COMMONWEALTH OF AUSTRALIA

PARLIAMENTARY DEBATES

SENATE

Official Committee Hansard

RURAL AND REGIONAL AFFAIRS AND TRANSPORT LEGISLATION COMMITTEE

(Consideration of Estimates)

THURSDAY, 19 SEPTEMBER 1996

BY AUTHORITY OF THE SENATE CANBERRA 1996 Thursday, 19 September 1996 SENATE—Legislation RRA&T 99

SENATE Thursday, 19 September 1996

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, Bob Collins, McGauran and Woodley Substitute members: Senator West to substitute for Senator Bob Collins on 13 September 1996. Senator Panizza to substitute for Senator Calvert for the period 16 to 20 September 1996 Participating members: Senators Abetz, Boswell, Brown, Brownhill, Chapman, Cook, Eggleston, Ferris, Forshaw, Gibbs, Harradine, Kemp, Ian Macdonald, Sandy Macdonald, Mackay, Margetts, Murray, Schacht, Tambling, Tierney and West

The committee met at 1.12 p.m. DEPARTMENT OF TRANSPORT AND REGIONAL DEVELOPMENT Proposed expenditure, $258,248,000 (Document A). Proposed provision, $209,626,000 (Document B). Consideration resumed from 17 September. In attendance Senator Parer, Minister for Resources and Energy Department of Transport and Regional Development— Executive Mr John Bowdler, Deputy Secretary Program 1—Aviation Subprogram 1.1—Aviation Policy Mr Peter Harris, First Assistant Secretary Mr Tony Wheelens, Assistant Secretary, International Relations Mr J. White, Assistant Secretary, Airport Regulation Mr Jim Wolfe, Acting Assistant Secretary, Aviation Industry Subprogram 1.2—Aviation Operations Mr Paul Merner, First Assistant Secretary Mr Ray Turner, Assistant Secretary, Aviation Security Branch Dr Hugh Milloy, Assistant Secretary, Sydney West Airport Taskforce Mr Ray Warren, Acting Assistant Secretary, Aviation Environment Branch

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Subprogram 1.3—Bureau of Air Safety Investigation Dr Rob Lee, Director Mr Ian McCallum, Deputy Director, Investigations Subprogram 1.4—International Air Services Commission Mr Danny Scorpecci, Executive Director Subprogram 1.5—Civil Aviation Safety Authority Mr Leroy A. Keith, Director of Aviation Safety Mr John Pike, Deputy Director Ms Sue-Ellen Bickford, General Manager, Finance Ms Marcia Kimball, General Manager, Human Resources Management Mr Rob Elder, General Manager, Corporate Relations Subprogram 1.6—Federal Airports Corporation Mr Peter Snelling, General Manager, Network Airports Subprogram 1.7—Airservices Australia Mr Bill Pollard, Chief Executive Officer Mr Peter Evans, General Manager, Air Traffic Services Mr Tom Grant, General Manager, Corporate and Employee Relations Mr Brian Kendal, Manager, Operational Policy Mr Colin Dahl, Manager, Environment Mr Graham Beer, Manager, Financial Strategy Mr Ian Rischbieth, Manager, Government Relations Program 2—Land Transport Subprogram 2.1—Road and Rail Policy Mr Bruce Gemmell, First Assistant Secretary Mr Andy Hrast, Acting Assistant Secretary, Roads Mr Warwick McNamara, Director, Roads Program Mr Daryl Quinlivan, Assistant Secretary, Rail Mr Stan Marks, Acting Director, Rail Enterprise Mr Richard Desmond, Director, Rail Policy Subprogram 2.2—Federal Office of Road Safety Mr Peter Makeham, First Assistant Secretary Mr Tony Ockwell, Assistant Secretary, Road User Subprogram 2.3—Australian National Mr Andrew Neal, Acting Managing Director Mr Alistair Powell, Chief Finance Officer Program 3—Maritime Subprogram 3.1—Maritime Mr Kym Bills, First Assistant Secretary

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Dr Greg Feeney, Assistant Secretary, National Shipping and Infrastructure Captain Kit Filor, Chief Investigator, Marine Incidents Mr David Holmes, Director, Marine Personnel and Administration Subprogram 3.2—Australian Maritime Safety Authority Mr Paul McGrath, Executive Officer Mr Brian Munro, General Manager, Corporate and Commercial Services Program 4—Regional Development Subprogram 4.1—Regional Development Mr Stephen Hunter, formerly First Assistant Secretary, Regional Development Ms Robyn Beetham, Assistant Secretary, Regional Development Ms Rosemary Cousin, Assistant Secretary, Regional Development Mr Steve Garlick, Assistant Secretary, Regional Development Mr John Okely, Assistant Secretary, Regional Development Ms Pieta-Rae Laut, formerly Director, Regional Development Mr Simon Murnane, Director, Regional Development Program 5—Corporate Direction and Support Subprogram 5.2—Management Support and Advice Mr Bill Ellis, First Assistant Secretary Mr John Elliott, Assistant Secretary, Finance and Services Subprogram 5.3—Research Mr Stephen Hunter, Director Ms Sue Elderton, Research Manager Dr Leo Dobes, Research Manager Mr David Luck, Research Manager Mr Len Hegedus, Manager, Corporate Services Department of Finance— Ms Anne Burhop Mr Stephen Hoult Ms Dianne Rimington CHAIR—I declare open this public hearing of the Senate Rural and Regional Affairs and Transport Legislation Committee. On 22 August 1996, the Senate referred to the committee the particulars of proposed expenditure in respect of the year ending 30 June 1997, and particulars of certain proposed expenditure in respect of the year ending 30 June 1997 of the following portfolio areas: Primary Industries and Energy, and Transport and Regional Development. On Tuesday the committee considered the proposed expenditure for the Department of Transport and Regional Development. Today the committee will conclude hearings on remaining programs from that portfolio. The committee will then examine estimates for the Department of Primary Industries and Energy and, if necessary, will conclude that portfolio

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 102 SENATE—Legislation Thursday, 19 September 1996 during hearings commencing at 9.00 a.m. tomorrow. The committee is required to report to the Senate on or before 10 October 1996. Committee members and participating members have been provided with Portfolio Budget Statements for each of the portfolio areas to be considered, and I proposed to call on the estimates by program and subprogram as they appear in these statements. I draw the committee’s attention to the tight timetable for these estimates and foreshadow to departments and agencies that it is likely that the committee will nominate Monday, 14 October 1996 as the date for submission of written answers and additional information. I should also indicate that the committee has authorised the recording and rebroadcasting of its proceedings in accordance with rules contained in the order of the Senate of 23 August 1990. I welcome Minister Warwick Parer, who has replaced the Hon. Richard Alston. As there is a leaders meeting on now—this is particularly important for the departmental people—it has been agreed that Senators Harradine, Margetts, Brown, Kemp and Panizza, who are either full or participating members, will be able to go back to a program if they wish to do so. Senator Parer, do you wish to make any comment or statement? Senator Parer—No, Mr Chairman. [1.15 p.m.] Program 2—Land transport Subprogram 2.1—Road and rail policy development Senator CONROY—Can you provide the committee with a breakdown, on a state and territory basis, of funding for the national highway over the next four years? Mr Gemmell—We could only partially provide information on that in the sense that information is available for those projects that are approved, announced and under way. The minister has to make some decisions about new projects to commence in 1996-97 and in later years. Senator CONROY—Can you break the current ones down into asset preservation and any other identifiable categories, such as roads of national importance? Mr Gemmell—We can do that. Senator CONROY—Take that on notice? Mr Gemmell—Yes, please. Senator CONROY—Can you identify individual projects and advise what electorates they are in? Mr Gemmell—We certainly can advise what electorates they are in, yes. Senator CONROY—What is the benefit-cost ratio for each project? Mr Gemmell—We can provide that for all projects that are currently approved and on the program. Senator CONROY—I understand that $622 million has been cut from the national highway over the next four years. Is that correct? Mr Hrast—That figure is correct, yes. Senator BOB COLLINS—I must say, Minister, having had my head beaten in for three or four years by a fleet of National Party and Liberal Party members of parliament all over

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Australia for our sins and iniquities in terms of road funding, I am astonished at that figure. I don’t think there is a question in there anywhere, Minister. Senator CONROY—Can you provide a breakdown of the cuts to funding of the national highway system on the same basis as I just asked for the committed projects? Mr Gemmell—No. We can provide information on what funds are available, but it is not possible to tell you what projects may have been approved that will not now be approved. Senator CONROY—What was the basis of the cuts to road funding? Was it simply to meet the bottom line or was it based on an analysis of the state of the national highway system? Senator BOB COLLINS—It was a hypocritical government that was talking— CHAIR—It is not up to you to answer questions, Senator Collins. We have some very capable officers at the table. Mr Gemmell—All I can say is that this is a policy decision for the government. Senator BOB COLLINS—I am grateful, Mr Gemmell, that you have agreed to take Senator Conroy’s question on notice. In respect of that $620 million, does the government currently have before it any proposals to hypothecate fuel excise to road maintenance and construction? Senator Parer—As far as I know, no. Senator BOB COLLINS—Nor is it ever likely, is it? Senator Parer—All I can say is that I guess I know why you are asking that question. It is something that has been coming out year in and year out for a long time. I think hypothecation is not on the agenda. Senator BOB COLLINS—Mr Gemmell, I understand that this is subject to negotiations with the states and all the rest of it, but in terms of a ballpark figure—not one I am going to hold anyone to—of that global amount of $620 million, based on the track record of disbursements on the national highway over the last four or five years, what would the Northern Territory expect to lose proportionally? I am looking for a headline for the Northern Territory News tomorrow. Mr Gemmell—It is a particularly awkward question to try to answer because it rather depends on a set of decisions that would have been made about how much the Northern Territory might have otherwise got in the program. We don’t work on a fixed state proportions arrangement. So if the Northern Territory got a priority on a particular road, they might have got a quite significant sum. Senator BOB COLLINS—I understand that and I know you also understand the question. I don’t want to hold you to a precise figure. I know the answer necessarily has to be qualified with those considerations. I am certainly familiar with this issue. Over the last four or five years in terms of the pattern of disbursements to this point in time, just in rough terms, assuming that as a constant, what would be the Northern Territory’s proportion of reductions, or savings if you want to call them that, of that $620 million? Mr Gemmell—It would be about $20 million over the whole period. Senator CONROY—Has any analysis been prepared on the proposed strategy or its effects? If so, can the committee obtain a copy? Mr Gemmell—At the moment the minister is going through a decision making process on the expenditure of the program that is available. We don’t have any analysis of the program. That is not being pursued.

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Senator CONROY—What works will be done on the Bruce Highway this financial year and in 1997-98? What works have been deferred and what planned works have been cancelled? Mr Gemmell—All works that were previously approved and commenced under the national highway system are continuing and will continue this year. There is a raft of projects on the Bruce Highway in that category where expenditure will continue to occur in 1996-97. As I said, the minister is still considering possible new projects to come into the program in 1996- 97. The Bruce Highway will be considered in that context, although there is one absolute new project that the minister has already announced, which is the Wallaville Bridge project. Senator CONROY—So no works have been deferred or cancelled on the Bruce Highway? Mr Gemmell—No works that have been approved and commenced have been deferred. Senator BOB COLLINS—Where is Wallaville Bridge? Mr Gemmell—Near Bundaberg. Senator BOB COLLINS—It’s a Queensland bridge. Senator Parer—The Bruce Highway is in Queensland. Senator CONROY—Prior to the last election, was there a commitment by the Common- wealth of $700 million to build the Sydney West orbital and improve Elizabeth Drive in western Sydney to take interstate trucks from the Hume Highway to the M4? What budget provision is there for this work in 1996-97 and in the forward estimates for the project? Mr Gemmell—Yes, there was a commitment from the previous government on the Sydney West orbital. That is a matter that is under consideration by the minister as to the program that might be pursued there and in what timing. Senator CONROY—Can you provide the committee with studies of the projected traffic flows for the Liverpool-Hornsby corridor both with and without the Sydney West orbital proceeding? Mr Gemmell—Yes, we can. We would have to seek a lot of that information from the Roads and Traffic Authority of New South Wales. It is not actually in our possession. Senator CONROY—If you are not to proceed with the western orbital this financial year, when will the project proceed? Mr Gemmell—That is a matter for the minister to determine. Senator CONROY—How does the choice of the site of Sydney West airport affect the western orbital? Mr Gemmell—The western Sydney orbital is justified in its own right. The selection of the Badgerys Creek site would affect the timing because of the volumes of traffic that might be going there. It would have an effect on the timing if Badgerys Creek were selected in the sense that it would bring forward the timing. Senator CONROY—Have any studies been done on this? If so, can you provide the committee with copies? Mr Hrast—The EISs that are currently being prepared for the western Sydney orbital are looking at both airport site options and traffic effects from both airport sites. They have not been released yet, but they are coming up for release in the near future. Senator CONROY—They will be available? Mr Hrast—Yes, when they are released for public comment.

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Senator CONROY—I understand that the member for Paterson announced in the local media at the end of June that $2 million will be provided for the Chelmsford Road and Metford Road intersection. Is that correct? Will the work be funded? If so, what was the basis for this particular project being given the go ahead? Mr Hrast—That particular project that you referred to is on the New England Highway in the Hunter Valley. No specific funding has been allocated to that project to this stage. We have had some discussions with New South Wales RTA about the possibility of using funding out of the minor works program to fund that particular project. Those discussions are still under way. Senator BOB COLLINS—On the question of the infrastructure for the second Sydney airport which, as I said in another committee last night, is as important if not more important than the airport itself, from a roads perspective—and it may be too early to say and I assure you that this is a question genuinely seeking information—leaving all other factors out, being aware that you are very familiar with all of the proposals in respect of Badgerys Creek as they have been on foot for ages, is there any particular and obvious advantage or disadvantage in respect of those two sites from a road perspective? Is it lineball in terms of the traffic challenge? Mr Gemmell—That is an issue that is actually being looked at. It is quite an important consideration. It is not independent of the consideration of whether there is a rail corridor and a rail service provided. You cannot actually look at the two separately. Just from nothing more than my observation, there is a freeway past Holsworthy. It is quite close. Senator BOB COLLINS—Existing? Mr Gemmell—The M5. There is also a proposal that that be extended to somewhere near Kingsford-Smith airport. I would imagine that analysis will show some saving in the road costs. Senator BOB COLLINS—It is potentially cheaper than Badgerys Creek would be. Mr Gemmell—Perhaps. But that is something that would have to be thought through. Senator BOB COLLINS—I understand that. It is long into the future. Mr Gemmell—It is also dependent on things like the Sydney West orbital and whether that is going to be there in time and so on. So they are not totally independent questions. Senator BOB COLLINS—What is the situation in respect of the two sites with rail? Mr Gemmell—Neither are serviced, of course. Senator BOB COLLINS—Honestly, I do not know. I am very familiar with Badgerys Creek; I know nothing about Holsworthy. Mr Gemmell—There is nothing going near Badgerys Creek at all. Senator BOB COLLINS—That is right. Mr Gemmell—There is in fact a railway line that goes somewhere near the Holsworthy site. Again, the real issue is where the airport is in the site. Is it there? How does the rail get to it? Goodness knows, there could be a cavern or some form they have to go over, and it could cost a lot. So it is not clear. In terms of simple physical proximity, existing rail services are closer to Holsworthy than they are to Badgerys Creek. Senator BOB COLLINS—This is my last question on this; I know the majority of this responsibility is with New South Wales. How far advanced is the planning for Badgerys Creek in terms of that infrastructure?

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Mr Gemmell—We are still very much in the planning stage. There was planning commenced and studies done for things like the Sydney West orbital and Elizabeth Drive. They are still valid. They stay on the books and that planning is still useful because they will occur at some point. I think it is a much more open question with Holsworthy as to when that will be starting. Senator BOB COLLINS—Thank you. Senator CONROY—Can I just return to the Chelmsford and Metford Road intersection. You indicated there was a possible allocation to come out of the minor works program. Can the committee have a copy of that recommendation in whatever form it was in? Mr Hrast—That was not a recommendation. It is under the discussions with New South Wales and there is a possibility of using some of that minor works program to fund that particular intersection. So it has not been finalised yet. Senator CONROY—I guess there is no schedule of completion date and budgeted cost for the project then? Mr Hrast—No. Not at this stage. Senator BOB COLLINS—Does the bottom line of all that mean that a statement made by anybody that $2 million will be spent on this project is not at this point in time correct? Mr Hrast—I am not particularly aware of the statement that was made. Senator BOB COLLINS—No, I am not expecting you to be. I am saying that, if a statement that a firm commitment to spend $2 million on this project had been made, would it be correct? Mr Gemmell—I think we would have to say, Senator, that, if that statement had been made, we cannot confirm that it is actually correct, because it has not been approved at our end. Senator CONROY—I would like to ask some questions about the Ron Camm Bridge in Mackay. How many vehicles is the bridge currently carrying per day? Mr Gemmell—Can we take that on notice, Senator? Senator BOB COLLINS—Somebody might know. Mr Hrast—About 25,000. Senator CONROY—Will it reach its capacity next year? Mr Hrast—The forecasts are that it should reach its capacity about next year. Senator CONROY—Was there a previous government commitment to duplicate this bridge? Mr Hrast—There have been commitments to duplicate that bridge. This really raises the issue of what is a commitment and what is an approved project. Senator BOB COLLINS—What is a core promise and what is a non-core promise? Senator CONROY—Is that work in the program for 1996? Mr Hrast—No, it is not. Senator CONROY—Is the work to be undertaken in the following year? Mr Hrast—It is not in the program for the following year either at this stage. Senator BOB COLLINS—It sounded like a non-core promise to me. Senator CONROY—What are the consequences for traffic flows in that area if the work is delayed beyond 1997-98?

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Mr Hrast—As the bridge gets to capacity, it is going to mean that there will be traffic delays. Mr Gemmell—Senator, I think I pointed out previously that the minister is still considering new projects to come on to the program for 1996-97 and beyond. Ron Camm is a proposal under consideration. That does not mean it is not put on the program along with a lot of others. Senator CONROY—Any idea of the anticipated cost of that work? Mr Gemmell—Approximately $26 million. Senator CONROY—Has the Queensland government been asked to make a financial contribution as part of that? Mr Hrast—The Ron Camm Bridge was part of the national highway. There is a Commonwealth commitment to fully fund the national highway, so there is no question of a Queensland contribution. Senator CONROY—We move to Tasmania. Has there been any delay in processing the Hagley Bypass? Mr Hrast—Yes, there has. It is a heritage issue to do with the Hagley Mill, which has been put on the Register of the National Estate by the Australian Heritage Commission. The minister is required to take a decision on where the route should go. The issue revolved around whether he was satisfied there is no feasible and prudent alternative. Analysis has been done that has identified at least another route and further analysis is being done. At the moment, the so- called southern route has been identified; that is being examined. At the end of the day, the minister will have to take a decision as to whether he is content that it is a feasible and prudent alternative under the Heritage Commission Act or not. All that has introduced a delay in proceeding with that project. Senator CONROY—Is there any allocation for the project this financial year? Mr Hrast—No, not this financial year. Senator CONROY—Any earmarked in the forward estimates for this project? Mr Hrast—I think it is in the same position as the other projects for forward use—programs under consideration by the minister. Senator CONROY—I thought you said new projects. Mr Hrast—Yes. Senator CONROY—This is sort of an ongoing one, though, isn’t it? Mr Hrast—No, it has not started. All the work to date has been involved with planning and trying to come up with an acceptable route. Mr Gemmell—If I could just add to that: it is quite normal for us to put small amounts of money into things like planning and environmental impact statements in preparing a project so it is ready. We analyse it too for the benefit of the cost analysis and so on. We prepare it so that it can come on the program. Once that work is done it is possible for it to come on the program, but it does not mean it is automatically on. There is quite a range of projects around the country that are of that nature: where we are preparing projects to potentially come on for the big dollars that are required to construct. Senator CONROY—Moving back to Queensland, can I ask some questions about the Woolcock Street extension in Townsville? The previous minister, Mr Brereton, gave a commitment for these works to proceed, didn’t he? How much was involved?

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Mr Gemmell—The previous minister did announce that project would proceed but it was never actually formally put onto the national highway system program. I do not know that we have information on how much was involved. Mr Hrast—The combined cost of Woolcock and Duckworth is around about the $20 million mark. Senator CONROY—Is there funding for this financial year for the projects? Senator BOB COLLINS—It might be easier if the office of— Mr Hrast—It is $21½ million. Senator CONROY—Thank you. Is there any funding in this financial year for the projects? Mr Gemmell—That is in the category—like many others—of potential new projects to be considered by the minister. Senator CONROY—Has the Queensland government been asked to make a contribution as part of the discussions? Mr McNamara—Part of the agreement last year when Mr Brereton announced the program was that the Queensland government and the local councils would do some other works in the city to complement our works. I understand they are still going to go ahead. Senator CONROY—On 6 June 1996 the minister issued the 1994-95 progress report on the Australian land transport development program which lists a number of national highway projects for which planning was under way. Can you advise the committee of the current status of each of these projects? Mr Gemmell—We can take that on notice and acknowledge, as I said before, that there are still a number of projects that would be in that category of being considered for funding in 1996-97. Senator CONROY—Can you provide any advice as to why projects are to be deferred or abandoned as part of that or are you not in a position to? Mr Gemmell—We are certainly in a position to tell you what projects have proceeded. For those projects that have not proceeded, it might be a little more awkward for us to respond. If they had been abandoned, we would certainly be able to tell you that. If they are still under consideration for coming onto the program at some time, that would be their status. We could certainly say that they were deferred. You are only deferred if there was an approved timetable. In many cases those projects do not start on the basis that there is an approved time frame for coming onto the program. Senator CONROY—Can you advise the committee of a Hunter Valley passing lane that was committed by the previous government to be funded? Mr Hrast—That is one of the projects still under consideration by the minister. Senator CONROY—Can you provide the committee with a breakdown of the expenditure of the Pacific Highway by the Commonwealth and the states for the last two financial years? What is the breakdown for 1996-97, 1997-98, 1998-99 and 1999-2000? Mr Hrast—I would have to take that on notice. Mr Gemmell—Senator, are you asking for information of expenditure by the Common- wealth and the states on the Pacific Highway? Senator CONROY—Yes.

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Mr Gemmell—The Commonwealth would not have spent anything in the last two years on the Pacific Highway—the previous two years from now. We would have to ask the states for information about what they might have expended on that highway in previous years. We can certainly provide the forward information on what the Commonwealth intends to expend. Senator CONROY—A publication was issued by the department in conjunction with the New South Wales and Queensland governments on the reconstruction of the Pacific Highway. How much did the publication cost? Mr Gemmell—Could you advise me as to which publication you are talking about? There have been a few. Senator CONROY—It is the one that had faces of MPs from the local area on the cover. Mr Gemmell—That cost $6,020 for 1,000 copies. Senator CONROY—Who produced the publication? Mr Gemmell—The Commonwealth; we did. Senator CONROY—I assume the work went to tender, did it? Mr Gemmell—It is unlikely to have gone to tender on a thing like that. Senator CONROY—Who was the publication distributed to? Mr Gemmell—One thousand copies were made available. Its distribution was across New South Wales; it was sent to various other interested groups and politicians in the area. We generally made it available for distribution to anyone interested at various functions and announcements. Senator BOB COLLINS—I wonder whether Mr Gemmell would be kind enough to lend me a copy of this thing. CHAIR—Can you table a copy for the committee? Senator BOB COLLINS—The only thing you ever put my picture on is the annual report. Senator CONROY—Is it normal practice for local MPs to be the principal contact for further information on such a document rather than the relevant state or Commonwealth authorities? Mr Gemmell—It is not an unusual practice, Senator. Mr Vaile, MP, has particular responsibilities on behalf of the government for the Pacific Highway program. Senator CONROY—Does the Pacific Highway pass through electorates of MPs other than those listed in the brochure? Mr Gemmell—No, it does not. Senator CONROY—I think you might want to take that on notice. Mr Gemmell—We will take that on notice and check. Mr Bowdler—I wish to clarify that. Are you referring to the whole Pacific Highway or the area of the Pacific Highway where the works are being done? Senator CONROY—Through New South Wales. Mr Gemmell—The Pacific Highway actually goes from Sydney. But the Pacific Highway we are talking about in terms of funding goes from— Senator CONROY—It passes through a particular electorate, but I suggest you investigate and find it for yourself. Who determined what names were to be included in the material?

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Mr Gemmell—The minister’s office. Senator CONROY—Do you know the basis on which the names were selected? Mr Gemmell—I could not advise. Senator CONROY—Are any state MPs included in the brochure? Mr Gemmell—I do not think there were any state MPs in the brochure. It was a Commonwealth government brochure. Senator CONROY—In conjunction with the New South Wales and Queensland governments? Mr Gemmell—That particular one was a Commonwealth government brochure. Senator CONROY—What state seats does the highway pass through? Mr Gemmell—We will take that on notice. Senator BOB COLLINS—Mr Gemmell, did I hear you correctly when you said that the cost of this publication came out of the department of transport? Mr Gemmell—That is correct. Senator BOB COLLINS—What was the cost? Mr Gemmell—The cost was $6,070. Senator BOB COLLINS—Someone spent hours listening to virulent discussion from government senators in respect of better cities program publications which simply advertised the projects themselves and did not contain a single photograph. I am astonished by this. I can say with authority that never—not on a single occasion—have I seen anything as blatant as this. Any member of the former government that had seriously approached me as transport minister about putting in this sort of stuff would have been told to get lost. That is the most outrageously up-front piece of partisan party politicking for your local member paid for by a Commonwealth government department that I have ever seen. Where did the instruction come from to produce this document on the Pacific Highway? I stress again for the benefit of the committee that this is a bit rich. I have no problem with this publication. It was a federal government initiative. The Pacific Highway is very important. I have no difficulty with the department of transport producing something like this, but we know that this work goes through a whole string of federal electorates. On the back of the publication are friendly smiling pictures of government members only with this heading above it: ‘For more information about the federal government’s commitment to the Pacific Highway reconstruction, contact your friendly Liberal Party local members.’ Fax numbers, telephone numbers and all the rest of it are provided below. I know that this was not an initiative of the department of transport. How did the instruction arrive for this to be published by the department and to be paid for out of the severely cut budget of the department of transport? How was the direction issued to the department to do this? Mr Bowdler—I am not aware of the direction. I would have to seek further advice on that. Senator ROBERT RAY—Can you take that on notice? Mr Bowdler—Yes. Senator BOB COLLINS—Who did the artwork, the layout, the photographs and all the rest of it? Was that the department’s internal public relations department?

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Mr Gemmell—I am told it is partly internal and partly external. We can take on notice the details of that question. Senator BOB COLLINS—Can you get the details of that? Mr Gemmell—Yes, we can. Senator BOB COLLINS—Do you know whether there was any correspondence between the minister and the department on the document? Mr Gemmell—The minister authorised the document. Senator BOB COLLINS—I am sure he did. What I want to know is the nature of the initiation, not the authorisation. Mr Bowdler—That would be part of our advice on notice to the committee. I do not think we can answer that at the present time. Senator BOB COLLINS—I would like the committee to be provided with any correspondence, file notes, memos, letters and so on that passed between the minister’s office and the department—and that is in respect of the minister’s advisers who, I presume, would have been the agents for this rather than the minister himself—in terms of the publication of this document and, in particular, the discussions held on the layout, the artwork and the photographs that appear on this 100 per cent departmentally funded publication which only exclusively features the government members whose electorates the Pacific Highway construction passes. Mr Bowdler—As I understand it, the members of parliament mention that they hold electorates where work is actually being done. I think there is another electorate where there is no current work. I am not sure whether there is any planned. Senator BOB COLLINS—I am grateful for that. An esteemed chairman from another committee is the senator I have just referred to. As the Hansard will show, you have arrived at just the right time. He has a very close interest in the matter of government publications and taxpayers paying for them. I have just given him an honourable mention. CHAIR—I think you have made your point, Senator Collins. Can we proceed with questions? Senator BOB COLLINS—No. I was going to finish on this point, but as a result of the last piece of information I would like to pursue this a tad further. Are you saying, Mr Bowdler, in respect of that additional information you have just provided to the committee that work is going on in these particular electorates? Are you saying that the information contained in this document only relates and is relevant to the members whose photographs appear on the back page? Mr Bowdler—I am advised that the current works being done are in those electorates. My colleagues may be able to confirm that or may prove me wrong. Mr Gemmell—The Pacific Highway is a state government responsibility. The Common- wealth is involved in some parts of the work on the Pacific Highway and the sort of stuff announced in that brochure. So the Commonwealth is not involved with every dollar being spent. Senator BOB COLLINS—That is the reason I am asking the question. The Pacific Highway is not part of the national highway system, is it? Mr Gemmell—No, Senator.

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Senator BOB COLLINS—What the Commonwealth is doing—I am not protesting; I am pleased to see that it is being done—is outside our clearly defined responsibilities in respect of the national highway system. We are contributing an amount of money into a state government highway. That’s correct, isn’t it? The state government is responsible for the Pacific Highway, isn’t it? It’s not a Commonwealth responsibility. Mr Gemmell—It is not part of the national highway system. Senator BOB COLLINS—So we are putting in a substantial amount of money to assist in its upgrading? Mr Gemmell—Absolutely. Senator BOB COLLINS—Is the amount of money we are contributing for that Pacific Highway going into nominated projects? In other words, is there a clear split between the state funded bits and the Commonwealth funded bits? Mr Gemmell—There is some dollar for dollar funding sought with the states on the projects involved, but the Commonwealth is involved with particular pieces of activity on the Pacific Highway. Senator BOB COLLINS—Correct. But as far as I was aware, some component of the Commonwealth’s contribution was dollar for dollar. Mr Gemmell—The whole Commonwealth contribution is dollar for dollar. Senator BOB COLLINS—That is what I am saying. So is it actually possible to carefully demarcate the Commonwealth’s responsibilities in the area? Are you saying that you can clearly define that the amount of federal government money going into this highway is only going to be spent in those three electorates? Mr Bowdler—Not to my knowledge. Again, I will seek further detailed advice. Mr Hrast—The Commonwealth program is on a dollar for dollar basis for specific projects, and we can identify the projects. Senator BOB COLLINS—Mr Bowdler, I wondered whether you might clarify how that answer I got sits with the answer you gave five minutes ago. Mr Bowdler—Which particular answer was that? Senator BOB COLLINS—The information you provided me was that, to the best of your knowledge, the work currently going on is only occurring in those electorates. Mr Bowdler—I think in three electorates. Senator BOB COLLINS—I have no argument with that if it is correct. CHAIR—But Mr Bowdler also said, ‘I can be corrected.’ Senator BOB COLLINS—I am not holding Mr Bowdler to that. I just wanted it checked. The reality is that it is a state government highway into which we are putting a swag of money. It is a combined operation between us and the New South Wales state government, which is the way it should be. You cannot say that all of those projects paid with by federal government money are only going to occur between now and the completion of the project in those three electorates, can you? Mr Bowdler—I am sorry, Senator and Chairman, it does appear that I do need to correct my answer. There is work going on in five electorates. Senator BOB COLLINS—Even currently?

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Mr Bowdler—I understand that is the case. Senator BOB COLLINS—Thank you. Mr Bowdler—There are three photos in five electorates. I am sorry for giving you the wrong advice. Senator BOB COLLINS—No, I appreciate the assistance you are giving the committee. I am not trying to give anyone a hard time; I just wanted to get the accurate answer. So it is going on in five electorates, not three? Mr Gemmell—Yes, Senator, and there are five names on the back of that pamphlet with only three photos. Senator BOB COLLINS—Why did Robert Baldwin and Garry Nehl not score photographs? Are they the ugly ones? They could not be any uglier than Ian Causley. Fair go! Why did their photos not appear? Mr Gemmell—I am told that they did not provide photos in time. Senator BOB COLLINS—We were told last night that there is a unit in the old aNiMaLS office downstairs that the government has set up to train government politicians. I suggest that they could do with a session or two down in that unit. But the answer I am pursuing: this document relates to the whole project, the upgrade of the Pacific Highway; it is not correct to say, is it, that, in terms of the federal money that is going into this project, all of the federal dollars between now and the completion of the project would be spent only in those five electorates? Mr Gemmell—Senator, first of all, that pamphlet relates only to those elements of the project being undertaken in New South Wales. There is a Queensland element to that. The Commonwealth is seeking to attach its dollars to particular projects to be undertaken on the Pacific Highway. I would have to take on notice to be absolutely sure that its— Senator BOB COLLINS—Could you just take that on notice. Senator CONROY—If you did discover that there is another electorate that the highway is passing through, could you give some suggestion on why that member was not included in the brochure? Mr Gemmell—Senator, I suspect from the questioning that I might find that there is another electorate. I think that what we have been trying to say is that because the Commonwealth is seeking to attach its expenditure to particular projects on the highway it is proposed that there will be no Commonwealth money spent in another electorate. Senator BOB COLLINS—There is another electorate? CHAIR—I think, with all due respect— Senator BOB COLLINS—Mr Chairman, this is a very relevant matter for Senate estimates. CHAIR—I am not saying it is not. What I was going to suggest is that there has been, I guess, a discovery of electorates as we went along. When you come back to the committee with your answers, could you just check that there are three or five or whatever it might be and give the relevant information? Mr Gemmell—I do have an answer on the other electorate. The electorate is Hunter. Senator CONROY—Who is the member for that? Any idea what party he is from? Mr Gemmell—It is Joel Fitzgibbon. Senator BOB COLLINS—He is one of ours.

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Senator CONROY—Have you any idea why he would have been excluded? Was he approached and perhaps did not get his information in on time? Mr Gemmell—The federal government is not putting any of its money into projects that might be occurring in that area of the Pacific Highway. Senator BOB COLLINS—We will finish on this but can I make a suggestion. With the greatest respect for my colleague Senator Conroy I have an alternative suggestion to his. Senator Conroy has suggested that in an update of this publication a photograph of all of the members might appear. Could I respectfully suggest to the federal Department of Transport and Regional Development that in any future publications the photographs and names of none of them appear, and that the department of transport is allowed by the government to get on with its job of spending a severely cut budget which has got $620 million lopped out of the national highway program and $20 million at least lopped out of the Northern Territory and that they spend that money on roads instead of political party propaganda for the government? Can I make that suggestion through you, Minister? Senator IAN MACDONALD—If you are doing another one, could you include photographs of the three Queensland members, Mr Bradford, Mrs Sullivan and Mrs Elson? Senator BOB COLLINS—I still think my suggestion is the best one. Senator IAN MACDONALD—Also, if Mr Sharp has only spent $6,000 on this, he has a lot to learn from the Labor Party. They spent almost $100,000 on their glossy brochures on the better cities program. Senator BOB COLLINS—That is right, but you did not have the pictures of local members— Senator IAN MACDONALD—Yes, they did. CHAIR—Can we proceed. Senator CONROY—Apart from those funds which had been continued for completion of the Ourimbah Creek Road to Kangy Angy Creek section of the F3, has any other funding for upgrading of the F3 between the Central Coast and Sydney been provided in the budget for 1996-97? Mr Hrast—No. Senator CONROY—Have any other funds been provided for roadworks on the Central Coast for 1996-97? Mr Hrast—Other than the Ourimbah Creek section, no. Senator CONROY—Did the former government commit funding to the Belford forest deviation project between Branxton and Singleton? Mr Hrast—Funding for that project was announced but was not approved. Funding for it is still under consideration. Senator CONROY—Did the Minister for Transport and Regional Development visit the site during the election campaign and announce that a future coalition government would honour Labor’s commitment? Mr Hrast—I cannot answer that question, Senator. Mr Gemmell—We will take that on notice, Senator. We will have to approach the minister’s office to find out.

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Senator CONROY—Did the department provide advice that the project was not of high priority and, therefore, should be deferred? Mr Hrast—To whom, Senator? Senator CONROY—To the minister. Mr Hrast—Our advice to the minister is advice to the minister, Senator. Senator CONROY—Who provided that advice to the minister? Who puts it together for you? Mr Gemmell—The department puts the advice together, drawing on whatever sources we consider appropriate. Senator CONROY—Will the proposed work on the Coonabarabran bridge be funded this year? Mr Hrast—It was one of three critical bridges announced for funding on budget night by the minister. Senator CONROY—How much? Mr Hrast—$2.3 million. Senator CONROY—Has work started? Mr Hrast—Yes, work has started. Senator CONROY—When was that? Mr Hrast—I will have to take that on notice. Senator CONROY—Have contracts been signed? Mr Hrast—I will have to take that on notice, Senator. Senator CONROY—Have tenders been let? Mr Hrast—I will have to take that on notice. Senator CONROY—Other than the Coonabarabran bridge, what other new national highway projects are planned for New South Wales in this and out years? Mr Gemmell—That is still a matter for consideration by the minister. Senator CONROY—Any new projects for Victoria? Mr Gemmell—New projects are still a matter for consideration by the minister. Senator IAN MACDONALD—I was late getting here and I thought I overheard Senator Conroy asking along similar lines. Being based in Townsville, I am interested in comments on Woolcock Street and Duckworth Street. Was that approved and in the system prior to the election on 2 March? Mr Gemmell—That was a project that was announced but was not formally approved for entry onto the national highway system program. Senator IAN MACDONALD—There has been no money allocated for it? Mr Gemmell—There has been no formal approval for money to be allocated to that. Senator IAN MACDONALD—I think I heard you say that it was one of the projects the minister was still looking at. Mr Gemmell—That is correct, Senator. The minister is looking at new projects that might come onto the program in 1996-97 and beyond, and it is, indeed, one that is on the list.

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Senator IAN MACDONALD—I do not want to over-emphasise the point, but are you quite sure there was no official approval of funding prior to that? Mr Gemmell—There was no formal approval of funding for that to come onto the program. Senator IAN MACDONALD—I raise this matter because Mr Brereton was in Townsville yesterday making all sorts of outrageous claims saying that had been signed, sealed, delivered, final and committed—all these sorts of words. That was not my understanding and it was not the understanding of local people. I am interested to clarify what you had told Senator Conroy. Mr Gemmell—Senator, you bring out publicly what is essentially a two-step process that can occur where a minister might agree in principle to something going on the program, but there is a subsequent, more formal decision for it to go on the program and for the funding to be allocated and so on. There was an announcement about the first bit— Senator IAN MACDONALD—Yes, I am aware that there was an announcement. There are a lot of announcements all over Australia prior to election. Mr Gemmell—But it was not formally approved to come on the program and, therefore, it was not there. Senator IAN MACDONALD—So it certainly was not signed, sealed, delivered or committed—all that sort of thing? Mr Gemmell—It was not on the program. Senator BOB COLLINS—Are there any proposals afoot to change the national highway? Mr Gemmell—In what sense, Senator? Senator BOB COLLINS—As you know, from time to time many proposals are put which say that the national highway should not go here but it should go there instead. Everyone has continual heroic suggestions about where it should be extended. My question is in two parts. Firstly, are there currently any serious proposals before the government to alter the current national highway plan in respect of substituting one route for another? Secondly, are there any proposals currently before the government to extend the existing national highway? Mr Gemmell—If I could preface my response by saying that you are quite right. There are always proposals afoot not only to extend it but also, in some other quarters, to actually reduce it. I am not aware of any formal proposals that are currently before the government in that respect. I would point out that the government has announced that an inquiry on the national highway system is to be conducted by the House of Representatives Committee on Transport, Communications and Micro-economic Reform and it is almost certain that that sort of issue will come up in that committee’s consideration of the national highway system funding. Senator BOB COLLINS—I can only put this down to three very late nights and early mornings. I have been looking at this appalling document and I have suddenly realised something. I want to put an additional question on notice. I was carrying on a minute ago about the total exclusion of a number of electorates of opposition members and I have suddenly realised something about this publication. The reason that I have is that I am an old Novocastrian, and I stress ‘old’. Joel Fitzgibbon, the member for Hunter, has been mentioned. The member for Paterson, who was giving me a very hard time in Maitland the other day on cooked chicken meat, is Bob Baldwin, who is a Liberal member. When Joel Fitzgibbon’s name got mentioned as being excluded from this publication, I had another look at it, because Mr Baldwin, who was giving me an honourable mention in Maitland the other day, also comes from the Hunter and he is on the Stuart

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Highway. I suddenly realised that these are not only government members but they are also exclusively members of the National Party, the same party as the minister for transport. Could you put on notice a further question: why does the department, at public expense—and you have already put this on the record—at the direction of the minister, spend $6,000 of departmental money on producing a pamphlet which is, in fact, political propaganda not for the government but for the National Party exclusively? In fact, I am going to take the trouble to get a copy of this to Mr Baldwin. Senator Parer—I thought I heard the officers answer before, and I was correct. I am having another look at one here. You must have had some late nights because his name is there. He is one of the guys who did not get his photo in on time. Senator BOB COLLINS—Yes. The explanation was that he was asked for a photo but did not provide it himself. Was that the explanation? Can you just make sure that gets chased up? Mr Bowdler—Yes. Senator BOB COLLINS—I will amend what I have just said: the only photographs that appear are of members of the National Party. CHAIR—Are there any other questions on 2.1? Senator BOB COLLINS—I have a number of questions on rail. They are not in any particular order, but I just want to canvass this issue first because, once again, it is in the news—that is, the high speed train project, Sydney-Canberra. It has now been reported that the Premier of Victoria has had discussions with the federal government regarding the extension of the high speed rail line from Canberra to Melbourne. Can the minister or the department advise—and I am happy for you to take this on notice—if any proposals have been made by the Commonwealth regarding tax incentives other than infrastructure bonds? Apparently, just to put this in context, Mr Kennett has suggested infrastructure bonds but, as I know from a 2 o’clock committee I was on two nights ago, the Development Allowance Authority—DAA—confirmed that there will be no further applications taken for these bonds in the rest of this financial year. So could you provide any advice as to whether there was any discussion on tax incentives that might be provided? Have any route options been suggested? Has the department looked at the operational and financial viability of extending the line to Melbourne? You can take that on notice. In respect of the actual proposal itself, it has been a fair while since I looked at the figures on the feasibility. The last time I did have a look at it, which was a couple of years ago, in terms of the very fast train proposal as distinct from a tilt train, for example, it appeared some fairly heroic assumptions needed to be made in respect of Sydney-Canberra and even more heroic assumptions needed to be made in respect of Sydney-Canberra-Melbourne. Has the department done any further work on the feasibility of this project? Mr Gemmell—Senator, we have not been involved in work on that Sydney-Melbourne corridor beyond the VFT stuff of some years ago. We have been involved in some work with other departments in the state and in the ACT on the Sydney-Canberra corridor. Senator BOB COLLINS—Can you give the committee any advice on where that is at as far as the federal department is concerned? Mr Gemmell—We are about to complete a report in conjunction with the others and report to government on that analysis. Senator BOB COLLINS—Shortly?

