COMMONWEALTH OF AUSTRALIA

PARLIAMENTARY DEBATES

SENATE

Official Committee Hansard

FOREIGN AFFAIRS, DEFENCE AND TRADE LEGISLATION COMMITTEE

(Consideration of Estimates)

TUESDAY, 24 SEPTEMBER 1996

BY AUTHORITY OF THE SENATE CANBERRA 1996 Tuesday, 24 September 1996 SENATE—Legislation FAD&T 401

SENATE Tuesday, 24 September 1996 FOREIGN AFFAIRS, DEFENCE AND TRADE LEGISLATION COMMITTEE

Portfolios: Foreign Affairs and Trade; Defence (including Veterans’ Affairs) Members: Senator Troeth (Chair), Senator Forshaw (Deputy Chair), Senators Bourne, Ellison, Evans and MacGibbon Substitute members: Senator Cook to substitute for Senator Evans for the consideration of the 1996-97 Budget estimates. Senator Hogg to substitute for Senator Forshaw for the consideration of the 1996-97 Budget estimates. Senator Sandy McDonald to substitute for Senator Troeth on 19 September 1996 from 3 pm. Senator Woods to substitute for Senator Ellison for the period 16 to 20 September 1996 Participating members: Senators Abetz, Bolkus, Brown, Brownhill, Cook, Eggleston, Faulkner, Harradine, Hogg, Kemp, Margetts, Ray, Schacht and West Senator Forshaw for the period 16 and 17 September 1996 Senator Lees for the consideration of the 1996-97 Budget estimates

The committee met at 9.11 a.m. DEPARTMENT OF FOREIGN AFFAIRS AND TRADE Proposed expenditure, $2,038,201,000 (Document A). Proposed provision, $4,532,000 (Document B). Expenditure from the Advance to the Minister for Finance, $2,762,666 (Document D). Consideration resumed from 23 September. In Attendance Senator Short, Assistant Treasurer Senator Hill, Minister for the Environment Department of Foreign Affairs and Trade— Subprogram 1.3—Interests in Americas and Europe Mr Justin Brown, Acting First Assistant Secretary, Americas and Europe Division Mr Ian Forsyth, Assistant Secretary, West Europe Branch Mr Jeff Benson, Assistant Secretary, Central Europe, Russia and Eurasia Branch Subprogram 1.4—Interests in South Pacific, Africa and Middle East Mr Rob Laurie, First Assistant Secretary, South Pacific, Africa and Middle East Division Mr Mark Pierce Ms Victoria Owen, Acting Assistant Secretary, Middle East and Africa Branch Mr Bob Bowker, Director, Central and Southern Africa Section Mr Mal Skelly, Director, Arabian Peninsula, Iran and Iraq Section

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Mr John Crighton, Assistant Secretary, Office of Pacific Island Affairs Mr Steve Henningham, Director, South Pacific Political Section Mr Frank Yourn, Director, Fiji, Regional Trade and Services Section Mr Colin Hill, Director, South Pacific Multilateral and Resources Section Mr John Burgess, Assistant Secretary, New Zealand and Papua New Guinea Branch Mr Gerry McGuire, Director, New Zealand and Nauru Section Mr Bob David, Director, Papua New Guinea Section Subprogram 1.5—Multilateral Trade Policy and Negotiations Dr Geoff Raby, First Assistant Secretary, Trade Negotiations and Organisations Division Mr Michael Carney, Trade Negotiations and Organisations Division Ms Joan Hird, Trade Negotiations and Organisations Division Mr Milton Church, Trade Negotiations and Organisations Division Ms Elizabeth Young, Trade Negotiations and Organisations Division Mr Iain Dickie, Trade Negotiations and Organisations Division Ms Jean Dunn, Trade Negotiations and Organisations Division Subprogram 1.6—Trade Strategy Development and Business Liaison Mr Tony Hely, Acting First Assistant Secretary, Economic and Trade Development Division Mr Philip Sparkes, Assistant Secretary, APEC Branch Ms Pamela Fayle, Assistant Secretary, International Competitiveness Branch Mr Peter Urban, Chief Economist Ms Michelle Marginson, Assistant Secretary, National Trade Strategy and Business Affairs Branch Mr Nicholas Coppel, Director, International Economics and Finance Section Mr John Pulley, Divisional Coordinator Mr Mike Adams, Director, Trade Impact Section Subprogram 1.7—Global Issues Mr John Carlson, Director of Safeguards, Australian Safeguards Office Mr David O’Leary, Assistant Secretary, International Organisations Branch Ms Meg McDonald, Assistant Secretary, Environment and Antarctic Branch Mr Paul O’Sullivan, First Assistant Secretary, International Organisations and Legal Division Mr Peter Hussin, Principal Adviser Mr Peter Heyward, Division Coordinator Mr Ian Cousins, First Assistant Secretary, International Security Division Mr Bill Barker Mr Matthew Neuhaus, Acting Assistant Secretary, International Organisations Branch Mr Michael Mugliston, Acting Assistant Secretary, Environment Branch

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Subprogram 1.8—International Legal Interests Mr Tony Vincent, Assistant Secretary, Legal Adviser A Mr Chris Lamb, Assistant Secretary, Legal Adviser B Mr Paul O’Sullivan, First Assistant Secretary, International Organisations and Legal Division Mr Peter Hussin, Principal Adviser Mr Peter Heyward, Division Coordinator Subprogram 1.9—Information and Cultural Relations Mr Ross Burns, Acting First Assistant Secretary, Public Affairs Division Ms Sally Mansfield, Director, Parliamentary Liaison and FOI Section Mr John Quinn, Assistant Secretary, International Cultural Relations Branch Mr Colin Mackenzie, Executive Officer, Australia-India Promotion Section Mr Jim Meszes, Director, Management Administrative Coordination Section Miss Suzanne Stein, Management Administrative Coordination Section Mr Peter Varghese, First Assistant Secretary, Public Affairs Division Subprogram 2.1—Passport Services Mr Bill Fisher, First Assistant Secretary, Consular, Programs and Security Division Mr Robert Hamilton, Assistant Secretary, Consular and Passports Branch Mr Graeme Middleweek, Director, Passport Operations Section Subprogram 2.2—Consular Services Mr Bill Fisher, First Assistant Secretary, Consular, Programs and Security Division Mr Robert Hamilton, Assistant Secretary, Consular and Passports Branch Mr Graham Thompson, Director, Consular Operations Section Subprogram 3.1—Services to Parliament, the Media and the Public Mr Ross Burns, Acting First Assistant Secretary, Public Affairs Division Ms Sally Mansfield, Director, Parliamentary Liaison and FOI Section Subprogram 3.2—Services to Foreign Representatives in Australia Mr Ross Burns, Acting First Assistant Secretary, Public Affairs Division Subprogram 3.3—Services to Australian Government Agencies Overseas Subprogram 4.1—Australia Diplomatic Communications Network Mr Doug Woodhouse, Assistant Secretary, Information Technology Branch Subprogram 4.2—Security Services Mr Bill Fisher, First Assistant Secretary, Consular, Programs and Security Division Mr Keith Baker, Assistant Secretary, Diplomatic Security and Countermeasures Branch Mr Ken Oakman, Director, Security Operations Section Mr Peter Mottram, Director, Australian Technical Security Section Subprogram 5.1—Executive Direction Ms Joanna Hewitt, Acting Secretary, DFAT Mr Kim Jones, Deputy Secretary, DFAT

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Subprogram 5.2—DFAT Corporate Services Mr Bob Cotton, First Assistant Secretary, Corporate Services Division Ms Sue Tanner, Assistant Secretary, Corporate Services Division Mr Richard Down, Acting Assistant Secretary, Services Branch Mr Mike Ovington, Director, Tertiary and Language Studies Section Mr John Monfries, Director, Personnel Development Section Dr Malcolm Leader, Assistant Secretary, Resources Branch Mr John Rigg, Director, Budget and Resources Section Mr Bob Nash, Director, Locally-Engaged Staff Section Mr Bob Howie, Acting Director, Overseas Resources Section Mr David Peirce, Director, Corporate Accounting Section Mr Allan Dixon, Director, Financial Management Services Section Dr Geoff Shaw, Budget and Resources Section Mr Guy O’Brien, Budget and Resources Section Ms Michele Kafer, Acting Secretary, Corporate Evaluation Branch Ms Lyndall McLean, Director, Evaluation and Audit Section Mr Paul Foley, Assistant Secretary, Information Technology Branch Mr Doug Woodhouse, Assistant Secretary, Personnel Branch Dr Alan Thomas, Director, Staffing Policy and Practices Section Mr Peter Davin Ms Susan Coleman Mr Joe Thwaite, Assistant Secretary, Corporate Evaluation Branch Program 8—Australian Secret Intelligence Service Mr Matthew Peek, Assistant Secretary, Strategic Assessments Branch Department of Finance— Mr Adrian Moss Ms Alexandra Ralph Mr John Martin CHAIR—I declare open this meeting of the Senate Foreign Affairs, Defence and Trade Legislation Committee. I welcome the Assistant Treasurer, Senator Short, and officers of the Department of Foreign Affairs and Trade. The committee has completed programs 6 and 7 and subprograms 1.1 and 1.2 of the foreign affairs and trade portfolio. This morning we will continue considering subprogram 1.3 and then consider the remaining subprograms and programs in sequential order. The committee will break at 11.30 a.m. and recommence in committee room 1R1 at 11.45 a.m. A lunch break will be taken between 1 and 2 p.m. There will be no waiting room today and the proceedings will not be telecast on the Parliament House system. Tea and coffee will be available from committee room 2S2.

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[9.15 a.m.] Program 1—International Relations, Trade and Business Liaison Subprogram 1.3—Interests in Americas and Europe CHAIR—Are there any further questions under subprogram 1.3? Mr Cotton—Could I just interrupt quickly? I think we were on the understanding that when we concluded last night we had concluded questions on the Europe part of subprogram 1.3. CHAIR—Yes. Mr Cotton—So I do not have officers available this morning to do with Europe, and we regard European questions as finished. Questions could be taken on notice if there is something of that kind. So the remaining portion of subprogram 1.3 is the American program. CHAIR—Thank you for that. Senator COOK—That is my understanding, too. Last night we concluded in midstream talking about the congressional liaison officer’s position in Washington. My final question at that time was: when was the decision made to reduce the grade of this position? Mr Cotton—We were debating this last night and overnight I have been able to give you the time frame. Perhaps I will just restate the position, as I was doing last night. The decision on the congressional liaison position in Washington was taken as part of a global reduction of A-based staff in our missions. Indeed, we were seeking a reduction of a certain salary budget in Washington. With Washington, as with other missions, the decision was very much for the mission to decide how best to take it forward in what they thought were their work priorities on the ground. I want to emphasise that the congressional liaison officer position remains in Washington. The work will continue to be done. As I was endeavouring to explain last night, Ambassador McCarthy has a very clear view of how he, as ambassador, also needs to give more point and focus to the work of that position. It is true that the officer currently performing that position is a band 1 or SES officer, and that is one of the positions which has been given up by Washington. I think there are two other A-based positions coming out of that mission and being substituted by a senior SOG B officer who will be doing the congressional liaison work. There is a very strong desire to more firmly tie that in with the political reporting that comes out of that mission. This whole process began in about mid-May when we went out to the various missions with our view of the salary reductions required in total. In the case of Washington, we had some dialogue with them, as I have explained, and we went back and finally accepted Washington’s proposals on 21 June. So that is when the decision was finally taken. Senator COOK—Last night I think my colleague Senator Schacht raised questions about the next ambassador to Washington. You quite rightly observed that you were in no position to comment on that, and I accept that. However, Ambassador McCarthy’s name has been in the newspapers as the next ambassador to Indonesia, and you probably cannot comment on that either. Mr Cotton—Correct. Senator COOK—Prudence on my part would dictate, given this has got to the stage of publicity, that I ask you this question. Hearing all that you have said about Ambassador McCarthy’s role as a former congressional liaison officer and considering his expertise on Capitol Hill, if that were taken away obviously a new ambassador with a different background

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 406 SENATE—Legislation Tuesday, 24 September 1996 and different experience may wish to redesign the post differently. Is it open to an incoming ambassador to reinstitute the position of congressional liaison officer to its former rank? Mr Cotton—An incoming ambassador, as the chief officer responsible for the management of the mission, would have both the authority and the responsibility to review the operations of that mission. If that person felt at that time that there was a need for further changes in the management of that mission, it would be open to that ambassador to make recommendations and to seek to reorganise the structure of the mission to achieve a different way of running it. Equally, though, it would have to happen in a reduced budgetary circumstance that we currently face. Senator COOK—When the decision was made to reduce the grading for the congressional liaison officer, was the National Farmers Federation consulted about the downgrade? Mr Cotton—To the best of my knowledge, no. This was very much an in-house process. It was necessary to give the management of all our missions the right to review what would be some very sensitive staffing decisions in terms of structure and in terms of the impact on individual officers and their families. So that was the way in which the process was handled in-house. Senator COOK—I understand you to be saying that it was driven by financial considerations primarily, not from the consideration of how best to manage the affairs of the embassy. Mr Cotton—I am afraid I am going to have to say I think it is driven by both. As I have been endeavouring to explain here, it is certainly driven by a very tight financial situation that we are in. With Washington, as with other posts and other parts of the department, we are endeavouring to find the right balance of resources and the right priority to give them to the right high priority areas of work. This is the way that this mission has decided to take forward its priority work areas. Senator COOK—I see. Senator MacGIBBON—I think at the end of the day our concern is that we see this as a very high priority. Our concern basically is that we want a structure in place because ambassadors, like politicians, come and go. One day you are going to have somebody with a lot of skills on the Hill; three times out of four you will not. We want a system in place that, for the good years and bad years, delivers a service. It is not only the relationship with the Congress. Somebody in that job is in a specialised role with their finger on the whole of the American political scene, and the quality of your political reporting is upgraded enormously. Like it or not, this is the unchallengeable super power for the foreseeable future, and we have to know what they are on about. Mr Cotton—I would not disagree with any of that. I acknowledge the force of your remarks. Please believe me that these are not pleasant decisions we are in the process of making. I think it would be appropriate for me, with your concurrence, to convey these remarks to Washington and to Ambassador McCarthy. I will do that. Senator COOK—I should also point out that I am not in any way implying a criticism of Ambassador McCarthy. Mr Cotton—Indeed. Senator COOK—I understand the financial constraints within which he has to work, but I do share very much the view that Senator MacGibbon has about this position.

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Mr Cotton—It is certainly fair for us to acknowledge the strong interest and concern of senators in this issue. We will certainly convey that to Washington, and we will certainly make every endeavour to make sure a high level of service is maintained in congressional liaison. We will need to report to you on how we are doing that. Senator COOK—What is the length of term that Ambassador McCarthy’s position has to run? Mr Cotton—Ambassadorial appointments are, generally speaking, for a three-year period with the option of an extension for one year but always at the pleasure of the government or the Minister for Foreign Affairs of the day. Senator COOK—Given their standard three years at pleasure, with a year extra if necessary, applying that formula, how many more months or years would Ambassador McCarthy have in his position in normal expectation? Mr Cotton—Ambassador McCarthy took up his assignment in Washington in approximately December last year. Senator COOK—So he has three and a bit— Mr Cotton—Certainly two years to run and possibly a further year if he sought an extension and was granted that. Senator COOK—Has former Senator Michael Baume been confirmed as consul-general in New York? Mr Cotton—Yes, he has. Senator COOK—Who was his predecessor in that post? Mr Cotton—Mr Jim Humphreys, a departmental officer. Senator COOK—Using the same formula, how long did Mr Humphreys have to run before his normal tour was completed? Mr Cotton—Mr Humphreys’s normal tour was due to expire around September next year. But certainly Mr Humphreys has a number of—I do not want to say too much—what I would regard as strongly private reasons for wishing to conclude his posting earlier. Senator COOK—From that answer would I infer that what drove the vacancy in New York was Mr Humphreys’s desire to relinquish that post, or was there some other reason? Mr Cotton—Certainly it is appropriate to say that Mr Humphreys made clear his wish to terminate his assignment earlier than the normal term. Senator COOK—Were there any other considerations? Mr Cotton—Not to my knowledge. Senator COOK—This case has a chequered history in career and non-career appointments. I will not bother asking any more about former Senator Baume. When does he actually take up his position? Mr Cotton—He is due to take up his position about 21 October this year. Senator COOK—He is going through the normal induction processes at the moment? Mr Cotton—Indeed he is, yes. Senator COOK—So does that mean the position is vacant now? Mr Cotton—No. Consul-General Humphreys will, I think, depart the post about 11 October. So there will be a gap of about 10 working days.

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Senator COOK—At one time the department was considering, as I recall, abolishing the post and folding it into the work of the Special Trade Representative for North America—the Austrade position—as a job sharing position. Mr Cotton—I think I would— Senator COOK—I note your knitted brow. Is that not— Mr Cotton—Certainly to my knowledge and from where I observe these matters, I do not think that was what I would call a serious proposition coming forward in the system. Senator COOK—Do any of our trade representatives in North America operate as well in a consular capacity? Mr Cotton—A number of consulate-generals in the United States are headed as consul- general by a number of Austrade staff—for example, Los Angeles. That person is both a senior Austrade official doing Austrade work and has the formal designation and responsibility of consul-general for that part of the United States on the west coast and some of the western states as well. Senator COOK—And in Latin America? Mr Cotton—I may have to ask my colleague Mr Brown; I do not think so. Mr Brown—There are no equivalent arrangements in Latin America. Senator COOK—Are there any such arrangements in Canada? Mr Cotton—I think in Vancouver. Mr Brown—Vancouver is essentially an Immigration post. Senator COOK—Given the existence of such arrangements in a tight fiscal climate, it would have been a way of making some savings for DFAT to have entered into such arrangements in New York, would it not? Mr Cotton—That is certainly a possibility. Two things have to be borne in mind: one, Austrade itself has a very clear view of the extent to which what it is pleased to call non- Austrade work, meaning the representation or consular general responsibility aspect of the work, should be kept in a fairly strict balance so that the actual work of the senior trade person is not spent far too much out of the core trade investment promotion activities. So there is an argument, given the importance of New York as a financial and trade centre, that there is a key need to focus on that kind of work. Equally, the consul-general has to, perforce, represent Australia at a high level and with a high range of key people across that city and that whole consular district. So, while the proposition you talk about has been talked about from time to time, I do not think it has ever had what I would call a serious pressure behind it from either Austrade or us. Senator COOK—But serious pressure is exerted this time with the fiscal climate and the need to find savings. Was not a job sharing or a sharing between Austrade and DFAT considered for New York at all? Mr Cotton—Not in the current environment. As I said, both Austrade and we see the core functions in New York as better carried out in the respective ways we do our work. Senator COOK—What presence in New York does Austrade have then? Mr Cotton—Again, I may need a bit of help or I may need to take that particular question on notice.

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Mr Brown—The two main positions are an investment commissioner and a trade commissioner, and they have a variety of sectoral areas of which New York is the speciality post. Senator COOK—I think that is financial. Mr Brown—Food and beverages. Senator COOK—Food and beverages? Mr Brown—Basically. Senator COOK—And this was not considered at all? It was considered that ex-Senator Baume should go straight in there—no downgrading, no reorganisation, no tipping one’s hat to the financial climate and finding savings? Mr Cotton—I do not think it is appropriate for me to comment on that. Senator MacGIBBON—Is former Senator Baume paid what a normal Foreign Affairs officer would be paid in a post like that? Mr Cotton—Yes, he is being paid at the same level as a career officer would be paid in this position. Senator MacGIBBON—Could you explain to the committee why Ambassador Tate and High Commissioner Blewett are paid more? What was the justification for that? Mr Cotton—All I can say is that non-career appointments of the former governments were paid at a different level. In the cases you have mentioned they were generally paid at Secretary A level. Senator MacGIBBON—What is that equivalent to? Mr Cotton—That is equivalent to a head of a department. Senator MacGIBBON—At Treasury or Defence level? Mr Cotton—Probably not Defence. It would probably be equivalent to the head of a department at the Foreign Affairs level. There are three categories of secretary payment and it was paid at the equivalent of Secretary A level. With the change of government, the new government has put in place new rules and requirements which, essentially, are that all non-career appointees will be appointed at the same level as a career appointee would have been, with the same terms and conditions of employment, and that is what has been followed to date. Senator MacGIBBON—That is quite reasonable and essential. Where would that direction have come from? Would that have been a ministerial or a cabinet decision? Mr Cotton—The decision of the new government? Senator MacGIBBON—No, the former government to pay higher than normal salaries. Would that have been a government directive? Mr Cotton—It is appropriate to say that that would have been a decision taken by the former minister. Senator MacGIBBON—I wish they would do that for parliamentarians—not parliamenta- rians going to foreign service, but coming in here. Senator COOK—I think you are right.

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Senator MacGIBBON—What is the tenure of people like High Commissioner Blewett and Ambassador Tate? Are they on a three-year plus one year but always, of course, at the pleasure of the government, as you said 10 minutes earlier? Mr Cotton—No. The former government did have a different requirement in that regard or a different application in that regard. Essentially, non-career appointees were appointed for a four-year term and if the term was terminated early at the pleasure of the government or the minister or the Governor-General of the day, then there was a provision for compensation for the balance of the four-year term unfulfilled. If, however, the appointee initiated termination themselves and not by the government of the day, then no particular termination payment was payable. Senator MacGIBBON—That is very unusual, isn’t it? Mr Cotton—I think it was a case where an argument could be made—and was made—that people coming into, say, as it were, the foreign service for a particular term could be seen as coming in on a particular short-term contractual basis. In most contracts there are provisions for payment for early termination set out in particular circumstances, and I think it was that particular logic and that particular thinking that was applied in this case. Senator MacGIBBON—Yes, but we have had parliamentarians appointed to posts probably since Federation; Prime Ministers love it for ex-ministers. But the ethics of the situation are that when the government changes the resignation is automatic. The Americans do this quite as a matter of formal practice. I just find it very unusual that a contractual period with compensation was ever entertained by the department. Was that a ministerial directive that you sign on the dotted line? Mr Cotton—Again, certainly these were decisions put to and made by the minister of the day. Senator MacGIBBON—And that compensation: is it pro rata for the salary forgone? Mr Cotton—I think so, yes. I think it is a certain month’s salary, so to speak, for a certain balance of months of the term remaining. Senator MacGIBBON—I think that is a most unsatisfactory way of doing business. I see former Senator Tate has had the decency to submit his future to the pleasure of the government and go, but I am not aware that High Commissioner Blewett has, has he? Mr Cotton—So far as I know High Commissioner Blewett is serving on his current term. Senator MacGIBBON—How much longer has he got? Mr Cotton—I think he goes until early 1998—April 1998. Senator MacGIBBON—And then a year extension after that? Mr Cotton—No. In that case for the former appointees it was a full four-year term. Senator MacGIBBON—No-one in the parliament was aware of those conditions. Can you explain why we were not aware of it until they were announced publicly a couple of months ago? Mr Cotton—I think it is a question of, on the one hand, striking the right balance between the individual rights to privacy of individual officers in what are essentially personal matters and, equally, on the other hand, the full right of the parliament and the public to know. A decision on those matters, I guess, has to be made by the relevant government of the day as to what the right balance is to strike there.

