COMMONWEALTH OF AUSTRALIA

PARLIAMENTARY DEBATES

SENATE

Official Committee Hansard

FINANCE AND PUBLIC ADMINISTRATION LEGISLATION COMMITTEE

(Consideration of Estimates)

THURSDAY, 8 MAY 1997

BY AUTHORITY OF THE SENATE CANBERRA 1997 CONTENTS

THURSDAY, 8 MAY

Department of The Senate— Program 1—Clerk’s Office ...... 2 Program 6—Black Rod’s Office ...... 19 Department of The Prime Minister and Cabinet ...... 22 Program 2—Government Support Services— Subprogram 2.1—Machinery of Government ...... 42 Program 4—Corporate Services ...... 46 Department of Administrative Services— Program 2—Government services— Subprogram 2.1—Domestic Property Group ...... 65 Subprogram 2.4—Ministerial and parliamentary services ...... 76 Program 4—Corporate Management ...... 96 Department of Finance ...... 103 Thursday, 8 May 1997 SENATE—Legislation F&PA 1

SENATE Thursday, 8 May 1997

FINANCE AND PUBLIC ADMINISTRATION LEGISLATION COMMITTEE

Portfolios: Parliament; Prime Minister and Cabinet; Finance (including Administrative Services) Members: Senator Short (Chair), Senator Murray (Deputy Chair), Senators Heffernan, Mackay, Ray and Watson Participating members: Senators Abetz, Bishop, Bolkus, Brown, Bob Collins, Colston, Conroy, Cooney, Evans, Faulkner, Harradine, Lundy, Margetts, Neal, Ray, Reynolds, Schacht, Sherry and Tambling

The committee met at 9.36 a.m. ACTING CHAIR (Senator Murray)—I declare open this public meeting of the Senate Finance and Public Administration Legislation Committee. We are dealing with the supplementary hearings of the 1996-97 additional estimates and certain specified matters of which notice was given as required by standing order 26(10). The committee will be commencing with the matters listed under the Department of the Senate, followed by the Department of the Prime Minister and Cabinet, the Department of Administrative Services and, finally, the Department of Finance. DEPARTMENT OF THE SENATE Proposed expenditure, $20,000 (Document C). In Attendance Senator the Hon. Margaret Reid, President of the Senate Department of the Senate— Mr Harry Evans, Clerk of the Senate Ms Anne Lynch, Deputy Clerk of the Senate Mr Cleaver Elliott, Clerk Assistant (Committees) Dr Rosemary Laing, Clerk Assistant (Procedure) Mr Peter O’Keeffe, Clerk Assistant (Corporate Management) Mr John Vander Wyk, Clerk Assistant (Table) Mr Robert Allison, Usher of the Black Rod Mr Graeme Nankervis, Director, Financial Management Ms Gabrielle Avery, Acting Director, Human Resource Management Department of Finance— Mr Brian Cooney, Chief Finance Officer Mr John Forsey, Senior Finance Officer Mr Chris James, Senior Finance Officer Mr Greg Shales, Finance Officer

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[9.37 a.m.] Program 1—Clerk’s Office ACTING CHAIR—I welcome the President of the Senate, Senator Margaret Reid. Is there anything you wish to say by way of opening remarks? The PRESIDENT—No, Mr Chairman. CHAIR—Is there anything anyone else at the table wishes to say by way of opening remarks? Mr Evans—No, Mr Chairman. CHAIR—I think it would be appropriate to move to Senator Ray. Senator ROBERT RAY—Madam President, we have been over the issue of supplementa- tion for extra sitting days, even yesterday, although we will not go into the content of those discussions, and staffing appropriation. For the public record, would you like to state your view on extra sitting days and the issue of supplementation? The PRESIDENT—My view is that for the extra odd day, half day or late sitting, it is a matter that the Senate can probably accommodate. Any sittings in the nature of an extra week or what we understand to be a week of sittings I believe should be supplemented. That should be agreed to and not have to be argued about every time it comes up. It just should be understood that the money is paid. Senator ROBERT RAY—So you would like to see an agreement with the Department of Finance, probably brokered by the Leader of the Government in the Senate as the appropriate person, that we do not have to argue it each time but, like many other things in government, it is an automatic tick by Finance when it comes to supplementation? The PRESIDENT—It is my view that it should be agreed by the Leader of the Government in the Senate and the Minister for Finance that, whenever the government asks for an extra week or more than one week, it is automatically paid. Senator WATSON—There have been some suggestions of restructuring of the services that are provided to senators and members. Various alternatives of groupings have been mooted. Can you outline any developments in that area? The PRESIDENT—There has been a report prepared by the heads of the five parliamentary departments, which was tabled in the Senate on 18 March. That was available for public comment. Senators and members were invited to write to the Presiding Officers with any comments they had on the proposal within that, which was substantially to restructure the de- partments into two departments based on the two chambers. The Standing Committee on Appropriations and Staffing is now conducting an inquiry into that and the dates for the public hearings are set. We have had, I think, 11 submissions relating to the proposal. The document which was tabled was a document for discussion, not a fixed position of the Presiding Officers, and I think the next thing that will happen after that will be the report from the Appropriations and Staffing Committee to the Senate. Senator WATSON—Could I be advised what was the basis of the division of the activities into two? There are certain facilities such as the Library and others that may well be better administered under a single authority in terms of management structure rather than— The PRESIDENT—You are welcome to read the report that was tabled. They are issues which will come before the Appropriations and Staffing Committee. It is not a report of the Presiding Officers. It is not a report that I argue is something that we are insisting upon or suggesting. In fact, the submissions to the Appropriations and Staffing Committee, which are

FINANCE AND PUBLIC ADMINISTRATION Thursday, 8 May 1997 SENATE—Legislation F&PA 3 public as from yesterday, I think, generally do not support the two concept. Some suggest one, some suggest three. So it is a matter that is before the Appropriations and Staffing Committee. I am not presenting any fixed view on it at all. The next document will be the report of that committee to the Senate. Senator WATSON—What would be the likely employment consequences of each of the alternatives? The PRESIDENT—There are some losses of jobs in some areas. There are some areas where I think generally people would agree it is essential that they should be amalgamated and done more efficiently. There are other things we want to do. There are things we want to do with the extra money that will flow from an amalgamation. Senator WATSON—Could you mention those extra things to the committee? The PRESIDENT—The Internet is something that a lot of senators want. There are areas within security. There are a lot of things within the building, certainly with respect to services and upgrading of the things that senators and members have at the present time. A lot of the equipment is getting to an age where it will need to be replaced. Some people still want extra newspapers. Senator ROBERT RAY—And books. The PRESIDENT—Yes, and books. Senator LUNDY—With respect to the report on parliamentary restructuring that has been tabled, who determined within the department that the two-department concept should receive the emphasis that it did in that report? The PRESIDENT—That was a report prepared by the four heads of the five departments, and that is one option. Senator LUNDY—Why weren’t other options canvassed with the same degree of emphasis, given that it was only a discussion paper? The PRESIDENT—Mr Evans, do you want to say something about that since you were one of the ones involved in preparing the document? Mr Evans—The Presiding Officers back in August last year asked for papers from the departments on options. Those papers went to the Presiding Officers. The paper which this department provided to the President is in the submission of this department to the appropriations and staffing committee which has now been published, so that is available. In those papers options were canvassed, and the option which was I suppose most frequently mentioned in the papers was the two-department option and the Presiding Officers decided to have a report prepared on that option. The PRESIDENT—My view is that the two chamber departments have to be the most important departments in the building. The rest are here to service the parliament. The chambers are the reason that the place exists. To have a structure which has them hanging off the end of something else personally I regard as unsatisfactory. The chamber departments are the reason it is all here. The rest of the departments are there servicing the senators and members and providing the mechanism to enable the parliament to function. Senator LUNDY—Are you contemplating any outsourcing of any services contained within the structure currently under review? The PRESIDENT—If that ever came about, it is well ahead of where we are at at the present time. You have to determine first how the place will be structured and how it will run

FINANCE AND PUBLIC ADMINISTRATION F&PA 4 SENATE—Legislation Thursday, 8 May 1997 before you could contemplate looking at that. There is nothing particularly in mind. Certainly, nothing is being looked at at present, but there may well be things that could be. Senator LUNDY—In terms of any potential outsourcing, it is not likely to occur within the next financial year, based on the comments you have just made? The PRESIDENT—I can’t say that it wouldn’t because I don’t know of anything that we are thinking about. Senator LUNDY—Can you clarify the time line in terms of the parliamentary restructure review? The PRESIDENT—The report of the appropriations and staffing committee is due in the Senate on 26 June. Senator LUNDY—What is the stage subsequent to that in your considerations? The PRESIDENT—It depends on what the Senate does. Senator LUNDY—On the question of outsourcing again, given the speculation currently in circulation about IT outsourcing generally, have you addressed this matter with the heads of department in any way at this point in time? The PRESIDENT—I haven’t. I don’t know whether they have talked amongst themselves. Senator LUNDY—Is it something that is being canvassed at the moment within the department? Mr Evans—Not in any detail, although obviously decisions made by the executive government could have a large significance for what goes on here. But certainly there has been no serious consideration of it at this stage. Senator LUNDY—What level of consideration has occurred at this stage? You say not serious. Mr Evans—Nothing that you could describe as a formal consideration of it. Senator LUNDY—What could you describe it as? Mr Evans—No more than informal discussion of likely implications for this place if there is a major contracting out of government IT services. Obviously, it is something that is always there as a possibility and a potential. Senator LUNDY—Do you think, in terms of the current considerations and upgrades and the issues that the President mentioned about changes to the information services and the advent of Internet, there is scope that any such consideration of outsourcing would occur in the next 6 months? Mr Evans—In the next six months—that might be a bit soon. As I say, it is a matter which is always there potentially for consideration, but I could not say that it has been seriously canvassed at this stage. Senator ROBERT RAY—You would not really have an enormous amount to outsource anyway. You are not like Social Security or one of the big line departments, are you? Mr Evans—No, that is basically right. In relation to data processing, certainly there is nothing like the amount of work that is in executive departments. Senator ROBERT RAY—I did not reserve the Library on this occasion. I thought I could ask you this question here rather than bring them all in. I previously asked questions about misuse of the library by MPs for tertiary matters. Evidence given under oath in Queensland also suggests further cases of this for children’s homework, party candidates and some

FINANCE AND PUBLIC ADMINISTRATION Thursday, 8 May 1997 SENATE—Legislation F&PA 5 commercial interests. The library has been used to research papers and then passed on. Would you consider, ahead of all this, writing to all MPs with guidelines indicating the purpose of those library research facilities, what the limits are and what they should be used for? I cannot recall seeing anything on this in the last few years? The PRESIDENT—I can’t either, but it is probably a good idea. Certainly there have been a lot of new senators in the chamber in the last 12 months or so, so it is probably a timely thing to do. Senator ROBERT RAY—My other area for a general question comes back to the payment of travel allowance. It has been suggested, not the least of which by my Senate leader but also by others, that it is time to centralise the payment of all travel allowances in one department and the suggestion was that the department be DAS. Can the Senate department see any difficulties or problems with that if that is recommended by the Baxter inquiry? The PRESIDENT—I have not discussed it with them at all. I do not know whether you want to make a comment. Mr Evans—The Senate department has the information on which the travel allowance that we pay is based, so it would be a matter of the Senate department transmitting that information to whatever body is going to do the processing and paying. You would have to consider that aspect of it. The other aspect that you would have to consider, of course, is that DAS is an executive government department under the control of a minister. If you put out even just the processing of claims to an executive government department, you lose some measure of control and influence over how the matter is conducted. Senator ROBERT RAY—You are saying that DAS may misuse its position. Is that what you are saying? Mr Evans—No, I am not suggesting that at all. Senator ROBERT RAY—We will be by the end of the day. Mr Evans—You have to bear in mind, as I said, that DAS is an executive government department under the control of a minister. As I said, the information on which the payment of travelling allowance is based has to come from the Senate department. Senator ROBERT RAY—In what sense? Claims currently put in are certified by the senator as being correct. You have said before under evidence here that you did not go to any great extent to check those, that you took the senator’s word. What will change between DAS accepting the senator’s word and the Department of the Senate? Mr Evans—When we talked about this before, we discussed two aspects. One was the open- ended nature of some of the entitlements and the question of whether claims were excessive— for example, a committee chair’s travel could not really be objectively checked in any way. The other was travel allowance claims as against travel. We indicated that there had not been a crosschecking of the travel allowance claims information that we have with the travel information that is possessed by DAS. As you know, we did a crosschecking exercise in relation to Senator Colston after allegations were made, and two reports were presented to the President and to the Senate. That area of crosschecking travel and travel allowance claims is an area where the system could certainly be improved. We have initiated steps to have a system of data matching between those two banks of data on a regular and systematic basis so that that could be done for every senator all the time in the future.

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Senator ROBERT RAY—If it was transferred to DAS and put in the hands of the executive, the suggestion has also been made that there be an independent auditor appointed to audit all MP entitlements and all complaints regarding them. Do you think that would have a checking effect on the executive having control of all these areas? Mr Evans—I think that is essential wherever the processing is done, and we are developing a proposal for an audit check on the payments. Senator ROBERT RAY—I think the suggestion basically is for an inspector-general’s position, but we use the term ‘independent auditor’ because people understand it much better. It would play a similar role to the various inspectors-general around, that complaints can be made and there are powers to investigate and resolve and, if necessary, refer. We hope that that would not occur. Mr Evans—As I said, I think it is essential in the future that some such system be put in place going across all entitlements. The audit office has indicated that they will be taking a close interest in how these matters are dealt with in the future. We will certainly be developing, as I said, a basis for systematic data checking and close auditing of the payments that we are responsible for. The other thing I would recommend is that schedules of payments continue to be periodically published so that they are available for public examination. Senator ROBERT RAY—That in some ways, though, is an argument to centralise them in one department so they are all published at once rather than on an ad hoc basis, say. It gives the more voyeuristic journalists five or six goes in one year rather than one go. Is there some suggestion—and it is probably right—that postage expenditure and all these other things should be published at the same time so that there is full visibility? Mr Evans—That could happen anyway, wherever the responsibility lies. Senator ROBERT RAY—Yes, that is true. The PRESIDENT—The other thing that needs to happen is for the publication to identify more clearly what it is for. A couple of them have had quite large travel accounts, but they have been on committees that have travelled a lot in recent times. It does not distinguish between which travel is which. Senator ROBERT RAY—People do not realise that any publication of ministerial overseas travel costs includes a staff member, your spouse and every little item Foreign Affairs can stick in your account and try to get away with, including carpentry to the chancellery, if they can get away with it. It is true. The PRESIDENT—I am not suggesting that the total figures are not accurate, but just looking at it myself it sometimes seems to ignore the fact of what some people are doing. Some of the committees have been pretty busy in the last 12 months or so, and you would know that, and then it comes out looking as though there are two or three senators who have been travelling a lot. I think there is room for that in the way we do it. Senator ROBERT RAY—On that subject, could you bear in mind next year when you publish these figures, as you quite properly did in September last year, that you just do a complete list—dates, et cetera. Could I ask you that, if a payment was made in the previous financial year, you publish that in a box and a subtotal and then the payments for this financial year and a total. Quite often senators get a bit behind and claim in the next financial year and someone says, ‘That person has claimed $15,000,’ when their actual expenditure in that financial year would have been $10,000 or $12,000. It can be very distorting of the gross figure.

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The PRESIDENT—I think there are distortions in it the way it is done. If there are any problems, I am sure it will be raised. Senator ROBERT RAY—Could you take that on board? Mr Evans—We can easily do that. We will take that on board. I indicated earlier that we hope to introduce a system of data matching. I have written to the Secretary to the Department of Administrative Services suggesting that a system of data matching be put in place. Senator ROBERT RAY—You would be fairly happy, would you, Madam President, that the recommendation of this committee about section 19 claims, as adopted by the Senate and processed by you, is now working efficiently and without too big a drain on the taxpayer? The PRESIDENT—I hope so. I think so. Senator ROBERT RAY—Would I be right in saying there have only been a couple of claims made since you brought in this new ruling? The PRESIDENT—I do not know. Is that right? Mr Evans—There has been a significant change in the number of claims since that system was introduced. Senator ROBERT RAY—I also notice your finetuned interpretation of some of the other things, which seems to me to be another step forward. The PRESIDENT—We are still doing it actually. There have been a number of responses to me from senators, so it has not been finalised yet because some suggestions are more sensible I think than others. So it has not been finalised, but it will be. Senator WATSON—Can I take issue with the matter raised by the clerk where he believes that publication probably puts a high emphasis on that. I would suggest that perhaps a more rigorous substantiation of the claim would probably be a better requirement, because in some states certain newspaper columnists have suggested that people who have higher claims are spending too much time out of their state. It really does take away from some of the important work that we do. It tends to diminish that for those senators who are tending to committee and Senate work if they have higher claims and it is headlined in the paper that it is about time they spent a little bit more time representing their constituents in their own states. I put it to you that perhaps you really should be looking at a more rigorous substantiation rather than just feeding free copy to some irresponsible journalists. Mr Evans—We certainly are not relying on publication alone. We have suggested measures to require greater substantiation of travel allowance claims as well. But I have to say that publication will be essential in the future to overcome public misapprehensions about the whole matter. Senator HEFFERNAN—As I understand it, during the last session of parliament—this is on the question of accountability and it is something that has been troubling me for a while—a senator handed in the keys to a car to which he was not entitled, yet he had had the car for three years. I have been wondering about the circumstances surrounding this that led to the possibility of his being able to have the car. It seems to me that there is a complete lack of explanation, understanding and accountability. Could you report back to the committee on those circumstances? The PRESIDENT—I understand that it is a matter for DAS. I understand that it was a car provided by DAS, not by the Senate.

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CHAIR—If that is the case, Senator Heffernan, you may wish to put the question to DAS. We have them a bit later in the day. Senator HEFFERNAN—Thank you very much. I will leave my question until later. Senator MURRAY—Madam President, I return to the question of tabled reports on travel and allowances and will pursue the line that Senator Watson was on. I am one of those who advocates absolute and total exposure of allowances and entitlements. But, accompanying that, there needs to be the explanation of individual senators and what they do—the number of committees they serve and whether those committees travel extensively. The consequence of that is much more work for the clerk’s department to produce those analyses so that commentators can at least have the opportunity to be properly informed as to the work of the Senate and what goes on. I think there is an advantage to that. My own impression as a new senator is that the community is not aware of the level and intensity of work undertaken by the Senate. I think that, apart from the benefits of disclosure, we could have the consequent benefit of a greater understanding of pressures and the amount of travel and work involved. Is it the intention of the department to produce much fuller accounts when these matters are tabled in future? Mr Evans—Mr Chairman, the sort of information Senator Murray is talking about is publicly available. But I think that what he is getting at is that it is not readily visible in one document. Senator MURRAY—That is right—tabulated. Mr Evans—We certainly are going to look at making the documentation that is presented more informative in that respect and in other respects within the constraints imposed by computer print-outs and so on. The PRESIDENT—That will be done this year. It may not be perfect; we still may need to modify it. Just looking at the figures, for someone who does not travel a lot, it leaves a great distortion in the sense of the Western Australians anyway because of the distance they travel and the amount of money that is involved and the number of nights. The other thing that amazes me is that, for every night’s travel you claim, it means it is a night you have to be away from home. It does not seem to be appreciated that there is a huge downside to all this, and to personal life as well. Senator MURRAY—As an aside, my own calculation is that I lose 15 to 20 days or nights a year simply because of the distance I live from the Senate—a large number of nights in the year. The PRESIDENT—Much better spent at home. Senator MURRAY—I would like to pursue the area examined by Senator Ray, that is, the centralisation of entitlements, allowances, administration and reporting. The two options would seem to be that it can be centralised either in DAS or in the Department of the Senate. I would appreciate your views as to whether the Department of the Senate would be more appropriate than DAS to have the centralised function. Mr Evans—That is a suggestion that has been made over many years, that parliamentary entitlements should be administered by a parliamentary department. It would be a major function for the Senate department to take on, particularly if we were taking on administration of electorate offices and so on. It would be a major shift of functions. But I do not think that centralisation is necessary for accountability. The accountability can be achieved by data

FINANCE AND PUBLIC ADMINISTRATION Thursday, 8 May 1997 SENATE—Legislation F&PA 9 sharing and data matching, for example. I do not think centralisation of the function helps one way or the other. It may not necessarily help. Senator ROBERT RAY—Senator Murray, if these issues were just centralised in the Department of the Senate and given its weak position in terms of the finance minister and the budgetary process, I think we would all be very badly disadvantaged, and that would be no fault of anyone sitting at the table. Senator MURRAY—Yes, I understand that. I would suggest to you though, Mr Evans, that there probably is an impetus now towards some kind of centralisation, and it would be wise for the Department of the Senate and, indeed, the President, if they had a contrary view to it being centralised in DAS, to develop the pros and cons of the alternative of it being centralised in the Department of the Senate. The PRESIDENT—I do not think it necessarily needs to be centralised in one or the other. I think you can have mechanisms in place that can still be transparent and protect the revenue but still have senators dealing with the Senate for things that ought to be. I do not think it has to be centralised. Before I go down that path, I would be looking at it from the point of view of as great a scrutiny as possible without it being centralised. Senator MURRAY—My third area of questioning refers to overseas travel. One of the problems with the public image of senators and members is the vision of them swanning around the world on first class tickets and having a jaunt at the expense of the taxpayer. The reality is different, but it is true that to some extent this facility has been abused. You have kindly responded to the questions I put to you on notice. I thank you for that and for doing so on time. I note that most of the questions will have to be responded to by DAS, so I will ask those questions later. For the benefit of both the audience and the committee, I will deal with overseas travel and the IPU budget, or actual expenditure, over the last five years so that we can get it into perspective. As to the IPU budget, is that just for senators or for both senators and members? Mr Evans—Both senators and members. Senator MURRAY—I will round out the figures: 1992-93 was $140,000; 1993-94 was $55,000; 1994-95 was $118,000; 1995-96 was $95,000; and 1996-97 is expected to be $85,000. That is the IPU expenditure. That is not a vast amount of money. Nevertheless, we have two problems. Firstly, we have the requirement by the government that all areas of government, including the parliament, reduce their expenditure. Secondly, we have the public view of how travel is being conducted. Madam President, is it your view that IPU and CPA travel is excessive at present, that sometimes it is unnecessary, that sometimes the delegations are too large and that the budgets, the itinerary and the number of people travelling could be cut back? The PRESIDENT—I have a view that it is valuable and worth while for members of parliament to travel to see other countries, to see other places and meet other parliamentarians and people. I see the CPA as being particularly worth while because of the involvement of the more developed countries, especially with so many of the other smaller ones. I believe it is extremely worth while. It meets once a year. There are other meetings on a regional basis as well. The IPU meets in full session twice a year, which I believe is excessive. Until that can be changed to once a year, I would be reluctant to say that Australia goes only once a year because then you lose significant influence and ability to have some say in it—if we only turned up every other conference. I think there is no reason whatever for the IPU to meet, as it does, twice a year. We have significantly cut down on the delegations to both from when

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I first came into the parliament. Senator Watson will know more about this than I do because he was a permanent delegate. Senator ROBERT RAY—How many trips did he get? The PRESIDENT—Very few, because there was an election called short of the three years. I am right, aren’t I? Senator WATSON—Yes. The PRESIDENT—When I first came in, we were sending pretty well the full delegation of votes, which was about 12. We cut back to about six. In recent times we have sent much smaller delegations to both. The difference depends on where it is placed, where it is held. Senator MURRAY—Madam President, if your view prevailed, the option available to you is to send just one or two persons for one conference and a larger delegation for the second conference. The PRESIDENT—Well, there are a number of things that go on. My view is there should be a woman in every delegation because there is a meeting of women parliamentarians associated with it. I regret every occasion that there is not an Australian woman parliamentar- ian in the group to attend that, because again it weakens the influence that you have by not having someone present. There are so many meetings and so many things that go on through the conference that a couple of people are probably hardly worth sending at all. It is a very difficult area. It is one that the Speaker and I are looking at. He is the president locally and the one who attends, but it is certainly his view that we should work towards it meeting once a year in full session, not twice. Senator MURRAY—Madam President, in the hierarchy of parliamentarians’ travel, I think I would classify them as two types—study visits, and CPA and IPU travel. If we broke that into three types and said there were study visits, IPU and CPA, how would you rank them in terms of importance one to three? Senator WATSON—There are others. The PRESIDENT—There are others as well. Senator MURRAY—Can you add those in your ranking as we go? The PRESIDENT—I cannot rank them in that fashion. I probably have a bias towards the CPA, but that is just a personal bias. I do not think there is any foundation for that, and I know others do not share it. With study leave, a lot of the trips that are done are enormously valuable and worth while. I know some of my colleagues who have produced reports and gone places and done things. Others use it for different purposes. I do not think it can be ranked like that. Senator MURRAY—I do not mean this rudely; I do mean it with respect, Madam President. I think that the Senate and members are going to have to face up to some kind of discretion, because community anger in this area is very high. We will need to decide which is most important and how that is to be dealt with. The PRESIDENT—There are bilateral visits as well which sometimes are worth while. There are other conferences we go to such as IPO and APPF, the Asia-Pacific Parliamentary Forum. There is a range, if you look at the list, of things that we do attend. There are United Nations meetings three months a year. Is it worth cutting that out altogether or cutting it down? They are things we are looking at, but you have to make sure that in the end whatever is done is meaningful. The study leave one is an amount that comes through DAS. These others are

FINANCE AND PUBLIC ADMINISTRATION Thursday, 8 May 1997 SENATE—Legislation F&PA 11 through the parliament. Then there are some that seem to come up in addition to that. There are some that come straight from the CPA that are paid for from London. Senator MURRAY—My memory, Madam President—and you might be able to correct or improve it—with regard to Senator Colston’s much publicised travel itinerary is that over the years he has had 40 or 50 trips overseas. There may be more. The questions both the public and I and many people would ask are: did he benefit? Did the parliament benefit? Did other parliaments benefit from those trips? The inference is possibly not, and possibly not sufficiently. I will recount to you, if I may, a story. A senator came to me in the last session and he said, ‘Have you copped one yet?’ I said, ‘Whatever do you mean?’ He said, ‘Have you copped a trip?’ It was quite plain from both his attitude and his question that he regarded it as a kind of gift, a benefit. I know that there are senators who work very hard and who treat these things very seriously and who benefit the parliament and the people as a result of their travel, but I suspect there are others who do not. The purpose of my questions is to ask if you and your department, and in your conversations with the Speaker, are attempting to tighten up the number of trips and the way they are dealt with and the seriousness with which parliamentary business is pursued at them. The PRESIDENT—The Speaker and I certainly are, and were at the beginning of this year. We cut back on some of them this year. I forget the number of trips that are allocated each year. I think it is 52 in total. Senator MURRAY—That is all types of travel? The PRESIDENT—No, they are the ones that are allocated through the parliamentary departments, not DAS or from other sources. That has been cut back. There is one under active consideration at the moment to be cut out altogether. I know some would disagree that it is one that should and others would perhaps support it. I am certainly very conscious of it. Senator WATSON—I will just make a comment on that. I am fairly conscious about an isolationist attitude being taken, given our geography—we are at a fairly remote part of the world. This discussion has tended to depreciate or downgrade the important role and the leadership role that many parliamentarians take in terms of world forums. Quite often Australia’s ideas are taken up, not only by the developed countries but, perhaps more importantly, by the underdeveloped countries. Australia’s ideas are highly regarded in world forums. I think we have to be very careful if we start developing, for cost reasons, an isolationist type attitude. The PRESIDENT—I had a comment made to me the other day by a person who has been very senior in the bureaucracy. I will not say too much in case it identifies him. He said, ‘Don’t allow all this to encourage you to cut back on overseas travel. The benefit to the parliament of members and senators getting away from Australia and knowing more about the world is invaluable.’ I agree with that, but I did tell him I thought that perhaps that line would be a little difficult to pursue at the present time. Senator MURRAY—I do accept that, Madam President. But, in my view, anyone travelling should be required to put up a full itinerary, report fully in terms of their activities and their visits, account for what they did, et cetera. They should not—as was stated in one widely publicised and probably exaggerated situation—lie around in a chateau in France, drinking wine and eating cheese with a lady of his choosing. I think that without doubt that would have

FINANCE AND PUBLIC ADMINISTRATION F&PA 12 SENATE—Legislation Thursday, 8 May 1997 been an exaggerated instance. The problem is that that image sits in the mind of the public, and we need that corrected. The PRESIDENT—I recognise that and we all suffer as a consequence. Senator MURRAY—Absolutely. The PRESIDENT—The point you make is absolutely valid. No-one can argue with it. Senator ROBERT RAY—If you are going to make it more accountable, the way to make it more accountable is by the people reporting orally to the Senate. I stress from my point of view—I don’t know about yours—that it should be in writing because these boring, dreary travel logs that I have had to put up with over the years, and I am sure you agree, Senator Short, are just terrible. Senator MURRAY—Senator Robert Ray makes the right point. I am referring to written business-like reports which accord with the seriousness of the job and the amount of money it costs to do the job. Senator ROBERT RAY—Now that we are going on such an enormous burst of transparency and openness— Senator LUNDY—Glasnost. Senator ROBERT RAY—Glasnost, indeed, as Senator Lundy says. It might be appropriate to have published in the Senate the expenses, travel and travel allowance paid to all senior Senate officers. Mr Evans—Yes, I would agree with that completely. Senator ROBERT RAY—I think it would be the only department that would. I think it is to your credit that you do. CHAIR—That you do agree with it? Senator ROBERT RAY—That they agree with it. Mr Evans—The travel of committee secretaries and delegation secretaries is in accordance with an approved parliamentary purpose, an approved itinerary and an approved travel requisition. We have been doing various things to make all that information public. The travel of delegations and committees is public, but if there is anything further that we can do to make all that public we certainly will. The PRESIDENT—My view as far as the Senate bureaucracy is concerned is that it should be published perhaps more in terms of the office holder who travelled rather than the individual. The clerk may go to a clerks conference or the deputy clerk may represent the clerk at a clerks conference rather than it being ‘Harry Evans on a trip’. And the same with the committee secretaries—that the secretary of a committee did something. CHAIR—Is that not included in your annual report? Mr Evans—Yes, of course. It is certainly mentioned in the annual report and the reports of delegations. It is one of those areas where all the information is theoretically public, but it could be consolidated in a more readily accessible form. Senator LUNDY—Has your department introduced any Australian workplace agreements? Mr Evans—Not yet, no. Senator LUNDY—Do you have any plans to, given that you have not yet? Mr Evans—I will ask Mr O’Keeffe to tell you where we are at with that.

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Mr O’Keeffe—The department is in the process of preparing itself for negotiations with a view to making certified agreements or possibly Australian workplace agreements, but no negotiations have yet commenced. Senator LUNDY—What groups of employees will be involved in these negotiations or are you intending to be involved in any such negotiations? Mr O’Keeffe—We would be negotiating with all employees or representatives of employees. The situation at the moment is slightly complicated by virtue of the amalgamation proposal, because obviously in the Senate we have certain categories of employees which are not necessarily shared with other departments and other departments have categories of employees which are not shared with the Senate. The Joint House Department, for example, has technical grades. The Library has librarian staff. The Senate employs virtually exclusively Australian Public Service grades. So there is a complication in terms of negotiations. Senator LUNDY—Are you saying that you will not proceed with that process until the parliamentary restructuring has been completed? Is that what you are saying? Mr O’Keeffe—No. It is difficult to give you a definitive answer on that. The senior managers of the parliamentary departments are having a meeting next Wednesday with a view to making recommendations to the heads of departments as to how we might coordinate our negotiations in a potential amalgamation situation so that if we do enter individually as departments certified agreements it will be done in a way which is as consistent as possible, bearing in mind the potential for amalgamation. Senator LUNDY—So you are basically going to coordinate your views on who should be covered by AWAs before the negotiations for parliamentary restructuring proceed? Mr O’Keeffe—Not necessarily AWAs, but just our approach at arriving at a consistent negotiating baseline. Senator LUNDY—In terms of any potential wage rises under AWAs, how is the department going to fund those? Will there be any supplementation or will it be within the budget? Mr O’Keeffe—We will be funding them with extreme difficulty. My understanding is there will be no supplementation for pay increases, that any pay increases which result as a consequence of negotiations must be paid from existing departmental running costs and those funds would have to be found from savings, from economies—those types of sources. Senator LUNDY—The process for parliamentary restructuring, as you have said, complicates any developments on staffing arrangements. What is the time line that you envisage for the negotiations around changes to the contracts of employment? Mr O’Keeffe—Again, as you say, it is very complicated by the amalgamation proposal. If the amalgamation goes ahead, it has been recommended— Senator LUNDY—I am using the word restructuring as opposed to amalgamation. Mr O’Keeffe—Yes. If the restructuring goes ahead, it has been recommended that it become effective from 1 January 1998. It may be possible that parliamentary senior managers and employees and the representatives of employees can begin a process of negotiation after a decision has been confirmed by the parliament that there should be a restructuring. In that kind of circumstance, the negotiation becomes relatively less complex than it would be if we were to enter into negotiations in a situation where none of the parties knew whether there is to be restructuring. In a sense, I do not think either the senior managers of the five departments or the employees or their representatives are expecting serious or significant negotiations to take place until we have had a firmer indication that the restructuring is on or not on.

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Senator LUNDY—Just going back to an earlier point, given that those two issues are occurring concurrently and given that you did not rule out the spectre of outsourcing of various sections, how as part of that process you have just described is the department going to deal with issues regarding outsourcing? Can you describe the process you will enter into in contemplating the merits of any service to be outsourced? Mr Evans—As I said before, major contracting out is still seen as down the track. I would see it, as the President suggested, as something to be considered after we go through these other processes. It would be very complicated to try to inject that into the combined processes that Mr O’Keeffe has just described. It would be very complex to try to deal with those things together. As the President suggested, I see any consideration of contracting out as something beyond those processes. Senator LUNDY—I do have a series of questions regarding the outsourcing area. Can I take that as an assurance that it is not something that is going to be contemplated in the confines of the process you have just outlined? If not, I am inclined to proceed with my questions with respect to more detailed outsourcing. CHAIR—Depending on Mr Evans’s answer, Senator Lundy, are they questions which could perhaps be put on notice? Senator LUNDY—They could be, but if nothing is going to happen about outsourcing within this department—within the confines of those two processes that have been described as being finalised—there would certainly be plenty of opportunities between now and when it is going to be contemplated to ask such questions. I would rather save the committee’s time now. Mr Evans—I think I can give the senator an undertaking that there will be plenty of those opportunities. So far as the Senate department is concerned, contracting out is not something that is sprung on everybody—announced one afternoon and put into effect that afternoon. It is something that should be— Senator LUNDY—In your department. Mr Evans—In this department, I stress. That is not the view we take at this time. We see contracting out of the services that we are responsible for as something that could only happen after a very deliberate process and certainly not in the very near future. The PRESIDENT—The Appropriations and Staffing Committee would have to be involved. CHAIR—It seems to me that you have a reasonable assurance there, Senator Lundy. Senator LUNDY—Yes, it is getting better all the time. Madam President, you mentioned moves to investigate the next stage of Internet access as part of the work of your department. With respect to the security issues involved in that and the actual connection fee, can you provide this committee with an update as to that process, including the cost of connections? Mr Evans—There are funds which will be available next financial year for Internet access. Security is something that is being given very heavy consideration. Mr O’Keeffe might be able to add to that. Mr O’Keeffe—We expect to receive in the next financial year $140,000 for the purposes of the employment of a technical officer and other administrative expenses to enable us to provide desktop Internet access to all senators. Senator COONEY—There is one matter that I would not mind raising, apropos what Senator Lundy said, about AWAs and the ability for the department to pay out the AWAs.

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I think you said there was no more money there. You would have to agree, Mr O’Keeffe, that you have most excellent staff in the Senate. Would that not be right? Mr O’Keeffe—We do indeed, Senator. Senator COONEY—For the sort of service they produce and the sort of things they do for us, they are clearly underpaid. Would you agree with that? Mr O’Keeffe—Speaking for myself, yes, Senator. Senator COONEY—What we are facing here is a terrible injustice. People who deserve to be paid more are not going to get it. Senator ROBERT RAY—Can we put a lead on the witness if you are going to lead him that much! Senator COONEY—I am not leading him. I am doing the sort of nasty questioning you do, Senator Ray. Senator ROBERT RAY—You are leading evidence-in-chief, I suspect. Mr Evans—We have already indicated that having to fund any salary increases out of running costs presents a very large problem for a department of this size and a department as specialised as this department is. Perhaps Senator Cooney will not ask me what the solution to this problem is because we do not know what the solution to the problem is at the moment. Senator COONEY—It is not only getting the money; it is the terrible injustice that is done to people who are not being paid for what they do and the quality with which they do it. Mr Evans—There is a serious danger of small agencies like this department and specialised agencies being left behind in this process and in the long run not being able to attract the sort of staff we would like to attract. As I say, I hope you will not ask me for a solution to the problem. Senator COONEY—I am sure it has been worked out. Senator FAULKNER—I just hope, Senator Cooney, that if he has the solution, he does not give it today! CHAIR—I just point out to the committee that we have allowed questions to range fairly wide. I do not want to be too restrictive but these hearings are supposed to deal only with matters that were raised in first round hearings and to which we need to return. So if we can keep that in mind in our questioning. Senator FAULKNER—I think it might be useful if we could just have an indication from the Clerk in relation to the events that surrounded contact with the office of the Clerk when the lawyers representing Mrs Smith provided her second statement to you. There has been some public speculation about the actions of the Clerk and communication with the President and so forth at the time. Could I ask the Clerk to inform the committee what actually occurred after the contact you had received—in other words, the written communication from Mrs Smith’s lawyers? Mr Evans—On 8 April, I think at about 3.30 or a quarter to four that afternoon, I was telephoned by a gentleman from a firm of solicitors. He indicated that he was acting for Mrs Christine Smith and that he was about to fax to me a statement by Mrs Smith. That statement was received on the fax at about 4 o’clock, and it was also faxed to the President’s office. The President. of course, was not present at that time. Having read the statement, I rang the gentleman from the firm of solicitors to confirm that I had it and to discuss possibilities of what might happen to it and what that might mean for

FINANCE AND PUBLIC ADMINISTRATION F&PA 16 SENATE—Legislation Thursday, 8 May 1997 his client. During the afternoon I conferred with Mr Fred Peppinck, the President’s senior adviser, who had received in the President’s office the copy of the statement addressed to the President. After discussing it, we agreed that I would telephone the President at about 9 o’clock that evening, that being about 6 a.m. where the President was, and inform her of the receipt of this statement and the content of it and make a suggestion to her as to how it should be treated. The suggestion that was going to be made to her was that it be provided to the party leaders and Independent senators. Senator FAULKNER—That was your suggestion, Mr Evans? Mr Evans—Yes. That was the course that we agreed on, so I was to phone the President at about 9 p.m. At about 7.30 or thereabouts I received a call from Ms Nicole Feely from the Prime Minister’s office who said that she understood that a letter had been received from Mrs Christine Smith. I asked her how she knew that a letter had been received from Mrs Christine Smith but she did not provide me with that information. She said that the Prime Minister wanted a copy of the letter. I said that I could not give the Prime Minister a copy of the letter until I had consulted with the President, that it was a letter addressed to the President and, through the President, to the Senate and that I could not provide the Prime Minister with a copy of it until I had spoken to the President and I would be ringing the President at about 9 o’clock that evening and I would get back to her and let her know what the President’s decision was about the disposition of the letter. However, some short time after that the President rang me to tell me that she had been contacted by the Prime Minister about the letter. We discussed how the letter should be treated. The President directed that it should be circulated to the party leaders and Independent senators that evening. I then went back to Parliament House and it was circulated by fax with accompanying telephone calls to the party leaders and the Independent senators at about 9 p.m. that evening. It was agreed that Senator Hill’s copy of the letter could be given to the Prime Minister’s staff. That was done at about 9 o’clock that evening. One of the Prime Minister’s staff called down to my office to get Senator Hill’s copy of the letter. Senator FAULKNER—You say it was agreed. Could you explain to me whom that was agreed with? The PRESIDENT—I said that. Mr Evans—The President and I discussed that and agreed that that would be an appropriate course. Senator FAULKNER—Was the letter provided to Senator Boswell as Leader of the National Party? Mr Evans—No, it was not separately provided to Senator Boswell at that stage. Senator FAULKNER—So the letter was provided to party leaders and Independent senators, the exception being for the coalition. It was also provided to a member of the Prime Minister’s staff. Mr Evans—In circulating those sorts of documents, we tend to treat the coalition parties as one. A document that goes to the Leader of the Government in the Senate is assumed to go to the coalition parties. But it was agreed, in view of the Prime Minister’s request for a copy of the letter, that Senator Hill’s copy—and Senator Hill was not in Australia at that time either— The PRESIDENT—He was overseas.