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Mr Gemmell—Shortly, yes. Senator BOB COLLINS—Is that report likely to be in the public domain, Mr Gemmell, do you know? Mr Gemmell—I think it unlikely. Senator BOB COLLINS—In any case, could you take on notice a request from me? It is up to the minister, but if it is possible to provide that report to the committee when it is available I would appreciate it. Are you in a position at this stage to say in respect of the Sydney-Canberra link as to whether the financial viability of the project has improved significantly over the last three or four years? Mr Gemmell—It is an air of contention as to what is the viability of the corridor. It really depends on the assumptions you make. The government could do some analysis and could make some assumptions, but even within government there are lots of disagreements. Senator BOB COLLINS—Is the work that you are doing confined only to a VFT proposal, or does it also canvass the cheaper options and, of course, slightly slower options? Mr Gemmell—It is looking at fast train options in the Sydney-Canberra corridor. So it encompasses all those. Senator Parer—Senator, just to respond to the question you have asked of me and just to clarify it: I think you did ask two questions—one was Sydney-Canberra and the other was Canberra-Melbourne. I think the officers responded by saying that they had done work on Sydney-Canberra and did not offer any comments that they had done any work on Canberra- Melbourne. All I can do is refer your request to the minister. Senator BOB COLLINS—Thanks very much. Did the national transport planning task force estimate that by 2014-15 about $3 billion would need to be spent on the Perth-Melbourne- Brisbane-Cairns track? Is that figure correct? Mr Gemmell—Yes, I am told that is correct. Senator BOB COLLINS—Does the department or government accept that figure as being a reasonable assessment of the needs by that date? Mr Gemmell—I do not think we could say the government has made a judgment on that. Senator BOB COLLINS—Has the department made any analysis of it? Mr Gemmell—We have done no further analysis on that since the NTPT report was produced. If I could just add to that: that analysis was based on an assessment by the Bureau of Transport and Communications Economics. It is not necessarily accepted, but it is based on an analysis by them. Senator BOB COLLINS—All right. Is there any even preliminary work being done on any proposals to initiate a strategy in respect of the implementation of that investment? Mr Gemmell—Are you referring to that investment on that? Senator BOB COLLINS—Yes, the estimated requirement of a $3 billion upgrade on that national route by that date. Mr Quinlivan—The forward estimates as a result of the recent budget include allocations in the next three years for a minor capital program for a national rail infrastructure authority. They are an estimate of the capital program necessary to improve the standard of the line from Brisbane around to Perth to a point where it can break even. The government is considering

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Thursday, 19 September 1996 SENATE—Legislation RRA&T 119 at the moment what the institutional arrangements might be for delivering that program, whether it is a national infrastructure authority or it is delivered in some other form. Senator BOB COLLINS—Please take this question on notice if you do not have the immediate detail to hand. Is the department in a position to provide the committee with details of the work that has to be done to accommodate double stacking of containers on that route— again, I am just dredging my memory here—between Sydney-Adelaide, Adelaide-Melbourne, Sydney-Brisbane, and so on? Mr Quinlivan—We will take that on notice. Senator BOB COLLINS—Fine. Can you provide the information on notice? Mr Quinlivan—Probably some of it, but we will have to determine— Senator BOB COLLINS—The only reason I make that point is I am not expecting the department to put 100 hours of effort into this. If you can just provide the committee with whatever information you have got reasonably available, I would be happy with that, thank you. If you are in a position to give me this as well: I would like any cost-benefit analysis attached to that of the benefit of actually putting in that capital investment in order to get the double stacking, which is the point of the information that I need. I am sorry, did you want to say something? Mr Desmond—The Bureau of Transport and Communications Economics did a considerable amount of work on the adequacy of infrastructure for the national transport planning task force. There is a certain amount of information available, and we are more than happy to provide you with copies. I am not sure if it will answer your specific question about double stacking all the way on the eastern rail corridor. Senator BOB COLLINS—Thanks. I mean, just accept the qualification that I put on that; I do not want you to go to any extraordinary effort to dig that out. But if there is something readily available. Mr Desmond—We will provide that to the committee, Senator. Senator BOB COLLINS—Again, one of the reasons—and I am just inviting a comment, if you have one, but if you do not just ignore this—I am interested in this, besides having a parochial Northern Territory interest, is the rational rather than political, if I could be so bold as to say that, return on the investment in respect of comparing money spent on upgrading the Pacific Highway with that spent on upgrading the rail link over the same route. Mr Desmond—There is some comparison of the investments in some of the material that I have. I will provide that to you as well. Senator BOB COLLINS—Thank you very much. Are there any plans already afoot to upgrade the Sydney-Brisbane line? Mr Quinlivan—The funding that I referred to—it is in the forward estimates—will to some extent be spent on that corridor. In fact, quite a lot of it will be. The principal aim is to replace wooden sleepers with concrete sleepers to reduce the maintenance charges on that track and thereby reduce the access charges to operators. I cannot say now what proportion of that money would be spent on that corridor, but it will be a significant proportion. Senator BOB COLLINS—Thank you. Is it still the view of the Bureau of Transport and Communications Economics that ‘the transit times, the reliability and the costs are so poor that the corridor will not survive as a commercial freight alternative unless improvements are implemented’?

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Mr Gemmell—Senator, you are asking us to present a view of the bureau. We are not in a position to present the bureau’s view. Senator BOB COLLINS—I know that. I just thought that, because of your encyclopaedic knowledge of these matters which I have been exposed to from time to time, you may have known whether that was still the bureau’s view. Just out of curiosity, Mr Chairman—I did not bother looking—does the bureau come before the estimates at any stage? Mr Bowdler—Subprogram 5.3 covers the Bureau of Transport and Communications Economics. You may recall there was some discussion the other night about the greenhouse study, for example. Senator BOB COLLINS—So we should get to them about 4 o’clock tomorrow afternoon if we sit all night. Mr Bowdler—I thought we had completed them. CHAIR—We have completed them. Senator BOB COLLINS—They are done? That is right. Would you be kind enough, because I know you are all one happy family, to get a response from the bureau to the question I just asked, please? Mr Gemmell—We will. Senator BOB COLLINS—I am sure you appreciate the reason I am asking the question and am interested to know that analysis is there. If that is the situation, I am interested to know how the upgrading of the Pacific Highway will therefore affect the viability of National Rail on that corridor if the analysis is as dim as it apparently is. Does anybody know whether copies of the Brew report were provided to anyone in Tasmania? Mr Quinlivan—Copies of the Brew report have not been provided generally at all, Senator, and to the best of my knowledge there are none in Tasmania— Senator BOB COLLINS—I know they have not been provided generally. I am having a hell of a job trying to get one. Do you know whether they have been provided to anyone in Tasmania? Mr Quinlivan—The version that was tabled in the Senate has been provided to some people in Tasmania and— Senator BOB COLLINS—The executive summary? Mr Quinlivan—That is right. Senator BOB COLLINS—Can you provide a copy of the Brew report to the committee? Mr Gemmell—Senator, we would have to ask the minister about that and, given what was tabled in the Senate— Senator BOB COLLINS—If you could take that on notice. What actually happened the other day in the Senate, Minister, and the matter is still not resolved, is that the government supported a vote, a unanimous vote, in the Senate to provide the Brew report to the Senate by 5 o’clock on that same day—that is a matter in the Hansard that is beyond question—and then subsequently after question time on the following day provided an executive summary of the report. So the government, to that extent, is still in contempt of the Senate. That is the reason I raise it here.

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Senator Parer—Can I just intervene there. My recollection—and I was there at the time— was that the information provided in the Senate was the Brew report less commercially sensitive information. I think that was made fairly clear. Senator BOB COLLINS—I am grateful if that were the case, Minister, because the document was described—and it is in Hansard—by Senator Tambling as an executive summary. Mr Quinlivan—It is in fact the executive summary with some deletions along the lines you suggested. Senator BOB COLLINS—We have some interesting clarification to make here. You realise that that conflicts with what the minister just said? CHAIR—You said it was the executive summary with what? Senator BOB COLLINS—With some deletions. Mr Quinlivan—The document that was tabled was the executive summary with some deletions. Senator BOB COLLINS—What the minister just said was that he understood it to be the Brew report with some deletions. Can we get this clear, Minister? Senator Parer—No, the executive summary. Senator BOB COLLINS—That is what I thought. I will go back to what I said, in that case. There was a return to order of the Senate to provide the Brew report, which was carried unanimously and supported by the government—and I have to say that, in the 10 years I have been here, I have not actually seen this happen before and I have been the subject of quite a few returns to order. We have now had it helpfully clarified that there is a Brew report and it is not the executive summary. We still do not have it and, to that extent, Minister—and it is a matter of some concern—the government is in contempt of the Senate. I expected that there would be deletions because of commercial-in-confidence matters from the report and I would have had no argument with that, but what we have is not the report. Senator Parer—Senator, I have a brief here that might clarify this. Senator BOB COLLINS—Thank you, Minister. Senator Parer—The government will consider releasing the balance of the report, but it will need to examine material that is commercial-in-confidence—which you would understand and you have done that yourself— Senator BOB COLLINS—Yes, of course. Senator Parer—That is provided on a confidential basis and that which is central to the government’s decision making process. We need to check that those people who contributed to the report are happy for their contribution to be made public. The report drew heavily on contributions made by people interviewed by the review team and on written submissions to that team. These contributions were made on the basis that this was a confidential report to the government on a range of policy and commercial matters. So it will need some discussion with those particular individuals. Senator BOB COLLINS—Thank you, Minister. That does help to clarify at least that issue, but it begs the question—and perhaps you could answer this now—if that is so and we are now being advised in this committee that the minister will consider releasing the report with

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 122 SENATE—Legislation Thursday, 19 September 1996 those commercial deletions at some time in the future, why the government voted to support a return to order motion in the Senate last week which committed it to provide the entire Brew report by 5 o’clock on the same afternoon. Senator Parer—Senator, all I can say is that I will check. Whether there was a misunderstanding about the executive summary less confidential matters, I do not know. All I can report to you here is that the government will consider releasing the report, subject to the approval of those people who gave personal information. Senator BOB COLLINS—Thank you for that, but it does indicate an extraordinarily cavalier attitude to Senate returns to order and the implications of those returns to order. Far be it from me to offer gratuitous advice to the government, but I would suggest that, in terms of the implications of those things, perhaps a less cavalier attitude towards returns to order might be taken in the future. But thank you, Minister, I am grateful for the advice. I would also like to ask, in respect of the advice we have just received, if a copy of the executive summary was send to some people in Tasmania. Mr Quinlivan—I should clarify my earlier advice. A copy of the full report was provided to Senator Abetz, who is a member of the government’s rail committee. Senator BOB COLLINS—Thank you. I am glad someone knew where I was heading. That is the substantive issue that is involved here, Minister. It is a serious one and I am grateful for that advice. I was aware of that, might I tell you. You have saved me and the committee probably another hour of the minister being belted around the head. Senator Parer—That is unusual for you not to be so direct. Senator BOB COLLINS—Minister, I know you understand the implications of what is being said here. I was aware that Senator Abetz, as a government backbencher and not as a parliamentary secretary or a minister, received the full report, not just the executive summary. People like Senator Harradine, Senator Sherry and other Tasmanian senators have as intense an interest in this issue as Senator Abetz has. My advice was that Senator Abetz had been exclusively provided with a copy of not the executive summary but the full report. I would assume that is the full report with no deletions. Mr Quinlivan—That is right. It was given to him in his capacity as a member of the government’s rail reform committee that the cabinet established. Senator Parer—Following the consideration of the draft reform, cabinet established a committee to examine its role in the rail industry and report on the recommendations and so on. The committee is made up of the minister, who is the chair; Mr Barry Wakelin, the member for Grey; Ms Trish Worth, the member for Adelaide; Senator Jim Short, the Assistant Treasurer; Mr John Moore, the Minister for Industry, Science and Tourism; Mr Ian McLachlan, the Minister for Defence; Eric Abetz; and Senator John Tierney. My understanding is that the full report was given to that committee, not just to Senator Abetz. Senator BOB COLLINS—No, I know who has the report and that is why I and other senators find this objectionable. Perhaps Senator Abetz could save us all a lot of time and just bring a copy of the report to the committee. Mr McLachlan is on the task force not because of any defence implications attached to this issue but because he is from South Australia. Many people are profoundly affected by what is happening with National Rail. Do not be surprised by this, but I have a passing interest in the Ghan and Indian Pacific from a territory perspective because of the extraordinary contribution that they made. The reason that I moved the return to order in the Senate principally was that I was annoyed as a senator that a

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Tasmanian backbench senator, for all his capacity and enthusiasm, had exclusive access to this report. There are people in Western Australia and the Northern Territory concerned with this, but the principal states affected are South Australia and Tasmania, are they not? Senator Parer—Yes, but let me clarify that this was a committee formed from cabinet. Bear in mind that the Brew report was a report to the government, not of the government. What you are suggesting is that the Brew report with all its confidential and personal bits should be given to everyone. That is not reasonable. Senator BOB COLLINS—I am absolutely delighted that you have made that contribution to this debate. Can you then explain to me, if it is not reasonable, why you voted last week in the Senate to produce it? Senator Parer—What was produced for the reasons given, of which you would be well aware, was an executive summary with commercial-in-confidence stuff left out. Senator BOB COLLINS—Correct. We have established this; we do not need to go over it again. The officer has provided the information that confirms it. The return to order related to the full Brew report, not the executive summary. The return to order was that the Brew report be produced to the Senate at 5 p.m. last Tuesday. You have now said that it is utterly unreasonable to do that. It is an absolutely reasonable question of me to ask you, as the minister representing the government. If that is the case, and it was utterly unreasonable, can you explain why the government, in toto, including yourself, voted for it? Senator Parer—No. What I said to you was that it was not unreasonable that the committee set up by cabinet should have access to the report. That is what I said. Also, I have explained earlier that the government will consider releasing the balance of the report but they need to examine the material that is commercial-in-confidence and private. Senator BOB COLLINS—Minister, with the greatest respect—and the Hansard record will in fact demonstrate this; I am not suffering from Alzheimer’s disease; I can assure you my short-term memory is very good—you did not say that, and this has to be clarified. What the Hansard record will show, and I will quote you fairly closely, is the suggestion—you just said this two minutes ago—that the whole report should be made available to everybody, that is, the Senate, because by tabling it in the Senate it is made available to everybody. I concede that. You said that that proposition that the whole report be made available to everybody in the Senate, not just Senator Abetz, was unreasonable. That is what you said. My question, therefore, is: why did you vote in favour of it? Senator Parer—No, no. Senator, you are twisting words, and you are pretty good at it. Senator BOB COLLINS—Hansard in fact will demonstrate that that is not the case, Senator. Senator Parer—In the context of what I said earlier, that the government would consider releasing the balance subject to its need to examine the material, which is commercial-in- confidence and information which was of a private nature. That is what I said earlier when you raised this matter. Senator BOB COLLINS—Minister, I have so much confidence in the ability of the Hansard department of this parliament that I will not pursue this any further. But I can assure you, Minister, that when the matter is brought back to the Senate, in terms of the standing contempt of the Senate that is involved in this return to order, the Hansard record, in terms of what you have just said in this committee, will be very clear indeed.

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Senator Parer—Senator, let me also say to you that what I have just said to you and what I said about 10 minutes ago—when Senator Tambling tabled this statement he said exactly what I said—is that the government would consider releasing the balance of the report. Senator BOB COLLINS—I do not know whether I am speaking in English or not. I know what Senator Tambling said, but can I point out to you, Minister, with respect, that what Senator Tambling said is not relevant to the terms of the return to order which were moved in the Senate on the previous day. I drafted them, Minister. I know what they said and they were very clear, that the Brew report would be produced in the Senate, in toto, by 5 p.m. on Tuesday evening. We had, let me tell you, protracted discussions with the government. They were conducted from my office, Minister, for your advice. We were advised, prior to going into the house before question time, that the government had agreed to produce the report. The whips will confirm that. I said, ‘Fine, we will not need to have a debate.’ Minister, I might also tell you, just to refresh your memory, again, that that was relevant as to whether the motion would be taken as formal or not without debate. I tell you what, if I had known that I was going to get dudded to this extent, I would have debated it for the rest of the day. I am angry that I was in fact misled because I had agreed not to debate it. Senator IAN MACDONALD—Is this a question? Senator BOB COLLINS—Yes, it certainly is, Senator. And perhaps you could let the Chair chair the meeting. That is the relevance of this, Minister, which seems to have escaped you. We were formally advised that the government had no difficulty in producing the Brew report. Let me tell you that the only qualification was the one you just put on it, but it may contain deletions because of commercial-in-confidence material, and I agreed with that. I was therefore somewhat angry, having agreed not to debate it, having accepted it as formal and having had it voted for by the government, to have the following day only the executive summary produced. CHAIR—Senator Collins, you have made your point. Senator BOB COLLINS—Yes, I have. If the minister had not attempted to change what he just told the committee, I would not have continued with that. CHAIR—I do not believe the minister did try to change what he told the committee. Senator BOB COLLINS—I am happy to rely on the Hansard to show what he said. Thank you. I will move on. Mr Chair, I might return to this item later, depending on how many further contributions there are to the matter. CHAIR—Does anybody on the other side have any questions? Keep going, Senator Collins. Senator BOB COLLINS—Senator Macdonald initiated this, but I just want to add something. I guess you have a system of chairs of committee like we used to. I wonder if, respectfully, I could suggest to you, Mr Chair, that the 15-minute routine—which I think has probably made for the most orderly dealing of business in estimates that I have experienced in 10 years—be applied across-the-board to all estimates committees. It seems to work very well. CHAIR—Yes. Senator BOB COLLINS—Can you tell me where the annual report for National Rail is at? Mr Quinlivan—They are no doubt preparing it and their accounts will be—

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Senator BOB COLLINS—What about the financial statements up to 30 June this year? Mr Quinlivan—They will be considered at the forthcoming annual general meeting. I am not sure of the exact date, but I think it is in early October. Senator BOB COLLINS—There was a question raised with me about Mr Brew’s covering letter to the Brew report that was released in Tasmania. If you want to take this question on notice, please do so. Was Mr Brew’s covering letter that was provided to Senator Abetz, or anyone else in Tasmania, the same letter that was attached to the report that was provided elsewhere, or is there more than one version of the Brew covering letter? Mr Quinlivan—I am not certain of the precise answer to that. Senator BOB COLLINS—Can you take that on notice? Mr Quinlivan—Yes. Senator BOB COLLINS—As I understand it, the Brew report refers to an interest by NR in the intrastate freight business. Is that correct? Mr Quinlivan—I would be surprised if it does not. Mr Gemmell—I think NR came out with a press release after the Brew report was tabled to confirm that. Senator BOB COLLINS—Was there a reference to this in the statement of corporate intent that was issued by National Rail in July 1995? Mr Desmond—I believe there was, Senator. NR has expressed an interest in operating intrastate freight for a couple of years now. Senator BOB COLLINS—Do you know whether there is any particular reason why this reference was removed from the version that was tabled in the Senate? Mr Desmond—No, I do not, Senator. Senator BOB COLLINS—Would it be possible for the committee to have a copy of the statement of corporate intent? Is that in the public domain? Mr Desmond—Yes, it is, Senator. Senator BOB COLLINS—Do you know when National Rail took a decision to actively pursue that question of intrastate freight? Mr Desmond—There has always been the capacity for National Rail to operate intrastate freight. This has happened with the opening of some intrastate businesses to competition—for example, the carriage of coal at Leigh Creek in South Australia—and there has been some discussion of opening up the coal in the Hunter Valley. They have explored it and are starting to pursue it. Senator BOB COLLINS—Was there any formal analysis done of the commercial viability of those intrastate operations by National Rail, the department or anyone? Mr Desmond—Not by the department. National Rail is pursuing its own commercial judgment. Mr Quinlivan—Both those cases are well known to the profitable rail operations. Senator BOB COLLINS—In general terms—I am not asking you to disclose anything that is confidential—can you advise the committee as to the current situation regarding, in terms of the future of the whole operation, the Commonwealth’s discussions with agencies? Who are we actively engaged in talking to about what is likely to happen at the end of the day?

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Mr Gemmell—Senator, what is likely to happen to what? National Rail? Senator BOB COLLINS—Yes. Is the department having formal discussions with your state counterparts? Mr Gemmell—Senator, we regularly have formal and semi-formal discussions with our state counterparts. We are all shareholders in National Rail, so we talk about the future directions of National Rail. We are all involved with National Rail and a strategic review of the business directions of National Rail. We talk a lot and regularly amongst the shareholders and with National Rail about future directions and activities it is around. Senator BOB COLLINS—Is NR on track to achieve the level of profitability envisaged by the shareholders at the end of the five-year establishment period? Mr Gemmell—We are broadly on track, Senator. Senator BOB COLLINS—Good. It is too early to determine the success that has been had in shifting freight onto the rail system? Mr Gemmell—Senator, the freighted rail system is becoming a rather more difficult question to measure because of competition coming in, which is a good thing. Therefore, you cannot measure it by looking at NR’s freight movements; you have to start to look at all freight movements across NR and all the competitive service interstate. Senator BOB COLLINS—I guess I was looking at the success of the track rather than— Mr Quinlivan—Senator, on some corridors, since the establishment of National Rail, rail’s market share has increased and on other corridors, principally the shorter ones, such as Melbourne-Adelaide, rail’s market share has fallen. Senator BOB COLLINS—Has fallen? Mr Quinlivan—Yes, fallen, which is what you would expect. With the new entrants to the Melbourne-Perth market, there has been a surge in rail’s market share. NR has lost some of its market share to other competitors and it would appear that there has been new business attracted to rail on that corridor. Senator BOB COLLINS—Right. Mr Quinlivan—The other development since National Rail was established is that the aggregate operating deficit of the interstate freight operations has fallen from somewhere in excess of 350 million to, we think, somewhere around about 50 at the moment. Senator BOB COLLINS—Again, do not go into any detail on this, but, in respect to the operations themselves, there were a raft of horror stories around the place a few years ago about horrendous delays, failed equipment, terminals having to, in fact, borrow contractors’ equipment and all of those dreadful maintenance problems that were at the terminals. Have they substantially been corrected? Mr Quinlivan—The situation has improved markedly, although reliability remains a serious problem with interstate rail freight. Senator BOB COLLINS—Is that right? Mr Quinlivan—Yes. Senator BOB COLLINS—And in identifiable areas? Mr Quinlivan—Across a broad range of areas relating to infrastructure, rolling stock, terminal operations and so on. The overall incidence has fallen, but it is still a serious problem.

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Senator BOB COLLINS—In regional terms, is there any particular corridor that stands out, or is it across the system? Mr Quinlivan—There are no parts of the corridor where there are not problems. Senator BOB COLLINS—I see. Mr Quinlivan—The incidence tends to vary a little depending on seasonal factors and so on. Senator BOB COLLINS—Fine. Again, I recall that some of the stories were just incredible. Some years ago they generally related to what appeared to be a fairly sorry state of maintenance of equipment that was pretty much the fault of years of neglect by local authorities. I understand there was going to be a fair amount of capital injected into redressing that. Has that been done? Mr Quinlivan—The improvement program is well and truly under way. As you say, the first product of the large capital program is about to begin operations on the system. Senator BOB COLLINS—What you are saying is that there is still a fair way to go. Mr Quinlivan—There is a long way to go. Senator PANIZZA—I want to ask about the national highway funding and the reduction of $48 million. There is $75 million committed to the Pacific Highway. Has anything been committed, or is anything likely to be committed, to that northern bypass in Western Australia? If there is not, what is the thinking on that one at the present moment? Mr Hrast—I think there is something like $4 million committed to the planning study of the northern bypass at this stage. Senator PANIZZA—I thought that was last financial year. Mr Hrast—No, this is committed over a number of years. There is no funding committed to the actual construction of the project at this stage. Mr Gemmell—I will just add to that. The cost of the bypass study was $5 million, and another million dollars of that—so, at the tail end of the program—is to be spent in 1996-97. Senator PANIZZA—Sorry. I did not understand that. Do you have $4 million or $5 million? Mr Gemmell—It is $5 million for the study of the northern bypass, and there is a million dollars more of that to be spent in 1996-97. Senator PANIZZA—I suppose you have to look at the feasibility study first, but it is certainly something that will have to be done sooner or later. It has been on the drawing board for 12 years, as far as I know. What is the likelihood that the feasibility study gets finished and they might even start allocating some money towards constructing it? Mr Gemmell—Senator, once the feasibility studies are done, it is a matter for the minister’s consideration as to when it might come onto the construction program. Senator PANIZZA—Is the feasibility study on one particular route or are you still looking at more than one route? Mr Hrast—The study is still identifying the third route. Senator PANIZZA—You are still identifying it? Mr Hrast—Sorry, I apologise. Apparently it has been chosen.

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Mr McNamara—The money is being used for the finalisation of planning and also to make sure the corridor is reserved. One route has been chosen. I think it is called route 9, but I will have to go back and check again. I understand that is the route that has been generally accepted by the community. There was a VMS on the project planning back in March, which we attended. It is a value management study involving all the local interest groups. The results of that VMS will be used by the Western Australian Department of Main Roads to refine the actual engineering concept so that it can be submitted to the minister perhaps late this year or early next year. Senator PANIZZA—What is the general policy on bypassing towns on that route—the Great Eastern Highway? Going back to the dim, dark ages when I was in local government, there was a policy that that highway was going to completely bypass all towns by 1992. Now 1992 is a long way behind us. Is that policy still around, or did you find it too costly to bypass Townsville? Mr Gemmell—Senator, I think it is more of a case that a bypass is looked at when it stands up to scrutiny and it makes sense in cost benefit terms. If it does not make sense in cost benefit terms—for example, there are no delays occurring in the area or it is not worth the expense of bypassing the town—we look at other more cost-effective solutions Senator PANIZZA—So what do you mean by ‘look at other cost-effective solutions’? Mr Gemmell—If I can use an example, a big issue in the Albury-Wodonga area is the issue of a bypass of Albury. The alternate route actually goes through the township of Albury. We are looking at the two cases and trying to work out which is the best in terms of differences in cost and the social and other costs of doing one versus the other. Senator PANIZZA—That is something different. I was thinking of some other place. I turn to the rail side of things. I refer to that crash at Hines Hill earlier this year. There has been a coroner’s report around since that happened. I think the coroner’s did come down and I think there was a finding of negligence. Mr Quinlivan—Senator, we have the Acting General Manager of Australian National here. He is probably best placed to answer this question. Mr Neal—The train involved was a National Rail train. There were Australian National locomotives on arrangements provided to National Rail for that train. I am not aware whether a coroner’s report has been released or not. Senator PANIZZA—You do not know whether one has been released? Mr Neal—It was a National Rail train, not an Australian National train. Senator PANIZZA—Coming out of that, has there been a feasibility study done on changing the ideas of trains crossing each other? I understand that it was one of those exercises that is not used very often—they cross when both are in motion. Mr Quinlivan—I think that is right. There were apparently some slight differences in the normal practices with use of crossing loops in Western Australia, which contributed to the accident, or were considered by some to have contributed to the accident. Since that time those practices have been revised and are now consistent with those used nationally. Senator BOB COLLINS—Can you provide the Senate with advice as to the current status of the establishment of the national rail infrastructure authority? Mr Gemmell—The government remains committed to the creation of the national rail infrastructure authority.

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Senator BOB COLLINS—I think you have $160 million in the budget, haven’t you, up to the year 2000? Mr Gemmell—For the three years beginning 1997-98. Senator BOB COLLINS—Is there any reason that you are aware of for the delay in getting them established? Mr Gemmell—The government is currently looking at its whole position in respect of its involvement with the rail reform committee. As discussed a little earlier, it is involved in that. It is looking at its whole position in respect of involvement with rail, and the rail infrastructure authority is caught up in that. Senator BOB COLLINS—I hope that doesn’t involve a complete exit from the scene. Again in broad terms, could you give us a breakdown of how it is proposed to spend $160 million? It is $160 million, isn’t it? Mr Quinlivan—I think it is $161 million. It is in that order. Senator BOB COLLINS—Is there a broad breakdown of how that money would be expended over that period? Mr Quinlivan—Some of it will be working capital for the new organisation. Senator BOB COLLINS—Where will that be? Mr Quinlivan—We are hoping at this stage, subject to the decisions which the government will be making shortly about its involvement in the rail industry, that if there is a positive decision to establish this body, it will happen by 1 July 1997, which would require legislation in the first half of next year. A small amount of that $160 million is for working capital for the organisation. A significant amount of that is for the program of re-sleepering that I mentioned earlier on the Sydney- Brisbane corridor. One of the first tasks of the new organisation would be to decide what its investment capital priorities were and how to deploy that money most efficiently. Senator BOB COLLINS—Did you mention earlier—if you did, I am sorry—how much money would actually be spent on that sleepering program out of the $160 million? Mr Quinlivan—No, I said it was a significant amount. Senator BOB COLLINS—Is that where the lion’s share of the $160 million is going to go? Mr Quinlivan—I would not be able to commit the organisation to spending a lion’s share on that corridor, but the intention is that a significant amount would be. Senator BOB COLLINS—Okay. And is that the most obvious major project that is likely to be undertaken during that period, or are there other stand-out ones? Mr Quinlivan—At the moment the general thinking is that the money should be deployed to reduce maintenance costs on the system and thereby reduce access charges to new entrants, so we are not talking about major capital works; we are talking about the sort of activities that will reduce maintenance charges and, in the main, that means in some cases replacing light sleepers with heavier steel and replacing timber with concrete sleepers. Senator BOB COLLINS—Is it possible to say at this stage what likely impact the authority is going to have on the operational and financial viability of the operators themselves? Mr Quinlivan—We expect that it will reduce the economic cost of access to the system though better investment practices, through more efficient maintenance of the system and

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 130 SENATE—Legislation Thursday, 19 September 1996 through more of a global approach to management of the infrastructure which is currently managed by a number of different authorities. So we would expect that to flow through to rail operators in lower access prices and therefore increased commercial viability of those rail operators. Senator BOB COLLINS—Thank you. Am I correct in saying that the budget papers indicate a reduction in Commonwealth funding for the authority of $133 million over the next four years? Mr Quinlivan—The reduction would be of that order. Senator BOB COLLINS—Compared with last year’s forward estimates, what is it now that is essentially not going to happen? Mr Quinlivan—The first thing is that the organisation will be established a year later than was envisaged by the previous government, so that is one part of the story. And the second thing is that the capital program will start more slowly than originally anticipated. Senator BOB COLLINS—That is not going to make any particular regional impact? Mr Quinlivan—No, the sort of program that I mentioned is likely to be spread widely throughout the network so the impact on any one region is likely to be small. Senator BOB COLLINS—Is there going to be any kind of contribution from the states or the private sector for funding over that period of time? Mr Quinlivan—When the Commonwealth government has settled its policy position here we will recommence formal negotiations with the states. We have had some informal talks with them along the lines of the proposal that has been around for a little while now, and that involves state contributions to the operating losses of this organisation in its initial years. Then there is, as you say, the question of private sector involvement. It is in the operators’ interests to invest in a system, and we expect that we will have to provide a framework that allows them to do that. Senator BOB COLLINS—Has any assessment been made on the impact that the cuts, savings, are going to make on the operations of NR? Mr Quinlivan—It would be difficult to isolate out those effects from the other influences on NR’s operational performance such as the arrival of new competitors and overall conditions in the Australian freight market which are difficult for all players at the moment. Senator BOB COLLINS—Does the department have any information, just on that point in terms of the private rail users in particular, on the extent of interest in that competition in the near term or medium term? Do you have any indication that that is likely to increase significantly? Mr Quinlivan—We understand that the two private companies operating on the Melbourne- Perth corridor are very pleased with the way their operations are going and— Senator BOB COLLINS—That is what they have told me. Mr Quinlivan—They are experiencing strong demand for their services so the signs are positive at the moment. Senator BOB COLLINS—That is a fairly efficient corridor, isn’t it, in terms of turnaround— Mr Quinlivan—It is. There are other private companies around at the moment who are talking to—

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Senator BOB COLLINS—Is that right? Mr Quinlivan—Possible suppliers of rolling stock and terminals and so on about commencing their own operations. Senator BOB COLLINS—I am actually quite apprehensive about asking this next question. I probably should not ask it but I have to know, I must know. What has actually happened to the road-rail—I am trying to remember what it is called now. Mr Quinlivan—Trailer rail? Senator BOB COLLINS—You know the one I am talking about. Russell— Mr Quinlivan—Russell King. Senator BOB COLLINS—Omaha, Nebraska? Where are they? Mr Neal—Wabash. Senator BOB COLLINS—Wabash. Thank you. Cannonball. How could I forget that. Where is that at? Mr Neal— It is now a wholly owned operation by National Rail. It is still operating twice a week between Perth and Melbourne. Senator BOB COLLINS—And efficiently as far as I am aware. Mr Neal—Again, I pass that to National Rail. We withdrew from the operation as of 30 June. Australian National withdrew from the joint venture. Senator BOB COLLINS—This year? Mr Neal—Yes. Senator BOB COLLINS—If you don’t want to answer that question, don’t, but I really was just upgrading my own information on this out of curiosity. Is Mr King still involved in the operation? Mr Neal—No, he is not. Senator BOB COLLINS—He is not? Mr Neal—No. Senator BOB COLLINS—Thanks, but some people were suggesting that this was going to be a red-hot technology and take off like a Bondi tram. That gives my age away, I have to say. Has that been the effect? Has there been a huge increase in the use of the technology? Has it spread to other rail systems? Mr Neal—It has remained on the one corridor. It has not had spectacular growth; it has had steady growth. When we withdrew in June the weekend train was certainly of a profitable nature. The midweek train was not at that stage. Senator BOB COLLINS—What actually happened to the disposition of the asset itself—all of the rolling stock that was originally held? Mr Neal—The rolling stock is the same as other rolling stock. The freight fleet has been nominated by National Rail but it is not yet transferred from Australian National. Senator BOB COLLINS—I see. Thank you for that. We are still on 2.1. Did the minister, his office or the department have any discussions or correspondence with the South Australian or any other state governments as to the appointment of Mr Brew to conduct this work, the Brew report? Mr Gemmell—I think we would have to seek advice,

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Senator BOB COLLINS—Take it on notice. KPMG are involved in this exercise, aren’t they? Mr Gemmell—KPMG were commissioned to do some support work as part of the Brew review, yes. Senator BOB COLLINS—Can you explain to me where KPMG came from in that exercise? Was that a tender that was put out? Mr Gemmell—That was tendered for, yes. Senator BOB COLLINS—By the department? Mr Gemmell—Yes. Senator BOB COLLINS—Can you advise the committee of the cost of KPMG—how much money they got? Is that in the public domain? Mr Quinlivan—I think it was just a touch under $100,000. Senator BOB COLLINS—Thanks. It was just a normal tender process that other firms competed for? Mr Quinlivan—Yes, I think we sought bids from four or five of the firms that we thought were able to provide the accounting expertise that we were looking for—and they were selected. Senator BOB COLLINS—On the face of it this might sound like a silly question; let me assure you it is not. Is the department satisfied that the executive summary which was tabled in the Senate is in fact consistent with the report itself? Mr Quinlivan—It is the executive summary of the report, so— Senator BOB COLLINS—This is just scuttlebutt and corridor gossip which, of course, I should ignore. I would if I were in government; now I am in opposition I pick it all up. This is the reason I asked about KPMG. Let me tell you there is a suggestion that has been made that KPMG in fact were responsible for drafting the report itself and Mr Brew drafted the executive summary. Someone has been uncharitable enough to suggest that there are some differences between the two. Do you have any knowledge of that? Mr Quinlivan—The report and the executive summary were the collective effort of KPMG, Mr Brew and the secretariat. Senator BOB COLLINS—I asked earlier about the high speed rail link. It is all right—I was just thinking about that highly entertaining press conference that was held where one of the attendees walked out. It appeared to be one of the proponents. Can you tell the committee who the major proponents currently are for the service? Mr Quinlivan—Are you talking about the— Senator BOB COLLINS—Sydney-Canberra. Mr Quinlivan—I am not sure how many undeclared hands there are, but the two who are engaging in a public discussion about it are the speed rail consortium and a group representing the Maglev technology—the German company. Mr Gemmell—You might add to that, Senator, that the tilt train proponents also have some interest in that— Senator BOB COLLINS—Still?

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Mr Gemmell—Yes, the tilt train people have come in and have been at pains to come to the department, for example, to point out the advantages of the tilt train. Senator BOB COLLINS—I am very familiar with this, of course, in respect of the Alice Springs to Darwin rail link, but I note in all the public comments of enthusiastic support for these projects that no-one has actually said that they will sign a cheque and put a big heap of money up. In that respect I was interested to note what Dale Budd said—this is what interested me. He said: As to which government does the borrowing and which government does the acquisition is an open question. What I picked up from New South Wales is that they do not appear to have any real intention to do any borrowing at all. I think the Premier did make it clear that there was going to be no financial commitment. I think I am correct in saying that, aren’t I? Mr Quinlivan—He said, ‘No net cost to New South Wales taxpayers,’ if I recall. Senator BOB COLLINS—I am sorry, that is correct. He said, ‘No net costs.’ Mr Quinlivan—Yes. Senator BOB COLLINS—But when I saw that Mr Budd had said, ‘As to which government does the borrowing and which government does the acquisition is an open question’, it appeared that, at least in terms of one of the proponents, there would need to be some government involvement. The reason I ask that question is this: in respect of the department at least, are you aware in a formal sense of any expectation by any of the proponents that there would need to be some degree of government involvement either at state and/or federal government level? Mr Quinlivan—If any of these proposals were to come to fruition there would clearly need to be involvement; whether it is financial or not is entirely another question. Senator BOB COLLINS—There is no question they would need to be involved, but is it on the table that there would be an expectation from any of the proponents that there would need to be a financial involvement of any government? Mr Quinlivan—Whatever their expectations or hopes might be, the New South Wales and Commonwealth governments have made their position quite plain that there will not be a cost to— Senator BOB COLLINS—Fine. So the position is as firm as that? Mr Quinlivan—After the New South Wales Premier made that statement the minister confirmed that that had been his view for a long time and still was. Senator BOB COLLINS—Right. Mr Gemmell—Senator, if I could just add to that: there is the question— Senator BOB COLLINS—It is all right. They were doing this all night last night. I went home totally depressed, I can tell you. I think you were there for some of the time. CHAIR—How much longer will you be on this program, Senator Collins? Senator BOB COLLINS—I don’t think all that much longer. I think probably about 15 minutes tops—yes. CHAIR—Can you do it with short questions, otherwise we are going to run into trouble at midnight or later tonight?

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Mr Gemmell—I want to add to that answer. There is the issue of infrastructure bonds which are government supported—once the speed rail consortium is leased, seeking them to be applicable to the project. Senator BOB COLLINS—I see. So they have actually indicated that they would be looking for infrastructure bonds, which at least for the next financial year appear to have been ruled out. Mr Gemmell—They have applied. Senator BOB COLLINS—They are inside the gate, are they? They are in the paddock? Mr Bowdler—Yes, they are a submitted application from speed rail. Senator BOB COLLINS—Did I see a press statement from the Minister for Transport in New South Wales saying that the delays in getting the project going were due to ACT and Commonwealth officials? Mr Gemmell—I do not know whether it was in a press release, but I certainly heard reports and heard the New South Wales minister on the radio saying those things. Senator BOB COLLINS—Yes, that is what it was; it was on the radio. Every time I hear these officials mention who is to blame, I prick my ears up. Am I correct in thinking that he did make a statement saying that about the delays in the project? I said a few very rude things to the car radio when I was driving down Northbourne Avenue listening to this. Is that correct; did I hear him right? Mr Gemmell—He did say that, yes. Senator BOB COLLINS—That it was due to ACT and Commonwealth officials? Mr Gemmell—Yes. Senator BOB COLLINS—Is that correct, from the Commonwealth’s perspective? Mr Gemmell—From this department’s point of view, we do not think we have been particularly the ones to blame for any delays that have occurred in the process. Senator BOB COLLINS—The reason I was curious about that statement was that I found it a little difficult to imagine—there are huge issues of land acquisition and route, all of which are absolutely the responsibility of the respective ACT and New South Wales governments— what responsibility rested with Commonwealth transport officials that would in fact delay consideration of the program. Mr Gemmell—With the study that is under way, there are two Commonwealth departments involved—the Department of Industry, Science and Tourism and us—the ACT government and the New South Wales government. We are all involved with that jointly funded study. Funding is shared between the parties, with the Department of Industry, Science and Tourism providing the Commonwealth contribution and us providing expertise and support to the analysis. Senator BOB COLLINS—Just bear with me; I have been handed a piece of paper. He did actually issue a press release. Have you seen this? The reason I ask whether you have seen it is that it has an attached list to it—chronology of delays. Mr Quinlivan—Yes, I know the one. Senator BOB COLLINS—You are familiar with it? Mr Quinlivan—Yes. I forget the precise detail of the chronology, but I am familiar with the document.

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Senator BOB COLLINS—As far as you are concerned, in terms of your advice to this committee, there is no area where the Commonwealth, in terms of its responsibilities, is dragging its feet or behind the schedule? Mr Quinlivan—No. The principal problem was that it is a small study with a small amount of funds and some people had some very large ambitions for it. There was a good deal of dissatisfaction with the depth and quality of the work, so there has been a lot of revision. But we have been relatively passive players in that. It has been principally a debate between the state and the ACT government. Senator BOB COLLINS—These trains of course are not designed to compete with road transport; they are designed to compete with air transport? Mr Gemmell—The Sydney-Canberra corridor is intended to be a passenger rail corridor. It is certainly intended to compete with rail, but it is also intended to pull people off the road. Senator BOB COLLINS—That is interesting because, in terms of my original understanding of the VFT project, the premium price that you would need to pay for the trip seems to make it fairly uncompetitive with road. It is pitched basically at being competitive with the air services between Sydney and Canberra. Is that correct? Mr Gemmell—That is correct. It is still pitched very much at trying to attract traffic away from air services between Sydney and Canberra, but they also will expect to pull some of the road traffic off that corridor and get people out of the cars and moving rather quickly to Sydney. Senator BOB COLLINS—The federal minister was reported in the Canberra Times this year, talking about infrastructure bonds and other tax incentives as well. He clearly indicated a preference for infrastructure bonds, I might add. The article said: The government was prepared to look at tax incentives, but infrastructure bonds would be an appropriate incentive for private sector projects. Is there any active consideration of tax incentives other than infrastructure bonds? Mr Quinlivan—Not at this stage, nor have any specific proposals come forward from any of the proponents of these trains. Senator BOB COLLINS—You may have already answered my last question on the joint report you just referred to. Is there any timetable on its release? Mr Gemmell—It is likely to be provided to governments shortly. I rather doubt it is going to be released publicly. Mr Quinlivan—There has been some discussion between those governments about the possibility of producing a public document based on what that might be and it is not settled at the moment. Senator BOB COLLINS—I will put in my usual request, more in hope than in any real expectation. Through you, Minister, could a copy be provided, when it is available, to the committee? Mr Quinlivan— Yes. Senator BOB COLLINS—On the budget papers, I noticed the Commonwealth has withdrawn money from Brisbane busway. I do not know what that is. Do you know what it is? Mr Gemmell—It is something to do with the Queensland government, as part of its metropolitan transport strategy, looking at things like a dedicated lane for buses.