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Senator MacGIBBON—We have spent two very long days—and presumably we are starting on another very long day today—with the whole purpose of public accountability of the funds that we authorise payments for. Now we find that these special deals have been done and, but for a change of government, they would never have been brought out. While the incumbents have a right to some privacy and sensitivity about their affairs, when they are on the public payroll and they are under special conditions there is an obligation on both the government and the department to make the public aware of those. So we had these secret contracts: are you in a position to tell me whether there are any other codicils or special clauses in these contracts beyond the above normal payment and the security of tenure? Was there anything else? Are they on part-time appointments? Are they given excess holidays? Mr Cotton—No, I think the only other thing that I would want to say here—and would want to say in fairly general terms—is that there were some additional provisions applying to former Senator Tate. They related in part to physical disability arrangements which we had to put in place for him—you would understand that. Senator MacGIBBON—Yes, I would understand that. Mr Cotton—Apart from that, no. Senator MacGIBBON—So there was no special provision for holidays or for travel or for working two or three days a week? Mr Cotton—No, otherwise the terms were the same as would apply to a Public Service appointee in these positions. Senator MacGIBBON—Thank you. Senator COOK—This is US presidential election year. Have any special arrangements been made to cover the events of the US election by the embassy? Mr Brown—Yes, the embassy has an extensive task force drawn from the various areas of the embassy which has been closely following both the Republican and the Democratic party conventions. It has also been monitoring the campaign and providing regular reports on those activities. Senator COOK—Is it the intention to provide any briefings to the joint parliamentary committee or the Senate committee on the events of this election? Mr Brown—Certainly if the committee would like such a briefing it could be arranged. Senator COOK—It looks like a one-horse race at the moment, but one never knows in an election. Well my only other area for the United States was Hollywood. CHAIR—Really, Senator, you surprise us.— Mr Cotton—I wonder where we are heading now. Senator COOK—Down Sunset Boulevard I would imagine. As I said last night, this is the second largest industry in the US and they have been pressing us over the years for relaxation of some of the rules that we apply governing our entertainment industry. Have they dropped this off or are they still doing it? Mr Brown—The local content quotas, which I guess you are referring to, have been on the year to year bilateral trade agenda for some years. They continue to feature in the US so- called priority watch list which is produced annually. They have not as yet taken any action beyond those sorts of representations in the last year or two, but it is certainly still an issue in the bilateral relationship along with a range of other intellectual property issues broadly defined.

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Senator COOK—Their objection is that they do not have free entry to the Australian markets, isn’t it? Mr Brown—The American argument is that local content quotas by their very nature are a market access restriction because you are setting aside part of the market for our local producers. So they simply consider that the existing market share by US producers is an irrelevancy. For as long as these sorts of measures are in place they consider that is an access restriction that needs to be removed, which opens up a sort of argument about the conjunction between trade and cultural policies, where there is a fundamental disagreement between us and the US. Senator COOK—And the US and Europe? Mr Brown—And the US and Europe, yes. Senator COOK—Is there any sign that they want to press harder on Australia in order to get a beachhead on cultural issues or for trade against the Europeans? Mr Brown—On this particular issue? Senator COOK—Yes. Mr Brown—No, we have not detected any such sign. My colleagues in multilateral trade negotiations may be more aware of it than I am, but it continues to be an issue both with the EU and with us. But I do not get the sense that they are trying to pressure us in a way that would set a precedent in dealing with the EU, no. Senator COOK—I think it would come as a hell of a shock to most Australians to realise that the Americans did not think our entertainment market was open. On page 25 under subprogram 1.3—Interests in Americas and Europe—in the third dot point down after Performance Outcomes for 1995-1996 you refer to a workshop, successfully initiated apparently last year, aimed at assisting the reinvigoration of the relationship requested by the Prime Minister. What were the results of that workshop? Mr Brown—It was an informal brainstorming session involving all relevant agencies and the intention was to take stock of our relations with the US in a range of areas, for example, the bilateral relationship, the trading economic relationship, our cooperation at the global level, as well as the defence and military aspect of the relationship. The workshop did not have any specific outcomes as such. A range of papers were produced for the workshop and some tentative conclusions reached, more by way of observations than firm recommendations for action. Senator COOK—But this was aimed at getting a better focus, a better grip, a deeper understanding of our relationship with the United States. Mr Brown—We stopped it with the end of the Cold War and the end of the Uruguay Round, but the US was clearly the dominant strategic power in the region in that there would be value in having a stocktake of our relationships to see whether there was a need to finetune aspects of the relationship in these new circumstances. Senator COOK—This was from the former government? Mr Brown—Yes. Senator COOK—When you say that no findings as such were made, the results of this brainstorming were presented to the government? What was the next step—where were they to go after that?

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Mr Brown—The summary conclusions from the workshop were presented to ministers, yes. The election intervened and no further action was taken. The reference here, on page 25, to the reinvigoration of the relationship, refers to a review which has been authorised by the Prime Minister which is currently being undertaken by the department to look at the relationship and to make some recommendations to ministers on ways in which it might be reinvigorated. The relationship between that process and the workshop from last November is simply that we are drawing on some of the discussions from the last November exercise in preparing the review of the relationship requested by the PM. Senator COOK—And does that review go to staffing at all—staffing levels? Mr Brown—It may touch on resources dedicated to specific activities, but it is more likely to focus on ways in which we could enhance our cooperation with the US in terms of specific policy issues. It is a little early in the process to speculate about how some of those recommendations may appear. Some of them may have funding or resource implications; others will be a question of the weight that we give to certain activities compared with others. Senator COOK—All right. On the last dot point under subprogram objectives, you talk about to exploit new economic and political opportunities in Latin America, Russia and Central Europe, particularly through effective coordination with Austrade in trade and investment promotion. We had Austrade before us and I do not intend to go back over that ground but they too have suffered, I think, proportionately greater budget cuts than has DFAT, which does affect their ability to have trade and investment offices in place in some of these countries. What changes to investment attraction, or investment promotion, roles of the department have been made for those countries—could you just briefly tell me? Mr Brown—I am only qualified to speak about Latin America where there is, I think, very little— Senator COOK—The investment has most been the other way? Mr Brown—It is mostly investment and export promotion rather than investment promotion from Latin America into Australia. Senator COOK—That is a growing market for Australia—Latin America—and I think, to give him his due, the current trade minister has set his cap at trying to enlarge our opportunities in that market. I think what was always common ground between the major parties was the fact that some economies in this region are growing—if not quite to the level of East Asia, it is not far off that level—and opportunities are opening particularly in mining and other sectors. In order to help Australian companies take advantage of those opportunities have we improved or increased our resources for them in that part of the world? Mr Brown—We have not increased our resources in that part of the world as far as DFAT is concerned. There has been no decrease in the number of staff resources on the ground in Latin America. Senator COOK—So the resources remain the same? Mr Brown—Yes. Senator COOK—Okay. Canada is still a member of the Cairns Group? Mr Brown—Yes—just. Senator COOK—Just—as they have always been, just. Thank you. CHAIR—Does that conclude your questions Senator Cook?

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Senator COOK—It does indeed. CHAIR—Senator Hogg? Senator HOGG—None. CHAIR—None. Very good. In that case we will move on to subprogram 1.4—Interests in South Pacific, Africa and Middle East. Subprogram 1.4—Interests in South Pacific, Africa and Middle East Senator MacGIBBON—I would like to ask a general question about PNG, although the same applies to the rest of the South Pacific. Has there been any upgrading of the development of the policy to PNG in particular since the change of government? I do not want the details of policy, but has there been a change in attitude? Mr Laurie—I am not quite sure what you have in mind about an upgrading of policy. Certainly there has been a good deal of focus on policy towards Papua New Guinea and the South Pacific as the new government has addressed the range of issues in our bilateral and regional activities. Senator MacGIBBON—From where I sit if I was uncharitable I would say we had a policy of absolute neglect of New Guinea in the last 10 years. Since I am not uncharitable, I would see it as absolutely bankrupt of any objectives and totally uncoordinated. This is an area of vital interest to Australia and Australia’s interests have been at best mute in the PNG with respect to any tangible outcomes for the last 10 years. I do not think that is a good position and that is why I asked whether there had been any rethinking of where the department sees its itself vis-a-vis New Guinea with respect to looking after Australia’s interests. Mr Laurie—I am afraid I do not quite agree with the assessment that you have made. I have only been engaged with the policy process for Papua New Guinea over the last four years almost. I am in charge of a policy coordination group of departments. We meet about every quarter to review all ongoing aspects of the relationship and we provide advice to the ministers on a very regular basis, both the present government and the past government. I think that, from the range of agreements, treaties and the like that have been arrived at with Papua New Guinea, it would be hard to categorise this as a process of neglect. We have recently just had the latest annual ministerial forum with Papua New Guinea in which a range of ministers from both sides get together to discuss a very wide range of issues. The last one was in Adelaide just a week or so ago. I have attended three before that, one in Kaveang in a new island, one in Melbourne and another one in Mount Hagen. These are annual events which a range of ministers attend from both sides under the previous government and under the present government. I would say a great deal of focus has been paid to the relationship with Papua New Guinea. That is not to say there are not complexities in it, there are not differences of view and there have not been some problems in the relationship. I think that is not altogether surprising in a relationship as important and as close as that between Australia and Papua New Guinea. But I must confess, from the amount of my involvement over the last three or four years, I cannot accept the suggestion that there has been neglect of the relationship or the policy development towards Papua New Guinea. Senator MacGIBBON—If you stand back and look at it from the point of view of outcomes, the outcomes have been deplorable. The problem that we have got and the personal relationship now with the Prime Minister, Julius Chan, openly criticising Australian positions and statements and the displacement of Australian commercial interests there with Malaysian

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 415 interests and other countries around Asia, there is no way you could be happy about the outcome of Australia’s policy towards PNG in recent years, with the greatest of respect. Mr Laurie—Obviously one would like to see the relationship in perfect harmony and perfect agreement on every issue. Not surprisingly, that is not the case. But I do think that, despite public clashes from time to time, which one might prefer to see in private, there is a good deal of understanding with Papua New Guinea and there is a good deal of common ground with Papua New Guinea. I might just mention that in the last little bit since the government came to office, the Prime Minister has met with Sir Julius Chan, one of the first visits of Mr Downer overseas was to Papua New Guinea, the Prime Minister met with Sir Julius at the South Pacific Forum and, as I say, we have had the ministerial forum. Not all the results have been perfect agreement and eye-to-eye on every issue, but there is a good deal of common ground. I think that both sides regard the relationship as an important one. Sir Julius, despite his other criticisms, the other day referred to Australia as ‘our best mates’. There are obvious areas of disagreement, but there is also a great deal of strength in the relationship. We remain the major trading partner of Papua New Guinea. There is a very sizeable Australian investment in Papua New Guinea. Others are entering into the Papua New Guinea economy partly as a result of a policy that Papua New Guinea itself is pursuing called the Look North policy, which is not meant to not look south but additionally to look north. We think that that is a very sensible and good idea, to diversify its economic links with the fast growing Asia-Pacific region. Sure there are differences and one would like to see more harmony, but there are some very solid strengths in the relationship. Senator MacGIBBON—You are putting the best face on the situation and what you say is true. But if you look at it over a 20- or a 30-year perspective, the relationship is in really bad shape and it needs to be picked up and improved. It may never go back to what it was before—I am not saying that—but we cannot proceed into the years ahead on the path that we are moving at the moment. I would just hope that the department does put a lot more effort into working for better outcomes than we have had in the last five years with New Guinea. Senator COOK—In Papua New Guinea, have we lost any positions at the embassy or have any positions been reclassified downwards? Mr Cotton—We are withdrawing an Australian based public affairs official and I think we are withdrawing a SOG B equivalent from that mission. Senator COOK—Broadly, what were the duties of the SOG B? Mr Laurie—Political reporting. Senator COOK—And what review did we undertake before those changes were made? Mr Cotton—Once again, as I have explained earlier, this was part of that total process where we went out and asked missions themselves to review their whole work program and priorities, to have a dialogue with us and decide which of their positions they thought in the very tight budgetary situation they could let go. Senator COOK—They had indicated to them what their budgetary positions would be. Mr Cotton—Yes. Senator COOK—They had to fit their staffing arrangements within the cap. Mr Cotton—That is it.

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Senator COOK—This is yet again one of these fiscally driven decisions, not necessarily one driven by an overview of the foreign relationship and what was needed. Mr Cotton—Correct. Senator COOK—My first questions in this whole department were really about the efficacy or the integrity of our world intelligence network—that is intelligence with a small ‘i’— reporting network and diplomatic network. I do not necessarily share the views of Senator MacGibbon on the PNG relationship, but it is an important one. And if I can just intrude this economic view, at the end of the day Australia tends to pick up the tab for any failure in the PNG economy or a large part of it. Australia is regarded as the developed country at the World Bank IMF level with the greatest influence or say about the needs and responsibilities of the PNG economy, is it not? Mr Laurie—Is that a question? Senator COOK—Yes. Mr Laurie—Given our past relationships with Papua New Guinea and the present fact that we are the largest aid donor to Papua New Guinea, we are seen as having an important relationship with that country, but that country is a sovereign, independent country that makes its own decisions. We do not tell Papua New Guinea what to do. Senator COOK—No. One could go on about Papua New Guinea, but I will not. But I do indicate that, while I have different views about it from Senator MacGibbon, who has expressed his views, my views about PNG are that it is a very important relationship for Australia and one in which we have to exercise a great deal more responsibility, while always putting the onus on them, in terms of World Bank-IMF responsibilities, if correcting their own internal economic problems, and that goes first in the order. But, nonetheless, assuming that they start directing themselves to doing that, our responsibility then does follow. Have we lost any posts in Oceania and the Pacific islands? Have any staff been reduced in the ranks? Mr Laurie—We have not lost any posts, Senator. Senator COOK—Have we lost any bodies? Mr Laurie—Mr Cotton referred to the two from Port Moresby. There are also going to be two from Wellington. That is it as far as I am aware. Senator COOK—So we still have the same numbers on those Pacific islands? Mr Laurie—Some of them, as you know, are very small in terms of staff members—maybe two or three Australian based. Senator COOK—Yes. What is the situation in Africa? Have we lost any bodies in Africa? Mr Laurie—No, Senator. Senator COOK—Have there been any downgradings as a result of embassy reviews? Mr Laurie—No. Senator COOK—And the Middle East? Mr Laurie—Again, no. In fact, we opened in Beirut, if you recall, towards the end of last year. So it is an addition rather than a subtraction. Senator COOK—During the current unpleasantness that is going on in the Gulf with the American intervention in Iraq, did Australia receive any requests to assist in any role militarily? Mr Laurie—Not that I am aware of.

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Senator COOK—Since you say ‘not that I am aware of’, if such an approach were made, would you be aware of it? Mr Laurie—I believe I would, yes. Senator COOK—You would. Were any requests made to play any diplomatic role in respect of it? Mr Laurie—No, Senator. Senator COOK—Did we have discussions with governments in Saudi Arabia, Jordan and Iran about the events that were occurring there in order to test their views? Mr Laurie—Only as part of the regular small ‘i’ intelligence activity—normal consultation over large issues with the governments that you mentioned—to seek their views and reactions. Senator COOK—To seek their views and reactions and to get a better understanding of how they saw what was happening. Mr Laurie—Sure. Senator COOK—Did we put any views to them about our position? Mr Laurie—We put views to them along the lines of those expressed by the Prime Minister on 4 September. Senator COOK—Can you tell us what their reaction was to that? Mr Laurie—Not in any detail, Senator. Our main purpose really was to seek their reactions to the situation—to get a readout on the developments—and also their views on what the future prospects might be. Senator COOK—We were, therefore, taking a monitoring role rather than any proactive advocacy role. Mr Laurie—Yes. Senator COOK—What, broadly, are their views about future developments? Mr Laurie—Broadly, without naming specific reactions, I think there was some concern at the developments in Iraq itself with the movement by the Iraqis into the northern area and the engagement with the Kurdish issue. There were some concerns in some parts of the Gulf about the US reaction; there is no question about that. There was a concern about it—a concern about the nature of it, and a concern that it should not go further. But there was not very much public comment by Gulf governments on the whole issue. They tended to keep fairly silent about it, in terms of official pronouncements. Senator COOK—They want to keep their heads down. Senator HOGG—What is our position in relation to the Kurds? What are we doing to help them? Mr Laurie—Our position in relation to the Kurds has been mainly to provide some humanitarian assistance through the NGO groups that have been there, particularly Care and United Nations bodies. We do not recognise anything like a Kurdish state or a Kurdish parliamentary system. Our involvement/engagement with the Kurds has essentially been in this humanitarian relief activity provided through various channels. We have had Australians on the ground. We did have some concerns at the time of the recent events in Iraq for the safety and wellbeing of the Australians who were in various aid roles. Fortunately, they all remained in good shape. A number of them remained in Iraq; some moved. I do not know whether anyone from the consular area is here, but at the time there

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 418 SENATE—Legislation Tuesday, 24 September 1996 were not more than 11 or 12, as I recall it. But a number of those were engaged in humanitarian relief activity, particularly the provision of food. Senator HOGG—Have we had any requests for any more aid as a result of that incursion by Saddam Hussein? Mr Laurie—I am not aware of any. Can I take that on notice and get back to you? I am just not aware of any additional requests for aid as a result of that. One thing I should mention is that, as you may know, there is this so-called Security Council resolution 986 which is the food for oil resolution, which permits Iraq to sell something like $2 billion worth of oil every six months for the purchase of food and medicines and so forth for the Iraqi people as a whole including, obviously, in that some of the Kurds. Because of the difficulties between the Kurdish elements in the north of Iraq and the difficulty in putting monitors on the ground to oversight the implementation of that resolution, the resolution itself has not yet been implemented. So the additional food that would come in as a consequence of the exchange of oil for food, if I can put it that way—the purchase of food from the oil proceeds—has not yet been implemented. It is not clear to me at this stage when it will be possible to implement that, simply for practical reasons, given the security situation on the ground. I think the UN Secretary-General has been reluctant to send in his monitors who are a necessary part of the implementation of that resolution until the situation settles a bit better on the ground, particularly in northern Iraq. That is not the only area where the food will go but it is an important area. Senator HOGG—Has the recent incursion heightened the concern for some of our nationals who might be in Saudi Arabia and places such as that? Mr Laurie—Not particularly, I do not think. There have been, as you will know, some activities of a terrorist nature in Saudi Arabia which has obviously given some need to issue advisories for Australians. But I do not think anything has dramatically increased in terms of the security risk to Australians in the Gulf area since this particular activity. Senator COOK—What can we say about the state of military development in Iraq? Can we be categorical and say that there are no chemical weapons in that country? Mr Laurie—Senator, I would like to be categorical about that, but really I cannot be. One of the reasons for that is that, as you may know, UNSCOM was set up to monitor these proceedings as a backdrop to the difficulties which led to the US military action against Iraq. There had been a period where UNSCOM’s attempts to monitor the weapons of mass destruction situation in Iraq had been continuously harassed, hindered, obstructed by the regime. That made it extremely difficult for them to carry out their mandate which is to observe this and report back to the Security Council and so forth. We had a visit some time last year by Mr Ekeus who is the representative in charge of UNSCOM. He gave us a rather graphic description of how difficult it is to get a fix on just what is there, what was there, what might be there. Therefore, with no stretch of the imagination could I give you a categorical assurance on that one. Senator COOK—I knew of the obstruction that the UN was experiencing in the years or so after the Gulf War but— Mr Laurie—It continues, Senator. Senator COOK—It continues? Mr Laurie—Yes, indeed.

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Senator COOK—What is being done to try to improve the monitoring, particularly in the light of more recent events? Mr Laurie—Of those WMD? Senator COOK—Yes. Mr Laurie—I do not think that I can point to anything particularly new. It really is a question of trying to encourage further cooperation from the regime in enabling these people to do their job. The only real leverage in one sense that you have got to encourage the regime to do this is the continuation of sanctions. The sanctions, in the main, do remain in place except for this 986, and that is not being implemented for the reasons we have discussed before. That is the only leverage the UN has got in any direct sense under its mandates to try to encourage the Iraqi regime to cooperate in this very important area. Senator COOK—So we are still in a sort of stand-off. Mr Laurie—I think that is a fair description. Senator COOK—And there is nothing on the horizon that appears likely to break that stand- off? Mr Laurie—I am not aware that there is any—I would not want to hold out a bright prospect to you for a breakthrough on that. I would like to be able to but we keep getting surprises, I guess, is what it amounts to. Senator COOK—Which sort of adds urgency to the task of finding out. Mr Laurie—Absolutely. Senator COOK—That is on chemical weapons. Can I just ask you about the nuclear weapons? Mr Laurie—I have bracketed the whole lot together, in terms of weapons of mass destruction. Senator COOK—So the answer also is that we cannot be categorical. Mr Laurie—Absolutely. Senator COOK—The nuclear capacity, as indeed the chemical one, depends on developed nations providing Iraq with capital goods of some sort to help make these weapons or provide them with weapons grade material for nuclear or chemical weapons. What monitoring is being undertaken by the UN or any other agency to make sure that no developed nation is doing that? Mr Laurie—Could I either take that on notice or refer it to my colleagues from ISD who are under subprogram 1.7? Senator COOK—That is fine. Mr Laurie—I am sorry, I would like to give you a good answer on that but I just do not feel competent to do so. Senator COOK—My point is simply that, rightly, we crack down on Iraq, but, equally and culpably, those who provide the means by which Iraq can arm itself. They seem to escape less public scrutiny, for whatever reason. Mr Cotton—Could I just intervene and add to an answer I gave to Senator Cook earlier on, when we were talking about potential staff reductions in our missions in the Middle East? What I had in mind, as I have explained earlier, Senator, was the 37 we have mentioned a couple of times. I think I also mentioned last Thursday that there are another prospective seven

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 420 SENATE—Legislation Tuesday, 24 September 1996 in addition to that which will come out of those missions at a later time frame—essentially, all of them by the end of 1997. I should mention that staff will come out of Cairo and Tel Aviv—one ASO2 out of each of those two missions. I just wanted to add to what I said earlier. Senator COOK—What roles were the ASO2s playing? Mr Cotton—In one case, what we call an admin attache, assisting with a range of administration and, no doubt, consular work; and in the other case, communications assistance within the mission. Senator HOGG—On page 29 of the portfolio budget statements, the second dot point under the heading ‘Sub-Program Objectives’ refers to ‘bilateral Government/Industry Forums’. What have we got specifically going for us in the Middle East? And, just coming back to what we have been talking about, has this been impacted on by the recent war or fracas there? Mr Laurie—What we are referring to there in bilateral government-industry forums is a fairly general statement. In terms of the Gulf and Middle East, our focus in terms of activity is with chambers of commerce. That is one important area. We deal with the Middle East chamber, the Israeli chamber, the Saudi chamber, and our dealings with them and Austrade are of various kinds. They have seminars from time to time and we address those. We also seek to engage their members in trade missions when we have them. If the minister is going— as you will recall, Senator Cook—we try to encourage members of the chambers to accompany those to have a business presence on the ground. So far, in terms of recent events in the Gulf, we have not seen any adverse developments on any planned activity. Our first planned activity will be next month when we have the joint ministerial commission with Saudi Arabia. That will be here in Canberra and we would expect quite a number of the Australian business interests to participate in that particular ministerial commission. The leadership of that is by the Australian Minister for Trade and, from the Saudi side, the minister of commerce. The Saudi team includes a number of officials and a number of Saudi business people who will come out to Australia. They will pay a couple of visits—one, I think, to Perth and one to Melbourne—and the main meeting will be here in Canberra. I see nothing on the horizon so far that is going to adversely affect that meeting as a consequence of the recent developments. So far so good—everything seems to be going along pretty well for what should be a successful meeting. Senator HOGG—I just want to take you down to the last dot point there which talks about assisting the peaceful settlement of disputes within and among countries in the South Pacific. What disputes are we currently involved in in the South Pacific? What is the level of our assistance? Mr Laurie—Fortunately, the only major dispute in the region between two regional countries is the difficulties that have arisen from time to time between the Solomon Islands and Papua New Guinea over the border situation with Bougainville. From time to time, as you would be aware, there have been movements of people across that border and there have been hostilities. It has led to tension between the governments of Papua New Guinea and the Solomon Islands who have been involved in trying to negotiate through a border agreement and a border arrangement. Our support has really been sort of, if you will, moral suasion, encouraging both sides to reach— Senator HOGG—It has been support at the edges, rather than proactive support.