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Senator FAULKNER—I understand that. Senator ROBERT RAY—You could not send it to Senator Alston because he was at Falstaff. Mr Evans—It was not to go to Senator Alston. The PRESIDENT—It was never contemplated. Senator ROBERT RAY—As deputy leader? The PRESIDENT—No, I said Senator Hill’s letter addressed to Senator Hill could be delivered to the Prime Minister. Senator ROBERT RAY—Wasn’t Senator Alston acting leader of the party in the Senate at that stage in Senator Hill’s absence? Mr Evans—That is probably so. Senator ROBERT RAY—Wasn’t it sent to him because he already knew the content? The PRESIDENT—I was not here. Senator FAULKNER—He certainly made public comments during that period as Acting Leader of the Government in the Senate. Perhaps you could explain why it was provided to party leaders, Independent senators and the staff in the office of the Prime Minister? The PRESIDENT—I do not agree in a sense that it was provided to staff. It was provided to Senator Hill and delivered to the Prime Minister. As I understand it, someone from his office came around and collected it. The others were faxed. I do not agree that strictly it was provided to a staff member; it was collected by a staff member. Senator FAULKNER—Mr Clerk, had you had contact with any other members of the government on that evening about the letter? Mr Evans—No. Senator FAULKNER—So the only contact that you had had obviously apart from contact with Madam President was contact with Ms Feely from the Prime Minister’s office? Mr Evans—That is correct. Senator FAULKNER—Have you been able to get to the bottom of the issue of how Ms Feely knew of the existence of the letter? Mr Evans—As I said, when she said she believed this letter had been received and that the Prime Minister wanted it, I asked her how she knew the letter had been received, but she did not answer that question. Senator FAULKNER—I heard you say that before, but I went beyond that and asked whether you had been able to establish after the events how that had occurred. Mr Evans—Not by any definite means; in other words, not by any knowledge that has come to me that is not also available to everybody else. Senator FAULKNER—Can you guarantee the committee that that was not provided by the Office of the Clerk of the Senate to Ms Feely? Mr Evans—Certainly not, no. It certainly was not. Senator FAULKNER—Her knowledge was not provided by your office? Mr Evans—No. Senator FAULKNER—I assumed that because you asked how she knew.

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Mr Evans—That is certainly the case. Nobody was told about the existence of this letter until I received the call from Ms Feely. Senator ROBERT RAY—On that subject, between receiving it at 3.30 p.m. and before Ms Nicole Feely rang you at approximately 7.30 p.m.—I know that pinning the times is not easy— were any media inquiries made to you not so much about the letter but about Mrs Smith recanting on her previous views? I had some knowledge of this at about 6.30 p.m. from your office. Mr Evans—I received a call from a journalist—I think it was only one until the time of the release of the letter—who said that she believed that such a document existed. I neither confirmed nor denied, as they say. Senator FAULKNER—Madam President—obviously, I am well aware that you were not in the country at the time—I was going to ask if you could throw any light on how Ms Feely of the Prime Minister’s office became apprised of this? The PRESIDENT—No idea. Senator FAULKNER—Are you aware of any contact that was initiated by the Prime Minister’s office with your own office either prior to or after their communication with the Office of the Clerk of the Senate? The PRESIDENT—As I understand it, the call was from the Prime Minister’s office to the clerk. Senator FAULKNER—But the Prime Minister himself rang you overseas. The PRESIDENT—He did. Somebody initiated the call. Senator FAULKNER—I assume he did not have your telephone number in his back pocket. The PRESIDENT—No. Somebody in his office initiated the call. That person presumably got the number from my office. That person was on the phone when I answered the phone—I really am not sure whom it was; I am not suggesting they did not say whom it was—and said the Prime Minister wanted to speak to me. Senator ROBERT RAY—In the days following this there were a couple of very catty articles in the newspaper criticising your clerk. The PRESIDENT—Criticising whom? Senator ROBERT RAY—The clerk. The PRESIDENT—I do not think I have seen them, but anyway. Senator ROBERT RAY—I think he would have. They inferred that in some way he had not properly complied with the Prime Minister’s request. I put it to you, Madam President, that, if the clerk had handed over the letter, he would have been roasted here at an estimates committee. The PRESIDENT—I would have been annoyed. Senator ROBERT RAY—So you say here publicly that he acted absolutely appropriately in the circumstances. The PRESIDENT—I have said that publicly, and he did. The Prime Minister said that there had been a development in the Colston matter and Mrs Smith had published a statement and he wanted it. The clerk had refused to give it and I said, ‘And so he should.’ That was not a problem. That was the end of that bit of the discussion.

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I said to him that it cannot be sent by me to him, but I could release it to all leaders and he could get Senator Hill’s copy. I said, ‘I think I had better come back’ and he said, ‘That is entirely a matter for you.’ Anyway there was no doubt in my mind that it was a development of significance. So then I rang the clerk and he raised the implications for Mrs Smith of the thing being made public. I had not thought of that. I said that I recognised the potential difficulties for her, but I could not be concerned about them. There was no way that this letter could be sat upon until it was tabled in the Senate, given that we were not sitting until 6 May. His view was that it should be released to party leaders. It was my view that it should be released to party leaders and that is what happened. CHAIR—There being no further questions on program 1, we will move to program 6. [10.49 a.m.] Program 6—Black Rod’s Office Senator ROBERT RAY—I asked a question on notice about the provision of a telephone line to the Deputy President’s residence in 1990-93. I think, from memory, the response came back ‘not applicable’. Was that not applicable because it is not a matter for the Senate and should be a matter for DAS or were no provisions ever made? Mr Allison—The answer is both. Senator ROBERT RAY—It would be a matter for DAS? Mr Allison—It would be a matter for DAS and, as I understand it, DAS did not supply one. Senator ROBERT RAY—I have a very quick question on the missing transport records. What exactly went astray? What exactly disappeared or was mislaid, or is this just a nonsense? Mr Allison—The missing records, as I believe, were for the calendar year 1995 and they were weekly sheets of senators’ movements to and from Canberra. Senator ROBERT RAY—Where were they located? Mr Allison—They were in red folders in the Transport Office. Senator ROBERT RAY—From time to time, of course, there is no-one in the Transport Office because they are here such long hours; they have to go and get lunch and wander around and deliver tickets to people, et cetera? Mr Allison—That is correct. Senator ROBERT RAY—I asked a question on notice whether any senator had asked for access to those records. You confirm that one had? Mr Allison—Yes, Mr Chairman. Senator ROBERT RAY—I have no more on that. CHAIR—When you say that the records went missing, was there a back-up copy of those records anywhere? Mr Allison—Yes, Mr Chairman. Those records were used to prepare weekly returns in respect of senators’ travel to and from Canberra. CHAIR—When you say that those records went missing, what you are really saying is that a copy of those records went missing. There remained another copy or copies in the system. Is that correct?

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Mr Allison—Yes, not copies of those records as such but different forms of the same information. Senator ROBERT RAY—And that would not necessarily have been known to anyone who may have had a role in disappearing the records? Mr Allison—That is strictly correct; I cannot answer for others. Senator FAULKNER—Can I ask when you became aware, Mr Allison, that those particular records were missing. Mr Allison—When I became aware? Senator FAULKNER—Yes. Mr Allison—I became aware early this year; I believe about March or April. Senator FAULKNER—Can I ask what has occurred since that time, what action you took, in terms of investigating the disappearance. Mr Allison—All that we could do was to determine that the records were missing. There was a thorough search done of the office. There were no records found for that particular period. I took the remainder of the records and put them in the safe. Senator FAULKNER—I assume there has only been an internal investigation of that? Mr Allison—Yes. Senator FAULKNER—To the extent that anyone conducted that investigation, was that conducted by you or under your auspices? Mr Allison—Yes. Senator FAULKNER—As far as you are concerned, the investigation is now concluded? Mr Allison—Yes. Senator ROBERT RAY—I have got some questions about the investigation by the Senate of Senator Colston’s travel allowance, but I want to make it clear, Mr Chairman, that these are on process and will not go to any substance. You understand the distinction, and you can listen very carefully, Mr Chairman. CHAIR—I will, and I will ask the President to listen carefully as well. Senator ROBERT RAY—Could you tell me the date on which the Senate decided to investigate Senator Colston’s travel allowance? Mr Evans—The decision to conduct a formal investigation was made immediately after the estimates committee hearing, the date of which I have here somewhere. I think it was 26 March. Senator ROBERT RAY—That is not right. Mr Evans—Sorry, 26 February. Although I had earlier thought that some investigation would have to be undertaken—should be undertaken. Senator ROBERT RAY—What led you to those thoughts? Mr Evans—The allegations I think had started to go around before that estimates committee hearing but, as you know, they were raised in a very definite way at that estimates committee hearing and I was asked whether we would investigate them and I said that we would. Senator ROBERT RAY—Have you been back through Hansard and reread the evidence? Mr Evans—Not in recent times.

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Senator ROBERT RAY—I think it is important because some people, Mr Chairman, said I had asked for an investigation—and I think we had a discussion on it. Wasn’t the question put to you: if evidence were provided to you, would you launch an investigation? Mr Evans—Yes, that is correct. Senator ROBERT RAY—It was not a request by any member of this committee for an investigation? Mr Evans—No, and I did not take it that way. Senator ROBERT RAY—No, I think it has just been interpreted that way, that’s all, and I thought we would clear it up today. CHAIR—For the record. Senator ROBERT RAY—Who authorised the investigation? Mr Evans—Basically, I directed the officers of the department to undertake the investigation, but it was with the approval of the President. Senator ROBERT RAY—I only want to ask one question. You can listen to it carefully, Mr Chairman. It goes to the method of the investigation rather than the content, and it also goes to the published report in the Senate. I take it that, as part of this investigation, you looked at travel allowance claims where there was potentially evidence elsewhere that the senator in question was elsewhere at the time. Mr Evans—I am not sure that it was confined only to those particular claims. Mr Nankervis, who actually undertook the crosschecking of data and compiled that report, can answer that directly. Senator ROBERT RAY—Without any detail. Mr Nankervis—I undertook some of those inquiries, along with my deputy, Graeme Holt, and another officer of the section. The process that we carried out was a comparison of the occasions on which travelling allowance had been claimed and the claim that the senator was in a particular location for the purpose of the payment of TA against records held by the Department of Administrative Services which included the air fares, the Commonwealth car hire and records for the same period. There were instances where the airline movements, Comcar records—leaving Brisbane, coming to Canberra; Comcar records—arriving in Canberra— Senator ROBERT RAY—I do not think I require that. I think we are starting to move into areas I do not require. The PRESIDENT—I think so. Senator ROBERT RAY—Would I be right, from what I have read and adduced, that the investigation covered travel allowance claims in Canberra from about 1 July 1993 to February 1997 and looked at interstate claims from 1 July 1993 to 31 December 1993? Is that the ambit of where the search went? Mr Nankervis—The interstate claims were extended progressively. Originally we only had one perception of what we were looking for. As we looked further, different variations on that business came to light and we simply extended the areas of investigation. Senator ROBERT RAY—I think I had better almost finish it here, because we might get into territory we do not want to. CHAIR—Yes, I was going to say the same.

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Senator ROBERT RAY—But I have to ask this question. In terms of the two reports given to Senator Colston, am I right in saying that you were continuing to investigate even after that particular point of time? Mr Nankervis—Yes, Senator, you are right. Senator ROBERT RAY—Okay. We will leave it at that. CHAIR—Do you want to add anything? Mr Evans—No, Mr Chairman. CHAIR—There being no further questions on program 6, that concludes the discussions with the Department of the Senate. Thank you, Madam President, Mr Evans and your team for your assistance. Sitting suspended from 11 a.m. to 11.07 a.m. DEPARTMENT OF THE PRIME MINISTER AND CABINET Proposed expenditure, $1,715,000 (Document A) Proposed expenditure, $220,000 (Document B) In Attendance Senator Hill, Minister for the Environment Department of the Prime Minister and Cabinet— Mr Bill Blick, Executive Coordinator, Corporate Services Mr Richard Mills, First Assistant Secretary, Corporate Services Division CHAIR—I welcome Senator Hill, the Minister representing the Prime Minister. Thank you for your attendance. There are two areas in the department that we will be pursuing. The first is subprogram 2.1, Machinery of Government, and 2.1.1, the Cabinet Office, and the second is Corporate Services. I remind members of the committee, as I did earlier, that while I will be reasonably generous in the latitude on questioning, matters that were not raised in the first round of hearings are not ones that should be pursued here. The purpose of these hearings is to follow up matters that were raised in the earlier rounds of hearings. With that proviso, let us start on subprogram 2.1. Senator FAULKNER—I have some general questions. It might be useful to kick off with them and then go to the specific subprograms. CHAIR—I hope in doing that, Senator Faulkner, your questions will be relevant to the matters that were raised in earlier hearings of the committee. Senator FAULKNER—I can actually indicate to you that I intend to respond to an invitation that was publicly extended to us by Senator Hill. Being the well-mannered fellow I am, I felt it was very appropriate that we oblige. Senator ROBERT RAY—Was this on the Sunday program? Senator FAULKNER—Yes. Senator ROBERT RAY—Do you recall that invitation you issued us, Senator Hill? Senator Hill—I think what I said was that there are many opportunities to question ministers on matters, including during question time in the chamber and estimates, and that I would be answering questions on estimates the following week. We all know that, under our rules, they have to be estimates that relate to matters that arose out of the last hearing.

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Senator ROBERT RAY—Is it more serious to mislead the Senate or Laurie Oakes? Senator Hill—It is more serious to mislead the Senate, but I would not seek to mislead either, I should add quickly. Senator FAULKNER—I did want to ask just a few questions in relation to the Prime Minister and Senate Hill’s role in the arrangements with Senator Colston. I do not think it will take long. I was interested in understanding, Senator Hill, in fact whether the Prime Minister had authorised you, as the Leader of the Government in the Senate, to act on his behalf in negotiations or discussions with Senator Colston either before or after Senator Colston was elevated to the deputy presidency of the Senate last year? Senator Hill—I would say not in as specific terms as that, no. Authorised me to act on his behalf? I do not remember any specific authorisation of that nature. Senator FAULKNER—When you said ‘not in terms as specific as that’, could you explain to the committee what the terms of your brief were? Senator Hill—I represent him in the Senate. I am a member of the leadership group of the government. Senator FAULKNER—Appreciating that, did you have a specific brief to negotiate on behalf of the Prime Minister with Senator Colston over the deputy presidency of the Senate? Senator Hill—No, I did not have a specific brief to negotiate with Senator Colston for the deputy presidency. Senator FAULKNER—Could you inform the committee who carried the Prime Minister’s brief in relation to those negotiations? Senator Hill—I don’t know that the Prime Minister briefed anyone in particular. Senator FAULKNER—You do not know? Senator Hill—I am not the Prime Minister. Senator FAULKNER—No, I understand that. CHAIR—Are you saying you are not aware, Senator Hill, that the Prime Minister briefed anyone? Senator Hill—Correct. The way the question has been framed suggests that the Prime Minister instructed someone to act on his behalf in relation to certain negotiations. Firstly, I do not know of any such instruction and, secondly, I actually do not know of any such negotiations. Senator FAULKNER—I am trying to come to grips with the issue of whether Mr Howard undertook these discussions or negotiations directly or whether he delegated someone else to undertake them. Senator Hill—I don’t think he did either. Senator FAULKNER—Can you explain to the committee what Mr Howard’s role was then in relation to the elevation of Senator Colston to the deputy presidency last year? Senator Hill—I don’t think he had any direct role at all. Senator FAULKNER—Could you explain to the committee what his indirect role was? Senator Hill—I don’t know that his indirect role went beyond being kept informed. Senator FAULKNER—Could I ask who kept him informed? Senator Hill—I certainly kept him informed of what I knew.

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Senator FAULKNER—How regularly did you keep him informed? Senator Hill—During a sitting period, I would speak to him every day. CHAIR—On matters generally, you mean? Senator Hill—Matters generally, yes. Senator FAULKNER—But we are talking specifically here about Senator Colston’s elevation, as you know, to the deputy presidency. Senator Hill—Sorry, Senator Faulkner. Senator FAULKNER—I interpolated to the chairman that we are talking specifically here about Senator Colston’s elevation to the deputy presidency. CHAIR—Yes, I am aware of that, Senator Faulkner. I was not clear whether Senator Hill’s answer that he had contact every day was in relation to that or whether it was every day on matters generally. I thought it was important to get that clear. Senator FAULKNER—I must say I assume that Senator Hill would have reasonably regular contact with the Prime Minister about some matters relating to the parliament. I am, of course, specifically talking about the issue of Colston’s elevation to the deputy presidency. What sorts of matters would you have informed the Prime Minister about? Senator Hill—I would have informed the Prime Minister that it had come to my attention that Senator Colston was interested in standing for the position. Senator FAULKNER—What other details of negotiations would you have informed the Prime Minister about? Senator Hill—I haven’t conceded that there were negotiations as such. Senator FAULKNER—So we can talk about this in a relaxed way, I am happy to use a word of your choosing so we can make this matter roll on. ‘Discussions’—would that be helpful? Senator Hill—I informed him that I had heard that Senator Colston was interested in the position. I obviously had to check that out. I would have informed him that there seemed to be substance in the suggestion. Senator FAULKNER—But how did you know that Senator Colston was interested in the position? Senator Hill—It was brought to my attention. Senator FAULKNER—Who by? Senator Hill—I am not prepared to say. Senator FAULKNER—Who else was keeping the Prime Minister informed? Senator Hill—I don’t know. Senator FAULKNER—Were you the main conduit of information to the Prime Minister in relation to Senator Colston’s interests? Senator Hill—I don’t know that either. Most prime ministers seem to have a range of sources of information, but I saw it as my responsibility to keep him informed to the extent that it was necessary for him to be informed. There is always the chance that he would be asked questions either by the press or by others, so it was really just an informal flow of information. Although it was a long time ago now, I think such exchanges were brief.

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Senator FAULKNER—Could you let the committee know if any others were also keeping the Prime Minister informed about this? Are you aware of any others? Senator Hill—I think that that is something you would have to ask the Prime Minister. Are you asking, in a sense, whether anyone was specifically instructed to keep him informed or are we talking about an informal sense or what? I don’t quite know where this is supposed to lead. Senator FAULKNER—I am happy for you to answer it in any way— Senator Hill—I am trying to answer it in the terms in which the question was asked, but I am finding the question puzzling. Senator FAULKNER—I am trying to establish, Senator Hill, who was communicating with the Prime Minister about these sorts of issues. I am interested in knowing whether Mr Howard was doing this directly, whether he had agents operating on his behalf, around what issues they were doing it, et cetera. Senator Hill—I said to you that I think all prime ministers maintain a range of sources. Senator FAULKNER—Who was the main source? Senator Hill—I have said to you that I saw it as my responsibility as Leader of the Government in the Senate to keep the Prime Minister informed to the extent to which I thought he needed to know. Senator FAULKNER—But were you, as Leader of the Government in the Senate, responsible for overall negotiations with Senator Colston or was it someone else? Senator Hill—I didn’t see a situation of negotiations in that sense. I said to you that it came to my attention that Senator Colston was interested in the position. I sought to confirm those facts and kept the Prime Minister informed. Senator FAULKNER—Were you also responsible for negotiating or discussing with Senator Colston the issue of the upgrade of his staff member? Senator Hill—No. Senator FAULKNER—Can you let the committee know who undertook that responsibility on behalf of the Prime Minister? Senator Hill—As I recall it, there was an exchange of letters between Senator Colston and the President of the Senate and then an exchange of letters between the President of the Senate and the Prime Minister. From there, as I recall it, it went to the Prime Minister’s department and certain advice was given and acted upon. Senator FAULKNER—What about acting or liaising with Senator Colston in relation to his view of legislation before the Senate, that is, after he became Deputy President? How did the Prime Minister communicate his wishes in that regard to Senator Colston? Senator Hill—I do not know that the Prime Minister did communicate his wishes. We obviously have an interest in having all of our legislation passed and we do our best to press the benefits of such legislation upon all Independents and minor parties, and the Prime Minister would obviously expect us to be doing that. Senator FAULKNER—Who was responsible for communicating the government’s views to Senator Colston in relation to legislation? Senator Hill—The starting point is the minister who has the conduct of the matter. On occasions someone else such as myself might become involved if there are stumbling blocks

FINANCE AND PUBLIC ADMINISTRATION F&PA 26 SENATE—Legislation Thursday, 8 May 1997 that I think I can overcome. On occasions, I suspect the Manager of Government Business might do likewise. Senator FAULKNER—Can you indicate who was responsible, on behalf of the government or the Prime Minister, for the overall negotiations with Senator Colston prior to his elevation to the deputy presidency? Did any particular person have that responsibility? Senator Hill—No. Senator FAULKNER—So you were involved in negotiations but you did not have responsibility for them? Senator Hill—I don’t believe that there were negotiations as such. I have said that now three times. Senator FAULKNER—So your involvement was merely to have discussions with Senator Colston? Who was responsible for the discussions? Who made the decision that Senator Colston would get the job? Senator Hill—I had discussions with him. I told you that at the time. Senator FAULKNER—Who made the decision that Senator Colston would get the job? Senator Hill—Our party room decided to support him. Senator FAULKNER—One assumes that some member of your party room must have made a recommendation on someone’s behalf in relation to this. Senator Hill—If you knew the internal workings of our party room, you would know the answer to that question. Senator FAULKNER—I don’t pretend to know the internal workings of your party room. Senator Hill—And I have no intention of discussing them here today. Senator FAULKNER—I’m not surprised to hear that. I’m much more interested, really, in the nature of discussions which took place with Senator Colston outside the confines of your party room, which is where I am interested in taking you. Senator Hill—You may be interested in that. Senator FAULKNER—I am interested in that. I’m interested in knowing who was responsible, on behalf of the Prime Minister, for ultimately delivering the government’s support to Senator Colston on the floor of the Senate, which is a very different issue from the party room. Senator Hill—What I have said to you is that nobody was responsible in the explicit terms in which you put that question. I said that I kept the Prime Minister informed and, as a result of various discussions within the government, the room ultimately decided to support him. Senator FAULKNER—Were there any go-betweens between you or other members of the government and Senator Colston? Senator Hill—What, a sort of a second or something? Senator FAULKNER—You know what a go-between is. Senator Hill—What do you mean? Do you mean did somebody send me messages or something? Senator FAULKNER—Did others act as go-betweens for your discussions with Senator Colston? Senator Hill—No.

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Senator FAULKNER—Did you have any discussions with Senator Harradine about the matter? Senator Hill—I have discussions, as I said to you in the Senate the other day, with all senators. If I had discussions with Senator Harradine, that would remain between him and me, unless he wants to talk about it. Senator FAULKNER—Are you not willing to confirm or in fact deny— Senator Hill—I’m not willing to relate my discussions with any other senator. Senator FAULKNER—I didn’t ask you to relate them; I just asked you whether you had them. Senator Hill—I have them regularly with Senator Harradine. Senator FAULKNER—But did you have them with Senator Harradine about Senator Colston’s elevation to the deputy presidency? Senator Hill—I think that I spoke to all Independents and minor parties and yourself, on behalf of the Labor Party, in relation to that matter. Senator FAULKNER—Before the vote? Senator Hill—I think so. Senator FAULKNER—So you did have discussions with Senator Harradine? Senator Hill—I think I told everyone of the decision that we had reached. Senator FAULKNER—But did you have discussions with Senator Harradine before you reached the position? Senator Hill—My memory is a bit vague on the Greens. I think I spoke to Senator Margetts. Senator FAULKNER—I appreciate what you are telling me, but let me ask the question— Senator Hill—It would have been better if you had of asked these questions six months ago. Senator FAULKNER—Senator Hill, as you properly invited them, I am asking them. I do not think it is going to take an enormous— Senator Hill—I don’t mind, but you— Senator FAULKNER—I appreciate you don’t mind. Senator Hill—You have to take into account that time has passed by. If you were interested in the issues, I would have thought that you would have asked them a long time ago. Senator FAULKNER—I think even my worst enemy would have to acknowledge that I have been interested in the issues, or this issue. Senator Hill—I don’t know why it has taken you so long to ask the questions. Senator FAULKNER—This might be the first opportunity, Senator Hill. Senator Hill—It’s not. Senator FAULKNER—Certainly, as time has moved on, slowly but surely more information has become available to those of us who did not have the benefit of being on the inside. Can I ask you, in relation to Senator Harradine’s role, whether you had discussions with Senator Harradine about the issue of Senator Colston’s elevation to the deputy presidency prior to your decision to support Senator Colston?

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Senator Hill—I am not prepared to answer questions that relate to my discussions with any other senator, except to say to you that to the best of my recollection I informed all parties and Independents, prior to the vote in the Senate, of our understanding that Senator Colston wished to be considered and that we had decided to support him. Senator FAULKNER—Had Senator Colston had any contact directly with the Prime Minister about his elevation to the deputy presidency? Senator Hill—Not that I know of. Senator FAULKNER—With the Prime Minister’s office? Senator Hill—Not that I can recall. Senator FAULKNER—Indirectly? Senator Hill—You are asking impossible questions. What do you mean by ‘indirectly’? Senator FAULKNER—Do you know of any contact at all between Senator Colston and the Prime Minister or his office on matters relating to the elevation of Senator Colston to the deputy presidency? I am trying to make the question as broad as possible, Senator. Senator Hill—Well, you are. I cannot recall knowledge of any such contact. I therefore suspect that there was no such contact. Senator FAULKNER—Perhaps you could take that on notice so we could— Senator Hill—Do another search of the records. Senator FAULKNER—No. We just easily ask the Prime Minister in relation to that one, I would have thought. I appreciate you have a suspicion, but I think if we could get it completely clarified— Senator Hill—What I have said is that I cannot recollect any contact or being informed of any contact with the Prime Minister or his office. I would be a bit surprised if there was. Senator FAULKNER—I would appreciate you taking that one on notice. When did you first contact the Prime Minister about this matter? Senator Hill—I would have informed the Prime Minister shortly after I became aware of his apparent interest in the position. Senator FAULKNER—When was that? Senator Hill—It was not long before the vote. My memory is that it all developed within a few days. Senator FAULKNER—So a few days before the vote? Senator Hill—That is my memory—that it was all within a few days of the vote. Senator FAULKNER—Was your first contact with the Prime Minister or his staff? Senator Hill—What do you mean? Senator FAULKNER—Well, his advisers—staff advisers. You indicated he had contact with him and his office about these matters. I was interested to know whether— Senator Hill—I cannot remember that. It was probably with him, but it would have depended on whom I saw first, I think. Senator FAULKNER—I would imagine that, given what I read in the newspapers and you were crowing a lot about the breakthrough in terms of the arithmetic in the Senate because of Senator Colston’s move to the cross benches, this would be a matter that you would have communicated—

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Senator Hill—I do not think I was crowing at all. Senator FAULKNER—You were certainly talking about it, Senator Hill. Whether you were crowing or not can be in the eye of the beholder, I suppose. Senator Hill—You have a better memory than I have because I do not remember saying anything public at all before the event. Senator FAULKNER—I think, Senator Hill, you ought to refresh your memory on that. But it is not germane to the point. I would have thought that, given the significance with which the government considered— Senator Hill—Crowing is not my style. Senator FAULKNER—this as a real breakthrough in terms of the numbers in the Senate, it obviously would be a matter you would talk to— Senator Hill—I think I said afterwards that it was a breakthrough in that it gave us another option. It meant that for legislation as well as trying to seek votes from Senator Harradine, the Greens and the Democrats there would be another Independent. Senator FAULKNER—Did the Prime Minister express a view as to whether you should consummate your support for Senator Colston? Senator Hill—I do not think it is appropriate for me to relate my discussions as such with the Prime Minister. Senator FAULKNER—I am not asking you to relate your discussions but I would have thought a decision by the party of government to support a candidate in those circumstances for the deputy presidency of the Senate would be something about which you would seek the views of the Prime Minister of Australia. I would be very surprised if that was not the case. Senator Hill—I said to you that I kept the Prime Minister informed. Within that process obviously there would be discussion on what it might mean. I would have pointed out to the Prime Minister that it would mean one extra Independent, basically, and therefore the opportunity that would come to persuade an extra Independent to support our program. Senator FAULKNER—So did the Prime Minister support Senator Colston’s elevation to the deputy presidency of the Senate? Senator Hill—It was not for the Prime Minister to support it as such. But the discussions we had ultimately led to a decision by our party room to support Senator Colston. We would be unlikely to have reached that position if I believed that the Prime Minister was opposed to it. Senator FAULKNER—I appreciate that, Senator Hill. Isn’t that just a longwinded way in code for saying yes. Senator Hill—If that is the way you want to interpret it. Senator FAULKNER—No, I am just asking you. It is not a matter for me to interpret. Senator Hill—With respect, Senator, I will answer the questions as I see fit and you can interpret them how you like. CHAIR—Senator Faulkner, I do not want to truncate you unfairly but I think we are starting to stray a little from matters that directly flow from the previous hearing. Senator FAULKNER—I am not expecting this line of questioning to dominate our proceedings. I am very well advanced in my questioning of Senator Hill on this particular matter, but I think all senators would accept these are important issues. I think there is also

FINANCE AND PUBLIC ADMINISTRATION F&PA 30 SENATE—Legislation Thursday, 8 May 1997 strong public interest in these matters. I know Senator Hill thinks that because he certainly invited this line of questioning. Senator Hill—I think what I said in answer to the press story you put out about your wanting the Senate Privileges Committee to examine the government under the guise of an inquiry into Senator Colston was that there were ample opportunities for opposition members and senators to question government representatives on those subjects. Senator FAULKNER—You actually said: But Estimates next week as well, Laurie. You know how intense the Senate Estimates . . . I’ll be questioned. My colleagues will be questioned. There are plenty of opportunities for them to have a go at us. I am not having a go at you; I am merely questioning you. We are progressing, Mr Chairman—let me assure you of that. CHAIR—I just ask you to bear in mind the relevance point in linkage back to the previous hearings. Senator FAULKNER—I am interested in understanding which senior coalition figures apart from you had a role in these negotiations. You said you did not hold the brief of the Prime Minister. Was it Senator Alston or somebody else? Whom does the buck stop with, in other words? Senator Hill—That depends on what the issue is. Senator FAULKNER—The issue is discussions or negotiations with Senator Colston over his elevation to the deputy presidency. Who had the ultimate responsibility for those? Senator Hill—We take a collective responsibility, but I certainly had discussions with Senator Colston. If you wish that to mean the buck stops with me, then I am happy with that. Senator FAULKNER—How long did the negotiations take? My understanding of what you said is that it was only a couple of days. Senator Hill—That is my recollection, yes. Senator FAULKNER—You have said in the Senate that there were no inducements in relation to the government’s support for Colston for the deputy presidency. What did Senator Colston ask for in terms of delivering his vote? It is a two-way street, in other words. You say the government offered no inducements. Senator Hill—Correct. Senator FAULKNER—I am interested in what Senator Colston put on the table. Senator Hill—He did not put anything on the table. As I have said to you, the advantage for us was that we would have the potential of another Independent. Another Independent over a Labor Party vote is obviously appealing to a government when the numbers are so tight. We know that you exercise a very strict whip. If he was to be an Independent—apparently it was the direction he was heading in—then there was an opportunity for us on each and every piece of legislation to seek to persuade him on the merits. Senator FAULKNER—Did Colston hold out for more than just the deputy presidency position? Senator Hill—As I recall it, he indicated that he was of a mind to leave the Labor Party and asked if we would be prepared to support him for the deputy presidency. We gave that consideration and, as I said, the party room decided ultimately to support him.

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Senator FAULKNER—But did he hold out for more; did he up the ante? Senator Hill—No. Senator FAULKNER—But would you necessarily know if you were not the only person involved in the discussions? Senator Hill—I only know what I know. I am answering these questions within my knowledge. Senator FAULKNER—But when you say that it is a collective responsibility, it is just that I am not clear who else shared in this collective responsibility. Senator Hill—The whole party room, basically. Senator FAULKNER—I do not think the whole party room descended en masse to Senator Colston’s office and had these discussions, did they? That really is stretching credulity a little, I think. Senator Hill—Collective responsibility then for what? I must have misunderstood your question. Senator FAULKNER—For actually holding and undertaking the discussions with Senator Colston—the ‘negotiations’, as I call them; you prefer to use the terminology ‘discussions’. I am using both so that we can just move along. Senator Hill—But you are trying to read more into it than what there was. My principal concern was to ensure that the messages that I had received were well founded. That is why I spoke to him—because I personally wanted to know that this was his intention. Otherwise, we would look very silly. Senator FAULKNER—You talk about collective responsibility—and I appreciate the point you made about the party room, because I think all of us in this building do understand the role and the importance of the party room. But, as I said, I do not expect that all members of the Liberal Senate party room landed en masse in Senator Colston’s office for these discussions—and you and I both know that is not the case. So apart from yourself, I was just interested to know who else was involved in the direct—direct, one-to-one—discussions with Senator Colston. Senator Hill—Others may have spoken to him. But all I can really answer for are any discussions that I had. I accepted that it was my responsibility to verify the information that I had been given; to inform the Prime Minister; to discuss it, if you like, with the Prime Minister. I suppose, when I talk in a collective sense, I presume that you operate similarly to us, in that the events of the day tend to be tossed around groups at various levels. Senator FAULKNER—Yes, I do understand that. I acknowledge that. I understand how the party room works. I know that, if I have a negotiation with someone, I wear the responsibility for it, and I am up-front and I go and report it to the caucus. That is the point I am making to you. I do not duck shove it. Was Mrs Smith’s staff upgrade discussed before the first deal was clinched to elevate Colston to the deputy presidency? Senator Hill—As I said to you—I thought I said—I do not recall that matter until it was raised publicly to do with the correspondence of the President, which was not all that long ago. Senator ROBERT RAY—You are saying that the first you heard about it was at the Staff and Appropriations meeting in February?

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Senator Hill—It might have been leading up to that meeting. That is my recollection. Certainly I was not involved in any negotiations. Senator FAULKNER—Does that mean someone else handled them? Senator Hill—I said to you that the most I know about it is really what is demonstrated by the public record, that is, that there was correspondence between Senator Colston and the President of the Senate, and then there was correspondence between the President and the Prime Minister. I think Senator Ray studies these things more carefully than me, but I think Senator Colston might have written direct as well, or Senator Reid was suggesting that Senator Colston write. That is right, she was suggesting that Senator Colston write, but I think she then nevertheless wrote herself. But all I am saying is that that was not a matter that I was involved in. As far as I can remember, it was not a matter of which I was even aware. Senator FAULKNER—Can you confirm that Senator Alston handled those discussions and negotiations on behalf of the government? Senator Hill—No. Senator FAULKNER—You cannot confirm that? Senator FAULKNER—No, I cannot confirm it. Senator FAULKNER—Is that because you do not know who did? Senator Hill—I do not know, but I have no reason to believe he did. Senator FAULKNER—So you do not know who did? Senator Hill—I have told you the extent of my knowledge. Senator FAULKNER—Was that reported to the party room? Senator Hill—What? Senator FAULKNER—Those discussions in relation to the staff upgrade. Is that collective responsibility? Senator Hill—I thought I just told you—now this will be for the third time—that I do not recall being made aware of that until events around and about the matter being raised at the Staffing and Appropriations Committee. Senator FAULKNER—Could you explain precisely what terms you came to for or on behalf of the Prime Minister, or not, as the case may be, for the act of Senator Colston’s defection from the Labor Party and his elevation to the deputy presidency? Senator Hill—I am sorry, that I? Senator FAULKNER—Exactly what were the terms struck? Senator Hill—There were no terms struck. Senator FAULKNER—How did you communicate the government’s support to Senator Colston? Did you communicate the government’s decision to Senator Colston? Senator Hill—I would— Senator FAULKNER—Or did the whole mob come in en masse again? Senator Hill—If that is the question you are asking, you could have put it that way in the first instance. I think that I would have, after the party meeting. I made a range of telephone calls. I called you. I think I missed you and you called me back, or I tried you a second time. I cannot remember that. But that is when I telephoned those who needed to be informed of the room’s decision and, as far as I can recall, Senator Colston was one of those.

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Senator FAULKNER—Did the Prime Minister ever express any doubt as to the legitimacy of coming to this sort of arrangement? Senator Hill—As I said, I am not prepared to discussion any discussions with the Prime Minister I may have had. Senator FAULKNER—Given that relevant ministers have spoken to Senator Colston since August of last year apparently about the support for government legislation, I assume that you would be willing to accept that you have negotiated with Senator Colston about legislation. Senator Hill—From time to time, yes—not very often, because, as I said, the prime responsibility under the way we do business lies with the minister responsible for the particular bill. Senator FAULKNER—I would certainly acknowledge that those who have been responsible for it have been very successful. Senator Hill—No, well— Senator FAULKNER—I would; I think you would have to. Senator Hill—On some occasions he has supported us; on others, he has not. Senator FAULKNER—He has always supported you when it has mattered, Senator Hill. Senator Hill—That is not correct either, but I do not know whether that is the debate for today. Senator FAULKNER—On what basis for the legislation that you were responsible for did you secure the support? Senator Hill—Only on the merits of the legislation. Senator FAULKNER—Force of argument. Senator Hill—We obviously start from the premise that it is good legislation. Senator FAULKNER—Superior logic. Senator Hill—Not necessarily superior logic. Senator FAULKNER—Promise of a sinecure? Senator Hill—Good legislation for the benefit of the Australian people, nothing else. Senator FAULKNER—Promise of a sinecure? Senator Hill—Nothing else. Senator ROBERT RAY—Minister, did you get to see a copy of Senator Colston’s press release that he issued on 21 August before it was released? To refresh your memory, he said, in part, ‘I will abide by my past Labor principles’ and added ‘but will also take into account whether the government has a mandate,’ et cetera. Did you see that before it was released? Senator Hill—I do not recall this. I do not think so. I think I can remember him saying in the media, or through the media—but it may well be the report of the press release to which you are referring. I do not recall that specific press release. If you have it, I will refresh my memory. I recall it being reported to the effect that he retained his philosophical Labor basis— I think it was something like this—otherwise matters would be considered on their merits. Senator ROBERT RAY—Your answer has probably made my next question redundant. I take it that neither you nor any other person in the government had a role in preparing his press release?

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Senator Hill—I do not want to speak for anyone else, except to say that I do not recall— time is marching on—being aware of anyone else playing a role in that press release. Senator ROBERT RAY—Minister, you say in the evidence that you have given before us that you became aware of Senator Colston’s potential availability for the candidacy of Deputy President—I think that is as pleasant as I can put it—just a few days before the actual vote. From memory, the actual vote was on a Tuesday. That implies that you found out probably on the Thursday or Friday of the previous week. Does that accord with your memory? Senator Hill—I can remember that I was in Canberra. I would be fairly confident in saying that it was all within a week. Senator ROBERT RAY—At no stage in the two weeks prior to the election of Deputy President did you give an indication to the opposition that the government would support the opposition nominee for Deputy President? Senator Hill—I had discussions with Senator Faulkner some week or two before. Senator ROBERT RAY—Did you indicate to him then that you thought the normal convention—albeit with some problems in the past—would be observed? Senator Hill—The 1990 problem? As I recall my discussion with Senator Faulkner—I presume he does not object to me relating it, because I would like to be consistent with what I said a moment ago. Senator ROBERT RAY—Senator Faulkner, do you object to Senator Hill revealing his negotiations and deals he may have made with you—separately—that you did not tell me about? Senator FAULKNER—As I recall it, I think Senator Hill would be able to confirm that there is nothing in the discussion that I would be ashamed of. Senator Hill—It reminds me of a telephone call I got in 1990. Anyway, what is the question? Senator ROBERT RAY—Did you at any stage prior to your knowledge of Senator Colston’s availability indicate to the opposition that you expected the normal convention to apply and that the Labor nominee would be elected? Senator Hill—As I recall it, Senator Faulkner—it would be interesting to see whether he recalls it similarly—said to me that Labor would support Senator Reid as President and would like our support for Labor’s candidate for deputy. I think he named the candidate—I am not positive of that. I am not sure that when you selected your candidate you named the candidate. I think my response was that I saw merit in that approach and would confer with my colleagues. Senator ROBERT RAY—When this previously came up when you were Leader of the Opposition— Senator Hill—I would have said that—I do not think that you can any longer, after 1990, talk about it as a convention—because, as a general rule, where the numbers in the Senate are not held by one party—the governing party of the time—splitting the responsibilities has worked quite well. Senator ROBERT RAY—So you were not the one who approached Senator Sandy Macdonald to run just recently? Senator Hill—The first answer would be obviously not. The second answer would be that I do not know what you are talking about.