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Senator BOB COLLINS—That is right. I can recall what it is now. Was that simply a budget savings decision, or were there other implications? Mr Gemmell—There was no proposal in this area for support for the busways program. It may have been through the better cities program that that was supported. Senator BOB COLLINS—Is the federal department now actively involved in any urban transport issues, or is it essentially the national highways? Mr Gemmell—We are heavily involved in issues that are national highway issues. Things like the western Sydney orbital are hard to disaggregate from an urban issue. Senator BOB COLLINS—Sure. That is what I meant. Are you involved in any urban transport matters that clearly are not connected with the national highway system? Mr Gemmell—We are still engaged in some discussions with the states about road and rail links that impact on urban areas—the airport rail link in Sydney, for example. Senator BOB COLLINS—The particular reason that I ask this is that I noticed last week the Victorian government released a major transport strategy for Melbourne. Is the department involved in that in any way? Mr Bowdler—I am slightly aware of that release, Senator. It was just announced by Minister Brown in Victoria last Thursday. It is a very large document and there are references in there that the Victorian government would be looking for federal support in some of the Melbourne transport corridors. Senator BOB COLLINS—That is why I noted it. Mr Bowdler—As yet, I am not aware of any discussions and proposals, but it could be related to national highway systems. Senator BOB COLLINS—Maybe that is more in hope than in expectation, too. Subprogram 2.3—Australian National Railways Commission Senator BOB COLLINS—What is the situation with the Australian National Railways Commission’s annual accounts and annual report? Mr Neal—It is still under preparation. We have a commission meeting next week where we will have a look at some of the body of the report, but there are still some outstanding matters that have been associated with the accounts that are being clarified with our auditors at present. Senator BOB COLLINS—Does AN have any rolling stock or locomotives in Junee? Mr Neal—Not that I am aware of. Senator BOB COLLINS—Is there any work currently under way or planned to upgrade the Burnie-Wiltshire line? Mr Neal—The Burnie-Wiltshire line currently has a very residual log traffic on the line. It is currently not operable because of some major storm damage caused some three weeks ago. At this stage we are having a look at the traffic potential before we decide whether we are going to return that to traffic. Senator BOB COLLINS—I see. So you have not actually taken a decision as to whether you are going to put— Mr Neal—No at all. When we closed the line we had less than 5,000 tonnes of contracted freight to carry on that track.

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Senator BOB COLLINS—Do you know what the costs were—and I am happy for you to take this on notice if you have not got them with you—for the establishment of the track access unit? Mr Neal—No, I do not. I would need to take that on notice. Senator BOB COLLINS—Are you happy to take that on notice? Mr Neal—Absolutely. Mr Quinlivan—Can I just clarify the meaning of your question, Senator. Do you want the cost of establishing the track access unit? Senator BOB COLLINS—Yes. What it want to find out is whether there was a one-off cost— Mr Quinlivan—Do you mean in terms of setting up a new organisation? Senator BOB COLLINS—Yes, and whether that cost was included in the AN loss for the financial year 1995-96? Mr Quinlivan—It is a very small organisation of about 60 people, so whatever set-up costs there were would have been very minimal. They were borne by Australian National, but the cost would have been very small. Senator BOB COLLINS—Thanks for that. If you could just take the actual cost on notice and provide it to the committee later, I am happy with that. Turning to AN productivity, the turnout figure of $74.3 million is lower than the adjusted estimate of $77.3 million for 1995- 96. Am I correct in suggesting that the outturn figure was lower than the adjusted estimate; that is, $74.3 million as against the adjusted estimate of $77.3 million for 1995-96? Mr Gemmell—The operating loss estimate of $74.34 million was fully expended. There was a $3 million payment of interest bearing advance that was not expended in 1995-96. Senator BOB COLLINS—Thank you. Why was the 1995-96 estimate adjusted from $38 million to $77.3 million? Mr Quinlivan—There were two principal reasons for that. One was the allocation made by the government to fund a redundancy program at Australian National. The other was that, with the introduction of third party operators onto the track and the fact that the track was carrying an uncommercial level of debt, there was a government contribution to offset that uncommercial debt level. That accounts for the majority of the difference. Senator BOB COLLINS—Thank you, that clarifies that. Am I correct in saying that the minister said that the loss for AN would be around $135 million to $148 million; were they the figures that were used? Mr Quinlivan—I am certain he has used numbers of that order, yes. Senator BOB COLLINS—How is that reconciled with the appropriation of $74.3 million? Mr Quinlivan—The government funds Australian National on a cash basis nowadays and has done so for some years—I am not sure how long but it has certainly been funded that way for a couple of years—so there is a significant difference between the actual accounting loss and the government contribution. It does not pick up depreciation charges, new borrowings and so on. Senator BOB COLLINS—Thanks. Does the board need the approval of cabinet to actually sell any of its businesses—just out of curiosity?

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Mr Quinlivan—It would depend on the dimensions of the sale, I would expect. For minor assets, I would have thought ministerial approval and perhaps an exchange of letters within government would be sufficient. For anything greater than— Senator BOB COLLINS—But is there an actual sort of demarcation? Mr Quinlivan—As you know, there is some flexibility in how they are handled. Senator BOB COLLINS—Yes, that will do. I was just interested in this after reading yesterday about some recent legal case work on directions. That is the reason I was asking that question. If that approval was needed, would that approval constitute a direction under section 19 of the act in terms of the sale of assets? Mr Quinlivan—That would probably depend on whether it was a direction under the terms of the AN act, the way in which it was framed and so on. Senator BOB COLLINS—Has there been any application from AN to this point in time for approval to sell any of its businesses to the government? Mr Quinlivan—There has been a discussion between AN and the minister about testing the level of interest in the private sector in parts of the business. Senator BOB COLLINS—Is that being done by advertising at the moment? Mr Quinlivan—There were plans to advertise for expressions of interest in parts of the business, as you know— Senator BOB COLLINS—I saw those, yes. Mr Quinlivan—They were withdrawn at the request of the South Australian government, which has made representations and sought an opportunity for further consultation before the advertisements are placed. Senator BOB COLLINS—That is the reason I asked the question. Again, I suppose it is different strokes for different folks. I guess this is more properly a question for the minister, but the officers may want to answer it. I was frankly astonished when I saw the ads, considering the implications for South Australia, which are significant, as you know. Is it a fact—and I am only looking for facts—that those ads were placed without any formal consultation with the South Australian government to your knowledge? Mr Quinlivan—The advertisements did not appear in the newspaper. Senator BOB COLLINS—No, the fact that expressions of interest were being called for, was that proceeded by formal discussions with the South Australian government? Mr Quinlivan—There were some discussions with the South Australian government. Its view in the end was that it would prefer to talk further under the terms of the transfer agreement and hence the withdrawal of the advertisements. Senator BOB COLLINS—I see, in terms of the actual transfer agreement itself. Mr Quinlivan—Yes. Senator BOB COLLINS—Unfortunately, I do not have the letter but I read it yesterday. It was from the minister to Jack Smorgon. In that letter, there was a reference from Mr Smorgan to the minister. Is it possible for the committee to get a copy of that letter? Mr Quinlivan—If it is correspondence between the commission and the minister, we would have to take that up with the minister. Senator BOB COLLINS—Can you take that on notice?

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Mr Gemmell—Could you be a little clearer about what you are asking? There is quite a range of correspondence that occurs between— Senator BOB COLLINS—It is the one that was tabled in the House of Representatives. Mr Quinlivan—The letter that initiated the one that was tabled: that is what you are referring, is it not? Senator BOB COLLINS—Yes. A letter was tabled yesterday, I think, in the House of Representatives from the minister to Jack Smorgon. In that letter, there was a reference to another letter. I put in the request—and you can take it on notice—for the committee to get a copy of that letter referred to in the letter that is already tabled. The most up-to-date corporate plan provided by AN to the government, is that in the public domain? Mr Gemmell—No, Senator, it is not in the public domain. Senator BOB COLLINS—Oh dear! Can I ask the minister for a copy of the corporate plan to be provided to the committee, and for the minister to consider that? Mr Gemmell—I will refer it to the minister. Senator BOB COLLINS—Has the corporate plan been altered since the election? Mr Quinlivan—The plan was endorsed by the federal government in September last year and has not been supplanted by another corporate plan. Senator BOB COLLINS—Oh good! I am relieved to hear. What job losses are set out in the enterprise bargaining agreement between AN and its workers that was signed last November? Mr Neal—I would have to take the exact figure on notice. I cannot remember. There certainly was a figure in there but it was also a qualified figure that said that it would be varied. It was not written in stone and it would depend on the marketing success of the individual businesses. Senator BOB COLLINS—Thank you. Is it possible for the committee to be provided with a copy of that agreement? Mr Neal—I think it is a public document, anyway, under the Industrial Relations Act. Senator BOB COLLINS—I think it is, but again I do not want to nail you down. Could have a look at it and, if it is appropriate, could you provide it to the committee? I understand that the Brew report, provided exclusively to Senator Abetz in Tasmania and no-one else, said, ‘Transfer of the Tasmanian rail system to the Tasmanian government with a negotiated adjustment to the states financial assistance grants so as to reflect a sunsetted subsidy payment so long as Tasmania continues to meet the terms and conditions of competition policy agreement.’ Can you explain to me what that means? Mr Quinlivan—I think I would probably need those words in front of me to do that. Senator BOB COLLINS—That is not a clause in the Brew report that is burned in your memory. Mr Quinlivan—No, although some elements of it seem familiar. But I would like see the words before me. Senator BOB COLLINS—It has been stated: . . . transfer of the Tasmanian rail system to the Tasmanian government with a negotiated adjustment to the states financial assistance grants (FAGs) so as to reflect a sunsetted subsidy payment so long as Tasmania continues to meet—

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I think I know what it means— the terms and conditions of the competition policy agreement between the states and the Commonwealth. Does that strike a chord in your memory? Mr Quinlivan—It sounds okay. The first part of it is just saying that the Tasrail operating loss at the moment, which is funded by AN, influences Tasmania’s FAGs. So obviously if there is a change of ownership, there would need to be some adjustment to FAGs. The second part of it I assume is saying that Tasmania would only receive its competition payments under the competition principles agreement in the event that it complies with the obligations under that agreement to provide third party access to the track when it becomes the owner of it. I assume that is what that paragraph means. Senator BOB COLLINS—That was my assumption too. I noted that that was not in the copy of the document that was tabled in the Senate. Are you aware of any formal discussions that have taken place on this issue between the Commonwealth and the Tasmanian government? Mr Quinlivan—There have been informal discussions at a ministerial level and at officials level, but there have been no formal discussions yet. Principally, the reason for that is that the Commonwealth has yet to settle its position on FAGs. Senator BOB COLLINS—Has discussion on a similar arrangement to the one we have just discussed with Tasmania been had with the South Australian government? Mr Quinlivan—The discussions, whilst still informal, have been slightly more expansive with South Australia, given that it is a much bigger issue for South Australia than for Tasmania obviously. Senator BOB COLLINS—Can you provide the committee with a breakdown of the profitability of each of AN’s businesses? I do not expect you to do that now, but is that possible? Mr Neal—I will take the question on notice. Senator BOB COLLINS—Was there a reference in the Brew report to the profitability of the Murray Lands mid-north grain lines and the Eyre Peninsula lines? Mr Quinlivan—Yes. Senator BOB COLLINS—Do those lines make a profit for AN? Mr Quinlivan—My understanding, which I am confident is reflected in the Brew report, is that the Eyre Peninsula operation is slightly profitable before interest charges and slightly unprofitable after interest charges. The Murray Lands grain lines are not profitable before interest. Senator BOB COLLINS—In respect of that question—and I will not press you any further on the detail—just for the last two financial years, can you provide information on notice to the committee in relation to those operations? Mr Quinlivan—I will take that notice. Senator BOB COLLINS—Is there any particular reason why that reference was not in the copy of the documents that were tabled in the Senate? Mr Quinlivan—The precise information has some commercial sensitivity. If indeed the government chooses to either transfer those operations to South Australia or to sell them to the private sector, that information is commercially sensitive.

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Senator BOB COLLINS—Do you know what the Brew report cost? Mr Quinlivan—You asked earlier about the cost of the KPMG— Senator BOB COLLINS—That was $100,000. Mr Quinlivan—The all-up cost was about half as much again. I think $140,000 was the total cost, or thereabouts. Senator BOB COLLINS—It sounds fairly modest. Mr Quinlivan—It was, yes. Senator BOB COLLINS—Did that come out of the department? Mr Quinlivan—It did. Senator BOB COLLINS—In the minister’s press statement of 11 September in respect of AN, there was a chart entitled ‘Future burden of AN: no policy change’. Are you familiar with that? Mr Quinlivan—Yes, I am. Senator BOB COLLINS—Can you explain what was meant by ‘no policy change’? Mr Quinlivan—The notion here was that the government made no changes to the capital structure of AN, it disposed of no businesses, but that the competitive forces developing in industry continued to affect AN in the way they are at the moment—and I think an assumption here is that at least one of those businesses closed. Senator BOB COLLINS—How do the financial parameters for 2000 and 2001 compare with those for the financial year 1995-96? Mr Quinlivan—What precisely do you mean by ‘financial parameters’? Senator BOB COLLINS—Contained in those charts. Mr Quinlivan—Are you asking whether they are both in current years? Senator BOB COLLINS—Yes. Mr Quinlivan—Yes, they were designed to be directly comparable. Senator PANIZZA—Returning to the subject of the Hines Hill rail accident, do I take it that you said the two locomotives belonged to ANR and that they were leased to the National Rail Corporation? Mr Neal—To be absolutely precise, one of the locomotives, the trail locomotive, belonged to Australian National. The lead locomotive belonged to a finance company called Allco, and it was on lease to Australian National for the term of its life. Senator PANIZZA—That is a problem for Australian National. But the one that was yours, the second locomotive which belonged to— Mr Neal—We own that outright; but we own the lease, and we are responsible for the lease over the life of the lease document, for the prime locomotive. So both of them effectively are under our control. Senator PANIZZA—How have you come out of that as far as insurance is concerned? Who was responsible? Mr Neal—At this stage, that is still unresolved between ourselves and National Rail. We will have a look at what we might claim from National Rail. We have had to pay out the lease on the AN locomotive, and that is included in the financial loss for the 1995-96 financial year.

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Senator PANIZZA—How much did you have to pay out then for the residual of the lease? Mr Neal—It was in the order—and I cannot be precise—of $4.2 million. Senator PANIZZA—You say that it is unresolved, so I presume that there is a conflict. Mr Neal—We are pursuing the matter through normal commercial channels, at the present stage, to recover. Senator PANIZZA—That you are pursuing it through the normal channels does not answer my question. Is it the position that it was fully insured, the interest was insured, or is there a conflict over whose responsibility it was to have it insured? Mr Neal—The matter is complicated because, under the terms of setting up of National Rail, it was one of those locomotives nominated by National Rail which we made available to National Rail. It was one of 50 locomotives nominated. Senator PANIZZA—I understand that, yes. So where is the conflict? Mr Neal—I am not aware of the insurance provisions associated with it under that provision. Really it is up to National Rail what insurance they took out on the item. Senator PANIZZA—Then why isn’t the situation completed? Mr Neal—The last I heard—and it comes back to the fact that I am not fully briefed on when the coroner’s report was issued— Senator PANIZZA—I am sure that it was issued about a month ago. It was found to be accidental, was it not? Wasn’t that when a 12-year-old boy was in one of the driving seats. Mr Neal—No, he was not in the driving seat. Senator PANIZZA—That is what the West Australian newspaper said. Mr Neal—The correction is that the people who died, the boy and the driver who died, were in the vestibule behind the cab. They were not in the driving seat. Senator PANIZZA—Excuse me. I know that is where they died, yes. But you know as well as I do that, when they see an impending crash, they slam the brakes on, cut the power and then dive for cover. I know that. I am fully aware of that. But the point is—and I do not want to lengthen the argument—that the newspaper reported that they were in the cabin. I hardly believe that they were back in the vestibule just in the normal course. Mr Neal—The last exchange of correspondence I had from National Rail on this matter when we sent them the bill was to say that, at that stage, their insurers had advised them that the matter was still sub judice; they had not got the results of the coroner’s inquiry. I am not aware that we ever pursued that in the last two to three weeks. Senator PANIZZA—Can I be advised in due course when matters are settled? Mr Neal—Absolutely. Senator PANIZZA—One other thing: do you have a claim from Westrail for any damages for that particular accident? Mr Neal—No. Senator PANIZZA—Are you aware whether NRC has one? Mr Neal—No, I am not aware of any arrangements between National Rail and Westrail. CHAIR—On that issue, if there is any other relevant information, it would be useful if you could get it for us, please.

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Senator BOB COLLINS—Mr Chairman, I do not want to try the patience of the committee too much, and I assure you that this will be my last question. Before the officers leave—and I am sure that they understand the reason I am asking this because there is intense interest; I canvassed this earlier—I wish to ask some questions about the Indian Pacific and the Ghan. There is fairly intense interest in terms of what is likely to happen. Can you advise the committee whether all that upgrading work on the Indian Pacific has been completed? I assume it has been. Mr Neal—It has been completed. Senator BOB COLLINS—Do you know whether the Ghan is still covering its avoidable costs on the run? Is it still keeping its head above water? Mr Neal—It is very close to it, but it is not quite there. Currently we are just commencing a planning process for both of those trains to have a look at what we ought to do to continue them and reduce the burden on the taxpayer of those particular operations. Senator BOB COLLINS—Again I am not expecting you to disclose any confidential information, but I know you are aware of the intense interest from train lovers like myself in these great train journeys. I know how difficult it is to make them profitable. But are you in a position to advise the committee in broad terms of what potential scenarios there are that might be available to keep those great trains operating on their journeys? Mr Neal—I can speak of one broad scenario we are looking at. We believe that we are still operating those trains very much as they were when the Indian Pacific was opened 20 to 25 years ago, and it was really at that stage a transport mode. We believe that, really, it is not a market in which we are trying to compete against coaches or aeroplanes. We are trying to turn those trains into experiential trains. We are looking at whether we slow the trains down and incorporate tours through areas of interest in the outback, visits to the outback—maybe even barbecues in the outback. Senator BOB COLLINS—We used to have those on the Ghan, but not out of choice. Mr Neal—But they were unintentional ones. We are looking at having intentional ones this time. Senator BOB COLLINS—We loved them nevertheless, I can tell you. Mr Neal—Certainly, one of the things we are looking at is slowing it down so that it takes, rather than 22 hours between Adelaide and Alice Springs, perhaps three days. We could have a proper experiential arrangement tied up with some of the local operators. Maybe you could go through Coober Pedy, have a look at the Finke River—some of those things. They are not formulated; they are just ideas at this stage. Senator BOB COLLINS—But there certainly is, you are telling me, a fairly concentrated, positive effort being put into keeping those operations viable. Mr Neal—Yes. Senator BOB COLLINS—In terms of viability, I assume that the Indian Pacific is probably still well off the mark, is it? Mr Neal—In particular, between Adelaide and Sydney it has improved considerably since we have had the refurbishment. During the wild flower season, which is currently on in the west, we are running double-length consists, which are really two trains in one, over to the west. Each time we run the train, it is filled to capacity. Senator BOB COLLINS—Are you still operating conference facilities on those?

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Mr Neal—Where people pay for them, where there is the demand, yes. Senator BOB COLLINS—I am fascinated to hear of those scenarios—and, of course, I will explore these later in some detail. But the reason I make that point is that, some years ago, a detailed survey was done of tourists in respect of Alice Springs to Darwin. One of the things—and it just triggered a memory—that fascinated me about that result was that it was a negative rather than a positive result in who was likely to use a train rather than a bus because of the additional flexibility that was provided by bus tours in stopping off at Hot Springs, and all the rest of it, which, of course, could not be done by train. I am really interested to hear that you are thinking of doing that with the train trips. Thank you. Senator WEST—You have said that the Indian Pacific from Adelaide to Sydney was not terribly profitable. Mr Neal—No, I said that it had improved significantly. Senator WEST—It has improved significantly. I am pleased to hear that. I want to know: what is the future of the Indian Pacific Adelaide-Sydney route being maintained through Broken Hill rather than going the long way around the coast. Mr Neal—The current plans that we are putting in place fundamentally are based on trying to do what we can to improve the operation of the trains as they are. It is my view that, before we try to venture into new territories, we should try to fix what we are doing properly and prove that what we are doing properly we can do well first. Senator WEST—I do not want you to stop going through Broken Hill. My only criticism of the train is perhaps one you have just covered—that, because you leave Sydney of an afternoon and get to the hill the next morning, you miss seeing all of that scenery through the western New South Wales area. Mr Neal—Absolutely. One of the things we would like to do is have a tour around Broken Hill, look at the Menindee Lakes and go through the Blue Mountains in the daytime rather than in the night-time. Senator WEST—The Broken Hill people would love that too. I am sure that the tourist operators there would be more than keen to be involved. Senator BOB COLLINS—I know that it is all romantic and that it is not profitable and that these things are dinosaurs. But I love dinosaurs, and I want to see a few left around the place. Senator Parer—Mr Chairman, I would just check with you that we have now finished 2.3 and that the officers can go. CHAIR—I was just going to come to that particular point. Yes, the officers can go. The leaders’ meeting finished at 2 o’clock and those who wanted to come to ask questions, I believe, have come. Our target now on regional development is to finish up by approximately 6 o’clock, do an hour on primary industry and then break for dinner from 7 o’clock until 8 o’clock. Short adjournment [4.08 p.m.] Program 4—Regional Development Subprogram 4.1—Regional Development CHAIR—I call the committee to order.

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Senator WEST—Can you tell me what projects have been funded under the regional development program since its establishment? Mr Hunter—A large number of projects were funded under the program in a number of categories. You might be interested in the category of infrastructure projects. Under that category, infrastructure which was central and important to a region’s economic development was funded in part by the Commonwealth and in part by other players. Some of it was in the form of capital works and others was in the form of feasibility studies. I would need to take on notice the total number. Senator WEST—Can you tell me what you mean by categories? Mr Hunter—Talking about the regional development program, the various categories of funding were structures funding, which is the funding provided to regional development organisations to support their activities. Then there was funding in a category called strategies, which was funding provided to such organisations to carry out the development of economic strategies for the regions. There was also funding provided for non-infrastructure projects. These were projects designed to meet the sorts of strategic aims identified in the strategies that I mentioned before. Funding was also available for capital projects, which I mentioned earlier. Finally, funding was available for activities which enabled the enhancement of skills of regional leaders. Then there was a further category with the title of partnerships, which was funding for projects with organisations that were capable of generating across a number of regions usually with interest and commitment to regional development. Senator WEST—So all of those have disappeared with the abolition of the department. Mr Hunter—The government has decided not to fund any new projects under the regional development program. In doing so, it has agreed to meet existing commitments under the program. Therefore, there are quite a number of those existing commitments which will continue to receive payments under the terms of the contracts which have been entered into. Senator WEST—What number of regional development organisations have started up and at what stages are they at? I know that some have been operating for some considerable period of time and others were quite literally only on the ground and launched a few weeks before your demise. Mr Hunter—That is correct. In total 45 regional development organisations were approved. Their distribution around Australia was 10 in Victoria, 15 in New South Wales and including the ACT, 11 in Queensland, one in Tasmania and four in South Australia to give a total of 45. Of those, the vast majority was funded for a period of three years. You are also correct in saying that a number only just got off the ground. Senator WEST—So they have their funding for three years? Mr Hunter—Not in every case. Senator WEST—Can you give me a list of names, where they are and how long they have their funding for? Mr Hunter—We will take it on notice. Senator WEST—Thank you. What was the strategies program doing? How many RDOs had strategies funding and subsidy programs going? Mr Hunter—Almost all of them had received funding for strategy development activities. The normal pattern was for a regional development organisation to first develop an interim

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 146 SENATE—Legislation Thursday, 19 September 1996 strategy, which could be done relatively quickly, and normally they were funded for around $15,000 for those purposes. Then RDOs went on to develop full strategies, which usually took a year and perhaps even more because they were fairly rigorous documents, and only a small number of those completed strategy development. A number of RDOS continue to receive funding for their strategy development because the contracts to develop those strategies were entered into prior to the termination of the program in terms of entering new commitments. Senator WEST—Is there any report available from those who have completed their strategies saying what their outcomes are and what they plan their strategies to be? Mr Hunter—Yes. My understanding is that each interim strategy and completed full strategy would have been a public document and available from each regional development organisation. It was certainly a requirement that those documents be provided to us because final payments were contingent upon our assessment of the extent to which those strategies met the guidelines for the program. Senator WEST—And the non-infrastructure part of the program? Mr Hunter—The non-infrastructure projects were for a series of activities. Essentially those activities had to be in line with the priorities identified in the regional strategy and could involve export promotion activities or activities designed to attract additional capital investment to a region. There was really a very broad range approved. Senator WEST—Do we have a list of what was what was approved and who it went to? Mr Hunter—We could provide you with information on the approved non-infrastructure projects. Senator WEST—I would like to know the location of the infrastructure projects and what has been funded. Can you tell me some information about enhancement skills? Mr Garlick—There were a number of elements to the skill enhancement part of the regional development program. For example, regional development organisations could employ a cadet; someone with a university degree freshly out of university who was interested in this field. They would employ them for a period of two years with funding from us as a cadet. They could also employ people with particular expertise on secondment from other organisations if they needed to develop one of the projects that you are referring to. So if they needed some specialist expertise, they could employ someone for a period of six months to help them. So that was regional development organisation specific assistance. Under that element we also provided some more global assistance to develop a range of training programs to do with regional development. A program was put in place with the Queensland government and marketed by them to attract people to existing training institutions to learn through courses on regional development. Senator WEST—How many people were employed under this enhancement skills part of the program. Mr Garlick—I would have to take that question on notice. Senator WEST—I would like to know more details about them. What did the partnership side of the program involve? Mr Garlick—As Mr Hunter mentioned, that was a part of the program that was focused not on the regional development organisations but on, generally, peak organisations—whether they were business, environmental or local government organisations—who have an interest in the way that their business is carried out on a geographic sense and how they might then relate what their general business is to the regions and to the regional development

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Thursday, 19 September 1996 SENATE—Legislation RRA&T 147 organisations. So the funding was provided to those peak organisations. For example, the Chamber of Manufactures, Greening Australia and the Local Government Association were provided with some funding to explore the way that their businesses could perhaps be enhanced by taking a greater regional development focus into account and including the regional development organisations in that. Senator WEST—Are there any results of the work that has been done? Mr Garlick—There are some results from some of the projects that started early in the process. The majority of the projects are a longer run nature. Certainly we could give you information on the progress of those projects, but there are only, I think, two that have been completed in total. Senator WEST—I would appreciate as much detail as you could give me on those. Turning back, I have asked what projects were funded and I have asked where those projects were. I would like to know who was involved in the projects. I would like to know the level of capital funding that was sought for each of the projects and what funding was obtained by each of those projects. I would like to know how that was used and what additional funding was actually leveraged out of industry, state, local government and others for projects. I am aware of a number of projects that were successful in getting money from the Commonwealth. Some got something like $2 million—and I think of the Orana gas pipeline—out of the Commonwealth, but they have leveraged something in excess of $40 million out of AGL. I am interested to see how many more have done things like that. I would appreciate it if you could provide any details plus a description of the successful projects. I also want to know what RDOs had submitted applications for funding under the program prior to its abolition, because I am led to believe—by talking to the communities and RDOs— that there was a whole stack that were part the way through the pipeline. I would like a list of where these projects were located and who was involved in them. Again, I would also like to know what Commonwealth funding was sought and what additional funding was expected to be leveraged out of industry, local government and other potential partners. I would also like a description of those. Mr Hunter—We can provide you with most of that information that you have sought. The qualification is that in many cases, when a proposal is first put forward under the program, the extent of funding which was envisaged from the Commonwealth or from other potential partners in the program was at one set of levels. Then one would go through a series of negotiations to get to an outcome. We will certainly be able to give you information on the amount of funds which are being sought from the Commonwealth, at least in the first place, although not all such funding would have necessarily been forthcoming. Senator WEST—I am aware of that, because I am saying that there is the odd case. Some people obviously thought it was the milch cow and were after getting maximum Common- wealth dollars and not looking to go and get cooperation with other places. I know there was a lot of discussion and negotiation that went on between the department and the organisations in the lead-up to the final grants being given the formal tick of approval. I am wondering how many applications had basically been given tacit approval that, ‘Yes, in the next round of funding, you are right. You have given us all the information we need. There is nothing further to be required.’ How many were at that stage of sitting and waiting? I presume you had only one round of sending out official letters to say, ‘Yes, you have been successful.’ There were no letters to indicate they might be being successful or might be being—

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Mr Hunter—I think that is essentially correct, Senator. Either they were successful or they were still under consideration, largely. For example, with infrastructure projects, the delegation for their approval lay with the minister. Unless and until the minister had agreed to a particular project, then it did not have approval. Naturally, there were processes that took place within the department and, in the case of infrastructure projects, until the minister had agreed to them, they were not agreed. Senator WEST—How many were at the stage of being ready to go across to the minister’s office to be given approval? Mr Hunter—I would have to take that on notice, Senator. Senator WEST—Were there any organisations which, whilst not having formal approval, had been given clear indications that there were no reasons why they could not start to do some sort of lead-up or complementary work? Mr Hunter—I cannot answer that question directly, Senator. In managing the organisation, I always sought to make it very clear to officers that, until final approvals had been given and a formal indication of a project had been provided, proponents ought not be led to assume anything. That was the way in which I encouraged our officers to run things so that proponents had certainty as well. It was really only once they had received a letter advising them of formal approval that they knew things would go ahead. Then that was followed by a process of entering into a contract for all the projects which we were funding. Indeed, it would not be until the project was entered into and signed by both parties that funding could flow. Senator WEST—How many had received a letter saying that their project was going to go ahead, but the contracts were not signed because the department was abolished overnight? Mr Hunter—I would need to take that on notice, Senator. Senator WEST—If there were some, I would like a list of all of those who had received a letter saying they were successful. I would like to know more details about the project. I would also like to know what planning and expenditure they may have incurred after they had received the letter of approval and the contract failed to be signed. You may not have any ideas. Mr Hunter—You would appreciate that may be a very difficult question for us to answer. We would always have encouraged organisations not to enter into any commitments until the contracts were signed. Senator WEST—I could imagine, if someone received a letter from the minister saying, ‘You have been successful and the contracts will be coming along shortly,’ that they would feel fairly safe in undertaking some preliminary planning work and not just sitting on their hands and saying, ‘Oh dear, we will have to wait until this date before we can do anything.’ The other thing is, had any of the projects received the letter of approval and had one signatory to the contract and not the two signatories that were required? Mr Hunter—We will find that out for you as well. Senator WEST—And names and where they are, please, if that has been the case. CHAIR—In terms of getting details from organisations that are scattered all round the countryside, that would be a very difficult exercise, would it not? Mr Hunter—I agree. I qualified my answer to the senator before by saying that it would probably be beyond us to be able to provide information on the extent to which individual,

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Thursday, 19 September 1996 SENATE—Legislation RRA&T 149 regional development organisations had engaged in activities and the expectation of a contract being finalised. Senator WEST—I appreciate that. Have you any idea what the impact of the abolition of the program might have been in terms of the effect upon the long-term planning of some of the projects that had previously been funded? Some of them were part of a whole structure and being staged. Has any work been done or has anything been looked at? Mr Hunter—The first thing I should say is that the government has indicated that it will meet the commitments which have been entered into under the program. Therefore, projects which had already been commenced and for which contracts had been signed will proceed. The only situation that might arise is where funding is provided, for example, for a feasibility study. But funding is only provided for a feasibility study. That is what the contract provided for. I am not aware of commitments having been entered into for anything which was contingent upon the outcome of a feasibility study. Senator WEST—You are not aware of any approval being given or anything funded that was a staged program? Say, they have funding for stage 1 and they have completed it but now the program has ended. Mr Hunter—The feasibility study is the only one I can think of. Senator WEST—Were any of these potential problems—the issues of the impact upon those programs that were part way through the pipeline or for which there had been feasibility studies done—taken into account when the department was abolished? Mr Hunter—The department was not abolished. Senator WEST—It ceased to be transport and regional development. There is basically no transport. Mr Bowdler—The department remains the Department of Transport and Regional Development. The regional development division was abolished as part of a decision. There is no planned change to the title of the department as far as I am aware. Senator WEST—That is an interesting question. The regional development branch has been abolished but you are maintaining it in the title of the department. Who is going to do regional development work or is no regional development work going to be done? Mr Bowdler—The regional development division has been abolished. There will be some ongoing work. A small regional development unit is being formed. That will carry on some ongoing work in the regional area. Senator WEST—There were in excess of 200 people in the former division, weren’t there? Mr Ellis—Yes, there were around 220 people. Senator WEST—How big is the unit going to be—staff size? Mr Hunter—The unit is being set up and it is around about six people. Senator WEST—It would be very helpful for us if we had a break down of position levels that are in that unit. I presume as a division you had senior executive leading it. What is the head level of the unit going to be? Mr Hunter—The arrangements that we are putting into place at the moment for the Regional Affairs Unit is that that unit will report to me. It will be staffed by six officers. Obviously it is smaller in size but it will still report through me as a senior executive officer. Senator WEST—You are in what particular area?

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Mr Hunter—I am now the director of the Bureau of Transport and Communications Economics but I will also continue to have a role in relation to regional development. Senator WEST—It is now being called the Regional Affairs Unit rather than regional development. Mr Hunter—That’s correct. Senator WEST—What is the role of the unit going to be then? Mr Hunter—The principal aspect of that initially will be to assist and advise the minister and the parliamentary secretary in terms of a range of regional development initiatives which they have identified, particularly in the document released at the time of the budget in relation to regional Australia. Principal amongst those, we will be supporting the role of the minister in the regional affairs ministerial working group, which was announced at that time. We will also be supporting the minister in terms of facilitation of regional projects, which was mentioned in the budget document. We will be supporting the minister in the participation of the Commonwealth in the regional development ministers council and providing support in relation to the funding which has been provided in the budget—to continue the $5 million for this year and next financial year for regional projects. There will be a range of other activities as well. In the longer term, once the wind down of the regional development division and the regional development program itself has completed, any residual activities associated with that will then be transferred to that unit also. Senator WEST—You talked about the facilitation of the regional program. The regional program is obviously taking a pretty major change in direction, emphasis and appearance. Mr Hunter—If I were to characterise it, it is a move away from a program approach to one which is more of facilitation and in particular approaches regional development at a national level. The sorts of activities would focus on what can be done by the Commonwealth government in particular to make its activities more sensitive to the needs of regions, for example. Senator WEST—What can be done within the Commonwealth government to make— Mr Hunter—To give an example, I mentioned the ministerial working group on regional affairs. I would imagine that one of the ways in which we could support that working group would be to look at a range of issues about the way in which Commonwealth programs are designed and delivered and the way in which they impact upon the economic development of regional Australia—working within government to seek to make it sensitive to those sorts of needs. Senator WEST—I thought part of the Department of Primary Industries and Energy kept a brief on some of this, too. Mr Hunter—From the perspective of primary industries, yes. The brief I was talking about was economic development broadly. We would expect to work very closely with departments such as the Department of Primary Industries and Energy in that sort of work. Senator WEST—With a staff of six you would not be doing much more than keeping a watching brief anyway, would you? Mr Hunter—I would anticipate that we are able to serve the ministerial working group effectively with that sort of staffing and to do a lot of other things besides. Senator WEST—The $5 million that you said was there, what is that going to be available for?

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Mr Hunter—The criteria for the application of those funds are under consideration by the government. Senator WEST—So we have no idea at all whether it is going to fund projects or feasibility studies or keep the regional development organisations going or what. Mr Hunter—I don’t think in advance of the government considering the criteria it would be reasonable for me to speculate about how the funds will be used. Senator WEST—So the government at this stage has not considered the criteria, minister? Senator Parer—The only information that I have is that the funding criteria will be developed to ensure that both regions and government derive maximum benefit from projects. I support what Mr Hunter has said. The criteria is currently under discussion with the minister. Senator WEST—What areas is it being discussed in? I am not asking for the advice that has been given or anything like that. I am just wanting to know who is involved with the discussions and the formulation of this. Mr Hunter—At this stage we have provided some preliminary advice to the parliamentary secretary and to the minister about what sort of criteria might apply to those funds. That is as far as we have got though. Senator WEST—I might want to come back to that when I have thought about it all the next time around. How much money remains for allocation in the program, the RDP? Mr Hunter—There is a total of about $80 million to fund existing program commitments under the regional development and urban programs. In relation to the regional development program itself, I might pass over to my colleague to take you through the funds which have been committed. Mr Garlick—The budget provided in total, as my colleague mentioned, for both the regional development program and urban programs, which includes the better cities program, a total of $80.16 million for this financial year and $5.736 million for next financial year. For the regional economic development program it is $27.3 million for this year and $5.7 million for next year. Those funds are for existing contractual commitments—those projects that have signed contracts in place. Senator WEST—So that money will cover that only and there will be no spare cash. What happens if, after the signing of the contract and the money has been allocated, the program falls over? What will happen to that money? Will that be reallocated to another organisation? Mr Hunter—Let me give you an example. For the regional development organisations we have offered to continue providing them with the funds according to the structures contracts that we have with them or the option, if they wish, of not continuing with those contracts. If a regional development organisation, for example, folded or decided to discontinue operations part of the way through its life, the various reporting and accountability arrangements that we will have in place would enable us to recover the funds or not pay out the next payment, as the case may be, to meet that sort of circumstance. Senator WEST—If you do not have to pay out all of the $27.3 million this financial year and the $5.7 million the following, what happens to the balance that is not paid out if regional development organisations opt not to continue with their contracts and they just say, ‘Right, that’s it, close up shop, go home, here’s your money back’? What happens to that money? Is that reallocated out to existing RDOs?

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Mr Hunter—We have quite a number of individual program elements for which there are commitments in place and for which funding has been provided. We will need to manage between those. We are not anticipating, by definition, any unexpected expenditure. It is a process that will need to be managed as we go through the next two years of things being wound up. If there is underexpenditure, my understanding of the normal government processes is that if within a program there isn’t a call upon that expenditure within the criteria which are approved by the government for that program, we would declare that as a saving. Senator WEST—Given that you are only going to honour existing contracts, that therefore is the criteria and you wouldn’t be looking at that money going to other projects that might still be in the pipeline. Mr Hunter—Essentially, that is correct. If there was any sizeable amount of underexpenditure as a result of programs not proceeding or whatever, it would be a matter for government to consider what it did with the funds. Mr Bowdler—There is again that $5 million we talked about just a while ago that is available for new projects. They are the sample figures that Mr Garlic and Mr Hunter gave. Senator WEST—At this stage, we do not know what the criteria for their use is. Mr Bowdler—That is right. Senator WEST—Or even what the evaluation, the selection processes and the eligibility are going to be. All of that is still yet to be decided. How much was in this program for grants to go out in the last financial year? Mr Hunter—I am looking at page 56 of the PBS. After the initial estimates are processed for 1995-96, it would have been a total of $18 million for regional economic development and $22.7 million for the infrastructure projects. So about $40-and-a-bit million. Senator WEST—So we are dropping from $40-and-a-bit million to $5 million. Mr Hunter—No. Because, of that $40 million, a significant amount will be spent on commitments which were entered into. Senator WEST—I am not disagreeing with that. But we are dropping from $40-plus million in the last financial year down to $5 million in this financial year. Mr Garlick—It was $27.3 million for this financial year and $5 million for next financial year. Senator WEST—Okay. Is that $5 million going to be for projects, or is administration going to have to come out of that, too? Mr Hunter—The $5 million that has been allocated for next year is program money, so that would not include running costs. Senator WEST—Have all of the project applicants been informed of the outcome of their applications? There were a whole lot of RDP applications with you on 17 July. How many of those who had applications in at 17 July have been advised formally of the outcome of their applications? Mr Hunter—We have sought to give information to every applicant about the status of their application. Senator WEST—I know that the chairs of the regional development organisations have been written to by the minister, but that did not give a great deal of information. I am just wondering whether there has been formal information sent by letter to all of those who had applications in to say yes, no or what the future is.

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Mr Garlick—Yes, there has been, Senator. That was a letter from Senator Tambling with a schedule attached to the letter from the department outlining what we understood to be their contractual commitments. Senator WEST—The minister put out a press release in closing down the RDP on 17 July, which said: Current arrangements for Regional Development and Urban management overlap with State and local Governments which have their own urban infrastructure and local Government reform programs. Have any state or local government bodies been asked to take over functions previously performed by the state under the RDP? Mr Garlick—Senator Tambling wrote to all of the regional development organisations—he wrote to the state government at the same time—putting forward a number of options for the regional development organisations. Option one was that they could end their operations. Option two was that they might consider folding their operations in with an existing state or local regional organisation. Option three was to continue on as they currently were. In the event that option two—that is, that they wanted to amalgamate their operations with the state or local regional organisation—was taken up, we would have engaged in consultations with the states. At this stage, not one REDO has indicated a preference to go that way. Senator WEST—What about the states? What have they indicated? Mr Garlick—There has been no response from the states. Senator BOB COLLINS—You would be entirely unsurprised at that, Mr Garlick, wouldn’t you? Mr Garlick—Very surprised! Senator WEST—I did not think any of them would want to go. Senator BOB COLLINS—Precisely. Senator WEST—So there has not been any response from any of those. The local governments have indicated as well that they are not interested in taking it over? Mr Garlick—That is correct. It is not that they have not indicated they do not want to take it over, it is just that they have not indicated anything to us. Senator WEST—So that is all local government bodies that you have contacted? Mr Garlick—We have not actually contacted the local government bodies ourselves. There has been correspondence from the Australian Local Government Association to the government. Senator WEST—Yes, I should say local government peak bodies. Mr Garlick—But in that correspondence there has been no volunteering of offering any financial support to the existing regional development organisations. Senator WEST—What are they saying—that they are disappointed? Mr Garlick—Yes, basically. Senator WEST—Is that putting it mildly? Mr Garlick—Yes. Senator WEST—That was the feeling I was getting from them, too. What are the states saying?