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Mr Laurie—Absolutely. We have not been brokering or mediating that process. It has been a matter for working through by the two governments, and it is an ongoing process. Senator COOK—On the live sheep trade, the last time I had anything much to do with this item there was still, if you like, a floating discretion being exercised by Saudi Arabia on the import of Australian live sheep. They had earlier objected on health grounds and on other regulatory technicalities while the sheep were on the water, in many circumstances, necessitating their redirection or slaughter. Has that relationship settled down now? Are there transparent and understandable rules that are observed in Saudi Arabia, or is it still by happenstance or as the mood takes some of the relevant ministers? Mr Laurie—Senator, you are obviously familiar with some of the chequered history of the live sheep trade for Saudi Arabia. I would have to say that matters have not improved greatly. The situation is that there is a ban by Australia on the shipment of live sheep to Saudi Arabia because we cannot meet the conditions required by the Saudi Arabian authority to admit the sheep. You have mentioned the problem that arose when we had shiploads on the water and some incidents of a disease called scabby mouth were found, and as a consequence— Senator COOK—It is a great name for a disease. It is almost up there with ‘mad cow’— Mr Laurie—It is great stuff; it is a kind of flu, I am told. But we have had this unfortunate situation where large numbers of sheep have been on the water and, because of the incidence of scabby mouth, have not been admitted into the Saudi port to which they were headed. As a consequence, this ban has been in place for some little time and we have not yet been able to meet the terms that would permit the open and free movement of live sheep to Saudi Arabia. Senator COOK—Our bargaining power must be less because they are getting sheep from somewhere else. Mr Laurie—Yes, but at a price, Senator; and if they are willing to pay it, that is their problem. But our own problem is that we cannot guarantee a scabby-mouth-free shipload. It is a physical and, I am told, scientific impossibility. Senator COOK—Do we know where they are getting their sheep from, and at what extra price? Mr Laurie—They are getting some from New Zealand—not a great number—and I am not sure where the others come from. Some, I think, are from Turkey. But it is a mixed picture. I am not familiar with all the detail of this—the relationship is handled essentially by the minister for primary industries—but it is a mixed picture where they are sourcing them from. Senator COOK—Has this just been in a stand-off mode for a length of time, or what? Mr Laurie—If I could go over a little of the history, Senator, in 1994 there was a ministerial change in Saudi Arabia which led to assurances that they would welcome attempts by Australia to recommence the trade which had been suspended in 1990. But they put the caveat: provided Saudi health and age requirements were met. We had high hopes of this, and in 1995 an outbreak of scabby mouth virus led to the rejection of the first and only shipment that we had tried since this change by the Saudi authorities. In 1995, the government here established a working group of government and industry representatives—Senator Collins initiated this—to review the future of the sheep trade. And, in 1995, the working group reported that, until industry could put in place effective measures to eliminate further outbreaks of the virus, the trade should not commence. There were recommendations that research on non-infectious vaccine for scabby mouth should be renewed

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 422 SENATE—Legislation Tuesday, 24 September 1996 and also that research be conducted on the incidence of scabby mouth on other shipments to other parts of the Middle East. While the problems have continued with Saudi, our exports have burgeoned elsewhere in the region. The figures I have are that exports of live sheep for the 12 months ending 30 June 1996 were 5.478 million head, at a value of $204 million. So trade is going on, but not with Saudi Arabia. I hope that a senior veterinary person from Saudi Arabia will be coming to this ministerial commission that I have referred to and we will try and work through some of the issues. But I honestly do not think that we are going to be in a position where we can meet this very stringent approach they adopt to the scabby mouth problem. Senator COOK—In the last six months have we launched any new initiatives in order to break this deadlock at all? Mr Laurie—With Saudi Arabia? Senator COOK—Yes. Mr Laurie—No; only that with this holding of the joint ministerial commission we would hope that issue would be addressed at a ministerial level, and that with the vet person here there will be consultations with our AQIS authorities. But I cannot promise you any breakthrough, Senator. I would like to be able to. Senator COOK—And nothing special has been done in the last six months? Mr Laurie—Only to seek to arrange this ministerial commission in which this will be an issue. Senator COOK—Right, okay. Moving on to Africa— Senator HOGG—I have something to raise which is probably a bit of both. At the bottom of page 31 in the portfolio budget statements reference is made to a Middle East and North Africa Economic Summit in Cairo in November. Mr Laurie—Yes. Senator HOGG—Could you give me some background? Mr Laurie—Certainly, Senator. It will be the third such economic summit—the first one was held in Morocco, the second one in Jordan. In a sense, it is part of the wider Middle East peace process. The summit was put together by the United States, Israel and Jordan in one case, the King of Morocco in another, and this one is hosted by President Mubarak of Egypt. It is partly designed, as developments have moved ahead in the peace process, to encourage economic activity in the region as a consequence of positive developments in the peace process. You could call it, in a strange way, a confidence building measure to engage Arab and Israeli and other international interests in the economic processes in the region. This particular meeting to be held in Cairo is, as I say, the third. It has had a little bit of uncertainty about it, given the changes in the political situation in Israel, and there has been a sort of on and off again approach as to whether the meeting is going to actually take place. The latest advice we have is that the meeting is going to take place. I believe it kicks off on 11 November. The uncertainties that have surrounded whether it is on or off are, I think, going to affect the issue of attendance and participation in it. That would be my guess at this stage. It has not been easy for people to commit to something that might, in some circumstances, be cancelled. We will participate in that. Senator HOGG—Who will represent us?

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Mr Laurie—The ambassador in Cairo will represent us and there will be a small number of business people. We have sought to engage a very wide range of business interests in it. There is a fee for participation in the meeting—it is over $US1,000. We have written to a very extensive list of Australian business people. For one reason or another, we have had a very limited response from Australian business to participate in this particular meeting and I think the uncertainty factor that I mentioned has conditioned this. But we will be represented by our ambassador in Cairo and there will be a small number. At this stage I cannot tell you how many. I personally know of one, and I suspect it may go up to four or five. But it is not going to be a large delegation; there has not been a positive response. Senator HOGG—All right. On the very next line, in that same dot point, we talk about commencing negotiations for a trade agreement with Lebanon. What is the situation there? Mr Laurie—We have started that process. The initial exchange took place either last week or the week before. It will be a bilateral trade agreement with the Lebanon, the terms of which will have to be negotiated out, but the process has begun. It will take a little while. Senator HOGG—My last question is on the next page. The dot point at the top says: Australia will continue to provide support for Middle East regional and peace-building through participation in the United Nations Truce Supervision Observers (UNSTO) ... What is the level of our commitment to that and do we have an approximate cost? Is it increasing or is it decreasing? Mr Laurie—Senator, I would have to take that on notice. I am sorry; I cannot give you that. Senator HOGG—I would not expect you to— Mr Laurie—We will get back to you about that. I might just say that, on the Middle East force, the MFO, we provide the commander of that force at the present time—not with very many troops, but the commander of the force is an Australian. Senator HOGG—And our role on the water resources working group that is referred to there? Mr Laurie—Yes, that has been really an engagement of our experts from the CSIRO and the state water authorities. One of the tracks, if I can call it that, of the Middle East peace process has been an arms control one; there has been this economic one that we have been discussing; and water resources. Around the area of Israel, Jordan and Syria, and so forth, water is an absolutely critical issue. To work out their regime and aspects of these water resources has been an area where we thought that our expertise could make a direct contribution. We have prepared a paper, Senator, that I made available to the JCFADT on some of the technical aspects of this, and so forth. I would be delighted to make a copy of that available to the committee if you would like, or to you personally. I think that will spell it out. It has been a good story. We have hosted a seminar here in Australia at Terrigal under this program and we have provided expertise and technology in the process. I would be delighted to make that paper available if that would be helpful. CHAIR—Senator Cook, do you have any questions on this section? Senator COOK—Yes. I have some questions on Africa. CHAIR—Okay. We will move on to those.

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Senator COOK—We are moving around the region sector by sector. CHAIR—We will deal with those now. Senator COOK—What is the reduction, if any, in embassy staff in the African posts? Mr Laurie—There has been none that I am aware of. Senator COOK—Has there been any reclassification or downgrading of any positions? Mr Laurie—Not that I am aware of. Senator COOK—It is pretty hard to cut this area to the bone by and large. The department conducted, as I understand it, an investigation into a fraud that cost Australia $80,000 at the high commission in Nairobi, Kenya. Is that right? Mr Cotton—I should take that question. Yes, it is true that there was a fraud at the Australian High Commission in Nairobi. That matter has been subject to a considerable degree of investigation by the department. Senator COOK—Was the amount $80,000 or thereabouts? Mr Cotton—I am just trying to get the exact amount for you, Senator. The original amount was approximately $70,650, of which we were able to recover approximately $27,505 and the balance of approximately $50,000 has now been written off. Senator COOK—What was the background to this fraud? What actually happened within our knowledge? How did we come to lose $50,000? Mr Cotton—Essentially, the fraud occurred because a locally engaged staff member, a cashier, had stolen these moneys, I think it is fair to say, by abusing our own accounting and processing systems and, I think it is also fair to say, with the possible compliance of somebody within the local banking system. Certainly, it was a locally engaged staff member. Clearly, it has pointed to some concerns about our own accounting processes and, indeed, the roles of the other staff with other accounting responsibilities at that mission. Senator COOK—Was the locally engaged staff person, who was the actor in this, prosecuted? Mr Cotton—I think the matter is still within the authority and competence of the Kenyan police. I think the matter has been prosecuted or the charges have been laid. But I think the matter is subject to some considerable delay in the Kenyan court system. Ms McLean—May I add something? The locally engaged staff member is still in detention and it is taking some time for his case to come to trial. We had agreed to waive immunity so that A-based officers at the mission would be able to provide evidence against him. We expect that there will be continuing delays before there is actually a trial. Senator COOK—Is this standard for Kenya that these delays occur or is this unusual? Ms McLean—I think the legal system there is fairly standard at this stage, yes. Senator COOK—We should read nothing into the fact that the delay is this long? Ms McLean—I do not think we should see that as anything adverse or aimed specifically at the mission or Australia, no. Senator COOK—How long is the delay? How long have you been waiting? Ms McLean—The case first came to our attention in 1994. The LES officer was detained very soon after that at the end of 1994, so it has been close to two years now.

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Senator COOK—Is this person, the locally engaged staff person against whom the charges are being preferred, being held in detention or is he out on bail? What is the state of his liberty? Ms McLean—No, he is still being detained by the local authorities. Senator COOK—Doubtless, he would be hoping and praying that his case would be heard pretty quickly. Was this person supervised by any A-based staff at all? Ms McLean—Yes, they were. Senator COOK—What changes to our systems have we introduced as a consequence of this? Any? Ms McLean—There have been no direct changes to the system as a result of that. There were failings in the system in Nairobi and the officers involved. We did an investigation to see whether any of the A-based officers were responsible or had in any way contributed to an environment that allowed the fraud to exist. Since then we have asked that all posts throughout the world make greater efforts to ensure that all of the requirements to monitor the locally engaged staff are being undertaken and they are fulfilling their roles, and our audit system will go out. We cover 25 posts a year in our audit program to ensure that posts are performing hopefully to the best of their abilities. Senator COOK—The amount of $50,000 is not small. Is it normal for locally engaged staff to have access to those amounts? Ms McLean—That amount of money was over a period of time. Senator COOK—It was $70,000— Mr Cotton—It was $70,000 originally. Senator COOK—Over the entire period. Ms McLean—Some of it resulted not from cash transactions; he had been forging cheques on the embassy account. Senator COOK—Did he have power to sign cheques? Ms McLean—No, he forged those cheques. Senator COOK—It was over a period of time and these amounts were vanishing from our account. What reconciliation or overview of the accounts did we maintain that would have brought this to our notice in the normal course of events? Ms McLean—We do require monthly bank reconciliations. As I said, there were some failings in the system in Nairobi that allowed a couple of months to go undetected. Senator COOK—And that is when the money went—during those couple of months? Ms McLean—Yes. Senator COOK—I think Mr Cotton said earlier that there had been several inquiries into this. Was there an inquiry into the conduct or the degree of supervision exercised by the responsible supervising A-based staff? Mr Cotton—Yes, Senator, there was. Senator COOK—What was the result of that? Mr Cotton—It was a fairly lengthy and detailed process. Coming to the end of it resulted in what is called charges being laid for lack of the correct behaviour by the individual officers, the supervising officers, under the Public Service Act. That becomes a fairly formal process,

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 426 SENATE—Legislation Tuesday, 24 September 1996 as you would appreciate. The next stage in that process, once an authorised officer has made a judgment that charges should be laid for that kind of behaviour, is for those charges then to be examined by an inquiry officer, which is a separate part of the Public Service Act process. That process was also undertaken and the inquiry officer came to the conclusion that the charges were not sustained. So, while the fund was fully examined and taken forward and charges were laid by a certain part of the process, the final stage of the process determined that the charges were not upheld. Senator COOK—If I have got this right, there was an investigation leading to the view that charges should be laid. They were— Mr Cotton—Correct. They were. Senator COOK—And an independent officer then heard those charges in some form. Mr Cotton—That is correct. Senator COOK—What was the final conclusion? The charges were dismissed? Mr Cotton—The charges were dismissed by the inquiry officer. Senator COOK—What were the charges that were laid? Mr Cotton—I might ask Ms McLean whether we are able to say that, or whether we can perhaps indicate it in a more general way. Ms McLean—In a fairly general form, Senator, there were 28 charges laid across the four officers who were involved. Some of those were of failing to maintain the bank reconciliations at the required intervals which I had mentioned earlier. Others related to a lack of monitoring of accountable documents. That would be the cheques, which the LES officer had been able to obtain and do the forgeries on. But different charges were laid against different officers, depending on what were their original responsibilities. Senator COOK—So these were charges which were, broadly, not charges of the A-based staff being complicit? Mr Cotton—Correct. Senator COOK—They were charges of omission— Ms McLean—That is correct. Mr Cotton—That is correct, Senator. Senator COOK—In their supervisory or prudential responsibilities? Mr Cotton—That is correct. Senator COOK—They were of that character? Mr Cotton—Of that nature. Senator COOK—Negligence? Ms McLean—Essentially, that would be correct. Senator COOK—Are these officers, shall I say, still with us? Mr Cotton—Of the four officers, two are still with us and two have departed from the service. Senator COOK—There were four officers? Mr Cotton—There were four officers charged, yes.

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Senator COOK—Can you just explain to me the nature of this? I am not familiar with the nature of how a Public Service charge of this nature is decided. This is a charge, broadly, of negligence. These charges were dismissed and we are 50 grand worse off. Someone is still incarcerated in Nairobi, for the last 18 months, waiting for a trial. Are there any reasons offered by the inquirer as to why the charges were dismissed? Ms McLean—I will explain the system slightly, Senator. The authorised officer, who is the first stage in what we would call a discipline process, is to examine whether an officer may have failed to do his or her duty. So the onus is quite low and they do not require proof, only a ‘may’ and ‘beyond reasonable doubt’. The inquiry officer— Senator COOK—Would you just go through that again? Ms McLean—He may or may not have failed to do his or her duty. Senator COOK—The standard of evidence is what—balance of probability? Ms McLean—Balance of probability. The inquiry officer goes a step further and needs to determine whether the officer did indeed fail to do their duty and whether to uphold the authorised officer’s findings. So the onus is slightly higher there. Senator COOK—Is that a ‘beyond reasonable doubt’ test? Ms McLean—It is not so clearly defined. In most instances we will go to the Australian Government Solicitor, who will lead the officers through a fairly convoluted set of tests here. It is examined against various legislation and regulations—the Public Service Act and our own departmental regulations and requirements. They can also take into account any mitigating circumstances. The officers of course, in terms of natural justice, are able to provide any of what they would see as mitigating circumstances or views that would show that they did not purposefully refuse to do their duties. For negligence there is a fine line as to whether it was done with forethought or otherwise. Senator HOGG—Who conducts the inquiry—someone from within Australia or from the mission itself? Ms McLean—In the first instance we have an investigation; that is undertaken. We sent to Nairobi two officers from the department—one from the audit section and one from the fraud and investigations section. In the second stage—the authorised officer process—in this instance the authorised officer also visited Nairobi, accompanied by two further officers, again one from the fraud and prevention and investigations area and another one, who has a very wide experience, from our executive branch. That one has wide experience in administrative practice. Senator COOK—Are people under investigation in those circumstances entitled to legal representation or some representation of any sort? Ms McLean—They can take legal representation but it is at their own expense. Senator COOK—Did they? Ms McLean—Yes, they did. Senator COOK—I accept that prima facie there is an investigation, a belief that there is a chargeable situation. Charges are made. What qualifications does the person hearing the case have as an adjudicator of legal matters? Ms McLean—An inquirer in these instances may not necessarily have any specific qualifications but is able to call upon the services of the Attorney-General’s Department, the

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Australian Government Solicitor or anyone else he or she feels may be able to provide information or advice to them. But ultimately the decision must be their own. Senator COOK—Sure. These would be senior officers, but they may not have legal training. Is that what you are saying? Ms McLean—That is correct. Senator COOK—They can call up legal assistance if they need to? Ms McLean—That is correct. Senator COOK—In this particular case, did the person hearing the case have a legal qualification? Ms McLean—I am not aware of it. Mr Cotton—I do not think so. Ms McLean—I do not think so. Senator COOK—Was there anyone in this proceeding representing the original inquirer that believed that the charges were to be preferred and, if you like, performing the role of a prosecutor? Ms McLean—No, Senator. That is not the practice. Senator COOK—Is it an inquisitorial type practice? Ms McLean—Yes. Senator COOK—Was there a counsel assisting in any way the inquirer? Ms McLean—No, there was not. Senator COOK—So, for want of a better description, the defendants—I do not know if that is the correct description; I just use it as a shorthand—had legal representation. The inquirer was not legally qualified and had no access, or did not have a counsel assisting him or her in the conduct of their inquiry? Ms McLean—I suppose that, while there was no formal counsel assisting, he did have access to and took the services of the Australian Government Solicitor. Senator COOK—So it was a he. What finding is entered here? The charges are dismissed. Was anyone reprimanded? What were the grounds for the dismissal of the charges? Ms McLean—That is a very extensive report, Senator, because each of the 28 charges is dealt with individually. I would have to check as to whether we could make the detail of those dismissals available to you. Senator COOK—I am not at this point—at least, I hope I do not need to—going into detail of each particular charge. What I am asking is whether you can give me a summary of what actually happened. Twenty-eight charges were laid; 28 charges were dismissed after a proceeding. What I want to know broadly is what were the grounds for the dismissal—lack of evidence, technicality or a sense that, in essence, these people had done their job and it was unfair to accuse them of negligence? Ms McLean—I think, from an inquiry officer’s point of view—and you have to understand that I am talking on his behalf—reading his report, it is a combination of all of those. With some of the charges he believed or found that, while the officers had failed on occasions to fulfil their requirements in terms of doing the bank reconciliations, this was not a practice that had been continuing over the full period of their posting; it occurred during an interim period when other staff changes were taking place.

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He also found that there were some mitigating circumstances. Indeed, one of the officers had identified the frauds and brought them to the department’s attention—unfortunately, a bit later than we would have preferred. But, indeed, they themselves found the frauds in the end and that the practice is not applied 100 per cent at all of our posts. I would have to say that, while strenuous efforts are made to ensure that all of our posts have the highest levels of accountability and that their responsibilities are fulfilled, while there is not a 100 per cent application across all posts, the inquiry officer felt it was difficult to penalise the people in Nairobi more so than those at posts in other areas who had also failed to perform their duties, but had not perhaps lost the same amount of money. Senator COOK—What then becomes the status of these four people, two of whom have left, two of whom remain? Do they have a notation on their service record of this finding? Ms McLean—No. According to the Public Service Act, if charges against an officer or officers have been dismissed or there has been no negative finding against them, we are unable to keep those on the personnel records and they are now expunged. Senator COOK—Given that some negligence was found but not serious negligence, I think you said—and I do not want to misquote you. Ms McLean—I think it is fair to say that it is recognised that the officers perhaps did not perform 100 per cent but not sufficiently so to the finding of a charge. Senator COOK—To that extent, was there any reprimand issued? Ms McLean—No formal reprimand, no. Senator COOK—No official chastisement of any sort? Ms McLean—I think the officers are probably aware of the view but without it being an official chastisement. Senator COOK—I am sure they are. Ms McLean—We are unable to move to an official chastisement, according to the act, unless the findings have been upheld by the inquiry officer. Senator COOK—There are 28 charges, you say. Did those charges relate to 28 separate incidents? Ms McLean—Yes, I suppose you could say that. They were laid across, as I said, four officers. One officer faced five charges; two other officers, seven charges each; and the fourth officer had nine charges. They referred to different incidences, depending on what their individual responsibilities were. Senator COOK—When was this all finalised? Ms McLean—The date? Senator COOK—Yes. Ms McLean—Fairly recently; about a month ago. I do not have the exact date; approximately a month ago. Senator COOK—When was the ‘hearing’—for want of a better description—commenced under the Public Service Act into this matter? Ms McLean—I will just go back over the history for you. The losses were originally notified in October 1994. In early 1995 the first stage of the discipline process was commenced with the appointment of an authorised officer. There was a technical difficulty in the findings

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 430 SENATE—Legislation Tuesday, 24 September 1996 of the first authorised officer, in accordance with the act; a second authorised officer was appointed, and we had to go through the whole process again. Mr Cotton—A separate person was appointed on the second occasion to be the second authorised officer. Senator HOGG—Was that a legal problem? Ms McLean—It was a legal problem, yes. Mr Cotton—I think the date of the formal commissioning of the second authorised officer was in October last year. Ms McLean—The second authorised officer then subsequently visited Nairobi with a new investigation team; and the inquiry officer commenced early this year and has recently completed his findings. Senator COOK—To do all of this work is obviously at a fair cost to the department. Is there a final figure known—apart from the money we lost—of the work then to investigate, inquire, decide, et cetera? What was the cost of all that? Ms McLean—I do not have a figure on that. I think we would be able to work it out fairly well, but I have not yet done so. Senator COOK—It is not a cost that you would normally budget for though, is it? Ms McLean—I would have to say that none of the investigations that we have become involved in have been things we budget for. We need to look at those on an ad hoc basis as they arise. Senator COOK—So how are those costs met? Do you have a sort of sinking fund within the department that you can draw on in the event of difficulties? Mr Cotton—Some of those things come directly out of my division and, indeed, out of Ms McLean’s branch. I guess some of the costs are attributable to the post and the time of people at post also involved in it. Senator COOK—So it is at post and out of your branch; it is spread a bit? Mr Cotton—Yes. Senator COOK—This is in Kenya. Do you have any idea of what our post numbers were at the relevant time in Kenya? Ms McLean—Do you mean our A-based staffing numbers? Senator COOK—Yes. Ms McLean—No, I do not know offhand. Senator COOK—The total all-up complement as well. Mr Laurie—I was going to approximate a guess at between five and six, including the head of mission. Senator COOK—Five or six A-based? Mr Cotton—Five or six A-based. Senator COOK—So four of the five got investigated, and four of the five got charges laid against them. Is that right? Mr Laurie—No.