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Senator ROBERT RAY—You did not have a conversation with an Independent senator to try to lobby support? Senator Hill—Senator Ray, what happens within the provinces of our side should not be related by me to you. If you have your sources and there are others who want to help you in that regard, so be it. Senator ROBERT RAY—Generally I accept that, other than that you are espousing a principle that seemed to me to be a question at 20 past 12 on Tuesday. I thought there may have been some principle thing that has occurred since then. Senator Hill—No, no. I think you should take more note of what occurred rather than what might be rumoured to have been considered. Senator ROBERT RAY—I take that on board. Senator Hill—It is not surprising that we toss it around. As I said a while ago, I presume the Labor Party tosses these things around as well. Senator ROBERT RAY—But when it was being tossed around in the past—I am right in asserting, am I not—you approached Senator Evans about this relationship between presidency and deputy presidency—or he may have approached you. You had a discussion about it. I can give you the specifics here: it was around the time that Senator Sibraa was about to depart and the government was nominating Senator Beahan. Senator Evans would have been suggesting to you that Senator Beahan should be the President. You would have quite properly come back and said, ‘Does this mean the opposition always gets the deputy presidency?’ Am I right in saying that you then asked Senator Evans to put that view in writing to you? Senator Hill—No, you are wrong. Senator ROBERT RAY—So he just did it as a frolic of his own—put it in writing? Senator Hill—Yes, because he was seeking, after having breached the convention, to re- establish it for his benefit. Senator ROBERT RAY—When you say that Senator Evans breached the convention, correct me if I am wrong, Senator Button was leader at the time in 1990. Correct? Senator Hill—He was. Now you are really starting to test the memory. I think it was Senator Evans who phoned me to say something along the lines of, ‘I am sorry, Rob, but politics is politics.’ It was one of the two. Senator ROBERT RAY—Am I wrong in this chronology about 1990? There was an election in March. The Labor Party, maybe foolishly, selected its candidates for President and Deputy President in April—I can confirm that—but, in fact, the elections do not take place until August. But you, as a party, do not select your candidate for Deputy President until just before? That is your tradition. It was just before the August vote. I think I am right in that so far, aren’t I? Senator Hill—As a general rule you are right, but I am not sure that it was right in relation to that occasion. I must say that whilst this is— Senator FAULKNER—I refresh your memory by reminding you of the quite hard-fought battle that occurred within the Liberal party room between Senator Reid and Senator Crichton- Browne. Senator Hill—That is why I think Senator Crichton-Browne may have sought to establish his position a little earlier. This might all be rather interesting for somebody who wants to write of political gossip in the future.

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CHAIR—Senator Ray, I am not sure that I see the relevance of this questioning. Senator ROBERT RAY—I will show you the relevance because basically the— Senator Hill—I might have to call upon the chairman to help me with his recollection on some of these matters. Senator ROBERT RAY—We have been accused of breaking the convention. There are going to be only another three or four questions, and then at least we can put that one to bed. CHAIR—Let us see if we can get it over with quickly. Senator ROBERT RAY—I accept, Senator Hill, that it is hard to remember when Senator Crichton-Browne was your nominee. I also say to you: isn’t it a fact that in 1981, when you first arrived here and I first arrived here, Sir Harold Young, as he is now, was a candidate for presidency and was opposed, Doug McClelland was a candidate for deputy presidency and was opposed, and it was the Democrats at that point that voted in Doug McClelland to establish the convention? Senator Hill—I think that is right. Senator ROBERT RAY—For virtually every ballot thereinafter the same thing happened. You would oppose our President with a candidate and we would oppose your Deputy President with a candidate. The Democrats would vote for the government for the presidency and the opposition for the deputy presidency. That is what happened. Senator WATSON—Except on the last occasion. Senator Hill—I think that that is the way it started, but then in more recent years— Senator ROBERT RAY—I am going up to 1990. Senator Hill—Certainly on that historical basis it is hard to say that a convention developed— Senator FAULKNER—It sure is. Senator Hill—I have heard from Senator Faulkner a lot about breaches of convention in recent times, but out of that— Senator FAULKNER—That is because there have been so many. Senator Hill—I have to confess that I think on occasions I might have accused Labor of breaching a convention in the same way as they have accused me of breaching a convention. As I recall it, as time went by, we did not always put up a candidate. Senator ROBERT RAY—Up until 1990, candidates had always been put up. Senator Hill—That might be right. Senator ROBERT RAY—So you had a situation where the Labor Party— Senator Hill—What I am saying is I think it evolved out of the circumstances. Senator ROBERT RAY—Yes. I think you are right to say it is not a convention. It was not written there. Basically the convention, if it were there, was enforced by the Democrats by voting differently. That is what I am trying to establish. Senator Hill—I think it is probably fairer to say that that helped develop a practice. I say to you, as I did a few minutes ago, that when the party of government does not hold the numbers in the Senate there is some benefit of having cross-party— Senator ROBERT RAY—I think we are all agreed on that. Senator Hill—We all agree on it from time to time.

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Senator ROBERT RAY—The point I am trying to make is that up until 1990 they were contested. So to accuse the Labor Party of breaking convention when all it did was respond to the conventional thing—run a candidate and vote for them—is not a breach of convention. It was the Democrats who blackballed Senator Noel Crichton-Browne and then ironically, three years later, reversed that. That is how he became Deputy President. Senator FAULKNER—Ironically, three years after that the Liberals expelled him. Senator Hill—I think you are being a bit generous to yourself. This is all very interesting to some, I suppose, but, as I understand it, basically Labor seized the moment. They saw the chance to put Senator Colston in as Deputy President, and they saw the chance because of the votes of the Democrats, as I understand it. Senator FAULKNER—You are wrong. Senator ROBERT RAY—For the record, you are wrong on that, but we may have some fault involved. Senator WATSON—Mr Chairman, I have a point of order. Senator ROBERT RAY—This is the last point, and then we are going to leave it. Senator WATSON—The history of this parliament is all very interesting, but it is not relevant. CHAIR—Senator Ray has said that this is his last point. I agree with you, Senator Watson, but we have given him licence for one more point on this issue. Senator WATSON—It is very interesting. Senator ROBERT RAY—Aren’t you right, Senator Hill, that we had the— Senator Hill—I think we are reaching the point where all of us in the future will not refer to it as a convention. Senator ROBERT RAY—We are reaching the point, aren’t we, in August 1990 where the Labor Party had a candidate endorsed for months, they voted for that candidate, the Democrats voted for Noel Crichton-Browne? I concede that we could have pulled our candidate out, but you would also have to concede—knowing his track record, having been endorsed by caucus— we could not have pulled him out and we could not get a special caucus meeting to strip him of the position. Even so, for our knowledge of him at that stage, it would not have been worth the humiliation. I just put that as what happened. Senator Hill—I disagree with you. My memory—and some of it is direct and, I have to confess, some of it was being relayed by our candidate who clearly had a vested interest—is that he was expecting Labor Party support. When the Democrats decided otherwise, the Labor Party decided to seize the moment and put Senator Colston, one of theirs, into the position. That is why I got the telephone call which said, ‘Sorry, Rob, but politics is politics.’ Senator ROBERT RAY—Which I have to say fits with my view that we said at that stage we could not pull him out. CHAIR—I think can we— Senator ROBERT RAY—It has been more interesting than some of the other questions. CHAIR—It has been interesting, but I have grave doubts about its relevance to the additional estimates. If we have canvassed that, can we move on to the next point. Senator FAULKNER—I want to conclude my questioning. I have one or two more questions for Senator Hill on the issue that I have raised. Can I just be clear, Senator Hill,

FINANCE AND PUBLIC ADMINISTRATION F&PA 38 SENATE—Legislation Thursday, 8 May 1997 about your discussions with Senator Colston around his elevation to the deputy presidency. I want to be absolutely clear as to whether Senator Colston asked for any other positions, whether he put any other demands to you, in the discussions that you had with him. Senator Hill—No demands. Senator FAULKNER—Any requests? Senator Hill—No requests. Senator FAULKNER—Any suggestions? Senator Hill—No suggestions. I don’t know what you are talking about. Senator FAULKNER—Was Norfolk Island raised? Was the Administrator of Norfolk Island raised? Senator Hill—It was you who offered him Norfolk Island, not us. Senator ROBERT RAY—Rubbish! When did we offer it to him? Senator FAULKNER—I am asking you whether Senator Colston raised the issue of the Administrator of Norfolk Island with you. Senator Hill—I am saying to you that— Senator FAULKNER—It is on the public record that I told him to get lost on Norfolk Island. We know that, but I am asking about you. Senator Hill—Labor had offered him Norfolk Island. Senator ROBERT RAY—When? Senator Hill—Do you deny that? Senator ROBERT RAY—Yes, categorically. Senator FAULKNER—Can I ask you, just so we are clear, Senator Hill, whether the issue of— Senator Hill—I have answered the question. No, nothing was requested and nothing was offered. Senator FAULKNER—Was the issue of the Administrator of Norfolk Island raised with you by Senator Colston? Senator Hill—I don’t recall Norfolk Island being mentioned. Senator FAULKNER—You just said a moment ago categorically that nothing was raised. Now you cannot recall whether Norfolk Island was— Senator Hill—No, the issue is whether it would have been raised in the sense of you having offered it to him. Senator FAULKNER—Look, it is not that long ago, Senator Hill. Senator Hill—I understand that one of the reasons for his claimed disenchantment with the Labor Party was that he had been offered various things that had been withdrawn. Senator ROBERT RAY—No. Senator Hill—You say it is not true. But the point, and what is relevant, is that nothing was sought and nothing was offered. CHAIR—I think Senator Hill has given a pretty specific answer. Senator FAULKNER—I want a clear answer to the question that I have asked. He can preface it any way he likes. I am not interested in that, because everyone knows the role I

FINANCE AND PUBLIC ADMINISTRATION Thursday, 8 May 1997 SENATE—Legislation F&PA 39 played in relation to that as minister for territories. I want to know, Senator Hill, from you whether in your discussions with Senator Colston last year he raised with you the issue of the Administrator of Norfolk Island. Senator Hill—No. I do not recall the issue being raised. But what I do know is that nothing was asked for and nothing was offered. Senator ROBERT RAY—I have a few questions. I want to take you back to 24 March this year. Between 11 and 12 o’clock that day, the Senate President’s office released—according to the two-hour rule or whatever—a copy of the Senate report into Senator Colston and Senator Colston’s response and Mrs Smith’s response. Do you recall that? Senator Hill—I understood that after some discussions had taken place, I think between Senator Reid and Senator Faulkner, Senator Reid planned to give her response to party leaders before it was tabled in the Senate and that that included relevant documents, if that is what we are talking about. Senator ROBERT RAY—Yes. My memory is that Senator Faulkner received his copy about 20 minutes to 12 that day. It was due at 11 but a few things slowed it down. Senator Hill—I do not know. Senator ROBERT RAY—What I am asking is: were you sent a copy as party leader, as Leader of the Government in the Senate, in advance of it being tabled in the Senate? Senator Hill—On that basis, I presume I was. Senator ROBERT RAY—It is true that you entered the debate— Senator Hill—I can remember reading it in the chamber. Senator ROBERT RAY—That is quite possible. Senator Hill—So I am not sure that I read it before I got there. Senator ROBERT RAY—I do not think it is unusual that your first view of it would have been in the chamber. In between questions you can do a bit of work and read through it. Prior to that point of you reading it, though, did you know or have communicated to you the fact that Mrs Christine Smith would either put in a statement or assist Senator Colston with a statement taking some of the blame for the misclaimed travel allowances? Senator Hill—I understood that that was the explanation for the errors. Senator ROBERT RAY—Prior to getting the report? Senator Hill—Yes. Senator ROBERT RAY—You said in the Senate the other day that to the best of your recollection—and I will always understand that answer because you can bump into anyone anywhere—you had not actually had a meeting with Mrs Christine Smith at any stage. Senator Hill—That’s correct. Senator ROBERT RAY—You said that you may have bumped into her because she was a receptionist in the office. Senator Hill—Well, I would not know her if she was sitting at this table. Senator ROBERT RAY—Yes. That’s precisely right. Senator Hill—I said that my only contact with her would have been if she worked in his office and I simply saw her in passing.

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Senator ROBERT RAY—Yes. That was a bit of a slip of the tongue—the receptionist thing—seeing you already knew on the public record the salary and emoluments that had been achieved? Senator Hill—I thought it was a pretty good political point to pick up. Of course I added, relatively quickly as well, I thought, that she would obviously be multiskilled. I said that because—I have to say that I have not called on Senator Colston all that often—once when I called on him I can remember that there was a woman at the desk. Senator ROBERT RAY—Who it was, you do not know? Senator Hill—No, I do not know. Senator ROBERT RAY—I accept what you say. For the record, you would like to say now that at no stage did you have any discussions, negotiations, cross-examination or anything to do with that with Mrs Christine Smith, because you would recall that? Senator Hill—No, I did not. Senator ROBERT RAY—Is it a breach of confidentiality to tell me how you learned of, if you like, the abbreviated way of Mrs Christine Smith’s defence of Senator Colston? CHAIR—It is your discretion whether you wish to answer that, Minister. Senator ROBERT RAY—I gave him discretion. Senator Hill—It would not surprise you that I was somewhat concerned by some of the revelations that were starting to appear. Senator ROBERT RAY—Not becoming a witch-hunt any more in your own mind? Senator Hill—There was a witch-hunt. There was no doubt about that. Senator ROBERT RAY—There were a few black cats around. Senator Hill—I was becoming a little concerned by some of the revelations that were occurring. As a result of becoming somewhat concerned, I was given an explanation that was consistent with the ultimate tabling of that letter. Senator ROBERT RAY—Could I ask you—I think I can ask you this—was it given to you or did you seek it and then it was given to you? Were you proactive in saying, ‘Gee, I’d better find out what is happening here’? Senator Hill—These things are often not quite as precise— Senator ROBERT RAY—Yes, I know. Senator Hill—As an analytical examination later would suggest. I think it was a bit of each in fact. Senator ROBERT RAY—Can I rephrase my question, which may assist you? Was it early in March, sometime just after 3 March, you heard this from whatever form of osmosis down to someone telling you—I know it is hard to recall—or was it very close to the 24th when the documents were actually tabled? Senator Hill—I do not think it was far before the tabling of the documents. Senator ROBERT RAY—So you would presume in that week ending Friday the 21st? Senator Hill—I would need to go to my diary and find out where I was the week before. My recollection was that it was not long before the tabling. Senator ROBERT RAY—Was it post the Senate President putting back the reporting date? Senator Hill—That is too tough. I am not sure what day she made that decision.

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Senator ROBERT RAY—You cannot recall exactly who informed you? Senator Hill—From my perspective, there was no relationship with the issue of the President’s decision to allow further time. Senator ROBERT RAY—No, I am not suggesting it was. In terms of being informed, again you have indicated to us in answer to past questions that you to do not always let us know who informed you of information. I accept that. But was it a government colleague who informed you of this, without identifying the person, or someone else? Senator Hill—I am not prepared to answer questions as to who provided me with the information. But, as I said, it is my recollection that I received that explanation before the tabling of the documents. Senator ROBERT RAY—What I am trying to get at is that you were not directly told. Someone told you about this information, that the information existed. Senator Hill—Certainly Mrs Smith did not tell me because, as I said, I do not recall ever having a discussion with her. Senator ROBERT RAY—So we can presume that it was her employer who told you? Senator Hill—No, you can’t. Senator ROBERT RAY—Well, that has narrowed the field down to one. Senator Hill—No, it hasn’t. Senator FAULKNER—Yes, it has. Senator ROBERT RAY—Yes, it has. Senator Hill—No, you can’t assume that it was her employer. Senator ROBERT RAY—It wasn’t the sort of George Smiley of the Liberal Party who was running his agent who actually came in and reported to you? Senator Hill—No. I can’t imagine that you would go as far as relate how you sought information to satisfy yourself as to particular concerns. Senator ROBERT RAY—Given the earlier evidence about how crucial it was, I wonder about that. We have established that you certainly had no contact with Mrs Smith, that you were informed prior to the statement going down to the Senate by, let us say just theoretically, a Victorian Collingwood supporting senator of the Liberal persuasion. I do not want to identify the person, but I thought I would use a hypothetical case here. Senator Hill—You shouldn’t assume too much. Senator ROBERT RAY—Then the statement was put down by you as Leader of the Government in the Senate. Am I allowed to ask you this? Was your defence of Senator Colston that day and the plausibility of the explanation based simply on reading the documents or on the reassurance supplied to you by whoever it was that this was a quite genuine mistake? Senator Hill—No. It was basically on the document. I actually believe in the presumption of innocence and there had been put before the Senate an explanation that was consistent with innocence. I think I said at the time that it might not have been consistent with a politically appropriate course of action in terms of standard of care but certainly in terms of anything beyond this place I thought it was an explanation that was consistent with the presumption of innocence and, unlike some others, I was not prepared find him guilty on that basis.

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Senator ROBERT RAY—You were not aware that Mrs Smith’s statement was actually drafted by another of Senator Colston’s staff, Douglas Colston? You were not aware of that at the time, were you? Senator Hill—I have no idea about that. I guess I presumed it was drafted by her. Senator ROBERT RAY—I think we all presumed that at that stage. So your defence was just based on the presumption of innocence—that that should be a presumption at least accorded at this stage? Senator Hill—Absolutely. Senator ROBERT RAY—And you had absolutely no contrary evidence at that stage? Senator Hill—What do you mean? Senator ROBERT RAY—You had no evidence that Mrs Smith’s first statement was not correct? Senator Hill—No evidence, no. Senator ROBERT RAY—When did you go overseas in this period? We are talking about 24 March. We get up here on 27 March. I think it is fair to say that all hell broke loose on 8 April. Senator Hill—I went to CSD in New York. I was away for less than a week. I think it was in New York that I heard about Mrs Smith putting down an alternative explanation. Obviously, various actions flowed from that. Senator ROBERT RAY—You were quite happy for your copy of her second statement to be passed on to the Prime Minister’s office—it is just the normal vehicle—without you being consulted? Senator Hill—Obviously. It seemed to me to be a reasonable way to do it, consistent with the President’s obligations to her senators. Senator ROBERT RAY—I thought it was very clever and very proper to do it in that particular way. The problem was that not everyone had a fax machine that worked. Senator FAULKNER—But not all of us were in New York, either. Senator ROBERT RAY—He probably got it before you. I have no more questions on Christine Smith. [12.22 p.m.] Program 2—Government Support Services Subprogram 2.1—Machinery of Government Senator FAULKNER—I read an interesting little article in the Australian newspaper about a tiff between Mr Max Moore-Wilton and Mr Michael L’Estrange. It is actually called a tenancy tiff, splitting the Prime Minister’s advisers. I do not know whether you are aware of the article, Senator Hill. I am sure you are. Can someone tell us what the background of the tenancy tiff is? Senator Hill—I am advised that the better explanation appeared in the Canberra Times of 24 April. Senator FAULKNER—I am sorry I don’t have it. I am sure you can do better than the Canberra Times. Senator Hill—It is headed ‘Bureaucrats agree to amicable separation’.

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Senator ROBERT RAY—We want to know who the co-respondents are before we get that far. Senator FAULKNER—Are there any other areas of Prime Minister and Cabinet that are required to pay rent for their office accommodation? Mr Blick—Of the department? Senator FAULKNER—Yes. Mr Blick—The whole department obviously pays rent for its accommodation. Senator ROBERT RAY—So the distinction between the rest of PM&C and the Cabinet Policy Unit, if I am right, is that the three to four members in the Cabinet Policy Unit are paid under the MOPS Act? Mr Blick—That is correct. Senator ROBERT RAY—Therefore, they are not employees of Prime Minister and Cabinet? Mr Blick—That is correct. Senator ROBERT RAY—Therefore, they are members of the Prime Minister’s staff? Mr Blick—That is correct. Senator ROBERT RAY—They are not listed in the Administrative Services— Mr Blick—They are listed separately in the return that is published. Senator ROBERT RAY—Why is that—just to lower the threshold numbers for the Prime Minister? Mr Blick—I think it is to make it clear that there is a distinction between their role as the Cabinet Policy Unit and— Senator ROBERT RAY—Who signs their employment contracts or who signs on behalf of someone? Mr Blick—I have not seen their employment contracts. Senator ROBERT RAY—I think we heard evidence last time that either Mr Howard does or his delegated authority, so they are, in fact, Mr Howard’s staff. They are employed under the MOPS Act, are they not? Mr Blick—That is correct. They are employed under the MOPS Act and they are the Prime Minister’s staff in the legal sense. Senator ROBERT RAY—All that long convoluted thing was to get to the fact— Senator Hill—All government staffers are employed under the authority of the Prime Minister. Senator ROBERT RAY—That is not true. Senator Hill—It is a pretty fine distinction really. He allocates them to various offices. Senator ROBERT RAY—They put it on another page of the handbook, so instead of having 37 staff, he has 33. It is as simple as that. Therefore, they are employed under the MOPS Act, not the Public Service Act. Therefore, if they go and work over at PM&C, why wouldn’t the user pay principle, which this government loves, apply to them? Why should they get a freebie?

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Senator Hill—According to these newspaper articles, that was the view of Mr Max Moore- Wilton. Senator ROBERT RAY—That is right. So, in effect, they were trying to flout the user pays principle, weren’t they? These are the Prime Minister’s key advisers. Senator Hill—Some might say it is taking user pays to a rather extreme point. According to the newspaper article, there was a discussion, after which an amicable separation was achieved. Senator ROBERT RAY—Are you going on the record and giving evidence here that their separation was amicable or are you just going to quote a newspaper article? Senator Hill—I know both gentlemen and I cannot imagine that it would be other than amicable. Senator ROBERT RAY—But you do not actually know whether it was amicable? Senator Hill—No. Senator ROBERT RAY—Don’t you regard, Senator Hill, these tenancy fights as absolutely trivial when you are dealing with big national issues and you have Mr Max Moore-Wilton and Mr Michael L’Estrange fighting over who pays rent? Presumably then they are brought over to this building, where space is short. You have all the costs of transport and the rewiring of phones. How much did all this cost in terms of a turf fight? Senator Hill—I would think there would be potential savings in having them over here—all sorts of savings of convenience. Mr Blick—There would not have been any significant extra expenditure as a result of their move because they moved into the suite next to the cabinet room. Senator ROBERT RAY—Who was moved out? Mr Blick—No-one was moved out. Senator ROBERT RAY—So it was vacant space? Mr Blick—That space, as you may recall, is used for notetakers in the ordinary course when cabinet meetings are taking place. That space is still used by notetakers when cabinet meetings are taking place. They simply share accommodation with the Cabinet Policy Unit. Senator ROBERT RAY—Why not move them there originally? Why send them over to PM&C for a free lunch? Mr Blick—I am not sure that I can answer that question with any great precision other than that at the time the Cabinet Policy Unit was established, there would have been discussions between the previous secretary and Mr L’Estrange and, I assume, the Prime Minister, as a result of which they were placed within the department. Senator ROBERT RAY—I would have thought Mr Max Moore-Wilton would have wanted them over in his department so he could keep an eye on them. Now all this turf fight has done is move them over where he has no visibility as to what they are up to. Senator Hill—It demonstrates the cooperative team approach, I guess, that you do not worry about those things. Senator ROBERT RAY—It demonstrates to me that it is all about tactics and not strategy. Senator Faulkner probably wants to pursue it; I am sorry to interrupt. Senator FAULKNER—I would just be interested to get clear what Mr L’Estrange—I should actually describe him as the mild-mannered Mr L’Estrange—

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Senator ROBERT RAY—Unlike his brothers. Senator FAULKNER—I do not know about his brothers. The newspaper is trying to compare him to Mr Max Moore-Wilton. That is the point that the Australian newspaper is trying to make. Senator Hill—I have found them both mild-mannered. Senator FAULKNER—I don’t know either of them. The only thing I do know is that Mr Max Moore-Wilton does act as if he knows me very well. Can you just explain to us precisely what the Cabinet Policy Unit is doing? Senator Hill—We have done that at previous estimates. Do you want to do it again? The role has not changed since previous estimates. Senator FAULKNER—Can you explain to us what the Cabinet Policy Unit is doing? Senator Hill—I explained it at the last meeting. Why do I need to explain it again? Senator FAULKNER—Senator Hill, do you know what the Cabinet Policy Unit is? Senator Hill—Yes. Senator FAULKNER—What is it? Senator Hill—What I said last time. Senator FAULKNER—Can you explain it again, Senator? Senator Hill—No. Senator FAULKNER—I do not believe you have done this, Senator Hill. Explain to us what the Cabinet Policy Unit does? Senator Hill—Go back and read the Hansard. CHAIR—I think I am right in saying that it was the estimates hearing before the last one; it was the budget estimates hearings. Senator Faulkner, I do not want to truncate you, but the matter was not raised at the last round of hearings and, therefore, it is not really relevant to today’s hearings. I think, as Senator Hill says, it was outlined in some detail in the budget estimates. Senator Hill—We had quite a long debate about it. CHAIR—Senator Hill is saying that the situation has not changed. Senator ROBERT RAY—It was about 8 June when we resumed. Senator FAULKNER—Let me ask this question. You might be willing to answer this. Who is responsible for ensuring that there is no duplication between the cabinet secretariat in PM&C and the Cabinet Policy Unit? That is what I would like to know. Perhaps you could explain that to us. Mr Blick—Essentially, the cabinet secretariat has purely a secretariat function. It arranges the meetings and is responsible for ensuring the attendance of ministers and for the secretariat work that follows meetings such as drafting minutes for the secretary to cabinet to sign and the distribution thereof. That is obviously a totally secretariat role and is not one that the Cabinet Policy Unit performs. Senator FAULKNER—You have explained the role. Mr Blick—I am sorry, you wanted to know who is responsible for ensuring that there is no duplication.

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Senator FAULKNER—Are you saying that any question of duplication is never likely to arise, that overlap is something that would not arise because of the role of the cabinet secretariat? Is that what you are saying? Mr Blick—Yes. So, in essence, the answer to your question is that there is no need for anyone to do that because it is not an issue that could arise by the very nature of the cabinet secretariat’s work. Senator FAULKNER—We will worry about it later. Senator Hill—Worry about what? Senator FAULKNER—We will move on. Senator Hill—I do not think there is an issue of duplication. As I understand it, and as we have said at previous meetings, the concept is to have a group that can be closer to the political aspects of the cabinet business whereas clearly the departmental officers are otherwise restrained. CHAIR—There being no further questions on subprogram 2.1, we will move on to program 4. [12.34 p.m.] Program 4—Corporate Services Senator FAULKNER—I want to go back to an issue I raised at the first round of the additional estimates hearings about whether the Secretary to the Department of the Prime Minister and Cabinet is required to make a contribution towards the cost of his temporary accommodation and, if not, why that was so. I received an answer from the department on 21 March indicating that the basis for determining the secretary’s allowances is Public Service Board determination No. 46 of 1984. That basically relates to SES officers, it is applied to secretaries as a guide, the rationale being that the secretaries allowances should not be consistent with those for the SES officers. I would be interested in knowing—the answer does not go to this issue—whether Mr Moore- Wilton’s non-payment of a contribution towards his temporary accommodation allowance is consistent with the situation for other SES officers. Mr Blick—There is provision in that regulation for there to be reduction in officer contributions and the reduction can be to nil. Clearly, therefore, there will be SES officers within the Public Service who have reductions. We do not obviously have details of whom they may be. In PM&C, to the best of my recollection, with the exception of the secretary, we do not have anyone who has moved from interstate so we have no-one within the department with whom we can make that comparison. I suppose the best I can say to you, Senator, is that, to the extent that there is provision for reduction, obviously there is contemplation that there will be reduction. There is a series of criteria that can be applied to that. Senator FAULKNER—But you do not know how many it might apply to? No-one in PM&C? Mr Blick—We do not have people transferred from interstate in PM&C as far as I know, with the exception of the secretary, and I cannot answer for other departments. Senator FAULKNER—So the issue I suppose is whether SES officers are normally required to make a contribution. Is that the case?

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Mr Blick—As I say, I cannot answer that question because all we can do is go on the provisions that we use. In the absence of knowledge of what happens across the rest of the Public Service, it is just not possible to say. Senator FAULKNER—How easy would it be to establish, if you took this question on notice, Mr Blick? I obviously understand that it applies beyond PM&C. Would it be difficult for you to establish this? Mr Blick—I think it would be quite difficult, only in the sense that it would be a lot of work, because it would mean asking every department and agency that is staffed under the Public Service Act to tell us whether in the past they have had people who have moved from interstate and, if so, what the terms and conditions of that move were. I imagine it would create quite a lot of work around the place to establish that. Senator FAULKNER—I do not want to create a huge amount of work. I am not interested in an historical analysis. How much work would it be to establish whether this were the case with any currently serving SES officers? Mr Blick—If the question were whether there were any precedents for it, I think it would probably be relatively easy to establish. If the question were the first one you put—which was whether it is normal—I think it would be quite difficult to establish. Senator FAULKNER—Let me ask it in the terms of: are there any precedents? If you could take that on notice, I would appreciate an answer to the question in that form. Mr Blick—We will take that on notice. Senator FAULKNER—There is obviously a discretion in relation to this, as you have indicated. The answer that I had received to my question in the earlier estimates round was that there was a provision in the determination for discretion in determining officer contributions towards the cost for temporary accommodation. And, to use your words, the factors set out in that clause were considered in determining that no officer contribution was required in the secretary’s circumstances. So who considered them? Mr Blick—I am not sure that I exactly said that they were considered. I said that there were factors set out in the determination which— Senator FAULKNER—You outlined what the determination is. The answer says that it provides for discretion in determining officer contributions. I do not know whether it is your answer, Mr Blick, but the answer to my question on notice was that the factors set out in that clause were considered in determining that no officer contribution was required in the secretary’s circumstances. So I do not think I am verballing you. Mr Blick—Yes, I apologise for that; I had forgotten. Senator FAULKNER—They are someone’s words. Senator Hill has provided this answer. Mr Blick—There are people within the department, within the Corporate Services Division, who have the responsibility for dealing with these kinds of issues. In the case of this particular one, it was the Acting Assistant Director (Personnel) in the People Management and Development Section. That is not to say there were not other people involved in the discussion. Senator FAULKNER—That was the officer that considered the factors. Who actually made the decision, who made the determination, that no officer contribution was required in Mr Max Moore-Wilton’s case? Mr Blick—In the event, the secretary agreed with what was put to him. Senator FAULKNER—So he made the decision, he made his own decision?

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Mr Blick—He indicated to the officer that he did not believe that it was essential for there to be an officer contribution, and I can only speculate that that was on the basis of assessments that had been provided to him about the relevance of the various factors in the determination. Senator FAULKNER—Let us just get clear who ‘he’ and ‘him’ are. Mr Blick—I am sorry, when I said ‘him,’ I meant the secretary. Senator FAULKNER—So the secretary made the determination that in his own case no officer contribution was necessary? Is this what you are saying? Have I understood you correctly? Mr Blick—In the event, that was the effect of the— Senator Hill—Yes, but that is perhaps glorifying the process to some extent. As I understand it, the relevant— Senator FAULKNER—It is quite inglorious, I would have thought. Senator Hill—The relevant officers with responsibility for working out these things worked it out in relation to the secretary to the department, and that is where the policy deliberations on the issue were taken. Senator FAULKNER—Did they provide advice? Mr Blick—They did. Senator FAULKNER—What was the advice? Mr Blick—Before I get to that question, could I say that, as you probably appreciate, the Public Service Board determination contemplates the existence of a secretary who makes the decision about a subordinate’s allowances. In this case, there was no capacity for a delegation to take place in relation to that because the secretary was the person whose allowances were being determined. So the precise situation contemplated by the Public Service Board determination just did not exist. Senator Hill—What happens with the secretary to another department? Mr Blick—One of the difficulties in this area is that these cases occur so seldom that it is very unusual for a secretary to be brought from interstate to a job, so I find it difficult to answer that question in the broad. But I presume the same thing arises, namely, a department puts a package to the relevant person as the employee coming on board and says, ‘This is what we believe your entitlements are. Do you agree?’ Senator FAULKNER—Let us talk about the process that took place in relation to the decision regarding Mr Max Moore-Wilton. Did he express a view himself? Mr Blick—He did express a view himself, according to the records. Senator FAULKNER—Let us hear more about that. Was his view the same as that of the officer in the department that you mentioned who was dealing with this matter? Mr Blick—As far as I can make out from the record, yes. Senator FAULKNER—So the view he expressed was that he should not make a contribution, and he ticked it off. Is that it in a nutshell, or am I being unfair? Mr Blick—No, that is the factual situation. Senator Hill—That is the recommendation. Senator FAULKNER—He made a recommendation. He expressed the view that he didn’t—

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Senator Hill—No, that is the recommendation that was taken to him by the officer who was responsible for administering— Senator FAULKNER—No, that is not right, Senator Hill. Be careful. Senator Hill—Have I misunderstood? Senator FAULKNER—I think you have. Senator Hill—I am only taking it from a document that has already been made public. So there do not seem to be any secrets about this matter. Senator FAULKNER—I do not know what document you are referring to. I am dealing with the answer that I have—I assume standing in your name— Senator Hill—I certainly hope it is consistent with everything else on the public record, Senator. Senator FAULKNER—No, the clever answer that has been provided by the Department of the Prime Minister and Cabinet does not canvass these issues at all. It is not unknown, at times, for some matters to be left a little up in the air. That is why I am asking questions about them. What is clear is that the Public Service Board determination provides for a discretion in determining officer contributions. The factors set out in that clause were considered by someone. I did not jot down the office that the office holder holds, but I assume some SES officer in PM&C considered these factors. Mr Blick—No, in fact not an SES officer. Senator Hill—This is the Acting Assistant Director (Personnel), People Management and Development Section. Senator FAULKNER—Yes. He or she has considered those. Senator Hill—She. Senator FAULKNER—She has considered those. I understand—and this is my next question—she has made no recommendation but has considered the factors. I think that is right, as I understand your evidence, Mr Blick. Mr Blick—The operative words in this document are, ‘Subject to your advice the above arrangements will be implemented.’ That is the nearest it comes to what we would regard normally as a recommendation. Senator FAULKNER—Mr Max Moore-Wilton has provided advice to that officer that he does not believe it is appropriate that he pay an officer contribution; is that right? Mr Blick—Mr Mills has got further information. Mr Mills—That document indicates that there was a previous oral communication between the secretary and that officer. The officer said in writing, ‘You indicated that you do not consider an officer contribution to be necessary.’ I take it from that that there was an earlier conversation, in the context that this officer is advising the secretary on what a reasonable amount is for reimbursement of accommodation costs. Senator FAULKNER—I understand. The Secretary to the Department of the Prime Minister and Cabinet told a junior officer that he does not believe it is appropriate that he pay an officer contribution, no recommendation comes from the officer—or recommendations in the terms that Mr Blick has read into the record—and Mr Max Moore-Wilton ticked off that he will not be paying an officer contribution. That is right, isn’t it? Mr Mills—It is the secretary’s decision.

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Senator FAULKNER—I think we are all clear. I would like to know whether the government or the Department of the Prime Minister and Cabinet have made any other contribution to Mr Moore-Wilton’s temporary accommodation? Mr Blick—Other than rental payment? Senator FAULKNER—For example, has the department in any way contributed to the furnishing or the outfitting of his accommodation in Canberra? Mr Mills—Yes. Senator FAULKNER—Is that the usual practice? Mr Blick—As I say, it is rather difficult to speak of usual practice since we do not have— Senator FAULKNER—Has it ever happened anywhere before to your knowledge, Mr Blick? Try the question in that form. Mr Blick—We believe that some previous secretaries may have received assistance of this kind. There is a suggestion, for example, that Mr Menadue may have done when he moved to Canberra as secretary to the department many years ago. But details of those sorts of things are not easy to establish after such a long time. Senator FAULKNER—Did he make a contribution to his TAA? Mr Blick—We do not know the answer to that. Senator FAULKNER—Mr Moore-Wilton did not, did he? I think you said to me that you thought Mr Menadue may have received some assistance. He was secretary of certainly more than one department, wasn’t he? I asked: did Mr Menadue make a contribution to his own TAA? Mr Blick—I thought I had answered that. I said, ‘We do not know the answer to that.’ Senator FAULKNER—You do not know whether that is a valid comparison or not? Mr Blick—You were asking I thought about furniture? Senator FAULKNER—I was. Mr Blick—And that was the context within which I— Senator FAULKNER—I went beyond that. When did Mr Menadue cease being an officer of the Commonwealth? It was some time ago, wasn’t it? Senator Hill—It would have been in the early to mid-1980s. Mr Blick—Before then. Senator Hill—I think the conclusion to draw as to whether or not it is a valid comparison is really for you. I think the officers can put the factual basis as best they understand it. Senator FAULKNER—What was done and how much was spent? Mr Blick—We have a record that something of the order of $2,796.75 was spent on items of furniture for the accommodation that Mr Moore-Wilton occupied in Canberra. Senator FAULKNER—What was purchased with that? Mr Blick—A sofa, a bed, occasional tables and lamps. The basis of the decision to purchase it rather than hire it was that it was more economical to do that. Senator FAULKNER—Who made that decision? Mr Blick—Again this was a matter that was considered within this section that was making the arrangements for Mr Moore-Wilton.

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Senator FAULKNER—I see. So Mr Moore-Wilton made this decision too? Mr Blick—I do not think that that is apparent at all. I think it would have been a matter of mutual discussion. Senator FAULKNER—Who with? Mr Blick—Between the people arranging the move and him. I should add that this was an alternative to either hiring the furniture or paying for the removal of some of his own furniture from Sydney. Senator FAULKNER—Is that the sum total of furniture or furnishing or outfitting his accommodation in Canberra? Mr Blick—Not the absolute total. Senator FAULKNER—There is more. Mr Blick—We loaned him some items that were within the department already. What is mentioned here is a small microwave oven— Senator FAULKNER—Has he given it back? Mr Blick—It is on loan to him as indeed effectively is all of the furniture we purchased. We have not purchased it so that he becomes the owner of it. Senator Hill—It says, ‘It is provided for your use during the time of your employment.’ Senator FAULKNER—So you purchased certain items for him and you loaned him other items? Mr Blick—That is right. Senator FAULKNER—What other items did you loan him? Mr Blick—I cannot answer that precisely now. The only item that is identified in these pages is a small microwave oven, but it does imply that there were some other items of furniture. Could we take that on notice? Senator FAULKNER—Yes. Does your brief go to the value of those items? Mr Blick—It does not. Senator FAULKNER—But effectively the decision made for the purchase and loan of these particular fittings—furniture and equipment—was made by Mr Moore-Wilton himself, is that fair? Mr Blick—I am not sure I would put it that way. I think it was a matter of an agreement between him and the department that this was the most economical and sensible way of doing things. Senator FAULKNER—Who did he come to the agreement with? That is what I am trying to grapple with. Senator Hill—It seems that it was discussed with this officer. Senator FAULKNER—It seems to me that he had an agreement with himself. Senator Hill—No, it appears that it was settled with the Acting Assistant Director (Personnel) in the People Management and Development Section. Senator FAULKNER—That is not quite right. Did Mr Moore-Wilton express his view to this officer that he wanted the furnishings and the outfittings as well as wanting to pay no officer contribution to his TAA or was he silent on this one?