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Mr Garlick—I have not actually seen any of the correspondence from the states, so I cannot answer that. Senator WEST—They are not writing but they must be saying things, I suspect. I cannot ask you that; it is not fair. So we know that 220 staff have lost their positions following the closure. Where were all those staff located? Mr Hunter—Some were located in the national office in Canberra and others were located in a series of regional offices both in capital cities and in regional centres around Australia. Senator WEST—All the staff have of course been notified. Where are the regional offices? Mr Hunter—The regional offices of the department were in the following locations: the ACT, Rockhampton, Lismore, Wollongong, Traralgon, Albury, Bunbury, Newcastle, Parramatta, Adelaide, Darwin, Cairns, Melbourne, Dandenong, Perth, Brisbane, Townsville, Hobart and Sydney. Senator WEST—How many of those regional offices—I am talking about the smaller ones, I guess—had basically only regional development staff? Mr Hunter—I would need to take that on notice. It is not completely straightforward. The regional development division was also responsible for the administration of a number of urban programs such as better cities and so on. Senator WEST—Yes, I am aware of that. I will take an all encompassing answer. Have you closed any offices anywhere? Mr Hunter—Yes. The offices which I am aware of— Senator WEST—Can you take on notice the questions relating to what offices you have closed and how many staff out of each of those offices you have lost, please? Mr Hunter—Yes. Senator WEST—Whereabouts in the portfolio or program will the funding be allocated to meet the costs of any redundancy packages? Mr Ellis—In the budget there is a figure of about $12 million to handle the administrative and staffing costs. That includes a component for salaries through this financial year as well as provision for a redundancy program. Right now we are well into a redeployment or redundancy program for those 220 staff. Senator WEST—If the 220 staff do not all take redundancies, what are you going to do with them? Where are they going to go? Mr Ellis—Perhaps if I answer that in a different way. There are some staff who are interested in taking the voluntary redundancy and leaving the service. There is a range of other staff who are looking for jobs within the public service, and we have approached that in two ways. Firstly, we have an internal job swap program within the department where some regional development people take jobs in, say, a transport division and a person in that transport division takes a package, which is still a cost, but the redeployment is done that way. Secondly, we have a similar arrangement with other Commonwealth agencies with those job swap arrangements, plus the fact that some people have obtained jobs through transfers so some people have taken voluntary redundancies. We are handling the 220 people and, at this stage, by my account, there are about 50 people yet to be resolved. Senator WEST—Of that 220, how many of them are actually taking voluntary redundancy?

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Mr Ellis—I will take that on notice and give you a firm figure. It does change day by day because we are dealing with them as individuals and people make up their minds as they go through the process. Senator WEST—When they got the notice that they were getting the chop, I know that the minister and the parliamentary secretary actually delivered the message, what support mechanisms were put in place to support those people? You are getting rid of a division. You are getting rid of 220 people. I know what the reaction was like out at the coalface. It was one of anger, horror, grieving and everything else. That must have been minute in comparison to what was going on in the department. What did you do? Mr Ellis—There are a number of steps. Firstly, we gave us much information as we could to all the people that were affected. At the same time, we set up two wind down teams, one handling the program issues, which is Mr Garlick, and another one to handle the people and infrastructure issues. We encouraged people to use our counselling service. We have a service provider. We provided the opportunity for people to obtain financial counselling. We then followed the provisions through the award in terms of consultation with the respective union. We put people in the actual office to handle the personnel issues on a direct one-to-one basis. We also tried to set up a regular communication channel through a local newsletter. We held a number of all staff meetings in Canberra, and we had a series of regional phone hook-ups for the people out in the regional offices. Throughout that process, we also involved the APS labour market adjustment group in the PSMPC who, once people are declared excess to requirements, help them find redeployment if that is their choice. There is a range of measures like that. I am reasonably confident that those measures were supported by the people who were affected by this decision. Senator WEST—I understand it was an afternoon, what happened? Tell me what happened. I know this might be painful for some people, but I would like to know what the process was. I presume a meeting was called of all staff in Canberra. What happened to those out in the regions? Mr Ellis—There was a phone hook-up immediately after the meeting at our offices at Woden. Mr Bowdler—The secretary to the department informed staff in the regions through the telephone hook-up of what had just been announced to the Canberra based staff. Senator WEST—Did you have your counselling teams there at the announcement? What happened at the announcement? Mr Ellis—No, we did not have counselling teams at the announcement, but we had our senior personnel officer on deck straightaway. Senator WEST—One senior personnel officer, is that right? Mr Ellis—We formed a team. We had the most senior fellow there straightaway and the team formed around him. Senator WEST—How many were in the team? Mr Ellis—It varies. It probably got to about eight or 10 people. Senator WEST—How many people in Woden were being given the chop? Mr Bowdler—There were 137.

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Senator WEST—So when did all these things swing into action? Did they swing into action that afternoon but basically the next day? Mr Ellis—Shortly after the announcement, yes. Senator WEST—‘Shortly after’ as in minutes, hours or what? Mr Ellis—The next day. Senator WEST—What support mechanisms were available in the regional offices for these people when they were told by the secretary over the phone? Mr Ellis—There was nothing physically on the ground in the regional offices. Senator WEST—So you are telling me— Mr Ellis—But the people in the regional offices also had access to the same type of information that flowed to the people in Canberra and also had access to counselling services in their area. Senator BOB COLLINS—Access to what? Senator WEST—Counselling services. When you get the chop, the counselling service comes in. It does not come in on the same day; it comes in a bit later. How many people have availed themselves of the counselling service? Mr Ellis—I do not know— Senator WEST—I do not want to know anything other than numbers. Mr Ellis—We would not have that specific information. The way that we operate our counselling service is that the member of staff can access that service and there is no need to go through the department’s management. It is a direct one-to-one relationship. Senator WEST—So you have no idea how effective or efficient this counselling service has been? You are not measuring or evaluating it at all? Mr Ellis—What I can report is that the people who have been seeking redeployment and taking the options that are open to them have, in general, been kept fully informed about the process. I think the redeployment and redundancy program has been comparatively successful. There would be stress for individuals—this I agree. Senator WEST—It suspect it is more than stress, Mr Ellis; it is actually grief and grieving. Senator BOB COLLINS—Mr Ellis, when you said ‘relatively successful’ I assume that you measure that success by the number of people who were successfully relocated into other employment? Mr Ellis—Yes, I mentioned the 220-odd. By my last count we were not too sure whether around 50 were taking VR or seeking redeployment. Senator WEST—In relation to the whole of the process that you have utilised, the whole of the support mechanisms, is there going to be any evaluation, Mr Bowdler, at the end of this to see if it is the appropriate way to handle massive staff redundancies? Mr Bowdler—Yes, there will be an assessment through the department of how it all worked. A number of people do have an interest in it. I think a project is being undertaken by some senior staff. Mr Ellis—And we are quite happy to share our experiences with other agencies in the service, if that helps them. Senator BOB COLLINS—As to how to do it.

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Senator WEST—Minister, I think you better have a talk to some of your colleagues about getting some better parachutes and safety nets for your staff if you are going to keep putting them off. It sounds to me like there would have been 220 people who were told on the day that they probably did not have a job and they were left with minimal counselling. It is a major life change for people. It is a grief situation. If you talk to any of the psychologists, they will certainly tell you that job loss rates not very much less in trauma and the consequences of that than spouse death. I recognise that the department has obviously done everything that it can to be helpful. Maybe the government is going to become quite expert at it by the time it is finished. Senator BOB COLLINS—I must say that I was intrigued to hear about the way in which this massive sacking occurred. I have heard a number of euphemisms this week in estimates for sacking people, including last night. The departmental officers said that they had farewelled a number of their staff and made it sound almost the nice thing to do. Specifically, in terms of the officers of regional development, I want to raise one story I heard here in Canberra since I have been here this week, which, perhaps, you could confirm. Might I tell you that I am not in any way being critical of the department in terms of how it is handling it, which would be obvious from the questions. Do you know if in fact there was a leadership course being held here in Canberra on 17 July for SES officers and, perhaps, others from the department? Mr Bowdler—That is correct. Senator BOB COLLINS—Where was that? I was told it was here in Canberra. Mr Bowdler—It was being held in the department’s offices. Senator BOB COLLINS—That is what I thought. I have to tell you this story was doing the rounds of this building. It is no joking matter for the people concerned, but it was getting a few wry laughs around here in terms of leadership. Roughly, how many officers were involved in this course? Mr Ellis—About 18 to 20. I should explain, Senator, that this is a program that we are continuing with and— Senator BOB COLLINS—Absolutely. Mr Ellis—That was the first group of SES officers to go through that program. Since then there has been a second group, and, more recently, about the same number—20-odd senior officers. So it is an ongoing program. Senator BOB COLLINS—Can you tell me what the purpose of the course is? Am I correct in saying it is referred to as a leadership course? Mr Bowdler—A leadership program. Senator BOB COLLINS—What is the purpose of it? Mr Ellis—In broad terms, it encourages managers to manage better and to lead their respective teams or their branch or their section. It is a chance for people to stand back and have a look at how they might improve their work in the office. It gives people an opportunity to think how they might do better and to undertake some further reading as well as an on-the- job project to test how they are going. Senator BOB COLLINS—Is it true that on 17 July—at some expense to the Common- wealth, I would imagine, but money well invested—this leadership course, which was designed to teach people to lead better, improve their work and put in a better contribution, was actually

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 158 SENATE—Legislation Thursday, 19 September 1996 interrupted by the minister, accompanied by my colleague from the Northern Territory the parliamentary secretary, Senator Tambling, to tell them all that they had, in fact, been sacked? Mr Bowdler—I will just explain the situation of the day a little better. The leadership program was in the old headquarters of Transport in town. The announcement to staff of the regional and development division was made in Woden offices. The announcement to the leadership program was made by the secretary at that point. The minister and Senator Tambling went into Woden, not into Civic. Senator BOB COLLINS—It was a course, nevertheless, on leadership and improving their work practices, and it was interrupted to tell them all that they had been sacked. Mr Ellis—No, the consultant for the course had set the dates, and they were set six or eight weeks ahead of the actual day. Senator BOB COLLINS—I know that. Mr Ellis—The timing was coincidental in that sense. Senator BOB COLLINS—No, hang on; that was not the question, with respect, Mr Ellis. I understand all that. Is it a fact—I think it is from what Mr Bowdler has just said—that the attendees at the leadership course on that day, 17 July, were interrupted to be told that they no longer had jobs? Mr Ellis—No, that is not quite correct. Senator BOB COLLINS—What is quite correct then? Mr Ellis—The people attending that first program did have their course interrupted to explain the nature of the government’s decision. Senator BOB COLLINS—I like bureaucrats. It is all right. I do—really. ‘The nature of the government’s decision’ means they were out on the street with no jobs. Mr Ellis—The people affected by the decision in terms of regional development included SES officers from that program who were at that course and other people from other parts of the department. Senator BOB COLLINS—You will not be surprised to hear it around this place. Everyone was saying what an extraordinarily brilliant new initiative it was in terms of leadership—get people together and then— Senator WEST—Abolish their situation. Senator BOB COLLINS—Yes. I would have to say that it would be a huge incentive, of course, to improve their work performance rather than to have to look for an entirely new career. Thank you for confirming the accuracy; I know that they are my words, Mr Ellis. ‘Explaining the government’s decision’ is yet another way of saying ‘sacked’. I have heard them. In fact, I am compiling a little book on them this week. I was simply provoked, I might say. I am not having a shot at the department; it has nothing to do with you. It is, in fact, a decision of the government, as you have said. Like a lot of ordinary people, I do get a little irritated with this whole business of outplacement, counselling and all this other nonsense. When you are 40 or 50 years of age and you have dependants, mortgages and all the rest of it, the sack is the bloody sack at the end of the day. Senator WEST—I refer again to the costs for the redundancy packages, which are already in a separate allocation and are not coming out of regional development’s budget. Do we know what the costs are likely to be with the closure of some of the offices as well? There must have been leases on some of those buildings that you occupy and that have closed. I am happy

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Thursday, 19 September 1996 SENATE—Legislation RRA&T 159 to take it on notice, if you can just let us know at a later date. Again, where is that money going to come from? Mr Ellis—There are lease arrangements in each of those locations. We did not own any of the property’s commercial rights. That is one of the things that we are trying to work through now in terms of reducing the cost to the Commonwealth of getting out of those leases. Senator WEST—It is a good time to be trying to get out of leases in some areas, isn’t it? Mr Ellis—It is a challenge. Senator WEST—That is another very nice euphemism. Thank you very much. If you could give us some details on that, it would be very helpful. I now leave regional development, as in out in the bush, and look at better cities and urban issues. I would like a complete list of programs and projects that were funded under better cities mark 1 and 2—where the programs were and how much funding was provided to each. I know some of that might be in some of the previous annual reports and things. I would also like brief descriptions of that. Did any better cities money—mark 1 or mark 2—go to cities other than capital cities? Mr Hunter—Yes, it did—I believe in relation to both better cities 1 and better cities 2. Senator WEST—Can you give me some idea of the proportion allocated to the capital cities vs the non-capital cities? Mr Hunter—I would not have the proportions in relation to capital cities available to me. Senator WEST—I guess I am just interested to see that it did not all go to Sydney and Melbourne and that it did come elsewhere. Mr Hunter—Some would have gone to non-capital cities. Senator WEST—Could you just give me some idea of what and where in relation to those applications, and the amounts that went to each of them as well? Under better cities 2, how many applications for funding had been received but not approved by the time the division hit the wall? Mr Hunter—I think we would need to take that on notice as well. Senator WEST—Also, where those applications were from, the amount that was requested, the nature of each project, and what stage each application reached would be most helpful as well. Mr Hunter—Okay. I should point out that the structure of that program is rather different from the regional development program in the sense that under better cities 2 arrangements took place more directly with the states rather than with individual regional development organisations. Senator WEST—How much funding will be allocated to implement the budget announcement that the government will make data on regional economic performances available at the regional level? Mr Hunter—That has not been settled, but I would envisage that the source of funds for the provision of that data would be from those two lots of $5 million that I mentioned before. The cost of providing that data will depend very much on what data is provided. That will need to be settled over the coming months. As I said before, I believe the source of the funding for that data is likely to be the $5 million this year and next that have been allocated for it. Senator WEST—So that actually reduces the amount available for projects, then.

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Mr Hunter—It is a call on the $5 million. As I said before, the criteria for that is still under consideration by the minister and I am speculating, as I said I wouldn’t, I am sorry. Senator WEST—I was making a comment rather than asking a question. What sort of data? The government does not yet know what sort of data it wants to collect? Mr Hunter—It is a question of establishing what is the most valuable data for regions from the point of view of them understanding their own economic performance and, in particular, being able to measure their economic performance relative to that of other regions. Senator WEST—There is no point in having each region measured differently, is there? You have to have constant measurements across Australia, otherwise you cannot do any comparisons. Mr Hunter—And one has to identify the key data components which would be essential for understanding economic performance. I think there will be a bit of work in that in terms of working with the Australian Bureau of Statistics, for example, and also understanding how regional leaders themselves see their data needs. Senator WEST—So what consultation is going to take place in the lead-up to this data being decided upon? Mr Hunter—I cannot be precise about that, but we are still to settle with the minister a proposal as to how we will go about giving effect to that commitment. Senator WEST—What is going to be the definition of ‘regions’ or ‘regional level’? That is a bit like ‘how long is a piece of string’ is it not? How is that decision going to be made? I am aware of some of the toing and froing that had to go on to get boundaries of the regional development organisations, and they were a little bit elastic because in the rural areas we got local government bodies who had a foot in here and a foot in there because part of their area related to one area and— Mr Hunter—They certainly are different regions for different purposes throughout Australia for administrative purposes, state government purposes and local government purposes. Senator WEST—Are you going to set up another one altogether as well, are you? Mr Hunter—I think that would probably be a good thing to avoid. Senator WEST—I hope so. Mr Hunter—I cannot be precise, but I think we would be sensible to try to seek to use some pre-existing boundaries for the definition of regions for these data purposes. Senator WEST—This is all work that is yet to be done? Mr Hunter—Yes. Senator WEST—How long do you think it is going to take to do? Am I going to be able to come to the next estimates in 12 months time and have you tell me precisely what the regions are and how much has been spent, and all of the information will be flying off the computers? Mr Hunter—I would anticipate that one year would be a reasonable time in which to identify the data sets one sought, the sorts of regions to which one would apply them and to have started on the process of collection, although the process of collection itself will be complex. Senator WEST—Who is going to be collecting? Mr Hunter—I think that is to be settled as well.

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Senator WEST—When do you think funding will commence for this? Mr Hunter—I would be speculating. I have told you where I think we ought to be able to get to in a year, but quite when the point is that you start requiring funds to do that I am not so certain. Senator WEST—You talked earlier about the ministerial working group. Who is involved in that? Mr Hunter—The composition of that is yet to be settled. It is under consideration by the government. Senator WEST—When do anticipate it will be established? Mr Hunter—My estimation of the government’s wish there would be that it be established as quickly as possible. Senator WEST—Minister, does the government have any idea what sort of membership it wants on this working group? Senator Parer—I cannot directly answer that, but Mr Hunter probably can. Mr Hunter—The focus of the ministerial working group on regional affairs, I think in the first instance, would tend to be on issues affecting the economic development of regions and therefore that would be reflected in the composition of the portfolios which were represented at such a working group. Senator WEST—I guess I am wanting to know what sort of bodies you are going to put on it, because it will contain people. Mr Hunter—It is a ministerial working group, so— Senator WEST—So the minister will be the one that sets the criteria for appropriate selection. Mr Hunter—They would be ministers. The intention would be to have ministers responsible for the portfolio areas. For example, if one included trade as a portfolio, Mr Fischer would be there. Senator WEST—So this would be only federal ministers, or would you be including state ministers? Mr Hunter—My understanding is that it is federal ministers. Senator WEST—How will it go about achieving its objective of ensuring that the needs and performances of regional areas are understood? Or are they yet to work that out, too? Mr Hunter—The ministerial working group has not yet been established, so I could only speculate on how it will go about that. I would add that I would see it as part of the role of the regional affairs unit and me to assist the working group to establish its priorities and ways of working. Senator WEST—So presumably your unit will be acting as the secretariat to the working group. Mr Hunter—Whether we put the formal term ‘secretariat’ on it, I am not certain but our role is supporting that group. Senator WEST—Have funds been allocated in the budget for your unit to cover that? Senator ELLISON—Within our internal departmental budget there is money provided to staff that unit.

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Senator WEST—It is not going to come out of the $5 million. Mr Ellis—Not out of programs. Senator WEST—Will the government be responding to the recommendations of the McKinsey report supporting regional leadership unfinished business? Mr Hunter—The McKinsey report has been completed and has been distributed to a large range of players in regional development, regional development organisations themselves and state and local governments. Indeed, the report was directed in particular at providing regional development organisations with suggestions and views about how they might adjust their performance. My understanding is that the government does envisage responding to the report and would naturally wish to do that having got the views of other players on the report, including state governments. Senator WEST—When is it expected that they will be bringing down a response? Mr Hunter—I think it is a bit too early for me to speculate on that. Senator BOB COLLINS—Minister, during the election campaign when I was trampling around regional Australia, I went head to head with your candidates and told everybody until I was blue in the face that your government would not maintain the commitment to regional Australia that we had. Nobody believed me. I kept on getting shoved in my face your policy, literally in a couple of places, which gave an absolutely clear commitment that when in government your party would continue to support the programs of this government in regional development. Is it a fact that the coalition policy produced during the election campaign gave an absolutely unequivocal commitment to maintaining these programs that we are now discussing that are being cut? Senator Parer—As you are aware, the decision is essentially a part of the deficit management strategy. The minister has put out a detailed paper entitled, ‘Rebuilding regional Australia’. I think it came out with the budget papers. It is our belief that we need to address the deficit management strategy, which was forced on us by your government. It is not something people like doing. We did not like doing this but we had no option. That in itself will result in higher national savings, lower interest rates which is important to everyone around Australia whether you are urban or regional, and a more competitive national economy. That is a simple fact. The rebuilding regional Australia program which Minister Sharp has brought down has details in it about improving the delivery of government services, the supermarket to Asia, which is a good project, the ministerial working group, which will incorporate the ministers who have most influence within the regional areas, and overcoming bottlenecks to regional investment with national significance. You have already referred to the McKinsey report and how to improve the services. Senator BOB COLLINS—Thank you for the script; I have heard it before. Senator Parer—I have heard the question before, too. Senator BOB COLLINS—I will still press my question. I will not go over the same old ground of saying that the Prime Minister—no less a person—in an interview broadcast on national television was asked the obvious question about the prospect of finding a larger deficit. I will not even bother to argue about the deficit. Senator Parer—No, let us not get into it.

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Senator BOB COLLINS—No, we are not going to. Leaving that aside, he said that it does not matter what the deficit is, we will maintain our promises. I am not simply raising this to squirrel a few points; I am raising it to get into this nonsense about core and non-core promises. Minister, I can tell you from the hustings, as someone that did tramp around seats in places other than Melbourne and Sydney, that I was constantly being reminded and shown your coalition policy. A great many people when working out who they were going to vote for took a lot of real comfort from your policy. They said that is an unequivocal assurance here that this will not happen. Then we had these extraordinary explanations—real animal farm stuff with a message on the blackboard changed every night—and we got into the business of core and non-core promises. Do you accept that for the people who were living in regional Australia, with an intense interest in the future of regional Australia, considered that the promise you made to maintain the programs for regional Australia were a core promise? Senator Parer—All I can say to you is that I believe the people who live in regional Australia recognise the imperatives of attacking the budget deficit strategy. They took the view that what we eventually did, even though it meant sharing that pain, was done fairly and equitably. I think you would agree with that. Let me say, Mr Chairman, Senator Collins and I can have this debate either here or in the parliament. Senator BOB COLLINS—We can probably have it in both places. Senator Parer—It seems to me that if we are to get through this program we should be looking at the program items. It is not that I am avoiding the debate, but this could go on for hours. Senator BOB COLLINS—I understand that term, minister, but I am one of these people who believes that it is better to have the committee stages of the budget debate in the estimates committees instead of the committee of the whole in the Senate. But I am quite happy to have it in there if we cannot have it in here. I find that breathtaking. Can I remind you of what you just said. You said that you want the debate in here to be confined to the matters that are before us in respect of the budget. Can I ask you with the greatest of respect, do you not consider that one of the biggest single matters that we are dealing with in terms of the budget is the fact that your government has abolished the entire department of regional development in real terms, sacked 220 people and closed down every single regional development program except for the ones that could not be closed down in Australia? Is that not relevant to the budget papers? Senator Parer—Senator, I think we can continue to debate this. Senator BOB COLLINS—Even though you are not prepared to concede it, and you are talking about people accepting it, this is the Townsville bulletin from regional Australia. You might be interested to know media monitors published an analysis of the press reaction to the budget. Senator Parer—I have seen all the reactions to the budget. Senator BOB COLLINS—Fine. There was overwhelming support in the major metropolitan cities, but in the regional press there was about 60 per cent negative reporting on the budget and about 40 per cent positive reporting on the budget. That is a typical example. The Townsville bulletin is the major newspaper of North Queensland mentions the savage axing to hit north.

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I am quoting it for this reason: you are not prepared to acknowledge it, but Senator Ian Macdonald, who is in here this afternoon, is. This is what Senator Ian Macdonald said about this: Liberal Senator Ian Macdonald admitted the Coalition had broken an election promise and expressed disappointment at the decision. Why don’t you just say it? But, and this is a matter of real concern to me, it is the first opportunity I have had to canvass it in parliament and I will do it now. What shocked and really angered me, because it is the first time I have ever seen it in print from a federal government, was this statement that was issued by the minister announcing the decision. This is what he said: Current arrangements for regional development and urban management overlap with state and local governments... and he is talking about the Commonwealth’s involvement in regional development. He said: There is no clear rationale or constitutional basis for Commonwealth involvement... et cetera. But it is that one line that stood out. I happen to believe after 20 years in public life that one of the single biggest and hugest structural problems with this country and its economy and its development is that we in Australia are the most highly urbanised people on the face of the earth and that we need to develop our regions. I have never seen this before from a federal government. For the first time ever, the official policy from the Minister for Regional Development said that as far as he is concerned there is no clear rationale or constitutional basis for Commonwealth involvement in regional development. What fascinated me about the minister’s statement was this: the National Commission of Audit found about the Commonwealth’s involvement—and this is what the bean counters—and I am very familiar with them—Treasury and Finance, my natural enemy and the enemy of regional Australia— Senator WOODLEY—Hear, hear. Senator BOB COLLINS—I knew you would agree with that. This is what the Commission of Audit said: There is no clear rationale or constitutional basis for Commonwealth involvement in regional— The minister’s statement was taken word for word out of the National Commission of Audit. I ask you, Minister—where does this leave the National Party—do you agree with the federal Minister for Transport and Regional Development that: There is no clear rationale or constitutional basis for the Commonwealth government ‘s involvement in regional development. Senator Parer—Can I comment in two ways, and I would like to go back and repeat exactly what I said before. Senator BOB COLLINS—I won’t keep going much longer after this. Senator Parer—I repeat exactly what I said before: we had an imperative to address the deficit management. My belief is that the view across the community was that it was done in a fair and equitable way. I would also be interested, Senator, because I know you are one of the ministers who thought that when Minister Howe came out with this better cities program he was mad, as did Senator Walsh and a whole range of other economic ministers—

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Senator BOB COLLINS—I did not. Senator Parer—Sure, Minister. As far as I know you were one of them. Senator BOB COLLINS—That is an extraordinary assumption considering that the City of Darwin, thanks to the better cities program, was finally going to get rid of the tank farm, which was going to be a huge boost for Darwin and remove an eyesore and a danger from the city. Senator Parer—You supported the original better cities program, did you? Senator BOB COLLINS—I was a member of the government that implemented it. Senator Parer—Your Finance minister didn’t Senator BOB COLLINS—I am not sure that is relevant to my question. Senator Parer—No, no. Senator BOB COLLINS—I want to actually conclude this. I do not want to carry on all night but if— Senator Parer—Let me take— Senator BOB COLLINS—Minister Senator WOODLEY—If we don’t hear you— Senator BOB COLLINS—Minister, for the benefit of the committee, I just want the question answered. I have heard the script before. The question is simple. Does the Senate minister at the table representing the minister—I wish I had the minister here himself, believe me, but I have to do it with you—I cannot do it any better than you do— Senator Parer—You have been doing it for years. Senator BOB COLLINS—Does the minister at the table representing the government here tonight in respect of the Department of Transport and Regional Development agree with the minister’s press statement issued—one of the first that he issued as minister—announcing his first major decision, which was to close down the entire section of regional. He said this: There is no clear rationale or constitutional basis for Commonwealth involvement in regional development. Do you agree with that statement? Senator PARER—You know what that means, Senator, don’t you? Senator BOB COLLINS—Do you agree with the statement? Senator Parer—What it means is that—and one of the things we had to address was duplication that has grown and grown. If you have to address the problems in this country— Senator BOB COLLINS—If something has been duplicated, I will agree to that. That is a separate question. The statement is not connected with duplication. It is a flat statement. I have sourced it, Minister. It comes out of the National Commission of Audit, word for word. But this is the minister’s statement, under his name. This is my last try to get a straight answer. It is a very important question for us in regional Australia, believe me. A lot of people had their hair stand up when they read this. Do you agree that there is no clear rationale or constitutional basis for the Commonwealth government’s involvement in regional development in Australia? Senator Parer—Let me say in response to that that urban infrastructure is the role of state or territory and local government operations, as you would know. That is basically all that the minister is saying.

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Senator BOB COLLINS—As you well know, Minister, it is not. In terms of your concurrence with what the minister has said, I am utterly appalled for the sake of this nation that for the first time, certainly in the 20 years I have been in public life, a Commonwealth government has said that there is no role—that is what it says—for the Commonwealth government to be in regional development, no constitutional basis and no rationale. Senator Parer—I know we will all be trying to get the last word in, but let me say to you that— CHAIR—You have made your point, Senator Collins. Senator BOB COLLINS—It might not worry you in Western Australia, Senator Crane, but it worries us in the Northern Territory. CHAIR—I did not say that. I said that you have made your point. Let us get on with the questioning. I am not debating these things. I am here chairing this meeting. Senator Parer—I am also appalled that we had to address the budget deficit that you people left us with. We had no option. Senator WEST—If the Commonwealth has no clear rationale or constitutional basis for Commonwealth involvement, what is the constitutional basis for local government involvement? The constitution does not recognise local government? Senator Parer—I do not know why I have to lecture you on the three levels of government. Senator WEST—No, I just ask it on the basis of the constitution. Senator Parer—There are three clear levels of government. Senator WEST—Not in the constitution. Senator Parer—And there are certain responsibilities that each of those—of course, there is not in the constitution. In fact, it went to the people in a referendum. Senator WEST—Yes. We supported it; you did not. Senator Parer—If you want me to define what local government is: as it now stands, local government is a creature of the states and had been until they tried to change it with a referendum which did not come off. Senator WEST—I have made my point. Senator Parer—There is a role for each of the three levels of government and that basically points that out. Senator BOB COLLINS—In respect of the minister’s concern about duplication, that is, that these organisations were simply doing things that state or local governments were already doing, do you concede that the REDOs, despite some of them being very young indeed, had produced, in some areas, an outstanding result and had, in fact, attracted substantial new investment into regional Australia. Senator Parer—That question has already been answered by officers at the table. Senator BOB COLLINS—Yes, I know. I am asking it now. Senator Parer—Yes, I agree there were some. There were some that were terrible, too. Senator BOB COLLINS—I understand that, but you recognise that when these REDOs actually received the letter from—as the officer has pointed out correctly—the parliamentary secretary, Senator Tambling, in that letter it said that the REDOs had resulted in some very worthwhile projects being developed and substantial private sector investment being attracted

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Thursday, 19 September 1996 SENATE—Legislation RRA&T 167 to the regions of Australia. That is a fact. Some regional mayors have said they protested about this on national television and enumerated the development in their region, but I am referring you to your statement about avoiding duplication. Don’t you concede, by necessary implication, because it was the REDOs that had attracted this new, substantial investment into regional Australia that, by absolutely necessity, they were not duplicating work that was already being done by state or local government? They were, in fact, filling a whole that was there. There was no duplication, Minister. That is what I am saying to you. CHAIR—I would like to ask the officer at the table or the minister a question. Is it a fact that some REDOs were successful and some were failures? Senator Parer—Yes. Mr Hunter—The report, prepared by McKinsey and company, was a mid-term evaluation of the regional development program. It found a mixed performance. Some had done well and some had not. CHAIR—Thank you. This should be addressed to the minister: the new government had to make policy decisions that involved judgements which not only addressed the deficit problems facing this country but also addressed issues that related to the amount of money the government had available for expenditure, and that is what the government has done. Senator Parer—Yes. Again, I reiterate what I said: regrettably, we had to take hard decisions. There was no option but to take hard decisions. We tried to do it and I think we did achieve that in a very equitable fashion. CHAIR—In terms of the feedback and reporting through both public and private arenas, has it been strongly supported as a necessary course for this country at this particular time? Senator Parer—Yes, and I would have to say that I think that is reflected in the polls that have subsequently come out. I think they felt that something had to be done. In fact, I think I can be fairly confident in saying that, if we had not taken those hard decisions, the public would have deserted us. CHAIR—In terms of the impact of what I would call the general direction in the economy, is it the case that we have seen the first falls in interest rates for a considerable time? Senator Parer—That is the purpose of the whole budget strategy. It is to tackle the budget deficit, to get interest rates down, to keep inflation low, to create an environment for investment which, in its turn, creates real jobs. Senator BOB COLLINS—Mr Chair, I thought you did not want the political debate to continue to save time for the committee. CHAIR—I asked some very specific questions. Senator BOB COLLINS—I will ask a few more just like yours in that area. CHAIR—I have asked about six questions in four hours, or whatever it has been. Senator BOB COLLINS—Could you make the questions a little more leading? I think you are being very subtle. CHAIR—You led into this debate. I just wanted to put the balance on the record, which I have done, and I have no more questions at this point in time. Senator WEST—Thank you. I will finish up very briefly. I am wanting to refer specifically to the funding for flood mitigation program. Where has that gone? It was in better cities, and so on. Where has the funding gone for rural flood mitigation—for instance, in regional towns when the levy banks get fixed up? What is happening with the urban flood mitigation?

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Mr Hunter—The urban flood mitigation program was transferred to the former department of housing and regional development and subsequently to the Department of Transport and Regional Development from the Department of Primary Industries and Energy. As I understand it, the rural elements of flood control and mitigation remained with the Department of Primary Industries and Energy. Senator WEST—Where is urban, now? Mr Hunter—The funding for the urban flood mitigation program was amongst the funding which was terminated in the budget. Senator WEST—So, there is no funding in this budget for any urban flood alleviation problems? Mr Hunter—There is no Commonwealth funding. I should add that the funding which the Commonwealth government provided was in partnership with the states and territories. Senator WEST—Yes, and often local government, as well. Mr Hunter—Yes; that is correct. As I understand it, normally the proportions were for every $1 Commonwealth contribution, it was $2 from local government and $2 from state. Senator WEST—That is right. Senator BOB COLLINS—Are you saying that the Commonwealth’s component has disappeared completely? Mr Hunter—The urban flood mitigation program— Senator WEST—I am sorry; I have a lot more questions now after that. I did not think that was what had happened. Senator BOB COLLINS—I tell you that there are a lot of little nasties in these budget papers that people just do not even know about yet. CHAIR—So, what was the question? Senator BOB COLLINS—Mr Chairman, Senator West’s question was: has the Commonwealth’s contribution gone completely? Senator WEST—And the answer for urban flood mitigation problems is? Mr Hunter—Yes. Senator WEST—Yes, it has. Can you now tell me what constitutes a rural area that would be covered under Primary Industries and Energy and what constitutes an urban area that was previously funded under this? Mr Hunter—I do not have the information available to tell you what would have been defined as the rural areas, because that is the Department of Primary Industries and Energy. So I think it might be sensible for me to take that question on notice. Senator WEST—Yes. I am specifically interested in the central coast of New South Wales, between Newcastle and Sydney. Is that urban or rural? CHAIR—Without trying to be difficult, I think this matter comes under a program for Primary Industries and Energy. Senator WEST—But, Mr Chair, this used to come under regional development. I am trying to elicit from the officers at the table just where the boundaries are so I can tailor the questions that I might want to ask, otherwise I do not have any questions to put on notice because they all related, I thought, to urban flood development. I want to know what I am going to tell—

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Mr Hunter—The urban flood mitigation program contributed to projects which were taking place principally in New South Wales and included metropolitan areas and non-metropolitan areas. So, for example, there were places in non-metropolitan New South Wales which would be affected. Senator WEST—Okay. How are you going to define ‘non-metropolitan’? Does that mean Bathurst? That has a flood mitigation issue. There are buybacks and things going on there. Mr Hunter—I think I would have to take on notice the question of where the particular projects affected by this budget decision are physically located. My understanding is that they focus particularly on cities or towns. Senator WEST—This is the city of Bathurst. I think it is one of those— Mr Hunter—I am not aware of Bathurst being affected but, as I say, I do not have all the information in front of me. Senator WEST—I think Bathurst was one of those 122s, 111s or whatever. Can you take on notice who is in and who is out, if you can tell me that? Mr Hunter—Yes. Senator WEST—In the 1995-96 budget, how much funding was provided for flood mitigation programs in New South Wales? Can you take on notice what the forward estimates were for this year and for ensuing years in last year’s budget? Until I get the list of who is in and who is out, I cannot ask about Gosford city or Bathurst. I am sorry this is taking a bit long, Mr Chair. Minister, can you or somebody else perhaps follow up what impact this is going to have on state and local funding, because of the ratios that were involved in those programs? Will the cutting of this program actually affect what funding the states and local government authorities are going to be able to put in? CHAIR—Can I clarify one point: which program are you talking about? Senator WEST—I am talking about floods—water, the lack thereof or too much. CHAIR—Can you identify the program? Senator WEST—It is in subprogram 4.1. CHAIR—I am not asking this to be difficult. I do not know whether this would help the committee, but I have just found that subprogram 2.1 of the primary industries portfolio contains the ‘Transfer of urban flood mitigation responsibilities between portfolios’. It then goes on to talk about ‘floodplain management’. All I am suggesting is that it could be more appropriate to ask those questions under that subprogram. I am not telling you to not put them on notice. Senator WEST—I am just wanting to sort of throw them up so that, if the department cannot answer them and it is appropriate— Senator BOB COLLINS—I think the officer is about to make a helpful suggestion. Mr Hunter—I was just going say that the distinction that is made between what has been picked up in the urban flood mitigation program and what has continued to be handled by the Department of Primary Industries and Energy is based around towns or cities of 30,000 or more. So 30,000 or above tended to be handled by urban flood mitigation. Senator WEST—That means that Bathurst and Gosford are urban then? Because they have both more than 30,000 population, they are cities. Mr Hunter—I do not have the precise details.

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Senator WEST—I will leave that with you. Mr Hunter—My understanding, for example, is that Bathurst is not. Senator WEST—I am just not sure. It has been getting money. I would appreciate— Mr Hunter—We will answer the question on notice. Senator BOB COLLINS—You know the thrust of what is required. Between you and primary industries or whatever if you could just provide the committee with that information. CHAIR—Thank you. Senator BOB COLLINS—For the advice of the committee I am happy to put the remainder of my questions on regional development issues generally on notice with only one exception for obvious reasons. I have some questions that I want to ask about the most far-flung part of the former empire and these questions relate to the Office of Northern Development. I will conclude on that line of questioning. CHAIR—I have some questions here that have been handed to me by Senator Ferris to the Department of Primary Industries and Energy which she would like to put on notice. If officers and the committee are happy, we will put these questions on notice. [The questions appear at the conclusion of today’s proceedings] Senator BOB COLLINS—Thank you, Mr Okely, for being here. As the chairman has done earlier—and all you can do—I apologise that you have had to wait around for about three days to appear. I am even sorrier about what has happened to the Office of Northern Development. Mr Okely, I say the same thing that I have said to all of the officers. If you think that any of these questions are more appropriate to take on notice, just indicate that and I am happy to do that. Am I correct in my recollection—and I should be, seeing as I got this thing started—that the Office of Northern Development began its work in 1991? Mr Okely—That is correct, Senator. Senator BOB COLLINS—For the advice of the committee, can you just explain in broad terms—and I might continue to use the present tense, inadvertently, knowing that you have effectively disappeared—what the charter of the office has been? Mr Okely—The charter of the office really began in 1991 as effectively an advisory body to the government covering the whole of northern Australia—anything above the 26th parallel. It had a minor research function and a minor analytical function. Essentially, its objective was to provide the government with a northern Australian perspective on the range of government policy across the board. In 1994, when the then Department of Housing and Regional Development assumed responsibility for the Office of Northern Development, the charter changed somewhat in that the office became more responsible for the delivery of a number of programs under that particular portfolio. I include among those the then government’s housing program, its local government development program, the regional development program and the urban development program. So the office became rather heavily program focused on the election of the new government in March. There were indications that the functions of the office would revert to it being a more policy advice oriented organisation—in other words, back to the original charter. That was the direction in which matters were heading. The government took a decision on 17 July in the context of the budget, and the office, as you have pointed out, has closed. In fact, it closed its doors today.

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Senator BOB COLLINS—Mr Okely, can I say that I was not aware of that coincidence. Even though I have known for months since the government announced its decision, I am profoundly unhappy to hear that you have finally actually shut the doors. Could you provide the committee with the suggestions of duplication that have been made all over the place? You do not have to go into gory detail. There have been suggestions also—and I have to say this with a hollow laugh, having been a regional member of parliament for 20 years—that state and local governments have leapt in with great enthusiasm to fill the gap. Could you advise the committee with some broad advice about some of the major economic and social development projects the office has engaged in since it started work in 1991? Mr Okely—It may be best to take that particular question largely on notice. I could provide you with a compendium of achievements of the Office of Northern Development since 1991. One of the major ones has been the negotiation on the Todd River mining exercise. That particular one involved chief executive officer Bill Gray, who proceeded me. The other one was the McArthur River project. I believe the office performed a very significant facilitation function in getting that particular project under way. Senator BOB COLLINS—Is it correct that the McArthur River development—which is a huge development—almost came off the rails on a number of occasions? Might I say in passing that I am grateful, Mr Okely, that you have in fact acknowledged that it was one of your predecessors, Mr Gray, who was operating at the time up there. Is it a fact—as has been publicly acknowledged in the Northern Territory on a number of occasions—that the Office of Northern Development was crucially involved in getting that project back on the rails and started? Mr Okely—My understanding is that there has been public acknowledgment of Mr Gray’s role. Senator BOB COLLINS—Thanks. I accept your suggestions. I do not want you to go into any more detail now, but could you provide the committee for its records with a more detailed list of the involvement of the office since 1991 and the various things that you have been engaged in? How many staff were employed in the office, including yourself? Mr Okely—Prior to the change of government in March, something like 15 staff were employed. Once the government changed, a number of programs went off to other portfolios, and the staff came back to about eight or nine. A couple left subsequent to that. At the time of the announcement on 17 July, the staff was down to eight. Senator BOB COLLINS—I am not interested in going into personalities in terms of individuals here because I will inquire more closely privately afterwards. I simply ask this question in relation to the advice Mr Ellis, I think it was, gave the committee earlier about the success—and I was pleased to hear it—of the programs that are trying to get this huge raft of people into some sort of employment. Do you have any understanding at this stage of how successful those programs have been in getting those Darwin staff—for whom I personally express a vote of gratitude for the contribution they made to the territory’s economic life— back into employment? Mr Okely—It varies obviously by individual, but the staff generally are satisfied with the directions they are taking. Senator BOB COLLINS—I am pleased to hear that. Mr Okely—A number have secured accommodation with other Commonwealth agencies. A number have decided to take voluntary redundancy packages and are seeking employment

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 172 SENATE—Legislation Thursday, 19 September 1996 within the Darwin region. They are territorians; they wish to stay there. My understanding is that I am the only one who is returning to Canberra; the rest are staying in Darwin. So there certainly will not be a loss to the territory. Senator BOB COLLINS—Can you tell me what has happened to your library? You had an extensive library. What has happened to that? Mr Okely—The compendium of books, as it was called, has been dispersed. Part of it has gone to the North Australian Research Unit at the Northern Territory University. Some of it has gone to the territory library. Senator BOB COLLINS—Was a cost involved in that? Mr Okely—No. Senator BOB COLLINS—You better not let Costello know about that; they will take all the bloody books back. So it has been located somewhere where it can do some good. Mr Okely—It has been dispersed, yes; but it certainly has not been thrown out. Senator BOB COLLINS—You said that the office itself has closed. Mr Okely—Yes. Senator BOB COLLINS—Was the lease paid out or was it terminated? It was in NT House, wasn’t it? Mr Okely—It was on the fifth floor of Northern Territory House. My understanding is that the Australian Property Group have negotiated a new tenant and that new tenant is moving in tomorrow. Senator BOB COLLINS—Do you have any knowledge of whether other Commonwealth agencies or Northern Territory agencies are going to provide the same kinds of assistance that the office formerly provided? I realise how difficult the question is. Mr Okely—I am not aware that any particular agency will take over the functions that were performed by the Office of Northern Development. Possibly on the regional development side the Northern Territory government will take up that particular cudgel. Senator BOB COLLINS—May. Mr Okely—May. Senator BOB COLLINS—But there has been no firm indication? Mr Okely—I understand the Northern Territory government has expressed its interest in pursuing regional development rather more robustly than it has in the past. But, it terms of looking across northern Australia as the Office of Northern Development did, there would be no specific agency that will take that function on. Senator BOB COLLINS—Do you or any officer at the table have any knowledge about the northern Australian ministerial council in terms of where that is at? Mr Okely—The Northern Australian Development Council, which was the predecessor I think to any ministerial council, is to my understanding largely moribund. It has to some extent degenerated into a body that organised a conference once every year or two years and there was very little interest in the organisation. I must confess that I do not know what is occurring in the future. Mr Hunter—My understanding is that it is the government’s intention for the northern Australian ministerial council to re-form and meet.