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Mr Cotton—I should say that the four with charges against them were people who were at post over a different time. When the further subsequent investigation into these matters took place, it was found that there was an incident of some of the fraud going back into an earlier time—back to 1991-1992—and, at that time, other A-based staff were in the mission. So they were then caught up in the full ambit of the investigation. Ms McLean—Also, in appointing the authorised officer, we did not specify any individual officers that he should investigate. His role was to see whether any A-based officer who was serving in the mission had failed to fulfil their duties and contributed indirectly to the fraud being able to occur. So, while four were charged, indeed, more officers were investigated in the course of the whole process. Senator HOGG—Could I just pick up what Mr Cotton said about 1991? Does that mean the fraud commenced in 1991? Mr Cotton—I think, while we discovered the original loss of moneys in 1994—and certainly the earlier part of the investigation concentrated on that period and that time in 1994—when the further more detailed investigation got under way and looked back further into the bank reconciliation cheques and so forth, indeed, it found there were some instances of that which had occurred in 1991-1992, although at irregular intervals, I guess it is fair to say. Senator HOGG—By the same locally engaged personnel? Ms McLean—Yes. I think he was employed approximately in 1989 by the mission and in 1991 dabbled his fingers slightly testing out the systems. A couple of frauds had occurred during that period—I cannot remember the exact amount involved; the materiality was not high—and the A-based officers in charge of or working at the mission at that time had subsequently moved on. When new A-based officers arrived, he dabbled his fingers one more time, found that there were some holes in the system and the greater frauds appeared in 1994. Senator COOK—Did any of the argument relate to the ability of the A-based staff to supervise—the time available to them to supervise, or the lack of resources available to them to supervise—the person who is now properly described as ‘the defendant’, the non-A-based staff person? Ms McLean—I am not aware of the direct evidence that they provided in their defence, as you might say, but I understand from reading the inquiry officer’s report that, yes, they would argue that the load, the tasking that they have to face, is excessive. I know the inquiry officer also, for example, took into account the findings recently by the ANAO. You may be aware that it did a performance evaluation of our management of small and medium size missions over the last year and one of their comments was that the breadth of tasking on senior admin officers, for example, and the admin staff is, they believe, too high, too large for them to manage effectively. This was also used and taken into account in the inquiry officer’s considerations. Senator COOK—And this was before the current round of fiscal tightening, further reductions in funding and downsizing. Mr Cotton—Correct. I can confirm that the A-based mission staff number in Nairobi is six and I think it has stayed at that level for some years. Senator COOK—But it is a reasonable thing to say, then, that the question of the ability of A-based staff to supervise locally engaged staff does now, with the further budget cuts and staff reductions and alterations, sharpen more than it did prior to this, and the prospect of events like this occurring because of that rises in possibility?

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Mr Cotton—I guess I am here to say that I cannot agree with you on that— Senator COOK—It is very loyal of you. Mr Cotton—Essentially from the point of view that the custody and care and accountability of public moneys always has to be a top priority for us and we have to work very hard at that task and we have to maintain our ability to try and ensure that task in the environment we are in. We do go to quite considerable lengths to put out these messages, to train our staff and so on. Of course, particularly in an environment of the Third World such as in Nairobi, and I think a fairly wide spread of accreditations out at that mission too, it does mean that there are many competing pressures on people to use up their available time. But, at the end of the day, if your administrative base and your financial base are not sound, your ability to go out and do other things is very considerably reduced. That is unfortunately our hard lesson and why we have to be fairly hard-minded in giving it top priority and indeed tracking out the reasons for it, and if necessary of a formal nature. Senator COOK—But it seems to me that the defence in this case was in part—not exclusively; I do not want to make more of it than is the case—pretty much how much can a koala bear: you are asking us to do all this work and it is not reasonable for us to have that degree of supervision. Mr Cotton—I think there are two comments on that. As Ms McLean has indicated, both the authorised and inquiry officer processes are quite separate from my division and we are not party to the material put before him, apart from the final inquiry officer’s finding— Senator COOK—Am I asking these questions in the wrong area? Mr Cotton—No, not at all. But we are not party to what a particular person might have put forward by way of their own defence. So, while what you say is a perfectly reasonable proposition and one would expect it to have been made, we ourselves are unable to confirm that it was made in this particular case. Senator COOK—I see. Whatever the defence it was effective, because the charges were dropped. Mr Cotton—As Ms McLean has indicated, the inquiry officer found numbers of causes as to why the charges should not be taken further forward. I think it is equally fair to say that even so, and given the tasks on our missions, a number of other posts are able to maintain the full accounting requirements and we really do have to insist on a high standard of accountability, both for the formal accountability requirements and, as I keep on stressing, we find to our cost that, once these things do start to collapse and erode, our ability to go out and do other government foreign policy and trade objectives very quickly crumbles and our attention then becomes very internally directed. Senator COOK—It ruins your whole day. Mr Cotton—And maybe a year. Senator COOK—I would say that, with further cuts to our diplomatic posts, increasing responsibility, and being asked to go further, the ‘doing more with less’ slogan which the government seems to have put forward—in this case in a department which has done more with less heroically over a whole number of years—seems to me to very much open the government to the prospect of it being taken advantage of because of the sheer weight of responsibility being borne at post level by officers. That is something that the government should pay attention to in this mad dash to cut costs at every point. That is more of a statement than it is a question.

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Senator HOGG—Mr Cotton, something you said before intrigued me—about there being levels of fraud at other posts. Is that correct? Mr Cotton—I am not quite sure I actually said it in quite those words. What I was trying to convey, I think, is that—I guess I am just repeating myself here—we make no bones about seeking to have the highest standards of accountability in the management of public moneys globally, and that is what we seek to maintain. Senator HOGG—All right. Maybe I should have phrased that differently: do we have evidence of fraud in other posts and, if so, to what extent? Mr Cotton—Yes, I think we do have instances of some frauds at other posts. I am not quite sure whether we need to or whether it is appropriate to go into them under this program item or whether we should pick them up in the corporate service item under 5.2. But, yes, indeed we do have one or two other instances, unfortunately— CHAIR—Perhaps we could deal with those— Senator HOGG—We could pick it up there. Mr Cotton—We could pick them up there, if that is okay, because we are under 1.4 here. Senator COOK—I got into this before I asked whether this is the right subject for Africa, including Kenya. It seemed to be an appropriate time because we are going to do it sooner or later. Can you take me back to one other thing? When did the hearing part of this process start? Ms McLean—There is not a specified hearing, per se. The authorised officer process was instigated formally. As I said, there were two authorised officers. The appointment of the first officer started, as I recall—I would have to check—in February 1995. Senator COOK—Yes. The second one? Ms McLean—The second one was some months later. I think it was about June or July, but I can check on that and confirm the actual date. Senator COOK—In 1995? Ms McLean—Yes. Senator COOK—Just so that I have got it clear again—I have lost track of this a bit, and I apologise for being a bit slow—is the second one the one where the senior officer is considering the evidence put by the officer’s lawyers? Ms McLean—No, not correct. Senator COOK—That is the process I am referring to. Ms McLean—Normally there should be only two: first there should be an authorised officer and then an inquiry officer. In this instance, with the first authorised officer a technical difficulty, legally, required us to appoint a second authorised officer. Senator COOK—That is the investigatory stage as I— Ms McLean—That is the investigatory stage and he had an investigations team assisting him. The inquiry officer was appointed this year—I will check on the exact date for you—and that is the one who reviews the findings of the authorised officer and determines whether to uphold the charges or not. If he were to do so, he would also determine the penalty. Senator COOK—I am interested in the starting date of the inquiry part of this process. You are going to check that for me?

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Mr Cotton—Yes. Senator COOK—I do not need it to be precise at this moment, but can you give us a broad idea? Was it in the last six months? Was it in January or— Mr Cotton—Yes. I would have to take a guess here, but I would think the inquiry officer’s part of the process would have begun in about May this year and would have continued on for about another four, five or maybe six weeks. I am anticipating through June and into early July. It is that type of time frame. Senator COOK—Is this the sort of thing that the minister would have been briefed on when he came into office and took over the portfolio? Mr Cotton—The minister is certainly briefed on these things in a general way, yes. Senator COOK—And he was briefed on this particular inquiry? Mr Cotton—He was briefed, yes, but I would not have said in the level of detail that perhaps we are going into this morning. Senator COOK—Did he seek any more detail? Mr Cotton—I think he felt he had sufficient information for his purposes as we were going through these various processes. Senator COOK—And you also had, of course, not only a new minister but also a new secretary? Mr Cotton—Correct. Senator COOK—I assume that when the secretary came in he would have been briefed? Mr Cotton—Yes, indeed. Senator COOK—Who appointed the inquirer? Mr Cotton—The inquiry officer is generally an appointment made by the secretary, and generally speaking— Ms McLean—Always. Mr Cotton—it is made on the recommendation from my area or me. I always seek to find a senior officer from totally outside the corporate service area, an officer with a blend of experience in Australia and overseas. Generally, depending on the nature of the circumstances, it is someone at a fairly senior level. Senator COOK—You would probably find it a great difficulty. I do not think people would particularly wish to volunteer to do this sort of work. Mr Cotton—It is not work keenly sought after in the department, Minister, no. Ms McLean—Senator, I can give you these dates, if you wish. The authorised officer, the second one, was appointed on 22 October, 1995, and the inquiry officer was appointed on 30 May, 1996. Senator COOK—Is that how it occurred on this occasion—you recommended to the secretary, he appointed? Mr Cotton—That is right. Senator COOK—Do you recommend a series of names, or does one poor person get his name put up? Mr Cotton—Yes, we do. We go around and recommend a series of names and generally pick and choose who meet the kinds of criteria I have mentioned: clearly no prior acquaintance

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 435 with the case in any way, shape or form whatsoever; somebody certainly outside the management area; someone obviously with a capacity for an independent judgement; and, clearly, someone with the respect of their peers in the department. It can go forward in that way. Senator COOK—The inquiry when it is completed reports to whom? Mr Cotton—The inquiry reports to the secretary and makes its findings known to the secretary. Senator COOK—Four people were charged, two are still with the department; what has happened to the other two—have they voluntarily left? Mr Cotton—They have, Senator. Senator COOK—Did they leave during the process or after the inquiry was completed? Mr Cotton—They left after the inquiry formally concluded and made its recommendations. Senator COOK—Obviously they had been found not guilty of any misdemeanour. Mr Cotton—Indeed. Senator COOK—And they have not been formally rebuked or chastised, or whatever. It is not clear to me whether they have actually been exonerated, given the presentation that we have had about what the inquiry found. The point I am drifting towards is that they have rights—I do not want to intrude against those rights, given that there has been a process adhered to. But were the two that left of an age that you would say they left in mid-career or at the end of their career? Mr Cotton—I think it is fair to characterise it, Senator, as being at the end of their career. Senator COOK—Would this have been a time for natural retirement then? Mr Cotton—It is hard to characterise that. It very much depends on the age of the individual, perhaps the congeniality or otherwise of working back in Canberra having been overseas for a while, and so on. Certainly, both those who have left the department had been with us for quite some time. Senator COOK—The two who remained with the department are still in the full flux of their career, I assume, are they? Mr Cotton—They are certainly officers in good standing of the department. They are currently working back in the department, and all the normal rights and opportunities are open to them. Senator COOK—Are they in positions in which they would supervise other people with access to funds? Mr Cotton—Senator, I would really have to take that one on notice. I would have to check it out. I think the answer I want to give you is ‘I do not think so’, and I will give it, if I may, subject to further checking. Clearly, as they have gone through this very thorough process and have now been exonerated of the charges laid against them, we do regard them as officers in good standing. They are at work in the department, and I am just not aware of the detail of the positions where these two particular officers are now working. Senator COOK—What I understand from what you are saying in your explanation of these circumstances is that now or in the future these officers may or may not be in such a position. Mr Cotton—Senator, we have been through this very lengthy and formal process. We have now concluded that process. The officers have been cleared of the charges. It follows, as I have

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 436 SENATE—Legislation Tuesday, 24 September 1996 said, that they are officers in good standing. They can pursue their careers with us. They can pursue, of course, a career in an overseas context again. Clearly, at some point that may no doubt happen. They will then be in a position at that time, if not now, of exercising supervisory responsibilities. Senator COOK—Finally, I refer to the fraud in Nairobi. When do we expect the final charges to be determined? Do we have any date on which the case of this person who is in gaol in Nairobi is going to be heard? Ms McLean—At this stage we have no indication, but I wouldn’t hold my breath over this one. Senator COOK—So he might stay in gaol for a long time yet before he faces justice? Mr Cotton—He may do. Senator COOK—That in itself is a bad principle. What charge is he facing? Ms McLean—I do not know the full detail of the charge. It is obviously related to a theft. I would need to take on notice the actual wording of the charge. Senator COOK—There is no question here of us getting restitution? He is not in a position, I do not imagine, to pay back 50 grand? Mr Cotton—I do not believe so. We were successful in getting some money back, as I indicated at the outset, from the bank because of a degree of liability there for this particular fraud. Senator COOK—Let us hope that justice is done swiftly and well in Nairobi. Mr Cotton—I just wanted to comment, Senator, without debating it with you, on your earlier comment about all of this in the resource environment we are in. I just wanted to reiterate that the A-based staff position remains the same now as before. The Nairobi budget base will reduce a bit, but what I am really saying here is that it is the quality of the supervision of the officers that we are looking for. I would not draw a direct straight line, as you have done, with the sort of resource we are in for the future. I just wanted to make that comment. Senator COOK—I appreciate that. I understood you to actually say that or something like that at the time. If I were in your shoes, I would probably say the same. The more that you ask officers in an overpressed department—I regard this one as being one, historically, that has been overpressed—to do even more with less, the more possibility there is that there will be events of this nature. Superman himself would not be able to prevent it, even if he had Batman as his offsider. We are putting a huge amount of responsibility on the department here and, understandably, these events arise. That is something which at the end of the day the government has to answer for—the endangerment of Australian moneys that are placed at risk as a consequence. Here we have lost 50 grand. Senator Short—My understanding is that basically it happened during the arrangements put in place by your government. But the point is taken. It is, of course, limited to how far you can stretch resources. But Mr Cotton’s point is that these matters were basically a question of quality of supervision. It was not, in this instance, as I understand it, because of a shortage of resources. There are other reasons. But the point is noted. Senator COOK—You did say that there have been some procedural changes in supervision, didn’t you? Ms McLean—Yes, that is correct.

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Mr Cotton—We seem to acquire those globally to learn that lesson. Ms McLean—We can expand on those under subprogram 5.2. Senator Short—If we ever come to 5.2. CHAIR—Minister, this is your first day. Some of us have been here for some time. Senator Short—It is the third committee though. CHAIR—I do appreciate that. Senator Cook, have you finished with 1.5? Senator COOK—With Africa? CHAIR—Are we out of Africa, should I say? Senator COOK—Pretty soon we will all develop this hostage mentality and start liking each other. CHAIR—That is drawing a very long bow. Senator COOK—I am sorry to hear it, Madam Chair. CHAIR—Are there any further questions on subprogram 1.4? Senator COOK—The National Trade and Investment Outlook Conference for this year again has South Africa as a feature country. I think South Africa is obviously an area in which there is a huge interest by Australian business and which, without making too fine a point, the former government moved swiftly to capture. I am pleased to see that the current government is continuing to do that. I will have some questions about NTIOC in the next section. Are any other African countries being invited to NTIOC? Mr Laurie—Not this time. The successful participation of South Africa last year and the degree of interest aroused in them, as you rightly point out, resulted in them being invited again. There is no other country this time around from Africa. There is one thing I might mention. On the eve of NTIOC, where there will be the usual sort of high-level representation from South Africa, people invited and so on, South Africans themselves are sending quite a sizeable investment mission to Australia. It is their own initiative and their own activity, but we are very pleased with this development. They will feed into the NTIOC process. As well, they will be present in Melbourne for some of the time of NTIOC. Senator COOK—I should also note that I am pleased to see that our exports to South Africa are growing at a very healthy rate of 30 per cent year on year. They are now valued at $657 million. Mr Laurie—I think it may be even a bit higher than that. We are heading towards the billion dollar mark quite fast. It is really moving along extremely well. Senator COOK—The other pleasing part of it is the compositional factor. Forty per cent of this is elaborately transformed manufactures. Mr Laurie—One interesting element is the exchange. We are selling quite a lot of Ford motor cars into South Africa, we are buying their BMW range 3 and the upholstery for that is made of Australian leather. So it is an interesting little two-way exchange. Senator COOK—Don’t get me going on this, because the Americans have just taken action against us in the WTO on Australian leather. Mr Laurie—Yes, I am conscious of that. Senator COOK—But at least we are selling Australian leather to South Africa. I have no further questions on this section.

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Subprogram 1.5—Multilateral Trade Policy and Negotiations Senator COOK—What is the number of staff employed by the multilateral trade section of the department? Dr Raby—There are currently 72. Senator COOK—Has that fluctuated in recent times? Has it gone up or down? Dr Raby—It has been declining over the past 12 months. Senator COOK—What is the reason for that? Dr Raby—It is largely operational. In the first nine months of last financial year, a decision to transfer funds between salaries and administration reflected changes in our programs and activities. But now, with the tighter budget setting, we have to reduce overall expenditure, both on the administrative and salaries sides. Senator COOK—What is the composition of that reduction? Have we retained senior positions or lost administrative staff? How has it impacted on the capability of the section? Dr Raby—It has been a mix. We have four branches in the division. Twelve months ago, the four branches had three directors in each branch. In three of the four branches, the number of directors has been reduced from three to two. There have been some reductions at junior levels as well. Senator COOK—Do you anticipate any further staff cuts? Dr Raby—The choice on staff cuts for us is really, again, the operational decision between salary vote and administration—and administration, of course, includes everything, including international travel and our attendance at committee meetings in the WTO in Geneva and so on and so forth. So we would imagine in the current budgetary climate that we would want to reduce total staff numbers in the division by a couple more people. Senator COOK—So there will be further reductions? Dr Raby—Yes. Senator COOK—Probably two? Dr Raby—No, it could be more—four or five. Senator COOK—How are the staff cuts achieved? Are they by natural attrition or are people transferred out? Dr Raby—To date, by natural attrition, which comprises officers moving to other parts of the department, officers moving to other departments and a couple taking outside employment. Senator COOK—You have given us the gross numbers of how many you have got now, but can you give us some detail on what level they are at and so on? Dr Raby—Yes. Senator COOK—Thank you. Do you employ consultants in this section? Dr Raby—We spend some money on consultancies in the division, yes. Senator COOK—What are the current consultancies that you have got? Dr Raby—In the last 12 months we have had a consultancy with the Australian Bureau of Agricultural and Resource Economics. We have a current one with the Centre for International Economics. There is a consultant that works with us to help us maintain our trades tariff database. Related to that, a computer consultant works on the tariff database. We have a consultancy with Alan Oxley—that was the report on trade and labour standards we had done

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 439 over the last 12 months. Alan Oxley is also doing a scoping study to determine the extent of market access barriers facing processed food and beverage exporters. That is it at present. Senator COOK—Were any of these consultants employed since March of this year? Dr Raby—Since March? Senator COOK—Yes. Dr Raby—I think both the ABARE contract and the CIE contract were actually signed in March, although the consultancies had been put in place before March. It was just that with the change of government we went back to ministers on those, and similarly with the international trade strategies consultancy—that is the Alan Oxley one on the scoping study on processed food exports. Senator COOK—Okay, I think I know enough about that. Although I should ask this question: has the Minister’s office been involved in the appointment of any consultants in this section? Dr Raby—No. But the practice that we followed with the previous government we have followed since the change of government, and that is to present to ministers the basis of the consultancy, the justification for the consultancy, and to advise them of our intentions with respect to the choice of the consultants, plus setting out the procedures for tendering and advertising and so on to select the consultant. Senator COOK—And that is the standard practice and it is adhered to still? Dr Raby—Yes. Senator COOK—The role and functions of this section are quite important and quite extensive. Do you, for example, oversee the APEC negotiations to zero tariffs by 2010 by developed and 2020 by developing countries? Dr Raby—No, we do not. We make some contributions at a technical level to that work, but that is the responsibility of the Economic and Trade Development Division at subprogram 1.6, I think. Senator COOK—I will save my questions on APEC for that, although you do have some input because it is a multilateral negotiation of a particular type. Dr Raby—It is regional negotiation, and our input is at a number of levels to make a contribution to development of our own individual action plan. We have the main sectoral areas of the department and, in fact, the division is organised largely on a sectoral basis and, secondly, because of our maintenance of the department’s tariff databases and so on, we play a major role in preparing the market access profiles—looking at other countries’ trade barriers and trying to determine our position vis-a-vis those other barriers. We also do most of the work on the agricultural aspects of APEC, reflecting the fact that the agricultural branch of the department is located in my division. Senator COOK—The incoming government put a great deal of emphasis on bilateral trade negotiations and, Minister, I think you criticised us on the basis that we spent too much time fiddling around at the multilateral level and that we have got to do more work on the bilateral level— Senator Short—I think we were saying that the bilateral level is very important, but I do not think we were downplaying the multilateral. Senator COOK—The impression I got was that you were, but maybe I was wrong about that, and maybe you were not. However, resources have gone down in the multilateral level

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 440 SENATE—Legislation Tuesday, 24 September 1996 while the resources in the bilateral level have been enhanced. That, I think, lent some credibility to my impression of what you were saying and what you are now doing. Have any of the multilateral personnel gone to a bilateral focus? Dr Raby—Actually, Senator, I did not want to create the impression that there had been in any way an excessively large reduction in resources in my particular area. What I said was that I was moving resources between various elements—between administration and staff— reflecting different activities. There is some overall reduction in our resources along the lines of reductions in other divisions. Mr Cotton, I think, could comment on this, but we did actually receive a net increase in budget at the outcome of the last budget round—or, at least, no net loss. Mr Cotton—I might just ask one of my colleagues on my right to see whether we can confirm that. Dr Raby—Whilst he is finding the answer to the other part of your question, I should say that staff move in and out of the area on a regular basis. That is seen as one of the strengths of the way the department operates. We are moving staff in and out, building up critical new skill levels in the multilateral trade area. It is very valuable that people with those skills find their way into geographic and other parts of the department because many issues, as you would have seen over the last couple of days, are the joint responsibility of two or more divisions. Senator COOK—I now turn to the Uruguay Round. The application of the Uruguay outcome is something that your section supervises. CHAIR—Senator, just before we move on to what is obviously a fairly major area, we are due to move now to room 1R1. Sitting suspended from 11.32 to 11.53 a.m. CHAIR—I call for further questions on program 1.5—Multilateral trade policy and negotiations. Senator COOK—Can you just give us a quick snapshot, Mr Raby, on where the application of the Uruguay Round outcomes is up to? Dr Raby—Yes, Senator. I undertook during the coffee break to get some information on our budget for you. I will pass that on to you before taking up your question. We just checked the numbers again and effectively the cut to the division amounted to $200,000 as part of the overall departmental cut, but there was then an allocation to the division of $180,000, representing some additional activities. Taking account of various adjustments, that is a budget neutral outcome for us in the current financial year. As for Uruguay Round implementation: that is well advanced. Since the signing of the Marrakesh agreements in April 1994, the WTO has been established; a new dispute settlement body has been created. The system is up and running. We would feel that it is working as well as could have been expected or perhaps better than our expectations. As for the many individual agreements that Australia has signed, we are monitoring the implementation of those agreements. Implementation is generally on track. If there is one area of slippage, it is amongst developing countries and the notification of their own policies and practices to the WTO. That problem is largely a technical one. Simply, the documentation that many of those countries have to fill out is quite substantial and countries are lagging, given the resources that they have to put to these sorts of issues. From our point of view, in terms of market access, there is not a great deal of concern on the notification process.