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Senator Hill—No, I think he indicated that a number of items of furniture were needed. Senator FAULKNER—He indicated to this officer that they were needed. What does that mean? Senator Hill—You need a bed to sleep on, I suppose. Senator FAULKNER—I need a bed to sleep on too, but I have gone out and bought my own. Senator Hill—It sounds as if it was fairly sparsely furnished, if I might say. Senator FAULKNER—Who bought the bed you sleep on, Senator Hill? You did probably, just like me. Senator Hill—This is a temporary arrangement. What are the alternatives? Mr Blick—The situation is that otherwise he would have been entitled to have furniture brought from Sydney from where he maintains his residence or he could have rented a fully furnished place. Senator FAULKNER—But Mr Moore-Wilton made this decision himself too, did he? That is what I am trying to get to. Senator Hill—It seems that it was arrived at after discussions with the officers of the department who deal with these matters. ACTING CHAIR—Senator Faulkner, do you have more questions to put? We are about to lose our quorum. Senator FAULKNER—I do have more questions for PM&C. ACTING CHAIR—In that case, we will adjourn now and reconvene at 2 o’clock, otherwise we are going to lose our quorum. Are you happy with that? Senator Hill—I have no choice, have I. Sitting suspended from 1.01 p.m. to 2.09 p.m. Senator FAULKNER—We have just heard evidence that Mr Moore-Wilton, the Secretary to the Department of the Prime Minister and Cabinet, made a decision that he should pay no officer contribution to his temporary accommodation allowance and that he expressed this view to a comparatively junior officer in the Department of the Prime Minister and Cabinet. It is that issue I would just like to address my questions to, Senator Hill, putting it in context, if I can. I would like to know what level the officer in PM&C is—I do not want to know the name of the officer—that Mr Moore-Wilton advised that he should make no contribution to his own TAA. Senator Hill—The one we have been talking about is a Senior Officer Grade C, but the minute also had to pass through a number of more senior officers. What are their various grades? Mr Blick—The most senior one was the head of the Corporate Services Division. Senator FAULKNER—I understand that Mr Moore-Wilton, the Secretary to the Department of the Prime Minister and Cabinet, has rung a Senior Officer Grade 3 level and told that officer that he did not think he should make a contribution to his own temporary accommodation allowance? I think that is the thrust of the evidence you have given. Senator Hill—It may not be quite as simple as that because I am now told that, during this process, a number of other officers of a more senior level were involved. We were just giving you the various rankings which were—

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Mr Blick—SES band 2, SES band 1 and Senior Officer Grade B, which is immediately senior to— Senator FAULKNER—I understand the minutes passed through those officers. Correct me if I am wrong, but I understand from the evidence that has been provided to the committee that the Secretary to the Commonwealth Department of the Prime Minister and Cabinet rang an officer at level Senior Officer Grade 3 of the Commonwealth Public Service and told that officer that he considered that he should not make a contribution to his own temporary accommodation allowance. That is as I understand it. I would just like you to confirm that. Senator Hill—I would ask the officer to clarify that as best as we know. Mr Blick—So far as we can establish, the more accurate description of the interchanges is that there were discussions between the two of them. I cannot honestly tell you whether some of these other people were also involved in the decision making process. That did not involve the Secretary simply ringing the officer and providing that instruction. It involved, so far as we can tell, a two-way exchange of views about what would be the most appropriate arrangements. Senator FAULKNER—A Senior Officer Grade 3, would you describe that as a comparatively junior officer in the Commonwealth Public Service? Mr Blick—Compared with some of the others that we have listed, yes, but it is a position of some responsibility. Senator FAULKNER—Yes. Senator ROBERT RAY—In military terms, it would be a lieutenant if Mr Max Moore- Wilton was a field marshal. Mr Mills—No, Senator, I would say about lieutenant colonel. Senator FAULKNER—If Mr Max Moore-Wilton was a field marshal, I can guarantee I would not be in the armed services. Mr Mills—In the old terms, his position is a class 9, now called a Senior Officer Grade C, and you would know about half colonel level. Senator FAULKNER—Thanks for that analogy, Senator Ray. That will have a lot of people perplexed. How common is it for the Secretary to the Department of the Prime Minister and Cabinet to ring—first of all, let me ask: how many communications did the Secretary to the Department of the Prime Minister and Cabinet have with the officer? Is that clear from the minute? Mr Blick—From the minute, there seems to have been at least one discussion, but it is not possible to establish whether there would have been more. Senator FAULKNER—Minister, you indicated apparently that this minute was public. I must say I have not had the benefit of seeing it, but I take your word for it. If it is public, would you be able to table it for the benefit of the committee? Senator Hill—Yes. As I understand, it was made available under freedom of information. Mr Blick—There is one deletion, Senator, which is Mr Moore-Wilton’s private address. Senator FAULKNER—But it was made available to someone under FOI? Mr Blick—It was made available under freedom of information. Senator FAULKNER—So if that could be tabled—

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Senator ROBERT RAY—We take it that it was not the company that supplied the furniture that put in for the FOI if the address is removed. Senator FAULKNER—If that could be provided now; I wouldn’t mind having a quick look at it when it is made available. We may return to that interesting minute. How often would a secretary to a Commonwealth department or a secretary to PM&C ring an officer at that level? Would this be a common occurrence? Senator Hill—We don’t know that the secretary rang the officer. Presumably the officer had instructions to progress this matter and spoke to the secretary. In this instance, the secretary happens to be the person who was going to sleep in the flat as well. Senator FAULKNER—Sorry, what did you say about the flat? Senator Hill—The question is really somewhat irrelevant to the facts that are before us. The facts seem to be that it was known that accommodation was to be provided. It was decided, if it was going to be vacant accommodation, that there would need to be some furnishings. The appropriate officer in the department spoke to the secretary about it. It looks as if there may have been other departmental officers involved. A minute was prepared, was initialled by the three more senior officers and then finally noted and agreed by Mr Max Moore-Wilton. Senator FAULKNER—With respect, Minister, I think the situation is now that we have evidence extracted at this estimates committee to the effect that Mr Moore-Wilton has made no contribution towards his temporary accommodation allowance. We have been told that he made the decision. We also now know after questioning that the government has made some other contributions—we haven’t explored all of them yet—to Mr Moore-Wilton’s temporary accommodation, including the purchase of furniture and fittings and the loan of some fittings, and that Mr Moore-Wilton made that decision, too; I think that is fair. What will be the department’s approach to auditing the fittings and furniture that has been bought for or loaned to Mr Max Moore-Wilton? How do we know it’s over there in the flat? Mr Mills—I assume, as part of our normal asset management practice, we would check to see that it is there, just as we do every now and again for other items of equipment in the department. Senator FAULKNER—Are they identifiable? Mr Mills—I presume so, Senator. Senator FAULKNER—I do appreciate your providing us with those assumptions and presumptions. But do you actually know what the auditing arrangements are, whether there is any record of these? Senator Hill—There is certainly a record of what has been provided, because we have told you. Senator FAULKNER—Could you perhaps explain to us what the departmental processes are in this sort of situation? Mr Blick—It is standard practice to affix an identifier to each item of equipment, or furniture in this case. Senator ROBERT RAY—Above a certain level, isn’t it? Mr Blick—Above a certain level. Senator ROBERT RAY—You wouldn’t do it for a toaster, probably, but for a microwave you would. That is usually the distinction, isn’t it? Mr Blick—You may be right.

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ACTING CHAIR (Senator Murray)—Whilst we have a break, I note for the record that this letter dated 5 June 1996 from the Department of the Prime Minister and Cabinet has been tabled. Mr Blick—There is certainly a level below which one wouldn’t worry about that kind of thing. But we have a register of material that is loaned to people, in this case the secretary. Senator ROBERT RAY—Could we have a copy of that register or is that private? Senator FAULKNER—Is this a formal Department of the Prime Minister and Cabinet inventory? Mr Blick—I am sorry; I did not catch that. Senator FAULKNER—What is the register? I just want to get clear what we are talking about. Senator Hill—This is property of the department, and the note that you have makes that clear. Senator FAULKNER—Were these furnishings and fittings sitting in Mr Max Moore- Wilton’s residence both bought by the department and loaned by the department to Mr Max Moore-Wilton? Mr Blick—Exactly. Senator FAULKNER—So there is an inventory? Mr Blick—There would be a list of items that would have been loaned to him. Senator FAULKNER—Could we have a copy of that list of items? Senator Hill—You have the list of items that were purchased for him. That is in the letter. Senator ROBERT RAY—You are saying it is only a sofa, a bed, occasional tables and lamps—that is the totality? Mr Blick—That is correct, Senator. Senator FAULKNER—That is what has been purchased? Senator Hill—That is correct, and during the luncheon break we have made inquiries to obtain a list of other items. Senator ROBERT RAY—That are on loan. Senator Hill—That are on loan. We mentioned, from memory, the microwave. There are a few other items as well which— Senator FAULKNER—Perhaps Mr Blick or you could read them into the record so we know what else Mr Moore-Wilton has. Senator Hill—There is a TV/video. Senator ROBERT RAY—Could I just stop you there. Provision of a TV/video. Would I be right, Minister, when I say departments cannot even supply a minister with a TV and video at home? Mr Blick—They would normally be provided by the Department of Administrative Services to ministers. Senator ROBERT RAY—At home? Senator FAULKNER—They are not provided. That is the point. Mr Blick—I am sorry; I thought you said in their offices.

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Senator Hill—It is not as if it is furnishing your ongoing home, is it? This is a temporary accommodation arrangement. As I understand it, you could have paid more and got a place that was furnished. Mr Blick—Exactly. Senator FAULKNER—Are you also aware that Mr Moore-Wilton is paid a significant temporary accommodation allowance, to which he makes no contribution? We have not yet had any indication as to whether this is breaking new ground because we simply have not had an answer to my questions as to whether there is any other precedent for an SES officer not making a contribution to his own temporary accommodation allowance. We are also aware that Mr Moore-Wilton makes decisions for himself, apparently, in relation to all these matters. We will get to the bottom of it eventually, I am really confident. Senator Hill—That is not quite fair either, but if that is the way you want to interpret it. Do you want this list? Senator FAULKNER—Please. Senator Hill—We were in the process of reading it out. Senator FAULKNER—I think that Senator Ray, in thinking back to our time as ministers and what we did not have, was so shocked about the TV and video that he— Senator ROBERT RAY—It took me years to get a phone on. Mr Blick—A lounge and two chairs, an office table and chair, a breakfast table and four chairs, a mobile drawer unit, two visitors chairs and a bookcase. Senator FAULKNER—They are all on loan? Mr Blick—Yes. Senator FAULKNER—So that effectively is the inventory. I appreciate the great foresight in obtaining that over the luncheon period. Had an inventory been established before today? Senator Hill—It must have been got from somewhere. Senator FAULKNER—I suspect it was. I would even be willing to hazard a guess at where it was got from. Mr Blick—In the sense that there is a list that was on the file which is dated 13 June 1996, yes, that is the case, Senator. Senator FAULKNER—Let’s now return to the question of how one audits what is on this inventory. Has anyone been out to check it is all still there? Mr Blick—The answer to that question is we do not know the answer. Senator FAULKNER—Could you take that on notice, please, Mr Blick. I would appreciate it. Senator WATSON—I am a bit concerned about the imputation in terms of your questions about whether the items are still there. Senator Hill—Isn’t it better to find out what is the standard auditing practice in relation to— Senator WATSON—That is better. Senator FAULKNER—I am happy for that. There is no imputation intended. I am sorry if you—

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Senator Hill—I think Admin Services come around our offices every few years and check off the list. Senator FAULKNER—I received a letter from the Department of the Senate telling me they were going to front up to my senatorial office to check that everything that should be there is there. I did not take that as being offensive at all. These are just standard procedures. But let me assure Senator Watson that no imputation was suggested. I am just very interested in the procedures. Senator WATSON—It is just the suggestion about whether they are still there. Senator ROBERT RAY—He may have returned some as unsatisfactory, Senator. Senator WATSON—Did departmental officers evaluate the alternative costs of providing accommodation et cetera? Did the alternative preferred by Mr Max Moore-Wilson result in a material cost differential compared with those other alternatives? This is the issue, isn’t it— that due process be complied with and whether there was any material cost differential compared with the alternative? I do not want to be wasting time going over trivialities when there are bigger items on the estimates agenda. Mr Mills—My recollection is— Senator FAULKNER—Well, let us be clear what we are trying— Senator Hill—We are getting an answer to the question. Senator FAULKNER—I am sorry. Mr Mills—My recollection is, Senator, that alternatives were discussed at the time and one option for the secretary was to take a fully furnished house, I think it was, in some other suburb. My memory is that that would have cost about $400 a week. He chose this particular unit, which was at a lower cost than that. Senator WATSON—So the overall cost was lower in terms of the alternative of a fully furnished unit? This is really what we are getting at—the cost to the Commonwealth plus due process. Senator ROBERT RAY—Senator, one of the things borrowed there is a writing table, on which no doubt the Secretary to Prime Minister and Cabinet wrote some of the wonderful speeches he gave in the first few months about bloated bureaucracy, wasted expenditure, et cetera. Senator Hill—But Senator Watson’s point is that there can be a cost saving in the way that the secretary and the department have entered into this arrangement. Senator WATSON—There might be a cost saving. That is what I want to find out. Senator FAULKNER—The document that I have in front of me is a minute to Mr Max Moore-Wilton from the Acting Assistant Director, Personnel, People Management and Development Section, which clearly says: Your proposed lease and furniture package equates to approximately $341.50 per week (subject to actual expenditure on furniture). You indicated that you do not consider an officer contribution to be necessary. In other words, Mr Moore-Wilton said he did not think that he should make any contribution to that. Do we know how that particular communication from Mr Max Moore-Wilton that he should not make any contribution was made? This is not the other contribution to his TAA we are talking about. Let us be clear, Mr Blick: these are separate amounts, aren’t they? There is an amount of temporary accommodation allowance which adds up to $29,300 a year, I think. Am I right there?

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Senator Hill—Not according to me. It is $330 a week, which, I am told, exactly reimburses the cost of the rental of this two— Senator ROBERT RAY—Then you amortise the furniture out over a five-year period. Senator Hill—I was getting to that. It covers the cost of the rental of the two-bedroom apartment in Canberra. What we have learnt today is that in addition some furniture was provided—about $3,000 worth of new furniture and some other items that were around the department. You must be able to amortise that out of the cost. What does it come to—$20 a week? Mr Blick—It was $11.50. Senator ROBERT RAY—That is an argument that he was being very economical in the amount amortised out over five years being only $11.50 a week, but it is also an argument that he was too stingy to pay the $11.50 a week. You can read that either way. Senator Hill—That is all right. We can argue about $11.50 a week. Senator WATSON—What is the answer to my question? Senator Hill—The answer to your question, I am advised, is that the total cost of this package to the Commonwealth is less than if he had taken the fully furnished alternate accommodation. Senator WATSON—That is pretty important, I think. Senator ROBERT RAY—But we presume from this that there was either an in-person but more likely a phone conversation between, I think it is, the Acting Assistant Director, Personnel, and the secretary to the department. We are not sure who initiated that call, whether it came from the bottom up or the top down. Senator Hill—And we are not clear on the level of involvement of the other officers in the matter. Senator FAULKNER—How are we clear it is a phone call? Senator Hill—You said it. Senator FAULKNER—That is what I am trying to establish. Senator ROBERT RAY—Can I just pick you up on that point. You say that you are not sure of the involvement of the other officers. If I take you to the top of the page, you will find that this was signed off on 5 June. It probably took a day to get up the food chain. It goes through three people on the same day and is signed off by the secretary on the same day, which means that I do not think they spent a lot of time assessing and contemplating the issues. They just noted it and sent it up—put it that way. Senator Hill—That is true, but we do not know the interaction on this matter prior to 5 June. Senator ROBERT RAY—I see; that is a good point, yes. Senator Hill—We know that there was contact. I do not know how many officers were involved or at what level. We certainly know that there were dealings with this particular officer who had the direct responsibility. But whether these other more senior officers were brought in earlier in the piece, I do not know at this stage. Senator ROBERT RAY—So any discussion and agreements would have been formulated before 5 June, and then it is just for noting because it has been put on paper? Senator Hill—Yes.

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Senator FAULKNER—But we do not know the nature of the communication from the secretary to the Acting Assistant Director, Personnel. It may have been telephonic, but we do not know. Senator Hill—Is that right? We do not know. Mr Mills—We do not know, no. Senator FAULKNER—Could you establish, if there was a written communication, the nature of the communication? I appreciate that you cannot inform the committee today, but perhaps you could take that on notice. Senator Hill—Yes, we can seek to find the answer to that question. Senator ROBERT RAY—While are you doing that, referring to this conversation that occurred between the secretary and the Acting Assistant Director, Personnel: when the proposition was put to the secretary that normally an officer makes a contribution, could you check back with the secretary as to whether he responded that he had taken a couple of hundred thousand pay cheque and there was a cut, and there was no way he was going to pick up the tab for this? Could you check that? Is there any way you could check the veracity of that? Senator Hill—If you want me to ask that, I will ask that. Senator FAULKNER—I assume in relation to Mr Moore-Wilton’s pecuniary interests that he supplies pecuniary interest information to the Prime Minister. Is my assumption there correct? Mr Blick—That would be the normal practice, yes. Senator FAULKNER—Does that pecuniary interest information include any arrangements that are come to within the Department of the Prime Minister and Cabinet on temporary accommodation allowance and the like—the sorts of matters we have been discussing? Mr Blick—Any such statement would be a matter between the secretary and the Prime Minister. I cannot answer that question. Senator Hill—It is not the normal thing you would expect on a pecuniary interest ledger, is it—well, I would not have thought. The details of your employment package you do not normally put on a pecuniary interest ledger. If you are arguing that he has a benefit of $11.50 a week that is otherwise not disclosed—is that what are you arguing? Senator FAULKNER—That is not the total amount of the temporary accommodation allowance, as you know. Senator Hill—No. Senator FAULKNER—That is an element. Senator Hill—But that is the— Senator FAULKNER—We have an answer from the Department of the Prime Minister and Cabinet at some point that goes to the total level of temporary accommodation. I do not actually have it in front of me. What I am interested in understanding is what was included. The reason I ask this question, just so you perhaps understand where I am coming from, is that Mr Moore-Wilton himself made decisions about the fact that he need not make a contribution to his temporary accommodation allowance. I think no-one argues that that is the case; we have clear evidence to the committee. Obviously, these financial arrangements of Mr Moore-Wilton, it seems to me, are just subject to any communications he may have with the Prime Minister—and one assumes that the Prime Minister gives oversight, as ministers do,

FINANCE AND PUBLIC ADMINISTRATION F&PA 60 SENATE—Legislation Thursday, 8 May 1997 to their secretary’s pecuniary interest forms. I am just interested to know whether that would be the way the process would work. Senator Hill—But the pecuniary interest form is to provide confidence that there are no conflicts of interest; they are not to record, as I see it, the detail of one’s salary package. Senator FAULKNER—But you understand, Minister, Mr Moore-Wilton has been given the task of checking your pecuniary interests, though it does not appear as if that is progressed very far. I was just interested in how his were checked. Senator Hill—That is a different subject, not relating to this at all. You are raising a new issue? Senator FAULKNER—No, I am asking about Mr Moore-Wilton. As far as I understand it, the only checking of Mr Moore-Wilton’s own pecuniary interests is by the Prime Minister himself. Senator Hill—I think that is correct. We will get it confirmed but, as I understand, he accounts to the Prime Minister for that, and the Prime Minister would hold the record. What I am saying to you is that I cannot see how that is related to this, because I cannot see that it is relevant to any potential conflict of interest. Senator FAULKNER—When I asked a question which was taken on notice about one of Mr Moore-Wilton’s three jobs, I asked when the Prime Minister was told by Mr Moore-Wilton about the other two jobs he had. The answer that you have given to me is an extract from Hansard of 5 November 1996 about Mr Moore-Wilton’s chairmanship of the Victorian Public Transport Corporation and the Prime Minister’s agreement for him to continue in that position until the end of 1996. I would like to know when Mr Moore-Wilton told the Prime Minister of his position as a board member of Victoria Hydro, which I think was quite explicit in the question that I had asked. Senator Hill—The Prime Minister said on 5 November that when he—that is, Maxwell Moore-Wilton—was approached to accept appointment as Secretary to the Department of Prime Minister and Cabinet, ‘he had a number of positions in the private and public sector that gave him an aggregate remuneration significantly above the remuneration he now receives’ and ‘he discussed all of those things with me’, et cetera. So it would appear that these matters were known and discussed at or before the time that he was approached to accept the appointment. Senator FAULKNER—As I think I made the point to you, the answer does not go to the issue I raised in my question. Perhaps if you could take on notice a further question as to when Mr Moore-Wilton told the Prime Minister of his position. Senator Hill—Sorry, I got distracted. What is the specific question? Senator FAULKNER—If you could take on notice then when Mr Moore-Wilton told the Prime Minister of his position as a board member of Victoria Hydro. Senator Hill—I will take that on notice. Senator FAULKNER—Would I be correct in assuming that Mr Moore-Wilton is now working full time as Secretary to the Department of the Prime Minister and Cabinet? Mr Blick—Yes, that is right, Senator. Senator ROBERT RAY—Senator Alston, your deputy leader, in an answer he gave in parliament yesterday—he was responding to what one might call an allegation or an assertion

FINANCE AND PUBLIC ADMINISTRATION Thursday, 8 May 1997 SENATE—Legislation F&PA 61 in a newspaper—said that, after checking all this, he had established that this was a cabinet day. That is the term he used. Did cabinet meet on 3 March? Senator Hill—What was a cabinet day? Senator ROBERT RAY—In his answer, in which he was rebutting an assertion— Senator Hill—The multi-part question? Senator ROBERT RAY—He was rebutting an assertion in a newspaper and adducing a case that he was correct. He said that in fact that day was a cabinet day. Senator Hill—He identified that as 3 March? Senator ROBERT RAY—I think it was. I am asking, just to have it formally on the record: was 3 March a cabinet day? Senator Hill—I would have to check that. Senator ROBERT RAY—While you are checking, would you like to tell me when the cabinet meeting started and when it finished? I am not seeking anything about what happened inside cabinet—I know how futile that would be. I am seeking the time the cabinet meeting started and the time it finished. Remember that it was a sitting day, Senator. I did not expect you to be able to answer it off the top of your head. In fact, I would be worried if you could because you would not be thinking about the right things. Senator Hill—I will try to get an answer to that, but I do not know how precise I can be. Senator ROBERT RAY—Fortunately, out of questions earlier today, the source of this material is very close. It is right below you. The cabinet secretariat have just been evicted from PM&C and have moved downstairs. So it may be possible for one of the officers to go down and get us an answer while we move on to other things. I do not think that I will have any further questions on it, but I would like that information. Senator Hill—I am not sure whether a record is kept as to what time cabinet finishes. Senator ROBERT RAY—Cabinet note takers do note in their notebooks the time cabinet starts and the time it finishes. They note a lot of other things you should worry about, but I am not going to explore any of that. Senator Hill—I will try to get an answer. Senator ROBERT RAY—Thank you. Senator FAULKNER—I want to ask a few questions on the issue of IT outsourcing. Had PM&C made itself aware of international experience with outsourcing initiatives—perhaps with the UK Inland Revenue, the UK Child Support Agency, the Florida State social security department and others—and the fact that they tended to indicate that they could not achieve the cost savings that were expected for them? Has PM&C been looking at this issue at all in the light of the much vaunted move to outsourcing of IT? Mr Blick—I am not sure that we have been looking at those specifically, Senator. Our place in the queue for outsourcing is quite a long way down the track because we are not a large agency. Therefore, it is reasonably unlikely that we would be concerning ourselves with those issues at this time. Senator FAULKNER—To what extent have you applied some of your time and resources to the issue of IT outsourcing? Mr Mills—We have been contributing to OGIT’s exercise, providing them with information about our small IT staff in the department. I would say that we are generally familiar with

FINANCE AND PUBLIC ADMINISTRATION F&PA 62 SENATE—Legislation Thursday, 8 May 1997 some of the overseas examples, but not in any detailed way—we have not studied them specifically ourselves. As Mr Blick says, we are a very small player in this. We are expected to look at the question of outsourcing, not just for IT but for other areas, because the government has told us to examine what we do and to see whether we can do it more efficiently. So we are guided by both that direction and the recent government decision on IT outsourcing. But, as Mr Blick says, it is mainly directed to the big departments. As far as it concerns PM&C, we are a bit of the way down the track. Senator FAULKNER—Where does PM&C fit into this vertical integration within the proposed five clusters? Mr Mills—To my understanding, we are not in any of those clusters, Senator. There are five? I thought there were four. Senator FAULKNER—I thought there were five, but you may well be right. Mr Mills—I am no expert, Senator, but I thought there were four and that they were all big departments. Senator MACKAY—Yes, there are four. Senator FAULKNER—I read in the paper that PM&C seem to be going in a different direction from many other government departments and agencies. I thought, from my all too brief experience in government, that it was quite unusual that PM&C would appear to be quite isolated in terms of the advice it was providing through its coordination comments to government. In fact, it seemed out of step with nearly all other departments and agencies. Mr Mills—Senator, I suppose the only comment I would make is that, from what I have read in the paper, it said the coordination comment from PM&C supported the proposals in the submission. Senator FAULKNER—Precisely. That is the point I am making. Mr Mills—I do not think I can add anything to that. Senator MACKAY—Not entirely. As I understand it, the position of PM&C is that you have concerns about the clean break versus phased approach, is that right? Mr Mills—We are certainly interested in that question, Senator. As you would have seen from the newspaper articles, there was a diversity of opinion on whether the phased or the clean-break options were the way to go. The Public Service and Merit Protection Commission has put out a useful guide on this, and its basic conclusion is that you have to look at things on a case by case basis. But they are certainly not rejecting the clean-break approach. We do not have a position on that, because we have not tested it with our own staff. Senator MACKAY—I understand that you have concerns about a phased approach. Mr Mills—As I have said, Senator, I do not have a position on that. We just have not studied that question. I am sure all departments would have a concern in that sense. They would need to work out whether a phased approach was cost effective. The basic argument was whether the clean break was more beneficial to staff and not detrimental to the department or, on the other hand, whether there was some way of introducing a phased transitional arrangement which would both benefit the staff and perhaps save the department some money. Again, it is on a case by case basis, which we have not yet studied.

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Senator MACKAY—If the clean-break approach were adopted rather than the phased approach—which, I understand, is what the government’s costings are based on—what would be the cost implications of that for your department? Mr Mills—If we offered voluntary redundancies to our IT staff—that is basically what the clean break is, as you know—I do not know what the cost would be. It would depend on the number of staff affected and how many years service they had. My immediate reaction would be to say that they mostly would be pretty young and would not have been in the place very long. So I would not imagine it would be a huge amount. Senator FAULKNER—Does the department have a view about in-house bids being part of the tendering process? Mr Mills—That is a possibility we will be looking at, Senator. We have not excluded it. Senator FAULKNER—But you do not have a view at this stage developed on that issue? Mr Mills—No, I do not yet, Senator. Senator FAULKNER—What sort of process are you undertaking to try to develop a view? Mr Mills—We are about to start a review of the Corporate Services Division, which will include the information technology section, to assess, as I mentioned earlier, whether the things we are doing can be done more efficiently. I would expect that the question of in-house bids will be picked up as part of that review. Senator FAULKNER—For in-house bids to be properly resourced, would they need a specific budget allocation? Mr Mills—I would not have identified already a specific budget allocation for such an exercise. What this review will do will be to test whether that is a sensible kind of option to pursue. I do not imagine that we would have a completed answer within the next couple of months on that but, as I say, it is one of the things to be analysed. One of the outcomes might well be that to do a proper in-house bid you would need to allocate a certain amount of time and money to that. Senator FAULKNER—It would seem that it would be not unreasonable to suggest it would require some sort of specific budget allocation if, in fact, you are in the business of realistically competing with some pretty large, well-resourced multinational companies in this area. Mr Mills—That is a respectable proposition, Senator. As I say, we will be testing that. Senator Hill—I do not recall that in-house bids within the armed forces were provided with additional funding to improve their competitive edge, but I think the questions are a little early. Senator FAULKNER—Obviously we can follow these through at a later stage, but I gather what we are being told is that the department is just developing its view and commencing its work on this issue. That is really the thrust of what you are saying, as I understand it, to the committee. Is that right? Mr Mills—Yes, that is correct. Senator FAULKNER—Is there any proposal for community consultation in relation to potential effects on Commonwealth service delivery? We are talking about a pretty fundamental change here. I was wondering if PM&C had given this any consideration. Mr Blick—I think that really goes beyond the scope of the corporate services area that we have come here to talk about. I cannot answer the question in the more general policy sense that you have raised it.

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Senator Hill—All of those issues would have to be considered. Senator FAULKNER—In terms of PM&C policy development in this area, Mr Blick, could you just explain to the committee how that is being handled within PM&C? I understand what you say about corporate services, but please could you explain that to me. It would be helpful. Mr Blick—I am making the distinction between what one might call government wide policy matters—where, obviously, the Department of the Prime Minister and Cabinet might have a view, as indeed other departments might—and our own approach in relation to the implementation of something like this throughout our department. Senator FAULKNER—But in terms of the policy development role—and that sort of work does occur within the Department of the Prime Minister and Cabinet—what sorts of resources and emphasis are you giving this? I appreciate what you are saying about the role of corporate services. Mr Blick—I am really trying to understand whether you are making the distinction between policy development for our own internal use and policy development in the Commonwealth wide area. Senator FAULKNER—There is both. That is what I was trying to get to—what your government wide contribution might be. Senator Hill—How you plan your role across— Senator FAULKNER—I am interested in understanding why PM&C appear to be going in a different direction to the vast majority of government departments and agencies, with the exception of OGIT, and how these strong views came about, where they have been generated within the Department of the Prime Minister and Cabinet. Mr Blick—The answer in relation to how one would generate a policy perspective within the department would be that it would not, generally speaking, come from our corporate services area. It would come from another area in the department which was responsible for that general area of government that we might be talking about. So, if you would like me to tell you how many people might be involved or at what level it was done, I cannot in this forum because I just do not know the answer. Senator Hill—I have some information for Senator Ray. I can tell him that the cabinet met in the morning roughly between 10 o’clock and 1 o’clock. I think the Senate met in the afternoon. There was also a cabinet committee on which Senator Alston was engaged before 10 in the morning on 3 March. ACTING CHAIR—And they did meet that day? Senator Hill—Yes. ACTING CHAIR—Thank you, Minister. Senator FAULKNER—Can I just indicate, Mr Acting Chairman, that I did place a number of questions on notice in relation to AWAs and consultancies. I think your suggestion was that I just read into the record the fact that I had done that. ACTING CHAIR—Yes, thank you. That concludes program 4. Minister and members of the Corporate Services Division, thank you very much. Sitting suspended from 2.58 p.m. to 3.06 p.m.

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DEPARTMENT OF ADMINISTRATIVE SERVICES Proposed expenditure, $672,545,000 (Document A). Proposed provision, $261,219,000 (Document B). Expenditure from the Advance to the Minister for Finance $20,499,028 (Document D). In Attendance Senator Hill, Minister for the Environment Senator Kemp, Assistant Treasurer Department of Administrative Services— John Mellors, Secretary Brendan Godfrey, Deputy Secretary, Business Development John Mackay, Deputy Secretary, Commercial Trevor Barrell, General Manager, Corporate Resources Bill Peel, General Manager, Corporate Policy and Government Relations Fay Styman, Acting Assistant General Manager, Office of Government Information and Advertising Graham Semmens, General Manager, Ministerial and Parliamentary Services Michael Deegan, General Manager, Domestic Property Group Julie McKinnon, General Manager, Australian Property Group ACTING CHAIR—We welcome the officers of the Department of Administrative Services. Program 2—Government services Subprogram 2.1—Domestic Property Group Senator FAULKNER—I think some of my questions might go across Domestic Property Group, Estate Management and Property Services. If it suits you, Minister, I might try to confine it to that. I am not entirely sure at this stage where they might all fall. Basically, I have a series of questions which go to the government’s management of its property assets and which of the subprogram areas of the government services program are appropriate I am not entirely sure. With the reports that we hear of an imminent and comprehensive sell-off of the Commonwealth’s property assets, could I get some brief explanation of what the government’s overall strategy is in regard to its stewardship of publicly owned buildings? Senator Hill—Its policies in relation to publicly owned buildings? Senator FAULKNER—A brief understanding perhaps of what the overall strategy is. Senator Hill—I think the government has already made statements on that. From an administrative point of view, can you say what is happening? Mr Mellors—In last year’s budget announcements the government announced its general policy towards the future of the Commonwealth owned estate. Essentially, it announced the adoption of a series of principles that should be applied to future decisions about whether to own or lease property. These were released at the time—the Commonwealth property princi- ples. The government also announced the establishment of a Commonwealth Property Committee, comprising two public servants and two private sector representatives—a committee which I chair. It was to undertake a review in the first instance of the DAS administered

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Commonwealth estate and report back to my minister and the Minister for Finance at six- monthly intervals on the progress of that review. That committee has been meeting at regular intervals. Reports have been provided to the two ministers and government will announce decisions arising from reviews to date in the budget context. Senator FAULKNER—I appreciate that; thank you for that. Is a key element of your strategy maximising the return to the Commonwealth on its property assets? Mr Mellors—It is certainly one of the key principles that are enshrined in the Commonwealth’s property principles—a required rate of return on owned property assets where that can be assessed or, failing that, some justification by reference to the public interest. That has dimensions that are spelt out in the principles that might justify continuing ownership. Senator FAULKNER—Does the government see itself as a trustee of these assets on behalf of the public? Senator Hill—What does that mean? They are publicly owned assets. Senator FAULKNER—I am interested in whether that is part of the philosophical underpinning of the government’s approach. Senator Hill—It is property that is owned on behalf of the community as a whole. It is not a trust relationship in the terms of any strict trust, but it is public property. I do not understand the question. Senator FAULKNER—I would be interested in getting from you—obviously I do not want to delay the committee— Senator Hill—I think our attitudes to property would differ a bit according to the property. Some have heritage significance. Some are very much just an accommodation for departments that could equally be interchanged with other accommodation. Senator FAULKNER—Is it an enormous task to ask you on notice, Mr Mellors, whether it would be possible to get a list of the Commonwealth commercial property holdings that you would have, the location of those and their value? Would that be an enormous task for the department or is it something that could be fairly easily spewed out if I asked you that on notice? Mr Mellors—In relation to what we term the DAS administered domestic commercial estate, it would not be a major task. I would simply note that we would simply want to look at any valuation in the context of potential commercial-in-confidence considerations. Senator FAULKNER—If you could take that on notice, I would appreciate that, to get a better understanding of it. How many of the Commonwealth’s commercial buildings actually have vacancies? Is that something that is easy to come to grips with for you? Mr Mellors—Totally vacant, Senator? Senator Hill—No, have vacancies. Mr Mellors—Yes, how many properties have vacancies. If you are asking whether they are totally vacant, the answer would be very few. Senator Hill—Do we know how many have vacant space? I remember that Senator Campbell was able to extract that information, perhaps not easily. Mr Mellors—I think the best thing is if we take that on notice. There is always an element of vacancy in most commercial property, whether it be publicly or privately owned. We can get you some figures.

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Senator FAULKNER—I am trying to come to grips with some of these issues. There is no hidden agenda here, I can assure you. That would assist me. Do you identify which buildings in the Commonwealth portfolio are actual in need of refurbishment? Is there a mechanism by which you do that and by which you prioritise this sort of thing? Mr Mellors—Certainly in relation to the DAS administered estate, yes. Senator FAULKNER—Is that something that is available too? Mr Mellors—I am not aware that we have ever been asked to produce it publicly in any comprehensive way. Senator FAULKNER—I just thought you might have easy to hand, not here today obviously, but in the department, a list of those buildings in your portfolio which were in need of refurbishment and it might be something that could be comparatively easily provided. I have never been in the business of asking questions at estimates committees which require an enormous amount of work. Even Senator Hill would have to acknowledge this. I do not want to send the Department of Administrative Services off to do an enormous amount of work. If it is a reasonable question that I ask, I would be interested. If it is something that is an impossible task, I will not ask you to undertake it. That is why I couch my question in those terms. Having been in better days a minister myself, I understand the sorts of questions that are asked at estimates committee. I do not want to put an impossible burden upon you if this is able to be done. Mr Mellors—I appreciate that clarification. The short answer is no, it is not an impossible task, provided we could frame our response in terms of what our current priorities for refurbishment are within the envelope of funds that we have at our disposal. Clearly, we work within a budget constraint. Senator FAULKNER—So you might have a look at that for me and come back? Mr Mellors—Certainly. Senator FAULKNER—I appreciate that. Do you have a set of criteria by which you determine whether the sale of a building should go ahead, whatever its present condition might be, or is a decision made on refurbishment prior to sale? Is there any department policy on that that you might be able to tell me about? Mr Mellors—The Commonwealth Property Committee has been applying the principles not only in relation to whether we should retain or we should think about divesting a property but also in relation to precisely the question you have raised as to whether a further investment in a particular property might or might not pass a threshold test. You would apply the same general economic principles to the buy as to the sell or retain decision and the ‘should we make a major new investment in a property prior to sale’ decision. Senator FAULKNER—What is the sort of lead time for this decision making process? Mr Mellors—As I said, the committee has been looking at the higher valued elements of the DAS administered estate over the past 12 months. Decisions will be announced in the budget context in relation to that part of the estate. Senator FAULKNER—So these decisions in relation to this sort of refurbishment prior to sale or details about that would currently be budget-in-confidence? Mr Mellors—Correct. Senator FAULKNER—So in the budget context it would be reasonable for me to establish, either at the budget estimates committee or through the budget papers or because I have given

FINANCE AND PUBLIC ADMINISTRATION F&PA 68 SENATE—Legislation Thursday, 8 May 1997 you advanced notice that I might be interested in this, which particular buildings have been or are to be refurbished? Would I be correct in saying that? Senator Hill—Budget estimates might be a good time. Mr Mellors—If it were about the decision making process, including the issue you have raised leading up to any decision to keep or do something else with any particular building, I think budget estimates would be the appropriate forum, yes. Senator FAULKNER—What about those buildings that have been refurbished? They are obviously not subject to appropriation of moneys in the next budget. Mr Mellors—I am sorry, Senator, what about them? Senator FAULKNER—What about those buildings that have been refurbished? I understand the point you make about decisions that will be announced. They are budget-in-confidence. What about those buildings that have been refurbished during the last financial year? Mr Mellors—I think I draw a distinction between major works and what you might call minor works—repairing a lift, replacing an airconditioning unit and so forth. If you had a Commonwealth tenant in a building locked into an arrangement and paying us rent through the Estate Management Branch, I would not pretend that decisions to keep that lift going or that airconditioning unit going go through any exhaustive evaluation process. It is part and parcel of the general running expenses of being a landlord. If is one is talking, however, about major refurbishment exercises, they go through economic and financial appraisals. Funding is sought for those refurbishments in the budget process. The central agencies and ministers take a decision based on that analysis. Then those decisions are announced and proceed, typically, through the Public Works Committee of the parliament. Senator FAULKNER—Would it be possible for me to get some sort of consolidated lists of where the decision making process has been concluded and is public in relation to buildings that have been refurbished? I understand the point you make about decisions that are to be announced next week, and I appreciate that. Mr Mellors—How far back would you like to go, Senator? Senator FAULKNER—I am only interested, as I said to you, in the last financial year. Mr Mellors—I see no difficulty in providing you with an outline of the process. Senator FAULKNER—That would mean that you could include for me the cost of refurbishment for each property. Mr Mellors—For each major work. Senator FAULKNER—Yes, I accept the distinction you made a little earlier. Thank you for that. How successful have you been in selling off buildings pursuant to last year’s budget decision? Mr Mellors—That is very much still in progress, but I might ask my colleagues to give you further details of where we have got to in the process. Mr Deegan—We have a series of sales scheduled in the next two to three weeks for the major properties announced last year. I could provide you with a list of the tender and auction dates of those. They have been advertised since early April. We are hopeful that that process will be concluded before the end of the financial year. Senator FAULKNER—I thank you for that list. That would be helpful. As I understand it, with my scant knowledge of this to date, a significant number of buildings have effectively been put on the market in very recent times, for example, over the last month or so. I thought

FINANCE AND PUBLIC ADMINISTRATION Thursday, 8 May 1997 SENATE—Legislation F&PA 69 the Taxation Office in Belconnen, West Row in Civic, a number of properties in state capitals, something in Townsville and something in Cairns were all examples. Is my understanding correct that there has been particular activity of late in relation to this? Mr Deegan—There has been a process in having those properties prepared for sale and then placing them out in the marketplace with tender processes or auction processes being finalised. Senator FAULKNER—What is the market reaction to this sell off? Mr Deegan—For the properties that have been sold in various areas, the market has been fairly healthy. We will have to see how they go in the auction and tender process for the response and how they go against our reserve prices. At this stage we remain confident of achieving our goals. Mr Mellors—If I might add at a slightly broader level, the reaction of property sector interest generally to the government’s approach to management of its property holdings has been, I believe, quite favourable. Senator FAULKNER—In terms of the selling off of buildings that was announced in the last budget, have property sales actually produced any receipts for the Commonwealth yet? Mr Deegan—There is a series of properties, both in the commercial office estate and in the industrial and special purpose estates that this portfolio looks after. We have sold a number of properties in the industrial and special purpose estates, also including blocks of flats, vacant land and some industrial sites. In relation to the commercial office buildings, the first auction is next Wednesday of the Customs House in Darwin, and the other properties flow immediately thereafter. Senator FAULKNER—I assume it would be possible to provide for the committee the details of any sales relating to those decisions in last year’s budget obviously. That is doable, I would imagine. Mr Deegan—We can provide that. Senator FAULKNER—Thank you. Are we talking about a substantial property portfolio or is it something you can briefly comment on to the committee today? Mr Deegan—There is a total of 40 active sales under way at the moment in the area that we are looking after. Senator FAULKNER—I suppose I am interested in the number of sales that have been concluded. Mr Deegan—Six have been sold to date and others are at various stages of finalisation. Senator FAULKNER—Would it be possible to quickly read into the Hansard which those are? Mr Deegan—I can give you the street addresses. They are blocks of land and flats. Four properties in Darwin, in the Northern Territory, have been sold. Would you like the addresses? I could provide them separately. Senator FAULKNER—If you would table that information, it would be easier I think. Mr Deegan—I will provide that. Senator FAULKNER—Thank you very much, I appreciate that. I read an article in the Sydney Morning Herald on 5 May, Mr Mellors—I do not know whether you read it or not— entitled ‘Budget plan for fire sale of public buildings’. Did you catch up with that one at all? Mr Mellors—I did happen to see it, yes.

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Senator FAULKNER—I thought you probably would have. Do you have any reaction about its accuracy at all? Mr Mellors—Firstly, simply one thing that is already on the public record; and, secondly, the point I have already made, that the government’s decisions will be announced in the budget context. The first point on the public record already is that my minister and others have said on more than one occasion that there will not be a fire sale. Senator FAULKNER—Can you give the committee an update of the work of that committee itself or are all those matters budget-in-confidence at this point? What is the situation there? Mr Mellors—Essentially, it is budget-in-confidence, but as part of my minister’s announcements in the budget context I would expect a summary of the committee’s work to date to be publicly available. Senator FAULKNER—Just so I am clear on that—I think the membership of that committee has been in the public arena for some time—can you remind me of the membership and the modus operandi of that committee? Mr Mellors—The membership of the committee comprises me as chair; Mr Len Early, Deputy Secretary to the Department of Finance; Mr John O’Grady, Chairman of the law firm Fisher Jeffries; and Mr Peter Delaney, Managing Director of Oxley Corporate Finance. The modus operandi is rather as I think I explained it before: to look at the Commonwealth estate against the property principles and to report to two ministers at least six-monthly. The committee has a two-year sunset clause on it, which may or may not come into effect. Senator FAULKNER—Is your operating brief from government something that is public? Mr Mellors—Certainly the purposes for which the committee was established are public. They were announced at the time that the decision to establish the committee was announced. Senator FAULKNER—I am just interested in whether you consider it is good commercial practice to off-load so much Commonwealth property onto the market in one hit. I would be interested in your views on that. Mr Mellors—I simply point out that there has been no decision announced to off-load a great amount of property at one point in time. What the government’s decisions are will be announced in the budget context. Senator Hill—Are you concerned that we might have depressed the market? That would not be in our interests. Senator FAULKNER—I am interested as to whether the committee does consider the issue of risk of destabilising the property market. That is an issue that I would assume the committee would give some serious consideration to. Would that be right, Mr Mellors? Mr Mellors—That is absolutely correct. I should point out, however, that a great amount of the Commonwealth’s estate is outside Canberra, and as a proportion of total stock in places like Sydney and Melbourne—even in places such as Townsville—the total stock of Commonwealth owned space is, generally speaking, a very small part of the total supply. So the scope to disrupt markets in areas where Commonwealth ownership is but a small part of total supply is rather limited. But as a general proposition, yes, we consider those factors. Senator FAULKNER—Is there a particular risk of destabilisation in the ACT? Mr Mellors—Clearly, given the proportion of stock in the ACT that the Commonwealth owns, that risk is greater, yes, if the matter is not handled sensibly.

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Senator FAULKNER—Do you actually undertake a cost- benefit analysis of proposals to dispose of Commonwealth buildings that have been put up for sale or will be put up for sale? Mr Mellors—As I think I said, we conduct a financial analysis, certainly, on the larger valued buildings—quite an exhaustive financial analysis. Senator FAULKNER—Can you give me a little more detail about how that is done and who does it and the sorts of resources that you commit to that particular task? Mr Mellors—Essentially it is done by estimating potential rates of return on individual properties, having regard to rental streams, potential refurbishment requirements, capital values. The committee has basically relied on two sources of advice in undertaking such financial assessments: firstly, modelling by my own department; and, secondly, modelling by private sector advisers to the committee, either using its own assessments or, in a sense, checking the modelling that has been done by my department and the assumptions underpinning it. Senator FAULKNER—Does the financial analysis include mothballing or perhaps even demolition of buildings? Mr Mellors—The modelling is essentially conducted against the property principles which say, ‘Does a particular building meet a financial threshold? If not, is there a public interest reason why it should nevertheless remain in Commonwealth ownership?’ If the answer to both of those questions is no, then consideration will be given or is being given to what might be done with the building. For example—I am taking a purely hypothetical example here—if it were decided there were no case to retain a building in Commonwealth ownership, but that sale of that building at the time might be difficult for some reason, then further consideration would be given to the options—mothballing, recycling, possibly even demolition. Senator FAULKNER—Would mothballing be a serious option in an area like the ACT in terms of stabilising a market that was on the verge of collapse? Mr Mellors—I would not want it to be it inferred— Senator Hill—It is getting a bit hypothetical. Mr Mellors—Very hypothetical. I would not want it to be inferred that I think the ACT market is on the verge of collapse, but that was not really your question. Senator FAULKNER—No, it was not. Mr Mellors—One would simply have to look at it case by case. Senator FAULKNER—Is it an option or one of the options that the government has under consideration? Mr Mellors—It is an alternative that would certainly be looked at if it were the case, as I say, that while there were no case for continued ownership in the long term, for some reason it was proving or was likely to prove disruptive or very difficult to sell that particular building at a particular point. Senator FAULKNER—Didn’t Mr Jull say that you should put a stick of dynamite under some of the buildings? Mr Mellors—I do not recall that particular statement. Senator FAULKNER—I think he did. How seriously does DAS treat concerns about, say, protecting the ACT economy from the negative impact of a major sell-off of government properties in Canberra? It must be something that you do treat seriously.

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Mr Mellors—Very seriously, and I think it quite possible that my minister will have something to say about that in the budget context. Senator Hill—The point is that we have already said, firstly, that we are not going to have fire sales; and, secondly, that we would not want to destabilise the market, because it would be against our interests. There is no point in destabilising the market and not getting the return that we wish. Senator FAULKNER—Is this Sydney Morning Herald article correct in relation to the DFAT building—the R.G. Casey Building—here in Canberra? Mr Mellors—I cannot comment on that; it is a budget matter. Senator FAULKNER—Would you be able to guarantee that any decision to sell that building would meet the requirements of the Commonwealth property principles? That is fundamental, I assume? Mr Mellors—I can certainly say that either that or any other building that was going to be sold in the context that we have been discussing—that is, the application of property principles to DAS administered property—would have undergone the sort of process and the analysis that I have described. Senator FAULKNER—It was reported to me that the Commonwealth Property Committee, which you indicated you had chaired, instructed Commonwealth departments that owned buildings to finalise their leases with building tenants by 14 March this year. I was wondering whether that was true? Mr Mellors—We would certainly be moving to formalise tenancy arrangements for Commonwealth owned office accommodation prior to the sale of any such property because, as you can imagine, the existence of a formal tenancy agreement is quite significant in terms of valuations that would be placed on the building. Senator FAULKNER—But this is a fairly straightforward one, isn’t it? Has the Commonwealth Property Committee instructed departments who own buildings to finalise leases with building tenants by 14 March? It either has or has not. I was told this. I am just trying to establish whether it is correct or not. Mr Mellors—As a result of a decision by cabinet, agencies were required to finalise at least an initial round of negotiations with DAS for the terms of their occupancy, that is correct. Senator FAULKNER—Beyond that, weren’t departments actually instructed that if the leases were not finalised they would be deemed to be finalised? Is that a fair comment? Mr Mellors—That is a fair general summary. Senator FAULKNER—Can you explain to me what the purpose of those instructions was? Mr Mellors—Essentially that my department had been discussing with Commonwealth agencies for some five years the terms of their occupancies in an attempt to formalise those terms and lock in specific agreements as part of the general move to commercial management of the domestic estate. After that protracted exercise of some four to five years, very few formal agreements had in fact been concluded. Clearly, there was a need for some circuit- breaker to provide greater encouragement to agencies to conclude those negotiations. Senator FAULKNER—Was part of the significance of this to ensure the buildings could be put up for sale along with the income stream generated by long-term leases? Mr Mellors—That would probably have been one element of the consideration. As I say, another and broader element was simply that, unlike agencies’ leases with the private sector

FINANCE AND PUBLIC ADMINISTRATION Thursday, 8 May 1997 SENATE—Legislation F&PA 73 which are legally binding documents, after four to five years of attempting to get agencies into a similar relationship with us we had made very little progress. If we are to manage the domestic estate in a proper, effective and commercially based approach we need formal agreements with our tenants. Senator FAULKNER—I suggested that part of the process was to ensure that the buildings could be put up for sale along with an income stream that was generated by long-term leases. You said it was a consideration. How significant is it? Senator Hill—It is not only relating to sale; it is in order that you can properly manage. As I understand it, a lot of these Commonwealth tenancies have simply been on a monthly basis and it makes it very difficult for the agency responsible for the management to plan its financial affairs. Senator FAULKNER—Were all the leases finalised by 14 March? Mr Mellors—Heads of agreement were concluded in 99.9 per cent of cases and I honestly cannot remember the exception. Senator FAULKNER—So you do not know how many remain outstanding? Mr Mellors—Maybe half a percentage by number. I would have to look to my colleagues for that. We are going through a second phase. Heads of agreement cover all key elements such as rent, period of the lease and the like. Those heads of agreement are now being translated into formal lease documents of a commercial nature. Senator FAULKNER—How many have been deemed to be finalised? Is that a separate issue? Mr Mellors—I think my colleague has the number of heads of agreement that were finalised by the due date. Mr Deegan—A total of 298 separate heads of agreement were finalised. Something in the order of 294 of those were concluded by 14 March and the remaining were concluded in the following week. As the secretary has indicated, that has now been turned into the formal lease document. Senator FAULKNER—Could I ask whether the rents written into ACT leases which were finalised by the deadline or those that are written into the deemed leases actually reflect the current rental market in the ACT? Mr Mellors—Essentially the rents struck in these agreements, as they would be in a private sector lease, were a matter for individual negotiation between DAS as the landlord and the tenant of the building concerned. Senator FAULKNER—In whose opinion would they reflect the current rental market? Mr Mellors—It would be a quasi-commercial negotiation—that is, we would take our advice about what we would think is a reasonable rent, the tenant agency would no doubt take advice of their own and there would be a negotiation. In both cases we would have regard to current market circumstances. Senator FAULKNER—Would your advice come from the Australian Valuation Office? Mr Mellors—Sometimes it would. Senator FAULKNER—Is the opinion of the Australian Valuation Office sought? Is it the opinion of the Australian Valuation Office that the rents reflect the current market?

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Mr Mellors—We as landlord make considerable use of the Valuation Office in our thinking about market rates. Agencies are free to seek advice from private sector experts in the local property market or indeed from another arm of DAS with a good Chinese wall around it, the Australian Property Group. Of course valuers do not always agree necessarily as to what the ‘fair’ market rent might be. Senator FAULKNER—In broad terms, what sort of contact do you have with the Australian Valuation Office on these issues? How close is it? Mr Mellors—Extremely close, but I might ask Mr Deegan to elaborate. Mr Deegan—We work very closely with the Australian Valuation Office on the valuations. Mr Mellors—Could I just clarify that the Australian Valuation Office is part of DAS. Senator FAULKNER—I appreciate that. Do you reckon it would be fair to say that the government and the private sector operate on a level playing field in the market in the ACT? Mr Mellors—I wonder whether you could be a little more specific. Senator FAULKNER—The private sector claims it is not a level playing field at times, don’t they? Senator Hill—But we lease from the private sector as well. Senator FAULKNER—Certainly that view has been communicated to me. I am interested in what your view is on that. I would be interested in the comments of the department. Mr Mellors—As the minister says, about half the Commonwealth’s accommodation requirements in the ACT are in fact leased from the private sector. So the ACT in that regard is no different from anywhere else. In relation to Commonwealth owned accommodation, I believe the private sector has, from time to time, suggested that perhaps some of our facilities do not meet the same planning or occupational health and safety standards that are imposed by local requirements. It is a fact that formally speaking the Commonwealth is not subject to that, but in practice we seek to provide accommodation which meets those standards. As in the private sector, as standards change buildings can be left behind with rising standards. What typically happens then is that there is a negotiation with the authorities about bringing accommodation up to standard over a period of time. Senator FAULKNER—Could I seek an assurance that leases for government owned buildings meet the same standards and contain the same sort of clauses as those that the government requires for private sector deals? Mr Mellors—The lease document that agencies are being asked to now sign is modelled in broad terms on the Property Council’s sort of standard lease document, but it has gone through modifications based on extensive work done last year by a group, the Domestic Property Task Force, to reflect the Commonwealth’s particular circumstances as a property owner. So it is not a pure commercial lease, but it is certainly the closest that the Commonwealth has ever come to having a commercially based agreement with its tenants. I believe that fact is recognised by the Property Council of Australia. Senator FAULKNER—Does the government actually require its buildings to meet the same occupational health and safety standards it requires for private sector building owners? Mr Mellors—The Commonwealth is not typically responsible for legislation relating to building standards. That is typically a state government matter. But the answer to your question in relation to new building projects is yes, even though legally— Senator Hill—Probably higher.

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Mr Mellors—As the minister says, in some cases possibly even above standard. Senator Hill—But it has been known that some of the older buildings have fallen somewhat behind over the years. Senator FAULKNER—I heard a suggestion, and I would be interested in your comment on it, that DAS is actually writing its standards down in order to allow Commonwealth buildings to meet them. Would you give that any credence at all? Mr Mellors—No, I would not, Senator. Senator FAULKNER—No truth in that? Mr Mellors—No. Senator FAULKNER—Can I ask if the government allows departments the same latitude in renegotiating leases as it exercises in renegotiating leases with private sector landlords? Mr Mellors—Generally speaking, leaving aside the situation in the ACT, that is the case, Senator. Departments are free, essentially outside of the ACT, to choose whether they occupy a Commonwealth owned space or space leased from the private sector. Therefore, the terms of the negotiation in that sense are quite level and even-handed. For many years, both under the former government and carried over to this government, in the ACT there has been a formal requirement that departments seek a release from the estate management branch of my department before entering a private sector lease in the ACT. Very typically, that release has been forthcoming and it is simply a reflection of the Commonwealth’s major property interests in the ACT that that special arrangement has been in place, as I say, for many years. Senator FAULKNER—What is going to be the future for the Domestic Property Group? As I understand it, you have a situation now where government departments are free to utilise private property firms to negotiate their tenancy requirements, if you like. That is true, I think, is it not? What is the future role for the Domestic Property Group? Mr Mellors—What we have called the Domestic Property Group this financial year has two arms within it—what used to be called the estate management division and what used to be called the Australian Property Group. They have distinct functions. It has already been announced that the Australian Property Group, which is basically a tenancy advocate quasi-business, is to be sold along with other DAS businesses. The estate management part of that group, which is responsible for the strategic management of owned Commonwealth property, will be retained and will continue to discharge that strategic management and landlord role in relation to properties that the Commonwealth retains. Senator FAULKNER—Can you just indicate to me what has happened in terms of the number of employees in the Domestic Property Group over the last year or so? Mr Mellors—It has diminished significantly. Senator FAULKNER—I gathered that. I think I read that in a newspaper. Mr Mellors—I do not have the precise numbers available. Senator FAULKNER—Could you take that on notice and perhaps give us the staffing profile of the Domestic Property Group over the last couple of years? I would appreciate it if you could. Mr Mellors—Certainly.

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Senator FAULKNER—Finally on this matter, I refer you to the Courier-Mail of Tuesday, 22 April 1997. Mr Jull—you might take this on notice, Minister—told a group of Logan City Rotarians about the quiet revolution in government business and the savings the department was making by moving from the Commonwealth buildings to private rental in Canberra. The article states: The empty buildings, some in serious disrepair, are now for sale, but the market is very soft. One idea might be to put a stick of dynamite under some buildings. You might ask him what he meant by that and if he in fact said it. Senator Hill—I have made some inquiries during this interchange and I gather it was a colourful way of expressing the fact that some buildings have been left by the previous administration in a very poor state of repair. Senator FAULKNER—So that means, Mr Mellors, the advice you gave a little earlier was probably slightly inaccurate but, nevertheless, very defensive of your minister, so I will not quibble. Subprogram 2.4—Ministerial and parliamentary services Senator HEFFERNAN—Could you explain to the committee the guidelines for backbenchers hiring self-drive vehicles under section P8-11? Senator Hill—Under what? Senator HEFFERNAN—P8-11. Mr Semmens—Could I just have clarification of what that is under? Senator HEFFERNAN—P8-11, which is self-drive for backbenchers. Mr Semmens—I think that you are referring to a common use contract for the use of self- drive cars. Senator HEFFERNAN—That is right. Mr Semmens—I have to say, Senator, we are not too sure what P8-11 refers to, but it certainly sounds like a contract organised by Purchasing Australia. We might have to check with them as to what the contract is. Senator HEFFERNAN—As I understand it, it is self-drive vehicles. While you are getting that, I will just go on to a couple of other questions. Mr Godfrey—Mr Acting Chairman, does the senator mean self-drive or self-hire? Senator HEFFERNAN—The one you pick up at the airport and drive and DAS pays for. Mr Semmens—As I understand it, it is a client code for a client. Senator HEFFERNAN—While I continue, I can give you time to gather your thoughts on that. Mr Semmens—I think, Senator, with these details—and it focuses on a particular senator; but you have asked the general question—we would need to take that on notice. Senator HEFFERNAN—I am happy for that to happen. Mr Semmens—Not today, but we will certainly get something back to you very quickly. Senator HEFFERNAN—No worries. I am led to understand that a senator for a number of years or more has hired vehicles under self-drive and it can be established he was not entitled to have these self-drive vehicles. In fact these hirings include the period from 13 March 1993 to 17 January 1996, 51 hirings, and the period from 17 January 1996 to 11 May

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1997, 25 hirings from Canberra, three from Launceston, two from Hobart and one from Darwin. Can you report back to this committee how these hirings went unchallenged for such a long period? Mr Semmens—Without the detail—and can I assume that the paper you referred to us a moment ago might relate to that? Senator HEFFERNAN—Yes. Mr Semmens—Could I take them both on notice concurrently? Senator HEFFERNAN—Thank you. Could you further report to the committee what action, if this is the scenario, you would take to seek compensation and what other appropriate action might be deemed necessary? Mr Semmens—Yes, we will, Senator. Senator HEFFERNAN—Would the use of fuel cards be included in these self-hirings and would they effectively trace the car movements during the period of those hirings? Mr Semmens—If the car is leased from Dasfleet—and it seems that is what we are talking about—it is leased with fuel included and a card that goes with it. So the answer to the question is yes. Senator HEFFERNAN—My understanding of this matter is that party colleagues of this senator have known about the use for an extended period and, under the clouds of recent events, suddenly the keys to this car—the present self-hire car—were handed in during the final days of the immediately previous session of this parliament. Could you report to this committee the cost to the taxpayer of this arrangement and the total number of days of self- drive hirings that were paid for by DAS on behalf of this senator? Senator Kemp—These sorts of questions we will take on notice and see what answers we can provide. Senator HEFFERNAN—My final question is that, in the event of air travel, what checks are put in place to establish that the nominated spouse is indeed the travelling partner that the Commonwealth is paying the airfare for? Mr Semmens—That is on the certification of the relevant senator or member that such person has travelled. Senator HEFFERNAN—Thank you very much. ACTING CHAIR—This is just to confirm I have been given four sets of questions on notice from Senator Faulkner which will be conveyed to you. Mr Semmens—Thank you. Senator ROBERT RAY—Could I follow up those questions? ACTING CHAIR—Yes, certainly. Senator ROBERT RAY—Mr Semmens, do you recognise this as Senators and members of the Commonwealth parliament office handbook dated March 1993, or can’t you see that far? Mr Semmens—I can see quite well with my eyesight, Senator. But it has been updated. Senator ROBERT RAY—I will come to that in a moment. On page 15 of that particular handbook there is a section ‘Car transport: senators and members’. It lays out the circumstances in which a member or senator is entitled to a car, either driven or self driven. Then on page 16 there is a further reference to ‘Types of car transport available’; is that right?

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Mr Semmens—I can’t remember the pages. Senator ROBERT RAY—Let me quote it: ‘Cars’ includes Commonwealth cars, chauffer-driven hire cars, taxis and, when travelling in capital cities for short journeys, self-drive hire cars booked through DASFLEET. This was issued in March 1993. We have further guidance now; you have an excellent service where you can pull it off the computer, which I congratulate you for. On one of the pages under ‘Dasfleet’, it says: In circumstances where it is more convenient or economical, Senators and Members may use self-drive vehicles when travelling on Parliamentary business in lieu of . . . driver services. This only includes use within capital cities other than their own and within Canberra on weekends between sitting weeks or weekends following a sitting week when a Member or Senator has a committee meeting in Canberra the following week. Could you tell me when these guidelines were put out, because they are different from the others? Mr Semmens—The guidelines were put out just following the election—end of the March last year election. Senator ROBERT RAY—So there are new guidelines. Very explicit, aren’t they? Mr Semmens—They are. Senator ROBERT RAY—They are explicit. But, before that, the guidelines for use of a self-drive car in Canberra were not explicit. Mr Semmens—What we endeavoured to do then was to provide a clearer set of guidelines for senators and members, and at that stage many new senators and members. Senator ROBERT RAY—I think you have succeeded; well done. But prior to that the guidelines were not so clear cut? Mr Semmens—I think that is why we sought to address them in the way we had. Senator ROBERT RAY—And in 1994 a senator approached DAS and expressed a preference to self-drive rather than Commonwealth cars? Do you know that for a fact or have you found out that for a fact? Mr Semmens—I am aware that a senator contacted the department and sought advice. I understand advice was that he could opt for one or the other: self-drive— Senator ROBERT RAY—Car or a Commonwealth car. But a provision was put in, was it not, Mr Semmens, that he could not use a Commonwealth car, other than for an emergency or something, if he had a self-drive car? Mr Semmens—I would have to check. Senator ROBERT RAY—You would expect that, though? Mr Semmens—I would expect it is one or the other, if that was what the choice was. Senator ROBERT RAY—So, when Senator Heffernan refers to someone having a self-drive car for three years that they weren’t entitled to, the advice of the department in 1994 was that he was entitled to it. Mr Semmens—That could well have been the case, Senator. Senator ROBERT RAY—And on each occasion he did not have a permanent car, did he? He would arrive from his home state, pick up the self-drive car in substitution for a Commonwealth car and return it to the airport when he was leaving Canberra?

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Mr Semmens—I can’t vouch for all of that, Senator. Senator ROBERT RAY—Have you any evidence to the contrary? Mr Semmens—I have not done a thorough check at this stage. Senator ROBERT RAY—But if that was the case—we have to run some assumptions here, I guess—DAS would have sent that particular senator a docket for acquittal for each one of those car hirings. Mr Semmens—Certainly. Senator ROBERT RAY—You don’t have those records, I understand. Mr Semmens—I cannot answer that today. Senator ROBERT RAY—Is there anyone else here that can? Mr Semmens—I doubt it, Senator. Senator ROBERT RAY—Nevertheless, the senator concerned kept every acquittal document going back to 1994. I inform you of that. So on something like 50 occasions—I think that was the figure Senator Heffernan mentioned—the senator concerned would have been sent an acquittal document without challenge by DAS, without questioning by DAS, for him to sign off to acquit that he used the car? Mr Semmens—Yes. Senator ROBERT RAY—But it is possible, isn’t it, Senator—sorry; Mr Semmens. Mr Semmens—Thank you, Senator. Senator ROBERT RAY—I do not know whether you have a quota or not. Mr Semmens—I have been many things but not that yet. Senator ROBERT RAY—You draw the line somewhere, don’t you. Senator Kemp—You have been called many names. Senator ROBERT RAY—Mr Semmens, you have indicated that the guidelines are more developed, more tightened up. Mr Semmens—We saw it was time to reassess and review the guidelines as they were. They were developed particularly for the situation immediately post the election and were to provide a clearer set of guidance to senators and members. Senator ROBERT RAY—Did you write to all senators and members with these newly created guidelines, or did you just put it in a handbook? Mr Semmens—No. I will have to check this, but I think you will find that we wrote to everybody, because everybody needed the disk to have it installed into their machine, and we referred to the fact that they were revised guidelines. Senator ROBERT RAY—They got sent a disk; they did not get sent a letter. Mr Semmens—No. As I recall, there was a letter that went with the disk. Senator ROBERT RAY—From what you are saying, it may have been possible for a senator, if he had not seen that disk, to continue for nine months the practices that were deemed to be legal and proper in the past, and your department did not pick up the fact that he was acquitting these things maybe outside entitlement. Mr Semmens—I think if we did not write and say, ‘Here’s your new handbook,’ which happened to be on disk, then that assumption could be made.

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Senator ROBERT RAY—I am just going to intent here. Mr Semmens—I understand that. Senator ROBERT RAY—I think the implication from Senator Heffernan was someone had a car illegally for three years, which we have proved wrong. It is possible that it was outside the guidelines from the date you issued these guidelines. We do not have the exact date but let us assume the nine months was from the end of March through to the end of December. This was drawn to the senator’s attention, wasn’t it, on 19 December? Mr Semmens—I cannot confirm the date. Senator ROBERT RAY—By Mr McFadden or Mr Murray. Mr Semmens—As I said, there are elements of the senator’s question I have had to take on notice. I will have to do likewise with elements of your question. Senator ROBERT RAY—You might check when that was drawn to his attention. You might also check how many phone calls there have been between the senator and the department and how many letters there have been between the department and the Senate trying to sort it out, and put on the record whether the senator has offered, if he has had the car outside entitlement, which was never drawn to his attention, to repay money for that. Mr Semmens—All of those items, and there are a number of subsets to that, have been taken on notice. Senator ROBERT RAY—Senator Heffernan mentioned use of a Dasfleet car in Launceston and Hobart. Do you know anything about that? Mr Semmens—No, Senator. Senator ROBERT RAY—Do you know that senators have a charter allowance with which they may hire hire cars and light aircraft? Mr Semmens—Yes. Senator ROBERT RAY—Could you check to see whether the car was hired from the charter allowance? Mr Semmens—We can. Senator ROBERT RAY—In regard to the hiring of a car in Darwin, would you like to contact the Senate Transport Office to see who made the booking? Mr Semmens—Of course. Senator ROBERT RAY—Would you also like to see that that senator asked for the bill to be sent to him and that he paid the bill himself? Would you like to check that? Mr Semmens—Of course. Senator ROBERT RAY—You know the senator I am talking about; I do not want to name the senator here. Could you also check whether that senator’s practice was, when first-class travel was available to MPs, that he nearly always travelled business class? Mr Semmens—We can, Senator. Senator ROBERT RAY—Would you also like to check that, now that business class has been introduced, he now flies economy? Mr Semmens—We can, Senator.

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Senator ROBERT RAY—Would you also like to check he regards using a taxi rather than a Comcar as being cheaper and when on committee business interstate he uses taxis rather than Comcars, and would you like to tell me how much the taxpayer has been saved by that? Mr Semmens—I think the answer to the question we can give you is that, whether he is using a taxi rather than other services, the saving is a different matter, of course. You would understand that. I think if you have the answer— Senator ROBERT RAY—That is a hard calculation. Why don’t I withdraw that part of the question. It was made for rhetorical effect, I guess. You know the senator I am talking about. Could you also take on notice how much of the charter allowance he as a senator is entitled to per year has been returned unused to the Commonwealth? Mr Semmens—We can, Senator. Senator ROBERT RAY—Finally, could you tell me whether any of this material on this issue has been transmitted to the minister’s office? Mr Semmens—We can do that too. Senator ROBERT RAY—Could you tell me on notice whether any of this material was requested by or sent to any staff of the minister’s office? Mr Semmens—Senator, that is something that we will take on notice. Senator ROBERT RAY—I have no more on that area. Senator FAULKNER—I have a couple of questions. I am interested in self-drive Dasfleet vehicles, too. Has the Prime Minister, Mr Howard, had any Dasfleet self-drive vehicles since he was elected Prime Minister in March last year? Mr Semmens—In what sense, Senator? Senator FAULKNER—Has he had a Dasfleet self-drive vehicle at his disposal? Mr Semmens—He has, of course, a Dasfleet vehicle as his electorate vehicle, as I understand it—as is his entitlement in that sense. As to any other vehicles, I understand that would be a matter to put to the Department of the Prime Minister and Cabinet. Senator ROBERT RAY—You could find out from DAS records whether you think it is more appropriate for us to go to the parent department. Mr Semmens—As you know, these costs are borne by the home department and facilitated accordingly. I think it is far more appropriate that, as the senator has just said, the question be addressed there. Senator ROBERT RAY—So the facilities provided to John Howard are paid by the parent department, PM&C, and are none of the business of DAS? Mr Semmens—That is right, Senator. Senator HEFFERNAN—Could I just ask a question by way of clarification: is a backbencher entitled to a self-drive vehicle in Canberra while parliament is sitting? Mr Semmens—The guidance that we have provided is that they should be using Comcar or car with driver services rather than self-drive, but there are some exceptions when it comes to weekends. We have referred to those. The reality there is there is a significant investment in having those car with driver services running. To provide something over and above that rather than utilising the resource puts the economies into question. So, essentially, the arrangements as they are today would see a senator or member using the car with driver services and not a self-drive car in the ordinary course of events in Canberra.

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Senator HEFFERNAN—So the guidelines that apply now for self-drive vehicles would have applied for the last three or four years? Mr Semmens—I think that, as Senator Ray has said, there was a degree of ambiguity in earlier days, and we believe that that ambiguity was corrected and clarified in March last year. Senator ROBERT RAY—The minister you represent put out a press release on 30 April releasing the 1994-95 office-holders expenses. You understand that—travel allowance, overseas travel, Comcar use, some staff travel allowance and car use. In that press release he criticised his predecessor for not releasing that in a timely way. August 1995 would have been the normal and appropriate time. He put out another press release on 30 June in which he released in advance, basically, the 1995-96 figures applying to the previous government and again gave the government a spray over their failure to release. Now that we have got to 8 May, is it not a fact that, much longer than any Labor minister took, you have not released the figures for ministerial TA—other than by order of the Senate, I am talking about, in a restricted case—for the period 11 March to 30 June 1996? Senator Kemp—I am advised that that is correct. Senator ROBERT RAY—Why? Senator Kemp—I am advised that they will be released shortly. Senator ROBERT RAY—Minister, do you think when you release them and put in a press release there will be a retraction of the criticism of Minister Walker for his tardiness in releasing the figures previously, considering that you have taken much longer? Senator Kemp—It is not my press statement. Senator ROBERT RAY—No, but you represent the minister here. Senator Kemp—Yes, I know, but it is not me who will be putting out the press statement. I am sure that— Senator FAULKNER—But were you, would you not do so? Senator ROBERT RAY—Minister, you are very fond of saying that you will draw matters to the attention of the minister. Will you draw this to the attention of the minister? Senator Kemp—At your particular request, I will do that. Senator ROBERT RAY—When you say ‘soon’, what do you mean? We are only talking about a three-month period of figures which is, what, about 20 days. Senator Kemp—I do not know whether we can be more specific. We can be more specific: very soon. Senator ROBERT RAY—Is there any rational reason for the delay? I note that reasons do occur for the delay. Is there any? Senator Kemp—I have not got any reasons before me. But again, as you noted, when you ask me for information on another minister’s portfolio, I always draw it to their attention. Senator ROBERT RAY—Mr Mellors, can you tell us when the department collated these figures and sent them to the minister? Mr Mellors—Personally, I cannot tell you that. One of my colleagues might be able to help. Senator ROBERT RAY—They might. Mr Semmens—I am afraid I did not bring that with me. Mr Mellors—We can provide that data.

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Senator FAULKNER—That was not the issue; the issue was when the department provided the aggregated lists. Mr Semmens—That is what I did not bring with me. The answer to your question is: I did not bring that with me. Senator FAULKNER—Perhaps one of the sticks of dynamite that the minister was going to stick under one of the Commonwealth buildings might be stuck under the minister on this. Senator ROBERT RAY—No, that is an unfair question. Senator Kemp—Next question. Senator ROBERT RAY—So we will seen them soon? Senator Kemp—See them very soon. Senator MURRAY—Whilst I am asking this question, I will cede the chair to Senator Watson. My question is to Mr Semmens. I put some questions together about two weeks ago and sent them into the committee, and they advised both your department and the Department of the Senate of the questions. The Department of the Senate were good enough to give me written answers, which considerably cut short the time we would have spent this morning. Do you have some written responses for me? Mr Semmens—I understood that we had provided the committee with written response. Senator MURRAY—I have not received them. Mr Semmens—I am astonished, quite frankly. Mr Godfrey—We understand that they have been submitted to the committee. We do have a copy here. Mr Semmens—Certainly, we did prepare a— Senator MURRAY—Do you know when you did? Mr Semmens—As to when it was tabled, yes, we are just checking. Mr Godfrey—As I understand, yesterday lunchtime, approximately. We do have a copy here that we could table. Senator MURRAY—In that case, I will take back the chair and leave that line of questioning. Perhaps they will pop up and have a look at them. Mr Semmens—We have tried to give you a fulsome account of every question you have raised. I think you will find them at least as helpful as the details you have from the Senate. The gaps that they have left, we have sought to address as well. I guess the best I can offer to you, apart from that, is to say that, if there are any further questions arising from that—and I know you might have preferred to deal with it in this forum—I am quite happy to give you a further briefing or follow up in correspondence. Senator FAULKNER—I am interested to know whether the branch had been tasked by the minister or his office to prepare briefs on any particular members of parliament or senators in relation to their use of their entitlements. Mr Semmens—No. Yes, there is one exception which was the subject of much discussion in the last hearing here in relation to Senator Colston. Senator FAULKNER—I am not interested in— Mr Semmens—We have not been tasked to target anybody.

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Senator FAULKNER—Trespassing into that area at all. I am interested in knowing whether other members or senators— Mr Semmens—No. Senator FAULKNER—Particularly those who might be identified as political opponents, even high profile political opponents, of the minister or the government had come in for some particular attention. Mr Semmens—No, we have not been tasked to target anybody. In qualification of that, I would have to say that, in the current climate, there have been many questions that have come to us or to the minister—many of them anonymous—that assert certain misuse or otherwise of entitlements. One cannot put those to one side, and we have been obliged to look at those. But we have not targeted, or been required by the minister or other ministers to focus on, any particular person. Senator ROBERT RAY—What is the criteria by which the department would launch an investigation into misuse of entitlements? What information base would they need to start an investigation? Mr Semmens—If we were to receive an allegation which on its surface looked like there may have been a breach of entitlement, we would have an obligation to raise that with our minister and to look at things from our own records to see whether there might be something there. But inevitably—and we get a number of these—the line generally is that we do not go into investigations, as such. We might make a check. Certainly, part of our process is to raise the matter with the respective senator or member that the allegation has been made against and seek their clarification of it. Senator ROBERT RAY—Do you draw a distinction between anonymous allegations and allegations where people have at least put their name to the allegation? Mr Semmens—I would have to say that we look at things on a case by case basis. It will often depend on the veracity of the allegation, not necessarily whether it is anonymous or otherwise. Senator FAULKNER—What period of time would elapse before, after being in receipt of an allegation you thought was of sufficient substance, you approach the member or senator in relation to the nature or content of that allegation? Mr Semmens—Again, that varies, but it is usually quite quickly. Senator FAULKNER—It would mean then that it would be impossible for a submission to go to the minister about an MP’s or senator’s entitlements or be prepared for the minister without a member or senator being approached by officers of the department? Mr Semmens—Quite often the approach is made by the minister rather than the department. Usually it will be the minister who will write. Senator FAULKNER—So you might have a situation where a brief could be prepared for the minister, go to the minister and he would action it, and it would be after that process that a member or senator would be informed of the nature of an allegation that might be made? Mr Semmens—Yes. Senator ROBERT RAY—So we have a process where there is some concern. Does the authority for the investigation always come from the minister or is it initiated by the department? Mr Semmens—It depends on how the allegations are received.

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Senator ROBERT RAY—I do not want to ask self-serving questions; nevertheless I am here. Did the Minister for Administrative Services ask for an investigation into the potential misuse of entitlements by my office when I was a minister? Mr Semmens—He did not ask for an investigation. Allegations were made in the Age.He asked us to make a check from our records, which we did. Senator ROBERT RAY—I want you to use precise language here because I have overstated it. I have used the word ‘investigation’, and you are saying, no, it is a check. So the minister has asked your section to do a check? Mr Semmens—Yes. Senator ROBERT RAY—When did he ask you to do that? Mr Semmens—Just a moment. It was around 18 April. I cannot guarantee that. Senator ROBERT RAY—Yes, I think you are right. Has a check been made? Mr Semmens—Yes, the check was made. Senator ROBERT RAY—Was a check report given to the minister? Mr Semmens—We briefed the minister. Senator ROBERT RAY—Was anything found? Mr Semmens—The records that we have about who attended the office at 4 Treasury Place did not reveal any pattern of use of the kind that was asserted in the Age. Senator ROBERT RAY—But in fact you do not have the full records, do you? Mr Semmens—What we have is what is recorded in the visitors book, and that is not a full record of people who have been in and out. In those days there was a guard, and if the guard knew people by their frequency there and there was knowledge and trust people were allowed in and out. Senator ROBERT RAY—I also put it to you that you did not have the full records in any event because a lot of them lay in the Department of Defence. Mr Semmens—It depends on what records we are talking about. If we are talking about people in and out of the offices— Senator ROBERT RAY—No, we are not. Mr Semmens—There are several. One is just attendance, two is use of equipment, and in that sense there were machines and office requisites provided by our department for general use in the corridors. But they were not the kinds of machines that would do the kinds of things that were asserted could be done in the allegations. They were older machines. But the machines and the office requisites and so on that a minister’s office would use are provided by their own department. Senator ROBERT RAY—Have you asked the Department of Defence for their records of the period? Mr Semmens—No, we have not. Senator ROBERT RAY—Are you aware that I have? Mr Semmens—I am now. Senator ROBERT RAY—Are you aware that I asked for the postage records of 1991, 1992 and 1993, the phone bills for 1991, 1992 and 1993, the photocopying bills for 1991, 1992,

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1993 and, finally, a read-out of all phone calls made out of the office for 1991, 1992 and 1993? They did not tell you that or you did not ask? Mr Semmens—We did not go to Defence. Senator ROBERT RAY—So a report goes to the minister, and I suppose you would have knowledge that the minister wrote to me? Mr Semmens—Yes, sir Senator ROBERT RAY—You have not seen my response yet? Mr Semmens—I have. Senator ROBERT RAY—That was quick work. Well done. Minister, I am a bit self-serving in asking about that. This inquiry was a request from Mr Reith following a newspaper article of Mr Jull. It went down the system, they have done their check and they have reported, and I assume that at some stage I will be shown the report—maybe, maybe not. It raises the question: on what grounds do you launch an investigation? I am not complaining. In politics, you dish it out and you cop it. As you know, I am on the record as saying that I do not believe any misuse of entitlements occurred. I want to explore the criteria by which you in future will, or currently, launch an inquiry into a member of parliament. I direct these questions to you, Minister, but you may like to refer them to others, but they tend to be a little more adversarial and inquisitorial. Senator Kemp—Yes. Senator ROBERT RAY—If a member of parliament admits to rorting one of their entitlements, do you launch an investigation? Senator Kemp—If the member of parliament admits to rorting? Senator ROBERT RAY—Yes. Senator Kemp—So he has indicated that he has misused his entitlements? Yes, absolutely. Senator ROBERT RAY—Absolutely. Say someone is asked these questions on radio, ‘But you in fact have passed stamps on to others,’ and they reply, ‘I think I probably have over the years, yes,’ and then they are asked, ‘Do you know other people who have?’ and they reply, ‘I think it would be a reasonably common practice,’ and they are then asked, ‘Well, isn’t that rorting the system?’ and they answer, ‘Well, I suppose it is qualified.’ Are you aware of those statements? Mr Godfrey—Yes. Senator ROBERT RAY—Have you launched an investigation? Mr Semmens—No, we have not. Senator ROBERT RAY—Your minister has not asked you to launch an investigation into this great self-incriminating admission? Mr Semmens—No. Senator ROBERT RAY—Do you know who I am talking about? Mr Godfrey—I have a fair idea. Senator ROBERT RAY—Would you like to inform Senator Kemp so he can inform the committee? Senator Kemp—I am informed that the quotes you were making were quotes made by Mr Jull.

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Senator ROBERT RAY—Yes. You would also be aware that the Prime Minister, two weeks later, was asked about it on the same program, and he gave Mr Jull qualified support, saying that his interpretation was that Mr Jull was not a rorter. That is correct, too, is it not? Senator Kemp—I am not aware of the quote, Senator. Senator ROBERT RAY—I have that somewhere. So you have a member of parliament who is established in high office who goes on the public record—albeit in a qualified way— and when asked, ‘Isn’t that rorting the system?’ replies, ‘Well, I suppose it is,’ yet we do not have an investigation. All I am asking is: where is the balance of decision making when someone who denies rorting gets investigated but someone who admits it does not get investigated. Senator Kemp—I am not sure how serious you are with these questions— Senator ROBERT RAY—Deadly. Senator Kemp—But note that I will see whether Mr Jull wishes to provide any further information. Senator ROBERT RAY—I am deadly serious—not with venom on this occasion but I am serious. I do not allege that Mr Jull has done this. But, if it could ever be shown that investigations were launched or initiated in a minister’s office by way of political payback rather than on a balanced assessment of whether there is enough to investigate, that is an issue. We do not have an investigation into Mr Jull, a self-confessed rorter, albeit about a probably very minor incident in his life involving a few thousand dollars worth of stamps. Senator Kemp—Senator, I do not accept that assertion, but I will refer that to Mr Jull. He will read your comments. Mr Godfrey—I think we also need to point out that my understanding is that the ‘investigation’ that you raised was an opportunity to ensure that a senator’s name was cleared. That was the basis on which the minister asked the department to investigate the issue raised in the Age newspaper in respect of your office. I think there is a difference between investigations, searching and providing data—that we need to do that. Senator ROBERT RAY—Minister, could you pass on my appreciation to the minister for his concern. I think I would have preferred a phone call beforehand to say, ‘I am taking this course of action,’ but anyway. Mr Semmens—Could I say, Senator, that you are underlying the general principle that I referred to earlier, if I could exclude this particular case, and you asked me about what happens when allegations are raised. The issue is raised with the senator or member concerned with the opportunity to either confirm, clarify or correct. I think that has been the practice for quite some time. Senator Kemp—I think it is also perhaps worth putting on the record that Senator Ray has made some allegations, throwing figures of $1,000 or $2,000 around. I think in fairness, Senator Ray, you should say you have no basis at all for making such accusations. Senator ROBERT RAY—No. The value in amount of the stamps, but I think by implication— Senator Kemp—I think in fairness— Senator ROBERT RAY—I think by implication, though, I assumed from what he was saying that they were used in a state campaign, because he goes on to sort of say, ‘They did go to my constituents in one form or another.’

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Senator Kemp—I think in fairness for the record—and I think you have been wanting fairness—you have no basis for what you have just said in your allegations. Senator ROBERT RAY—Minister, your admonition is quite right. I will withdraw that, but I do ask you to take on notice now— Senator Kemp—Thank you. Senator ROBERT RAY—No. I now ask you to take on notice to the minister you represent as to what value of stamps he passed on. I am glad you reminded me of that. Could you take that on notice. Then my withdrawal will be even more genuine if it is minor. Senator Kemp—Senator, I am glad that you have withdrawn those figures of which you had no basis for and— Senator ROBERT RAY—But you will take my question on notice. Senator Kemp—I will pass your comments on to him. Senator ROBERT RAY—No, you will take it on notice. Senator Kemp—I will take it on notice and see whether he is able to provide, or wishes to provide, a response to you. Senator ROBERT RAY—Thank you. Senator FAULKNER—To be absolutely clear about your previous comments, Mr Semmens, there has been no investigation—we are putting aside the issue of those matters that might be currently subject to AFP investigation or subject to charges, I understand that—initiated by the minister or his office into a member or senator. Mr Semmens—We have not been tasked to go and investigate individual senators and members. Where an allegation has been raised—and I have drawn a distinction, I think, Senator—I think there is a clear distinction to be made between— Senator Kemp—A fishing exercise. Mr Semmens—me being tasked to do an investigation and saying, ‘X is an opponent. Do him over,’ and looking at examining an issue, which may have been raised otherwise, and having the checks made that relate to that allegation. So I have drawn the distinction between the two. In respect of the latter, there have been checks made in a number of instances. Senator FAULKNER—Look, I will be very frank with you. The reason I raised it is that I have received information from within the department that, in fact, it had occurred in relation to myself, which I took to rather unkindly, I might say. Mr Semmens—Senator, I assure you that has not occurred. There has been no directive given to me by the minister or from other members of the government. I have not asked for it to be done; Mr Gavin has not asked for it to be done. So if it has been reported as such— Senator FAULKNER—I would not say reported—leaked. Mr Semmens—If it has been leaked as such, the leaking is totally misinformed and mischievous. Senator FAULKNER—I accept that absolutely and I am pleased to hear that that is the case. I am pleased to hear, more broadly, that it is true in the case of others in the parliament from whatever side of the parliament they might represent. I take and I accept the assurance that you have given me and the committee. I am sure a number of members and senators will appreciate that.

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Senator ROBERT RAY—Can I just add for the record—I know you should not editorialise—that I in no way say that the check on me was politically motivated by Mr Jull. I think, if information were received, he is entitled to deal with it. However, I say for the record for you to pass on, Minister, it is not for Mr Reith to call on Mr Jull to want such an investigation in such overblown terms that he used in his press release. If it were not for the fact that government ministers and defamation are backed up by the government—and you cannot afford ever to sue them—you would have a writ on him right now. Senator Kemp—I think in relation to this debate a lot of what you refer to as overblown comments have been made. Senator ROBERT RAY—You always say that, don’t you? Senator Kemp—They have. You, if I recall, have made some fairly strong statements as well. Senator ROBERT RAY—When? On what? Senator Kemp—I think your performances recently have shown some very strong comments, Senator. I make the point that Mr Jull will clearly read the transcript of this and he will note your comments. Senator ROBERT RAY—Good. He might like to note the following, because we were looking at the question of what criteria are used in launching an investigation when things are on the public record. I want to turn to another case of evidence given in the CJC hearing in Queensland over recent weeks, when evidence given under oath says, first, a senator conspired with his employee to forge a signature on an overtime claim. I make no judgments as to whether those events occurred; nevertheless, it is now on the public record. Does that meet the department’s criteria for an investigation? Mr Semmens—Yes, it does. Senator ROBERT RAY—I know aspects of it in terms of discovery of documents are before the AAT, so I do not want to go too far into the overtime issue. Were you also aware that the same senator is quoted under oath as asking that employee to go quietly because he did not want a DAS audit of his office? Has that been brought to your attention? Mr Semmens—I am aware of that allegation, Senator. Senator ROBERT RAY—Good. Are you aware that that person under oath alleged that his employer directed him to take leave but stay at work and that senator would employ his wife to replace him for that six or seven weeks, even though he was still working and shown as being on leave? Mr Semmens—I am aware of the allegation, Senator. Senator ROBERT RAY—Are you aware of the allegation in terms of access to the office; that is, that Young Liberals were constantly in there not only on weekdays but on weekends— this has a resonance and ring about it in terms of the allegation made against me—doing extensive photocopying? Mr Semmens—I understand it is an allegation. I understand the context in which it is made. Senator ROBERT RAY—Will there be an investigation of that? Mr Semmens—To the extent that we need to, there will be.

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Senator ROBERT RAY—Can I rephrase the question. Will there be a check, because that is a better word that fits your criteria. Mr Semmens—I understand the CJC hearing is still proceeding, and I guess not all evidence has been taken on board yet. I think we have heard the assertions and allegations of one person. So I guess one of the things that we would be looking to is what else comes from the CJC as well. Senator ROBERT RAY—Are you aware of allegations that an employee of the Commonwealth, employed under the MOPS Act, employed by the senator had a part-time consultancy and did business out of the senator’s office? Mr Semmens—I am aware of the allegations. Senator ROBERT RAY—Yes, good. This is probably more a matter for the Library— company searches. It does not really come to you, does it? Mr Semmens—I don’t think so, Senator. We do a number of things but we don’t go quite that far. Senator ROBERT RAY—So you are aware of this range of allegations under oath and under cross-examination? Mr Semmens—I am aware of the allegations made, yes. Senator ROBERT RAY—I take it you have not launched an investigation into this yet. Mr Semmens—I said a moment ago that we are talking about the allegations made by one individual before the CJC. There would be other witnesses, I understood, on the matter. Senator ROBERT RAY—Where do you get that understanding from? Mr Semmens—Sorry, I am assuming there will be. Senator ROBERT RAY—I do not think so. Mr Semmens—If there is not, then we would be looking at things as to how they relate to us but not in such a way—and one would have to be careful about this—that would prejudice the CJC hearing as well. Senator ROBERT RAY—There is no suppression order on this part of the evidence. I carefully checked that. Mr Semmens—I would have to say that I have not checked all the details about the CJC hearing. I am aware of the things you have raised but we have not gone to the detail of checking— Senator ROBERT RAY—We would be happy to give you the Web site number and you can rip it off Internet. It will take you a while. There is about 80 days of hearing. The relevant parts I can draw your attention to. I should say in fairness to the senator that the witness may not be the most reliable individual in history. He has admitted under oath that he has lied on other occasions but never under oath. I put that in to balance it for the senator concerned. ACTING CHAIR (Senator Watson)—I think we have to be careful about these allegations. I permitted these questions on the basis of due process and the fact that the department has to execute its responsibilities quite impartially. Senator ROBERT RAY—The point is we have heard evidence today— ACTING CHAIR—Yes, I know. I permitted that.

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Senator ROBERT RAY—That an investigation has been launched against two former ministers— ACTING CHAIR—It is the asides that I am worried about. Senator ROBERT RAY—You have had evidence given today that a check was made on two ministers, and I say quite properly. What I am asking for and what I am checking here is whether there is going to be consistency and whether there are other allegations on the public record— ACTING CHAIR—I have had no problems with that but there are little asides which cast aspersions. That is what worries me from the position of Acting Chair. Senator ROBERT RAY—I think I have put this last set of questions on this particular senator very delicately considering what is in the evidence. If anyone has read the evidence they would realise how delicately I put the questions and how much more crude and damaging I could have been. Senator FAULKNER—I think you have been delicate. Senator ROBERT RAY—Shucks, Senator Faulkner! We have got to a stage where there isn’t an investigation. You are going to wait until all the evidence is heard in case there is any counter evidence and then you may or may not have an investigation depending upon how it works out. Mr Semmens—As I have said, each one is looked on a case by case basis. I know that sounds hackneyed, but it is true. Senator ROBERT RAY—It sounds like just taking one week at a time. Mr Semmens—It sounds like a coach at a football match, doesn’t it? That is what we do and I am sure that is what you would expect that is what we do. Senator ROBERT RAY—My office has been contacted by someone—I am happy to put you in touch with them—to say that in 1992 a lower house member’s office in Melbourne was used by the NUS Liberal students consistently in the disaffiliation ballot at Monash University. Up to 20 students at a time were invited into this member’s office to make phone calls to students to lobby them about whether Monash should disaffiliate from NUS. Is that a legitimate use, Minister? Senator Kemp—I would wish to look more closely at these matters, whether they were making calls on behalf of the member which has to do with his parliamentary duties as defined. I do not propose to give an off-the-cuff opinion. Senator ROBERT RAY—You don’t. Maybe the people who are in charge of the entitlements might like to give us a view. Senator Kemp—As I said, I would need to know more. I know that political parties often have people in to work for them. Senator ROBERT RAY—Do they? Senator Kemp—In offices to assist, yes. Senator ROBERT RAY—But do they all have an investigation or a check made of them? Anyway, you might check the phone records for the member for Goldstein in 1992—I think you know him—to see whether there were exceptional phone calls made on or about the time of the Monash University/NUS disaffiliation ballot. I will not name the names of some of the people who were there in the office who have later revealed this information but I am happy

FINANCE AND PUBLIC ADMINISTRATION F&PA 92 SENATE—Legislation Thursday, 8 May 1997 to give it to you in a private capacity. Do you think that might be worth investigating, Minister? Senator Kemp—You have made a comment and that is now on the record. I guess that others will make other comments. Senator ROBERT RAY—We seem to have vagued up the use of entitlements as the afternoon as gone on. Mr Semmens—No. Senator ROBERT RAY—No, you haven’t, Mr Semmens. I am talking to the minister. Senator Kemp—No, I haven’t vagued up the use of entitlements. We had a lecture from Senator Faulkner about how we do not want people to be attacked and now you are trampling around raising allegations against people— Senator ROBERT RAY—Just looking for some consistency. Senator FAULKNER—You have not had a lecture from me today at all. But I wanted to be assured that a high level source from DAS— ACTING CHAIR—We have all this on the record. Can we move on? Senator ROBERT RAY—We might. Senator FAULKNER—We may. ACTING CHAIR—Senator Faulkner, I think we should move on. Senator FAULKNER—We are moving along very well. Senator ROBERT RAY—Minister, let me ask you directly: at any time from the point you were elected to the federal parliament have you allowed anyone in your electorate office to misuse any of the entitlements given to you and provided by DAS? Senator Kemp—Senator, I always try to abide by the rules, like you, I hope. Have you? Senator ROBERT RAY—Have you? Senator Kemp—Have you? Senator ROBERT RAY—Have you? Senator Kemp—As I said, I always abide by the rules. Senator ROBERT RAY—I have been checked. I may have been cleared; I may not. I am asking you. Senator Kemp—I am saying that I always try to abide by rules. Senator ROBERT RAY—You are saying to this committee that you have never allowed the Liberal Party to use your office facilities? Is that what you are telling us? Senator Kemp—I am saying that I have always tried to abide by the rules. Senator ROBERT RAY—You have never let an outside group use your photocopier? Senator Kemp—I have always tried to abide by the rules, as I hope you have always tried to abide by the rules. Senator ROBERT RAY—Thank you for the evidence that you tried to abide by the rules. Now why don’t you answer my question as to whether you have in fact applied and abided by the rules? ACTING CHAIR—I think he has given a reasonable answer under the circumstances. Senator ROBERT RAY—No, he hasn’t.

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Senator Kemp—I have given an answer to your question. Senator ROBERT RAY—No, you haven’t. Senator Kemp—Yes, I have. Senator ROBERT RAY—Has any outside group ever used your electorate office facilities—Friends of the ABC or anyone like that? Senator Kemp—There is one local group that occasionally has meetings in my office—I think they are to do with self-funded retirees. I am happy to provide a service to them. Senator ROBERT RAY—I see. Mr Semmens, is that within entitlement to allow outside groups to use the office facilities? Mr Semmens—I have to say—and I might be going beyond what I should say—that I can just imagine that next week I am going to have a series of letters to write to every senator and member about the use of entitlements. Senator ROBERT RAY—I expect the minister to take the fifth on this. But I draw the serious parallel that it is okay for you to have self-funded retirees meet in your office but it is not okay for some group, without my having any knowledge, if it ever occurred—and I don’t think it did—to have misused my office the same as your office may have been misused with your concurrence. Senator Kemp—I remember in evidence before this committee former Senator McMullan outlined in the press that groups were using his office. Senator ROBERT RAY—So? Senator Kemp—I am just saying. What you are doing, Senator—and you know exactly what you are doing—is spraying allegations around about people, people who are honest and try to abide by the rules. If you wish to proceed down this track, I can understand the department would receive a whole host of allegations about the use of offices. Senator ROBERT RAY—I think we are doing two things here, to be serious, Minister. First, we are trying to get a definition of where the line is between strictly parliamentary use and broader participation in the community, which you do with self-funded retirees. I do not criticise you for it. But what we have really done is vague up the line where it is drawn—and that for future use may be useful. Secondly, we have been looking at the question, if allegations are made, what criteria is applied, either in the department or more likely with the guidance of the minister’s office, as to whether there is a check, investigation or referral? I have been trying to see whether there is consistency and making sure that there is no political malice in it. I do not think there is, but I am making sure of that. I think I am entitled to do that. Senator Kemp—You are entitled to state your views on where you think the line should be drawn, but spraying allegations around about people is unsatisfactory. Senator ROBERT RAY—What other allegations, apart from your brother, have I sprayed around? Senator Kemp—Just prior to that, if we examine the record, I thought you were referring to another senator. Senator ROBERT RAY—Yes. Senator Kemp—You asked me what other allegations; I have just mentioned another one to you.

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Senator ROBERT RAY—But you are saying I made the allegations. The allegations were made under oath by a former staff member of his, under cross-examination and on the public record. They are not allegations that I have invented or made. I even prefaced it at the start by saying that I do not make a judgment as to whether the allegations are true or not. Sometimes I do, but this time I did not. I asked whether there would be an investigation. We got a reasonable answer from Mr Semmens, who said that he thought there may be other evidence in—I accept that—and they all wait until the end of that process but that an inquiry or a check or an investigation, whichever terminology you care to use, may occur. Therefore, there is some consistency. I am also asking if the use of electorate offices by outside groups is okay, but where do you draw the line? Do you draw the line in a union ballot? Do you draw the line with the Prime Minister when he was Minister for Industrial Relations sending out letters in the middle of union campaigns? I am just trying to get guidance on these things so that there is fair application. ACTING CHAIR—Can we move on? Senator ROBERT RAY—I think they want to respond to my last summation. Senator Kemp—Sorry, could you give us your last question. Senator ROBERT RAY—I just gave you a summation and asked for a response. That is it. Senator Kemp—Could you state your question again so that we can reflect on it. Senator ROBERT RAY—It was more an editorial. But, to get a response, I was saying that I think what we have established here is, firstly, that the lines of demarcation between parliamentary duty and use of the office because of community involvement tends to be a blurred one. That is the first point I am making to seek a response. Senator Kemp—I am not sure where the department would draw the guidelines. I think that if the department, on reflection, would give us some response that would be of assistance. Senator ROBERT RAY—But you agree that it is vague at the moment? Senator Kemp—I think it probably is. I have not turned my mind to it recently, but if you feel there is a need for greater precision that will be looked at. Senator ROBERT RAY—I am not saying that. ACTING CHAIR—I can remember a similar debate going back a number of years ago when a minister from the other party at the time was fairly relaxed with voluntary community organisations being able to access certain information through senators’ or members’ offices. Senator ROBERT RAY—I think we are in agreement on that. Therefore, it comes back to the question of what criteria is used. Senator Kemp—I am advised that the distinctions on the parliamentary and electoral entitlements have never actually been tested in the courts, so judgments are made on a case by case basis. As I said, I think there probably is a degree of vagueness on this issue. Senator ROBERT RAY—I think we would all agree with that. It only comes back to the question of when allegations are made as to misuse of entitlements what sort of objective criteria can we have to say, ‘This one should be investigated and this one should not be’? That is the question I pose, just to make sure that when this occurs there is no political malice involved in choosing one and not another, et cetera. That is the point I am trying to get over.

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Mr Semmens—Could I just make a final comment. There are times when there are clearly frivolous allegations. We generally do not pursue those. If there is anything which impugns a senator or member, a letter is usually taken up with them directly and they have the chance to clarify or clear the issue. Just about every one that is raised, the minister would write off about. Senator ROBERT RAY—I take it that the last three or four months has put a lot of pressure on you—a hothouse sort of atmosphere of you trying to deal with a whole range of issues at the one time. Mr Semmens—It has been a rather curious time. Senator ROBERT RAY—I move on to another topic, just briefly. DAS is responsible for funding staff travel costs when they come to Canberra. You put an overall cap on it and it can be drawn down by one, two or three staff members, and when it is over that is it. But there is an increasing tendency for the government to argue for extra sitting weeks. I am not talking about sitting days. Inevitably, at those negotiations people say, ‘Well, if we are to be here, we will need some staff support in terms of research, staffing the office, et cetera.’ There is nearly always an agreement that they will lift the overall pool. It seems to me that you are always told immediately about that. Minister, I am really asking whether we can put some sort of process in where, firstly, Administrative Services is informed of those decisions by your leader and your manager so they know that the budget has gone up and, secondly, some arrangement can be made with Finance for that to be funded rather than squeezing DAS resources. Can you take that on board, Minister? Senator Kemp—I will take it on notice. Senator ROBERT RAY—It has been taken on notice before, by the way. It has never been properly sorted out. I think it is time to sort it out, otherwise you will not get extra sitting weeks as often. Maybe you will not then. Senator FAULKNER—Is it the case that ministerial staff have to provide written advice of their nominated headquarters to DAS? Mr Semmens—That is a requirement—their home base. Senator FAULKNER—Is it the case that the headquarters have to be either in Canberra or in the city in which the minister’s state, ministerial or electoral office is located? Mr Semmens—Perhaps I will go through it briefly. Electorate staff, first of all— Senator FAULKNER—I am not talking about electorate staff; I was talking about ministerial staff. Mr Semmens—You are talking about office holders’ staff, which includes not just ministers of course. They must nominate a home base for travel purposes. Their home base must be the office where the staff member spends the most time on duty. That has been the standard for a long time. That home base may be the office holder’s Canberra office or the office holder’s home capital city or the office holder’s electorate office. Senator FAULKNER—Have all ministerial staff complied with that requirement? Mr Semmens—Yes, they have. Senator FAULKNER—There are no staff who have nominated headquarters other than in the three categories that you mentioned—Canberra, a minister’s electorate office or state office?

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Mr Semmens—I am not aware of any staff, including from the other side, who have nominated as their home base a location other than that specified within those three options. Senator FAULKNER—When you say you are not aware of it, that means that that is not a situation that has occurred? Mr Semmens—I do not believe so. Senator FAULKNER—If the exception to that were to be permitted, what process would be required? Would it be possible to have an exception to that? Mr Semmens—I would normally require my minister’s decision to vary it. Senator FAULKNER—So it is possible to vary it via a decision of the Prime Minister? Mr Semmens—You asked: if it were to be done, how would it be done? My minister, as you know, has responsibility for determining the terms and conditions for MOPS Act employees, and that would be one of them. Senator FAULKNER—But there is no case where this has occurred? Mr Semmens—No. Senator FAULKNER—Thank you. Senator HEFFERNAN—Can I ask one final question on the matter I was asking earlier. Can you provide to this committee anything over the hiring of that particular series that is outside the guidelines— Mr Semmens—Outside the current guidelines? Senator HEFFERNAN—Yes, for the period March 1993 till today. Mr Semmens—I think that has come through the series of questions, including those of Senator Robert Ray. If I put the two together, we have a very comprehensive picture to paint. That will come through there. Senator HEFFERNAN—I take it that, if you hired a car at the airport here at 11 o’clock on a Sunday night and then used it for the sitting week, that would be outside the guidelines even though you hired it at the airport before the parliament sat. Mr Semmens—Under the guidelines, just by way of clarification and reiteration of something I said earlier— Senator HEFFERNAN—I think probably a lot of people are interested in this. Mr Semmens—When we are talking about the use of a self-drive car by a senator or member in Canberra—and that is what we are talking about—under the current arrangements that is outside of the guidelines, yes. Senator HEFFERNAN—So, in theory, you would have to hand the car back the next morning before parliament commenced if you hired it at the airport at 10 o’clock at night. Mr Semmens—I think that that is starting to get outside the guidelines. Senator HEFFERNAN—Thank you very much. ACTING CHAIR—There being no further questions, we will move to program 4. [5.12 p.m.] Program 4—Corporate Management Senator FAULKNER—I want to raise the issue of IT outsourcing. I know this is of particular interest to Mr Godfrey. I understand from reading the newspaper that DAS has very

FINANCE AND PUBLIC ADMINISTRATION Thursday, 8 May 1997 SENATE—Legislation F&PA 97 serious concerns about whether the savings that OGIT and Finance think will be realised as a result of IT outsourcing will be realised. I was interested to understand why DAS has those concerns. Mr Godfrey—I think our concern in regard to the overall outsourcing was that it is a very wide initiative covering various aspects of IT. We are of the view that some of the savings are based on averaging principal. Because we have both been outsourcer and outsourced some of our functions, we think we have probably been at the lower end of costs in regard to our IT usage. As we have won business for use of our mainframe by other agencies in open market competition, we have some proof we think that we are at the low end of cost. The exact savings that are required of our department as a result of this year’s budget have not been announced. We believe, though, that we can achieve major savings through IT outsourcing, from the desktops through to the mainframe. Senator FAULKNER—As I understand it, among DAS’s concerns is the fact that some of the savings were based on assumptions that had not taken into account existing cabinet decisions. What decisions of government do you feel DAS considers have not been taken account of? Mr Godfrey—I think that is a matter that will be notified on Tuesday night. I cannot respond to that, because it is a part of the process. Senator FAULKNER—So this refers to cabinet decisions that are subject to this year’s budget, effectively? Mr Godfrey—I think you are quoting from a cabinet-in-confidence document—albeit it was leaked—so I am not prepared to say what those specific comments of the department referred to. But I believe we will be happy with the outcome and will work towards outsourcing of our IT. Senator FAULKNER—You are right. It is not so much that I am quoting from a leaked cabinet document as one of Senator Kemp’s colleagues had the good sense, for once, to invite us all into the processes of the cabinet, which is something that we when in opposition always find very generous and appreciated. Senator Kemp—I have heard you make that comment before, Senator, and I do not believe it. Senator FAULKNER—That minister’s actions are greatly appreciated. Senator Kemp—I do not believe that, Senator. I have heard you make that comment. Senator FAULKNER—I have not made it very often. Senator Kemp—You have made it often. It is malicious and it is untrue, I suspect, but you persist in saying it. Senator FAULKNER—I move on. There are a lot of press reports about the Department of Finance’s proposal to piggyback on the contract of the Department of Veterans’ Affairs to outsource its IT infrastructure. I was interested in the DAS view of this. What do you understand as the principle of piggybacking? Mr Godfrey—Under the procurement guidelines, if we have like contracts, the delegate or the secretary can say that you can utilise other contracts. We have that installed within our period contracts where we go out with open contracts and then people can just buy off those contracts. You can classify that as a piggyback.

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The example you are giving is that the Department of Veterans’ Affairs went out to an open tender for the provision of outsourcing of their full IT range from desktop to mainframe applications. It is my understanding that the Department of Finance is exploring whether that contract would be very applicable to it and would enable it to utilise the resources of ISSC, who won the DVA contract for the provision of outsourcing services to the Department of Finance. I do not think it is correct to say that there has been a decision taken to piggyback, but they are investigating that position. Senator FAULKNER—Is the practice acceptable to DAS? Mr Godfrey—It is covered within the procurement guidelines to allow utilisation of other contracts that are in place. As I said, there are numerous examples where that is utilised. Senator FAULKNER—Taking the Commonwealth purchasing policy guidelines as given and given that the contracts of the Department of Finance and, I think, the Department of Immigration and Multicultural Affairs are valued at more than 50 per cent of the existing DVA contract, how do they fit existing Commonwealth purchasing policy guidelines? Don’t they violate those guidelines? Mr Godfrey—That is a matter for the determining officer, the Secretary to the Department of Finance or his delegate, to make a decision upon. I think the contract also needs to be looked at in the specifics. The Department of Veterans’ Affairs contract does allow for piggybacking. In fact, there are incentives under the contract if the scope of the contract is enlarged. It was envisaged at the time of the tender documentation preparation by the Department of Veterans’ Affairs and the signing of that contract. So piggybacking was con- sidered. I should also indicate that the Office of Government Information Technology has indicated that, while it had some broad structures of clusters—five clusters—they were flexible and there was going to be an allowance for smaller agencies in particular to piggyback onto other clusters to facilitate them getting into the outsourcing arrangement rather than being required to go out to open tender. Outside of the guidelines it becomes a matter for the delegate or the secretary to make a determination. But all the other aspects—value for money, et cetera—of the procurement guidelines are satisfied. Senator FAULKNER—But DAS has expressed very serious concerns about this issue to the Department of Finance, hasn’t it? Mr Godfrey—No, the press indicated that we had. From my knowledge neither anyone in the procurement area nor the secretary nor I have spoken to the Department of Finance in regard to the piggyback issue. That was stated in the press, but that was not correct. Senator FAULKNER—Have you spoken to the Department of Immigration and Multicultural Affairs about this? Mr Godfrey—I spoke to my equivalent in the department after the press to indicate that it was not correct. Senator FAULKNER—Is it correct that you do not have concerns or that you have not expressed those concerns to the relevant departments? Mr Godfrey—I believe that there is provision within the guidelines to utilise piggybacking of contracts. It then becomes the responsibility for the determining officer to ensure that the guidelines are met. We would then examine it to make sure and provide assistance to those departments if they wanted to piggyback.

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Senator FAULKNER—So as far as you are aware, are those departments continuing their negotiations with ISSC? Mr Godfrey—It is my understanding that the Department of Finance are continuing their negotiation, but they are the only one. Senator FAULKNER—So DAS has not either recommended or instructed the Department of Finance not to proceed with that proposal in any way? Mr Godfrey—No, Senator. Senator FAULKNER—Do you have concerns that, if it does proceed, the Department of Finance can in fact effectively avoid the process of competitive tendering? Mr Godfrey—No, I believe that the delegate would be required to address the issue that the competitive tender undertaken by DVA is applicable to them and therefore, for the purpose of outsourcing of Department of Finance IT, that it satisfies the competitive tendering position. Senator LUNDY—I have not quite understood what you mean when you refer to the delegate. Mr Godfrey—Expenditure of any moneys of the Commonwealth has to be approved under the Finance Regulations. Secretaries normally delegate to officers within the department their powers under Finance Regulations 44A and 44B. Before you can expend money, the delegate must be satisfied that the requirements of those regulations are met. To assist in delegates making the decision under those provisions, the department has issued procurement guidelines. People would be aware that they would go through those guidelines, particularly in such a large expenditure item as this, before they exercised their powers under the Finance Regulations. Senator LUNDY—Thank you for that clarification. Has it ever occurred that a decision for a procurement to occur has gone against the policy guidelines of the department? Mr Godfrey—We are the ones who issue the guidelines. We then would rely upon other people, particularly the Australian National Audit Office and individual audits within departments, to make an assessment of whether the guidelines and the financial regulations have been satisfied. I think it would be unreasonable for me to say that no, the guidelines have never been breached, because I think there are examples that have been shown in public papers that guidelines have been breached. Senator FAULKNER—But the truth of the matter is that neither the Department of Finance nor the Department of Immigration and Multicultural Affairs have conducted a tender process in relation to these proposed outsourcings. We can actually say that, can’t we, Mr Godfrey? Mr Godfrey—At this stage, that is correct. Senator FAULKNER—The Department of Administrative Services drew strong attention to this in your coordination comment to the Minister for Finance/OGIT cabinet submission. Mr Godfrey—I cannot disclose what we put into a cabinet-in-confidence, but it was not what the senator just said. Senator FAULKNER—I appreciate that you can’t, but given that one of Senator Kemp’s colleagues has leaked it— Senator Kemp—You keep on making that assertion, Senator. I do not believe it. You have not been able to sustain it. Senator FAULKNER—I do not want to name that minister.

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Senator Kemp—You are entitled to rage around, I guess, but I want it to go on the record that I certainly do not accept what you are saying. Senator FAULKNER—I do not want to name that minister, for fear of embarrassing him. Senator Kemp—You can’t name that minister. Senator FAULKNER—Put it another way: the cabinet submission has been leaked and says, ‘Neither DoF nor DIMA have conducted a tender process in regard to these proposed outsourcings.’ That is a direct quote from the cabinet submission. I acknowledge that the Department of Administrative Services is properly drawing the attention of that matter to ministers, as I am sure you, Senator, would believe is appropriate in these circumstances. Mr Godfrey—I think there are some quotes that are in the press that are very misleading. We have not drawn that matter to the attention of ministers. The Department of Administrative Services will be going down an open tender arrangement with some other agencies for outsourcing. But the provisions do exist within the procurement guidelines to piggyback, that is, to not have a specific open tender but to utilise an open tender conducted by another agency. That is what the Department of Finance are doing. There was an open tender by the Department of Veterans’ Affairs. The Department of Finance are exploring whether they can utilise that open tender for their outsourcing. I do not think that is in breach of our guidelines at all. Senator FAULKNER—Does the value of the contract have an impact in terms of the point at which the guidelines are breached? Mr Godfrey—Clearly the value of a contract is one matter that would need to be considered, but it is also the similarity of what is being contracted that is as important as the value. Senator FAULKNER—What do the guidelines say about the value? Can you explain that to the committee? Mr Godfrey—They are silent in terms of value. What they do say is that the delegate must be satisfied that the Commonwealth has received value for money in making such a decision to piggyback or to invoke Finance Regulations 44A and 44B. Senator FAULKNER—What year—remind me again, I think I know the answer to this— was the Department of Veterans’ Affairs competitive tender process? Mr Godfrey—It was in 1996-97. So it was out in the market in the latter part of 1996 and a decision was made in the early part of 1997. I do not have the exact dates with me. Senator FAULKNER—Has the Department of Finance actually taken on board the overwhelming views of departments and agencies within the Commonwealth Public Service in relation to this? Are they starting to cave in? Senator Kemp—I think that is a question for Finance, Senator. I am not resisting the question. On the advice I have got, that is better answered by Finance. Senator FAULKNER—No doubt questions like this will be directed to the Department of Finance. Given that the cabinet decision has been made over the objections of the Department of Administrative Services and, one assumes, the Minister for Administrative Services— Mr Mellors—Could I please put on the record something that Mr Godfrey has alluded to a number of times. One should not infer that the matters reported in the press reflected either the sequence of events or the precise advice given by DAS to government.

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Senator FAULKNER—I am perfectly happy, if it clears it up, to table the leaked cabinet minute from which I am quoting. I think we are talking at cross purposes. I understand why you say that, Mr Mellors. I do not criticise you for saying it or blame you for saying it, but I can only deal with the cabinet minute I have before me. As I say, I am thankful that someone had the generosity of spirit to benefit the opposition by leaking it to us. Mr Mellors—If I may say, Mr Godfrey quite properly has been very reluctant to divulge our advice to government in a cabinet-in-confidence environment and I am also so reluctant. I do not think I am breaching any confidentiality to say that I first became aware of Finance’s proposed approach to this—and I think I speak also for Mr Godfrey—after the whole set of outsourcing proposals had been considered by government. Therefore, it could not have formed part of our advice to government. Senator FAULKNER—Who then was responsible for signing off the coordination comment of the Department of Administrative Services? Senator Kemp—We are discussing a cabinet document that you have— Senator FAULKNER—I have taken Mr Mellors’ point on board. I am following it through with the obvious follow-up question. Who wrote it? Who signed it off? Did the minister approve it? Senator Kemp—This is, as you have correctly identified, a leaked cabinet document. We are not prepared to provide any more information than that which you have improperly obtained. Senator LUNDY—Can I just clarify another thing. You say that you are utilising the open tender from another department’s contract as a basis for expanding that contract or opening it up. My interpretation of that is that, for the department intending on coming in on that contract, it effectively becomes a short list of one. How do you then substantiate the notion of competition providing some sort of mechanism to actually increase the efficiencies gained out of the whole outsourcing exercise? Mr Godfrey—I think that these are issues to discuss with the Department of Finance because they will be the ones who make those decisions under the Finance Regulations and in accordance with the procurement guidelines. I do re-emphasise that there was an open tender conducted by the Department of Veterans’ Affairs in conjunction with the Office of Government Information Technology. That open tender had provision for piggybacking as will most other tenders in the outsourcing arrangement. That therefore allows people to join that tender without going out to open tender. Senator LUNDY—How many companies participated in that open tender process with DVA? Mr Godfrey—That would be best addressed to the Department of Veterans’ Affairs, but it was marketed as an open tender and anyone who wanted to tender to DVA could do so. Senator LUNDY—At that time, were the companies that were capable of participating in that process made aware of this piggyback option? Mr Godfrey—The provision existed that there would be a provision within the final tender contract for other people to utilise that contract. Senator LUNDY—Were potential tenderers notified of that fact? Mr Godfrey—I think they are fully aware of that because it is a part of the Commonwealth’s procurement guidelines that if one agency has gone through an open tender

FINANCE AND PUBLIC ADMINISTRATION F&PA 102 SENATE—Legislation Thursday, 8 May 1997 that any other agency can utilise that tender. I think it is very well known in the IT industry that that is a possibility and I can see no reason why that would not have been the position with the DVA open tender. Senator LUNDY—Has there ever been a breach of the procurement guidelines, Finance Regulations or cabinet guidelines involving the procurement of IT services? Mr Godfrey—I think we need to exclude cabinet guidelines because they are not included. As I indicated before, I believe there have been breaches which have been reported publicly. Senator LUNDY—Which are? Mr Godfrey—I would not have those in front of me at present, but I think there are examples where the audit office has indicated that the contract may not have fulfilled the full requirements of the Finance Regulations. Senator LUNDY—Could you take on notice to provide the committee with details of those occurrences? Mr Godfrey—We will take on notice to provide as much as we can which is available on the public record because most of these would be questions that should be addressed to individual agencies. We are not the policemen of individual agencies. Senator Kemp—As these would apply to other agencies, as you say, I do not think it is the job of this department to do their work. If you wish to put questions on notice to the relevant agencies that is fine. Senator LUNDY—It is a procurement issue and it relates to the regulations that have been cited, and the role of DAS with respect to procurement I think is entirely appropriate. Perhaps through you, Mr Acting Chairman, is the minister saying that he is not prepared to allow that question to be taken on notice? Senator Kemp—Better still, Mr Chairman, you can refer that question to me and I can respond. I am saying that we will provide any information we can from the department’s sources, but the officers are saying that their sources may not be comprehensive. Therefore, they are saying that as these relate to other agencies if you have concerns those questions should be addressed to the other agencies. We will assist to the extent we are able to assist. ACTING CHAIR—I am sure, Minister, you will be as helpful as you are able to be within that guideline. Senator Kemp—Absolutely. ACTING CHAIR—I think you have a commitment. Senator LUNDY—I would hope that the department that manages procurement would also manage its effectiveness and monitor its effectiveness as a policy item. Mr Mellors—I think Mr Godfrey did make it clear earlier on that DAS is responsible for the preparation and review, from time to time, of the Commonwealth’s procurement guidelines—and I emphasise ‘guidelines’. The responsibility for having regard to those guidelines in their application to specific purchasing decisions rests squarely with agency heads and whether or not they are in breach of those guidelines is their responsibility as audited from time to time by the Auditor-General. We, as I think Mr Godfrey used the phrase, are not the policemen of compliance. Senator LUNDY—You have just stated that that responsibility lies with agency heads. Is there any centralised audit process? Who identifies within the government structures where a breach has occurred and follows those issues up with the departmental heads?

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Mr Mellors—It would typically be the same processes that apply to any expenditure of public moneys—namely, internal audit processes within departments, their own systems and ultimately the Auditor-General. Senator LUNDY—I suppose the buck would stop, in terms of articulating anything in that respect, with the audit office? Mr Mellors—That would certainly be a very logical avenue for further inquiry. Senator LUNDY—Just to turn to some general questions with respect to IT outsourcing within the department, can you provide some statistics as to the current number of PCs, desktop units, major computer centres, that exist within DAS? Could you provide us with some information about what we are talking about when we talk about IT within DAS? Mr Godfrey—To give you a figure on the number of desktop units would be rather misleading because the sale of DAS businesses is going to mean that the department reduces from about 5,000 to 1,600 or 1,700, but the average is that about 94 per cent of our people have a PC, or its equivalent, within the department. I do not expect that that will change, in fact it might go slightly higher, when DAS finishes the sale of the businesses and is downsized. That is just one small element of IT outsourcing. DAS also has mainframe machines. It has several mid-range machines and also runs an extensive data network and voice network. When we are talking about IT, we are talking about all four levels from the desktops through to the mainframe. Senator LUNDY—With respect to the desktop, do you have a common operating system within the department at the moment? Mr Godfrey—Within each business there are common operating systems. Within DAS there are several operating systems and each has connectability. Senator LUNDY—And interoperability, like they are fully compatible? Mr Godfrey—Where required. For example, we have some machines in the design studio of AGPS which are highly specific and there are some machines within the Australian Government Analytical Laboratory that are highly specific and they do not need to be connected to the rest of the network. So where network connection is required, that is done, but in some instances it is not required. ACTING CHAIR—There being no further questions, thank you, Minister, and thank you to the members of DAS. Sitting suspended from 5.43 p.m. to 5.46 p.m. DEPARTMENT OF FINANCE Proposed expenditure, $366,045,000 (Document A). Proposed expenditure, $49,629,000 (Document B). In Attendance Senator Kemp, Assistant Treasurer Department of Finance— Len Early, Deputy Secretary Program 1 Stephen Bartos, First Assistant Secretary, Resource Management Framework

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Grant Hehir, Acting First Assistant Secretary, Resource Management Framework Paul Goodwin, Assistant Secretary, Resource Management Framework Olliffe, Director, Resource Management Framework Program 3 Phil Bowen, First Assistant Secretary, Corporate and Business Services Program 4 Graham Millar, Assistant Secretary, Commonwealth Superannuation Group Sandra Wilson, Assistant Secretary, Commonwealth Superannuation Group ComSuper Program 5 Christine Goode, Commissioner John McCullagh, Assistant Commissioner, Business Management Group Office of Asset Sales Program 6 Mike Hutchinson, Chief Executive Officer Ross Smith, Executive Director Simon Lewis, Senior Director Glenys Roper, Executive Director Clive Davidson, Executive Director Jan Mason, Senior Director David Yarra, Senior Director Mark Heazlett, Senior Director Jonathon Hutson, Senior Director Chris Thorpe, Special Adviser Ivon Hardham, Senior Director Judy Hurditch, Senior Director Stuart Shearwood, Business Manager Office of Government Information Technology Program 8 Allan Maclean, Executive Director Mike Herron, Assistant Secretary, IT Infrastructure Trixie Makay, Director, IT Infrastructure John Mikus, Director, IT Infrastructure ACTING CHAIR (Senator Murray)—Minister, if it is convenient to everyone available, it appears that we will not finish OGIT in less than half to three-quarters of an hour. So the proposal is to break from 6 o’clock to a quarter past 7 for a dinner break, if that is suitable, which would mean OGIT would come back at 7.15 and probably go through to a quarter to eight, and then we would proceed with the rest of the program. Senator Kemp—What comes after the program?

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ACTING CHAIR—We pick up subprograms 1.1 and 2.3 and program 6. Programs 4 and 5 apparently will not be required. Is that satisfactory? Senator Kemp—I am at your disposal. Senator FAULKNER—I have placed some questions on notice, not to OGIT but to other parts of the department, which will assist our getting away a little earlier tonight. No doubt OGIT is aware that there is a lot of overseas outsourcing initiative. A few examples are the UK Inland Revenue, the UK Child Support Agency, the Florida State Social Security Department, and there are a number of others, and they have failed to achieve the cost savings expected of them. I suppose OGIT is well aware of this international experience. Mr Maclean—Yes, Senator, we have been in regular contact with ITSA—the IT Services Agency—of the Department of Social Security, the Inland Revenue Service in the UK and through the Child Support Agency. We have copies of audit reports conducted by the UK Auditor-General on these outsourcing initiatives and we have some informal recent briefing material which leads us to conclude that the press reports on these are inaccurate, according to the agency, and they present solid evidence to say that there is no blow-out, for example, in the IT Services Agency. Senator FAULKNER—So you have done your own work to indicate that the press reports that we read about in relation to all three of those particular agencies that I have mentioned— UK Inland Revenue, UK Child Support Agency and the Florida State Social Security Department—are inaccurate. Is that your suggestion? Mr Maclean—We do not have an up-to-date picture from the Florida state government. We have a comment, which we believe is reasonably independent, which paints a different picture explaining the circumstances of the Florida deal. We haven’t got an independent view of that as yet. Senator FAULKNER—What sorts of resources do you put into and how internally in OGIT do you develop your independent views? Obviously you have indicated an analysis of the available material and so forth. Do you put a fair bit of effort into making assessments and undertaking analysis of that material that is available to you? Mr Maclean—We have regular contact with ITSA and with the Inland Revenue Service in the UK. We had a very senior officer from the Inland Revenue Service which we funded to come out here in December last year and she gave us comprehensive briefings on the status. Through the regional director of the Department of Finance office in London, we maintain a regular contact with these two agencies. Senator FAULKNER—The picture that I would have picked up from reading some of the popular press, I suppose, about this is in relation to cost savings that had not gone at all close to fulfilling any of the expectations in those three areas. Could you just try to very quickly give me a picture of what the real story is? Mr Maclean—The comment with Inland Revenue, for example, refers to a blow-out in the costs. The explanation from that department was that there was no blow-out; that the contractor, EDS, delivered services in accordance with the contract. What emerged in a growing market was additional requirements and these had to be paid separately. That is where the blow-out was mentioned but incorrectly. I have a brief here from the regional director in London which is informal but paints the picture. I am quite happy to pass a copy to you.

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Senator FAULKNER—I would appreciate that; that would be really helpful if you could table that. And what about the other agencies I have mentioned? I appreciate what you said about the Florida State Social Security Department. Mr Maclean—We have not had an update from the IRS since December last year when the senior executive from that agency was visiting here. There is a senior officer from ITSA coming to Canberra I think next month and we will be having extensive consultations with him. Senator FAULKNER—So you do actually see these sorts of international examples and experiences as very important in terms of OGIT’s own activities in developing its own views on IT outsourcing? Mr Maclean—Absolutely, and we maintain a regular dialogue with the state governments who are active in this area. Senator FAULKNER—What about the whole of government outsourcing by the South Australian government? How closely have you analysed what is happening in South Australia? Mr Maclean—We have statements from the South Australian government and from the head of the IT agency that is managing the contract. Some of these are in confidence in terms of their projected savings and their achievings to date. We’re satisfied with that material. We do not like the South Australian model and we are in no way following that model in the approach we have to IT outsourcing in the Commonwealth. Senator FAULKNER—I appreciate the fact that you said some of this is in confidence, but is it actually beginning to show significant cost overruns? Mr Maclean—My understanding of it is that this is year 1 of the contract. Small savings were projected and these are being achieved. The main savings will come in years 2, 3 and 4. Senator FAULKNER—I read of these studies by the Gartner Group and Deloittes suggesting that outsourcing has about a 50 per cent chance of actually achieving the target set for it. Has OGIT looked at that work also as it considers its view on outsourcing? Mr Maclean—Yes. We are aware of the Gartner studies. We are also aware of a more recent study by an Oxford University group, which has published a comprehensive report surveying extensively outsourcing across the world, and the conclusions reached in that. We have taken that on board. We have consulted private sector companies who have outsourced for some time in this area and state governments. Senator FAULKNER—I suppose the issue, Mr Maclean, is to what extent this is relevant to the proposals from the Commonwealth government. I would be interested to hear your views on that: the relevance of these sorts of studies, this sort of work, to OGIT’s proposals. Mr Maclean—Remember that we are entering a market testing process. The decision will rest on the business case resulting from that market testing process. If the business case is not there, then we would not recommend going ahead. Senator FAULKNER—Appreciating that, can you indicate to me what the relevance of these studies is to OGIT or in OGIT’s view what their relevance is? Mr Maclean—I think there are three points here. Firstly, it reflects a rapid growth in outsourcing in the industry. Secondly, it mirrors what we believe is the fact that a large part or a significant component of IT service delivery is becoming very routine. Thirdly, it emphasises the point that there is increasing sophistication in delivering these services and

FINANCE AND PUBLIC ADMINISTRATION Thursday, 8 May 1997 SENATE—Legislation F&PA 107 governments do not have the necessary range of skills, any more. They are finding it increasingly difficult to support these. Senator FAULKNER—As I understand it, OGIT has obviously got some very strong views—I think we all acknowledge that—from departments and agencies here and a significant number of them are really drawing on and expressing grave concerns about these unsatisfactory overseas outsourcing experiences. Mr Maclean—Yes, but we have closer to hand the experience of the Department of Veterans’ Affairs, which outsourced in 1991, which has by all accounts been a very successful exercise. Senator FAULKNER—But you obviously would not discount the views of Treasury, the Australian Taxation Office, ABS, the Department of Social Security and the Department of Immigration and Multicultural Affairs. These are significant players in the Commonwealth Public Service. Mr Maclean—But we are not asking them to outsource; we are asking them to test the market to see whether their services can be more effectively delivered from outside. Senator LUNDY—On that market testing, what sorts of parameters have OGIT put in place for the cost saving indicators? Mr Maclean—We have been scoping for the last eight months the baseline costs of delivery and support of that service in the agency. That is the bottom line against which we are measuring. Senator LUNDY—For comparative purposes, for example, do you take into account the transition phase from the service being provided in-house to an outsourcing contractor and other issues such as redundancy payments and transitional costs? Mr Maclean—In the business case we presented to government we scoped and included the cost of ongoing support of these outsourced contracts and the transitioning costs. Senator LUNDY—And what about the redundancies? Mr Maclean—Those were included as well. Senator LUNDY—Is a report available for this committee to scrutinise that will demonstrate that? Mr Maclean—It is one of these reports that was leaked extensively. Senator FAULKNER—We have been canvassing that, Mr Maclean, but we have established it was not leaked from the government. Senator Kemp assured me of that. Senator MACKAY—It doesn’t augur well for privacy. Senator FAULKNER—I was terribly relieved to hear it did not come from government! Mr Maclean—We have a recommendation, subject to our minister approving it, that we put it up on the Internet from Tuesday evening. Senator MACKAY—You may as well. ACTING CHAIR—I think that is a good time to call a halt to proceedings. Sitting suspended from 6 p.m. to 7.23 p.m. Senator LUNDY—With respect to statements by Andy McDonald and a common platform being a desirable outcome across all Commonwealth departments, can you remind the committee when OGIT first took the position of having a common operating system?

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Mr Maclean—Senator, I am not quite sure of the question. Could you rephrase it? Senator LUNDY—When did OGIT first articulate their view that there should be a common platform or a common operating system across Commonwealth department information technology? Mr Maclean—Senator, we have never articulated that view as such. We have put it forward as a desirable objective. Senator LUNDY—That is what I am saying. Mr Maclean—That was first mentioned in the Clients First report, which was tabled in March 1995 under Mr Beazley. That recommended that the Commonwealth move towards common platforms. Senator LUNDY—Just briefly, can you remind the committee of some of the broader justifications of the desirability of that proposal? Mr Maclean—There are a number of reasons behind it. One of the principal ones would be studies done by the Gartner Group that show, when you have a common platform— Senator LUNDY—Done by? Mr Maclean—The Gartner Group, an independent research group, which makes the point quite explicitly that very significant savings in supporting IT technologies in large organisations can be realised by using common platforms. Senator LUNDY—In reaching that position, do you think it is a fair comment to say that the technological developments with interoperability between platforms has developed from that point? Mr Maclean—It has progressed and is progressing well. But today we still do not have full interoperability between the proprietary platforms in common use. For example, if you are on a Lotus platform and I am on Microsoft, I cannot seamlessly transfer a document to you. I can send it to you and you will get most of it, but I cannot guarantee that you will get it as I see it on my terminal. Senator LUNDY—Do you think that technological developments have proceeded to a point where the desirability of that proposal first articulated in 1995 is still as current and as relevant as it was back then? Mr Maclean—Yes, definitely, but the interpretation of the word ‘common’ is changing. It does not mean a single proprietary platform; it means a move towards common interfaces that can be widely supported by the industry. Here I am talking about latest developments in Java, which show tremendous promise to achieve the full interoperability and the universal adoption of the Internet standards on information management platforms. The industry and the world is moving that way. In the longer term, that is certainly going to realise full interoperability, without having to stick to a proprietary platform. Senator LUNDY—Can you explain why OGIT’s view—a view that, as I understand, has been publicly expressed—that a common platform, in the way that you have described and as is generally understood, is still a significant part of the argument that OGIT has used to justify issues like piggybacking that we were discussing earlier with respect to contracts? Mr Maclean—Whether there is a synergy between the platforms operated by different agencies, the ability to cluster or consolidate these is considerably simplified.

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Senator LUNDY—How much contact does OGIT have with the various developers, suppliers and manufacturers of the different platforms? You have mentioned Lotus and Microsoft. What is the type of contact that your office has with those organisations? Mr Maclean—We have a regular dialogue. Every week there will be segments of industry coming in and making presentations or briefing us on the latest developments and their particular technologies. We do subscribe to the Gartner Group. We do get independent reports from other sources, which comment on the various developments in different manufacturers’ platforms. Senator LUNDY—Have you recently received any presentations from groups arguing against the need for a common platform to be such a substantial feature of what you are promoting in respect of outsourcing for the departments? Mr Maclean—We have had representations from the main competing platforms as to why their particular technology is the preferred way to go. We have not supported that; we have supported the principle of interoperability. But we have said quite clearly that we want a fully competitive market in this situation. The preferred alternative is full interoperability between these platforms. Senator LUNDY—With the current break-up of desktop units, for example, would you be able to provide the committee with a breakdown of what systems are operating where at a given point in time? Mr Maclean—We conducted a survey in May 1996 of all agencies. We have the results of that survey. This is a very dynamic environment and these statistics will have moved since May 1996. Senator LUNDY—Since May 1996, have you prepared another snapshot of those statistics? Ms Makay—The scoping study that we conducted with 66 agencies include identification of all the software components on the IT infrastructure. So, yes, we do have more up-to-date information. But, as Mr Maclean has explained, the situation is changing. We have projected information about not only the projections of costs by agencies but also the changes to their IT strategic direction and, therefore, plans that agencies might have on their operating systems. Yes, essentially we could produce something from our database which at a point in time—the point in time we conducted the study—would identify the operating systems for the agencies that respond. Senator LUNDY—Would you be able to provide that information to the committee utilising the information from the May 1996 study? Ms Makay—The one I was commenting on was the scoping study that we conducted over the last six months for the IT infrastructure submission that went forward to cabinet. So the point in time would be approximately January 1997. Senator LUNDY—I am looking for some comparative figures. It would be very useful if you used the figures from when that original survey was done along with using your database as a picture of the figures for some time in 1997. Ms Makay—Yes, we could undertake such a study. Senator LUNDY—Thank you. I think it would be interesting to see some of the trends in interoperability with different platforms in the departments. Ms Makay—I probably would need to go back and consider the implications and the time scales to respond to you and provide that sort of information.

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Mr Maclean—The platforms are dominated by three main suppliers, and that would cover at least 90 per cent of the PCs installed in the Commonwealth agencies. Senator FAULKNER—Before the dinner adjournment we were talking about market testing. Is it OGIT’s view that there is a sharply competitive market for outsourcing services? Mr Maclean—Yes, and it is evolving very fast. In the figures we have from the Gartner Group, this is one of the fastest developing segments of the IT industry. Senator FAULKNER—As I understand it, the contracts that are currently being contemplated by the government are amongst the largest ever let. I think it is fair to say that they are very significant. OGIT is proposing that IT infrastructure be grouped into a number of clusters. I thought it was five, but I understand from my colleagues that in fact there are four clusters. Is that right? Mr Maclean—That is correct. Four clusters are the main agencies and there are a number of other clusters with smaller agencies. But that was not set in concrete. These were used for indicative purposes in establishing potential costs. Senator FAULKNER—But these clusters would represent extremely large contracts, wouldn’t they? Mr Maclean—By Australian standards, yes; by world standards, no. Senator FAULKNER—Would you expect—this is what interests me about this—that competition could extend further than the three multinational companies or vendors that dominate the market, that is, EDS, ISSC and CSC? Realistically, will competition extend, given what we are talking about, the size of these clusters and so forth? Mr Herron—There are different competitions at different levels. For the large mainframe agencies, clearly the larger players in the market are keen to be involved in that segment. In the smaller segments, there are certainly consortia and partnerships developing with Australian companies. For example, one was launched just recently, last week, and is targeting at the lower end of the market. So, yes, there certainly will be Australian competition at the lower end. Senator FAULKNER—At the lower end, but in terms of these four major clusters, is it fair to say that it is only the big three that are in the ring realistically? Mr Herron—Certainly there is a lot of interest from industry beyond those big three—and Australian industry as well. Senator FAULKNER—Where are small and medium sized companies in this? I come back to the question I am asking you: is it realistic, given what OGIT envisages, for any others than effectively three multinational companies being serious contenders? Mr Herron—We will certainly be requiring the larger players to indicate in the competitive process how they will be treating small to medium enterprises as part of their bids. Senator FAULKNER—I would also be interested to know whether the big three becomes the big two because of the shadow that has fallen over EDS due to what occurred as a result of its performance in the South Australian contract. Is that of concern to OGIT? Mr Herron—The shadow over EDS in what sense? Senator FAULKNER—I think we are all aware. I talked a little bit earlier today about what has occurred in South Australia and some of the projected savings and the like. Is there a shadow over EDS as a result of the South Australian experience?

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Mr Herron—At the time of market testing, each bid will be treated on its merits. That is part of the competitive tendering process. Senator Kemp—Senator, you made some fairly strong comments there. The officer on my right has given me some information which he might like to share with the committee on that issue so that we can perhaps get another perspective. Senator FAULKNER—Certainly. I would appreciate that. That would be useful. Mr Maclean—Senator, in recent consultation—and I am going back within the last fortnight—we were advised in writing in effect by the South Australian government that their savings were on target, that the industry development they sought to achieve was happening. I am aware of press comments that in responsiveness there have been some difficulties with EDS. The press comments and statements from the head of the IT office in South Australia said these were being addressed and they were satisfied with the measures taken by EDS to address these. Senator FAULKNER—I appreciate that. Thank you, Mr Maclean. What I was referring to is also what I read in the press about cost overruns in South Australia. I do not appear before estimates committees of the South Australian parliament. I do not even know whether they have them, but I, like you, read the newspapers. You have access, I am pleased to say, to far more information than I have, but I am just wondering, because of the South Australian experience, whether it might effectively reduce the competition by a third. If we have three major players—and everyone accepts that there are basically three multinational companies, the big boys, in the IT business—I ask the question, I do not assert it, whether a shadow has fallen over EDS. I am trying to elicit information from you in that regard. I appreciate what you have said. Senator Kemp—I think perhaps we can add a bit further to that. I do not know anything at all about EDS, but I think a shadow over a company is a fairly strong comment to make to a Senate committee. You mentioned cost overruns. So perhaps you might be able to inform the committee. Senator FAULKNER—Let me use different language if you would prefer, but it is a question in relation to the South Australian experience. That is what I am trying to elicit. Senator Kemp—I think we can provide some information on the cost overruns, Senator. Mr Maclean—We are sure that there are no cost overruns, that the reported overruns are, in fact, additional work which was fully covered in the contracts. It is a dynamic situation, Senator. Workloads change and the contracts allow for that change and the costing of that change. Senator FAULKNER—My colleagues have some questions that they would like to ask about the South Australian experience and how OGIT has analysed it. The point I am asking about is what impact this has on the competitiveness of the market. I might return to that at a later stage, but my colleagues would like to explore a little bit of South Australia. Senator LUNDY—I am interested in the minister’s response to this particular issue. In South Australia, some of the sections or departments said that they cannot identify any long-term savings from the outsourcing. They said it was a ‘cumbersome, bureaucratic and time consuming process and does not lend itself to urgent requirements’. That was reported in the Australian as a quote from the Department for Correctional Services. Another example, Minister, is with respect to the South Australian police, which reported the highest cost blow-out under the EDS deal—a $2.2 million excess for $15,000 in savings.

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They reported an average response time from EDS of 41 days. Just with that snapshot of information, Minister—and I know it is only a small part of what happened with the South Australian contract—I put to you that that does affect the credibility of EDS. I am just curious about your response to that information. Senator Kemp—I do not know if it affects the credibility of EDS. It is a press report. I do not know the veracity or otherwise of that press report, but we have a number of distinguished officers at the table who might be able to enlighten us. Mr Maclean—These claims of cost blow-out are being refuted by the office of IT. That is all the information we have. Dean Brown’s office has issued a press statement refuting that press article. Senator LUNDY—Would it be a fair comment to say that in refuting those issues in the way that is being done by that office is looking at the contract holistically and making a broad assessment of the efficiencies and costs rather than looking at each specific department in which the performance rate does vary quite considerably? Obviously they claim, I think, net savings achieved of one per cent. Obviously when you have massive losses like that in some departments other areas must be performing to some degree. So I put to you: is that your understanding of the situation—that the effectiveness does vary considerably amongst those departments? How is OGIT addressing that in the context of the clustering approach that you have outlined? Mr Maclean—I cannot comment. We do not have a detailed breakdown that would refute or support that statement. Senator LUNDY—Do you think it is a good idea for OGIT to have that type of information, given your position in advocating the outsourcing of IT on a clustering basis and therefore on a basis that does involve a number of departments in any one contract? Mr Maclean—First of all, we are not following the South Australian model. Senator LUNDY—No, I am not saying you are. But I am saying there are some comparisons that should be taken into account in your considerations. You are telling me that you have not analysed the South Australian situation beyond the holistic picture being presented by the office of IT over there. Mr Maclean—Because it is not a model we are following. We are not offering the IT platform as an integral whole; we are offering it in bundles. Secondly, we are not proposing that OGIT or anybody else should control that. It would be managed and controlled by the agency or agencies concerned. We have to counter that with the experience of the Department of Veterans’ Affairs, which is just along the road, which has been very positive. Senator LUNDY—Yes. My point is that the DVA model you are using to support the arguments for outsourcing is a single department model. The proposal is now up, through a piggyback mechanism, that the DVA contract be extended to cover at least one other department, possibly two. Therefore, given that the South Australian model is multidepartmental, albeit whole of government, and your clustering proposal is not, surely to move to a multidepartmental outsourcing structure you must, if you are to dispense with your duties in the public interest, take into account the results of a multidepartmental model, given that is the direction in which you are now moving. Mr Maclean—Our model is significantly different whereas agencies in South Australian are driven centrally. That is the one fundamental difference. The second difference is that we are entering a market testing situation. Prior to this, two studies have shown that there are

FINANCE AND PUBLIC ADMINISTRATION Thursday, 8 May 1997 SENATE—Legislation F&PA 113 significant benefits to be achieved by clustering—that is, bringing small, uneconomic centres together and leveraging— Senator LUNDY—I am not arguing that. I think you miss my point. My point is not that clustering is necessarily a bad thing. I am not putting that to you. What I am saying is that surely it is beholden upon OGIT to look at models which contain more than one department as a guide for what you in fact intend to do. I am not casting aspersions on that model at this particular time. I will come to that in other areas and other issues which I think are a concern to clustering. The point I am making is the degree to which you are taking into account the South Australian experience, given we really do not have any other multidepartmental example under Australian conditions to look at. Mr Maclean—I correct you. There are. The Western Australian government has gone out in multidepartments. We have been in touch with them. They have divided the process into three clusters—two outsourced and one left internally. We have regular contact with them on their progress. The information from them is very positive and they are delighted with the results. Senator LUNDY—Do you have any summaries of the circumstances over there? A summary of the model they have worked on would be useful for the committee. Mr Maclean—They have worked on a not dissimilar one to the one that we are putting forward—that is, the agencies control and manage the process and there is no central body trying to oversee it. Senator MACKAY—What Senator Lundy is asking is: do you have a critique of the Western Australian situation? Mr Maclean—To my knowledge, no. Nobody has provided an independent critique. The information we have has come from the Western Australian government. Senator MACKAY—So you are actually following a model in Western Australia which has not been critiqued or analysed in terms of its efficacy? Mr Maclean—To my knowledge, I have not seen anything that has provided an independent critique of it. Senator MACKAY—Why have you not sought an independent critique on a model that you are following? Mr Maclean—We have advice from the Western Australian government that it has been very successful. Senator MACKAY—They would say that, wouldn’t they? Has OGIT critiqued it or sought an independent assessment of what has happened in Western Australia? Mr Maclean—No, we have not critiqued it. One of the reasons is that the scale is much smaller than anything we are doing here, just as we have not critiqued the US model because the scale is so much larger. Senator MACKAY—How effective was it as a model other than what the Western Australian government has said to you? Mr Maclean—It is basically similar to what we are following. Senator FAULKNER—Explain to me, because I do not know this, and perhaps I should, the difference in the size. What are we talking about in Western Australia and what will we be talking about in the clusters here?

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Mr Maclean—Clusters of agencies—and I do not have a figure in front of me compared with, say, an equivalent cluster in the Commonwealth department. It would be significantly different in terms of scale. Senator FAULKNER—Thank you for that, Mr Maclean. Could you quantify the difference for us? Mr Maclean—No. I would have to take that on notice. I would have to look at the figures. Senator FAULKNER—But you certainly acknowledge it would be significantly different? Mr Maclean—For sure. Senator LUNDY—Given we have now established that we have potentially two models from which OGIT could draw information but clearly there has been no critique or complete analysis of just what is going on by your office, is it OGIT’s intention to actually conduct such critiques and use that information in the proposals that OGIT now have or not? Mr Maclean—No. We believe it is up to the market. We believe there are not two models, there is a whole range of models that can be put forward, and it is up to the industry to put them forward and for us to judge them on their merits. Senator LUNDY—Can I ask the minister if he thinks that that is a wise course of action, given that we have a potential source of useful information that is not being tapped into by OGIT. Senator Kemp—Senator, I was very comfortable with the response that was given by the officer at the table. If you find that not satisfactory, again, that is up to the minister, who will undoubtedly closely read the transcript to see whether he wishes to take your suggestion on board. People of good faith may well differ on these issues. I felt that the officer at the table answered your question rather effectively. Senator MACKAY—I am unclear; can I just clarify this before Senator Lundy continues. What model is this proposal based on? Mr Maclean—We are proposing that, in the interests of having a competitive market, the Commonwealth— Senator MACKAY—No, what existing— Senator Kemp—Why don’t we allow the officer to answer. If you are unhappy with the answer— Senator MACKAY—With respect, it sounded like I was just going to get a repeat of the previous answer. Senator Kemp—Let’s see if you are. Senator MACKAY—If I could clarify my question. Senator Kemp—Ask your question and then give the officer a free run. Senator MACKAY—What empirical pre-existing models is this based on? Senator Kemp—Have you finished the question? Senator MACKAY—It is a pretty short question. It would have been a lot shorter if you had not interrupted me. Senator Kemp—It is a very nice short question. Now will you keep quiet so that the officer can have a free run. Senator MACKAY—Absolutely. Then I will ask another very short question.

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Mr Maclean—There are basically two models—that is, you let each agency go independently. The IT review report which was produced under the last government and adopted by the last government suggested that there were rich opportunities to consolidate the IT infrastructure within the Commonwealth. A further independent study was done in 1995 and that put specific figures on what savings could be achieved by consolidation. Senator LUNDY—Was that Clients First? Mr Maclean—No, the study following Clients First. Senator LUNDY—What is that called? Mr Maclean—It is called the Data Centre Consolidation and Modernisation study, conducted internally by a number of agencies in the public sector. Senator MACKAY—But what pre-existing model is this based on? You have cited the Western Australian example but then you said to Senator Faulkner that it actually significantly differed. Senator Lundy talked about the South Australian model. You said that was completely different. What current model is this system based on, either internationally or nationally? Mr Maclean—There is huge consolidation going on in the US government. US Defense has consolidated from around 96 processing centres down to a small number. I am not sure of that number, but it is less than 20. In the private sector there are well publicised examples in the large corporations in the United States and in Australia where they have consolidated down from a large number of centres to a small number. This is a worldwide trend. It is not rocket science. There is nothing new in it. It has been going on steadily for the last six or seven years. Senator MACKAY—So you would cite the US as the closest comparison to what has been proposed? Mr Maclean—In terms of scale, probably yes. Senator LUNDY—Out of any of the three majors that Senator Faulkner mentioned—EDS, CSC, ISSC— Mr Maclean—Senator, there are more than three. Senator LUNDY—I understand that but they are the ones that we know of. I know there are others. Would you care to mention who the others are in your view. Mr Maclean—I think the others would disagree with your judgment on them. I can mention Unisys, Fujitsu, the Siemens Business System, the conglomerate that my colleague mentioned earlier and there is another established in Sydney, Allwell Systems, which won one of the banking contracts recently. You are up at seven or eight already. Senator LUNDY—Have any of those put to you as part of a presentation or a proposal the model that you are now advocating? Mr Maclean—We have put out an RFI in draft form to industry, which had the clusters. We have invited the industry to comment on it. Senator LUNDY—What is an RFI? Mr Maclean—A request for information. Senator LUNDY—Prior to putting out the request for information, had any of those companies you mentioned put to you, to OGIT, the model that you are now advocating? Mr Maclean—Some companies have put a model to us and have suggested, for example, that they would do the whole of the Commonwealth’s IT. Others have said, quite rightly, ‘If

FINANCE AND PUBLIC ADMINISTRATION F&PA 116 SENATE—Legislation Thursday, 8 May 1997 you want a competitive market, you have to carve it up.’ To leverage the economies of scale, you must put it into bundles, where you get significant cost benefits. Senator LUNDY—So would it be a fair comment to make that the major companies that you mentioned have made it very clear and indicated to OGIT that, to achieve the efficiencies and economies of scale that the government is seeking, the contracts must be of a certain magnitude? Mr Maclean—No, they have not specified anything. Senator LUNDY—I can say that ISSC has said that publicly. Mr Maclean—They are saying that the largest economy would be achieved by giving all the IT business to one company. I personally believe that, if you wanted economies of scale in the short term, that would be the best way of doing it, but that would not do much for competition. Senator Kemp—In the Clients First policy, which was issued by Kim Beazley, there was a measure of the economies of scale that could be established. Mr Herron—It sought consolidation of data centres to a minimum size to be economic. I believe the number was 400 mips, which is a measurement of the size of the data centre. Mr Maclean—Incidentally, that is the standard used by the US government. All US agencies have been told that if you have less than 400 mips, you have two choices—outsource or consolidate. They are going through that program at the moment. Senator LUNDY—So you are using this 400 mips as one of the benchmarks on quantifying the cost benefit of outsourcing a particular group of IT services, whether clustered or a singular department? Mr Herron—There are several different categories of logic of consolidation of the data centres. The minimum size is bigger than 400 mips. So for the four clusters that Senator Faulkner referred, some of the criteria used were: the size of the individual agency—for example, DSS is a cluster by itself because of its individual size—and similarities of client base was used in the second cluster, which is the Health Insurance Commission and the Department of Health and Family Services. Another cluster was, for example, the Australian Taxation Office, the Department of Employment, Education, Training and Youth Affairs, and the Department of Immigration and Multicultural Affairs. Senator LUNDY—So the clusters are developed around the 400 mips measurement? Mr Herron—Some are significantly larger. Two of them are around the 700 mips size and the DSS one is 1,000 mips and beyond. Senator LUNDY—Can you specify for the committee what a ‘mip’ is? Mr Herron—It is a performance measure to show the size of the machines, in essence. Senator LUNDY—So is it a bandwidth thing or is it a bits thing? Mr Herron—It stands for millions of instructions per second, so it is the measure of the capacity of the machine, basically. Mr Maclean—It is a measure of the raw processing power of the processor. Senator LUNDY—So it is bits of information as opposed to bandwidth, voltage and things? Mr Maclean—It is a measure of the rate at which a processor can operate. Senator LUNDY—Obviously, that standard is something you have pulled straight out of the US. How come this is the first time I have heard this? Correct me if I am wrong, I have

FINANCE AND PUBLIC ADMINISTRATION Thursday, 8 May 1997 SENATE—Legislation F&PA 117 not heard of that measurement being quoted publicly as one of the benchmarks for establishing the cost benefit for outsourcing of IT services. Senator Kemp—I do not think it was pulled right out of the US. As I understand it—and if I am wrong, officers can advise me—it was analysed in the Clients First report that Kim Beazley put out. This is not a matter which this government has invented. In fact, your government played a major role. I am prepared to concede that at this meeting. I am prepared to concede that your government with the Clients First report helped start this process off, Senator. Senator LUNDY—There is no doubt about you, Senator Kemp, is there? You just cannot get away from Mr Beazley as a topic of information. Senator Kemp—I thought that would give you some comfort. I am surprised at your response. Senator LUNDY—Senator Kemp, if we are allowed to proceed. I am starting to get a feel for the criteria OGIT has set and not shared with anyone else up to this point, certainly not with you and other senators. Going back to the 400 mips as being a point of guidance, if you like, in the structure of the IT outsourcing contracts, once that has been established, the companies you mentioned—the big players, if you like—obviously have capabilities in that area or of that magnitude to take on those contracts. Mr Fahey has continually articulated the opportunities for smaller players to participate in this process, given that OGIT has obviously established criteria that it is quite exclusive of those operators? Senator Kemp—Senator, I think that is a fair question. I do not pretend to knowledge I do not have, so I will see if one of the officers at the table can assist us. Mr Herron—The measurement of mips refers to IBM compatible mainframes. There are several layers involved here. Senator LUNDY—Sorry, you have set criteria that are operating system specific? Mr Herron—The Clients First report identified agencies with IBM compatible mainframes. That is the predominant machine used in the Commonwealth. There are other machines. For example, the Australian Customs Service uses a Unisys platform, which is not compatible. Senator LUNDY—How do you measure their capability if it is not mips? Mr Herron—They are currently out through a competitive process at the moment— Senator LUNDY—Sorry, the question I asked was: what do you use in terms of capability comparative to mips for a non-IBM system? Mr Herron—I must confess that I cannot remember the measurement for Unisys machines, but there is an equivalent measure that Unisys use for their machines. Generally speaking, the rest of the mainframes in use are IBM or IBM compatible machines. So the opportunities for consolidation present themselves much more easily on that particular platform. Senator LUNDY—Does that fact lend itself to a bit of an exclusive approach for IBM operating machines? Explain the significance of that? Mr Herron—There are a number of IBM compatible manufacturers. Amdahl, Hitachi and others make compatible mainframes so it is not just IBM exclusive. Senator LUNDY—It is IBM compatible. Going back to the point about smaller players having the opportunity to submit effective tenders, given that your minister has said repeatedly that they will have the opportunity, can OGIT tell us how?

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Mr Herron—A consortia of smaller players in the market has recently been formed and it has expressed interest in a mainframe cluster. It is Australian content, is Australian owned, and is aiming at that particular cluster. So there is certainly interest in specific mainframe platforms. At the other levels, there is also the mid-range and desktop platform. The opportunities there for smaller players are much greater. Senator LUNDY—Is it not OGIT’s position that, with respect to these clusters, the outsourcing is across all levels within the cluster, such as with DVA? Mr Maclean—We have said to the industry that we do not want a single supplier. We want a raft of sharp elbowed niche players, albeit perhaps under the one contract, bidding for this business. The responses to the Vet’s Affairs tender have been very reassuring from that point of view. The industry has responded accordingly. That is the model we will be pursuing. Senator MACKAY—How many vendor responses did you get from RFI? Mr Herron—Twenty-one. Senator MACKAY—I understand that three of those indicated that they would establish regional data processing centres in Australia if they were successful. Whom were they? Mr Herron—That is part of commercial-in-confidence information, so I do not believe it is appropriate to provide that information at this time. Senator MACKAY—Commercial-in-confidence is an interesting subject. Why is it that we as an estimates committee, asking a valid question as to who these three vendors were, cannot get an answer from you as to their capacity or willingness to establish effectively regional industries? Why is that commercial-in-confidence? Mr Herron—In the sense that the RFI itself is very preliminary and we were seeking indicative figures and broad approaches, the actual respondents themselves did not give away a great deal of information. They wanted to keep their powder dry, so to speak. Senator MACKAY—But you cannot even tell us who they are. I am not asking how much or anything that may in fact jeopardise their business. I am asking: who were the three that indicated that they may be prepared to have a regional focus? Mr Maclean—When we approached the industry we said that their responses would be kept in strict confidence because of the intellectual capital that was tied up in them. So the industry would respond freely, we would not reveal any response to any other supplier, nor would we make that public. Some of these bids which the industry were putting forward were given in strict confidence. Senator MACKAY—We have been through this process with EPEs and PEPEs and the CES privatisation. When do we as the parliament get to know who they are and whether we approve of them or not as being suitable vendors in terms of setting up regional industries or in terms of getting these tenders? Mr Maclean—I would suggest that that would be in response to the RFTs. Senator MACKAY—When the decision is made? Mr Maclean—When the evaluation is being conducted, and the Department of Industry, Science and Tourism will be deeply involved in the industry evaluation. Senator MACKAY—When the RFT process is complete, when can we as legislators determine whether or not we approve of the vendors and whether or not we think that they are in the best interests of Australia?

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Mr Maclean—My understanding is that the recommendations would go back through ministers to the government. Senator MACKAY—That is the government; I am talking about parliament, the estimates process and the transparency of the whole nature of outsourcing and contracting out. When will we know who these people are, and will we have a chance to make our views known prior to a decision being made? Mr Maclean—I think that is a question best put to the Minister for Finance and the relevant minister of the agency. Senator MACKAY—Perhaps the minister can assist. I will ask the question of the minister. Senator Kemp—Please do. Senator MACKAY—Minister, we understand that in response to the RFI there were three vendor responses that indicated that they would establish or would consider establishing regional data processing centres in Australia. Who were they, please? Senator Kemp—This will not surprise you, but I may seek some advice on this. If I cannot get any advice at the moment, I will take it on notice. Senator MACKAY—That would be fine. Senator Kemp—It is commercial-in-confidence. Senator MACKAY—Why is it commercial-in-confidence? Senator Kemp—What I will do is defer to someone— Senator MACKAY—OGIT have deferred to you. Senator Kemp—You ask whether it is commercial-in- confidence. Can we provide any information—or else you can give me a note and I will read it to Senator Mackay. Mr Maclean—The companies gave their information in response in strict confidence because there was intellectual capital tied up with it, and we agreed that we would not reveal that publicly. Senator Kemp—Sounds very persuasive. Senator MACKAY—It does not to me, Minister, because we have been through this in the contracting out inquiry, as Senator Murray well knows; we have been through it in relation to the CES privatisation; we have been through it in a number of areas. The commercial-in- confidence determination, for want of a better phrase, is used essentially to block parliament from scrutinising what is happening with regard to both outsourcing and contracting out. My question is: why can’t we as an estimates committee ask a perfectly legitimate question of you as the minister as to who these three companies are? You are saying to us that this proposal is the best thing for Australia. When are we going to get to see who they are and say whether we, as parliament, think that they are relevant or appropriate for this country? Senator Kemp—Senator, no-one is trying to stop you from asking questions. Senator MACKAY—But you will not provide the answers. Senator Kemp—Let me get to that. You tend to jump in a bit. Senator MACKAY—I do. Senator Kemp—No-one is stopping you from asking questions. What the answers are, of course, we have to reflect on to make sure that the information we give you is accurate and appropriate. Of course, commercial-in-confidence is a practice which has, I think very

FINANCE AND PUBLIC ADMINISTRATION F&PA 120 SENATE—Legislation Thursday, 8 May 1997 appropriately, been used by all governments. Many senators would remember some years ago that the former government ministers would often—and appropriately—rely on commercial-in- confidence for the reasons that the officer at the table has given us. ACTING CHAIR—Could I jump in here as chair? Senator Kemp—You have always got the right, Mr Chairman. ACTING CHAIR—As I understood the answer to Senator Mackay, Mr Maclean, you said that you offered to keep it confidential when you originally wrote to them. In other words, it was not a request from the 21; in other words, you offered the commercial-in-confidence. It is possible that those 21 or the three out of the 21 might be happy, in fact, to have their names exposed. I would suggest that a good second course here would be for you to go back to them and ask them if they would be willing to have their names released to the committee. Senator Kemp—Mr Chairman, you are constructive as always; we will go back to see whether they are prepared to allow their names to go forward. Senator LUNDY—If that is indeed the case, why did OGIT make the decision to in fact offer that to those who indicated an interest? Mr Maclean—We wanted the industry to give us as much intellectual input to the process as they could. In the earlier consultations they expressed reluctance to do that; their competitors might then have seen it if we did not give the assurance that we would keep everything in strict confidence. Senator LUNDY—I go back to a question I asked earlier to which I did not receive an answer. Have any of the 21 companies who expressed an interest as part of that process specified the model upon which you are now basing the clustering proposal? Mr Herron—The responses sought from those companies were essentially to put out a particular model, so the companies responded on that basis. One of the questions asked in the actual request for information was: is there a better way of arranging things, particularly at the mainframe level? There were several different responses in the sense that they said that putting certain agencies in certain groups made particular sense for them, but there was no one obvious answer saying that this is the correct way to do it. The conclusion we drew from that was that the clustering arrangements, for any particular agency, were as good as any other. Senator LUNDY—And you are prepared to continue to assert that, prior to that process, you had not received a presentation, a submission or something from one of the 21 companies that led to you advocating that clustering model in the first place? Mr Maclean—To my knowledge, no. The models were put forward. There were one or two suggestions. There was one facetious one that said, ‘Give us the lot and we will give you a good deal.’ That was dismissed out of court. Others have suggested groups of agencies that they regard as having a synergy of business and that was not taken on either. Senator LUNDY—What I am trying to get to is that you obviously received submissions from these majors about the model that would be preferable for them in achieving the efficiencies the government desired and that is model upon which you are basing this? Mr Herron—It was not just majors. We spent a lot of time consulting with industry about the particular approach to the RFI. Senator LUNDY—But the model advocate by the majors was the one that was adopted? Mr Herron—No, it was the model developed by OGIT.

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Senator Kemp—I can be corrected by the officers here, but I think there is a fairly important assertion in your question which I do not think has been accepted by the officers at the table. Senator LUNDY—That is why I am asking the questions, Minister. Senator Kemp—Sure, but I wanted to get that clear. Senator LUNDY—Yes, that is a normal part of questioning, I suspect. Senator Kemp—They are always trying to help. Mr Maclean—In order to get a valid comparison we had to use some model, otherwise industry could have come back with a plethora of answers. Senator LUNDY—I understand that. I am not laying a trap. What I am trying to ascertain is the distinction between the access to these contracts between the majors and between smaller companies who may in fact have a strong claim to providing those services either in a niche capacity or in a consortia that they subsequently develop. My point is—and I think I have demonstrated it quite clearly—that the model has been based upon what suits the larger companies and what, by its nature, excludes the participation of smaller companies whether or not they form consortia. I think that is a reasonable assertion, given what we have heard this evening. Senator Kemp—Let us get a comment on it. That is a big statement, as they say—a BS. Senator LUNDY—It is not so big. It is pretty well common knowledge. Senator Kemp—Let us get a comment on it. Mr Maclean—I think there are nine major computer centres and there are 160-odd smaller ones. We have looked at grouping together the nine larger ones. We have not passed any judgment on the smaller ones. They would be tackled in different ways. Senator LUNDY—Let us have a look at the piggyback contracts. Because it was common knowledge that you were using the model with clustering and so forth and because it is reasonably common knowledge that the model you are using suits bigger players and not smaller players, when ISSC got the DVA contract, from what I understand from information that DAS gave to this committee this afternoon, they were fully aware that the capability of piggybacking other contracts on that open tender contract existed. Can you confirm this? Mr Maclean—The RFT from Veterans’ Affairs—and that is a question of accuracy that would be best put to Veterans’ Affairs—spoke about the objectives and the desirability of consolidating smaller data centres within the Commonwealth and getting economies of scale. While not explicitly nominating other departments, it was open obviously for any other agency to use. Senator LUNDY—So yes, you are confirming it. Given that is the case, can you give me some indication of how many mips come out of DVA? Mr Maclean—I have not got an accurate figure, but it would be around about 75. Senator LUNDY—The point I am trying to make is that, because it was an open tender process and common knowledge according to DAS and confirmed by you that the opportunity for ISSC to piggyback and that DVA was only 75 mips, is it fair to say that ISSC got that contract on the basis that they would know it would grow? Mr Maclean—I cannot comment on that. Senator LUNDY—Perhaps the minister could.

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Senator Kemp—On these important and technical issues I tend to seek advice. Mr Herron, have you got any comments that you could make to assist the senator? Mr Herron—You are asserting that that chain of events has occurred. Senator LUNDY—But that would be a reasonable expectation on the part of ISSC, given everything we have heard? Mr Herron—Or whoever won the contract. It was ISSC that won the contract on that particular occasion. Senator LUNDY—Where does competition stand in that regard? Where does that leave competition for achieving efficiencies, given that there is such a natural tendency and obvious expectation that the DVA contract would be allowed to piggyback no doubt up to the 400 mips mark given that DVA is sitting at the 75 mips point? Mr Maclean—The DVA contract was awarded following a fully open and competitive process. Senator LUNDY—I am not saying it was not. As Mr Herron said, how it happens is how it happens. Again I am not laying traps for you. I am just trying to ascertain how these things come about and the reasonable expectations. The point I am trying to make to the minister, and what I want to ask the minister about, is how efficiency is served when competition is so obviously compromised, given the process? Senator Kemp—Senator, you reach these sorts of profound conclusions not based on the evidence which has been given to you. The question was put that this was a tender process in which people competed. Competition presumably started at that level. Because I claim to have no great expertise in this area I welcome any correction by the officers, but presumably when they put in their tenders they looked at the market prospects. Presumably, the various companies would have made assumptions—is that correct?—about potential growth prospects. I just do not think your claim, ‘Where does that leave competition?’ is sustained. Senator LUNDY—My point, Minister, is that the model that OGIT has proposed, provided for and articulated to the point of actual capabilities and mips lends itself completely to the expansion of that DVA contract; therefore, compromising the public principle that has been advocated that outsourcing will lead to competition and therefore efficiencies. Senator Kemp—But do you not agree that in an open tender process on outsourcing it is a competitive process? Do you accept that? Senator LUNDY—In the first instance, yes, not in the subsequent instances. Senator Kemp—You do. Do you think that when people put forward— Senator LUNDY—I should qualify that. In the first instance, I think I have already made my point about the contracts exclusively designed for the major players. Senator Kemp—But do you think in making their tender bids they would have— Senator FAULKNER—It is not actually relevant what any member of the committee thinks, Senator Kemp. What is relevant is the advice we are receiving from you. Senator Kemp—I am not being obstructive, as you used to be. Senator LUNDY—You are. Senator FAULKNER—You are once you start asking questions of committee members, although I understand with your lack of knowledge why you would consider doing that. I think you are starting to waste our time. We want to ask you questions, Minister. If you cannot

FINANCE AND PUBLIC ADMINISTRATION Thursday, 8 May 1997 SENATE—Legislation F&PA 123 answer them, let someone else who is sitting beside you have a go. It is really not, as you know, your role to start cross-questioning us. We are happy to give you a private briefing outside the committee. We are not willing to waste our time around the table being cross- questioned by you. ACTING CHAIR—Let me call a halt. Minister, if you are trying to clarify exactly the question that Senator Lundy is driving at, that is fair enough, but if you are trying to ascertain her own opinion on things that is not fair enough. Senator Kemp—Let me make it absolutely clear that we are trying to assist the committee and we are trying to clarify the question. I thought that you put it rather well. The competitive nature of this was being asserted. We went through that there was a competitive tender and then the argument was run that, in making their tender bids, presumably companies took into account their assumption on market prospects. It seems to me to be a normal competitive market process. I am saying that I do not think that Senator Lundy’s earlier comment and statement demonstrates what she was asserting. You can assert that, but if any other officers wish to— Senator LUNDY—I do not think it is appropriate for— ACTING CHAIR—Perhaps, Senator Lundy, you could continue with your questions. Senator LUNDY—I would really like to, Mr Acting Chair. Thank you for that. I think it is interesting that the only substance of the minister’s response this evening has been to interpret my questioning. I will continue. Senator Kemp—Please do, we are happy with that. Senator LUNDY—With respect to the Department of Finance’s regulations on procurement policy, there is an issue there relating to the value of contracts and piggybacking. Minister, can you tell the committee what the regulations are in relation to piggybacking in the context of expanding a contract that has been to open tender as in the case of DVA? Senator Kemp—I will seek advice from the experts at the table. If any of the experts at the table can answer your question, can they please provide the information. Mr Maclean—My understanding clearly is that an agency is free to buy, to purchase or to acquire services through any other Commonwealth government contract that is available. The decision as to whether they proceed with that is one for the head of the agency concerned. Senator FAULKNER—Can I just intercede here. I just want to be clear on something so I understand what you are saying to us. Can you just give me a precise timing for when the Department of Veterans’ Affairs originally outsourced its IT? Mr Maclean—Initially in the year 1991, but I could not tell you the specific month. Senator FAULKNER—I realised it was around 1991-92. Who did DVA contract with then? Mr Maclean—Initially with Ferntree Corporation. Senator FAULKNER—Then there was a full competitive tender process again about a year or so ago from DVA? Mr Maclean—Yes, in the latter part of last year, 1996. Senator FAULKNER—And the successful tenderer then was ISSC; is that right? Mr Maclean—Correct. Senator FAULKNER—I do not want to break too much into the important line of questioning of Senator Lundy, but I just want to understand this background that I have no

FINANCE AND PUBLIC ADMINISTRATION F&PA 124 SENATE—Legislation Thursday, 8 May 1997 doubt she has. In relation to the Department of Finance, I want to be absolutely clear about the so-called piggybacking, to use the accepted terminology, with DVA. What is the precise status now of the Department of Finance’s IT functions and the piggybacking proposal? Mr Maclean—You would have to put that question to the Department of Finance. Senator FAULKNER—You cannot tell me that? I was going to ask whether OGIT in fact was involved in advice to the Department of Finance in relation to this. Mr Maclean—The process was that we were asked whether we would be sympathetic to such a deal. Senator FAULKNER—I was interested to know whether you had any involvement in providing advice to the Department of Finance. Mr Maclean—My understanding is negative at that point of time, although we were asked for an opinion as to whether we would support this arrangement. Senator FAULKNER—You were asked? Mr Maclean—Yes. Senator FAULKNER—Can I ask you when you were asked. Mr Maclean—It would be within the last two or three weeks. I haven’t got the precise date, but I can find out. Senator FAULKNER—Thank you. Senator LUNDY—With respect to the need to satisfy Finance Regulations in relation to procurement of things like IT services, what rules apply in terms of actual monetary value of the original tender and subsequent piggyback contracts? Mr Maclean—I am not aware of any financial barriers that are put in in that respect. It is best value for money that is the criterion. Senator LUNDY—And how is that established? What constitutes best value for money? Mr Maclean—That is an interpretation by the agency concerned in terms of a range of— Senator LUNDY—By the agency? Mr Maclean—Yes. Senator LUNDY—And at what point does the person within Finance that is delegated the responsibility of making those decisions play a role in such a determination as to what constitutes value for money? Mr Maclean—That is a question you will have to ask Finance. I think they have a management committee that passes judgment collectively on these sorts of recommendations. Senator LUNDY—Surely OGIT, because OGIT is overseeing this whole process, would have some role in advising the nominated delegate within Finance on what constitutes value for money under an IT procurement contract and, if not, why not? Mr Maclean—No, it is an agency responsibility. We are there to facilitate, to promote; we are not there to take decisions. So it is an agency decision. Senator LUNDY—No, but you are there to advise them on whether or not value for money has been identified, surely? Mr Maclean—No. The criteria for purchasing are well specified in regulations and guidelines produced by the Department of Administrative Services. It is up to each agency to follow these regulations. We are not experts in that area and we don’t claim to be.

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Senator LUNDY—No, I appreciate that. OGIT is established to advise the whole of government on IT outsourcing efficiencies, et cetera. Now you are saying that, when it comes to crunch time as to what constitutes value for money or an efficiency having been gained, you do not play a role in that advisory process. Is that what you are telling the committee? Mr Maclean—We would have a view, but the final decision lies with the agency. Senator LUNDY—That is my point. At what point do you express your view to the delegate who is the one to make these decisions? Mr Maclean—We do not deal directly with the delegate. Senator LUNDY—Who do you deal with? Mr Maclean—We deal with whoever in Finance or other agency is handling these arrangements. Senator LUNDY—Wouldn’t that be the delegate in Finance who makes these determina- tions? Mr Maclean—I cannot comment. I am not sure whether that is the case or not. I suspect the action officer would be the head of the division concerned. The delegate may well be the deputy or the secretary; I don’t know. Senator LUNDY—Let me get this clear: with respect to a piggyback contract, the determination of whether or not it falls within the confines of Finance Regulations 44A and B is made by the delegate with no direct advice from OGIT as to what constitutes that value for money? Mr Maclean—That is correct, they are not compelled to seek our advice. Senator LUNDY—I know they are not compelled to seek your advice. So the delegate makes that determination with no formal guidance from OGIT? Mr Maclean—First of all, Finance has not made any decision yet. Senator LUNDY—Have they sought your advice? Mr Maclean—They have formed a steering committee and we are represented on that steering committee. That will be meeting, I understand, next week for the first time. Senator FAULKNER—One thing that is clear for those who read the non-leaked, non- cabinet submission that seems to have been made available from a non-person to the rest of us is the fact that OGIT and the Department of Finance have worked closely on a range of issues. I do not want to go into anything here that is cabinet-in-confidence. I suspect that some of the matters that I could raise are, hence I am steering clear of that. But, in the development of the IT outsourcing proposals, the market testing and so forth—I can ask the Department of Finance later but let me just ask you—how have the departmental and OGIT interagency processes worked? How closely have you worked with the Department of Finance on these matters? I am not going to substance; I am going to process. I just want to understand the logistics of it, if you like. I think that would be useful for us to understand as Senator Lundy continues this important line of questioning. Mr Maclean—Remember that we are building on a process that has been going on for the last two years—the IT review, Clients First, the internal study. Clients First was conducted from the Department of Finance. That was before OGIT was created. In the current scoping exercise we have cooperated closely. They have been concerned mainly with the budgetary matters and budgetary savings while OGIT has driven the process in terms of collecting data, the consultation with the industry, the preparation of the RFI, the analysis of the RI, et cetera.

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Senator FAULKNER—Yes, but how does the work of OGIT and the department mesh? Mr Maclean—It comes through in advice to the minister where both the secretary and the chief government information officer approve that advice. Senator FAULKNER—What are the departmental and agency mechanisms, for example, when you have a responsibility of drafting for the minister, let us say, a joint cabinet submission? Let us just use that as an example, because it is one that we all happen to know about, even though it did not happen. I would be interested to know not the substance of it—I am not interested in understanding anything that might be difficult for you to talk about—but how you work with the department in, say, the development of any joint submission or whatever direction your internal workings may take you for whatever reason. Mr Maclean—The framework of the chapters and segments and the issues to be addressed would be identified. These were allocated. Some fell clearly in our court, others fell clearly in the Department of Finance court and some were common. We exchanged information on every one of these submissions. So, to give an example, privacy was in our court. So the submissions on privacy we drafted and we did all the consultation with the Privacy Commissioner, et cetera. But, naturally, these were fed to the Department of Finance as well for their comment, and vice versa. Senator FAULKNER—I appreciate that. So they are allocated. Who would do the allocating? Mr Maclean—That was basically done by OGIT in agreement with Finance—apportioning responsibility. Senator FAULKNER—So is OGIT, in a sense, the lead agency or would that be putting it at too high a level? Mr Maclean—No, that would be correct. Senator LUNDY—Is it true that Finance Regulations 44A and 44B exclude the extension or piggybacking of a contact if it exceeds the value of the original contract? Mr Maclean—I am not familiar with the regulations enough to say whether that is true or not. I am not aware of it, but I will have to take that on notice. Senator LUNDY—Could you take that on notice and if it is not the value of the original contract, could you tell us what percentage thereof or multiple thereof it is if any such restriction applies? Senator Kemp—We will take that on notice. Senator LUNDY—Has OGIT had representation, either written or verbal presentation format, regarding the transition process from potential vendors, particularly from the big end, the 21 that you mentioned, or any other? Mr Herron—That was one of the questions asked as part of the RFI process. We sought from vendors indications of their approach to the human resource management issues. Senator LUNDY—Prior to the RFI process, had you received presentations from any of the 21 vendors that were mentioned? Mr Herron—Formal presentations, no. We had discussions with industry before the actual development of the RFI in broad terms of any particular approach that a vendor might adopt. But as a formal presentation process, no. Senator LUNDY—Post-RFI, have you had any formal presentations?

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Mr Herron—No. Senator LUNDY—In terms of the information that came back in the RFI, can you provide the committee with some indication as to the length of transition time that is required in the implementation of a contract? What are the variables? Are there huge variables between— Mr Herron—It depends on each particular circumstance. Some, for example, said that three months out to a six-month period was typical but it depended on a case by case basis. Senator LUNDY—I want to be quite specific about this. Has OGIT sought advice from any potential vendor as to their transition phase time frame? Mr Herron—Sorry? Senator LUNDY—Has OGIT asked any potential vendor for specific advice about the duration of the transition phase? Mr Herron—The question the RFI was of the general approach to say— Senator LUNDY—Yes, I understand in the RFI. I know you sought information through the RFI, but I am asking you if you specifically approached individual companies on this issue and sought their advice. Mr Herron—I will come back to the RFI. As part of the clarification process we certainly spoke to those who provided detailed information to examine their assumptions and to get more detail on their particular approach. Senator LUNDY—Is it possible for you to table any correspondence exchanged on this matter between those vendors? Mr Herron—This was all done as part of the evaluation process for the RFI. Senator LUNDY—Minister, is it possible for that information to be made available to the committee? I believe it is very important with respect to the transition phase and this committee’s assessment and scrutiny of this process. Senator Kemp—I think we would have to check with the supplier. I think there are commercial-in-confidence issues which we would respect. I think officers have indicated that we could check with the supplier. Senator MACKAY—Before we move from this commercial-in-confidence thing, in relation to my previous line of questioning, where did OGIT get the authority from to give the guarantee of commercial-in-confidence with regard to any information that emanated from the RFI? Mr Maclean—It was an assurance we gave to them in the interest of getting them to freely present innovative ideas and wide-ranging suggestions to us. They said that they weren’t prepared to do that if there was any risk that their competitors would find out their current thinking, et cetera. Senator MACKAY—Have you had the imprimatur of the government for this? Did you seek the imprimatur of government? Senator Kemp—I don’t know whether you would need to seek the imprimatur. I do not know whether officers can shed any light, but my first off the top of my head reaction is that I am not sure whether you would need to. Senator MACKAY—So, Minister, in your view the imprimatur of government is not required with regard to this particular issue?

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Senator Kemp—Every time commercial-in-confidence issues become a matter between government departments and suppliers—I could be corrected—I don’t know whether procedure is to seek the authority of the government. Senator MACKAY—So it is standard procedure for commercial-in-confidence and for— Senator Kemp—I will seek some advice from the officers. Mr Maclean—That is my understanding, yes. Senator MACKAY—So at what point do we as legislators get to examine and what point does the process become transparent as to who the successful contractors might be? Senator Kemp—Just to go back to a bit of history, commercial-in-confidence is a matter which has been around for a very long time. All governments have acknowledged the importance of commercial-in-confidence in relation to certain contracts. So this is nothing new. This is a procedure which, as far as I am aware, this government has not changed. We are presumably building on the precedents that have occurred prior to the ascension of office of this government. There is nothing insidious or malicious about these issues. In order to deal with the range of contractual arrangements that governments have to deal with there are certain matters which inevitably are commercial-in-confidence. You are entitled to ask the question. In relation to the specific matter I understand you have raised we have indicated that we will go back to the supplier to see whether we can give you any additional information. I think that is a sensible and fair process, given the nature of the understandings which were reached. Senator MACKAY—The point, Minister, is that we have never seen contracting out on such a scale before and the concern that a number of senators have is that the commercial-in- confidence aspect is being used as an excuse for making the process opaque rather than transparent. My question is, again: when will we know who the successful contractors are likely to be and are we as an estimates committee entitled to have a view about this? When will we know? Senator Kemp—Contracting out occurred under the previous government. I think there is no argument with that. We, I suspect, are giving greater emphasis to a process which was developed under the previous government, but the processes—the officers can correct me—are similar and similar arrangements are made in relation to commercial-in-confidence. I do not think that you would be advocating overthrowing commercial-in-confidence arrangements, as that would make it extremely difficult for government to conduct its business. I do not argue there aren’t dilemmas here but we will try to assist you to the extent we can. Senator MACKAY—Minister Vanstone has already expressed the view in relation to the major privatisation that is going on in her portfolio that she is extremely concerned about commercial-in-confidence being used to actually stop transparency in decision making processes of parliament. This is a colleague of yours. She understands it, and she is putting processes in train to ensure that there is full parliamentary scrutiny. My question is, again: when will we be able to find out who is likely to get these contracts and express a view—after the decision is made, when it is too late, or before the decision is made? Senator Kemp—I do not think it is normal process for members of parliament—I think most members of parliament would shy away from it—to become involved in tender processes. I would be surprised if they wanted to become involved. Senator MACKAY—We would like to know prior to the decision being made—because there are regional implications, there are cost implications, there are service implications—who

FINANCE AND PUBLIC ADMINISTRATION Thursday, 8 May 1997 SENATE—Legislation F&PA 129 the successful tenderers are likely to be, particularly if they are likely to involve overseas interests, particularly if business is likely to go overseas. We as a parliament have a right to that information. Senator Kemp—The government finally makes announcements and then it is open to questions. Senator FAULKNER—On what date did the RFI process commence? Mr Herron—The release of the RFI to industry? Senator FAULKNER—Yes. Mr Herron—It was on 16 December 1996. Senator FAULKNER—And when did that conclude? Mr Herron—The actual close of the RFI itself was 7 February 1997. Senator FAULKNER—What stage are we up to in the process? I assume we are at some point in the RFT process. Is that right? Let me know where we are up to. That would be useful. Mr Herron—The RFI process was to gather information for the scoping studies. So in parallel with information from industry we gathered information from agencies about their baseline costs. We were able to use that to compare the likely costs under an outsourced arrangement for the business case. So the step we have got to now is to say the figures look good to proceed to the next stage, which is the actual market testing. That will be a series of competitive processes. Senator FAULKNER—In relation to the RFT processes—and I will not hold you to this—I just want to have a bit of an understanding of the sorts of time frames that OGIT is looking at. Mr Herron—The conduct of the actual tendering process or competitive process should be concluded for mainframe agencies by 31 December 1998 and for other agencies—that is, those with only mid-range and desktop—by 30 June 1999. Senator FAULKNER—I assume the RFI documentation has been made available to a range of companies. Has it been? Mr Herron—The RFI document is a public document. Senator FAULKNER—I assumed so. In relation to the RFI process and the prospective tendering process, is that the most recent document that has been made publicly available? Mr Herron—In terms of information requested from industry for our particular purpose, yes. Senator FAULKNER—What else is in the public arena or could be made available to the committee? Obviously the RFI. Mr Maclean—As I stated earlier, we would seek to release the business case one immediately after budget day. Senator FAULKNER—Is that it? Senator Kemp—Sorry, what was the question again? Senator FAULKNER—I was interested to know what else might be made available after next Tuesday.

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Senator MACKAY—Can we get an assurance from you, Minister, that there will be consultations, there will be some indication with regard to this committee, say—some discussion with regard to this committee—prior to the final decision being made by government; or are you just going to proceed and leave us completely in the dark? Is there the capacity for in camera meetings? Senator Kemp—I am not aware that such a procedure has existed before. I would be surprised if it had—and if anyone can correct me they are welcome to. I will put your view to the Minister for Finance and see whether he has a view. But I think it would be fairly unlikely that, in relation to this decision, there would be further discussions with a Senate committee before it was made. I am not aware that such an arrangement has existed before. Senator MACKAY—We will pick it up in the inquiry. I would ask OGIT: how many agencies supported this proposal? Senator Kemp—I do not think that is a matter for OGIT to answer, is it? I think that is a matter, a question, which I will put to the Minister for Finance and, if he wishes to provide any information, he will. Senator FAULKNER—Just so that I am clear: did you describe it as a business plan that is going to be made available on or soon after budget night? Mr Herron—This is the business case of comparing the costs of how agencies do it currently with the indicative pricing from industry to say, ‘Lets proceed to the next stage.’ Senator FAULKNER—Is this drawn from the scoping study? Mr Herron—Yes. Senator FAULKNER—That will be made public soon after the budget? Is that right? Senator Kemp—Subject to the approval of the minister, of course. Senator FAULKNER—It is now being made available subject to—I am sorry, I must have misunderstood you. I thought there was a clear commitment that it would actually be made available after the budget. I cannot see a problem with commercial-in-confidence with that document, can you, Minister? That is what I am grappling with. Senator Kemp—I think that we would want to inform the committee as much as we could. Senator Lundy— Senator LUNDY—I am not laughing at you, Minister. Senator Kemp—Might be a little cynical, but we would wish to inform the committee as much as we could. Subject to the usual arrangements, if there is a document which we think can be provided—and that document is always, of course, subject to the approval of the minister—we will try to provide the committee with as much publicly available information as we can. Senator FAULKNER—If it is publicly available, there is no need to provide it. Senator Kemp—Information which can be released to the public. Senator FAULKNER—I understand that. Were you planning to release that document publicly? What is the plan of OGIT in relation to that? Mr Maclean—That business case is part of the cabinet submission, so it is covered by cabinet-in-confidence. We would have to seek cabinet and minister’s approval to release that segment of it.

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Senator FAULKNER—Again I read in the non-cabinet submission that was non-leaked by a non-person that there was a subsequent cabinet memorandum or submission that went to some of those issues. Senator Kemp—You might actually have it then, Senator. Senator FAULKNER—I cannot confirm or deny that. Senator Kemp—Oh! Senator FAULKNER—But could you raise that with the minister? Senator Kemp—We will. We are anxious to provide information to the committee. I know there is great interest in this issue, and whatever we can provide we will. But, of course, it is subject to the minister. Senator FAULKNER—That mainly draws from the scoping study, I assume. Ms Makay—It is an evaluation of the scoping study findings. Senator FAULKNER—An evaluation of the scoping study by Finance? Ms Makay—Sorry; it is the findings of the scoping study. It takes into account the RFI considerations and also comparison against the baseline information we got from agencies. Senator MACKAY—Just talking about privacy for a moment, I understand that the Privacy Commissioner has significant concerns about the privacy implications of this proposal. Is that correct, Minister? Senator Kemp—Sorry, I am trying to check my briefing notes on privacy, actually. Senator MACKAY—Do you want a minute? Senator Kemp—You now could ask me the question again and I think I may have something. Senator MACKAY—The Privacy Commissioner, as everybody knows, has significant concerns about the privacy implications of outsourcing. Is that right? Mr Herron—There are several aspects to this. The question is the Privacy Commissioner has already developed contractual clauses for use in IT outsourcing contracts, and they have been around for some time—I do not know the exact date of publication of those guidelines. The contractual arrangements that will be used will require vendors to meet strict specifications with regard to the privacy requirements. So we are using the Privacy Commissioner’s contractual clauses in that regard. Senator MACKAY—It is alleged that the Privacy Commissioner has the view that nowhere in the OGIT proposal is there a recommendation that gives guarantees with regard to the public that the personal information held by government will continue to be able to be adequately protected. I understand that there is some proposal by the government to extend the Commonwealth legislation to the private sector with regard to this. Is that correct, Minister? Senator Kemp—The advice I have is: yes, privacy will be extended to anyone signing these contracts. Senator MACKAY—So that you are going to extend the current privacy that applies to the Commonwealth to the private sector with regard to contracting out, et cetera? Senator Kemp—Yes. Senator MACKAY—How will that apply if the contract is won by an overseas company?

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Mr Maclean—I cannot see any problems as to why they would not do that. They have, I understand, signed equivalent assurances in other contracts, including the recently signed Veterans’ Affairs one. Senator MACKAY—They might agree, but how can we be sure that they are upheld? They can say, ‘Yes, we’ll do it.’ But if you are dealing with databases, or whatever, that are based in other countries, how can we be sure in terms of Australian legislation that full privacy provisions are being upheld; and what will the government do to ensure that? Mr Maclean—The contracts usually state quite explicitly under which laws the contract is to be interpreted. That would be Australian law. These companies are signing and are committing to that. So that means that law is fully applicable to them in Australia. Senator Kemp—My understanding is that existing Privacy Commissioner guidelines provide clauses which can be included in contracts to safeguard personal information, whereby the contractor agrees not to transfer personal information outside Australia or allow parties outside Australia to have access to it without prior approval of the agency. Senator MACKAY—The point that the Privacy Commissioner has made elsewhere is how can this be policed when you are dealing with a company that is based overseas and the functions, databases or the information may be held overseas? What are you going to do to them if they breach it? How are you going to know? Mr Maclean—The processing is all held in Australia. The staff are located in Australia. They are governed by Australian contract law. They have signed a contract in Australia. My view is that we would be very concerned if there was any leakage from their side of the house because that would be pretty damning in the market. Senator MACKAY—Has there been any leakage anywhere else with regard to IT outsourcing? Has there been any international experience in that? Mr Maclean—I have not seen any considered report anywhere which compares internal leakages—there has been a few of those in the last few weeks—or that by contractors undertaking outsourcing. Senator MACKAY—This is not a cynical or smart comment, but if the cabinet submission cannot remain confidential with regard to this matter, you cannot blame us for being cynical about the capacity for the information with regard to the Australian public to remain private and confidential. This is supposedly sacrosanct documentation. Senator Kemp—There are sanctions that deal with that. Mr Maclean—Severe contractual penalties. Senator FAULKNER—Of course, that is because cabinet ministers are particularly untrustworthy, isn’t it? Senator Kemp—That may have applied in your government, Senator; it does not apply in ours. I am not a cabinet minister, but you are obviously speaking from experience. Senator FAULKNER—I want to thank you formally for leaking it, Senator Kemp. Senator Kemp—Oh, that is absolutely outrageous and you know it. That is an absolutely disgraceful comment, Senator, and I would ask you to withdraw it. Senator FAULKNER—I wanted to thank you formally. Senator Kemp—No, you withdraw that. That is an absolutely disgraceful comment.

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ACTING CHAIR—From the point of view of the chair, we will disregard that as repartee, shall we? Senator Kemp—I make the point—I was not going to say this, but I was a bit provoked by Senator Faulkner—that, in the six years since the Veterans’ Affairs IT has been outsourced, there was not one breach of privacy—except, I am advised, for Senator Faulkner’s admission that Labor told Veterans’ Affairs to supply a list of names so that they could help Jim Soorley send out his Christmas cards. Is that right, Senator? Senator LUNDY—Are you reading that, Senator Kemp? Senator MACKAY—Can you table that document, Minister? Senator Kemp—No, I have got it right here. Senator FAULKNER—I don’t know what you are talking about. Senator MACKAY—It is a brief that has been provided to you, is it? Senator Kemp—It is a nice brief that has been provided to me. Senator MACKAY—You obviously do not take this issue very seriously. Senator Kemp—I take it hugely seriously. Senator FAULKNER—I do not know what you are talking about, but I know this: if Jim Soorley sent out Christmas cards, it certainly helped him in his last election because he smashed them. He certainly had a very good campaign—60 per cent of the vote; he did pretty well. Senator Kemp—Senator, I am glad that you have not denied that apparent breach. Senator FAULKNER—I do not even know what you are talking about. All I know is that Jim Soorley is a good bloke and— ACTING CHAIR—Can I draw a halt to this. Senator LUNDY—I have a follow-up issue on privacy and security. Does OGIT collate and collect data from the agencies regarding breaches or suspected breaches of security or confidence with respect to IT systems? Mr Maclean—No, nor am I aware of any independent report which provides any comprehensive comment on that across government. Senator LUNDY—Yet you prepared the non-cabinet submission on privacy, you said earlier; it was OGIT that prepared that brief. Mr Maclean—In consultation with the Privacy Commissioner and Finance. Senator LUNDY—But you do not collect information from the agencies with respect to privacy and security breaches? Mr Maclean—No, Senator. Senator LUNDY—Can you tell me how you are in a position to prepare such a brief from a basis of knowledge and experience about what is actually occurring out in the agencies? Mr Maclean—We rely very much on the advice of the Privacy Commissioner here— informed comment. As I have said, we are not aware of any report that tells us where, either in Australia or overseas, there has been breaches of privacy from outsourced contracts. Senator LUNDY—You said that the RFI went out to industry on 16 December 1996 and closed on 7 February 1997. Was there an extension of time for that process? Mr Herron—Yes, there was an extension by one week.

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Senator LUNDY—Why was that? Mr Herron—To be honest, I cannot recall the exact circumstance. The RFI was not as formal a process, if you like, as an RFT, where a deadline is treated very strictly. The information we required from industry we sought from them, and some people asked for an extension by a week and we granted it. Ms Makay—As I recall it, we had an agency for which we were still validating their data, and that caused us subsequent delay in finalising some industry bids for that cluster. Senator LUNDY—Thank you. Given the comment, Mr Herron, you just made about it not being such a formal structure, how did you actually distribute the invitation to participate in that process to the industry, and to whom did you extend the invitation formally? Mr Herron—It was through an advertisement in the press in the usual way. It was just an open invitation for industry to collect the RFI and to respond. We also put it up on our Internet site, so if anyone was interested they could look at the actual information. Senator FAULKNER—Did you advertise the change of closing date? Mr Herron—I believe so, but I will take that on notice. Senator LUNDY—Yes, please. With respect to the time period, is a 48-day process— originally a 41-day process on my rough calculations for that RFI—reasonable time for an RFI? How does it compare with other comparable processes? Mr Herron—The RFI was not used to eliminate anyone from any further process. Senator LUNDY—I am not suggesting it was. I am just asking for a general comment. Mr Herron—It is an information gathering exercise. We sought comments from industry on a reasonable period. Generally speaking, that sort of period was regarded as okay. Senator LUNDY—What proportionality with respect to the big players—the 21 that we have been talking about and the rest—existed with the responses that you received from the RFI process? Mr Herron—In what sense? How many large players? Senator LUNDY—Replies, submissions or any correspondence, whether it constituted a submission or not. Mr Herron—It is a question of where you draw the line at who is a large player. Senator LUNDY—All correspondence? Could you take that on notice: the proportionality of all correspondence received as a response to the RFI process, based on the distinction of the big 21. Is it possible to table that document? Senator Kemp—I do not think we have bits of paper that we can— Senator LUNDY—We have been talking about this esoteric 21. It would be very useful for the committee to know who we are talking about. Senator Kemp—I do not propose to table a commercial-in-confidence document. We are trying to provide information. There are officers to assist in responses. Senator LUNDY—While you are still asserting that, can I ask you to provide the committee with the correspondence that indicated to the 21 companies on that list you have in front of you that in fact their names would be commercial-in-confidence as a result of this process. Mr Herron—That is stated in the RFI itself.

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Senator LUNDY—So the specifications for the RFI are not available to the committee either? Mr Herron—The RFI document is, yes. That is a public document that was issued. Senator LUNDY—Yes, and that document articulated the commercial-in-confidence nature of anything that was submitted under that process? Mr Herron—The way it would be treated, yes. Senator LUNDY—So it was contained in there. There was not any subsequent correspondence clarifying that with any of the contributors? Mr Herron—Not that I am aware of, no. Senator LUNDY—I will put this question on notice. If there were any correspondence from OGIT to a vendor or potential vendor that dealt with the issue of commercial-in-confidence, could that be provided to the committee? ACTING CHAIR—Senator Lundy, could I ask you to wind up your line of questioning? Senator LUNDY—Certainly. I have a couple more questions. For all of those who participated in the RFI process which led to the scoping study leading to the request for tender, did you ever at any point as a department, as OGIT, invite submissions that did not conform with the clustering model? Did you actually actively encourage different modelling from potential vendors? Mr Herron—One of the questions in the RFI was for vendors to propose alternative approaches. So we certainly sought that, yes. ACTING CHAIR—Senator Murphy has a quick question. Senator MURPHY—I have a question relating to privacy, not so much about overseas information but about access to information on people as a result of the contracting out of services domestically. I want to give you an example that happened last year. It relates to a government minister, Mr Warwick Smith, who is the Minister for Sport, Territories and Local Government. The example is this: a person wrote a letter to the editor of a newspaper in Launceston and complained about the service they received from Mr Smith’s office. Mr Smith sought to obtain the phone number of that person. As he was a former Telecommunications Ombudsman, I thought he might have achieved the information through that source. He contacted the newspaper in question, being the Examiner in Launceston, and asked for the phone number of the person concerned. The paper, which had the phone number, contacted the person and asked if they could give the phone number to Mr Smith. The person concerned said no. The number was an unlisted number. It was a new number. Indeed, the person had only very recently moved to that address. The person was an unemployed person who was participating in a training program with a private training provider. Mr Smith acquired the telephone number from the private training provider. If that is the case, I would be interested in the view of the officers as to whether or not that is a breach of contract. I investigated this matter, and the department said it could be depending on the terms of the contract. Senator Kemp—Which department? Senator MURPHY—The Department of Employment, Education, Training and Youth Affairs. There are two things I would like to know. First, if you are going to outsource

FINANCE AND PUBLIC ADMINISTRATION F&PA 136 SENATE—Legislation Thursday, 8 May 1997 anything with regard to employment services or the questions that have been followed in information technology infrastructure, what sorts of guidelines are you going to put in place that will guarantee that sort of thing will not happen? Secondly, how are you going to check it? You have been asked a question in relation to the outsourcing of IT infrastructure and the protection of information. How are you going to proceed to check, even at a domestic level, whether or not there are breaches? And what sorts of penalties might you be intending to apply if there are breaches? Senator Kemp—I am happy for the officers to answer the last part of that question as it relates to this department. I have no knowledge of the matters that you have raised and the accusations which you have made against a colleague. I have no knowledge of those. If you wish to pursue those matters—I do not accept them—you can put the questions to the relevant departments. This is the Department of Finance, not DEETYA. If you wish to pursue that in relation to training programs you can put those questions on notice to those departments. In relation to the substantive matters that relate to this department, I am happy for the officers to respond. Mr Maclean—First of all, this is in the fine print of the contract. DEETYA is entirely responsible for that data just as it would if it were being processed internally. Senator MURPHY—But at the end of the day isn’t it the case that, as far as information available through a government service is concerned, whether it be a contracted out service or not, it has to run across government? You cannot just say, ‘It is not our fault; it is somebody else’s fault,’ can you? Nor can the minister. Senator Kemp—Let us answer your question. It is a fair question. I am not resisting it. We have people at the table who may be able to shed some further light on it to assist you. If that is not sufficient we can get further information for you on notice. Mr Herron—In terms of being able to ascertain whether breaches have occurred, certainly contractual clauses could require access by agencies such as the audit office, other agencies and so on. In terms of being able to track down a breach, again as Mr Maclean said, it is in the contractual print. Senator MURPHY—Minister, would you be prepared to check with your colleague Mr Smith with regard to this particular matter so that you may better inform your government of the types of steps that might be necessary for it to take to protect individuals from this sort of invasion? It was Mr Smith and his office who then proceeded, following the acquisition of that phone number, to harass that person at no length. Can I say also, Minister, that it was only as a final result of a conversation that I had with Mr Smith with regard to him harassing that person that that harassment ceased. Senator Kemp—Senator, you have made some fairly strong accusations. I have no knowledge of those. Senator MURPHY—I am asking: are you prepared to ask your colleague about them? Senator Kemp—No. If you wish to check with Mr Smith or the relevant department— Senator MURPHY—No, I do not have to check with Mr Smith or the department. I am asking you to. Senator Kemp—You are entitled to do that but I do not propose to check with Mr Smith. What I propose to do is to ensure that the questions on privacy as they relate to this department and outsourcing are answered. We have already given some answers. If there is any further information we can give, we are happy to provide it.

FINANCE AND PUBLIC ADMINISTRATION Thursday, 8 May 1997 SENATE—Legislation F&PA 137

ACTING CHAIR—Unless you have something substantial to offer, perhaps you could take it on notice and respond in writing and then Senator Murphy can develop his questions. Senator MURPHY—Do I take your nod as you are taking it on notice and you will make some investigations? Senator Kemp—I have already said I am not. I thought I was fairly explicit. As it relates to this department we are happy to see what we can do. ACTING CHAIR—My Senate colleagues on my right have kindly agreed to shorten this session considerably. Senator Faulkner has put to us some 60 questions which he intended to put to you here. Senator FAULKNER—If OGIT would prefer me to ask them I am happy to. It is quite a serious point because I do know that this requires some resources. Senator Kemp—Is it possible to skip through them? Senator FAULKNER—No. These cannot be skipped through. Senator Kemp—If there was an ability to quickly answer some of them we are happy to do that. Senator FAULKNER—I do not believe so. Senator Kemp—If you are saying they are questions which will require further research— Senator FAULKNER—That means there will have to be some effort put in. I am sensitive to this because I have been on the other side of the table. My judgment would be that it would probably be in our interests and, I suspect, in OGIT’s interests on this occasion to take a large number of questions on notice. Mr Maclean, do you have the resources to be able to handle that comfortably? Senator Kemp—We have not seen the questions, so it is a bit hard to make an observation. I remember when you were in this seat you always insisted I show you the questions before they went on notice but I assume, as a former minister, you will know what is appropriate to put on notice. Senator FAULKNER—I do not think the point that you make is accurate. I have never rejected a question on notice in my life. ACTING CHAIR—Can we not get distracted? Senator Kemp—We are happy to assist in any way we can. ACTING CHAIR—Minister, we have 60-odd questions on notice coming from Senator Faulkner. Senator Mackay advises me of a further substantial number, 40 to 60, of questions on notice which will come to you on Monday. We have one more question from Senator Lundy, then we would be happy to let OGIT go once that is concluded. Senator MACKAY—Minister, are you saying you are going to determine whether you will accept questions on notice or not? Senator Kemp—No. I was on your side of the table for many years and it was the practice of the former government to look at questions on notice to see whether they could be answered and the resources required were not excessive. We will attempt to assist in any way we can. Senator FAULKNER—Mr Maclean, if there is a question that I have asked that is going to cause a significant resource issue for OGIT could you contact me and we will have a chat about it? I do not think that will be the case. I would be very surprised if it were but, Mr Maclean, feel free to lift the phone and talk to me about it. I am not insensitive. I am not

FINANCE AND PUBLIC ADMINISTRATION F&PA 138 SENATE—Legislation Thursday, 8 May 1997 interested in bogging OGIT down in answering questions on notice which are more trouble then they are worth. That is, I think, a very reasonable spirit in which to make that offer to you. I do not think you will need to, but feel free if there is a problem. Senator MACKAY—With respect to me, Minister, and the questions I am going to ask, if there are a substantial number that you do not believe are acceptable—and I presume you are narrowing this down to resource criterion—what I will suggest to the committee is that we get OGIT back to ask the questions. Senator Kemp—There are great incentives to quickly dispose of questions on notice. We are well aware of what the Senate can do. So we will work hard and conscientiously to supply answers. Senator MACKAY—I am being quite genuine. I have sometimes got answers back saying, ‘No, too many resources required,’ et cetera. If there are a lot of those, I am going to propose that we get OGIT back. Senator Kemp—That is fine; you are entitled to propose that. Senator LUNDY—Since 16 December has OGIT received any representation from a group representing ACT information technology businesses, including representation from either the Business Council, individual businesses or Mr Smith’s ministerial forum, which claimed to represent the interests of local IT businesses? Mr Maclean—I am not aware of any. There have been individual visits by a number of ACT companies to the CGIO on occasions. I think these were just part of the briefing process. We did receive a copy of a letter from Mrs Carnell to the Prime Minister lobbying on behalf of SMEs in the ACT region. They are the only ones that I am aware of. ACTING CHAIR—Thank you very much for your attendance and your answers tonight. There are no further questions to be put to the Department of Finance. The questions that are to be put to them will be put on notice. Therefore, we thank you for your attendance. Committee adjourned at 9.26 p.m.

FINANCE AND PUBLIC ADMINISTRATION