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Senator BOB COLLINS—Mr Okely, I would have to agree with your observation. From my own attendance, I know that we had a few that were getting fairly moribund. I am pleased to hear that that is going to be rejuvenated. Mr Okely, is it a fact that delegates from all over the Northern Territory travelled to Darwin for a regional development forum on 5 June, just shortly before the boom was lowered? You were there, were you not? Mr Hunter—Yes, I was there. Senator BOB COLLINS—So either officer attended. I have an attendees list. That was on 25 June, was it not? Mr Hunter—Yes, that is correct. Senator BOB COLLINS—This forum was organised by the OND, was it not? Mr Okely—It was organised by the chamber of commerce in conjunction with the Northern Territory Local Government Association as a watershed forum, or a forum to determine what was the most appropriate form of regional development organisation in the territory. Senator BOB COLLINS—That is right, I have a copy of Senator Tambling’s speech, who unfortunately could not be personally present. The parliamentary secretary to the department had a speech delivered at that conference, did he not? Mr Okely—Yes, he did. Senator BOB COLLINS—Who actually delivered it? Mr Okely—I delivered the speech Senator BOB COLLINS—He said, among other things, that the forum was an historic watershed meeting on the future of regional development; does that ring a bell? Mr Okely—That rings a bell, Senator. Senator BOB COLLINS—Is it also correct that the forum was told on behalf of the Parliamentary Secretary to the Minister for Transport and Regional Development that the government has come out strongly in support of regional development both before and since the March election? Do you recall that being said? Mr Okely—I recall that being said. Senator BOB COLLINS—It would have been said by you, I presume. Mr Okely—It was said by me on behalf of the department. Senator BOB COLLINS—I might add that I was also in Canberra at the time that this was on and could not attend, otherwise I would have been there too. I understand if you do not want to answer this question, Mr Okely, as I realise the position that you are in. I know most of the people on this list, the people who turned up, and I have great heart for them. The question is this: having the thing called and having been given by the parliamentary secretary of the new government a resounding statement saying that happy days are here again, was there any indication given that, a couple of weeks after that statement was delivered, the entire regional development section of the department was going to be abolished and that the Office of Northern Development was going to be closed down? Mr Hunter—I recall that in the course of that meeting there was some discussion about the amount of funds which would be available to support a regional development organisation in the Northern Territory. My recollection—it is a recollection—is that I did indicate that all things were subject to budgetary allocation.

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Senator BOB COLLINS—That is what good, competent, professional bureaucrats always say. Mr Hunter—I was just doing my job. Senator BOB COLLINS—I think that I just said that. Mr Hunter—My recollection is that I did make that point. Senator BOB COLLINS—Thank you. I want to get into a little bit of detail, Mr Okely, in terms of where these things go. There is a whole range of strategic projects going on, and there is one in particular that I want to ask about. The office, as I understand it, was the coordinating agency for the Commonwealth territory task force on the Wran report recommendations. Is that correct? Mr Okely—That is correct. The Office of Northern Development was the secretariat for that particular exercise. I chaired the joint task group on the follow-up to the Wran committee and Mr Bowdler chaired the interdepartmental committee in Canberra on the follow-up to the Wran committee. Senator BOB COLLINS—The reason I have a keen interest in this is that the Wran committee had a whole range of recommendations for what the Commonwealth could do for the territory, which in round terms amounted to something like $20 million in terms of potential commitments. Given the abolition of the office, can you or any of the other officers explain to me how that will be progressed? Mr Bowdler—We are now in the process of progressing a response to that report. It has been delayed for a number of reasons, including the election, the budget process, et cetera. We are now finalising responses to 77 recommendations. There have been diversions. We are looking to the detailed responses to the 77 recommendations. There was a meeting of the joint task group, which I also attended, in July. We are talking to the Northern Territory government on these matters. We will be reporting further to the parliamentary secretary on this and we are expecting him to make a statement in response to the Wran report. In terms of long-term arrangements, at its last meeting the joint task group did agree to meet again in the new year. We knew at that stage—I think we did anyway—that we were closing down up there. We will have to look to alternate arrangements to provide the secretariat and chair for those meetings. That is something that we will have to settle down the track. We will be still working and talking and cooperating with the Northern Territory government on that range of issues. Senator BOB COLLINS—There are a couple of Aboriginal organisations—the Northern Land Council was one and the east Arnhem business development was another—that were actually progressing examinations of REDOs. I would assume that that would be concluded now. Is that correct? Mr Okely—The individual projects that were being run under the implementation strategy, which was to have finished on 25 June and contributed to that particular meeting, have all been completed. We are in the various stages of getting in final reports. Senator BOB COLLINS—Does that include the ones that were being run by the chamber of commerce and the Northern Territory Local Government Association? Mr Okely—Yes, that is right. Senator BOB COLLINS—I have asked about the Wran report, so I will not canvass that again. I assume that that report will go to the minister at some stage.

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Mr Bowdler—Yes, it will go through the usual process of discussion. In fact, it is doing that now from the point of view of the various portfolios that are contributing to the response. Senator BOB COLLINS—Quite a number of those recommendations have already been adopted. Mr Bowdler—The report has been around for some time now, to be honest. Senator BOB COLLINS—Can you confirm that the Northern Territory government has rejected those recommendations relating to the corporatisation of the Darwin Port Authority, the opening up of the Northern Territory Government Insurance Office to competition and the commercialisation of the Northern Territory’s trade development zone? At this stage they have been officially rejected, haven’t they? Mr Bowdler—I am not aware of what has been publicly stated by the Northern Territory government. I am more aware of the port corporatisation than the other two. In discussions, the Northern Territory officers I have talked to have mentioned that in their view it is important that that port stays in overall government control for the moment. But they have taken quite a few steps towards commercialisation of its operations, et cetera. I am not too sure about the other two items. Senator BOB COLLINS—I am happy if you could take it on notice. There is another little nasty in the budget that took a few weeks to filter through. The strategic roads program for Aboriginal communities was a $15 million program, as I understand it, and $5 million has already been expended: is that correct? Mr Oakley—It was a $15.6 million program over three years—$5.2 in each of those three years was the intention. In the context of the budget the government has decided not to proceed with the two out-years. Senator BOB COLLINS—So the remaining $10 million has now gone? Mr Oakley—Yes, the $10.4 million. Senator BOB COLLINS—Again. do not go into detail, Mr Oakley: what was the $5 million broadly spent on? Mr Oakley—The agreement that was concluded with the Northern Territory government as the implementation managers for that particular program set out a range of works to be done in the first year. Those works were largely to fix up some of the really bad spots on the roads that had been included in the program and to begin some formation work on various parts of the roads in that first year. Senator BOB COLLINS—In conclusion, Mr Oakley, I did not realise this was officially the last day, but as a Northern Territory senator can I thank you and the officers and your predecessors of the department in Darwin for what has been acknowledged by both sides of the political fence up there as an outstanding contribution to the Northern Territory’s development. Mr Oakley—Thank you very much, Senator. I will certainly pass that on to members of staff and— Senator BOB COLLINS—And can I wish you personally the best for whatever you do in the future. Mr Oakley—Thank you very much indeed.

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CHAIR—That concludes consideration of the Department of Transport and Regional Development portfolio. I thank Senator Alston, Senator Parer, John Bowdler and all your staff for their cooperation. Sitting suspended from 6.21 to 6.30 p.m. DEPARTMENT OF PRIMARY INDUSTRIES AND ENERGY Proposed Expenditure, $469,385,000 (Document A). Proposed Expenditure, $331,652,000 (Document B). Expenditure from the Advance to the Minister for Finance, $27,493,987 (Document D). 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 Smart, Acting Executive Director Crops Division Mr Bruce Lilburn, Assistant Secretary, Horticulture Branch Land Resources Division Mr Ross Walker, Acting First Assistant Secretary Mr Peter Thomas, Assistant Secretary Mr Mike Lee, Assistant Secretary Livestock and Pastoral Division Mr Steve Hoare, Acting Assistant Secretary Mr Barry Schick, Assistant Secretary Mr Paul Sutton, Assistant Secretary Australian Bureau of Agricultural and Resource Economics Dr Brian Fisher, Executive Director Mr David Ranham, Corporate Manager Australian Geological Survey Organisation Dr Neil Williams, Executive Director Dr Cliff Samson, Director Australian Plague Locust Commission Dr Gordon Hooper, Director National Registration Authority Mr Greg Hooper, Director Australian Quarantine and Inspection Service Mr Paul Hickey, Executive Director Mr Digby Gascoine, Director Mr Bob Biddle, Director

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Ms Sarah Kahn, Assistant Director Mr Brian Macdonald, Director Mr John Cahill, Director Mr Denis Paterson, Director Mr Tim Carlton, Manager Mr Bill Roberts Dr Bill Hetherington Bureau of Resource Sciences Dr Peter O’Brien, Executive Director Mr Bill Pahl, Assistant Secretary Headquarters Group Mr Ken Matthews, Executive Director Ministerial Coordination Division Ms Venessa Tripp, First Assistant Secretary Corporate Affairs Division Mr George Zuber, First Assistant Secretary Mr Greg Read, Acting Assistant Secretary Corporate Policy Division Mr Dennis Gebbie, Acting First Assistant Secretary HQ Group Support Mr Paul Miller, Acting Group Administrator Rural Division Mr Bernard Wonder, First Assistant Secretary Mr Bruce O’Meagher, Assistant Secretary Mr Bob Calder, Assistant Secretary Mr Onko Kingma, Assistant Secretary Resources and Energy Group Mr Russell Higgins, Executive Director Coal and Minerals Division Mr Mike Holthuyzen, First Assistant Secretary Mr Robert Rawson, Assistant Secretary Electricity and Gas Reform Division Mr Ted Mathews, First Assistant Secretary Mr Chris Lloyd, Acting Assistant Secretary Energy Division Mr Robert Crick, Assistant Secretary Mr Phillip Harrington, Assistant Secretary Australian Fisheries Management Authority

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Mr Richard Stevens, Managing Director Petroleum and Fisheries Division Dr Alison Turner, First Assistant Secretary Mr Rick Pickering, Assistant Secretary Ms Sandy Radke, Manager Department of Finance— Mr Darrell Allen Ms Michelle Foster Mr David Leach CHAIR—I welcome Senator the Hon. Warwick Parer, Senate ministerial representative, officers of the Department of Primary Industries and Energy and associated authorities. Minister, do you wish to make an opening statement? Senator Parer—No, Mr Chairman. Program 1—Industries Development Subprogram 1.1—Livestock and pastoral CHAIR—I understand, Senator Brown, that you would like to open the batting. Welcome to your first hearings of the rural and regional affairs and transport committee. It is a very good committee. Senator BROWN—I want to ask about the diesel fuel rebate scheme. I do that because I note that the Audit Office says in its report this year that when policy issues have arisen most input on this issue has come from you or from Customs. I wonder if you could tell me, from the outset, what the responsibility of the department is in determining policy for the diesel fuel rebate scheme. CHAIR—Could I just make a point here. This department does not have primary carriage of this matter but, Minister, if you wish to make some comments or answer it, that is fine. Senator Parer—I can, Mr Chairman, but that I think comes under subprogram 1.5, not 1.1. Senator BROWN—I am happy to wait. Senator BOB COLLINS—It is primarily the customs department. Senator Parer—It is primarily Customs but we do have an involvement, as you would know. CHAIR—It comes under 1.5, so we shall handle it then. Senator WOODLEY—I want to ask you about live sheep exports because I am particularly concerned about things such as the absence of value adding to that product but, following on from that, I want to ask about issues of animal welfare. Would the department agree that live sheep exports are really very much the export of a raw product without any value adding at all, and does the department believe that value adding to that kind of product would bring far greater economic benefit to Australia? Mr Smart—Value can be obtained in many ways from a product. It can be from processing it in Australia or from shipping it in a form that is of value to the customer. In fact, for example, getting product to the market fresh and unprocessed could provide more value than processing it, so it depends on the economics of the circumstance.

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The live cattle trade is an important trade for Australia. It provides its own form of value. That is what the customers are interested in in the respective markets. In answering your question, no, it depends on the market. Senator WOODLEY—In the report of the Senator Select Committee on Animal Welfare there was a conclusion which said: . . . the government should promote and encourage the expansion of the refrigerated sheepmeat trade to the Middle East and other countries, with the aim of eventually substituting it for the live sheep trade. Would you agree—I guess you would not—with that recommendation? But you can see that I have some incentive for asking that question. How would you react to that recommendation of the committee? Mr Smart—It would depend again on the market. In relation to the export of chilled meat, there has been a whole range of activities in attempting to improve the performance of the industry—whether that be in quality management or indeed in micro-economic in ports and in the processing sector that would help that industry. But my answer again would be that it would depend on the market. Senator WOODLEY—I understand that we have available in Australia now—and you can correct me if I am wrong—people who are suitably qualified from the religious point of view to verify that the animals would be killed in the correct way if we wanted to move to carcass export. Are you aware of that? Mr Schick—Yes, we do have people who are trained and accredited in halal slaughter. As Mr Smart has already said, we can only sell what the market wants to buy, and a great deal of effort has gone into expanding the market for carcass trade, in the Middle East particularly, but there are still demands for live animals. So, in effect, what we are trying to do is satisfy both segments of the demand rather than focus on one and, in a sense, tell the customer what he can have rather than what he wants. Senator WOODLEY—Would the same kinds of arguments apply from your side to live cattle exports or would there be a difference in those two products? Mr Schick—There is a difference in the sense that most of our live cattle trade is going up into Asia and to a substantial extent is being used to develop cattle herds particularly in the Philippines but in other Asian countries as well—Indonesia, Malaysia and so on. So less of the product is going for slaughter. Indeed, there are discriminatory—that is the wrong word, I am sorry—different tariff rates on the animals going into countries. Senator WOODLEY—You can say ‘discriminatory’. I am happy for you to do that. Mr Schick—It may have other connotations, depending on whether they are used for building herds—breeding, in other words—or whether they are used for slaughter. Senator WOODLEY—You may want to take this question on notice, but I understand that there was an increase in exports of frozen sheep carcasses to Saudi Arabia when the live sheep trade was banned. Are you aware of that? Is it possible to get those figures? Mr Schick—I could give you the figures on notice. It is certainly the case that, when the trade was banned to Saudi, export of carcass did develop to a faster degree than hitherto. However, that growth rate has not continued, yet the trade is still not plied with Saudi Arabia. CHAIR—Is it also true that, in the development not necessarily just with Saudi Arabia but with other countries, even with that expansion of trade—I think the graph will show that, while the live sheep trade has stayed relatively static or grown slightly, the carcass trade into the Middle East has grown significantly in the last 10 years—the price received back on the farm

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 180 SENATE—Legislation Thursday, 19 September 1996 by the producer—I declare an interest here because I am a farmer—for mutton is about 50 per cent of what it is for live sheep? Mr Schick—I cannot answer you about price. Senator WOODLEY—Could you take that on notice because that would be useful information to the committee? Mr Schick—Yes. Senator WOODLEY—Could you tell me whether or not we are fulfilling orders for sheepmeat from Europe and the Middle East? This was reported in the 15 February 1996 issue of The Countryman. Mr Schick—I am unaware of orders not being fulfilled. I am very much aware of the fact that we are limited by a quota as to how much product we can put into the European community. In terms of sheep, it is approximately 18,000 tonnes in any one year. Once we reach that quota, the door is closed. In that event, we would have to decline orders. Senator WOODLEY—Can I move on to some issues of welfare for sheep. The Senate Select Committee on Animal Welfare that I quoted before also said: . . . if a decision were to be made on the future of the trade purely on animal welfare grounds, there is enough evidence to stop the trade. Obviously, that is a comment about animal welfare and there are other considerations. I wonder if the department agrees with that particular conclusion. Perhaps it is something you have not thought of. Mr Schick—There has been a changing characteristic in the trade—that is, that mortality rates have been declining progressively and they are now approximately 1.7 per cent. We are optimistic that with further developments those rates can be brought lower. I am not sure of the basis upon which the committee made its finding, but I am not sure I would agree with it in today’s world either. Senator WOODLEY—That answer is helpful. It was the follow-on one, so you have answered me two questions. Are ships which carry live sheep from Australia required to have vets on board? Mr Schick—No, they are not, but they are required to have experienced stockmen on board to manage the animals. Senator WOODLEY—Is it the case that New Zealand ships carrying live sheep do have vets on board their ships? Mr Schick—It is normal practice for one vet to be on board ships plying out of New Zealand. The numbers involved there are considerably less in yearly terms and perhaps there is a cost implication there which they do not face and which we do. Senator WOODLEY—I think you said before that the current death rate during sea voyages has come down. Mr Schick—If I can answer that in two ways: on board ship the current death rate is down to 1¼ per cent, but if you take the death rate between farm and destination—inland transport, conditioning in feedlots, and so on—the figure is in the order of 1.7 or 1.8 per cent. Senator WOODLEY—What are the causes of death. Has any analysis been done of that? Mr Schick—Yes. The major cause is—‘non-feeders’ is the expression in the trade—that sheep refuse to eat. Other causes of particular concern are the weight and age of animals travelling. It has been found that leaner sheep tend to travel more easily than do fat sheep.

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Younger sheep tend to travel more easily than older sheep. The other element is heat exposure, particularly in the Red Sea where temperatures can reach 40 degrees. The problem of heat exposure can be a killing factor for sheep. Senator WOODLEY—How are sheep that die during the voyage disposed of? Mr Schick—I do not know that, Senator. I would have to take that on notice, if you wish. Senator BOB COLLINS—I have a rough idea. Mr Schick—I could make a guess, too, Senator. Senator WOODLEY—I have a couple of questions that probably need to be taken on notice, but the committee would appreciate answers. What is the usual or average stocking density on board ships? Obviously, there are ships of different sizes, so I am talking about sheep per square metre, or however it is measured. Are there guidelines for that? Mr Schick—Yes, there are very strict guidelines which the Australian Maritime Safety Authority applies. I do not have the schedule with me at the moment, but that can be made available. Senator WOODLEY—Could you do that for us? Mr Schick—Yes. Senator WOODLEY—That would be useful. Are the guidelines enforceable? Mr Schick—Yes, they are. Senator WOODLEY—Do you believe there is any reason to revise the guidelines, or review them in the light of the recent fire on board the live sheep carrier the Uniceb? Mr Schick—That certainly is the name of the vessel. In answer to that, the density of the sheep on board had nothing to do with the fire in the engine room which caused the sinking of the Uniceb. It would not have made a great deal of difference to the ultimate result if the sheep were either packed more densely or less densely. So I would say the fire and the accident as a whole had no relationship at all to the density of sheep loaded. Senator BROWN—Does that death rate of 1.4 per cent take into account the recent sinking of that ship? Mr Schick—No, Senator, that does not take that number into account. Senator BROWN—What would the figure be if you did take that into account? Mr Schick—I have not done the calculation. Senator BROWN—Would you be able to supply that to the committee, please? Mr Schick—Yes. Senator BROWN—Does the department deal with the export of wild possums from Tasmania? Mr Schick—No. I assume you are talking about the animal welfare aspects. Senator BROWN—No, I am just talking about the proposals for export of possum meat from Tasmania to markets like Taiwan. Mr Schick—The only way the Commonwealth would become involved is if inspection were required by the importing country. Then there would be a need for inspection and certification to take place. Senator BROWN—So an export licence is not required?

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Mr Schick—I am not aware of that. I suggest that, when quarantine and inspection comes on a little later in the evening, you then ask that question. The people coming later will know the answer. Senator BROWN—I was next going to ask about snakes. Mr Schick—Again I am not in a position to answer that. Senator BROWN—The audit office’s reports say that the department had quite a deal to say about the policy of the diesel fuel rebate. I wonder whether you could tell me what responsibility the department does have in determining that policy, how that policy is designed and achieved, and whether that is set out somewhere that is handy? Senator Parer—You are talking about the audit office before Customs. Senator BROWN—Yes, the 1996 audit office report says that this policy is determined by this department and Customs largely. Senator Parer—Certainly we are involved in the diesel fuel rebate. But I think, as I mentioned earlier, it does come under coal and minerals at 1.5. Senator BROWN—Would you like me to wait until then? Senator Parer—Yes, I think we should follow the programs through logically, if you do not mind, Senator. Senator BROWN—Not at all. CHAIR—We must, because we will then have the right officers, otherwise we will get out of sequence. Senator BROWN—I am showing my ‘greenness’. CHAIR—That is all right. We will help you through. Senator BOB COLLINS—Can you advise the committee of the situation with the department at the moment in respect of running costs? Mr Zuber—Certainly. I do not know if you have our Portfolio Budget Statements in front of you, but— Senator Parer—Mr Chairman, I would just intervene again. I notice that in the programs we have here, we have corporate management and policy under item 4 which covers running costs and staff reductions. Senator BOB COLLINS—I am happy to leave it. Senator Parer—If we follow the logical practice, we should wait until then. CHAIR—Let us stick to 1.1, Livestock and pastoral. Senator BOB COLLINS—What are the allocations currently for BTEC in the Northern Territory? Mr Hoare—Is your question just general? Senator BOB COLLINS—No. I might just say to the officers at the table what I normally say: I am happy obviously to have taken on notice questions of detail. It is just pure parish pump stuff, Mr Hoare, as I am sure you will understand. I would like to know the NT allocations, if you have them. Mr Hoare—Our total budget for BTEC next year is $3.126 million. I will have to take it on notice to give you an exact figure. But the Northern Territory is the bulk of the campaign.

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There is a little bit going on in northern Queensland and a little bit in the Kimberleys, but it is almost all in the Northern Territory. I would have to do a calculation. Senator BOB COLLINS—No, that is close enough; that is fine. CHAIR—That was $3.16 million for the Northern Territory? Mr Hoare—It is $3.126 million for 1996-97. Last year it was $3.327 million. Senator BOB COLLINS—We get most of that—which, of course, is only right too. In last year’s budget papers, an increased allocation was provided for the Northern Territory because of—regrettably—a higher number of outbreaks than had been estimated. Can you provide the committee with details of the outbreaks and the extent to which they have been controlled? Mr Hoare—In 1995 we had eight breakdowns on TB. A ‘breakdown’ is an occurrence, an observance of disease in a herd which has already passed through the campaign. Five of those eight occurred in the Northern Territory. In 1996 to date, we have had three breakdowns of which only one has been in the Northern Territory. In global figures, the breakdowns are small, single figures. We are down to three this year. The target is to achieve the eradication phase by the end of 1997, and we are as confident as we can be that we are on target for that. CHAIR—Was it brucellosis or tuberculosis? Mr Hoare—The campaign is brucellosis and tuberculosis. CHAIR—Yes, I understand the campaign. But which one was it? Mr Hoare—There have been no brucellosis breakdowns since 1991. These are all TB. Senator BOB COLLINS—Did the breakdowns themselves have any impact at all on the overall strategy, or were they small enough in number not to have any impact on that? Mr Hoare—No, there were no strategic changes in the plan. Senator BOB COLLINS—When does the government expect that northern Australia will get down to a level of less than one per cent? Mr Hoare—Our achievement date for eradication is at the end of 1997. Senator BOB COLLINS—What is currently happening with the program in Arnhem Land? In other words, what is happening with the mop-up stuff in the Aboriginal reserves, particularly in respect of buffalo? Mr Hoare—I do not have that with me. I will take it on notice. Senator BOB COLLINS—Yes. As I understand it, to the best of my knowledge it is a pretty successful outcome. It was a problem for many Aboriginal communities using the animals, of course, as an important source of protein. But the last time I checked, I was told that a pretty satisfactory negotiation had been achieved in getting those final problems out. I mention that because it is that particular aspect I would like canvassed. Would you please take that on notice? Mr Hoare—We can give you a detailed position paper on that. Senator BOB COLLINS—Thank you. Under the heading ‘Performance outcomes 1995-96’, the budget papers state: Assistance was provided to ensure the Australian beef industry was not affected by the UK . . . (BSE) event and that access to the UK market was maintained. Could you provide the committee with some details of that assistance?

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Mr Hoare—Certainly. Senator BOB COLLINS—Mr Chairman, does any other member of the committee have questions related specifically to Mr Hoare’s area of expertise? CHAIR—Are there any other questions on the TB and brucellosis problem? Mr Hoare—My bailiwick is animal health and dairy. CHAIR—In answering the question that Senator Collins asked with regard to the BTEC program, will you be giving the figures for all states in Australia as well as those for the Northern Territory? Mr Hoare—We probably can give you the figures for all states. CHAIR—Would you do that on notice, please? Mr Hoare—Yes. Senator BOB COLLINS—I refer to the mention in the budget papers of the assistance provided to ensure that the Australian beef industry was not affected by the BSE event and that access to the UK market was maintained. Is there anyone who can give any detail of that assistance? Mr Schick—To my knowledge, in financial outlays there was no direct assistance given, but there was a great deal of assistance given by way of negotiating with the British authorities to ensure that access was maintained. Indeed, at one stage, the British passed a regulation prohibiting the import of animals, failing to exclude from that regulation animals coming from BSE-free countries. After approximately three weeks of fairly heavy negotiation, we managed to have a second regulation passed which excluded BSE-free countries from that process. So in terms of assistance, it was in kind rather than in dollars. Senator BOB COLLINS—I noted early in the crisis when it was causing severe problems for Great Britain that there was some extraordinarily ill-informed comment here in Australia— comment that grated with me, I have to say—that this could be an advantage for Australia in major markets such as Japan. It may have come from the AMLC, but I heard the comment some time ago that there was a tangible problem in that major market in that—and this is precisely what I would have expected to have happened, I might add—consumers were not making a distinction, which is exactly what you would expect to happen. Can anyone confirm whether that was correct? Mr Schick—Yes, that was correct. In fact, it was not just in that market but in most of the beef markets of Asia, and particularly of Europe, but also in North Africa. There was a general downturn in demand, and the perhaps false expectations of there being an opportunity here were not realised. Senator BOB COLLINS—I will not embarrass anybody here tonight by saying who it was who made that statement; I will save that for the Senate. Sitting suspended from 7.00 p.m. to 8.06 p.m. Senator WOODLEY—Is there a job description or a framework for the new Australian Animal Health Council that you could let us have? Mr Hoare—I can table a document. The Australian Animal Health Council Ltd is a non- profit company limited by guarantee established under Corporations Law, so it is required to have a memorandum of articles and articles of association which are public documents. I believe that I have a spare copy of those documents.

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Senator WOODLEY—Would you please table that? Does that council have a specific role or task to consider the welfare of animals as distinct from health in general? Mr Hoare—No, it is not a welfare regulating body or an interested body in welfare as a subject matter. Animal welfare can be an aspect of commercial performance. So, to the extent that animal welfare interests impact on trade and commercial performance, there is a possibility for the council to be involved from that angle, but it does not have a direct role in animal health. Senator WOODLEY—I understand that there is a committee that advises the minister on animal welfare matters. Is that so? Mr Hoare—Yes, the National Animal Welfare Consultative Committee I believe is the right title. Senator WOODLEY—Do you have any specific costings for that committee, or are they caught up somewhere else? Mr Hoare—The costs of running that committee are in our running costs, as are those of the secretariat staff to support the committee. Senator WOODLEY—And the numbers of staff would be there too? Mr Hoare—Yes. Senator WOODLEY—All right. I wanted to ask some questions about rabbit calicivirus. Is that appropriate? Mr Hoare—Yes, that is our program. Senator WOODLEY—I know there some investigations have beendone into the initial escape of the virus into the general environment. Has there been any report of that investigation? Senator BOB COLLINS—It has nothing to do with the DPIE or CSIRO portfolios. Senator WOODLEY—Could I have a reply from the current government rather than the previous one? Mr Hoare—Technically, that is right. The program on Wardang Island was run by a consortium, but that was managed by CSIRO. You would have to ask CSIRO. CHAIR—Has there been a report brought down on that or not? That was the question that was asked. Mr Hoare—The details are— CHAIR—If you do not know, it does not matter. Senator WOODLEY—If you do not know, I will not press it. Mr Smart—At the time it happened, the proponent committee did review the circumstances, and there was some internal discussion, but it is a CSIRO issue. Senator WOODLEY—I know there was some investigation done. I am asking, again: is there any report available? Was the department convinced that the initial rapid decrease in rabbit numbers led to foxes and cats becoming more predatory on native wildlife? Is there any evidence of that? That was one of the concerns expressed. Mr Smart—It has been a concern. I was not aware of any information out of that accidental release. Senator WOODLEY—So that is not being monitored then?

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Mr Hoare—The program was monitored, but there was no information on prey switching that I am aware of. Senator WOODLEY—Could we get that information? Would that be CSIRO again? Mr Smart—It would be CSIRO, if there was any information gathered. Senator WOODLEY—Is there any further testing being done—I understand that there is— on effects of the virus on native animals? Mr Hoare—Yes. There were extensive tests done at the Australian Animal Health Laboratory. On the basis of those tests, the department’s BRS report has recommended that there is not a concern on that score. Senator WOODLEY—There is a report somewhere on that? Mr Hoare—Yes. We do have a Bureau of Resource Sciences report on the totality of all the research that was done and all the inquiries that were undertaken in the consideration phase of whether to release the virus. Senator WOODLEY—Is it possible to have that tabled? Mr Hoare—I think I have a copy with me. Senator BOB COLLINS—Is it correct that there is an ongoing history on the Tasmanian tiger or devil— Senator WOODLEY—Tasmanian devil—the black one. Senator BOB COLLINS—The one that is not extinct. Senator WOODLEY—The little black one that growls. Mr Hoare—The Tasmanian government is looking further at two animals: Tasmanian devils and spotted quolls. Senator BOB COLLINS—Thank you, Mr Barratt. I think the situation still is that there has been no clearance for the virus to be released in Tasmania? Mr Barratt—The ministerial council has authorised the release for use as a biological control agent. Individual states make the decision. The Tasmanian government will, we expect, delay the decision while they resolve those matters. Senator BROWN—How long did it take to test—[inaudible] Mr Barratt—I cannot answer that question, Senator. Senator BROWN—How long did it take to test the other native species that were tested? Mr Barratt—From my recollection, it was a couple of months. Senator BROWN—That is all? Mr Barratt—It was basically a question of testing for antibodies in the blood of the animal after an injection with the virus. Senator BROWN—And not assessing the impact it has on the animal itself? Contact may give rise to antibodies, but what about the potential effect on the species itself, other than the stimulation of antibodies? Mr Barratt—I am not competent to answer that question. Senator BOB COLLINS—Do we actually have officers from the BRS here? Mr Barratt—They were actually expecting to come on under 2.5, Senator. Senator BOB COLLINS—But they will be here?

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Mr Barratt—Yes. Senator WOODLEY—This might be a 2.5 question, too; you can tell me. Are there other plans under consideration to use other biological control agents for other problems? CHAIR—That would be under 2.5, would it not? Mr Barratt—Yes. Senator WOODLEY—All right. I just have one other set of questions. Is the department aware of whether or not face branding is used on some exported cattle? Mr Schick—Senator, the answer to your question is yes, it is used in a very limited extent in the Northern Territory and Western Australia. If I can add, the Minister for Primary Industries and Energy has written to his counterparts in the states and territories asking them to review that process and those approvals for the use of the face branding technique with a view to its eradication. Senator WOODLEY—Is the practice banned in the other states, then? Mr Schick—In most other states it is banned or it is not used because of economic effects. Senator WOODLEY—Would part of the reason for the minister’s concern be the animal welfare aspect of it, I should assume? Mr Schick—It is the whole reason, Senator. Senator WOODLEY—Is it required for some export market? Mr Schick—Most markets require live cattle to be identified. Face branding is a technique to avoid damaging hides, but it has other effects on animals which are undesirable. Yes, there is a requirement for identifying animals and branding is done in this way. Senator WOODLEY—I understand that it is banned in the USA also. Mr Schick—I will take your word for it, Senator. I don’t know the answer. Senator WOODLEY—I take my researcher’s word for it. It looks as though there is a fair pressure to probably phase it out in Australia? Mr Schick—I think so, Senator, but I should add that its use is very, very limited. Senator WOODLEY—I think that is all I have under 1.1. Senator BOB COLLINS—We finished off, prior to the dinner break, discussing the effect that the mad cow disease had on markets in the UK that were affected by BSE, and I think we were talking about Japan when we concluded. As I understand it, it was confirmed, from memory, that indeed there had been a downturn in the market. Can you provide the committee with advice as to whether this effect was noted in any other markets and, of course, whether there has now been any indication that the concerns are abating to any extent? Mr Schick—I think it is fair to say that in most of Australia’s major beef markets, there was a definite downturn in demand following the outbreak of BSE. In the case of Japan, that downturn was estimated as between 15 and 20 per cent. That situation was, of course, exacerbated by the outbreak of E.coli in Japan, which had a further depressing effect on demand. Senator BOB COLLINS—Is that still the current position with the market? Is it still a soft market? Mr Schick—It is an extremely soft market at the moment, Senator, although in the last week or so I have had reports of orders starting to flow again after a period of no orders at all.

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Senator BOB COLLINS—No orders at all? Mr Schick—For a period the reports were of no orders at all. Senator BOB COLLINS—Thank you very much. The meat industry task force: do you know how many times it has met? In terms of the context of the question, again from memory, I understood it was supposed to report in about three months. Is that correct? Mr Schick—Yes. The task force itself has been working virtually full time, and that has three people. The steering committee has met on about half a dozen occasions during the period of three months. I think the appointment was made in about May and it was due to report by the end of the month. The report has been brought to finality at the present time, so it will report within the sort of time scale that was envisaged. Senator BOB COLLINS—I have some questions on chemical residues as well, which I will ask under subprogram 2.5. Is the government proposing to introduce legislation to vary the stockpile disposal arrangements? Mr Smart—After the wool round table discussion, where agreement was reached on changed arrangements, the minister is to go back to cabinet and, subject to that consideration, introduce legislation. Hopefully that will be next month. Senator BOB COLLINS—Can you advise the committee in broad terms what the government’s decision has been. I do understand in broad terms what it is, but I think it is important for the record tonight. What is it precisely that the government will legislate for? What will the terms of the legislation be in broad terms as it affects the stockpile disposal? Mr Sutton—Senator, the changes to the legislation will probably—presuming that the government accepts the recommendation of the round table, which is not in place at this point— Senator BOB COLLINS—I will take an enormous bet on it with you, if you like. Mr Sutton—The changes are not that extensive. They would merely involve a change to the range of disposal, which is currently 182,000 to 192,000 bales a quarter. Progressively, from 1 January, there will be a minimum of 135,000 bales per quarter to a maximum of 350,000 bales per quarter. Then from 1 July it will drop to 90,000 with the same maximum. There would be some other changes to the act as well. In particular, there would be one to change the objectives set for the Wool International board to operate in such a manner as to recognise the need to maximise overall returns to the wool industry. There would not be the fairly strictly commercial requirements that it currently has to maximise returns from the stockpile specifically. In other words, the Wool International board would be asked to take into account the balance of objectives that it has set for it, not merely the stockpile objectives but also the impact of disposals on the fresh wool market. There could be some other minor changes as well. Senator BOB COLLINS—It is unfortunate. I recognise the politics of the industry at the moment and the difficulties the Wool Council has. Of course this is obviously conditional on cabinet approval, but what is the prospective timetable so far as the legislation is concerned? Mr Sutton—The objective, if the round table recommendation is accepted, is to have it in place by 1 January. So that would require approval before the Christmas rising. Senator BOB COLLINS—Fine. Thank you. Are there ongoing schedules of consultations with the industry on the issue or has that concluded?

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Mr Barratt—That is the last wool round table discussion, Minister. We had one at the start of the process and one to bring this matter to— Senator BOB COLLINS—You can keep calling me that if you like, Mr Barratt. Mr Barratt—Sorry, Senator. Senator BOB COLLINS—It is okay. The minister has done it twice tonight; you can too. What is the current ABARE view of prices over the foreseeable future of 12 months or 18 months? Dr Fisher—We released the current forecasts on Tuesday in the September issue of Australian Commodities. Our current forecast on an eastern indicator basis for this financial year was 620c. Just to give you some basis of comparison, it was 619c last year. So our feeling is that the market is going to be pretty flat through Christmas, and then it will start to pick up into the 1997 calendar year. That is on the assumption that we see more positive growth, particularly in western Europe and Germany. Senator BOB COLLINS—What about the finer wools? Dr Fisher—The prices of finer wools recently have been what has actually held the market up. That little surge we have seen in the last few weeks, which has now abated again, has been principally driven by a little bit of extra demand on the finer end. CHAIR—I just want to clarify a couple of other points for the record. Could you also complete the answer to Senator Collins’s question as to when it is intended that the debt should be wound up as far as the stockpile is concerned. Also, what is the finalisation date as to when the stockpile disposal is to be wound up? Otherwise you only have half the record. Mr Sutton—Sure. The round table recommendation was that the stockpile disposal be completed by the end of the year 2000. The intention would be that that would be a firm target and would be incorporated in the act. There is also an objective that the debt be fully repaid by the end of 1998. On the basis of ABARE modelling, that seems to be a fairly safe assumption. It would not be incorporated in legislation but would be a very firm target set by the government. CHAIR—With regard to that, could you also inform the committee what the average sell-off has to be per quarter to meet that 30 December date in the year 2000. Mr Sutton—I think it is 126,000 bales per quarter. It will depend on the 1 January start, but that is the basic average. CHAIR—That is on that proposal. Senator BOB COLLINS—I want to say, Mr Sutton, that I still have the heretical view and in my opinion—for what it is worth, which is nothing—these changes are not going to make any appreciable difference to the price of wool. I do understand the political pressures inside the organisations. The reason I make that point is that I actually do think the Wool Council has played a very responsible role in this issue for some years now. I have no more questions on the wool industry. Senator PANIZZA—I have a question on wool, carrying on from what Senator Crane was saying about the disposal of the stockpile. You said you would need an average, under this new system, of 125,000 bales a quarter. Is that right? Mr Sutton—About that—126,000. Senator PANIZZA—I, like Senator Collins, did not agree with the changes, as I was a wool grower. Unfortunately, my opinion did not carry. Could you give me an idea about what you

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 190 SENATE—Legislation Thursday, 19 September 1996 think, should the case come, will happen when it comes down to 120,000 bales a quarter and then down to 90,000 by July next year? You are chairman of the committee. If it keeps going at that rate, what is going to happen when you are pushing towards the year 2000 and you might have a bigger stockpile than you had anticipated at the time? Could you give me a scenario as to what might happen? Mr Smart—Obviously, it is not viable to stay at 90 or 126 given the objectives and the timetables. There is an expectation that, at some stage during that process, they could be up above whatever average limit you need to set, up to the 350,000. Senator PANIZZA—Under the old formula, it had to go, but that is about all. Anyhow, carry on. Mr Smart—It would be predicated on the opportunity for Wool International to sell into a rising market at some stage in the future. The main issue at the round table was really, in effect, the need to grow demand and there is an expectation that there will be an opportunity some time in the next two years to sell into a rising market. Senator PANIZZA—Do you consider there to be any greater expectation? The expectation is always there. When was the collapse—1989? But there has been an expectation all along. What makes you think the expectations are going to be more accurate? Mr Smart—This is probably more a question for ABARE than for me, but the demand for wool is very much driven by the pipeline and the stocking policies. You can make some judgments about the levels of retail demand around the world, but it is very much the pipeline that tends to affect the price. If there is a restocking, there could be the possibility of growing demand. Mr Barratt—I think the important point is that, whatever the expectation might be, the people charged with disposal of the stockpile will have a legislated responsibility to complete the disposal and delivery of the stockpile by the end of the year 2000. So they have to manage that business in a way that completes that task. Senator PANIZZA—That is what worries me. As the time approaches you are left with a lot more. I just float that past you. When is machinery supposed to be in place for Wool International Holdings? Mr Sutton—July 1997 is the target date set in the act, but it was not an essential event, if you like. There were a number of considerations as to why decisions were taken not to privatise Wool International early on in the piece; namely, the commercial viability Senator PANIZZA—I am talking about Wool International Holdings. Mr Sutton—Yes. There was no commitment in the act, no reference to Wool International Holdings. I think there is a reference to privatising Wool International. Wool International Holdings is a proposal that emerged I think in 1995 as an opportunity to advance an initiative in forward trading. So there is no obligation in terms of a time frame for privatising Wool International Holdings, but it is a proposal that is being canvassed at the commercial level. The minister is still awaiting the submission of a firm proposal to him. As you know, the second wool round table received an interim report from Mr Warburton foreshadowing that a proposal is likely to come forward in the near future on a forward trading proposal. Senator PANIZZA—Can you give me an idea of how far away the short term future might be? Mr Sutton—It is in the hands of the commercial interests involved in the negotiations. There is a strong interest by our minister in receiving the proposal sooner rather than later. The Wool

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Council would also like to see it sooner rather than later. There is a general expectation, as I said, that a proposal will be submitted in the near future. CHAIR—In view of what was put on the public record, I think it is also fair to say that there are two important disciplines. One is the removal of the debt by a certain date and the other is getting the stockpile down which will ensure, in the commercial operation, that those two targets have to be met. If the price is down there will be more wool sold to meet the debt. If the price is up it will encourage more wool to go to the stockpile. Senator BOB COLLINS—That was the situation we already had. CHAIR—I know it was the situation we already had. We can debate for as long as we like whether it should be 87,000 bales or 95,000 bales, but those two disciplines are still there. Also, there has been a bipartisan approach taken since 1990 to solve the wool problem. I think it is absolutely crucial that the backs of both the debt and the overhang of the stockpile have been broken. So at least we are on the home straight now. Are there any more questions on subprogram 1.1? Senator WOODLEY—Can someone tell me the current number of bales left in the stockpile and the current debt? Mr Sutton—As of 16 August the stockpile was 2.185 million bales and the debt was below $1 billion. CHAIR—Are there any other questions on wool? If not we will move to subprogram 1.1. Subprogram 1.1—Livestock and Pastoral Senator BOB COLLINS—I want to ask a few questions about the dairy industry, particularly a statement issued by the United Dairy Farmers of Victoria on 5 July relating to the finance summit. Mr Hoare, I would not mind asking Dr Fisher to chance his arm on this one. I thought a number of very salient points were made in this press statement. It is headed ‘Finance summit reports simplistic and inaccurate’. Are you familiar with the release? Mr Hoare—No. Senator BOB COLLINS—I will take you through it. I would ask you to contest this statement if you wish. The Australian dairy industry is probably in the best shape it has been in for an awful long time; it is probably one of the most efficient industries in the world. The dairy industry in Victoria was extremely concerned about the reports that were published after the finance summit. The release stated: Reports from the rural finance summit of farming industries with spiralling debt and falling incomes were at best simplistic and in the case of dairyfarming, totally inaccurate and— this is important— a threat to future profitability, United Dairy Farmers of Victoria (UDV) President, Ivan Jones said today. The second paragraph contains the reason for his concern: Mr Jones said a major challenge for dairyfarmers was to secure access to competitively priced finance, and that task was not helped by generalised statements which portrayed all rural industries in a weak light. Mr Jones then goes on to talk about the fact that the industry in Victoria is world competitive, in very good shape. The final paragraph is this: Mr Jones said it was up to individual dairyfarmers to ensure their financiers understood the real picture. That task was not made easier— boy, I can relate to this—

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 192 SENATE—Legislation Thursday, 19 September 1996 when government agencies provided muddled visions based on composite figures across different sectors, only to have those views faithfully reported in the financial press. I am just wondering whether that was drawn to your attention at all? I bet it was drawn to Dr Fisher’s attention. Do you want to comment on that, Dr Fisher? Dr Fisher—Yes, I can help on this. As I recall, I am probably the person that was being quoted rather inaccurately in some press statements. At the summit, we drew a distinction between the performance of the dairy industry and the performance of some of the other broadacre industries, particularly some of the livestock industries that have been under severe pressure since about 1990. The particular point made in my presentation to the debt summit was that, even though debt per farm in the dairy industry has been growing recently, that was due to the fact that the dairy industry was in fact seeking outside capital. It was actually expanding. The dairy industry was in fact confident enough, and the banking sector was confident enough in the dairy industry to allow it to increase its debt financing. That is quite contrary to some of the difficulties we see in the wool industry. It might be useful to the committee if I table the September quarter Australian Commodities, which has a summary of the paper that I presented at the debt summit and some graphs showing those relationships for the different industries. CHAIR—Senator Collins did ask if he could speak to his staff member, and I agreed to that, which is not usual. Senator BOB COLLINS—I am happy to do that. Dr Fisher, I saw the reports referred to, which obviously you did yourself, and the press statement issued by the dairy farmers. Do you or any officer know whether there was any ministerial response to the quite critical tone of the statement? Dr Fisher—I was not approached directly. We have provided detailed information to various media outlets on the actual numbers and what they mean. Mr Matthews—There wasn’t a ministerial response to the media release. Senator BOB COLLINS—I have no further questions on the dairy industry. Senator WOODLEY—I am not sure when it was—it was some months ago, possibly February—but there was a report in the media that the United States was now subsidising dairy products to what we regarded as some of our markets in South-East Asia. Do you have any knowledge of that media report? Was it accurate? Mr Hoare—The US have been subsidising dairy products for a long period. They have a program called the DEIP, the dairy export incentive program. That press release would only have set out the current intentions. In July the US announced the subsidy rates and the amounts of money which will be available for 1996-97. The reality is that currently the market is fairly high. Because the price is high they are not making any subsidised sales for the time being. The scheme is notionally in place. It is practically only a notional program for the time being. Senator WOODLEY—What was the nature of the subsidies? Mr Hoare—I could give you all the figures. They vary; for each product and for each market there is a different subsidy price. We could give that to you. The US has announced that. Senator WOODLEY—It would be useful. Mr Hoare—We could also tell you how many sales have been made.

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Senator WOODLEY—Was there any adverse effect on our export industry because of that? Mr Hoare—The announcement of potential subsidies have always had a depressing effect on buyers. How you can quantify that is a bit difficult? The export prices have been holding up and have not really shown any softening in recent times. Senator WOODLEY—In terms of the amount of product that we export, there was no falling off in the amount of product? Mr Hoare—No. Senator WOODLEY—That is very encouraging news. CHAIR—I would like to ask a question on subprogram 1.1. I am not sure whether I should ask it under landcare. You might even need a bit of notice. In the development of the live cattle trade out of the Northern Territory in the Kimberleys, I am told that because of the turn- off of stock at 15- to 18-months-old, rather than going to 2½-year-olds, it has actually lowered the stocking rates with a better economic return to producers and has had a beneficial environmental impact in the stocking rates. Do you have any information on that? Mr Smart—I think we will have to take that on notice. CHAIR—That completes subprogram 1.1. Subprogram 1.2—Crops Senator WOODLEY—I am interested in the expansion of the sugar industry program, which is an expansion from $2.157 million, I understand, in 1995-96 to $10.483 million in 1996-97. One of the controversial issues that I have been following up is the Walla Weir on the Burnett in Queensland. I am wondering what the state of the environmental study on that is and what the state of that whole program is at this stage. Mr Lilburn—There is an amount of $4.745 million set aside in this financial year for payment in respect of that particular program. I have not got the details as to whether the environmental assessment has been undertaken. We can provide that to you on notice. Senator WOODLEY—Yes, that would be helpful. The other issue that has been fairly controversial is land clearing on farms. I am wondering whether those concerns are being addressed, how they are being addressed and if the department is satisfied that those concerns are being taken up. Mr Lilburn—Each program is subject to an assessment as to the effect on the environment before final approval is given. That is a normal component of the assessment of the program. Senator WOODLEY—Just in terms of irrigation, in particular relating to sugar, I am aware of some water conservation practices being taken up within the sugar industry. Does the department have any opinion about the need for those programs? Do you have any kind of deliberate policy of seeking water conservation within the sugar industry? Mr Lilburn—That is perhaps a land and water management issue rather than one coming within this area. Senator WOODLEY—I might ask under there—some of these things tend to cross over a lot. Thanks very much. Senator BOB COLLINS—The budget statement says that the Commonwealth contribution to the operation of the AHC has been terminated one year earlier than proposed. I quote: . . . the AHC will be able to continue its activities on behalf of levy paying horticultural industries and undertake work on a fee for service basis for other horticultural industries.

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The statement then goes on to say: With the earlier withdrawal of Commonwealth funding the AHC— this is a bit of a challenge, but I am sure you will rise to it— will need to review its current structure and operations and ensure it can meet the requirements for increased industry competitiveness with reduced funding. I am wondering if you might like to reconcile those two paragraphs for me? Mr Lilburn—If you do not mind, I will just have a quick look at the— Senator BOB COLLINS—Yes, chance your arm. The first paragraph says, ‘Not a problem. Despite the fact that this uncaring government has chopped off the funding one year earlier, there’s not going to be a hassle.’ The next paragraph says that the AHC will have to review its current structure and operations to ensure it can meet the requirements. Senator Parer—What page is that? Senator BOB COLLINS—It is on page 33. Mr Smart—I will chance my arm at that, as you say. Both the AHC and the Horticultural Research and Development Corporation are currently reviewing their own operations with a view to assessing whether there is any advantage in their combining and whether any efficiencies can be obtained. There are also discussions within the industry to look at the extension of industry levies to other areas of vegetables. The overall operation of these corporations would be looked at in terms of the review under Horticulture 2000. Senator BOB COLLINS—That is right. What you are saying is that the industries are already looking at that amalgamation, which, of course, has been on the table for some time now. Mr Smart—Yes. Senator BOB COLLINS—I have no difficulty accepting that, Mr Smart. Can you explain, then, why the need for review and the potential for restructuring have been deliberately linked in the second paragraph with the early withdrawal of Commonwealth funding? Mr Smart—The withdrawal of Commonwealth funding was a savings measure. It has brought forward the need to achieve the efficiencies and other sources of funding for the organisations. Senator BOB COLLINS—Which were going to happen anyway. Mr Lilburn—That is true. The funding was going to be withdrawn at the end of the following financial year. Senator BOB COLLINS—That is right, it has been brought forward a year. Mr Lilburn—They would have had to review their structure and improve the efficiency of their operations. They are having to accelerate that process. Senator BOB COLLINS—Sure. Thank you. What is the timing of the review? Did you say it is currently under way by the Horticultural Research and Development Corporation and the AHC? Mr Lilburn—Yes. The corporations are due to meet the parliamentary secretary, Senator Brownhill, next month to report on their consultations with the member industries and give their view as to whether there would be a benefit in moving ahead with a merger. Senator BOB COLLINS—In the papers under the ‘Wine Industry Package’ heading, the explanation under the subheading says it all, in my view:

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If not for the scheme’s cancellation, payments would have begun in the second fiscal quarter on application by eligible commercial winemakers. Such payments will now not be made. Do you agree that the government’s action in this regard is a disgraceful betrayal of the wine industry in Australia and that the government should be flogged from office for doing it, or would you like to refer that question to the minister? Mr Lilburn—Senator, are you reading from a press release? Senator BOB COLLINS—No, I am reading from the budget papers, Mr Lilburn, the first bit anyway. What I do want you to help me with is—I do not know whether my calculator is right—the actual individual payments. They were around $6,000 per winemaker, were they not? Mr Barratt—If this scheme had gone ahead. Senator BOB COLLINS—Can you advise the committee as to exactly when those payments were due to be made? Mr Lilburn—In the normal course, if there had been an appropriation and if terms and conditions for the grants had been set, probably in October. Senator BOB COLLINS—Was there any communication with the industry at all forewarning them of the planned abolition of the scheme to enable them to factor these cuts into their business plans? The question is not as silly as it sounds, Mr Lilburn. I know the Victorian health minister has recently said publicly that there were discussions with the Victorian government in respect of the reductions in funding for the dental laboratories, and so on. Are you aware of any discussions with the wine industry that gave them any indication at all that the cheque was going to be bounced? Mr Lilburn—There were no discussions with industry as to whether the program would proceed or otherwise. Senator BOB COLLINS—The higher education sector is another area that was extensively consulted prior to the budget, for example. I thought they might have had just a thought for one of the most successful value-added primary industries in Australia at the moment. Senator Parer—Senator, I think perhaps I should comment on this. This was a policy decision of the government, as you are aware. Senator BOB COLLINS—How disgraceful! Senator Parer—Well, no, if you will just hear me out. Of course, you know that the original reason for its implementation in regard to wholesale sales tax, bearing in mind that the government had to tackle the deficit, was that this particular industry had an enormous growth. Senator BOB COLLINS—Yes, that’s correct. Senator Parer—So giving that sort of subsidy, in view of the enormous growth and in view of tackling the budget deficit, was not warranted. That is the reason; there is no other reason. You did ask about meetings. Certainly— Senator BOB COLLINS—You do realise these are not big winemakers we are talking about. These are the smaller— Senator Parer—I am talking about winegrowers across the board. I might say to you that I am aware of the fact that either Senator Brownhill or the minister did have meetings. I do not know what dates those meetings were, but they certainly had meetings with the wine growers. Senator BOB COLLINS—But you do not see this as a breach of an election commitment?

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Senator Parer—No, I do not. I think it was an imperative because of the way you people mucked up the economy. Senator BOB COLLINS—We are going to hear a lot more about that before midnight, I can tell you. I assume then that this was not a core promise? CHAIR—I believe he is right: there were discussions before the budget. Senator BOB COLLINS—With the industry? Senator Parer—I am pretty sure, because I remember— Senator BOB COLLINS—That appears to conflict, on the face of it, with the categorical advice Mr Lilburn has just given the committee that there were no discussions— Mr Lilburn—I was commenting on discussions between the department and the industry. Senator BOB COLLINS—Of course. I am sorry, Mr Lilburn. Rather than getting bogged down on it, will you clarify it? Senator Parer—I will. But I can recall Senator Brownhill talking to me about this. Senator LEES—The letters across my desk suggest that there were no discussions— Senator BOB COLLINS—That is what the industry has told me. Senator LEES—And they had budgeted for what they had presumed was—[inaudible] CHAIR—The minister has made the statement that he will check what discussions took place, and I made the same statement. We have got the answer from Mr Lilburn and I think we should get on with it. Senator BOB COLLINS—I intend to. As soon as you stop talking, Mr Chairman, I will get on with it. CHAIR—I have stopped talking. Senator Parer—Are you staying on wines? Just to quote you— Senator BOB COLLINS—Yes, I am sticking with wines. Mr Lilburn, did you know that red wine is one of the most valuable natural sources in the world of antioxidants? CHAIR—Before you answer that, the minister wanted to make a comment. Senator Parer—I just wanted to make a comment to you: to give you an idea, in 1995-96, despite a short grape crop, exports rose to a new high of 130 million litres valued at $471 million. The figure was 103 million litres valued at $293 million in 1992-93 before the WST came into effect. So you had an increase on the dollar figure, before the WST came in, of $293 million going to $471 million. Senator BOB COLLINS—Yes, I understand that, and I don’t want to unduly delay things by having a legal debate with you. I will save it for the Committee of the Whole in the Senate. Without going into the details, one of the reasons why the wine industry was understandably angry about this—and the minister may or may not have seen the press release issued as a result—is that, based on the discussions they had with the then opposition when this issue was first raised and based on the statements made by a raft of then opposition members in parliament about the sins and iniquities of the then government in respect of this matter, and not having heard a squeak about the commitment that was given, particularly in South Australia during the election campaign, that the now government was going to support the industry, they not unreasonably assumed that they would get the next cheque. That is why they are angry. So they will be interested to know, Minister, the explanation you have provided tonight that, because they are doing so well, they never should have got it.

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Senator Parer—My understanding is that that was explained— Senator BOB COLLINS—That is fine. That is on the record. CHAIR—Mr Lilburn has a question to answer. Do you remember the question? Mr Lilburn—I think I will take Senator Collins’s word for it. I would not be expert in that area. Senator BOB COLLINS—I am sure the wine industry was pleased to see a thoracic cardiac specialist on television last week saying that we should all drink one or two glasses of red wine—this is presuming you already have a health plan under way, do you?—because it is a very valuable source of anti-oxidants. The Bible said it; Saint Paul said it some 2000-odd years ago. ‘Drink a little red wine,’ said Saint Paul. From memory, Mr Lilburn, the then Treasurer advised the industry that the grants would not continue beyond 1997. I know that they did factor that into their business plan. I think I am correct in saying that the grants were paid at the end of the financial year for that year. So, the grants for 1995-96 were to be paid from July 1996. Is that correct? Mr Lilburn—No. Senator BOB COLLINS—Fine. What was the situation? Mr Lilburn—If there were to be grants this financial year, they would be based on the amount of wine sold in the previous financial year. That would have been the mechanism to assess how much grant might have been paid this financial year. Senator BOB COLLINS—Could you provide the committee with some advice—do not go into any gory detail, but in general terms—on the kinds of businesses that would have attracted the grant? Mr Lilburn—It would apply to any business that sold a certain volume of wine in dollar terms. If they sold that amount of wine, they would be eligible for a $6,000 grant, whether they were a large or small winery. Senator BOB COLLINS—Sure, but, in the main, these businesses did tend to be the smaller wine makers, were they not? Mr Lilburn—No. Each winery was eligible for $6,000 if it had gone ahead. Senator Parer—Senator, it actually does not apply to the very small ones because it only applied where there was a WST obligation of at least $10,000. Senator BOB COLLINS—Dr Fisher, has ABARE produced any recent work on projections for the wine industry in income and so on? Dr Fisher—Our next medium- to long-term forecast will be produced in November this year. Senator BROWN—Firstly, Senator Collins has been referring to the Bible. I want to get to the loaves before we get to the fishes. Is it true that the loss of the wheat freight subsidy and the wheat freight capital allocation to Tasmania will put the price of bread up 8c a loaf in Tasmania? Mr Lilburn—The consequence of a reduction in the wheat freight subsidy will be subject to a number of commercial decisions. Basically, there will be fewer funds available to make the subsidy payments. How that will be reflected in the final cost of the product we cannot say. There is a possibility, we believe, of economies in the transport and storage of wheat, and we would expect that those economies will flow through. In the final analysis, I am afraid that we could not estimate the effect on the price of bread.

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Senator BROWN—What are those economies? Mr Lilburn—One of them would be to reduce the number of ports where the wheat is unloaded and to try to minimise the cost of taking the wheat across to Tasmania. Senator BROWN—Was that not the point of the wheat freight capital allocation? Mr Lilburn—That may well go ahead, but it will not be subsidised by the Commonwealth. It is still possible that there will be an effort to make those economies, but they will not be subject to a Commonwealth subsidy. Senator BROWN—Who will make up the shortfall? Mr Lilburn—That is up to the commercial interests and the Tasmanian government, if it wishes to pursue that option. Senator BROWN—So this is no disincentive to pursuing this option? Mr Lilburn—It is a commercial matter. If there are economies in that arrangement then presumably it will go ahead. If the economics justify it it will go ahead. Senator BROWN—Taking away that $3.6 million does not make any difference to the chance of that economy, through reducing three ports that receive wheat to one port, proceeding? Mr Lilburn—If it is not a commercial proposition it not will proceed. If it is, I assume it will. Senator BROWN—Are you telling the committee that removing a Commonwealth allocation of $2½ million to the rationalisation of wheat handling facilities in Tasmania is not going to make any difference to whether that goes ahead or not? Mr Lilburn—I suppose you could argue that if it is going to be subsidised there is a greater chance of it going ahead and therefore there will be that additional subsidy incentive as well as a commercial incentive. That does not mean it will not go ahead if the economics justify that. Senator BROWN—It will be harder for it to proceed. There is a certain logic attached to it. With the loss of the $1 million freight subsidy, can you tell me how that policy fits into the government’s policy of the subsidy to Tasmania to treat Bass Strait as a highway? Mr Lilburn—Basically, the decision to reduce the subsidy was made to try to introduce more economies into the arrangement and to get more commercial decisions made with respect to the transport of wheat to Tasmania. Where all the costs are met by the government there is less incentive for economies to be made and commercial decisions to be made on which options to pursue. Senator BROWN—So the idea was to stimulate the production of economies in the transport of wheat across Bass Strait? Mr Lilburn—Eventually, there will be decisions made on the economics rather on whether there is a subsidy available. Senator BROWN—How does that sit with the purpose stated here that it was to contribute to meeting the goals of the fiscal target by a reduction in the level of assistance to subsidise the cost of shipping wheat from the mainland to Tasmania? Mr Lilburn—That is another objective. Senator BROWN—That is the only objective that is listed here.

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Mr Lilburn—Obviously, there are a number of flow-on effects of the initial decision to reduce the subsidy and therefore contribute to the government’s objective of reducing the deficit. Without a subsidy there is going to be commercial decision making involved. Senator BROWN—I come again to the government’s highly publicised success in subsidising the ferry services across Bass Strait as effectively an interstate highway. How does this policy of taking away a subsidy from Tasmania to stimulate economies fit with that policy to subsidise transport across Bass Strait? Mr Lilburn—I do not think I could comment on that aspect. I am not involved in the other aspect of subsidising the transport of— Senator BROWN—Perhaps the minister would like to comment. We have two policies at odds here. The removal of the wheat subsidy was done to stimulate more economic movement across Bass Strait, but the government in the Senate today was saying that the subsidy to passenger transport across the strait was to stimulate the economic benefits that are going to flow from that. Senator Parer—All I can say to you is: do not move away from the fact that we had a tight fiscal situation and we had to look at every single program. You are looking at a tight fiscal position which we had to address. According to my brief, based on limiting the subsidy or notional cost per tonne of shipping wheat from Portland to the nearest port in Tasmania they still expect a subsidy of $19 a tonne. Senator BROWN—How do you reconcile these two exactly opposite government policies? Senator Parer—I did not hear that one today, so I cannot comment on it. Senator BOB COLLINS—It does not matter; you are hearing it now. The question is simple enough. Minister, how do you reconcile it? You said that the government has a fiscal problem. I appreciate that. Can you explain the evidence to a Senate committee only 48 hours ago that, in respect of the subsidy, a brand new scheme using $300 of public money— Senator Parer—You are objecting. Senator BOB COLLINS—No, hear me out—per trip to cross the Bass Strait is demand driven. In other words, there is no cap; the more cars that go across, the more the $300 subsidies will be paid. Senator Parer—What we are addressing right now is the primary industries portfolio. The other one has nothing to do with primary industries. Senator BOB COLLINS—Senator Brown would probably reject that view. Senator Parer—There would be another portfolio in which you could address this. I have no idea which one it is, but it is not this one. Senator BROWN—I guess that we are not going to get much further with this. The government has demonstrated here that it has an internal illogical plan. On the one hand, it is saying that the removal of the subsidy is to stimulate economies but, on the other hand, it is putting a much greater subsidy—I, as a Tasmanian, applaud this—on the movement of passengers across Bass Strait. The point that I am getting to is that the removal of this subsidy is simply a government fiscal policy and has nothing to do with stimulating economies through the movement of wheat across Bass Strait. Senator Parer—I think it does as well. It is a twofold measure. Frankly, I do not see the correlation that you were trying to make before. Neither can I address it, because in regard to the motor cars it does not concern this particular portfolio.

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Senator BROWN—The point I am making is that the government has embraced an idea for the reparation of Tasmania because it does not have an interstate highway link, and Bass Strait gets in the way. It is making up for the fact that it puts a lot of money into roads and other facilities which link all the mainland states and which Tasmania misses out on. CHAIR—How much wheat is actually transported from the mainland across the Bass Strait to Tasmania? How much wheat production is there in Tasmania which provides grain for their own home consumption? Would you have the figures for the last five years? Senator BOB COLLINS—It is around 63,000-64,000 tonnes a year, from memory. CHAIR—Can you take those questions on notice? Senator BOB COLLINS—There is 32,000 tonnes through Devonport. CHAIR—I believe that there has been a significant growth in the Tasmanian wheat crop over the last 10 years. My question asks to get those figures, and it has to be addressed to the officers at the table, not to Senator Collins. Senator Parer—If you look at the figure that I just gave, you will see that they expect the subsidy to be $19 a tonne, which is pretty close to the figure that Senator Collins gave you. CHAIR—But I was talking about the number of times. Can you also inform the committee whether or not the price equalisation scheme for wheat that goes from the Australian Wheat Board across to Tasmania, which was actually paid for by growers on the mainland, is still in existence? Mr Lilburn—My understanding is that that ceased in 1989, and this program came into operation at the termination of the domestic controls on sales of wheat. CHAIR—Thank you. Senator BOB COLLINS—Minister, are you aware that the Tasmanian Minister for Primary Industry and Fisheries has written a very strong letter to the federal minister protesting, as you would expect, the removal of this scheme? I have the letter in front of me and I would like a response as to some of the things that are asserted here. Senator Sherry, who was here earlier this evening and was responsible for this particular scheme, was my then parliamentary secretary. I do want to give some credit to both him and Dick Adams for their efforts in providing this assistance for their home state of Tasmania. I will read the second paragraph of the letter, and this is what I want an answer to. The minister stated that he was astounded at the announcement and so on, saying: The announcement is in direct contravention of the agreement between the Prime Minister and Tasmanian Premier in a letter setting out the arrangements dated 17 August 1993. This was subsequently reaffirmed in a letter from the then Minister for Primary Industries and Energy to the Minister for Primary Industry and Fisheries dated 11 March 1994. I understand that we are talking about the previous government, but there are some conventions about how these things are handled. This was a formal agreement. The letter states: This sets out that the subsidy would continue for a further 5 year period from the 1st July 1994 at $2.7m with a component to be set aside to partly meet the cost of upgrading storage. After this five year period, the subsidy was to be set at a level to approximately equate with the Tasmanian Freight Equalisation Scheme. It then goes on to say: Your Government’s decision places in jeopardy a major portion of grain using industries in this State.

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Is that the view of the government? Was there any analysis done to have a look at the potential impact of the removal of the assistance? Senator Parer—I am unaware of that letter that you are talking about. You might give me the date of it just for interest. Senator BOB COLLINS—The letter is dated 21 August this year. It is to the federal Minister for Primary Industries and Energy from the Tasmanian Minister for Primary Industry and Fisheries. Senator Parer—Certainly the previous government, of which you were a part, did earmark $2½ million for the upgrade of grain storage. It was supposed to be on a dollar for dollar basis with the states. Even though you made that offer quite some time ago—I don’t know how long ago it was, but it was a good while ago—Tasmania did not accept that proposal on a dollar for dollar basis until June this year, at which time the incumbent government, this present government, indicated that it would have to consider it in the budget context. As there was no legal or policy commitment by the previous government to continue it in its present format, it was considered in a budget context. It was only in June this year that they said, ‘Okay, we’ll go ahead with this on a dollar for dollar basis.’ I would guess—you with your own experience within the Northern Territory would know—that, with all the comments being made by this government about looking at every program in the budget, they decided it was time to exercise that option. Senator BOB COLLINS—Thank you, Minister. I do appreciate the fact that you have not seen the letter yourself. If you do not mind, Mr Chairman, I will table the letter in the sense of it being on notice for response because, in respect of the explanation you have just given, the second last paragraph of the letter says: The comments in your Government’s Budget background information do not reflect that an officer of my Department and the Manager of the Tasmanian Grain Elevators Board met with your staff on the 9 May 1996 detailing proposed capital development and matching funding thereby fulfilling the terms of the Heads of Government agreement. Accordingly, I am extremely concerned about what has been committed to paper in the budget... I will conclude on that point. I will table the letter, Mr Chairman. CHAIR—Thank you. Very grateful. Senator BOB COLLINS—I ask for a response in due course from the minister. CHAIR—Have you any further questions on this program or this matter. Senator BOB COLLINS—Not on wheat. CHAIR—Anyone on 1.2? Senator BROWN—I think this might be the right point to ask about the prospect of cotton growing in the Coopers Creek region. I wonder if the department has been involved in discussions on that matter. Mr Lilburn—No, not to my knowledge, but I will make inquiries. I will take that on notice. Senator BROWN—Would you? Have you any viewpoint on the prospect of cotton growing at Coopers Creek? Mr Lilburn—No, I have no opinion on that. Senator BROWN—What involvement would be required from the Commonwealth if it were to proceed?

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Mr Lilburn—It would normally be a commercial decision as to whether cotton would be grown there. I know there may be some state decisions to be made as to whether there is a sufficient water supply or whatever, but we would not necessarily be involved. Senator BROWN—Not with environmental impact assessments? Mr Lilburn—No. Senator Parer—To the extent that governments are involved, it is a state government matter. Senator BROWN—Yes, to the extent, as far as the environment is concerned, of course, that it is not impacting on areas of natural or cultural value that are of national or international significance it is a state matter, but if it involves any of these things it immediately becomes a federal matter as well. I think I would keep a watching brief on that, if I were you. CHAIR—I just want to clear up a point here. I want to ask some general questions with regard to the anthrax outbreak in Western Australia which I am sure you are all well and truly familiar with. Do we do that when AQIS is here or now? If we do it when AQIS is here, that is fine. I just want to clear it up because it— Senator Parer—AQIS. CHAIR—Do it with AQIS? Okay. I just put you on notice that I have some general questions about the outbreak there. Thank you. Senator BOB COLLINS—There has been a reduction in the citrus development grants scheme. Would you remind me, Mr Lilburn, of the extent of that reduction? Mr Lilburn—It has been a 10 per cent reduction on the remaining funds available. Initially it was a $9 million grant, there is $6 million remaining; so 10 per cent was a $600,000 reduction. Senator BOB COLLINS—Was that simply a savings measure consistent with a whole lot of other savings measures or did it come about as a result of some analysis that the scheme in fact could or should be reduced by that amount in a way that would not reduce its effectiveness? Mr Lilburn—It was from the point of view of achieving overall savings from the broader budget point of view. Senator BOB COLLINS—So no work was done on the demand of the scheme and how it was going? Mr Lilburn—We made an assessment as to whether that would be a major problem— whether those cuts could be accommodated. We assessed that it was possible to accommodate those cuts without affecting the most important aspects of the programs. Senator BOB COLLINS—So that was reviewed? When you say ‘the most important’, again, without going into detail, could you give me what the department’s assessment was about on the impact of the cuts? Mr Lilburn—It is up to the group advising the government as to which programs should be cut, so there is no decision by the government to terminate particular programs. But the fact is that about three-quarters of the funds are used to support the expansion of exports and about one-quarter to subsidise the promotion of fresh juice in Australia. The latter aspect is currently being reviewed because there is a view that that program could be cut, but it is up to the group to make recommendations. The government has not got a firm view as to how the cut can be implemented.

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Senator BOB COLLINS—Again, to save time, Mr Lilburn, would you mind taking on notice a request from me to provide the committee with a list of the projects that are currently in place or planned? I am only talking about the ones for which the funding is committed. Mr Lilburn—I have available information about which programs have been funded and where there are commitments in the current financial and following financial years. But, in respect of this financial year and the next two years, there are still decisions to be made on the allocation of most of the funds. Most of the funds remain unallocated. Senator BOB COLLINS—Would you mind just providing the committee at some stage with the information that you do have? Mr Lilburn—I can table that. Senator BOB COLLINS—Thank you. In respect of the wheat subsidy, I just wanted to check that a question about the details of the amount of wheat going into Tasmania has already been put on notice. CHAIR—Yes, it is. Mr Smart—In relation to 1.1, I table the memorandum of association of the Australian Animal Health Council and the report of the biological control act that was referred to before. CHAIR—We already agreed to table that, did we not? Mr Smart—Yes. CHAIR—Earlier, there were some other documents which the officer on the end of the table agreed should be tabled. I presume we have got those. That concludes 1.2. Subprogram 1.3—Fisheries Senator LEES—I have some questions on the Australian Fisheries Management Authority, particularly relating to the Australian National Audit Office report. Could I just begin by asking you whether you have accepted the conclusions of the Australian National Audit Office report? Mr Stevens—The audit report itself contains recommendations by the ANAO as well as our responses to them. Volume 2 of the report has got our responses incorporated in it. Senator LEES—Have your responses actually identified some resources that you could put into making some of the improvements that were suggested? Mr Stevens—No. We have not identified resources because, in a number of instances, we do not agree with the ANAO about the need to allocate such resources. The task involved in fisheries management is what I would call the skilful use of quite limited data and, in our view, it is not warranted to allocate resources to some of the things that the ANAO have identified. Senator LEES—For example, they suggest that when you are looking at setting limits they are inevitably set in favour of maintaining fish catches rather than looking at a more precautionary principle or stock assessment. You do not accept that that is correct? Mr Stevens—No, we do not accept that statement by the ANAO. We believe there is very little evidence in their report to justify that statement. In our view, the setting of total allowable catches in fisheries is undertaken through a process of assessment of research information available and the input by the operators in a particular fishery. The total allowable catch is generally set on a precautionary basis.

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I think it is also fair to say that total allowable catches are often never taken because of a number of contributing external factors, such as environmental conditions and the fact that there are a whole lot of things that influence the availability of fish stocks other than commercial fishing, such as environmental conditions, changes in water temperature, predator- prey relationships, et cetera. The other thing that influences the taking of the total allowable catch is the price received for the fish itself. Senator LEES—Perhaps I could ask a question regarding environmental impact statements. I note again the comment in the report that the ANAO observed that ‘there had been no environmental impact assessments’ of any fisheries management decisions ‘under either AFMA or the former AFS’ and no referrals to the Environment Protection Agency. Do you accept that that is the case? Mr Stevens—No, I certainly do not accept that that is the case. Senator LEES—Can you give us some examples? Mr Stevens—I certainly can. Under the Australian Fisheries Management Authority legislation, the Fisheries Management Act and the Fisheries Administration Act, there are provisions to develop management plans for fisheries. The management plans for both the northern prawn fishery and the southern bluefin tuna fishery were referred to the EPA, as were the arrangements under the offshore constitutional settlement for jurisdictional arrangements of fisheries around the Australian coastline. So I do not accept the ANAO’s statement that no decision has ever been referred to the EPA. Senator LEES—Could I have a list of times that an issue has been referred for an environmental impact statement? Mr Stevens—Certainly. Senator LEES—Have you sought an environmental impact statement in relation to the new fisheries proposed off Heard and Macquarie Islands? These are sites that Senator Hill has just announced the government is going to nominate under the world heritage convention. Mr Stevens—Yes. The proposal for the Macquarie Island fishery has in fact been designated as a proposal—the proposal developer management policy for a developmental fishery around Macquarie Island—under the Environment Protection (Impact of Proposals) Act 1974. It has been designated as a significant environmental proposal under the EPA act. Senator LEES—Will there be a full environmental impact statement on that? Mr Stevens—That is ultimately a matter for the Minister for the Environment to determine. I would just like to make a couple of comments on environmental assessment in fisheries generally. The whole process of environmental assessment in fisheries is undertaken through a number of means. One is by scientific assessment; the other is by actual commercial activities. In the case of fishing activity around Macquarie Island, apart from the research that is associated with the commercial fishing operation that is there, we believe the actual fishing itself and the vessel that is being used is being used on a research basis anyway to try to gain information to assess the prospect of that fishery becoming a commercial fishery. The actual commercial fishing activity itself, with the observers that are involved and the research that is accompanying it, is part of an assessment process. Whether one would constitute that as an environmental impact assessment process I guess is a matter for debate. But certainly in our view, as fisheries managers, commercial fishing constitutes a considerable component of assessment of a fishery resource.

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Senator LEES—So you basically leave it to the commercial operators to do the major part of the assessment of what is actually there. Is that what you are saying? Mr Stevens—Yes, I am saying that. In the case of the Macquarie Island fishery, the operator who is fishing in that area has cooperated very closely with our agency and with environmental agencies in doing a whole lot of work that is related to the fishing activity down there, including interaction with sea birds and mammals and things like that. Senator LEES—Just so I can have more of an idea of what you mean by interactions, you are talking not just about the particular commercial species that they may decide is there ready to fish but also about the relationship beyond that to other marine creatures as well as the marine environment? Mr Stevens—Absolutely. In the case of the commercial operator who has been fishing down there, a research scientist from the Australian Antarctic Division has accompanied voyages of that vessel down there. There has been an observer on board every time the vessel has gone down there. There has been considerable information recorded on bird life interactions and mammal interactions. Senator LEES—So have you got back a formal report at this stage? Mr Stevens—The Australian Antarctic Division has produced reports, as I understand it, and I am certainly happy to find out the nature of those reports and provide them to you. Senator LEES—That would be most helpful. Are there any occasions where you recommend to government that an impact statement is needed and that is not carried through? Is it basically over to you to recommend to government? Mr Stevens—My understanding of the Environmental Protection (Impact of Proposals) Act is that we designate an activity; we have a responsibility for designating that activity. It is ultimately up to the EPA and the Minister for the Environment to determine whether an environmental impact statement is necessary. Senator LEES—Has it ever been decided that one was not necessary when you suggested it should have been done? Mr Stevens—We have never recommended that an environmental impact assessment be done. That is not our role. Our role is to designate the activity as significant. Senator LEES—So are there occasions when you have made that designation but nothing has happened? Mr Stevens—There have been a number of occasions where we have made the designation, but I am not aware of any occasion where EPA or the Minister for the Environment has determined that an environmental impact statement is necessary. Senator LEES—I realise that we may be going back a year or two, but it would be most helpful if you could give some examples, just over the last couple of years, of any instances where that has happened. Mr Stevens—Where we have designated activity—certainly. Senator LEES—Are there any people as part of the board or the management structure of the Fisheries Management Authority who do have either scientific or conservation expertise? Mr Stevens—There are presently two vacancies on our board which are in the process of being filled. The board is an expertise based board. There is a present member who is a person with scientific background. There are three ex-directors of Fisheries from the state scene—the South Australian scene, as a matter of fact. The expertise that is required of board members

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 206 SENATE—Legislation Thursday, 19 September 1996 is set out in our legislation and there is a selection committee process that must be gone through. Senator LEES—I am just interested in whether any have a background in the scientific, particularly marine science, field. Mr Stevens—There is one particular member. Senator LEES—What about conservation interests? Mr Stevens—A member of the board who has come up for selection, who was on the board up until the time of her term of appointment expired, did have conservation experience. Senator BROWN—What is the name of the commercial fishing operation that is taking place at Macquarie Island? Mr Stevens—The commercial fishing operation up until now has been a vessel by the name of the Austral Leader. It is owned by a company in Western Australia known as Kailas and France. Senator BROWN—How long has it been operating on Macquarie Island? Mr Stevens—It has operated on Macquarie Island for one season. Senator BROWN—What is the impact on the seal and penguin population of Macquarie Island? Mr Stevens—I don’t have that information available here. I can certainly see if there are reports done by the Australian Antarctic Division on that. Senator BROWN—Has your department sought reports on that? Mr Stevens—We have had a number of meetings with environmental agencies over the past 12 months in relation to a whole range of activities to do with fishing around Macquarie Island. I would be happy to make all that information available to you. I do not have it to hand here. Senator BROWN—Are you aware that Macquarie Island is a prospective world heritage site? Mr Stevens—Yes, I am. Senator BROWN—Are you aware of the world heritage values of Macquarie Island? Mr Stevens—No, but I am aware in relation to the world heritage listing that it is based on geological situations rather than commercial fishing situations and that in fact the Minister for the Environment has accepted that the approach being taken by AFMA in relation to commercial fishing down there is a responsible one. Senator BROWN—But you do not know what the impact on the wildlife on Macquarie Island has been? Mr Stevens—The people who have participated in the workshop process to do with fishing around Macquarie Island certainly do. I am not personally aware of it. My officers would be. Senator BROWN—Do you think you should be? Mr Stevens—I believe we should be, yes. Senator BROWN—Yes, I do too. You have told Senator Lees that the ship down there is effectively doing the environmental assessment work. What is that? Mr Stevens—No, I did not say that. What I said was that, in our view, as fisheries managers, commercial fishing is a key component of gaining an assessment of the state of the

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Thursday, 19 September 1996 SENATE—Legislation RRA&T 207 stocks. Whether one regards that as environmental assessment or an environmental impact assessment is a matter for judgment. Senator BROWN—In the case of this operation, what is the information that is coming back to you? Mr Stevens—The information that is coming back is basic information about the catches of particular fish—patagonian toothfish and icefish—and a lot of information that the Australian Antarctic Division and, I understand, environmental agencies have been seeking in relation to interactions with bird life and mammals. Senator BROWN—How close to the island is the fishing taking place? Mr Stevens—My understanding of where the commercial fishing is taking place is beyond 12 miles. Senator BROWN—Not coming within the 12-mile limit? Mr Stevens—Not coming within the 12-mile limit. Senator BROWN—Are you aware whether it has led to any catch of by-product, that is, other species that are of no commercial value? Mr Stevens—No, I am not. My understanding of the catches there is that patagonian toothfish and icefish are the only species that have been caught. Senator BROWN—Is that being used domestically or is it going onto the export market? Mr Stevens—I am not aware of how the product is being marketed. That does not come within our responsibility. Senator BROWN—What are the volumes? Mr Stevens—I think volumes have been in the order of 300 tonnes in the one fishing season that has occurred. That is the catch that has been taken to date. Senator BROWN—Could you find out for the committee what the make-up of that 300 tonnes was and where it has been destined for sale? Mr Stevens—I may be able to find out the first part. The second part may be information that is commercial-in-confidence to the operator. Senator BROWN—In other words, you could not say whether it had gone to Europe or Hong Kong? Mr Stevens—I have no idea. Senator BROWN—Could you endeavour to find out for the committee, please? Mr Stevens—I could certainly make inquiries. Senator BROWN—Thank you. Senator WOODLEY—I am particularly interested in the mitigation devices that are being implemented in long-line fishing boats for the protection of albatrosses and other sea birds. Can you tell me what financial resources the department has put into that for 1995-96? Mr Stevens—We are a statutory authority, so we are a bit separate from the department. We are putting no resources into our agency. The resources that are being put into it are being put in by the commercial sector itself on the basis of its awareness of the necessity to put the mitigation devices in. Our role has been to provide the regulatory framework for that to occur. Senator Parer—It is to reduce the catch of bird life on long-line nets. Senator WOODLEY—I have more of a layman’s description, but that is what I mean.

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Dr Turner—There has been a requirement in domestic fisheries since December 1995 that all Australian tuna long-line vessels operating below latitude 30 degrees carry both seabird tori poles and bird lines. It has previously been a requirement for our bilateral agreement with Japan that they also carry similar devices. Senator WOODLEY—The whole cost of that is borne by the commercial industry? Dr Turner—That’s correct, yes. Senator WOODLEY—Do you know what it cost them? Dr Turner—No, I’m sorry, I don’t. Mr Stevens—I wouldn’t think it was a significant cost. A tori pole is like a scarecrow. Senator LEES—Are all countries that are fishing in our waters now cooperating or not? Are the Koreans there anywhere? Dr Turner—No, there is no Korean fishing in Australian waters. Senator WOODLEY—The fee that I understand the Japanese pay for access for entry into our EEZ—what does that stand for? Dr Turner—Exclusive economic zone. Senator WOODLEY—Right. How is that fee collected and how is it disbursed? What does it go to, in other words? Dr Turner—I can’t give you a breakdown as to where it actually goes, but it is used to fund a number of things. It is used to fund the management costs of administering the Australian- Japanese bilateral agreement. Some of that money goes to research; some of that money is returned to consolidated revenue. I don’t have a breakdown of it with me, but I am happy to provide one. Senator WOODLEY—If you would, that would be handy. A similar question is to do with the southern shark fishery. Are there any funds allocated—or is that all done commercially, too—to ensure that effective methods are introduced into that fishery to reduce by-catch of non-target shark species? Mr Stevens—No, there are no specific funds allocated other than funds which are allocated by the Fisheries Research and Development Corporation or bodies such as the Australian Maritime College. The Australian Maritime College has a facility which concentrates on looking at things like gear technology, use of excluded devices, et cetera. It gets most of its funding for that from the Fisheries Research and Development Corporation and there is quite an extensive program being undertaken also by CSIRO on by-catch minimisation devices. Senator WOODLEY—A similar question in terms of the northern prawn trawl, particularly in relation to unintended catches of marine turtle and other by-catch during 1995. Is there any money allocated for that? Mr Stevens—Again, that is through exactly the same process. There are considerable funds allocated by the Fisheries Research and Development Corporation for that program. Senator WOODLEY—I understand there was a recent experimental trawl called the eastern gemfish trawl of New South Wales. Are there any costs available for that program? Mr Stevens—That program was funded again by the Fisheries Research and Development Corporation. I can certainly get the details for you on what funding was allocated for that. Senator WOODLEY—I understand CSIRO was involved in that.

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Mr Stevens—CSIRO were involved in that and the cost of the research was offset by the sale of the fish. Senator WOODLEY—Do you have any idea what that cost was? Mr Stevens—I think it was of the order of $280,000, but I would like the opportunity to check it. Senator WOODLEY—I am very happy with that. That would have gone to CSIRO, I presume? There would have been a fee to CSIRO? Mr Stevens—Yes, CSIRO. I believe that New South Wales Fisheries were also involved on a joint basis with that project. It used commercial vessels. Senator WOODLEY—I have only two more questions, and I am very happy for you to take them on notice. The estimated cost of developing an environmental impact statement for the orange roughy industry managed by, I believe, the AMFA for the coming year? Mr Stevens—There is no environmental impact statement actually undertaken. What we undertake is annual stock assessments. The basis of the stock assessment process is that various projects are funded by either FRDC, the Fisheries Research and Development Corporation, or by Commonwealth money made available through CSIRO or the Bureau of Resource Sciences. Individual projects are funded which look at various aspects of stock assessment. That information is then synthesised into a stock assessment which says, ‘The state of this particular fishery is such and such.’ In the case of nearly all our commercial species, that is undertaken on an annual basis. In the case of orange roughy, there is a Total Allowable Catch Subcommittee of the Management Advisory Committee for the South-East Trawl Fishery—I am sorry this is a bit longwinded. Senator WOODLEY—That is all right. We will get it on the record so we can go back and read it. Mr Stevens—That is chaired by the Director of the Australian Institute of Marine Science, Dr Russell Reichelt, and that makes recommendations to the AFMA board on total allowable catches for individual species in the south-east trawl fishery. A number of those projects which contribute to the whole stock assessment process are funded by the Fisheries Research and Development Corporation or by Commonwealth moneys provided to CSIRO or BRS. Senator WOODLEY—Would there be annual reports that would give us some of that information? Mr Stevens—Yes, the Bureau of Resource Sciences produces an annual stock assessment report on each of the major Commonwealth fisheries. Dr Turner—We would be happy to provide you with a copy if you like. Senator WOODLEY—I would be very grateful. Obviously, I can go and find them myself. But, if you can do that, it makes it easier. It is really for the committee. My next question would be on notice. How many marine turtle species, albatross and other seabirds and great white sharks have been taken as by-catch in AFMA controlled fisheries over the past five years? Mr Stevens—That will certainly be on notice. Senator WOODLEY—I understand that. Senator BOB COLLINS—I just want to test my memory, Mr Stevens. Were you on Norfolk Island at one stage?

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Mr Stevens—Yes, Senator. Senator BOB COLLINS—I thought that was you. Has the level of cash balances considered appropriate by the government been agreed with the AFMA? Mr Stevens—Yes. Senator BOB COLLINS—What is the level of cash to be held? Mr Stevens—The amount of cash returns of the government was $3.5 million. Senator BOB COLLINS—At what rate is funding provided to the authority? Mr Stevens—AFMA is funded principally from two sources—levies paid by commercial fishermen and funding provided by the government. The funding provided by the government is in the order of $8.174 million in 1996-97. Senator BOB COLLINS—Does the authority currently draw on an overdraft facility? Mr Stevens—No. Senator BOB COLLINS—The budget papers refer to the fact that the drawdown of AFMA savings—and I will quote from the budget papers—‘will not significant affect AFMA’s capacity to carry on current programs’. Has there been any assessment made of the impact of cutting cash reserves to enable that judgment to be made? Mr Stevens—Yes, there has. Senator BOB COLLINS—What will the effects be? Mr Stevens—My view is that there will be no effects. As you may recall, Senator, in 1993- 94 the previous government required AFMA to achieve savings over three financial years. We had to achieve a saving of $0.5 million in 1994-95, $0.8 million in 1995-96, and $1.5 million in 1996-97. We have been able to achieve all those targets. Through the achievement of efficiencies in our operations, we have been able to return $3.5 million. That has not reduced our reserves to a level that would not allow us to fund an abnormal event. Senator BOB COLLINS—Under the ‘Performance forecast’ heading in the Portfolio Budget Statements it states: . . . the provision of agreed guidelines for the future development of environmental codes of practice will be facilitated, and in cooperation with the states and territories, the National Strategy for Aquaculture is to be reviewed. Are you in a position to provide the committee with details of timing, process and the participants for both these exercises? If it would be easier for you to take that on notice, I am happy for you to take it on notice. Dr Turner—I cannot offer any more specific details than is there. Certainly the strategy is being reviewed. My understanding is that it is being done through the aquaculture subcommittee of the standing committee and that has representatives from each state and territory involved in aquaculture. I also believe that body is involved in developing environmental codes of practice. I believe a consultancy has been let to do that, but I would need to clarify that. Senator BOB COLLINS—Can you advise the committee of the role the federal Department of the Environment, Sport and Territories is playing in this? Dr Turner—I assume they would be consulted. I think the project is being done in a cooperative manner.

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Senator BOB COLLINS—Can you advise the committee what work is being undertaken by the task force in relation to imported fish and fish products? Dr Turner—We have recently completed another draft of the report and that will shortly go out to all members of the task force. We hope they will agree to it, in which case it can be finalised and submitted to the ministers. Senator BOB COLLINS—Are you in a position to advise the committee in general terms as to the outcomes of that exercise so far? Dr Turner—I think it would be inappropriate before the report is finalised. Senator BOB COLLINS—It was worth a try. When do you think that is likely to happen? Dr Turner—It depends on whether members are happy with the latest report. If members are happy with the latest report, hopefully it can be with ministers in about a month. Senator BOB COLLINS—Did you say a month? Dr Turner—Yes, because we intend to send it out in the next day or two. We give people a couple of weeks to comment, because it is quite a lengthy document, and then we have to incorporate their comments. It really depends on what they say. If their comments are fairly minor and of an editorial nature, hopefully we can then finalise the report. But if they raise new substantive issues it may take longer. Senator BOB COLLINS—From memory it was supposed to report jointly to Cairns and the Ministerial Council on Forest Fisheries and Aquaculture. Dr Turner—That is correct. Senator BOB COLLINS—Under the heading ‘Performance forecast’ the statement refers to the expansion of the national fish care program. Has any evaluation been done on the effectiveness of the program? Dr Turner—Not at this stage because it is still in the development stage. There is not a lot to evaluate at this point in time. Senator BOB COLLINS—That being so, what was the basis on which the government decided to expand the scheme? Dr Turner—The expansion of the fish care program was on the recommendation of the fish care committee which has been set up with all states for what they considered needed to be done to fulfil the objectives of the program. Senator BOB COLLINS—So the fish care people recommended that they should be expanded and they were. Things must be different these days. Dr Turner—I understand that it was considered at the last ministerial council. Senator BOB COLLINS—How much money was spent on the program in 1995-96? Dr Turner—It was just under half a million dollars. Senator BOB COLLINS—What has been appropriated for this financial year? Dr Turner—It is $1 million. Senator BOB COLLINS—So it is double. Can you provide the committee with details of the program for this year? I am happy for you to take that on notice, unless you have it with you now. Dr Turner—I am happy to answer that now. The program is basically in three components. The first component is what we call Commonwealth fish care, which is a range of initiatives

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 212 SENATE—Legislation Thursday, 19 September 1996 that the Commonwealth will fund. These include design and recreational survey, some work on national carp control and various other activities. The second part is the funding of fish care liaison officers in the state. The third part is called community fish care, which is going to be cost shared with the states. Under that scheme projects will be developed to fulfil the objectives of the program which relate to preservation of fish habitat, restoration of fish habitat and general education and awareness in getting people to understand how to protect fisheries. Senator BOB COLLINS—As you would be aware, the whole question of management of fisheries has been in the news in quite recent times, with some fairly pessimistic views being expressed as to the international situation with fish stocks generally. Could you comment on the international situation and provide the committee with your view about how we stand in Australia on our own fisheries? Mr Stevens—I guess the experience in the Northern Hemisphere has been of dwindling fish stocks, overfishing, considerable overcapacity and, in the case of some fisheries, total collapse. I guess the Grand Banks fishery is the classic case. I think the result of that has meant that countries have had to get together to make sure that there are proper codes established for the conduct of their fleets both in their own 200-mile zones and on the high seas. Australia has put a lot of work into making sure those codes are as effective as possible. I may be a little biased, but I believe that the approach taken to fisheries management in Australia over the last 20 years by both the states and the Commonwealth has been to move to limit the number of operators in fisheries at pretty early stages of fisheries. We have received some benefit from that. The principal issue that we face in relation to commercial fisheries is the expanding technology that has become available not only to the commercial sector but also to recreational fishing. Trying to cope with that and limit the amount of fish being taken is the principal challenge that we have. I believe Australia’s record, particularly the partnership approach that has been taken through the model of the Commonwealth level, is the correct approach to take. I believe it is possible to get all of the participants involved, and those who are interested in fisheries management around the table, to make sure there is a clear understanding between all of them as to what needs to be done. This could involve conservation groups, recreational fishermen, game fishermen, scientists, managers, et cetera. I think the approach is working. It takes a fair while to build up confidence and trust between commercial fishermen, in particular, and fisheries, managers and scientists, but I believe the four years that AFMA has been in existence is starting to bear fruit. Senator BOB COLLINS—There is still a fair bit of cynicism by professional fishermen as to the scientific basis of these assessments of stocks. Mr Stevens—Yes, there is, and I think that is largely based on the fact that they have adopted a lifestyle and a style of employment which hates bureaucracy and regulation generally. Senator Parer—I think you have to give credit where credit is due. I attended the second world fisheries congress in Brisbane and I ran into John Kerin. I congratulated him on setting up AFMA. I thought it was an excellent structure. The keynote speaker at that conference was Dr Pamela Mace from the United States. She said that at the federal level Australia has had in place a very innovative and progressive management system for about four years—AFMA. Among other things she then said, ‘And I do believe that Australia’s investment in fisheries,

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Thursday, 19 September 1996 SENATE—Legislation RRA&T 213 science and progressive approach to fisheries management put it at a forefront of the world scene.’ I say that here because there is a tendency in this country for knockers. Senator BOB COLLINS—I have noticed. Senator Parer—I am sure AFMA would agree with me that there are challenges. There are things that still have to be worked out, but that is occurring. The important thing is that, when you have a world leader saying we are at the forefront of something, we should encourage it and not knock it. Senator BOB COLLINS—I have one question about bluefin tuna. Mr Stevens—I would like to add one thing. I say this a lot. The management of fisheries is quite different from the management of land based resources because you simply cannot see what is going on under the water and how the interactions are occurring. Senator BOB COLLINS—There are huge holes in the data. I am interested in this report on imported fish and fish products. It makes sense when you think about it. It is like people thinking that doctors should have a cure for everything. There is an expectation in the community at large that there should be a huge body of accumulated knowledge about how everything works and operates. I learnt very quickly that in terms of the marine environment— and this is the difference—most of the research has obviously tended to concentrate on the more commercially valuable species and those a little bit down the list. There are huge gaps in the knowledge base. Mr Stevens—That is correct. Senator BOB COLLINS—Could I conclude by asking what the situation currently is with bluefin tuna and the difficulties associated with that. Dr Turner—I wonder whether you could be a bit more specific in your question. Senator BOB COLLINS—The last time I checked we were still having problems in getting agreement on the quota. Dr Turner—The resolution of this year’s quota was achieved in February. That concluded the second meeting of the commission. The third meeting of the commission, which is to set next year’s quota, is due to commence next week. Senator BOB COLLINS—Where is that going to take place? Dr Turner—In Canberra. Senator BOB COLLINS—We will not have long to wait. CHAIR—That concludes subprogram 1.3. I thank the officers for attending. Subprogram 1.4—Petroleum Senator GIBBS—I would like to talk about the ethanol bounty scheme. How did you decide to terminate the ethanol bounty scheme? Senator Parer—This scheme was introduced in the 1993 budget. The idea behind it was that if a bounty could be given to ethanol it could be used as an alternative to petrol. An amount of $25 million was put in with the idea that it would be used over a three-year period to develop the ethanol industry. It was done for a number of reasons. We had a review undertaken, bearing in mind we only got in this March, basically by the BRS which involved five departments. When that review was completed we decided on all the evidence before us that we would bring forward the determination by one year, two years having expired.

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I put a report to the Senate, which was available to anyone who wanted it. No doubt Senator Lees will argue with me about the details of the report, and we will get a few experts up here who can argue backwards. As far as I am concerned, we had an independent review of it. With the progress of time, two ethanol producers took it up. Both of those producers had been producing ethanol for quite some time. One was CSR at Sarina, just south of Mackay. It had been producing ethanol since 1924. That ethanol basically was used for industrial purposes, but I believe that quite an amount of it went to Japan, and I was also told it was to fortify Suntory whisky. Whether you like to believe that is another thing. The other group that took it up was Manildra, who are very large in the processing of wheat. They also are into making gluten, and a by-product of that is ethanol. No-one else took up the scheme. One of the officers may correct me, but in the first year I do not think that CSR took any of the bounty; is that correct? Dr Turner—That is correct. Senator Parer—They did not produce enough to warrant picking up the bounty. Manildra did pick up the bounty, and they then started to sell that through some of the independents, who were blending it with other fuels. I think it is a 90 per cent blend—90 per cent petrol, 10 per cent ethanol. At the end of the period, the amount of mixture of petrol and ethanol being sold was 0.07 per cent. There is the commercial side to it, and, from that perspective, the cost of producing ethanol was in the order of 70c a litre compared with the current price of petrol where the cost of production is about 23c a litre. Ethanol does not attract to it excise or the state excise duties where they apply. So, in effect, if you added in the bounty, the support for the ethanol was about 60c a litre. Then there is the environmental side. This is where I had some little disagreement with Senator Stott Despoja. A newspaper article in the Australian pointed out that if you got ethanol from things like sugar cane or wheat and used that as the sole source, the effect of that would be to contribute to greenhouse gases rather than the other way. Senator Stott Despoja said, ‘Yes, but in Australia we are not suggesting that; we are saying that, where you already produce the wheat or the sugar cane, you do not grow it specifically for that purpose, so producing the ethanol for it can have a beneficial effect.’ The other side is that ethanol does not reduce CO2 emissions. It reduces carbon monoxide. Putting all those things together, there is some serious doubt about whether it had a net plus or negative effect from an environmental perspective. I am just giving you a brief summary of a fairly thick document—off the cuff, I might add, so if officials think I am wrong they can pull me up. At the end of the day, my view is that any sensible person reading that report could not come to any conclusion other than to cease it, to cut it out. Senator GIBBS—Does the report that you are talking about concern the portfolio evaluation for the ethanol bounty scheme? Senator Parer—Yes. Senator GIBBS—I notice that the composition of the committee was one person from the transport department, three officers from Finance and only two from the environment, sport and territories department. Was there a reason for that? Why would there be three from Finance? Ms Radke—It might be easy for me to answer that. There were not three officers there at one time: there were three officers in succession who provided input to that committee. So,

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Thursday, 19 September 1996 SENATE—Legislation RRA&T 215 in a sense, it was like one man person on the committee. It is just that all three officers did contribute. Senator GIBBS—I see. Right. Ms Radke—You could say the same for DEST in that they did not both attend all the meetings but there were contributions from both of them. Senator GIBBS—All right. In relation to the scheme’s contribution to ecologically sustainable reductions in greenhouse gas and environmentally damaging pollutants, what were the major findings in the conclusion of the evaluation submitted to the Minister for Resources and Energy? Ms Radke—The scheme was set up to encourage a viable fuel ethanol industry, but the overall rationale for encouraging ethanol production was to gain benefits in greenhouse gas and in environmental air pollutant emissions. The finding of the report really established that there are a lot of uncertainties in what the net benefits are for use of ethanol. In terms of greenhouse benefits, BRS came up with some interesting studies on that, as well as looking at urban air quality. ABARE modelled the cost-effectiveness side of using a production subsidy in order to achieve some benefits. The end conclusion was that the production subsidy does not justify the benefits as is currently the state of play with research into the emissions from use of that fuel. Senator GIBBS—Are you saying it is better for us to breathe the lead from petrol than— Ms Radke—No, that is a bit misleading. Air pollution is a very complicated issue. There is not one particular criterion pollutant we are looking at; we are looking at a range of criteria pollutants. The findings on that are that, if we look at what is known as primary pollutants—in other words, pollutants that are just coming out of an exhaust pipe on their own into the atmosphere—you could probably say that there are more net benefits: it does reduce carbon monoxide, lead and so forth. The main concerns are with what are known as secondary pollutants, which are to do with the chemical reaction of what comes out from either evaporative emissions or from the exhaust and the reaction with the atmosphere to produce ozone and other pollutants. It is in this area that the jury is still out. There is a lot of testing going on, but there have been results that have come up that show that use of fuel ethanol increases evaporative emissions and these contribute to this reactive mix which ultimately produces smog. The finding was not coming out saying, ‘It is definitely creating a problem here,’ but there are strong indications that we should be concerned before encouraging this industry further. There is still a jury out on this in terms of the trials. Senator GIBBS—But as far as the research into reducing emissions of greenhouse gas is concerned, how did this analysis differ from those undertaken in the US? Ms Radke—The US does not actually have reduction of greenhouse gas as a rationale for using ethanol: in itself, the use of it there is not directed at that. If you are looking at greenhouse and fuel cycle analysis for use of ethanol you will find that there is an enormous range of answers here, and really you could pick any answer you want. The evaluation looked at the range of analysis that was available, and that included material supplied to us for the Manildra plant. A fuel cycle analysis was conducted under the BRS program using newer data and, on the basis of looking at that range of data and coming up with what is possible in an industry-wide sense, we made some determinations. Basically, it really came out that it is not

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 216 SENATE—Legislation Thursday, 19 September 1996 cost effective and it is not going to reduce any greenhouse gas emissions if we are using ethanol sourced from annual cropping systems, as is the case currently. Senator GIBBS—So why did the Bureau of Resource Sciences, in its report, only consider a continuous cropped, conventional tillage wheat cropping system in the Wimmera region in Victoria? Ms Radke—It happened that BRS had, before this evaluation, been doing work in the Wimmera region for agricultural systems and their impact on greenhouse gas. That was research that they had done before. They found that short-term crop systems, such as wheat or sugar, are net emitters of greenhouse gas to quite a large extent, to the tune that in only one year in 10 will any carbon be reabsorbed from the atmosphere from a wheat system. The impact that this has on the fuel cycle analyses that are done is that an assumption that is conventionally made of carbon neutrality, meaning that the carbon that is combusted from the use of a fuel is reabsorbed by the plant cycle, cannot be guaranteed. BRS actually has strong evidence, admittedly from the Wimmera region—it should be extended Australia wide—that you cannot guarantee carbon neutrality and that these assumptions may be underestimating greenhouse gas emissions by 30 to 50 per cent. Senator GIBBS—How can you equate that to the wheat regions of the rest of Australia? Ms Radke—You cannot. They were not assuming that. That is why they did not come up with a specific figure to balance against the fuel cycle analysis. It is indicative but they are saying they have strong evidence that wheat cropping systems generally in Australia are unique in that they are net emitters of greenhouse gas and, considering that this is a production subsidy—it is not research and development—I think we should be sure what we are talking about here in terms of what this impact is. They have strong evidence to suggest that the assumptions being made in fuel cycle analysis now were incorrect for Australia. Senator GIBBS—Did the Bureau of Resource Sciences take into account the continuous advances being made by Australian farmers on conservation, tillage and humus retention practices which contributed to the retention of fossil C in the soil? Ms Radke—The BRS analysis was based on a model called the Howden-O’Leary model. As I said, they had been doing work on this—they told me it had about two PhD theses behind it and previous work that the BRS had done. That model incorporates a number of scenarios including different types of tillage practice—conservation tillage, different systems for nitrogen, and so forth. It also has data for the past 100 years for climatic conditions. The model itself is a fairly comprehensive and robust one for looking at short-term crop systems. Senator GIBBS—Didn’t the committee assume in their analysis that ethanol production in Australia is from dedicated crops, as is the case in Brazil and the US? Ms Radke—No, not strictly speaking. This is where there has been some confusion in this debate. There are two issues here: whether or not Australia will be producing entirely from a waste stream is one issue to argue; the other is how the evaluation treated it. This issue has come from the fuel cycle analysis undertaken by Economic and Energy Analysis and the consultant’s rationale for why he did that might be a good starting point. He says: . . . ethanol cannot be treated as a by-product in future, if it is to make a discernible contribution to Australia’s liquid fuel requirements. Full allocation of a share of energy used in the starch plant is therefore considered appropriate. He came up with a model for an integrated system, including the starch processes at Manildra. He did also indicate various other scenarios that we were able to look at and consider.

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We also had data from Apace. So the evaluation did not just hang its hat on that one piece of data as it were. In fact, I went to the starch plant at Nowra twice, and Manildra told me that half of their feed stock was from the waste stream from the gluten and half was from starch that could have been sold. This is probably what the reality is. It is not going to be one extreme or the other. It is going to be some sort of mix. The position of the evaluation was that it would be equally ridiculous to pin your hat on total waste stream production as it would be to have the other thing of a total dedicated crop. So we looked in the middle. In fact ABARE chose to take a conservative approach on this—that more middle-of-the-road action. They took a low carbon coefficient and a low production figure to incorporate a range of production scenarios in their modelling. The evaluation did not assume that extreme. CHAIR—That would be a good spot to pause. We will come back to Senator Lees. Senator LEES—Can I just pick up from there and look at the various documents that the minister tabled in the Senate. I refer to appendix C page 24 of one of those, which said that BRS assessed that determining the net results of ethanol fuels in terms of pollution mitigation was premature at this stage as there were a number of issues that limited this evaluation’s ability to make net determinations. With comments such as these, I find it very difficult to understand how the minister can have found conclusively that the industry was making no effective contribution to greenhouse gas emission reductions. I also have some questions in relation to the model that was used. From my reading of the documents, you certainly have used data from the US and Brazil, rather than a mixture as you were suggesting. My discussions with Manildra as well assure me that the vast majority of what they are doing is from the waste stream. Minister, do you acknowledge that even BRS is saying that they have some major reservations? Senator Parer—I think, Senator, I summed it up initially. I do not want to go into it again, but I will say that, having looked at the complete report—which was a very professional report done by very professional people; and I am sure you might not like it because it was the Democrats who pushed this on the government of the day—if you were sitting in my position, whichever way you looked at it, you could come to no conclusion other than to terminate the scheme. You could ask the officer for more scientific detail if you wished. Senator LEES—Perhaps I could come at it from another way. You are saying that the study has not ascribed to ethanol production in Australia the carbon released in the cropping of wheat and the growing of sugar for food? Ms Radke—That we have not ascribed to that? Senator LEES—You are arguing that— Ms Radke—I am arguing that we have taken a more broad approach, in that an industry is not going to be one extreme or the other. In terms of coming up with the conclusions we have, we did not necessarily take the extreme that it was just from a waste stream. BRS’s analysis makes it almost a moot point. If carbon neutrality cannot be maintained, the impact for greenhouse gas emissions is significantly underestimated by any of these fuel cycle analyses by 30 to 50 per cent. That would conclude that, from short-term cropping systems, you are not getting a net benefit in terms of greenhouse gas. Senator LEES—We will have to go back to the drawing board on some of those. I go back to the BRS study, and can we look at the way they treated the plant at Nowra. When it

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 218 SENATE—Legislation Thursday, 19 September 1996 conducted its greenhouse gas analysis of ethanol production, was that done on the older plant built prior to the ethanol scheme and not on the new plant? Ms Radke—No, Manildra gave us data for their current plant. That is what they said. My understanding of the complaint that Manildra is raising is that they did not supply us with any data for their new proposed plant that has not been built yet. We had a lot of consultations with Manildra, and they did supply a formal submission with data for us to incorporate into the study. They supplied us with data for their current plant as it exists. Senator LEES—That comes back to other questions on the competitiveness of the industry. The minister has made some statements. In particular, he put out a press release at one stage— I think it was on 21 August—looking at whether or not this industry is really competitive. As you say, Manildra’s main plant will not be at full production until next year. Minister, looking at some of the difficulties that the company has faced, particularly from the major oil producers in marketing their product, is it not a little bit early to decide whether or not we are really up and running with a competitive industry? Senator Parer—No, Senator. This complaint about the major oil producers just does not hold water. Senator LEES—Then why aren’t they marketing the product, or at least supporting some trial marketing of the product? Senator Parer—There is marketing going on, and this is one of the— Senator LEES—Independents. Senator Parer—Yes, there is no problem about that. They were supplying everything the independents could take, and the independents were bringing in oil from overseas or were about to. I think Burmah was the name of one of the independent oil companies that had bought tanks at Botany, and they were blending the two together. Remarks have been made in the Senate that really I object to. Let me tell you that the oil companies never came anywhere near us plus or minus about whether this thing would go ahead or not; they just were not interested one way or the other. Senator LEES—I understand that you consulted with them as part of the study— Senator Parer—I did not consult with the oil companies. Senator LEES—and that they were not supportive. Ms Radke—The downstream petroleum industry, the refiners, that talked to me indicated that the only circumstances where they would consider taking on board any alternate fuel, such as biofuel, and refining it is where there is sufficient and reliable supply for them to warrant the reconfiguration of their refineries. They also felt that they would not do that as long as there were subsidies. They did not have problems with using ethanol itself, except that, with using it in splash blends as it is now, they feel it could be misleading to the public that petroleum products may be underperforming. That is their view; that is not the view that I totally came to in this evaluation. Their concerns were on a commercial basis for their business of undertaking the refining or distribution of ethanol. Senator LEES—So you did not place any weight on the claims by the major oil companies regarding evaporative emissions from ethanol? Ms Radke—Claims of evaporative emissions did not initially come to me from the oil companies. The Victorian and New South Wales EPAs have great concerns about introducing ethanol—and that is where my ears pricked up. I have reports from the Bureau of Transport

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Thursday, 19 September 1996 SENATE—Legislation RRA&T 219 and Communications Economics and from NIPER in the US that indicate that yes, for low blends there is an evaporative emissions increase. There are concerns. Senator LEES—Could you table those documents if you have them available? Ms Radke—The NIPER report and the BTCE? Senator LEES—Yes, very much so. Senator GIBBS—Did the steering committee report any results of testing currently being carried out by the New South Wales environmental protection authority, Apace Research and the NRMA under the fuel ethanol R&D program? Ms Radke—Those tests that you refer to being conducted by the New South Wales EPA, NRMA and Apace are only partly complete at this stage and no analysis has been made at this point. Those results have been not available to me. My understanding is that they are confidential. I have not been privy to them. In discussing things with the New South Wales EPA my understanding is that it is far from complete what the outcome of that is yet and it is quite misleading to say it is. Senator GIBBS—When this report was completed, is it not true that BRS concluded that more primary research was required and that determining the net effects of introducing ethanol blended fuels into the Australian fleet was well beyond the resources of that study? Ms Radke—That remark has been misconstrued. It is unfortunate. The BRS study identified that there were primary pollution benefits in ethanol blends. But it also identified that there are clear risks in secondary pollution, as I mentioned before. BRS felt that determining the real balance between the two, the net benefits for air quality on this issue, was beyond the resources and scope of this study for two reasons: BRS did not have the resources or time during the study to do it and the evidence is not in. Just like the test results that you referred to previously, there are just not enough test results to make those determinations yet. Senator GIBBS—So really the study was a very small thing, and you just did not have enough information to make a full study— Ms Radke—Not at all. I think the point here is that this is a program to encourage fuel ethanol production on the basis that it will have benefits in air quality and greenhouse gas. It is quite clear that there is a lot of uncertainty in that. There is testing going on. It is premature to say that we will have these benefits. Senator GIBBS—How can we encourage ethanol when it has been scrapped, it has gone— caput, nothing, no more money? Ms Radke—That is not true. It has not been scrapped, but as Senator Parer said— Senator GIBBS—According to this here it has. Ms Radke—The scheme has been scrapped, but there are other ways to encourage ethanol if you feel that there are some benefits worthwhile pursuing. In the context of the outcomes from this evaluation, perhaps research and development is a bit more appropriate. To that end, the government certainly has maintained those programs. We are talking about a program for encouraging production of ethanol, a production subsidy, not research and development—and there are still avenues for pursuing use of ethanol. Senator WOODLEY—In terms of research and development, Australia has developed many products over many years. But what happens all the time is that they are never developed in this country commercially and generally go offshore. I would say to you that what you are going to do with your research and development again is prove a product. But, because you

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 220 SENATE—Legislation Thursday, 19 September 1996 destroy the commercial operation at the moment, no benefit will accrue to Australia—and that would be my proposition. Senator GIBBS—I agree with you, Senator Woodley. CHAIR—If we are going to have propositions—and I am not going to get into this debate— I think there are very good reasons why you could debate that, and we shall debate it in the chamber. It will stand on its commercial merit or it will not. Senator LEES—This debate can continue in the chamber when I have had the opportunity to look through a couple of the other reports. What we have found with regard to the impact or not of greenhouse and the emission of greenhouse gases, has that been found anywhere else in the world—that there is a real question mark over ethanol? Ms Radke—For greenhouse gas, yes. The range of estimates is quite variable. You can pick any answer you want virtually. Senator LEES—Does the answer differ between whether the crop is planted for other purposes, such as food, or for the crops that are specifically planted to produce ethanol? Do you have some detail on that other than what is in this report? Ms Radke—Yes. We looked at a number of other studies. For example, there was a recent study which DEST commissioned—an alternative transport fuel study. That study advocates the use of ethanol for long-term planning. It believes that from the year 2010 to 2015 ethanol source from lignocellulosics is a strategy that Australia should be looking at very seriously. However, they also state in that report that the prospects for a very large improvement in greenhouse emissions from ethanol compared with petrol is not high in 1995, and an E10 blend would deliver a potential increase of CO2 by about two per cent. It was further concluded that it is inappropriate for Australia to seek to generate transport fuel ethanol from sugar cane or any product which requires intensive farming practices. This is in concert with what BRS have come out with. Senator LEES—Yes, but you are again going back to looking at actually producing the crop for the purpose rather than using waste and whether the waste comes from— Ms Radke—No, they were talking about what is currently done. They did a study for the Australian conditions, and this was regarding as it is used here now. Senator LEES—Could I have a look at that study? Ms Radke—Sure. Senator LEES—So you are saying that right now it’s of no use but by the time we get to the year 2000-10 it will be? Ms Radke—In terms of intensive farming and short-term crops, it is not providing the benefit to justify the subsidy that we are talking of here. In fact it is probably not providing any benefits at all. Unless ethanol is sourced from lignocellulosics in high blends— Senator LEES—That’s the plant that is being set up now? Ms Radke—There is any potential for that. Senator LEES—Could you say that again? Ms Radke—Unless we are looking at sourcing ethanol from lignocellulosics and using them in high ethanol blends—85 per cent—do any studies recommend that it is going to actually have any significant impact. The problem that we have in our study on this is that

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Thursday, 19 September 1996 SENATE—Legislation RRA&T 221 lignocellulosics is yet to be commercially proven and we do not have reliable data for what we need in this study to make this assumption. Senator LEES—So basically what you have done is to make sure it is not going to be commercially proven? Ms Radke—No. The government has $2 million for a pilot plant. CHAIR—Surely the question is— Senator WOODLEY—Having destroyed the commercial operation, then you are going to see if you can produce something else. CHAIR—The research and development is continuing? Senator LEES—Can I move on to another issue for a moment? I have a couple more potential questions. Let us look at other impacts, particularly on the rural community, who are looking at this as a potential new industry, particularly those farmers that are already involved with their wheat being more than the waste being used. Was there any examination of the economic impact on rural areas of scrapping this in this study? Ms Radke—No, there wasn’t. The rationale for the scheme was not for regional development. It was for environmental impacts. Senator LEES—Have we looked at a competitive, robust and ecologically sustainable fuel ethanol industry? You are saying that, because we didn’t have any sort of rural incentives in there, you didn’t consider that at all in your examination? Ms Radke—The only thing I would have to say on that is that, if the findings were that there were clear benefits for environmental reasons, then other issues such as regional development may help justify a subsidy, but it was not the main rationale for this scheme. Senator WOODLEY—Did you look at the effect on regional employment in the area in terms of the study? Ms Radke—No, we didn’t. Senator LEES—I have got some further questions, but I will do that in additional estimates once I have seen the answers to these. Senator Parer—I had meetings with the two producers and, while they were unhappy, of course, about not continuing to get the subsidy—this was before the budget, but I flagged that this was on the cards—their remarks to me at the time were that they would continue to produce ethanol. I know that other lines have been run, I suspect as part of the process of saying, ‘We would like to get our subsidy back’, but basically they indicated to me that they would continue producing ethanol. Senator LEES—Certainly one of them intends to continue producing ethanol, probably for some of the purposes that they were producing it before. But when we actually look at beginning to set up an industry and looking at new technology and developing something in Australia for once where we don’t have to buy in the technology from overseas, I think we have at least put it back quite a few years. What they were, I think, reasonably expecting was what had already been legislated for, what had been guaranteed— Senator Parer—Hang on. Senator LEES—And they asked you at that meeting to extend the scheme to the year 2000—no more money, simply roll it on, so that once particularly the larger plant came on stream, which is I think 100 million litres a year—

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Senator Parer—I am responding to Senator Woodley’s remark about employment. CHAIR—Are you going to ask the rest of your questions at additional estimates? Senator LEES—I have some further questions. Could you respond to that one question. When you met with them they put the case very strongly to you that they had budgeted for and were expecting what had been legislated and that the best possible thing you could do for a new industry—in this case, for the ethanol industry—was to extend the scheme to the year 2000. It wouldn’t involve any additional money. It simply would have been a case of rolling the money over for a longer period of time. Senator Parer—Of course they put it to me, but I subsequently had a report that put me in a position where you could make no other decision. Senator GIBBS—I said I didn’t have any more questions, but that was only because the minister left the room. I have two quick questions. Minister, has the industry asked you for an independent review of the department’s evaluation? Senator Parer—Yes, they have. Senator GIBBS—Can you give this committee some indication of your attitude towards such a review? Senator Parer—No. Senator GIBBS—So you won’t give the industry what they are asking for? Senator Parer—No. Senator GIBBS—Why not? Senator Parer—If you had listened to the officer who gave you very detailed, technical answers to your questions, I cannot see the sense in having a review. Senator GIBBS—But that was the bureaucrat’s point of view; that wasn’t the industry’s point of view. Senator Parer—Well, I have to make some decisions about that. My decision was no. Senator GIBBS—Bureaucracy at work. Senator BOB COLLINS—Under the performance outcomes on page 47 of the budget papers it says: A number of measures were undertaken to ensure that Australia’s secondary taxation regime does not impede industry development, while still achieving a satisfactory return to the community. Can anyone give me a slight expansion of that in terms of what those measures were. Mr Pickering—It was a package of measures which had its genesis with the previous government and had the support of the Australian Petroleum Production and Exploration Association. It was revenue neutral, which would have the effect of lowering the administrative burden on the industry and also streamlining the excise arrangements. Senator BOB COLLINS—Has the compliance audit program begun, as referred to in the same paragraph? Dr Turner—Yes, I believe that is an annual program. Senator BOB COLLINS—The only reason I am raising this point is that it refers—we will talk about it later—to the diesel fuel rebate scheme. I have read the National Audit Office’s report—I think it was tabled about six months ago—on diesel fuel. It canvassed a whole range of issues, talking about how difficult it was to precisely nail down how all this is properly

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Thursday, 19 September 1996 SENATE—Legislation RRA&T 223 accounted for. Was that a similar problem in terms of this excise? The audit says that it was established. How long ago was it established? Dr Turner—I would have to take that on notice. Senator BOB COLLINS—That is okay. I will be asking some questions when we get to the diesel fuel rebate which will make this a little clearer. But could you take that on notice. Could you provide the committee with some details about when the compliance audit program was established. What I am basically interested in is whether it has been running long enough to demonstrate whether it has been effective or not and what the level of efficiency gains were in the excise collection. I do not know when it was established; it just says here it was established. Dr Turner—Yes, we will be happy to do that, Senator. Senator BOB COLLINS—I will leave the other questions until diesel fuel. Subprogram 1.5—Coal and minerals Senator BOB COLLINS—I might kick off as I only have a small number of questions. I will deliver them all in one hit. You can take these on notice if you want to. Could you provide the committee with the total cost of the regional mineral development strategy? Mr Holthuyzen—The total cost of that strategy in relation to this financial year, Senator? Senator BOB COLLINS—Yes, that will do. Mr Holthuyzen—Three hundred thousand dollars is the appropriation for that. Senator BOB COLLINS—What is the extent of the contribution that is going to come from the states and industry? Mr Holthuyzen—Senator, consistent with the previous application of the scheme, that is something that will need to be negotiated with the various parties. The parties will be industry and state governments. Senator BOB COLLINS—Are all the states involved? Mr Holthuyzen—No. The regions will either be a mix of one or two states, but normally within a particular state, and the actual selection of a region has not yet been made by the minister. Senator BOB COLLINS—Do you know if the Northern Territory has indicated an involvement? Mr Holthuyzen—At a local level. Senator BOB COLLINS—What will the relationship be between this body and the ministerial council? Mr Holthuyzen—The Australia-New Zealand Minerals and Energy Council? Senator BOB COLLINS—Yes. Mr Holthuyzen—Senator, the relationship is consultative. The council will be used as a dialogue and a reporting forum on progress in relation to the regional development initiatives. Senator BOB COLLINS—Again, briefly, how precisely is this regional mineral development facilitation strategy actually going to work? Mr Holthuyzen—It is based on a somewhat unique concept of bringing together key interested parties in achieving accelerated facilitation of mineral projects. What we intend to do is similar to what was undertaken in the Gulf of Carpentaria, Mount Isa and the Western

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Australian goldfields area, and that is to attempt to knock over as quickly as possible all the impediments to mineral projects, such as approval processes and environmental assessments, and undertake those altogether. Senator BOB COLLINS—I see. You are trying to get to where you cut in and where the commercial world takes over. So the principal aim is to assist in terms of that interface between government and industry. Mr Holthuyzen—Yes, Senator. Senator BOB COLLINS—Does the government plan to have, or has it already initiated, discussions with the Northern Territory government regarding the payments made to the territory in lieu of uranium royalties? Mr Holthuyzen—No, there is nothing in train in that area at all at this stage. Senator BROWN—I come back to the responsibility of the department in determining policy for the diesel fuel rebate scheme, which involves more than $1 billion in rebate. Senator Parer—Can I just correct you there? We are on minerals at this stage. It is about $800 million. The total diesel fuel rebate that I think you are referring to is mining and rural, which is about $1.2 billion. Senator BROWN—That is right; you are spot on. What are the purposes and objectives in the diesel fuel rebate scheme for the mining and forestry sectors? Mr Holthuyzen—Perhaps I could just clarify first of all with regard to the responsibilities: the application of the diesel fuel excise is the policy responsibility of the Department of Industry, Science and Tourism. The administration of the scheme, and the administration of the rebate scheme, is the responsibility of a subprogram of that department, the Australian Customs Service. There are other departments, including the Department of Primary Industries and Energy, which is also involved in the development of policy advice in terms of a whole of government approach, but the direct responsibility is not with this portfolio. Senator BROWN—Let me refer to the audit office report of 1996 on this rebate scheme, which states that when policy issues have arisen most input has come from this department and Customs. Mr Holthuyzen—That might be the view of the audit office, but I can assure you that there are many other departments that are involved in the development of policy. Senator BROWN—Is the audit office wrong? Senator BOB COLLINS—It’s not always right. Senator BROWN—Well, I’m just asking: is the audit office wrong? Mr Holthuyzen—It depends on the emphasis. I have not read that particular reference, but we have a responsibility for export industries in the rural and mining sectors. To that extent, we have input to government policy formulation through the minister. The direct responsibility is that of the Department of Industry, Science and Tourism. Senator BROWN—What was your input? Mr Holthuyzen—That is an ongoing input. It depends on the issue of the day. Senator BROWN—What has it been over the last 12 months? Mr Holthuyzen—The most recent involvement of the portfolio related to budget consideration by government of the review of the rebate scheme. The government made a decision as a result of the budget in relation to that.

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Senator BROWN—What was your input? Mr Holthuyzen—Our input related to advising on the impact of changes to the scheme on the mining sector. Senator BROWN—What was that advice? Mr Holthuyzen—The advice is basically policy advising, and I am not in a position to mention that here. Senator BROWN—Then let me be specific. What was your advice in terms of the economic impact of removing this rebate on the mining and forestry industries separately? Mr Holthuyzen—The removal of the rebate from the point of view of export industries and the mining sector would be to significantly disadvantage the international competitiveness of those industries relative to other mining ventures in other countries. Senator BROWN—Okay. What was the significant disadvantage? Give me a dollar figure. Mr Holthuyzen—If the rebate was removed completely from the mining sector, it would have the effect of making the effective tax rate on the mining sector in Australia something like 62 or 63c in the dollar. Senator BROWN—What is the disadvantage of that vis-a-vis competitors? Mr Holthuyzen—The disadvantage of that is that there would not be any mining activity in the world that would reach that sort of level of taxation or anywhere close to it and the effect would be quite simply a massive closing down of Australia’s mining activity. Senator BROWN—So there would have been a massive closing down of Australia’s mining industry if this rebate had not been maintained? Mr Holthuyzen—That would be our judgment, yes. Senator BROWN—Which other country in the world has a similar rebate? Mr Holthuyzen—Not many. There are other countries who have rebates, but they are very significantly lower rates of taxation. Senator BROWN—And why is it that the Australian mining industry cannot compete with those countries? Mr Holthuyzen—They can compete with those countries because they also get the rebate. Senator BROWN—Let me talk about the other countries. You said that they get a significantly smaller rebate— Mr Holthuyzen—No, Senator. Their rebate or their tax levels are as low as ours or lower than ours. Senator BROWN—Then, for the countries where that does not apply, why cannot the Australian mining industry compete with them? Mr Holthuyzen—There are no significant mining producing countries that have an excise or have a tax level higher than Australia. Senator BROWN—Which countries have a similar level? Mr Holthuyzen—European countries which are not mining countries. Senator BROWN—Can you tell me which companies have been principally advantaged by this rebate? Let me lead off by asking your directly. A newspaper reports that BHP will be advantaged to the tune of $80 million this year. Is that correct?

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Mr Holthuyzen—I do not have those figures at the top of my head but, as a general statement— Senator BROWN—Can I just help you and the committee by asking you whether you would provide those figures to the committee? Senator Parer—I would like to come in there. I think it is important that I do. One of the things that BHP has pulled out of the hat is that it happens to be the biggest mining company in this country. One of the difficulties is that you are asking the officer questions that are very difficult to answer because the effect of removing the rebate would vary from mine to mine. If you just take the coal industry, which I am sure is one of the industries that you are thinking about, and, if you take the BHP mines, they would not be as diesel dependent—the ones that I know, anyway—as the smaller mines. One of the things that they do is use electric drag lines whereas a lot of the smaller operations in the Hunter Valley, the Bowen Basin and the south coast of New South Wales would basically be diesel dependent. CHAIR—Almost all of Western Australia. Senator Parer—Yes, but I am talking about the coal miners at the moment. They would probably use truck and shovels and scrapers and so on. So it is very difficult. Just out of interest, I did a little calculation—and it depends on whether you are talking big or small and variations in depth and what the strip ratios are—and a typical coalmine in the Hunter Valley is not a big mine by mining standards but it could be anywhere between 80c and $2 a tonne. Senator BROWN—So the list that is to be provided of the various companies to the committee is to be a question on notice? Mr Holthuyzen—Senator, that would have to come from the Australian Customs Service. We would not be able to provide that direct but we could request it from them. CHAIR—Is it reasonable to bring forward the names of industrial companies in terms of their situation? I think we would need to put a qualification on that particular question. I do not know what the rules are, what the rights of these companies are. If it is okay to do it, fine, but— Senator BROWN—Let me respond to that by saying that we are talking here about $800 million of public expenditure. There can be no reason for secrecy on that money out of the public purse going to the companies. I think the officer is quite right in saying that if the information is available it would be supplied under freedom of information if that request were made so I would be quite happy to receive it as it has been promised. Mr Barratt—I simply want to raise the point that we are being asked for information that is not in the possession and control of the Department of Primary Industries and Energy. CHAIR—Yes, I understand that. Did I understand the officer to say that he was prepared to hand that on to Customs and that it is up to them? Mr Holthuyzen—Only the request, Senator. Senator BROWN—Does your department have that information? Mr Holthuyzen—No, Senator, we do not. Senator BROWN—I understand that the diesel that attracts the rebate is used, amongst other things, for transport, for machinery, for electricity generation and for other purposes. Can you give me a breakdown of what proportion of diesel is used for each of these major uses. Mr Holthuyzen—Senator, again that is not information that is available to this portfolio. As I indicated earlier, the Australian Customs Service has responsibility for the administration

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Thursday, 19 September 1996 SENATE—Legislation RRA&T 227 of this scheme. All information that is available would be available from them. I do not know whether they have that breakdown. Senator BROWN—What is the policy objective of the scheme? Mr Barratt—Quite simply, to refrain from taxing business inputs to production. So it is a rebate on tax already paid, which is a system that is an alternative to not collecting the tax in the first place. CHAIR—In terms of this, I am going to have to suggest—and I do not want to interfere with the process—that questions which should be going to the other departments should be addressed to those departments directly. I do not think it is reasonable to ask officers here to do a route around the track. There are other committees here through which this information can be asked for and obtained. I think we should deal with what applies to this department as far as the diesel fuel rebate is concerned. Senator WOODLEY—I accept your ruling, but I would like to make a 30-second statement on it. CHAIR—Certainly. I do not want to inhibit the debate, but I think we have to be fair to the officers and we have to be fair to the department. We have to stay with the system. Senator WOODLEY—I certainly would want to be fair. The problem is that, when we asked whether or not this could be discussed here and we were debating whether it should go to customs and excise, the offer was made from the department that they would deal with it under subprogram 1.5. CHAIR—I do not believe that is correct. My understanding of the decision that was made was that we would deal with those things that pertain to this debate. Senator WOODLEY—Correct. CHAIR—There was no suggestion that now we should be having questions which should go to another department. Senator WOODLEY—Of course, we do not know what is appropriate until we ask the question. Senator Parer—I want to make a broad comment. The rebate to the mining industry is less than the excise charged to the mining industry. Mr Barratt—Yes. Senator BROWN—I want to go to the area of input, and you told me you do have—and, of course, the audit office says so too—a major role in policy formulation as far as this scheme is concerned. I ask you again: what is the objective of this policy in so far as this department is concerned? Mr Barratt—This objective is to refrain from taxing inputs to production before the company generates a profit. It is a perfectly sound taxation principle to tax profits rather than the cost of inputs. Senator BROWN—That is an across-the-board policy of the department. Mr Barratt—That is the approach we take to the policy issue you are asking us about. Senator BROWN—Yes. In general, outside this diesel fuel rebate it is a general policy that the department holds and the minister endorses as being a government policy.

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Senator Parer—It is government policy to minimise the input cost to the industry in an industry that is the biggest source of investment and the biggest source of export income in this country. It represents 60 per cent of the commodity export income to Australia. Senator BROWN—Yes, thank you for that. I just wondered if you could tell me what assessment of the impact of the use of diesel fuel, in so far as the emission of greenhouse gases and carcinogens is concerned, is taken into account by your department in formulating your policy. Senator Parer—Senator, I think perhaps I can answer that. The impression I think you are trying to give, quite wrongly, is that these people are using diesel fuel rebate because of its cost. Let me tell you that diesel, where they use it, is the only source of energy they can use. There are avenues open in the newer emerging technology, such as photovoltaic cells and things, but they cannot drive a truck and they cannot drive a scraper. They can be used, and they are being used more, in the more remote areas for the generation of electricity for specific purposes. Usually they are an addition to a diesel generator simply because they rely on the sun. What we are seeing, which I think is a major improvement, certainly in Western Australia, is that with the new gas transmission lines that are now coming in, particularly into the gold fields, you are seeing people where they can switch to gas. A fairly rough estimate of that would be that within the next 12 months we may well see a reduction in the diesel fuel rebate as an outlay of something in the order of $50 million because it has switched to gas. That in itself is a plus in regards to greenhouse gases. Senator BROWN—Let me ask you again: what consideration did you take into account of the reduction of greenhouse gases and carcinogens, specifically from diesel, in your input in the organisation of this policy? Senator Parer—I would like to switch that around. What option are you offering? Senator BROWN—I am saying here— Senator Parer—No, what option are you offering to drive a truck or a scraper or— Senator BROWN—If you would like to swap seats with me, Senator, I would be happy to accommodate you. I am asking the question here and I would like an answer to it. Senator Parer—The options are limited. There are no options at this stage. Senator BOB COLLINS—There is one, Minister, that you did see and that is what the drivers of the truck have. Senator BROWN—You referred to the photovoltaic cell and the production of electricity. In these areas where the diesel fuel rebate is being given, is the fuel rebate extended to public sector production of electricity in those same regions? Senator Parer—I am not sure what the question is. CHAIR—I believe that that is a question for Customs. Mr Holthuyzen—If you are seeking a specific explanation regarding the eligibility of particular individuals or projects, et cetera, that would be a question the Australian Customs Office could provide information for. Senator BROWN—Let me tell you that the public sector does not get the fuel rebate but the private sector does in the generation of electricity in outback areas. You might take that into account— CHAIR—That is not an absolutely correct statement.

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Senator BROWN—Isn’t it? CHAIR—I have to say now that we are really getting in the realms of another department in the details of that. I have been fairly generous in terms of allowing it to flow, but I do not think it is reasonable to ask officers of this department detailed questions about the application of the diesel fuel rebate. Senator BROWN—I was putting the question to the minister rather than the officers. CHAIR—Even so, the minister is representing this department. The place to go to for the answer to those detailed questions is the other estimates. Senator BROWN—And the minister would not have the answer to those questions? CHAIR—I would be surprised if the minister would have those at the top of his head. Senator BROWN—I would be too. Senator Parer—Yes, it is Customs. CHAIR—We are talking about very sophisticated details of a scheme which has had something like over 200 individual applications for the diesel fuel rebate that came through on agriculture and I am not sure how many on mining. But we had a significantly long debate on it last year anyhow. Senator BROWN—The minister might be able to answer another question. Could you tell me if there has been any recent discovery of a mineral ore body in the vicinity of or south of Macquarie Island? Senator Parer—If there is, Senator, I have not heard about it, but one of the officers might know. Mr Holthuyzen—We are not aware of it, but that is probably something, in the first instance, that has been recorded by the state governments. CHAIR—Before we go anywhere, I would like to seek permission of the committee to table a document which spells out, at least in five instances, the variation between the cost of diesel in this country and other countries and the impact of the diesel fuel rebate. Senator BOB COLLINS—That would be very useful, thank you, Mr Chairman. Senator WOODLEY—My questions may be out of order, but I do not know until I ask them. I probably should declare an interest in the farming section of the diesel fuel rebate and say that I am in favour of it, if you want to know. What I would like to know is the percentage of the agricultural for farming and the percentage for other uses under that particular heading. Do you think that might be customs and excise? Senator Parer—Get the officers to correct me if I am wrong, but my understanding is that the mining industry is $800 million and the rural industry is about $400 million. If you want to compare it on a pro rata basis, from a commodity export point of view, mining represents 60 per cent and I think rural represents 35 per cent, or thereabouts. Mr Holthuyzen—That is correct, Senator. Senator WOODLEY—Within the rural section itself, would most of it go to actual farming? Mr Holthuyzen—Yes. Senator WOODLEY—I understood the original purpose, particularly the farming part of the rebate, was that, because most of the vehicles were off road, it was not fair to collect the tax. The diesel fuel tax was originally seen as being an income for road construction and maintenance. Is that correct? That was the original rationale, whatever it is now.

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Mr Holthuyzen—Certainly the rationale for the scheme now, Senator, is as the secretary indicated, that is, it is put in place to ensure that taxation of imports to production does not occur. Senator WOODLEY—I know that this has been a matter of debate in the chamber, but have you any idea of the—I do not know whether this is a fair question—percentage of the rorts that apply to the whole of the scheme that certainly the previous government was concerned about and I presume this government is concerned about as well? Mr Holthuyzen—Isn’t that a customs question? Senator BOB COLLINS—It is, in fact. Have you got a copy of the audit office report? Senator WOODLEY—No, but I will get it. Senator BOB COLLINS—I was just going to suggest to you that the most useful document you could have in respect of laying out all of the problems would be that report. It was tabled in the Senate so you get it from the Senate Table Office. CHAIR—I think one should state that we made it quite clear in the debate last year, on our side of politics and since we have come into government, that we are about cleaning up any rorts, for want of a better word, or misplacement of payment that exists through that rebate scheme. Senator PANIZZA—One of the officers said earlier on in an answer to Senator Brown that other countries rebate less than Australia. Is that right? Mr Holthuyzen—No, what I said was that they tax less. Senator Parer—Can I just say that the Chair has just tabled a document— Senator PANIZZA—I know. Can I ask my questions? What did you say? Mr Holthuyzen—What I indicated was that in the vast majority of those countries that are major mining producing countries, taxation of diesel fuel is very low or non-existent and lower than it is in Australia. Senator PANIZZA—I thought it might have been the case that they were taxing less in the first place. Mr Holthuyzen—That is the case. Senator PANIZZA—I also heard you say you did not want to tax imports. Could you tell me when the department went from changing their idea because it used to be a levy, it is still called a levy and now everyone is calling it a tax. Senator Parer—We are not. Senator PANIZZA—The term ‘tax’ has been used half a dozen times in the short time I have been back here. You were talking about taxing imports. The term ‘tax’ was used, rather than ‘levy’. Mr Holthuyzen—As a general principle, the point that was made was that the imposition of the diesel fuel rebate scheme and the application of the rebate to the mining sector acknowledged the need to avoid as much as possible taxing inputs to production. That was the statement that was made. Senator PANIZZA—I would like to know when the department starting its thinking because originally there was a levy to make on-road users pay certain contributions towards roads and what was used off-road was not levied. We had that situation. Then it seemed to become a

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Thursday, 19 September 1996 SENATE—Legislation RRA&T 231 taxing measure. Can you tell me when it became a taxing measure rather than a levy for off road? Mr Holthuyzen—I think that really does harp back to the very first statement I made. I think you will find that those issues were pursued by the government of the day and applied by such departments as Treasury and the Department of Finance in terms of revenue raising, et cetera. Senator PANIZZA—The government of the day that brought in the provision that you pay the levy, then rebate it, was the Fraser government. It must have been after 1973. I have read the speeches that were made at the time and at no stage did they say that it would be a taxing measure. It was only brought in that you pay a rebate because of rorts, or ones that were not eligible. Somewhere along the line, without me being rather definite, it changed from a levy for on-road to a taxing measure on transport. Mr Holthuyzen—I think all we can say is that, from the perspective of this portfolio, we have consistently applied the definition and the support for the rebate on the basis that we wish to avoid as much as possible taxing inputs to production. That is the basis upon which we support the rebate scheme. Senator PANIZZA—I know that this is not the taxation department, but what is the difference between sales tax exemption that is never returned—you don’t pay it and there is never anything like that—and the diesel fuel rebate? Do you class sales tax exemption as a subsidy to industry? Mr Holthuyzen—That strikes at the heart of who administers the scheme and how it is administered. How it is administered—whether it is through an exemption scheme or through a rebate scheme—is really a matter for the Australian Customs Service and for the government as a whole and not for ourselves here. We have to take as given the administration of the scheme. Senator BOB COLLINS—How many times are we going to chase this rabbit around the track? Senator PANIZZA—Senator Collins, you have been on all night. I have been watching you. Senator BOB COLLINS—I haven’t said a word for almost an hour, Senator Panizza. Senator PANIZZA—I have been watching you. I think you will excuse me, seeing that I am on the committee, for asking the odd question about what I am interested in. Senator BOB COLLINS—I respect that, Senator Panizza. All I am saying is that this is not the relevant department. CHAIR—These questions were dealt with earlier. The department answered them in terms of what their position was from a policy attitude. They said that they did not believe it was in the best interests of agricultural mining to have taxes on inputs. I think that was the answer to the question that was given at that time. I do not see much point in us going around two or three times. Senator BOB COLLINS—I have one question to ask on the diesel fuel rebate scheme. I think it is relevant to the department. In fact, I will be terrified if I find out that it is not. I refer to the National Audit Office report to Customs on the administration of the scheme. In fairness, I must say that the word ‘rort’ has been used a fair bit here tonight. There clearly is a concern in the report, but a lot of it has to do simply with maladministration, systems failures and so on—a conservative figure of around $30 million a year was estimated as being

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 232 SENATE—Legislation Thursday, 19 September 1996 lost from the scheme. I note the budget papers—and correct me if I am wrong—have projected potential savings over the four years of $380 million, approaching $400 million. Senator Parer—About that. Senator BOB COLLINS—In that order. I understand that—and I assume the department is involved in this—there will be some sort of consultative group or task force put together to work out in a cooperative way what changes can be made to the scheme to achieve those savings cooperatively without having them imposed. I presume that, if that fails, there will be some cap put on it at the end of the day. But the question I want to ask is: does the department have a close role or a close involvement in the establishment of that task force? Senator Parer—Basically, discussions have occurred primarily between the minister for customs and the industry, but we have been very heavily involved in them and are still participating. It is a cooperative approach to achieve that target figure. The sort of thing we are addressing and one of the concerns is that the rebate itself was growing at an expediential rate greater than the growth of the industry or the CPI. Everyone has recognised that. Those discussions are continuing, let me put it that way. Senator BOB COLLINS—Fine. But is it the intention of the government in that examination to have participation from the affected industries, the mining sector and primary industry in that process? Senator Parer—No, because the discussions are simply going on with the mining sector. Senator BOB COLLINS—Thank you. Senator BROWN—Have you any news of any recent ore body finds south of Macquarie Harbour in western Tasmania? Senator Parer—I do not. CHAIR—That finishes questioning on subprogram 1.5. We will now move to subprogram 2.1. [11.25 p.m.] Program 2—Industry and community services Subprogram 2.1—Natural resources management Senator WOODLEY—In the subprogram dealing with forests I notice that there is a costing of $1.15 million spent last year for the North Queensland community rainforest’s revegetation program. No money is being provided for this program this year, as I read the figures, but I can always be corrected. I am wondering about the effectiveness of the program last year and in any previous years, what the benefits were to the community and why no money is being provided this year or in the future. Mr Thomas—The original allocation for the community rainforest program expired last year. Further funding is being provided this year through the wood and paper industry strategy. The funding to be provided will be lower than the amount provided last year, but there is still funding there. It is of the order of $700,000. Senator WOODLEY—Would you assess that program as having both environmental and employment benefits for the region? Mr Thomas—The way that it is administered is quite innovative, in my view, and it does have those sorts of benefits. It is administered by a board within North Queensland and in effect pools money from the wet tropics tree planting program from the department of the

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Thursday, 19 September 1996 SENATE—Legislation RRA&T 233 environment; the community rainforests program from our department, which has got a much more commercial bent to it; and the labour market programs of the department of employment. It gets a multiplier effect from combining funding from all of those programs. Senator WOODLEY—I am pretty enthusiastic about it, of course. That is where my concern comes from. I think that will do for the moment. I have other questions on the Murray-Darling Basin, but I imagine we had better stay with forests. CHAIR—Yes. Senator Brown? Senator BROWN—I might begin by referring to today’s gazetting of the regulations for export woodchip licences. In relation to transitional licences, is it correct that the minister is not required to consider any environmental impact assessment before issuing a licence? Mr Thomas—Not at all, senator. The EPIP Act requires any Commonwealth official, including a minister, who takes a decision that may have a significant impact on the environment to, in most cases, designate. That is what you have said is not the case. Senator BROWN—But there is not a requirement within those regulations? Mr Thomas—There is a requirement within the law, within the EPIP Act itself. I am not sure that I understand the reasoning behind your question. The requirement already exists— Senator BROWN—The reason is quite simply that there is no reference to that requirement for an environmental impact statement in the regulations. Mr Thomas—But the requirements are already written into Australian law. It would be redundant, I think, to repeat it again in this legislation. Senator BROWN—So there will be a requirement for an environmental impact statement for each of the licences that are to be issued which involve woodchipping in native forests? Mr Thomas—I cannot answer yes to that, because each case must be considered on its merits. I cannot envisage an application where there would not be an environmental impact assessment, but I cannot prejudge every application that is going to happen. I would expect that is the case. Senator BROWN—Has the past issue of licences been predicated by an environmental impact assessment in each case? Mr Thomas—An environmental impact assessment is something that the Minister for the Environment determines. The responsibility of the Minister for Primary Industries and Energy or the action minister in any case is to designate to the Minister for the Environment. The Minister for the Environment then determines whether or not an environmental impact assessment is required. Senator BROWN—So has an environmental impact assessment resulted from the issuing of each licence in past years? Mr Thomas—Not for each and every licence. Senator BROWN—For what proportion of them? Mr Thomas—I could not give you an honest answer to that in that I have not done it. But the exports that are going to occur from any one year to the next are going to be in a similar area of forests. They are going to adhere to a similar code of practice. What has happened in the past is that major environmental impact assessments have been undertaken of broader forest regions. Then, consequent on that, licences have been issued for a number of years without the requirement for a further formal assessment, so that the environmental impact assessment will occur. I think the most recent one covering the whole of Tasmania was in the mid to late

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1980s. That environmental impact assessment has been the main assessment done prior to the issue of licences in that state since that time. Senator BROWN—So licences issued 10 years on from that assessment in the mid-1980s have not required a new environmental impact assessment? Mr Thomas—That is a matter for the judgment of the Minister for the Environment. Senator BROWN—I am not asking about future licences, I am asking about the reality of what has happened. Has that been the case? Mr Thomas—That has been the case. There have been further environmental impact assessments for specific proposals within Tasmania. Senator BROWN—For each licence? Mr Thomas—For specific licences within Tasmania. Senator BROWN—For the issue of each licence? Mr Thomas—For the issue of some licences not every licence. Senator BROWN—Do you know what the proportion is? Mr Thomas—I could not honestly answer that question. I would have to come back to you on that. Senator BROWN—Would you do that for the committee please? Mr Thomas—Yes, I will go back to the last major assessment in the mid- to late 1980s. Senator BROWN—I think it was about 1985. Mr Thomas—The year that comes to mind is 1986. Senator BROWN—Is it true that, with the regulations that have now been gazetted, the issuing of licences is a matter solely for the minister with responsibility for this department? Mr Thomas—As it always has been, the answer is yes. Senator BROWN—What requirement is there on the minister for this department to get the advice and an environmental impact assessment off the Minister for the Environment? Mr Thomas—There are three sources of advice, the first is general policy advice. That is a matter which both portfolios have an interest in. The two ministers relate to one another. In addition to that, there is a statutory requirement—the minister is required by law—to consult on any decision where the action minister judges there is going to be a significant impact on the environment. Last year each application for a licence was and this year every application for a licence will be designated to the Minister for the Environment. There is also a requirement under the Heritage Commission Act to refer all applications to the Australian Heritage Commission where the national estate is involved. There is quite a comprehensive requirement for consultation both at a statutory level and a policy level. Senator BROWN—What is meant by consultation? Mr Thomas—Seeking advice in the terms of your question. Senator BROWN—It can be as simple as that? Mr Thomas—The advice is provided as part of a statutory obligation. The advice must be considered by the minister issuing the licences as a statutory obligation. Senator BROWN—But the minister does not have to abide by that advice? Mr Thomas—That is the way the law is written.

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Senator BROWN—So the actual issuing of a licence is solely at the prerogative of the minister? Mr Thomas—It is and has been for as long as licences have been issued. Senator BROWN—What is a degraded forest? Mr Thomas—A degraded forest, in terms of these regulations, is a particular type of forest with respect to which a licence may be issued. The first decision the Minister for Primary Industries and Energy must make prior to issuing a licence is whether the forest is possibly going to be required for a comprehensive, adequate, representative forest reserve system. If it is, no matter what its state, then that forest is not available for the issuing of a degraded forest licence. If that forest is potentially not possibly required and not going to be required for the reserve system, the minister must then appoint an independent assessor—the qualifications of the assessor are broadly set out in the regulations—to provide a report to him on the state of the forest. The report would go both to the Minister for the Environment and the Minister for Primary Industries and Energy and based on that report the minister would make an assessment as to whether he would issue a licence. Senator BROWN—So an environmental assessment is made of all degraded forests before they are further considered for woodchipping? Mr Thomas—Yes, an environmental assessment must be made. In that response, I have not covered the minister’s legislative responsibilities under the EPIP Act. He would be required to designate, I would assume, that such an operation would be likely to have a significant impact on the environment. If that is the case, he must designate. The Minister for the Environment, if you like, provides a statutory response under that act. Senator BROWN—Is the assessment done to decide whether it is a high conservation value forest or to decide whether it is required for the nation’s forest reserves or is it done before the issuing of a woodchipping licence? Mr Thomas—I am not sure that I understand your question. Both assessments must be done. The first question the minister must address is: is that forest, that a licence is being sought for, likely to be required for a reserve system? If the answer is yes then there is no further consideration for a degraded forest licence. If the answer is no, it is not likely to be required, then the minister would require a report to be produced as to whether the forest was degraded. The minister would, in all probability, designate the application and ask for formal advice from the Minister for the Environment under the EPIP Act and, at the end of that process, I would expect a decision to be made on whether or not to issue a licence. Senator BROWN—What is a degraded forest? Mr Thomas—A decision on whether or not a forest is degraded would be made by the minister for primary industries based on the advice of the independent assessor. Senator BROWN—Can you tell me what a degraded forest is? What are the parameters for that? Mr Thomas—Under clause 14(1) of the regulations, a degraded forest is defined as: Before deciding whether to grant a degraded forest licence, the Minister must consider, in relation to each forest to which the application relates: (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;

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and (b) any other relevant matter. Senator BROWN—Before deciding whether to grant a degraded forest licence—that is, whether the forest is degraded—the minister must consider these things. In coming to that decision, can you give me a description of what a degraded forest is? Mr Thomas—A degraded forest, in terms of the regulations, has been defined in those terms. Senator BROWN—Can you tell me what ‘significant’ means? Mr Thomas—It is a judgment that would be made by the minister based on the advice of the independent expert. Senator BROWN—So the judgment could vary according to the minister or the expert? Mr Thomas—I imagine the judgment could vary at the margins, according to the minister or the expert. I would have thought that there would have been a broad set of principles to be followed. We are talking about the science of ecology, forest management and forest health. CHAIR—It is an independent assessor who does the assessment and not the minister, is that correct? Mr Thomas—An independent assessor provides advice to the minister who, at the end of the day, is responsible for the decision. He certainly makes the recommendation. At the end of the day, the minister is the decision maker. Senator BROWN—So it is the judgment of the minister that determines whether a forest is degraded or not? Mr Thomas—It is based on the advice of an independent assessor. Senator BROWN—But it is the minister’s judgment? Mr Thomas—The minister is the decision maker under the law. Senator BROWN—What is ‘wilderness’? Mr Thomas—That term is defined within the regional assessment process and it is defined in terms of the National Wilderness Index. That is really a matter for the Heritage Commission. Senator BROWN—It is in the regulations that wilderness values have to be considered. I would like you to tell me what the department’s definitions of ‘wilderness value’ and ‘wilderness’ are? Mr Thomas—The definition of wilderness used by the department would be in terms of the national wilderness index as defined by the Australian Heritage Commission. Senator BROWN—But you do not know what that is? Mr Thomas—I am not an expert in all things. I cannot tell you what that is. Senator BROWN—If the department cannot say what that is, how is the minister going to make an assessment? Mr Thomas—I did not say that the department could not say. I cannot, from here and with the knowledge that is in front of me, respond to you on that question. It is something I could get back to you on. I can certainly help you with the Heritage Commission’s definition. Senator BROWN—The committee would be pleased to have that. Can you tell me if world heritage values, which are also mentioned in the regulations, are established to be there or potentially there? Is that a matter for protecting an area from woodchipping?

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Mr Thomas—We have a set of obligations under the world heritage convention that we have signed to protect world heritage values. The way in which those values are protected will depend upon the nature of the values and on how they are best protected. Senator BROWN—But if they were world heritage values, they would be protected? Mr Thomas—We have an obligation to protect those values, yes. Senator BROWN—Is it not true that the state and Commonwealth last year decided there were eight coupes in Tasmania that had world heritage values or were involved in protecting world heritage values of the existing world heritage area and that, in fact, only five of those have been protected? Mr Thomas—That is a matter that was decided by the previous government. I must say that I am not familiar with the detail of that particular decision. Senator BROWN—I was aware that that was decided by the previous government. Has there been any change of mind by the present government? Mr Thomas—To my knowledge, the question has not been addressed by the present government. I am confident of that. Senator BROWN—Should it be addressed? Mr Thomas—That is a value judgment. That is a matter we could put to the minister, but that is not a question for me to answer. Senator BROWN—Well, I might ask the minister. If there are coupes which have world heritage value or potential world heritage value, would you see it as your duty or obligation to protect those while that status was maintained? Senator Parer—That is something I cannot answer, but let me say to you that I would be going down the same line you are going down with the officer before and saying, ‘How do you define world heritage value?’ Senator BROWN—Well, how do you? Senator Parer—I am asking you. Senator BROWN—No. I am— Senator Parer—I think what we are doing—and I am getting a bit tired of it—is engaging in philosophical semantics on words, for example when you start asking, ‘What is significant?’ I could ask you what is significant on anything. Senator BROWN—If I can— Senator Parer—Let me finish. I have been listening to this now for about 15 minutes and I think we are going around and around in circles. It is something I am happy to refer to Minister Anderson for you, but then you start asking questions about what is in a regulation, and you know you cannot put a definite thing on it. You know that; you are very intelligent, Senator Brown. You know darned well when you are going down that track that you cannot specifically say, ‘It has to have x percentages,’ or whatever it might be. I do not know how long we are going to continue going around in circles on semantics. Senator BROWN—Let me ask you again. There has been a joint state-federal assessment of forests targeted for woodchipping in Tasmania, which established that eight coupes were of world heritage value, potential world heritage value or protecting world heritage values that existed. Would you therefore accept that those coupes should be protected?

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Senator Parer—I think the officer made the remark earlier that the previous government did not accept them. The officer indicated to you that it has not become an issue at this stage. I will refer your hypothetical question to the minister. Senator BROWN—Let me say again: it is not a hypothetical question. I have given you the facts about these eight coupes. You are prevaricating— Senator Parer—No, I will refer it to the minister. Senator BROWN—on what your position is as far as world heritage values is concerned. I simply asked you whether you believe world heritage values should be protected or whether they should not. Senator Parer—I will ask the minister. Senator BROWN—Can you say yes or no to that? Senator Parer—I will ask the minister and get you a response. Senator BROWN—What is your opinion? Senator Parer—I am not the minister. Senator BROWN—What is your opinion? Senator Parer—I am not the minister! Senator BROWN—So you are not prepared to give— Senator Parer—Senator, I am not the minister—fourth time around. Can’t you hear? Senator BROWN—I can hear very clearly that you are unable to give this committee— Senator Parer—I have said that I will ask the minister and he will give you a response. CHAIR—Can I just make a point here? People do not have to state opinions in terms of particular things. The minister has made it quite clear that he will refer the matter on to Minister Anderson, the responsible minister, and come back with an answer. Senator BROWN—Chair, what the officer said earlier was that we had obligations under an international treaty to protect world heritage values. CHAIR—I heard all that. But a question has been put to the minister at the table, who is not the responsible minister. He has offered to refer that to the responsible minister and come back to the committee. Senator Parer—Except to say that we will carry out our obligations under world heritage. Okay? Senator BROWN—Thank you. I would like to now ask about the monitoring of the hardwood woodchip export licences. Firstly, would the minister make the conditions on the current export woodchip licences available to the committee? Mr Thomas—The conditions can be made available. Senator BROWN—Could the department also make available the compliance reports by the Woodchip Export Monitoring Unit on the woodchip exporters? Mr Thomas—There is an annual report put out by— Senator BROWN—Yes, I have that. Mr Thomas—And that reports on compliance against each one of the conditions.

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Senator BROWN—That report does not include all compliance reports on all the woodchip exporters. I just wondered if you could make that available to the committee. I guess their reports are a summary. Mr Smart—I do not know the answer to your question on the status of the reports, but in its annual report last year the unit reported in some detail on those existing reviews and in the next report they will report equally on the subsequent reviews and assessments they have made. Senator BROWN—Did that annual report include all the compliance reports coming from the companies? Mr Smart—I think you have seen the annual report that covered the compliance reports. It covered three cases and reports on those. It did not cover all of the detailed reports that the unit made. Senator BROWN—What I am asking is if the committee might have the compliance reports coming from all the companies. Mr Smart—I cannot give you an answer at the moment. I will have to have a talk to the unit and ask them what the status of those reports is. Senator BROWN—Could the committee have the reports from the companies that are available to the unit? Mr Smart—I do not know what the status of those is, but I am happy to take it on notice and advise the committee. Senator BROWN—I am sorry, what do you mean by ‘the status’? Mr Smart—I do not know whether the reports have commercial-in-confidence status. I am not sure. Senator BROWN—Could you give the committee those reports minus any commercial-in- confidence information with an explanation as to what the commercial-in-confidence information is? Mr Smart—I do not think I can answer that specific question. I have to go back and talk to the unit and ask them about the status of the reports. CHAIR—My understanding of your answer, if I could get it clear, is that you have offered to go back, find out what is available and what is not available and come back to the committee. Mr Smart—Exactly. Senator BROWN—Yes, but, Chair, I am not satisfied because what I am asking for is compliance information coming from the companies to the unit. I have, on behalf of the committee, said that if there is commercial-in-confidence information there let us have that blacked out and an explanation given. But let us have the rest of the compliance reports given to the committee. I think that is fair enough and it is clear enough. Otherwise the committee is left in the position where a decision is made at some future date on whether or not we will get the information, and that is not good enough. CHAIR—My understanding from the officer is that he will go back, find out what he can get and what is reasonable to bring before this committee—with the parts blacked out or not blacked out—and report back to the committee. If, in fact, at the time when we get to additional estimates you think there should be more information above that or you want to

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 240 SENATE—Legislation Thursday, 19 September 1996 pursue it further, that is the time to do it. I think we need to get what the officer said he will bring back to us. He has got on record what you have asked for. Senator BROWN—So, Chair, it is usual for the committee to leave to the officer whether or not the information will be supplied to the committee? CHAIR—Certainly at this stage relative to the offer that the officer has made to us. Senator BROWN—So you would overrule my request that we get the information minus commercial in confidence? CHAIR—No, I am not overruling that at all. Senator BROWN—Then I stand by the request. CHAIR—You have asked him that question. He said he will go away and get what he possibly can in terms of that—subject to the commercial in confidence, as I understand the answer—and I will wait to see it. I am not overruling your request, but I think the officer has a right in terms of the position and what he can do and what he cannot do. I would suggest it could require ministerial approval; I do not know the technical processes. Maybe Mr Barratt can explain those to us. Mr Barratt—What our obligations are— Mr Smart—It is not just a question of commercial in confidence. I am not aware of the legal status of these documents. I would have to go and check that out. Senator BOB COLLINS—Mr Smart has already said, to use the formal expression, that he has taken the question on notice, hasn’t he? CHAIR—Yes. Senator BOB COLLINS—With respect, I do not think we can go much further than that tonight. Senator BROWN—I will come back to that in the committee stage if we do not get— CHAIR—Certainly, I have got no problem with that, but I think we must proceed. The officer said he can go as far as that at this point in time and we will follow it from there. Senator BROWN—Can I ask if the Woodchip Export Monitoring Unit, WEMU, relies solely on reports from the woodchip exporters to make its evaluation? Mr Smart—No, it can do its own investigations if necessary. It can use a consultant to give it advice on aspects of the processes. It is in the process now of forming agreements with different states which will include, for example, the possibility of reviewing and auditing their processes. Senator BROWN—It can do, but has it done that? Mr Smart—I am advised it has. Senator BROWN—On how many occasions? Mr Smart—I do not know. Senator BROWN—Could you find out for me, please? How many reports from the woodchip companies have come to the unit? Mr Smart—I cannot give you the exact number, but the companies are required to report every six months. Senator BROWN—Could you find out that information about independent assessment, as against the companies sending in information, for the committee tomorrow morning? I will

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Thursday, 19 September 1996 SENATE—Legislation RRA&T 241 be very pleased to have it. We will be able to put that question again. It is very important to find out. What I am trying to establish here is whether, in fact, we have a self-regulation system or whether the WEMU is actually going out and doing the assessments in the field. Has the unit sought public input in the assessment being made about compliance by the woodchip exporters? Mr Smart—I will have to take that question on notice, but, just to clarify, I think on one or two occasions they have done their own investigations. I would imagine that that would have been to also seek the views of organisations which have lodged concerns. Senator BROWN—Do you know if the unit has attempted to obtain copies of submissions to the regional forest assessment process—alleged breaches of which have export licence conditions, including breaches of the forest practices codes that apply from state to state? Mr Smart—I will have to take that on notice—I do not have it here—but I can come back tomorrow morning. Senator BROWN—Okay. Possibly somebody from the unit could come along to help answer the questions in the morning. That might be of big assistance to the committee because I recognise that I am asking specifics here that are a little difficult. CHAIR—Sorry, what are you saying about an officer coming along tomorrow? Senator BROWN—Somebody from the Woodchip Export Monitoring Unit, so that we will be able to get this advice and it will not take so long. CHAIR—Is that possible, Mr Barratt? Mr Smart—It is possible. Senator BROWN—What is the staffing level of the WEMU? Mr Smart—There are two people. Senator BROWN—Just two people. Will that be increased in order to take into account the very big increases in woodchip export activity which is coming out of the government’s July 1996 woodchip decisions? Mr Smart—We would have to look at the staffing level against the workload. Senator BROWN—It is to be looked at. Mr Smart—In the course of the normal management of a unit like this, you would staff it to the size needed to do its job. At the moment it has been assessed by the unit that the current staffing level is adequate. If that is not adequate, we will look at it in terms of the people they need. Senator BROWN—Is that adequate to assess the report being sent in by the companies, or is it adequate for the unit to go out and independently assess what the companies are doing in the forest? Mr Smart—The unit has a number of resources available to it in terms of including consultants, but at the moment it is adequate to do the task. Senator BROWN—Has it used consultants in the last year? Mr Smart—I would have to take that on notice. I believe it has but I do not know the details. Senator BROWN—That is important. Having consultants available is a very different thing than having used consultants. I am becoming particularly Tasmanian to ask whether the

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WEMU has a copy of the report of 4 July by Andrew Ricketts from northern Tasmania dealing with numerous breaches of the woodchip export licence conditions. Mr Smart—Breaches against whom? Senator BROWN—Against woodchip companies operating in Tasmania. Mr Smart—I do not know the answer. I will have to take it on notice. Senator Parer—Would it not be better rather than pursuing this line of questioning to wait for that person to come tomorrow. CHAIR—We will adjourn and recommence at 9 o’clock. I particularly thank you, Senator Parer, for agreeing to sit tomorrow primarily to satisfy Senator Bob Collins and me. Committee adjourned at Midnight

QUESTIONS ON NOTICE The following questions were placed on notice— Senator Ferris to the Department of Transport and Regional Development— Program 4—Regional Development Subprogram 4.1—Regional Development Unsuccessful applications I note that the Department has yet to provide an answer to the question asked by Senator Tambling in the Senate on 21 September last year (no. 2527), relating to Better Cities Mark I. These questions were: (1) What applications and/or proposals for funding under Better Cities Program Mark I were unsuccessful or rejected? (2)(a) Who were the sponsoring applicants in each instance; and (b) what was the nature, manner for form of each proposal? (3) On what dates were unsuccessful applications submitted? (4) By whom were the decisions to reject the proposal made in each instance? (5) On what dates were each of the successful applications or proposals submitted and approved? Note, I would like to reactivate that question in my own name and to also ask: (6) Were any reasons given for rejecting the unsuccessful applications, and if so what were they? Did the former Minister or the Department reject any Better Cities Mark II projects which had been nominated by South Australia? Responsibility for nominating projects Did the former Minister or Department suggest Better Cities II projects for South Australia which had not been nominated by the State Government? If there were projects, what were they and did they satisfy Better Cities guidelines? Did the Department nominate to the States particular Better Cities II projects which it was interested in progressing? If so, what were they? Funding allocations under Better Cities programs Could you please provide the Committee with a complete list of all expenditure the Department has directed towards South Australian regions under the Better Cities program since its inception, and an indication of the specific regions and projects to which this expenditure was allocated, and why these areas were chosen?

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Could you provide the Committee with a detailed breakdown of all funding allocated under the Better Cities programs to the following regions in South Australia: Mount Gambier, Murray Bridge, Claire, Kyancutta, Parilla, Peterborough, American River, and Barmera? Evaluating effectiveness of the program What criteria were used to evaluate the general effectiveness and efficiency of the Better Cities programs? Did these criteria change over the years the program has been in existence? And if so, how? How did the strategy behind the Better Cities Mark I generally differ from the Mark II program? What has the Department learnt from administering the Better Cities program with respect to the management of urban development initiatives, specifically in the context of coordinating funding arrangements under Commonwealth-State programs that have similar goals? Current funding arrangements Will any further grants or funding be allocated under the Better Cities scheme during this financial year? If so, what initiatives will these funds be spent on and in what regions? What applications from South Australia remain from Better Cities Mark I and Mark II, and will these applications be included?

Senator Ferris to the Department of Primary Industries and Energy— Program 2—Industry and Community Services Subprogram 2.1—Natural Resources Management National Landcare Program Co-ordination with other programs What mechanisms exist for co-ordination of federal Landcare programs with other government programs and agencies, and what arrangements, formal and informal, exist between the States and the DPIE and DEST in relation to Landcare programs? Administrative and funding priorities Can you provide the Committee with the total number of people employed under the National Landcare Program in each year of its operation, State by State, and provide: (i) a description of the nature of the activities they are employed to perform; (ii) the location of their offices; (iii) details of any travel costs and allowances incurred by these employees. What organisational costs are involved in the administration of the Landcare program? Which of these costs are borne or funded by the Commonwealth? What percentage of the total funding is used for administration? How much did the Landcare program spend on the production of public relations material, publications, graphic design, advertising, and communication activities, in each year of its operations? Can the Department provide a detailed breakdown of the amounts involved, and the nature of these costs, during those years? Under what arrangements are regional Landcare offices made available? Where are these offices located? Are they leased premises or otherwise? Can the Department provide details of any rental costs involved? Criteria used to evaluate efficiency What benchmarks are used to measure the performance and effectiveness of the Landcare program’s management in the DPIE and DEST portfolios against recognised best practice measures? National Landcare Advisory Committee What costs are involved in the funding and administration of the National Landcare Advisory Committee? Can the Department please provide a detailed breakdown of those costs?

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Participation levels and Participant profiles On a State by State basis, and by years, how many community-based Landcare groups were established between the beginning of the program and the end of August 1996? On a State by State basis, and by years, what is the level of involvement by broadacre farmers in the Landcare program since the beginning of the program and the end of August 1996? What was the level of private sponsorship of Landcare groups, or of the Landcare program directly if it occurs, in each year of the program? Can you please provide details, indicating a State by State breakdown? What information is available on the Landcare Foundation and its links to DPIE and DEST? Funding allocations How many applicants have sought Landcare grants in each State, by year, since the program’s inception? How many such applicants were successful, and how much was paid in grants in each case? Who were they, and how much have any such applicants received? Can you please also provide me with a regional breakdown of all funding allocated in South Australia? How many such applicants were rejected? Who were these applicants? Were any reasons given to these applicants, and if so what were they? What conditions are attached to funding grants allocated under the Landcare program? What sort of evaluation exists after the grant is given? Accountability What actions have been taken by the Department in each successive year the Landcare program has been in operation, to improve the targeting of Landcare funds in light of the previous year’s experiences? Is there any monitoring of, or data available relating to, the financial performance of Landcare members as against non-Landcare members involved in the agricultural sector? If so, what data is available?

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