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Senator COOK—As I recall in the final Uruguay Round outcome there were some areas that had ongoing negotiations that were not in the final package. I think shipping was one of those. Where are each of those areas up to? Dr Raby—There are three main areas of ongoing negotiations: financial services, telecommunications and maritime. In a sense maritime is the easiest to deal with, and that was dealt with in Geneva most recently. Essentially, the United States would neither make an offer nor a request in those negotiations and instead has preferred to leave the negotiations to the year 2000 when the GATS agreement—the General Agreement on Trade in Services—is to be reviewed. So, essentially, maritime is off the agenda now until the year 2000. Senator COOK—On the backburner until the year 2000. Dr Raby—Financial services was the first of the three main areas of negotiations to be dealt with and that concluded in July last year with, from our point of view, a reasonably unsatisfactory outcome. That is the US reserved its MFN position. It is what is called an MFN minus one, the one being the United States. Senator COOK—That is a big one to be minus! Dr Raby—Indeed. That is a temporary measure and the negotiations are to be resumed in June or July next year. I should say though on that that the negotiations were reasonably successful as far as the level of the offers that other countries, particularly developing countries in our part of the world, were prepared to put on the table. It simply was not enough, in the US terms, for there to be a critical mass for them to be prepared to join the agreement as of July last year. But there is a reasonable amount of optimism, although I do not wish to overstate it. That is something to be worked out after June and July next year when negotiations are resumed. For basic telecoms, quite a good level of offers were put on the table. Senator COOK—Before we get into telecoms and still on financial services: are you in a position to give us a broad idea of what type of outcome we are looking at? What might the possibilities of conclusion be? Dr Raby—Application of MFN and national treatment, right of establishment for the financial service providing bodies and transparency are the main objectives, simply so our financial service providers can enter foreign markets on much the same terms and conditions as foreigners can enter this market. On basic telecoms, there is a reasonably high level of commitment by a good number of players: the European Union, countries in our region. But not what the US regard as an adequate critical mass from some countries in East Asia, particularly some ASEAN countries. Also, the US has now introduced a new particularly complex issue for the negotiators and that is satellites and how satellites will be treated. Essentially, the US, which has quite a lead in this field at present, is inclined or would like to withhold MFN treatment from the provision of satellite services. In any event, it was agreed not to push the negotiations to a final conclusion this year but to suspend them—they are to resume on 15 or 20 February next year—and use the intervening time, including the Singapore WTO ministerial in December, to lift the level of ambition for these negotiations and try and improve the level of offers so that, as the US would term it, a critical mass would be reached and it would enable them to sign off on the negotiations. Senator COOK—I have a couple of other questions here on negotiations on financial services. I think we did talk about the improved offers that have been made in the financial

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 442 SENATE—Legislation Tuesday, 24 September 1996 services negotiations. You gave us a bit of an overview of that. Is there some sort of compensation package agreed with the European Union over financial services or maritime or telecoms? Dr Raby—I am not sure what you mean by ‘compensation package’ in this context. I am not sure what the question is. Senator COOK—I am not sure what it is either. It is a question that someone has invited me to ask and it does not make much sense to me. Dr Raby—Casting around, I would give a qualified no, subject to my understanding of what the question is. Senator COOK—There are no compensation or offsetting packages? Dr Raby—No, not that I know. Senator COOK—What progress has been made in further rounds of negotiation with China and Taiwan? This is an entry to the WTO question, I assume. Where is the Chinese application for WTO membership up to? Dr Raby—It is where it has been for some time, unfortunately. It is certainly not a satisfactory state of affairs from our point of view, but there are some important issues at stake. In particular, we have some very specific market access demands we are making on China and to date China has been unprepared to— Senator COOK—These are at the bilateral level? Dr Raby—Yes, although the framework for the negotiations is China’s—or Taiwan’s in the case of Taiwan—bid to join the WTO. Within the framework of the WTO accession negotiations, we conduct bilateral negotiations with China within the framework of WTO accession. A snapshot of the overall situation is that China is still actively pursuing entry to the WTO, but it has not satisfied the main players with the quality of its application. Similarly, it has not satisfied us in terms of a list of specific market access objectives that we are pursuing in this negotiation. The next meeting of the working party on China’s accession will be held in Geneva in late October. There is activity by friends. The Japanese are convening a seminar in late October as well to try and get some movement. But, basically, the negotiations have not made much progress over the past two years. Senator COOK—What issues of market access are we concerned about with China? Dr Raby—There are a good number: wheat, wool and barley are some of the main ones, and auto parts. Senator COOK—Has any progress been made here at all or is it just a matter of an endless dialogue with no movement? Dr Raby—It is certainly not a dialogue of the deaf, Senator. Progress has been made and both sides have started with their negotiating positions at the outset. China has moved very much towards our position in a number of these areas. We feel that the progress has been reasonable, but we still want China to make a few more steps towards our position. In particular, in areas such as wool, China is offering a tariff rate quota. We are arguing and discussing the volumes that are involved. First of all, we are discussing whether there should be a TRQ—a tariff rate quota—or not but, secondly, discussing the issue of volumes that would be covered in any such TRQ. Senator COOK—If China and Australia settle that does not clear the way for China to join the WTO. It still has to satisfy a number of other countries bilaterally, including the United States, does it not?

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Dr Raby—Yes, Senator. Senator COOK—And is their main issue still intellectual property protection? Dr Raby—The US has a good number of issues. There are some market access issues like ours. Intellectual property has been important, but the most recent bilateral agreement between China and the US on intellectual property does seem to have satisfied the USTR to date, and that is an encouraging sign. There are also important issues about the transparency of the Chinese system, the role of China’s state owned enterprises, the duality of the Chinese economy with part of the economy internationally oriented, open to international trade and international disciplines, and the Chinese seeking to isolate another part of the economy from those international forces and influences. There are some important issues there that we would agree with the US on. The US, being the largest negotiator in this game, is taking the lead on those issues. Senator COOK—What about with the European Union? Are there a number of issues there for China as well? Dr Raby—Yes. Senator COOK—So, for the patient impartial observer of all of this, we are still looking at some time in the future, are we not, for a WTO membership for China to be granted? Dr Raby—Yes. The cards are very much with China and it depends on the willingness of the Chinese leadership to make—as we would see it—reasonable accommodation of the positions of the many members of the WTO. Whether there is the possibility of an earlier move to China’s accession obviously depends on a number of factors. I would not wish to be seen as naive about the fact that there is not a large element of politics at play as well. Senator COOK—This is one of those dilemmas in that we all have a vested interest in having China in the WTO yet we also all have a vested interest in making sure the terms on which it joins are fair and reasonable and not tilted unfairly in its favour. It is a dilemma for us as well as for China. Do we have any view about how determined they are to push membership and accommodate other countries? Are we satisfied they are trying to do that earnestly or are they holding back a little? Dr Raby—Frankly, it is very difficult to read partly because whenever they address this issue they are always in negotiation mode. The Chinese system is opaque. No doubt their position on this issue and their external presentation of this issue are not unrelated to a number of political currents that would be running in Beijing at any one time. However, I should say that the Chinese negotiators attend in good faith and their public statements are that they are very keen and determined still to join the WTO. Senator COOK—Has the cancellation of the DIFF scheme by the Australian government intruded itself into these negotiations in any form? CHAIR—Senator, I did understand as of yesterday that we had concluded the discussion of DIFF. Senator COOK—I know we have concluded that but I am talking about the accession of China to the WTO. CHAIR—It can only be a peripheral issue for this discussion. Perhaps Dr Raby would like to answer it. Dr Raby—All I can say is I have no knowledge of that. I should say that we have not sat down in a formal WTO negotiation with China for some time and the next meeting of the working party is late October.

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Senator COOK—Okay. With all that you say about China, is that equally true of Taiwan or are there some special considerations there as well? Dr Raby—There are some considerations for Taiwan but could I just make one more general comment on the issue of accession with China to help put it into some context. As a measure of strength of the WTO and the importance of that institution, some 25 countries are currently lined up to join. Another element in all our thinking on the terms and conditions of accession will be the precedent that will be set for others, not least Russia, when they seek to join the WTO. It is a very important negotiation and each one has to be treated on its own merits. As for Taiwan, the Taiwanese system obviously is more compatible with the system of the WTO. The WTO is a system of black letter law, effectively. It is transparent, it is open and there is a degree of automaticity, and they would not be terms that one would use necessarily to describe the Chinese system. So there is a difference of systems. The Taiwanese system is obviously much more compatible with that of the WTO. Taiwan has made—and it is easier for Taiwan to make—a good number of concessions in terms of bilateral market access demands. There are some outstanding areas with Taiwan, for us. Beef is a particularly difficult issue we have with Taiwan. Ultimately, the special factor with Taiwan is that the US and the other majors have effectively agreed amongst themselves that Taiwan could not sensibly join the WTO before China. Senator COOK—So it is that political consideration that intrudes most of all, is it? Dr Raby—There is a clear political link that has been established between both accessions. Senator COOK—Concerning the issues that we have on our bilateral slate with Taiwan, can you just run us through those again? Beef is the main one. Dr Raby—Beef— Senator COOK—Are apples still an issue? Dr Raby—Yes, beef and apples. I have my list of Taiwan accession items in front of me. Shall I run through them? Senator COOK—Yes. Dr Raby—Beef, seafood, cheese, oranges, apples, margarine, some vegetables, beer, titanium dioxide, toiletries, fire board, iron and steel, aluminium plates, sheets and strip foil. Senator COOK—These are in the main agricultural and primary industry issues, but not exclusively so.— Senator SCHACHT—Did you say titanium oxide? Dr Raby—Dioxide. Senator SCHACHT—Is that from plant in Western Australia? Dr Raby—I do not know. I am reminded that these are areas where we are seeking specific access, where there are particular problems and where we believe that, in the context of Taiwan’s accession, we can improve access substantially. There are lots of other exports we have to Taiwan which are not a problem or other countries which are much larger exporters of those products into that market as a result of taking the lead in those negotiations. Senator COOK—Mr Sharp made an unofficial visit to Taiwan recently. Senator Short—Sharp or Anderson? Senator COOK—Anderson. Mr Anderson made an unofficial visit to Taiwan recently. Did he take up these items in negotiation or talks with the Taiwanese administration?

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Dr Raby—I cannot answer that exactly, Senator. These issues were in his briefing. I have not read the records of conversation. Senator COOK—Did he meet any trade ministers? Dr Raby—Again, I do not know whom he met in Taiwan. We can get that for you, but I have not taken a close interest. Senator COOK—I would like you to take it on notice. Are there tripartite consultations with the United States and Japan on the automotive agreement? Is that something in your area? Dr Raby—Yes. Senator COOK—Tripartite would have to involve the WTO or Australia. Are we involved in any tripartite arrangements? I know the auto consultations between the US and Japan are notorious, but has that been moved into a WTO context? Dr Raby—No. It arose last year as part of the settlement of the US-Japan auto dispute that was taken up in the WTO and resolved in the consultation stage of that process. We were the only country to be accepted as a third party to that dispute. The US and Japan agreed to have annual consultations, and we have been able to join the consultations. I will ask Joan Hird from my division to elaborate on that answer. Ms Hird—The settlement that was reached was not reached within the WTO framework itself, so there is not a WTO role in this arrangement. We sought to join in the annual monitoring surveillance between the United States and Japan, and we were accepted. The European Community is also involved. So it is a review process of where things are going. Senator COOK—I think Mickey Kantor, who was then the USTR, and Hashimoto, who is now the Japanese Prime Minister, were the key actors in that. Dr Raby—Yes. Senator COOK—I understood that part of the deal was that they record their understandings in the WTO. Is this not so? Ms Hird—Because the settlement was reached outside of the WTO formal dispute settlement framework, there was no obligation on their part to report. They made a brief report to the WTO bodies that they had settled their dispute. So there is not a requirement to report to the WTO on an ongoing basis. Senator COOK—I understand that part, but I thought the terms of the settlement that they reached between themselves, and to some extent at Japanese insistence, were agreed to be reported by them to the WTO so it would have MFN standing in some form, and Australia would then have access to it on that basis. Ms Hird—The Japanese insisted upon having MFN provisions in the settlement. It was at their insistence that the outcomes had to be MFN, so that is where the guarantees came in for Australia. We would have had the right, if they had not been MFN, to take it up ourselves within the WTO dispute settlement system against both of them. Senator COOK—This deal was settled in June-July 1995 with periodic reviews. Have there been any reviews of it? Is this your division? Ms Hird—Yes. Dr Raby—Reviews between the US and the Japanese? Senator COOK—Yes.

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Dr Raby—Not that I am aware of. We were involved in discussions as part of our observership of this arrangement in October-November of last year in the US. I think there will be a meeting in Japan next month. Ms Hird—But there are ongoing assessments by both sides of how they are going. Senator COOK—I know at the time there was a fair bit of misgiving—misgiving is probably too strong a word—or corridor gossip that, given the high profile the auto industry has in American domestic politics, and given that this year is the election year for the President and that the Democrats in office have made a big play of the auto industry, they could expect some dispute to reignite between the United States and Japan. I notice that has not happened, so the sceptics or the cynics were perhaps wrong. There is still a way to go yet before we are in the clear. The presidential election is not until November, and you have your meeting in October. Is it too early to have a readout on what the issues of that meeting appear to be about? Dr Raby—As I understand it, as the first meeting operated, it is really an exercise in transparency and an opportunity for us to satisfy ourselves. The situation was that we have a public agreement and they agreed to MFN. That seems perfectly acceptable to us, but there was concern that there would be some other understandings that would be less transparent and may influence the performance of our trade in that sector. That is really what the meeting is about to us; to reassure ourselves that there is not an informal arrangement operating and to make our concerns known to representatives of the industry from the US and Japan. I do not know what the agenda is for that meeting, and I am not aware of any very recent industry representations to my division about that meeting. I could find out if there is already an agenda that has been decided on. Senator COOK—It is noticeable that the issue has not become caught up in the American domestic political agenda at this point of that agenda’s campaign—and people were forecasting that by about now it would have been. Perhaps they were thinking that the presidential race would be more closely run than it appears to be. But the concern for Australia in the prelude to the June-July settlement last year was that previous overtures by the US to Japan about access to the Japanese market for US autos and auto components seems to have resulted in some accommodation by the Japanese of the American pressures but at the expense of third countries like Australia. You can track a decline in automotive component parts export from Australia to Japan almost in the same way as the pressure was applied on the US for market entry. One could say we were the collateral victims of that bilateral negotiation. That is why we pressed so— CHAIR—Senator, is this a statement or is this leading to a question? Senator COOK—No, this is an important— CHAIR—I understand the need to background but I am sure the officers know this perhaps not quite as well as you do but nearly as well. Senator COOK—They probably know it better than I do. CHAIR—Could you lead to a question, please? Senator COOK—Have we been monitoring the level of Australian exports to Japan of automotive component parts? Is there any fall-off in our market penetration? Dr Raby—I do not want to be excessively strict about demarcation on this but I honestly cannot answer; it is really handled by our bilateral areas. Our responsibility is for the

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 447 agreement. I simply have no knowledge myself of what the situation is over the last 12 months with respect to export of auto parts into the Japanese market. All I can say is that I am not aware of industry representations to my division on this issue, but I am sure the bilateral area could provide the information if you wished. Senator COOK—I think we have gone past the bilateral areas in the— Senator SCHACHT—I would have thought there was a lead-in on page 36 of the last dot point under your outlook, subprogram 1.5, ‘Due to the development of the government’s trade strategies—particularly through the trade outcome and objective statements and through the previews of the TCF and PMV post-2000 industry assistance arrangements’. Dr Raby—It just gets messy with trade work; it overlaps all over the place. Senator SCHACHT—You should not have put that in there, should you? Dr Raby—We are making a contribution to the TCF and PMV industry assistance reviews. We have contributed— Senator SCHACHT—Are you telling the industry assistance review that it is messy? Dr Raby—No, I am not saying that at all. I am saying that our role is a fairly narrow one in these issues. So far with the TCF and PMV reviews we have contributed to framing the terms of reference. We have commented on the terms of reference. Our responsibility is for the WTO aspects of those reviews. My division has a general obligation across the whole government to provide advice and information on Australia’s WTO obligations under those treaties. So that is the extent of our involvement. CHAIR—The officer has indicated the extent of his knowledge on this. Perhaps that is something you could take up in the supplementaries, Senator Schacht. Senator SCHACHT—Would some of these questions that Senator Cook was asking be covered in the next program on trade strategy developments and business liaison under 1.6? Or will we be bowled over on that as well? Dr Raby—Joan Hird is prepared to help on this. So the position is clearly understood, the bilateral trade issues are actually handled by the geographic areas. As I said, trade issues overlap. There are WTO obligations that are of interest to us. But Joan Hird does have some information. Mr Cotton—As we have gone past the bilateral programs for the various countries, but Senator Cook has some questions that appear to relate to that aspect of our bilateral relationship, would it be possible to have those questions put on notice? We could undertake to have them answered when we come back and respond to them that way. Senator COOK—I will put some the of questions on this on notice because, Madam Chair, as you know, the government has a car industry review and access of component parts to the Japanese market is critical. We argue greater competitiveness and therefore greater entitlement for access. How the Japanese market is responding to its promise of being more open and whether it is discriminating against us in favour of the Americans who have bigger pressure, are important issues for this industry. CHAIR—Could you put those on notice? Senator COOK—I will put some questions on that on notice and perhaps foreshadow as well that in the supplementary estimates I would like to pursue this matter. Before I yield the floor, there are a few things that I would like to do in the supplementary estimates that I was saving to indicate at the end of this process.

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CHAIR—It is for you to flag those when we get to that stage. Senator Short—Senator Cook and Senator Schacht have a long way to go today. Perhaps you could put your questions on notice to be pursued in the supplementary estimates. I am thinking of the timing of the committee’s deliberations; it is up to you. If there are factual type questions that could just as easily be handled by putting them on notice, it may help the work of the committee. Senator COOK—Where I can I will. Senator SCHACHT—I notice in the annual report 1.6, the same section in the PBS document, you list on pages 107 and 108 the exports for all our major markets and imports, et cetera. They are all individually listed, so when we get to that I presume there might be a few questions we can ask about further breakdown. You do actually list in that section major commodities for imports, passenger cars, et cetera. So presumably some of these questions that Senator Cook was asking could be covered in that area because you have the table in that section covering individual imports and exports and you have listed them according to categories. CHAIR—That would be covered in 1.6 which is the next section but we have not got to that yet. Are there any further questions on 1.5? Senator COOK—The issue of quarantine measures, particularly the topical one of quarantine on salmon imports into Australia: how has Australia defended its right to maintain its current policies on quarantine in the WTO? Dr Raby—The issue has not come into the WTO as such. It has come into the WTO inasmuch as there are processes that we need to undertake and follow through and we have been doing that. Your question on defending our position though at this stage has not arisen; we are simply following prescribed WTO processes in trying to resolve this issue. Senator COOK—So where is it in the system then? Dr Raby—It is an AQIS issue, essentially, at this stage and AQIS are conducting their import risk assessment. They have done one, this is the second, and we expect a result in the next couple of months. Senator SCHACHT—Have you or any of your appropriate officers been down to Tasmania to discuss this issue with the organised seven producers? Ms Hird—Yes, I have been with other officers from our department and from DPIE. We went originally at the invitation of the Tasmanian Department of Agricultural Primary Industry and we have constant contact with relevant officials and with the salmon growers themselves. Senator SCHACHT—I will put one further question, and you may choose not to answer it. Do you think this is a non-tariff barrier that our producers are constructing which helps them out in the marketplace? Ms Hird—It is not a question that I think I could answer, but the issue for us is it is a government measure. Senator SCHACHT—We all as members of parliament have been lobbied hard from all sides of politics on this issue. We have visited a number of breeding farms, et cetera. Have you come across similar examples in other countries where a sensitive industry to disease has also been very concerned about the quarantine regulations being changed under WTO pressure, that other countries have raised similar issues and have refused to budge on their quarantine rules?

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Ms Hird—There is an issue in the WTO at present on hormonal growth promotants in the European Community with regard to livestock that have been treated with certain hormonal growth promotants. It is not for me to say whether it is protectious or not, but obviously it is a very sensitive issue in terms of human health and the question of how far science can go in terms of risk. There have been other issues with Japan where we have been endeavouring to get access for Tasmanian Fuji apples. There are sensitivities in every country about quarantine. Senator SCHACHT—The Tasmanian position—the producers and the Tasmanian government—is not unusual in general comparison around the world. There are similar issues being raised by similar producers of agricultural product, primary product, elsewhere in the world arguing about quarantine and the impact of disease on their import such as exotic diseases affecting their industry? Ms Hird—Certainly. I would just like to add on that score that when New Zealand undertook a similar exercise there was as high a degree of concern expressed in New Zealand domestic circles as in Australian. Senator SCHACHT—What happened? Ms Hird—New Zealand has opened its market on a limited basis. Dr Raby—It has lifted the quarantine restriction. Ms Hird—Yes, on a limited basis for certain types of salmon. Dr Raby—Can I just add that, generally, as Joan has said, quarantine is sensitive everywhere. It is going to become more so. The capacity to ship fresh and unprocessed foods around the world is increasing all the time. That is why it is very important that there is a framework of multilateral rules and disciplines in place. Australia has a lot at stake here because we export five times as much food as we import. So, if other countries can use quarantine restrictions against us in some sort of trade protective way, that obviously could seriously disadvantage us. Joan Hird has mentioned some of the gains we have had on quarantine. One other I would like to add is sheep offal into France. We have fruit going into the Philippines. We have had a reasonable amount of success in South Korea with dairy products. We have used the framework of the WTO rules and we will use the framework much more aggressively now that it is in place of the Sanitary and Phytosanitary Agreement of the Uruguay Round to break down these quarantine barriers. Senator SCHACHT—In what sanitary agreement? Dr Raby—The Sanitary and Phytosanitary Agreement. Senator SCHACHT—The fibre sanitary agreement? Ms Hird—Animals, plants and humans. Senator SCHACHT—You said fibre? Ms Hird—Phyto. P-H-Y-T-O. Dr Raby—It is an agreement of the WTO. We are using that fairly aggressively now where there are unjustifiable quarantine measures against us to try to have those removed. Senator SCHACHT—If in the end the quarantine measures on salmon stand and the importation is prohibited because of our quarantine rules, do you think that would be used elsewhere by other countries, not necessarily by Canada, on other product to beat us around the head when we are seeking market access for other products?

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Dr Raby—It depends on the basis of our reasoning and judgment to keep the current regime in place as to what action would be taken against us. Ms Hird— If the decision were based on scientifically credible and justifiable points, there would be no reason for that. If Canada believed it was not, it would resurrect the dispute settlement processes. It would go into the WTO if it believed that our processes were not compatible with our WTO obligations. That would be the response. Senator COOK—With AQIS in the hands of the National Party you do not quite know what is going to happen. Is anyone taking any actions against us? We have cooked chicken meat, we have salmon, and I think we have pork from Canada, all of which are dealing with AQIS in some way and the independent scientific tests that AQIS applies. Is anyone in the WTO raising questions with us about AQIS and its ability to make scientific evaluations fairly and properly? Ms Hird—No. Senator SCHACHT—You may have said this before to Senator Cook and I missed it. When we do the scientific evaluation, in this case for salmon, for AQIS and legitimately use science or transparent processes where a report is made, is there a mechanism whereby because we are parties to the WTO or its conventions, covenants, et cetera, at some stage Canada can ask them to come in and do an independent evaluation? Ms Hird—No. Dr Raby— They take an action. Senator SCHACHT—They can take an action in the WTO against us. In taking that action, are they able to get independent scientific advice through the WTO? Ms Hird—Yes, there is provision in this particular agreement. If it goes to a panel, which is the heavy dispute stage, that panel can have an advisory panel of scientific experts to call upon, but it is an advisory panel only. That panel of experts would not rule to the full panel on the scientific justification. Senator SCHACHT—So far, with experienced observation, are you confident that those panels are acting transparently within the spirit of the rules, or is there a bit of a nasty game of politics going on behind the scenes of trading votes from different issues with different countries? Dr Raby—Can I make a general comment then I will ask Joan to describe in detail how a panel is constituted. Since the establishment of the WTO—and, of course, the GATT system has been in place for 50 years and the panels have been a very important part of that process for a number of years—in the 2½ years or so that the WTO has been in operation, there have been a number of panels. The results of the panels have been found to be highly satisfactory by all participants. One has even gone through to the appellate body stage—that is, the US Venezuela oil case—where a finding went to the appellate body and it was found against the US, and the US accepted the findings. I guess the general point I wish to make is the processes are very transparent. The credibility of the system depends absolutely on the quality of the findings and the reasoning and the judgment of those panels. They are comprised of independent experts. Joan may wish to elaborate on that. Senator SCHACHT—Who appoints the panel? The council for the World Trade Organisation or the Secretariat?

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Ms Hird—The WTO Secretariat which is acting on behalf of the director-general, in consultation with the parties to the dispute. But it is in the rules of the WTO dispute settlement understanding that you cannot have a panellist who is a national of a party to the dispute. Dr Raby—Perhaps you could explain how panels are put together. Ms Hird—Yes. There is a panel of three, generally comprised of three trade policy experts. Normally they are drawn from national governments, from a roster of panellists, usually from missions in Geneva. The secretariat consults with the parties to the dispute on the composition of the panel. Senator SCHACHT—Senator Cook and I, being old apparatchiks with the Labor Party trade union movement, know all about the power of the credentialling committee: who is a returning officer, who is a credentialler. If you have got both those wrapped up, you never leave. So as to that arrangement of the selection of the panel of three, do the two countries in dispute have a say in the three? Ms Hird—Yes. They do not have an absolute veto. It is within the rules. The rules are that they cannot be from their own country and you cannot have a panellist from another country which would have a substantial interest in the dispute. Say, for instance, if New Zealand were having a complaint against Japan on beef, there certainly would not be an Australian on the panel. So they are the checks. There are also ethical codes of conduct. There are a number of checks within the rules themselves. Senator SCHACHT—If there is an argument over the panel selection, is it the Director- General of the WTO who has the final say? Ms Hird—Yes, he does. Senator SCHACHT—And that is accepted by the parties under the rules? Ms Hird—Yes. Dr Raby—It would be most unlikely for it to go that high. Ms Hird—Well, it happens. Dr Raby—The secretariat put in a big effort to have lists of panellists, to have a very open and transparent process. Senator COOK—And people accept their rulings. Dr Raby—And it is done through the secretariat. There is an officer in my division currently who is participating in a panel. Kim Anderson from Adelaide University has been selected for a panel recently. Australians are quite active— Senator COOK—In providing panellists? Dr Raby—Yes, in providing panellists. Senator SCHACHT—What is the appellate body? Ms Hird—This is a new feature in the dispute settlement system. It was not in the old GATT. It is five or seven— Dr Raby—Seven. Ms Hird—It was done by a process of consultation between the WTO members. It was part of the implementation process. Senator SCHACHT—Is that the one that we tried to get Mr Duffy on? Dr Raby—Yes.

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Senator SCHACHT—And we lost? Dr Raby—Yes. Realistically, there is a broad geographical spread of interest. In that particular case, we did prevent the US and the Europeans having two representatives each, which would have given them four out of the seven. Of course, Japan would have to have had one, which would have been five out of seven, leaving two for the rest of the world. Part of our campaign was to prevent that happening, and we did so. I should also say that our permanent representative to the WTO, Don Kenyon, was the first chairman of the dispute settlement body in the inaugural year of the dispute settlement body last year. He was responsible for ensuring that the process of selecting the appellate body was fair and reasonable. CHAIR—If you were interested in the minute structure of the World Trade Organisation, I am sure the department would be happy to give you a briefing on that. Senator SCHACHT—It is on the record here. Senator Boswell will be very interested in this material; it is then in the Hansard. CHAIR—I am happy to hear that you are so concerned for his welfare. Senator SCHACHT—Well, you have got to keep up with everything. CHAIR—I am sure these structures have not changed much in six months. Senator SCHACHT—In the trade area. CHAIR—I am sure the information was available. We are under reasonable time constraints today. If possible, I would like these questions dealt with expeditiously. Senator COOK—With respect to the hormonal growth promotant case, I think the US has taken the challenge to Europe. Are we involved it that case in any way, in protection of our interests; if so, which way? Ms Hird—There is provision in the WTO dispute settlement system for interested parties which have a substantial trade interest in the dispute to be involved as third parties. It is now at the panel stage. The United States has taken this complaint against Europeans. We in our division are currently preparing a third party submission to that process. Senator COOK—How far has that case got to run? Ms Hird—It is only in early panel stages. It probably has got another six months or so— maybe less, but there is a fair way to go. Senator COOK—Are we involved in a case against Hungary for the use of export subsidies? Ms Hird—It is at the consultation stage; it is not at the panel stage as yet. Dr Raby—It is to do with changes in the Hungarian subsidies from what they notified in their WTO agreements. Senator COOK—And it is at an embryonic stage? Dr Raby—It is at the consultation stage. Joan, that is advanced consultation, isn’t it? Ms Hird—Yes, it is fairly advanced consultation, and it is a question of a decision being made whether to move to the next stage, which is to request a panel. Senator COOK—And we are involved in that? Ms Hird—We are a party to it, along with a number of other countries. Dr Raby—We have big trade issues. There is also a very important principle there in terms of what countries had notified as part of the WTO agreements and then subsequently sought

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 453 to change. The principle for us is that it would indicate a softer accommodating position by us on a range of subsidies, in particular, agricultural subsidies. Senator COOK—One of the standard chestnuts we get in trade areas is that our anti- dumping legislation is a non-tariff barrier. Has anyone taken any action against us or raised questions with us about reviewing our anti-dumping procedures? Dr Raby—There are a number of answers to this, and I can really only speak from this division’s responsibility. Our anti-dumping— Senator COOK—I hesitate to interrupt you. I do not think they are, but the allegation is made against us by would-be litigants. Dr Raby—Our anti-dumping legislation and practice is perfectly consistent with WTO rules. That is basically all I can say from this division’s perspective. But I would note that some countries, for various reasons, raise Australia’s use of its anti-dumping provisions in bilateral contexts. Senator COOK—Can you confirm that the US has threatened to take, or is taking, an action against Australia in the auto industry over leather? Dr Raby—They are neither threatening to take action nor taking action at this stage. The situation is that two leather companies in the United States have filed a 301 petition naming one Australian company. That is now going through the formal 301 processes in the United States. The petitioners have raised aspects of our import credit scheme under the TCF arrangements. Senator MacGIBBON—That is really a counteraction rather than a primary action against the importation of leather seat covers. Dr Raby—They are claiming that aspects of our TCF under the mentioned schemes are, in a nutshell, giving our firm an unfair advantage in their market. Ms Hird—Perhaps I could explain that the leather in question that is at the centre of the commercial problem is going to Mexico as crust leather. It is being cut in Mexico and then exported to the United States under NAFTA arrangements. Some of it is going into cars from Mexico, some of it is going to the United States. So that is the commercial problem. Senator COOK—So where will this process be up to in the United States before the United States administration will make a decision either way to carry it on? Dr Raby—It is a 301 process, and that involves obviously interagency consultation in the United States and consideration by a 301 committee—that is the formal part of the process— which has representatives from relevant agencies. They will then determine the course of action. Senator COOK—Have we formed a view about the efficacy of this petition—whether it is well based or not? Dr Raby—It is not for us, Senator, to form such a view. At this stage of the process, we have to see the nature of the 301 committee’s position on this. The petition is simply going through the process, and we have certainly formed a view in terms of wishing or seeking to influence the deliberation of the 301 committee. Senator COOK—We have not? Dr Raby—We have. We have been active in trying to influence that. Senator COOK—That is, I guess, what I was asking—we are actually proactive in lobbying.

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Dr Raby—Very much so, yes. Senator COOK—Because, once it becomes a 301, the horse has bolted. Dr Raby—Yes. There is a degree of automaticity about it, but we still have to see how the 301 committee comes out. Senator COOK—What is the time line for that? When do you expect the 301 committee to complete its deliberations? Dr Raby—By 3 October. Senator COOK—Pretty soon. We will expect to hear more of this soon? Dr Raby—Yes. Senator COOK—Well, let us hope the lobbying works. The government has announced trade policy reviews. What are the trade policy reviews that are being carried out? What are they primarily for? Dr Raby—This is the normal TPRM, the trade policy review mechanism, process of the WTO. Essentially on a rotating basis countries are subjected to very detailed scrutiny in the WTO in relation to their trade policies. I think we were done a couple of years ago. Ms Hird—The second time around. Dr Raby—It was the second time around. It is an opportunity for us. Obviously, it is a very resource intensive exercise. We put resources into doing a detailed assessment of the trade policies of those countries in which we have most commercial interest. That goes to Geneva, and in Geneva we ask and are able to ask in the committee a series of questions about other countries’ trade policies. Joan, you are more familiar with the process that I am. Do you want to elaborate? Ms Hird—As Senator Cook may recall—I do not know whether he was minister at the time—in the Uruguay Round it was one of Australia’s objectives as part of transparency to have this series of trade policy reviews that do not look at the legal aspects of a country’s regime but take the whole of the economy and look at the various strands of trade and trade related measures. It brings it altogether. Senator COOK—So that is what these reviews are? Ms Hird—That is what they are. Senator COOK—That is what I did not understand. When is this process going to be completed? Dr Raby—It is ongoing. Ms Hird—It is ongoing. You have schedules of reviews of countries. Australia is about every two years or so. It is a very burdensome exercise for some of the smaller countries. There is a schedule of continual reviews of different countries. So it is part of the in-built process of the transparency of the WTO. Senator COOK—Right. You have a scheme called the export barriers reporting scheme? Dr Raby—Yes. Senator COOK—How does that scheme operate? What does it do? Dr Raby—The genesis of the scheme was the previous minister’s statement on trade policy last year entitled Winning Markets. A number of initiatives came out of that exercise. The scheme essentially both tries to improve our knowledge of trade barriers, particularly non-tariff

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 455 barriers, and seeks to advise industry about the nature of those barriers. Although it was never specifically resourced, and so it operates on a fairly modest scale, drawing on— Senator COOK—You have had to cover that from within your existing resources? Dr Raby—Yes. Senator COOK—And nothing in this budget has added new resources to help you? Dr Raby—No. It draws on existing resources, particularly the state offices. Industry is encouraged to report to us barriers that they may strike in the actual process of exporting goods and services. My division simply collects that information and has a look at it to see if those barriers have come up previously in that country or another country. Usually the next step is to refer it to a bilateral desk. The bilateral desk will have a look at it. We may refer it to the post. We undertake to try to get back to firms with some advice within six weeks of the lodgement of the initial inquiry. We certainly cannot undertake to remove the barrier, but many times we find that the barrier does not exist. It is based on hearsay or inadequate information. But even being able to go back to industry and advise them of that fact can often help them in their efforts. CHAIR—Thank you. It is now 1.00 p.m., and I propose that the committee breaks for lunch. Senator COOK—If we had another five minutes we might at least complete my part of it, but I am happy to come back afterwards. CHAIR—You are tempting me, Senator Cook. You have five minutes. Has anybody else got— Senator SCHACHT—On subprogram 1.6? CHAIR—No; we are on subprogram 1.5. Senator SCHACHT—I have got no more questions. CHAIR—Right. Senator Cook, let us wind it up. Senator COOK—At the end of the day do you publish a report of these things somewhere? Dr Raby—No, we have not to date. Part of the problem with publishing barriers like this is that one has to be very careful when we go public with them that, first of all, they are accurate, they are representative. So we do not, for example, have a list of barriers from country A in South-East Asia simply because there have been a lot of complaints from that country. If the same barriers apply in country B, we would be seen to be treating countries unevenly. But the government, as part of its election commitment, has put in train a process to produce an annual report on trade policy. This is called the Trade Outlook and Objectives Statement. That statement will draw on that database to reflect in a careful way the nature of barriers in selected markets. Senator COOK—My semi-last question relates to labour standards in WTO. Can you tell us what Australia’s position is on the move to include labour standards in the WTO operation? Dr Raby—The Australian government position is that at best there is a very weak link between trade performance and adherence to core labour standards. Labour standards is a human rights issue and is most appropriately taken up in the ILO. It is not an appropriate issue for the WTO. Senator COOK—So we do not have any involvement with labour standards at all? This is a strong debate within the WTO, isn’t it?

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Dr Raby—It is a debate amongst WTO members, but it is not within the WTO forums at this stage. The debate has arisen in the lead-up to the inaugural Singapore ministerial meeting in December. Some countries have tried to put this on the international agenda, many countries have opposed it and, even amongst the OECD group of countries, there are very deep divisions on this issue. CHAIR—So it would more properly come under the Department of Industrial Relations? Dr Raby—No, Madam Chair. It is handled by this department and by my division. Senator SCHACHT—So is the WTO in favour of child labour? Dr Raby—No, Senator. The WTO does not have a position. Some WTO members have said that this— Senator SCHACHT—The WTO has not expressed an opinion about it? Dr Raby—No. The OECD has. The OECD has done a report which shows that there is no clear link between conformance to core labour standards and trade performance. In fact, they have found a reverse link. Those countries with higher incomes and higher conformance to core labour standards tend to have much stronger trade performances than those countries with low conformance. Senator COOK—Finally, what progress has been made in negotiations on the OECD multilateral agreement on investment? How is Australia expected to benefit? Dr Raby—This is an issue that is led by Treasury but we have a strong interest in it, and not least in terms of its consistency with any possible work or agreement on investment that may be undertaken in the WTO. The interest we have in this negotiation is that it provides the opportunity for a plurilateral agreement comprising the OECD members which basically gives equal treatment to foreign investors in each other’s markets, particularly in terms of MFN, most favoured nation treatment. There is discussion about the possibility of a dispute resolution mechanism in this agreement as well. But essentially it is the first time ever that there is an attempt to produce plurilateral and multilateral rules on investment. CHAIR—Thank you. Sitting suspended from 1.05 to 2.10 p.m. CHAIR—The committee has reconvened. We will, I hope, finish the entire foreign affairs portfolio some time this evening but this will necessitate going on beyond 6 p.m. Subprogram 1.6: Trade strategy development and business liaison Senator HOGG—My first question relates to staff. What is the current number of staff employed in each branch of the trade strategy and business liaison? Mr Hely—Currently in the division we have 72 staff and that number is made up of 21 in the APEC branch; 24 in the trade analysis branch; 13 in the national trade strategy and business affairs branch; 9 in the international competitiveness branch; plus myself as first assistant secretary, and four additional people based in the division’s support and coordination unit. I think that adds up to 72. Senator HOGG—How has this number varied from that of past years? Mr Hely—It tends to go up and down quite a bit, not so much in program terms but largely because of natural attrition due to postings and so on. It has been reasonably stable in the last

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 457 couple of years, probably down a couple on the last couple of years, but generally it has been around 70 for some time, or slightly above that. Senator HOGG—Do you anticipate the numbers being cut this year? Mr Hely—The numbers probably will go down this year a little, not so much because of major budget cuts but more because we have two or three secondments based in the division that are due to finalise some time in the course of the next six months, so we will probably waste two or three people mainly for those reasons. Senator HOGG—So your section has been treated relatively lightly in the cuts? Mr Hely—Our division has come off not too badly in the program of budgets cuts. In fact, all of our core program activities can be resourced in both funding and staffing terms. Senator HOGG—I just take you to page 9 of the portfolio budget statement. With actual 1995-96 and budget 1996-97, there seems to be a substantial increase there in the outlays. Mr Cotton—That is the 18 to 21 figure? Senator HOGG—Yes. Mr Cotton—I will ask whether Mr Rigg is able to give you an answer on that, Senator. Mr Rigg—Yes, as we have explained in answer to earlier and similar questions, these figures are made up from answers given to us, not only by the Economic and Trade Development Division but also from information supplied from posts on their activities that they attribute to this program, and also our state offices that contribute to the program. So the estimates for both 1995-96 actual expenditure and forecast expenditure for 1996-97 are an amalgamation of the responses given from the posts, the state offices and the divisions in Canberra. Senator HOGG—So there is no net additional funding there in effect? Mr Rigg—No, this just simply reflects what those respondents have estimated as their resource use and staff time spent on this program last year and what they forecast for this year. So that could reflect real changes in activity between last year and this year; it could reflect carry-overs from last year of unspent moneys into this year, a number of factors; and also, as we talked about earlier, exchange rate changes. Senator HOGG—Does it indicate an increase in workload activity and workload for the section? This is what I am interested in when I said that the staff years have dropped. Your indication in the questioning so far is that staff seem to be relatively static. Mr Hely—Probably that increase in outlays there on page 9 is reflecting reports from posts, probably reflects a heavy workload in monitoring and representing and reporting on APEC activities. As far as our division is concerned, in this year we have had a fairly small cut in monetary terms—about five per cent—but our staffing figures are pretty well static. In terms of new work that we are taking on this year, there is not a great deal. We have assumed responsibility for coordinating the market development task force, which is a new mechanism to give a renewed impetus to bilateral relations. I think Joanna Hewitt briefed this committee on it last Thursday. Also we anticipate some increased workload, looking at domestic impediments to trade competitiveness arising from Mr Fischer’s interest in that, both as Minister for Trade and Deputy Prime Minister. I think they are the main new levels of activity that we have taken on. Senator HOGG—Will there be any redundancies offered in your area this year as a result of staff cuts or will it be just through attrition, if there are any?

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Mr Hely—One thing I should mention is that one program we have had cut this year is a program called the trade and investment promotion services program—a thing called the TIPS program. That is a slightly unusual situation. It has been funded by AIDAB at about $2.9 million a year and administered by DFAT through our particular division. It is a program that was designed to help developing countries market their products in Australia and attract investment to their countries from Australia. It had its genesis back in the 1970s when the ASEAN countries were concerned at bilateral trade imbalances in our favour. I think the government of the day felt the need to offer some sympathetic treatment for their concerns. Over the period of time, of course, the Australian market has opened up, given the significant cuts in protection, so perhaps the rationale for the program has not been so strong. The program was reviewed between AusAID and DFAT two years ago, I think. It was decided then by ministers—and, I think, Senator Cook was one—to continue the program but for only three more years on a much reduced scale. A decision was taken this year to cut the program out at the end of the second year of the program. That involved 10 staff, some of whom were funded by DFAT and some by AusAID. There were two staff in Canberra, both of whom have been placed back in the department. There were four staff in Sydney: one on a contract which has concluded, one returned to DFAT, one went back to AusAID, and one took a voluntary redundancy and has been employed elsewhere. There were four staff in Melbourne: one on a contract which has concluded, one has been placed in the DFAT Victorian state office, and two took voluntary redundancies. Senator HOGG—What is the number of staff employed at each Public Service level within your section? You can take that on notice. Mr Hely—Okay, sure. Senator HOGG—Also—and you can take this on notice as well—what is the number of staff employed with the following periods of service: less than one year; greater than one year but less than two years; greater than two years but less than five years; greater than five years but less than 10 years; and greater than 10 years? I am looking for a profile of the staffing arrangements. Have any consultants or contractors been engaged by trade strategy and business liaisons since March 1996? Mr Hely—Yes, Senator. For 1995-1996 and 1996-1997 we have, in a sense, a rolling consultancy program of about $200,000 a year. The consultancies that have been undertaken include, firstly, one consultancy on climate change, which was a joint research program with ABARE on the economic and trade impacts of different abatement strategies. The cost of that was $180,000, of which the last payment was in November 1995. Secondly, there was a second climate change study also carried out jointly with ABARE, also at a cost of $180,000. That project is designed to be completed by the end of 1996. Thirdly, there was also a contribution of $30,000 made towards a BIE study examining the opportunities for jointly implemented projects to reduce greenhouse gas emissions in East and South-East Asia. That is to be completed in July this year. Fourthly, there was a contract entered into in June 1996 with a Western Australian consultant specialising in trade aspects of chemicals to identify possible trade implications of a trade ban or phase out of trade in certain hazardous chemicals. All those consultancy studies are basically designed to underpin multilateral treaty negotiations in that area. That has been our consultancy program for 1995-1996 and 1996-1997. That adds up to about $440,000 or thereabouts.

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Senator HOGG—What was the involvement of the minister’s office, if any, in the employment of the consultants or the contractors? Mr Adams—The minister’s office was involved in this process. We obviously wanted to keep the minister and the minister’s office very much involved in some of these projects, particularly in relation to very sensitive ones like climate change. So it made good sense that, when you are letting contracts or involving yourself in significant joint studies, the minister’s office would be involved. They were involved at the various stages in that process. Senator HOGG—Where do the reports that come from these consultancies find the light of day? Mr Adams—There have been a number of outputs. Just before Christmas there was a major joint DFAT-ABARE study released on global climate change. That study attempted to look at the economic impacts and the trade impacts of different abatement strategies. I think that that study not only contributed to the economic literature on different abatement strategies and started to point in the direction of more efficient abatement strategies but the department plus ABARE worked very hard to market it internationally. We did discuss the key findings of the study with the US, the Canadians and various European governments and with industry and conservation NGOs. So that was quite an important and quite a tangible outcome. The most recent joint piece of work that we have with ABARE is one stream of advice that is going into our policy process and our approach to climate negotiations. Senator HOGG—If we can move on, I will take you now to some questions on APEC. What is the current state of play in Australia’s preparations for the APEC leaders meeting? Mr Hely—We are operating at a multiple level, Senator. On one level we have the APEC trade and investment liberalisation agenda, which is the core activity of APEC this year. This is the first year of implementation of the agreed objective of moving towards free trade by 2010 for developed countries and 2020 for developing countries. APEC members are doing that by preparing this year what we call individual action plans that set out the direction in which we are moving towards that goal. We are doing a number of things in that area. We have approval by cabinet in terms of an Australian individual action plan, which has been tabled in the APEC process. Senator HOGG—Is that action plan in existence? Mr Hely—That action plan is in existence. In addition, we are monitoring what is in the individual action plans of the other 17 APEC members with a view to seeing what we can do to encourage them to be more forthcoming in their individual action plans in the period between now and the end of the year. The process is designed to present first drafts of individual action plans to leaders in November. They will be the start of a process, not the end. We are not looking at tabling plans that would set out a detailed blueprint of each and every action we take between now and 2010, but rather to put in what detail we can about existing movements towards free trade with more detail to come over the years. So what will be tabled this year in APEC will be the start of a rolling, annually updated process. I think we are basically on track in that. All 18 member economies have now tabled draft individual action plans. They may be subject to change between now and the end of the year. Senator HOGG—Sorry, how many action plans?

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Mr Hely—All 18 members, including Australia, have tabled individual action plans and they will be subject to further consultations and possible revision before being submitted in November this year. So that is what is happening on the trade and investment liberalisation front. Senator HOGG—Is the action plan itself public? Mr Hely—It depends on whether you are a journalist or a government official, but the short answer is ‘not really’. The intention of the individual action plans, because they are drafts and they may be subject to revision, is to keep them basically confidential—not releasing the text to either the media or the public. I think there is an expectation that in terms of the details of the plans APEC ministers need to consult with industry. So in our own case, when we have been consulting industry, we have been telling industry about our own plans and the plans of others. But, in terms of releasing the text, they are not available at this point of time in a public way. Senator HOGG—How has the process of consultation been undertaken with industry? Has it been on a very wide basis? Mr Hely—Yes, it is on a very wide basis. We have tried to strengthen our consultation with industry. We have a number of existing mechanisms through the Trade Policy Advisory Council, which is the Minister for Trade’s key private sector advisory body. That has about 38 or 40 business representatives. We have also consulted under the national trade strategy consultative process that brings together a range of about 13 or 14 national industry associations and state governments. We have consulted them on a number of occasions. In addition, we have tried, in particular on the individual action plan, to cast the net much wider. We have had some detailed consultations in main capital cities in April and May this year. In April I think we consulted about 20 to 30 peak industry association bodies. In May this year we consulted about 90, I think, key industry bodies and companies. We have just recently written to, I think, about 300 bodies, updating them on APEC with a view to having a further round of consultations some time in October. So it has been quite an extensive consultation program. Senator HOGG—You will come up with the final draft of this representing your views later this year? Mr Hely—We will. We have already had an agreement by cabinet to a current level of inclusion in the individual action plan. I think if we were going to look at changing that in any way, we would need to go back to cabinet. At the moment what we are looking at is revisions in formatting to give a common sense of format to each of the 18 plans. Senator HOGG—What bilateral initiatives have been employed to pioneer arrangements to liberalise or facilitate trade and investment within APEC? Mr Hely—In APEC? Senator HOGG—Yes. Mr Hely—Again, there is the trade and investment liberalisation side of APEC through the individual action plans. In a sense they are bilateral consultation processes. What we have been doing is analysing what is in the individual action plans of the other 17 members. We have that on one side. On the other side we are developing, in consultation with industry, what we call market access profiles of the other 17 economies. That gives you a snapshot of the market in terms of its openness. It gives you a bit of an idea about where barriers are in the main sectors. Then in a detailed annex we set out in

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 461 priority terms the detail of barriers that exist in those economies, and we set out areas we would like to see included in the individual action plans. Then we use whatever opportunities we have got, either bilaterally or in the APEC context, to try and press for their inclusion. So that is what is happening bilaterally. Senator HOGG—Do you know when the government will propose an APEC group in the World Trade Organisation? Mr Hely—What is happening on that is that there was a meeting of APEC trade ministers in Christchurch in July this year to look at how APEC might build support for a more ambitious multilateral liberalisation endeavour, partly designed to reflect the fact that we have the APEC leaders meeting in Subic Bay in November. Then only a matter of a couple of weeks after that there is the WTO Singapore meeting. What we are looking at now is the possibility of having APEC leaders come up with a very strong political message to the WTO meeting. That will, firstly, encourage the WTO to undertake a more ambitious preparatory phase towards a new round of multilateral negotiations and, secondly, encourage the WTO to accept a more ambitious longer term objective, such as APEC has in terms of its end goals. Senator HOGG—Realistically what is the chance of success? Mr Hely—I think the chances of success of building a good political message are quite strong. The views about the idea of the WTO in a sense accepting the same long-term objectives as APEC are probably not all that strong, but we are looking at some kind of wording to the effect of the WTO taking on a longer term objective at least equal to the ambition of the most ambitious regional trading arrangements, and really APEC is it. Senator HOGG—Has or will there be an attempt to establish an APEC business advisory group? Mr Hely—There are already existing groups. Regionally there is a body called the APEC Business Advisory Council on which each APEC member economy places two to three representatives. Australia has three representatives. That body meets four or five times a year and at the moment is in the process of preparing a report for APEC leaders. That is at the regional level. At the domestic level we have some existing consultative arrangements through the Trade Policy Advisory Council, National Trade Strategy Consultative Process, supplemented by an ad hoc process of consultation. What we are now looking at doing in response to a decision by Mr Fischer is to establish a much broader APEC business advisory body called the Business Advisory Forum of APEC, or BAFA. That is a body that will meet in Sydney on the first occasion on 26 September. It is quite a broad ranging body. We have invited some 500 or 600 industry associations, companies and professional bodies to come along. So far I think we have about 120 to 130 acceptances. The basic purpose of that is to allow business to input to government and to our representatives on the APEC Business Advisory Council, the regional body and to input their views and priorities on APEC from a business perspective. Senator MacGIBBON—Which are the three Australian companies? Mr Hely—There is Michael Crouch from Zip Industries Australia in Sydney, Imelda Roche from Nutri-Metics, who was on the previous regional body, and Malcolm Kinnaird from Kinhills.

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Senator HOGG—Can you tell me what the APEC ambassador has achieved since appointment? And this is a related question: what activities and duties has the APEC ambassador undertaken? Mr Hely—His duties are that he is the APEC senior official, so he heads up the officials level Australian delegations. When you ask, ‘What has he achieved?’, the original intention by selecting an APEC ambassador was to underline the government’s commitment to APEC as a primary vehicle for regional economic cooperation. I am not sure it was designed to bring about a wholesale change in the way we go about things. In terms of what has been achieved in our own sense, there are a couple of points to be made. Firstly, it has brought Australia in line with only a very small number of other APEC economies whose officials level delegations are headed at an ambassadorial status level. Domestically, it has tended to enhance the profile of APEC in the business community. We have certainly seen an increase in the number of requests by major business associations for speeches and addresses on the implications of APEC for business by the ambassador. Internationally, it signalled a clear message of our commitment to APEC, which has been noticed and well received by leaders such as President Ramos. That is what it basically set out to do and that is what it has achieved. Senator COOK—Is the ambassador still Peter Grey? Mr Hely—It is still Peter Grey. Senator HOGG—If I can now turn to NTIOC for a moment. What preparations have been completed for NTIOC 1996? Mr Hely—Perhaps I can come back to the basic point we were talking about, that is our budgetary allocations. NTIOC has in fact been quarantined from any budget cuts this year. NTIOC 1996 is proceeding much as was the basis last year. The basic objectives, market industry sessions, keynote speakers and sponsors have all been confirmed in terms of the featured markets. This year they will be Argentina, China, Indonesia, Republic of Korea, Malaysia, Thailand and South Africa, with a special session focusing on European research and development activity in Australia and the commercial benefits from that. The industry sectors to be featured are building products and services, energy systems, environmental technology, financial services, food processing and distribution, information industries infrastructure and minerals industry. Then we have a confirmed number of keynote speakers to date who are Mr Howard, the Australian Prime Minister; the chairman of POSCO, the major iron and steel corporation in Korea; the President of the China International Trust and Investment Corporation; the Philippines secretary for finance; Martin Bangemann, the commissioner of the European Commission; Trevor Manuel, the Minister for Finance in South Africa; Patricia Higgins, president of Unisys Corporation in the United States; and Don Mercer, Chief Executive Officer of the ANZ Banking Group Ltd Australia. Basically, all of the concept and all of the various integral parts of the program are now in place. It is just a question of the logistics of bringing the thing up to its final speed. Senator HOGG—What is the anticipated cost of NTIOC 1996, do we know? Mr Hely—The budget we have at the moment—and this is the upper end of the budget because it may be a bit lower—is roughly $2.7 million and we expect corporate sponsorships and registration fees to be roughly half of that. So the cost to government agencies would be in the order of $1.3 million to $1.4 million. Senator HOGG—And is there a special allocation in the budget program for this?

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Mr Hely—Yes, there were special allocations arising a couple of years ago from the Asia and Australia initiatives and the Working Nation initiative which provides funding of about $1.2 million. Senator HOGG—This is part of the quarantined funding? Mr Hely—That is part of the quarantined funding from NTIOC 1996. Senator HOGG—I might have missed this, but how many delegates are expected to attend the conference? Mr Hely—Last year we had about 1,375 delegates, of which there are about 850 Australian business people and about 180 internationals. This year we would anticipate much the same in terms of the Australians, but slightly fewer internationals. We are cutting back just a little bit on the number of fully paid internationals. Last year we had nine market industry focus groups. This year we will cut it slightly back to eight, just because of the logistical difficulty of it. So there will be a slightly fewer number of internationals, I suspect. Senator HOGG—What is the reason for the lower interest? Mr Hely—Not lower interest. We found that last year 1,375 people, nine industry and nine market focus groups were really pushing us in terms of logistics and the capacity of the venue to handle things. We slightly cut it down to make the logistics administration slightly easier. Senator COOK—As you say, the individual action plans are not public documents at this stage. Are they intended to be released after the APEC conference in November? Mr Hely—Yes, that is the intention; that they would be released and made public after the conference. Senator COOK—Do you know whether or not the Minister for Trade has seen fit to brief his shadow counterpart on the action plans, given the essential bipartisan nature of all this? Mr Hely—I do not know the answer to that. Senator COOK—Has DFAT run these through an IDC or some such thing with DIST? Mr Hely—Yes, we have had several IDCs in which DIST has been involved. Senator COOK—They are the outcome of that type of bureaucratic level consideration. Mr Hely—What went to cabinet was the outcome of an IDC process. Senator COOK—We are about 10 to 11 weeks off, are we not, from the APEC leaders meeting? Is Prime Minister Mahathir attending? Mr Hely—We understand so, yes. Senator COOK—Are all the leaders fronting up? Mr Hely—Yes, we understand they are all fronting up. I suppose it is subject to elections in one or two economies, but our understanding is that they are all intending to front up subject to re-election. Senator COOK—The big argument to me in the lead-in to last year’s APEC meeting in Japan was this question of whether there should be exceptions permitted. At the end of the day, my recollection of the communique was that no exceptions were to be permitted. We are still working on that basis, are we? Mr Hely—We are. Senator COOK—In the discussions leading in to the formation of the action plans, have any countries claimed exceptions or sought to argue a case for exceptions?

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Mr Hely—No, no country has sought to argue a case for exceptions, which is not necessarily to say that they have all included all sectors in their individual action plans. But none have sought to argue exceptions. I think all leaders accepted the principle of comprehensiveness, and that is reflected in the Osaka action agenda. Senator COOK—Comprehensiveness is a firm principle for Australia, isn’t it? Mr Hely—Yes. Senator COOK—When the Minister for Industry, Science and Tourism, Mr Moore, claimed an exception for the automotive industry in Australia that would have embarrassed our position internationally, wouldn’t it? Mr Hely—Again, I cannot answer that. I have not heard of any such embarrassment. Senator COOK—But he did seek an exception of some sort for the Australian automotive industry? Mr Hely—I am not sure about that. The motor vehicle industry is currently under review by the Productivity Commission, and the relationship of the industry to APEC and regional development is part of the terms of reference. I guess the Productivity Commission will make some deliberations about that and report those to the government. Senator COOK—You are not familiar, then, with the statement by the industry minister, Mr Moore, during the lead-up to the decision by the government on how it intends to structure this automotive industry review, saying he believed that there was a case for the tariff which is to be phased down to zero by 2010 to be ameliorated or held back in some way? CHAIR—Senator, as that statement was made by the minister from another portfolio, I think that that should properly be addressed to Minister Moore. Senator COOK—I do not think so, because this is an important part of Australia’s trade strategy negotiations. CHAIR—But that is a personal remark made by the minister himself and, as such, the question should be addressed to the minister for industry. Senator MacGIBBON—I am not aware that that is what Minister Moore said: I thought he said we would just have a look at it. As someone who goes around Asia a fair bit—I was in Korea a few weeks ago—there are only three brands of cars on the road: the Hyundai, the Kia and the Daewoo. I think we need to have a look at what is going on in the world. Senator Short—As was said, he is not aware of what Mr Moore said anyway. I must say that I think— Mr Hely—The only observation I would make is that in our individual action plan we have, naturally, included the tariff phasing program under the existing PMV scheme. We have also included, but not prejudged, the review process that is currently under way, so what goes into our individual action plan will reflect the government’s decision on the review process. Senator COOK—Given the intensity with which the no-exceptions comprehensiveness issue was argued last time and the desire by us all to hold to that principle and get workable individual action plans, when ministers claim exceptions for industry sectors independently of that strategy it is embarrassing to our position, isn’t it? Senator Short—The arrangements for the future of the industry will be reviewed, as you know, Senator Cook. I think any comment in advance of that is sheer speculation and hypothetical and, I would suggest, not appropriate for this committee.

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Senator COOK—Was Minister Moore talking out of turn on our trade strategy when he made those observations? Senator Short—No. As I say, the Industry Commission will be reviewing the future arrangements for the industry and, until such time as that is done, at the very least it is certainly not a matter for this committee. Senator COOK—I guess I will ask DIST tomorrow what he meant when he made those— Senator Short—I think you might address it in that committee, if you wish to do so. That is the committee that deals with industry. Senator COOK—I know, but this is the committee that deals with trade. What we are talking about is a trade strategy to phase tariffs down to zero by 2010, and you have got a senior minister of the government saying, ‘Whoops, hang on. Wait for my industry sector. Don’t do it there.’ Senator Short—Why do you not ask Mr Moore or his representative in the committee tomorrow precisely what was said in that context? It is an industry portfolio matter. Senator COOK—It is a trade matter too, with respect, because what we are trying to do is fight this argument for comprehensiveness and fight back the forces arguing for exceptions, yet we have within our own ranks one arguing for an exception. It does affect the credibility of Australia to argue in international fora for comprehensiveness when, domestically, senior ministers are calling for exceptions. That is the point of my line of questioning. Senator Short—I suggest- CHAIR—Senator, it is not possible for anyone in this portfolio to answer that particular question and therefore I suggest that that question is out of order. Senator COOK—I think the impact of domestic utterances on our trade strategy is in order. CHAIR—I suggest that you explore this question tomorrow and then, if you can glean any specs of gold from the answer that you are given there, return to these questions perhaps in supplementary estimates. Senator Short—That is the appropriate way to go. You are speculating— Senator COOK—I am not speculating; he said it. Senator Short—No-one knows precisely what Mr Moore said for a start, so why do you not pursue it in the relevant forum tomorrow and then, as Senator Troeth has said, if you want to pursue it here in the light of what you discover tomorrow then you will be free to do so in supplementary estimates. Senator COOK—My understanding is that what Mr Moore said was that there should be an exception for the Australian automotive industry. Senator Short—We are suggesting that you clarify that in the appropriate forum, which is the committee tomorrow. Senator COOK—The target for zero protection within APEC is 2010 for Australia, is it not, Mr Hely? Mr Hely—Correct. Senator COOK—The automotive review that the minister has referred to is to examine post- 2000 tariff levels. Is that right? Mr Hely—Correct.

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Senator COOK—This is a review by the now styled Productivity Commission, formerly the Industry Commission. What is the purpose of that review, given our commitment to zero tariffs by 2010? Senator Short—Had not your government also proposed such a review, Senator Cook? Senator COOK—Yes, I proposed it. Senator Short—What was the purpose in that? Senator COOK—I am asking you, Minister. Senator Short—Well- Senator COOK—I know what the purpose was under my government. Senator Short—Yours was the first suggestion. Senator COOK—You are the one who has to answer questions, not me. I know what the purpose was under the government of which I was a part. I am asking you what the purpose is under the government of which you are a part. Senator Short—And I am saying to you that that is a question to be put in the industry portfolio because it is entirely an industry matter. Senator COOK—Are you refusing to answer? Senator Short—I am saying to you that you are asking it in the wrong forum; that the appropriate committee to ask those questions in is the committee which is dealing with DIST, which is, as I understand it, meeting tomorrow. Senator COOK—Minister, I appreciate your defence of this but I ask you to consider this. Senator Short—I am not being defensive; I am just being accurate. You have picked the wrong committee to raise the issue. The right committee is the one that you are a member of tomorrow. Mr Hely—Just picking up on that point, Senator: the review of the passenger motor vehicle industry has a breadth that brings it somewhat beyond just what is happening in terms of its protection levels in APEC. It is looking at the entire structure of the industry, domestically and internationally. It is reflected in the terms of reference. As I understand it, certainly the commission will look at the relationship of the industry to APEC but there are much wider terms of reference than just the APEC dimension. I guess there is the period between 2000 and 2010 and how it moves within that phase as well, leaving aside what the end point is. Senator COOK—As far as trade policy is concerned, our commitment is to zero tariffs for all industry in Australia, including the automotive industry, by 2010 within APEC. That is our commitment. At the same time we are reviewing post-2000 levels of protection for the automotive industry. Mr Hely—That is one element of the review, yes. Senator Short—The review goes much wider. Mr Hely—Environmental factors, investment factors. Senator COOK—I am aware of what the review does. Senator Short—It is not just APEC and it is not just tariffs; it is everything pertaining to the future of the industry. Senator COOK—I am aware of what the review does. If I can complete my question, I will be able to ask it. In view of this review of post-2000 arrangements for the Australian

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 467 automotive industry, what consultations have you had in the formation of this review about the realisation of your zero tariff in the APEC situation? Mr Hely—As I have said, domestically we have consulted the relevant sectors. In terms of our individual action plan, we have included in that the existing tariff cutting mechanism to 2000. We have also included that we will include in our individual action plan whatever decision the government takes in response to the review. That is in our plan and that has been commented upon by a number of economies who are naturally interested in the outcome of that review, but none of them has sought to press us to prejudge what that outcome might be. That is a matter for the government after it has received the review. Senator COOK—Three of the world’s largest economies in auto production are involved in APEC—the United States, Japan and Korea. On a world scale, Australia is an important but by no means by world standards a significant producer of motor vehicles. I think in Australia we manufacture 0.7 per cent of all the Ford motor cars made in the world, for example. All of those major producers will be concerned within the APEC setting about what levels of protection will apply in 2010. In our individual action plan we have been opaque, in the sense that we have said, ‘There’s a review here; we cannot give details until such time as that review is completed.’ What type of response has that elicited from the Americans, the Japanese and the Koreans? Mr Hely—That has not elicited a specific response. Both those economies have expressed interest in the process and they have expressed interest in the review. I guess, consistent with the public nature of the proceedings, they will make submissions to the Productivity Commission setting out their views in more detail. But at this point of time they have not engaged us in a detailed discussion on motor vehicles in the APEC context. Senator COOK—Have you had discussions with the Americans, the Japanese and the Koreans specifically on motor vehicles within the APEC context? Mr Hely—Not specifically in the APEC context. We have had a number of bilateral consultations covering a whole range of APEC matters, of which individual action plans have been one. Certainly the Japanese have expressed an interest in the outcome of the review of the PMV inquiry; but, as I said, none has sought to press a particular point on us in those consultations to the APEC context. Senator COOK—From the point of view of this industry there are those three major producers I referred to and Australia. There are other producers in APEC. That is one way of looking at the industry on a country production basis. Another way of looking at the industry is on the basis of who are the companies. In the case of Ford, for example, they produce in Detroit and in Australia. They produce also as a shareholder with one or two of the major Japanese companies their product, and they are a major shareholder in Kia. The levels of protection in each of those countries and the speed by which it is dismantled and things like that are matters for the international board of Ford to consider. Toyota is another example, to take the Japanese side, that has got production in the United States as well as shared production facilities in Korea and production in Australia. Has there been any discussions between the APEC nations and the major producers on the basis of a regional approach? Mr Hely—Not in that context. The only consultations we have had domestically with motor vehicle companies has been on the nature and terms of what has been included in our individual action plan on motor vehicles, which is what I have just said recently.

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Senator COOK—Who are the major commercial sponsors of NTIOC this year? Mr Hely—There are eight sponsors this year. The major sponsor is the ANZ Bank. The others are BHP, Western Mining Corporation, Qantas, the Australian Stock Exchange, Price Waterhouse, the AMP Society, Telstra and Minter Ellison. Senator COOK—In past NTIOCs there has been an effort by the department to try to quantify the value of the event. I recall seeing statements from ministers from time to time saying roughly what the value of the total number of audits was that were placed during the conference or can be followed up and realised. Have you gone back over those performance indicators and verified them to see what in fact it is? I think it works out to be about $1.7 million that taxpayers are paying for this conference. What do we get for our buck? Mr Hely—Last year a company, Worthington di Marzio, did an independent survey of a number of Australian companies that participated. It came up with figures based on responses from companies that had commercial value of NTIOC deals roughly of the order of $148 million. The veracity of that is to be tested by the same company which is going to do a follow-up survey with the same company in the next few weeks. At this point in time we cannot quite say that $148 million has materialised, but we should be able to soon. There were other figures floating around earlier from the same company’s surveys that put the commercial benefits of NTIOC at about $2 billion to $3 billion. That might have appeared in the draft DFAT annual report that I think you may have access to. That figure was based on an extrapolation by the company assuming that the figures that they got from the small survey were the same for everyone that attended. Subsequent checking of all of that found us not comfortable with those figures. The final figure and the figure that we think is more verifiable is around $148 million. That is the figure that will be the subject of further follow-up interviews by the company soon. Senator COOK—It is quite substantial? Mr Hely—Yes. Senator COOK—I take it that Treasury and Finance accept there is a dinky-di multiplier here that works in Australia’s national interest? Mr Hely—You would have to ask them. Senator COOK—Has this not been the base of any discussions on funding between the department and Treasury and Finance? Mr Hely—Not at this point in time. Senator COOK—The NTIOC program has been quarantined, but I assume partly for this reason too that it generates growth to the economy and income to the bottom line of the budget? Mr Hely—Partly that and partly the commitment of the government to holding NTIOC. Senator COOK—Does the European ASEAN forum fall within your area of trade strategy? Mr Hely—No. Senator COOK—So I cannot ask you any questions about Australia’s role in that and what our future outlook might be? Mr Cotton—I think you are talking about ASEM. Senator COOK—Can you just tell me a bit more about the Malaysian view of APEC at the present time?

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Mr Hely—The same as it has been for some time, I think. I think Malaysia sees APEC as being an important regional grouping and one in which they can derive some practical cooperative benefits. I think it is true to say that views from senior levels of Malaysia that would like to see Malaysia at the core and centre of regional cooperation have not changed. That has been manifested by a view by Malaysia that is designed to avoid proliferation of institutional development of APEC in terms of new committees but, at the same time, one that adheres to the view that APEC, being open regionalism, means open membership and therefore quite expansive in membership terms. They have been views that have been around for a little while that have not changed. At the practical official level, it is quite a cooperative arrangement with Malaysia, and they play quite a constructive role in the official and technical discussions. Senator COOK—What is the situation with the EAEC at the present time? Is that still regarded by Malaysia as being a caucus within APEC? Mr Hely—I think there was a question on that yesterday or the day before and John Dauth from the South and South-East Asia Division answered it. I do not think I have anything to add to what he said. Senator COOK—The Prime Minister was recently quoted as wanting to confer with India over APEC. Is Australia proposing India as a member? Mr Hely—The current situation is that there is a moratorium that is due to expire at the end of this year. Ministers will be looking at new APEC policy. It is probably premature to predict what might be the outcome of those discussions, given the sensitive nature of that membership question. Our own assessment at this point of time is that there is strong support in favour of extending the moratorium because of the desirability of consolidating APEC at the moment, particularly the individual action plan. However, we, like others, recognise that there are a number of regional countries, of which India is one, that would have strong claims when the moratorium is lifted. Again, that matter is subject to consensus on the part of all APEC members. Senator COOK—I am very much in favour of extending the moratorium in order to consolidate the work that is being done. The broader the membership base becomes, the harder it becomes to get a real outcome. Mr Hely—That seems to be the view that is shared by most. Senator COOK—Is any nation in APEC suggesting any new members at all? I know that Malaysia had ideas of extending the membership. Are they still pushing that? Mr Hely—There have been discussions about the desirability and timing of the possible inclusion of new members to APEC. The discussions have not focussed on any specific countries, but Vietnam has applied for membership. From time to time there were discussions of other aspirants like India and Russia, but I do not think any one is advancing any one other at this point in time. The question, more generally is whether or not the moratorium should be extended and, if so, whether APEC should develop some sorts of criteria and principles that would govern membership applications after the moratorium. That has been the nature of the discussion rather than whether India or Vietnam should become a member. Senator COOK—Russia was quite critical of Australia at one stage, alleging that we were holding them out of membership. Mr Hely—That is right.

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Senator SCHACHT—Were you or any part of the department involved in organising the preparations and then participating in the APEC SME ministers meeting in Cebu City in the Philippines recently? Mr Hely—The arrangements were mainly done by the DIST in consultation and collaboration with our embassy in Manila, although the chair of that meeting was the Philippines so the main organisational capacity for the meeting was done by the Philippines. Senator SCHACHT—Do you have any information, on the level you were involved in, of how many Australian business people accompany a minister? Is it the usual trend in these conferences of SME and APEC meetings to have a private sector involvement? Mr Hely—Our understanding is that there were 11 business people that accompanied the minister and they had two levels of activity. One was involvement in an APB-NET business congress in Manila immediately prior to the ministerial meeting, and then there was a joint dialogue session— Senator SCHACHT—That was in Manila? Mr Hely—That was in Manila on 2 and 3 September, immediately prior to the ministerial meeting at which, I am told, there were 445 companies from the 18 member economies, including 11 from Australia. So they had that networking conference, and then there was a dialogue session between the SME ministers and a representative group of business people from the congress, including three from Australia. Senator SCHACHT—Do you know who the three representatives were? Mr Hely—I cannot tell you. I would have to check. I do not know who the three were. Senator SCHACHT—So in the joint meeting with the ministers, which is a feature of these SME ministerial meetings, there was a joint session, for want of a better description, where, at the same table, there were both the ministers and business representatives in open dialogue. Mr Hely—Yes, that is right. I think it was also an occasion for the business people to present the recommendations from their APB congress. Senator SCHACHT—So the recommendations came from the APB-NET congress in Manila? Mr Hely—Yes, a number of recommendations came from the congress. And I understand that, the decision of ministers was to refer those to officials to build into the action program in 1997. Senator SCHACHT—Can we have a copy of those decisions, first of all, from the APB- NET that went to the meeting? Mr Hely—Sure. Senator SCHACHT—Did the ministers adopt the recommendations? Or did they not adopt them and refer them on to officers? Mr Hely—The ministers took some of their own decisions. With respect to the private sector recommendations, I understand that they directed the APEC policy level group on small and medium enterprises to consider the recommendations in developing their action program in 1997. So it is up for further consideration by officials. Senator SCHACHT—Was there also a declaration at the end of the conference? Mr Hely—There was a joint declaration.

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Senator SCHACHT—Could you provide us with a copy of that, as well as the decision of the APB-NET— Mr Hely—Yes. Senator SCHACHT—And mark those where the ministers added further recommendations. Of the 11 businesses from Australia that attended, would we provide any assistance for them to attend? Mr Hely—I do not know. If any assistance were provided, it would have been provided by the DIST portfolio. You might want to ask them. Senator SCHACHT—When they had the joint meeting with the ministers and the business representatives, which was three from each economy, was the Australian minister present for that discussion? Mr Hely—I do not know. Again it is a question to direct to DIST. I do not know whether he was in that specific session. Senator SCHACHT—Were there actually DFAT representatives at the conference in Cebu City? Mr Hely—There was one DFAT representative. Senator SCHACHT—Was he from your division of APEC? Mr Hely—Yes, he was from the APEC branch of our division. Senator SCHACHT—Has he given any sort of report on DFAT’s viewpoint about the success or otherwise of the meeting? Mr Hely—I think he, along with the DIST view naturally, thought that it was quite a successful meeting. It tended to consolidate the work program from the meeting you hosted in Adelaide last year, and you had a forward looking agenda in 1997. So I think it was perceived as being a useful meeting and a good outcome. Senator SCHACHT—Of the 445 SMEs which were represented at the APB-NET in Manila, obviously the host country has a disproportionate number, only naturally. Did every economic group supply at least three? Mr Hely—I do not know. I would have to check for you, or you could check with DIST. Senator SCHACHT—Most of the questions now would probably be relevant to DIST, but in the meantime if you could get to us those declarations and the material that was published, that would be helpful. Finally, did they take a decision to meet again? Mr Hely—Yes, they did. The are going to meet in Ottawa in September 1997. Senator SCHACHT—Good. I think the Canadians in Adelaide last year were queuing up. Mr Hely—Yes Senator SCHACHT—From my experience, it is only after that meeting that you make a decision to meet again. Is that still the case, or is there more of an indication that these SME meetings might become a regular feature of meeting in a different APEC economy? Mr Hely—I do not know. My impression is that they would become part of a regular process. The results that were indicated as the result of the networking of SMEs in Adelaide suggested something of the order of $80 million worth of business. That was perceived as being a pretty useful outcome. It has generated a sense that it is worth while having these things as a regular part of the process.

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Senator SCHACHT—Okay. Senator COOK—I have just one final question. There are now an increasing number of APEC sectoral meetings. There was one that the Minister for Resources and Energy chaired here in Australia just recently. There is the small business one. There is the APEC science ministers meeting, which I think is due in Korea any day now. There was a finance ministers one too. Can you provide us with a schedule setting out what these meetings are and what the forward program is, where it will be held next and in which sectors? Mr Hely—Yes. CHAIR—I think Senator Hogg has questions on 1.6. Senator HOGG—In the portfolio budget statement, at page 39 under the outlook, the first dot point there talks about further contributions to government discussion and policy development on micro-economic reform issues. What specific issues are you looking at there? Can you tell me at all? Mr Hely—It varies. Part of the purpose of all that is that under an increasingly globalised international trading system the competitiveness of companies and your country increasingly depends on what is happening at the domestic level in the micro-economic reform agenda. It is what has been called the fifth platform of the government’s trade policy. So what we are looking at in DFAT is trying to identify areas where domestic economic issues have an impact on our trade competitiveness. Two recent examples that we have looked at were a submission to a parliamentary inquiry into the air freight chain and how it might be improved to improve our trade competitiveness. Another one we are looking at at the moment is doing a departmental submission to the Wallace inquiry into the financial system, with a view to putting views there about the extent to which our financial sector is either enhancing or hindering our trade competitiveness and engagement with the region. Senator HOGG—Who or what determines what issues you will address there? Is it something generated by the government itself? Mr Hely—It is partly a combination of factors really. It is partly generated by what is on the government’s micro-economic reform agenda in the coming six to 12 months. It is partly issues that we might pick up from our own activity, and it is partly views and interests that might come out of the minister’s office. Senator HOGG—The next question again refers to the same page, where the third last dot point says, in the third line, ‘including the completion of research on trade and investment linkages’. Is there a report being generated on that? Mr Hely—No, not yet. We were looking at doing, again, some consultancy work and research into Australian investment in ASEAN, and the extent to which trade and investment flows are linked in that important part of the world. At this point of time we have not moved forward to engage a consultant or to— Senator HOGG—It has not even been started? Mr Hely—No, it has not. Senator HOGG—The way I read that was ‘including completion’, so I thought it must be near completion. Mr Hely—No.

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Senator HOGG—On the next page, the third last dot point says, ‘Undertake investigations in analysis of key economic and trade issues affecting international competitiveness.’ Am I to assume that is something into the future? Will it be just a general report for use by officers of your section, or will it be something more substantial? Mr Hely—Yes—probably the former, Senator. This really comes under the general role that we have in the division of trying to both keep our ministers and department generally informed of major domestic and international— Senator HOGG—This was not a specific, major report, though? That is what I was trying to get at. Mr Hely—No, it is not. It is part of an ongoing process of research and analysis. It might be looking at our export outlook, trade performance, exchange rates. Senator SCHACHT—I have another question on 1.6, about APEC. Again I will raise this issue with DIST, but in my old portfolio Customs were at the forefront of a whole range of arrangements on harmonisation processes, et cetera. I know that they chaired a couple of committees. Are we still providing a leadership role in the customs arrangements for harmonisation? Mr Hely—Yes, we are. That is probably one of the more successful stories in APEC and the trade facilitation process. There is a large body of work going on in terms of streamlining and harmonising customs procedures. Our customs people are at the forefront. I have probably got details in here, but it is a question that you might want to direct to DIST. Senator COOK—I have a couple of quick questions on Team Australia. There is a real need for this program, I must say, with states bidding each other up, to no advantage to the national interest, over attracting business. I have always thought it was a good concept but I have always thought it was very hard to get the states to comply. In fact, they do when it suits them and they don’t when it suits them. I see that your performance forecast has a number of steps, but do you monitor where states break from the Team Australia concept and pinch things off one another or bid up the prices for investment or industry location? Do you monitor that? Mr Hely—We tend not to monitor where they compete with each other on the inward side of investment. Where we try and get a better handle on things is where they are putting their export activity, in terms of visits by state government ministers and officials and by missions, and we try to bring about a better sense of coordination with the Commonwealth. We had a situation, as I am sure you would be aware, a couple of years ago, where you found in a particular country quite a number of Commonwealth and state government missions all overlapping each other at the one time, with very little coordination. It was sending a message of division rather than Team Australia. We have tried to look at that process and develop a better process of coordination, but more in terms of offshore activities than of the inward investment side of things. Senator COOK—The constitutional responsibility for trade is a Commonwealth one, but how many trade ministers do we have in Australia? We have got one in Western Australia. Mr Hely—Yes, Hendy Cowan in Western Australia and— Ms Marginson—One in every state, essentially. Senator COOK—All claiming to be trade ministers, all knocking on the door of foreign governments?

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Mr Hely—No. Quite a few of them are ministers for business development or something of that nature but they have in a sense the trade portfolio—a minister for state development or a minister for business development. Senator COOK—Do they now lodge with you what their forward programs are, so that you can help organise and coordinate? Mr Hely—Yes, they do. They normally do that through our state offices, so we get a consolidated list of what the states have in mind, looking six months or so down into the future. Senator COOK—Has the practice of one state rubbishing all the other states to foreign markets ceased as well? Mr Hely—Certainly our overseas missions have fewer and fewer reports of that sort of activity. I am not sure it has entirely ceased but certainly it has significantly reduced. So the trend is right. Senator COOK—Finally, in the outlook part of your subprogram you talk about further analysis and advice to the government on environmental issues as they affect economic and trade performance. Then you go on to talk specifically about climate change obligations and greenhouse gas strategies. I may be a heretic within my own party about this, but in terms of what you have looked at in greenhouse gas responses, have you looked at the possibility in any way of increasing Australia’s greenhouse gas emissions by attracting more and more industry from the dirty pollutant economies of North Asia and elsewhere, so that the net effect to global greenhouse gas emissions is less? We have cleaner burning technology, a better location and all the other things. It is a global problem yet everyone takes it on a country by country basis. Mr Adams—We have looked at that issue in the general context of articulating a strategy on the differentiation of national targets. What we would be trying to do is to achieve an equitable distribution of costs of abatement. In our case it might mean that that kind of strategy could be compatible with Australia being allowed, for example, to increase its emissions over the next 10, 15, 20 years—but in the context of other economies reducing their emissions as compared with a base year like 1990. Senator COOK—For example, I think the emissions from steel production in the world would go down dramatically if the dirty brown coals used in Germany to produce steel were not used but German steel production were done with high calorific black coal, energy efficient black coal, in Australia. That would cause a considerable reduction. We have the Europeans claiming that we are not meeting our country target and they are, but nonetheless the global level of greenhouse gas emissions is not necessarily going down or even being abated. Mr Adams—That is correct. What we can demonstrate and have done in our joint work with ABARE, for example, is that if you did remove subsidies on brown coal productions in countries like Germany, greenhouse gas emissions would go down quite substantially. That kind of work is being done. Senator COOK—The greenhouse gas matter is related, I think, to the Rio declaration and goals set under that. But it applies, as I understand it, mostly to developed countries. China, for example, the country that emits more greenhouse gas than any other country in the world, is not captured by those targets. In looking at this from a trade point of view—Australia’s trade relationship with China—particularly in environmental technology, clean burning technology and the development of mineral resources relating to lower greenhouse emissions are all quite

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 475 important. Do you look at those sorts of issues with China, and with India and Brazil, the other major contributors? Mr Adams—We are certainly looking at joint implementation and activities implemented jointly. You may be aware that Senator Hill, at the second conference of parties, in Geneva in July, announced an Australian ‘activities implemented jointly’ initiative. This is all about being able to establish projects in countries within our region and being able to supply environmentally benign technology. What we are trying to do is certainly to increase our trade in environmental technology with a range of countries, initially focused on Indonesia. In the fullness of time we would like to apply an AIJ approach to countries like China and India, but it is more difficult to do that with China and India, simply because the general approach that they are taking on AIJ is a much harder approach than Indonesia’s. Senator COOK—Thanks very much. CHAIR—Thank you. Senator Schacht, do you have any more questions on subprogram 1.6? Senator SCHACHT—No. Subprogram 1.7—Global Issues CHAIR—For the information of senators, within subprogram 1.7 I will deal first with 1.7.1 ‘International Organisations’ and 1.7.2 ‘Environment and Antarctic’, which come under the International Organisations and Legal Division. Senator SCHACHT—‘International Organisations’ is really subprogram 1.8, or is that ‘International Legal Interests’? Where in subprogram 1.7 ‘Global Issues’, in pages 41, 42 and 43 are— CHAIR—I am working off page 5 of the PBS. Senator SCHACHT—Page 5? CHAIR—It is the portfolio structure, and the information says that 1.7 deals with 1.7.1 and 1.7.2—‘International Organisations’ and ‘Environment and Antarctic’, which comes under the international and legal division. Senator COOK—Does this include things such as the chemical weapons convention, the nuclear non-proliferation treaty and the comprehensive test ban treaty? Mr Cotton—Excuse me, Senator Cook, in subprogram 1.7 we are covering essentially two sets of items. The first is with my colleague Mr O’Sullivan. That covers the International Organisations and Legal Division, which is the whole, fairly wide range including the UN organisation, human rights matters, et cetera—environment and subsequently legal. The second part and, indeed, the other four subprogram component items are arms control and disarmament issues, which are handled by Mr Cousins. I think that we are going to take them in that order. Senator COOK—I have a couple of questions, in that case. The first one I suspect I am out of order in, and you will tell me, but I draw your attention to the possibility in advance so that we can move swiftly. Australia’s affiliation to the International Labour Organisation, which is an agency of the United Nations—it is in the United Nations family— Senator Short—I think it is DIR. CHAIR—Yes, that is correct. Senator COOK—Did DFAT have any input into the decision to reduce the amount of payment to ILO? Senator Short—No.

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Mr Cotton—No. Senator COOK—Were you consulted? Mr O’Sullivan—I was not consulted, Senator. Mr Cotton—Nor on my side, either Senator COOK—I see, you were not consulted. The United Nations is undergoing an internal review about the structure to make it more efficient, is it not? A series of questions have been raised. Indeed, the outgoing foreign minister wrote a whole book about it, which we all got an autographed copy of. Senator Short—Have you still got it? Senator COOK—Yes. Where is that up to and where is it heading—into the sand or into success? Mr O’Sullivan—You are right, Senator, that the issue of UN reform has been around for some time, and the former minister was intensely interested and wrote extensively on it. What is happening now is that the new government has continued to support the principle of reform of the United Nations to make it a more effective, more credible and realistic organisation. The proposals for reform have been taken up by a series of what are called high level working groups, in New York. I think there are five of them, and they cover things such as the Security Council reform, the financial situation of the UN, strengthening the UN system, the agenda for peace and the agenda for development—the latter two being initiatives of the Secretary-General. So there are five groups working on those matters in New York right now. Senator COOK—With the agenda for peace, is that where the debate is about the use of UN forces? Mr O’Sullivan—No. This is a question that my colleague Mr Cousins might want to comment on. But, as I remember it, the agenda for peace was a statement put out by the Secretary-General in 1993, and responded to by the General Assembly in 1993 also, which specifies a series of activities that the international community will undertake to advance the course of peaceful development. The issue of preventive diplomacy is being handled in a slightly different context. There is a working group underneath the chapeau of the agenda for peace which consists of two subgroups. There is one subgroup on preventive diplomacy and peacemaking which Australia chairs. That is where the main activity on preventive diplomacy is going on now. I believe there is an open-ended group on the issue of the agenda for peace itself, which is somewhat different. Senator COOK—On the preventive diplomacy and peacemaking part, there were a series of items for consideration, as I recall, under this heading which related to nations nominating parts of their military forces for use and so on. I take it from what you are saying that none of these things have yet been decided or are even approaching conclusion, or am I wrong about that? Mr O’Sullivan—I will ask Mr Neuhaus to comment in detail, but I think it is a bit more optimistic than you believe, Senator. Senator COOK—I am pleased to hear it. Mr O’Sullivan—The visit in May last year by the Secretary-General of the UN saw the government of the day announce its intention to conclude an agreement between Australia and the UN for the earmarking of forces that might be used for preventive activities. Subsequently,

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 477 those negotiations were concluded successfully. So Australia has an agreement with the UN and elements of our military forces are now, at least in a notional sense, earmarked so that they could be used if the government decided. Mr Neuhaus—Essentially, we are talking here of two different matters. One is the stand-by arrangements which a large range of countries have entered into now with the UN, and that is managed under the department of peacekeeping operations. There is a subgroup in the General Assembly working on preventive diplomacy as a concept and it is still grappling with the notion of preventive diplomacy. It still has not, in its report, which it brought down just before the end of UNGA 50, reached full agreement on just what preventive diplomacy encompasses. So discussions will continue on that in UNGA 51. Senator COOK—What is your anticipation of this? Is this going to be an ongoing debate, or do you think we can reach some agreement? Mr Neuhaus—We are very confident that, at the end of the day, we will reach some agreement. There has been some concern on the part of non-aligned countries that there has been too much of a focus on agenda for peace issues at the expense of development issues. There has also been some concern over sovereignty and the extent to which preventive diplomacy might impact on sovereignty. But, as time goes on, the various shades of opinion are coming closer together. We are optimistic. Senator COOK—As for the lobbying for Australia to get a seat on the Security Council of the United Nations, when is that vote going to be taken? Mr O’Sullivan—I do not think there has been a decision yet, Senator, because the administrative committee that determines the way the Assembly will function over the course of the period between September and December has not made those decisions. But our best guess is around the end of October. It may be a little bit before that. Senator COOK—End of October this year? Mr O’Sullivan—Yes. Senator COOK—So it is quite close? Mr O’Sullivan—Yes. Senator COOK—Have we got the numbers? Mr Neuhaus—No sensible person goes into an election without a feeling that they have some numbers. Mr O’Sullivan—We think we will get there. Senator COOK—I notice that the foreign minister, on his recent trip to Germany, met Klaus Kinkel, the German foreign minister, and we reached an agreement that Germany would support Australia for a seat on the Security Council and we would support Germany for a permanent seat on the Security Council. Mr O’Sullivan—I do not think that was a new development. The Australian government, for a number of years, has been in favour of an expansion of the Security Council to include Japan and Germany. That is a position that, historically, we have held for several years. It is also the case that several years ago, Germany informed Australia that it would support us for our actions to- Senator COOK—Actually, this is just a re-announcement of an ancient agreement? Mr O’Sullivan—Yes, it was a confirmation of an agreement already reached.

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Senator COOK—Right. Senator SCHACHT—On the policy of supporting Japan and Germany for the permanent membership of the Security Council, does that also involve changing the veto power to be a bit more reasonable? Instead of needing only one vote for the veto, are they going to require two or three out of the seven? Mr O’Sullivan—The issue of the veto, Senator, has been a very contentious one since 1946. Australia, since that time, has opposed the veto. We saw it as an instrument of Cold War rivalries that really distorted the effective functioning of the council. Since the end of the Cold War the veto has been very rarely used. One question in this whole consideration is whether the matter of the veto has the same degree of pressure behind it as it did in the first 35 years of the UN’s operation. Having said that, however, our position under this government and under the previous government is that Australia would like to see a diminution of the veto in some form. How might that be done? One way would be the way you have just suggested, to have a higher criterion of numbers. Another might be to confine it to chapter 7 operations which involves the use of UN forces and so on. There are various ideas around and our hunch is that at the point when the reform of the council finally is decided, there will be several elements in that reform. One of them might be an expansion, but another might be another look at the veto. Senator SCHACHT—I accept that it has been a bipartisan policy to support Japan and Germany for permanent membership. That would still make the Security Council overwhelm- ingly OECD countries with Russia and China. They are still all big economies in one form or another. There are no Third World, no African countries and no Latin American countries with permanent membership to the security council. Have those groups of countries—or the committee of 77—been pushing for one of the African countries or one of the Latin American countries to be permanently on there to represent their interests? Mr O’Sullivan—Yes, our view is that if there is to be a successful outcome to the problem of how to reform the council, including how to expand it, it would have to parallel the inclusion of Germany and Japan with the inclusion of developing countries from Africa and from Latin America. Senator SCHACHT—I presume there are probably a few project countries that would like to be the candidate for being at full forward, or at least in the forward pocket, kicking a goal. Have we got any indication of which one we would support? Are there any viable candidates that have domestically their internal stability such that, once they got a permanent position, they would be effectively around for a while? Mr O’Sullivan—The trouble is that, if it were explained to them in those terms, they would probably all agree on the concept of a full forward. The trouble is they cannot agree on who it should be. So they are quite prepared to accept the idea that there has to be an expansion that includes geographical balances but, when it comes down to saying which countries from Africa should it be or which countries from Latin America, you get into what are now quite unresolved and sharpish disputes about that. My hunch, frankly, Senator, is that that will not be resolved very easily and it will not be resolved in an orderly process; it will probably be resolved in a rather messy environment at the end of the day. Senator SCHACHT—Are you suggesting that will have to be resolved at the same time as Japan and Germany— Mr O’Sullivan—It might have to be. Mr Neuhaus would make another point now about rotation arrangements. So there are several ideas around. It might not have to be.

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Mr Neuhaus—Senator, just one idea that has emerged during this year to handle the very problem you have put your finger on is the suggestion of rotating permanent membership for some groups. That idea would be that there would be a permanent seat set aside for a group but there may be three or four countries that would rotate through that seat. There has been a lot of discussion about that concept with, as yet, no agreement on the countries who might rotate. It is largely felt that it should be for the regional groups concerned to decide who those countries might be. But that is seen as a way forward into the next year in this discussion. Senator SCHACHT—So, as far as Germany and Japan are concerned, there is a reasonably broad consensus amongst most of the major players that they ought to be on the Security Council. Mr O’Sullivan—I think that is pretty close to it. I think the word ‘consensus’ is probably a bit strong. There would be a fairly strong majority sentiment in those directions but the problem is that it would have to be part of a bigger package and it is those other parts which you get undecided. Senator SCHACHT—The existing members of the Security Council, particularly France and Great Britain, do they have any view about Germany going on? Mr O’Sullivan—I think they have been reasonably positive about it. Possibly because they judge it is unlikely to happen in the near term. Senator SCHACHT—So your suggestion is this is not going to happen before the turn of the century. Mr O’Sullivan—I do not think that is necessarily true. I think that these things do not necessarily progress in a smooth and linear way. I think you can have a situation where at a certain point a crisis is engineered and out of that crisis some result may emerge. Senator SCHACHT—The change to the Security Council itself, is that just required by a majority vote of the General Assembly or can the Security Council itself veto its own change? Mr O’Sullivan—It would have to be a resolution of the council and a resolution of the assembly and they would be—two-thirds? Mr Neuhaus—Two-thirds majority in the assembly, but any Security Council permanent member could veto the agreement. So you would have to have the agreement of the five current permanent members. Senator SCHACHT—And even though you have got a two-thirds vote of the General Assembly, one of the five permanent members can still veto the decision? Mr O’Sullivan—You would not get to that stage, I suspect, because it would not get out of the council. Senator SCHACHT—I can see why Doc Evatt did not particularly like it at the time. It make the House of Lords look positively democratic about self-nomination, doesn’t it? A very diplomatic shrug, Mr O’Sullivan. You have obviously sat at the Security Council. Has anyone suggested that it still might be a bit out of kilter that you would have three West European countries out of seven? Mr O’Sullivan—I do not know that it is put in quite those terms, but I think part of the engine of this debate is a bigger sense, frankly, that what has changed since 1945-46 has been a huge expansion of the international community and a complete revolution in the geographic, demographic, cultural and other balances around the world, so that if you want a United Nations Security Council which is representative of the contemporary international scene you

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 480 SENATE—Legislation Tuesday, 24 September 1996 cannot persist with the sort of balances struck in 1945. In that sense, I think there is a bigger sense around that something has got to change. Senator SCHACHT—We are in what is called the Western Europe and Other Group. Is that correct? Mr O’Sullivan—That is correct. Senator SCHACHT—I think I have raised this before, so I am not having a go at the new government, but would it ever be contemplated that we should join an Asia-Pacific grouping? Mr O’Sullivan—First of all, this is a grouping for electoral purposes; it is not a caucus or a consultative group in that sense. Senator MacGIBBON—It is not a faction. Mr O’Sullivan—No. It reflects a lot of delicate judgments and balances that have been sustained over time as the UN has expanded. So, if it were to change, it could only be done in association with a series of other changes. It makes it quite hard to do. Former foreign minister Gareth Evans, in fact, made a part of his speech in 1994 to the General Assembly, focusing on just this problem. But, quite frankly, since then, I do not think there has been much enthusiasm for trying to redo the groupings. If you are trying to reform the UN, Senator, you would do other things. You would do these other things I have talked about rather than try to focus on the structure of electoral groups. Senator SCHACHT—You are talking about the regrouping, but do we have a power ourselves to choose to leave the Western Europe and Other Group and join the Asian group or whatever it is called? Mr O’Sullivan—We can walk out of the WEOG group if we like, but we have no power to insist that we be accepted into the Asia group. Senator SCHACHT—I see. Mr O’Sullivan—All it would mean is we would simply have no chance of elections anywhere. Senator SCHACHT—I gathered that we would be permanently, to use Dick Woolcott’s term, the odd man really out rather than the odd man even partly in. Is that true? Mr O’Sullivan—I think that would be very true. Senator SCHACHT—The structure of those groupings can be changed by a decision of the UN through the General Assembly. Mr O’Sullivan—Mr Neuhaus will explain the status of it. