public health risk assessment that was done was a thorough and professional assessment? The reason I ask the question is that it is your name that ends up on the bottom of the document that actually approves the product coming in at the end of the day. Mr Gascoine—It would be our practice as a matter of course to examine the reply given to us by ANZFA on a reference such as this and to consider whether it seemed to be a proper full coverage of the issues. To our knowledge, plausible in the circumstances, I am not aware of the detail of what we did specifically on that particular instance, but we could go back to the files and have a look if you wish. Mr Hickey—We would have to rely substantially on ANZFA’s own quality control processes. I am not aware whether they go through a peer review process of the same kind that we do. Senator BOB COLLINS—I am not either. I would actually like to know that. Mr Gascoine—We can let you know. Senator BOB COLLINS—Thank you, Mr Gascoine. If you would not mind just checking what was done in relation to this specific issue and advise us on notice. Mr Gascoine—Yes.

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Senator BOB COLLINS—There were a number of questions asked earlier of ANZFA itself about the public health risk assessment that it did on imported Canadian cooked pig meat. Obviously, given the importance of this part of the overall assessment, my assumption is that a thorough process would have been followed—that is, the preparation of a draft assessment and the assessment released for public comment and peer review as AQIS does, and I am grateful for Mr Hickey’s intervention there because that is precisely the information I am looking for in respect of how this was carried out by ANZFA. That is not only going through a proper scientific process but also is seen to be going through a proper process. That of course has been a constant concern in terms of industry perceptions and so on and others to these matters. Dr Burch advised the community affairs committee on 2 June that ANZFA followed the brief that it was given. Whilst it may not be specifically in AQIS’s area of expertise, is it possible for anyone here to advise the committee of what would be required for a full public health risk assessment of an imported processed food product? Mr Hickey—I think we will have to refer that to ANZFA to get a reply for you. Senator BOB COLLINS—Okay. Consistent with the AQIS process, which I think is a proper process in terms of discharging those two responsibilities of doing it properly and being seen to have done it properly, it is possible for the committee to have a copy of the formal request that was made to ANZFA by AQIS in respect of the response that Dr Burch gave this committee, that he was just following a brief? Mr Gascoine—Yes. Senator BOB COLLINS—When asked whether there had been any public scrutiny of the ANZFA assessment, Dr Burch replied that it was not a matter for ANZFA but a matter for AQIS. Was the statement from Dr Burch that it was in fact AQIS—and I have to say that I was extremely intrigued by this answer—that had the responsibility to progress the public health risk assessment process once ANZFA had done the initial work correct? I might say it is all available in the Hansard. Mr Hickey—I would be interested in having a look at the full Hansard report, with all of the comments you are quoting there, Senator. I think we ought to have a look at all of that, and come back to you on those questions. Senator BOB COLLINS—Certainly. I can assure you that I am a little more reliable than Senator Margetts in this respect—just a tad. But that is a low base to work off. Mr Hickey—I was not trying to imply anything. CHAIR—That does not make you good. Senator BOB COLLINS—No. As I say, I was intrigued by the answer. Leaving aside what Dr Burch said for a minute, is it a fact that AQIS would be responsible for the initiation of any public scrutiny of an ANZFA assessment? As we know, AQIS contracted this job out to ANZFA, and ANZFA did it. We asked whether there was a public scrutiny, consistent with the way AQIS do theirs, from ANZFA’s point of view. Would it be AQIS’s responsibility— forgetting what Dr Burch said—to be the responsible agency to ensure that there was a public assessment of the ANZFA work? Mr Gascoine—If I could comment, it might be helpful to you. ANZFA has parallel responsibility for risk categorisation of imported foods under the Imported Food Control Act. Part of that process obviously looks at candidate foods and comes to a conclusion about what the risk categorisation should be. To my knowledge, that process is not a public process, nor

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 460 SENATE—Legislation Wednesday, 11 June 1997 is it a process which involves the preparation of draft advice, then public scrutiny and then the finalisation of that advice. In other words, that process does not parallel the process which is normally followed for a quarantine import risk analysis. Similarly, in this case, if you like, we addressed a question to ANZFA as to the public health risks which were associated with imported Canadian pork. If I am not mistaken, we are talking about pork for processing in Canada and then export to Australia. The principal issue of concern from a public health point of view, I think, was probably the organism Trichinella. The process which ANZFA followed, to my knowledge, did not involve any public examination, or draft response and public examination, of that question. The AQIS process, of course, does provide opportunity for the public to comment on the import risk analysis and, therefore, ipso facto, provides opportunity for people to comment on the public health dimensions, although those public health dimensions are not normally treated in our risk analysis in the same way in which we treat the quarantine risks as a matter of normal practice. I hope that background is helpful. Senator BOB COLLINS—Yes, it is, thank you. Mr Gascoine—We could go and, as I said previously, look at the detail of this particular case and provide you with more information. Senator BOB COLLINS—Thank you. Are you aware of any inquiries that were made from industry sources to AQIS in respect of this matter and ANZFA’s work which were then referred by the contacts in AQIS back to ANZFA? That is my advice. The reason I asked that question is that I am just trying to establish who was running the process. Dr Wilson—There is a fairly complex pathway there. I understand that we summarised the replies received on the risk analysis that we circulated in order to assure people that we were taking account of comments received in finalising protocols. Part of that summary was a summary of the ANZFA reply, and that would have gone to various organisations that sent comments in. But we did not send anything out in the way of direct copies. We do not normally do that as in many cases there are commercial in confidence reasons, and so on. I understand that the Pork Council received that, and there was some correspondence there. But I was only alerted to this issue by Dr Burch this morning, so I am still not clear on what happened. Senator BOB COLLINS—I am sure you are aware that the ANZFA public health risk assessment on imported cooked pig meat products was referred to the Pork Research and Development Corporation who, in turn, referred it to CSIRO’s Food Science and Technology Division for a review. Does AQIS consider the Food Science and Technology Division of CSIRO to be an expert organisation as far as AQIS is concerned when it comes to public health issues? Does AQIS accept that advice from CSIRO’s Food Science and Technology would be authoritative advice on issues of public health? Mr Gascoine—I think the answer to that in general terms would be yes. Senator BOB COLLINS—The ANZFA document, as I understand it, was examined by Mr Barry Shay, Acting Program Manager for Food Safety and Quality, and Dr Fred Grau. My advice is that both of those scientists had very significant reservations about the document. Specifically, my advice is that the CSIRO public health scientists found that the document contained insufficient detail to assess the risk to public health, if the product is imported. I have to say that I found that a comprehensively damning conclusion in respect of public health—if, of course, it is supported in the scientific community.

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They also found that the information important for a proper risk assessment was not contained in the document. They found that material written under the heading of each micro- organism was often not clear and did not always address specifically the problem of cooked pig meat. They found that data in the document on the sensitivities of the micro-organisms was couched mainly in vague terms. No devalues of any micro-organisms were given. They found that the effectiveness of the specific heat treatment to be used in Canada was not addressed in any depth. They found that some of the microbial testing did not seem applicable if applied to cured product. The assessment failed to identify the type of product to be imported and failed to address the different uses that the product might be put to after its arrival. They also found it was not clear whether the imported meat was to be cooked in the final package or cooked and then repacked. They found that it was not clear whether the meat would be exported in a chilled or frozen state. Nor were there any time temperature requirements for storage and transport. Is AQIS aware of whether that list that I have just given, on the basis of my advice of CSIRO’s assessment, is accurate? Dr Wilson—Yes, it is accurate. Senator BOB COLLINS—To go back to the baseline finding of the CSIRO scientists, the document, which was designed to assess the risk to public health, contained insufficient detail to assess the risk to public health if the product is imported. Does AQIS agree, having confirmed the accuracy of these CSIRO reservations, that in scientific terms this was a fairly damning critique of the ANZFA work? Mr Hickey—I think unless we have some response from ANZFA on that—we offer them the opportunity of commenting on that. Senator BOB COLLINS—That was my next question. Has AQIS done that? Has AQIS followed up with ANZFA their response to the critique of the CSIRO food division scientists about their work? When did AQIS first become aware of the CSIRO concerns? Mr Gascoine—Our recollection is that we received this material approximately two weeks ago. It raised issues which are relevant to the imported food control program. We believe that the material has been referred to that part of the organisation for consideration but we would need to check on that and determine its current status. Senator BOB COLLINS—That is ANZFA? Mr Gascoine—No, that part of our organisation that deals with imported food control. Senator BOB COLLINS—Is there no officer here tonight who could confirm whether that was so? Mr Hickey—The officer is not here. Senator BOB COLLINS—Obviously, Mr Hickey, considering the serious nature of this matter, I will conclude the questions—which is why I move to this now to get it finished by 11 p.m.—so AQIS could be in a position, hopefully, to come back with responses to these questions tomorrow. Mr Hickey—Sure. Senator BOB COLLINS—Is any officer here aware of AQIS contacting CSIRO—that is, the source of the criticism—after you became aware of it two weeks ago? Have you been back to CSIRO since then?

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Dr Wilson—I am not aware of that. Mr Hickey—That is another matter we will follow. Senator BOB COLLINS—If you cannot answer any of these, could you take them on notice? I would like to know when AQIS received the report. You answered that that was about a fortnight ago. What action did AQIS take in respect of its communication with ANZFA about the damning nature, in fact condemnatory nature, of the CSIRO assessment of the ANZFA job? What contact was there between AQIS and CSIRO? Basically what action has AQIS taken since you became aware of this a fortnight ago? The reason I ask the question is obvious. On the face of the CSIRO concerns, they would provide reasonable grounds for AQIS, from what I know of it, to ask ANZFA to redo the entire public health risk assessment process or maybe even somebody else. The AQIS advisory was released on 28 February. So the 30 days for public scrutiny is well and truly past at this point. Is there anyone who can advise me where the formal process is at now? Dr Wilson—We have concluded the animal quarantine risk analysis and we have finalised the protocol. We then advised the minister. It has been drawn up into the government discussions with industry on restructure processes. Senator BOB COLLINS—You mentioned the minister has been advised. Has the minister been specifically advised of the detail that I have just had confirmed of CSIRO’s criticisms of the ANZFA report? Has there been a brief given to the minister alerting him to the fact that basically CSIRO has essentially debunked the entire process and said that it is really not worth the paper it is written on? Mr Gascoine—I do not believe so. Senator BOB COLLINS—It appears that I may be the agent of alerting him, Minister. Mr Hickey—Until we establish just what has been done with the document by the imported foods area and what, if any, contact there has been with ANZFA, we will leave that question open for a while. Senator BOB COLLINS—The answer I have just been given—I think it was the secretary that provided it—was that the minister has not been briefed. Mr Gascoine—To my knowledge he has not. Senator BOB COLLINS—To your knowledge he has not. Mr Hickey—We would need to check it more clearly. Senator BOB COLLINS—You want to clarify it. Mr Hickey—In answer to a question from Senator Collins on testing of pilchards, I have provided some incorrect information. I understand the sampling ceased some time ago. I will find out for you when that was. I understand it was on the basis that there had been no positive results from the testing, but I will confirm that as well tomorrow. CHAIR—Tomorrow we are meeting in 1R1. We are starting at 9 o’clock with Transport. We anticipate that will finish around 11.30 a.m., but we will keep you informed as to what the progress is on that. The other thing I wish to mention tonight is thank you to Maurice Chalmers. This is his last estimates before he goes into private enterprise. He has served this committee well and we appreciate it very much. Thank you very much. Committee adjourned at 11.02 p.m.

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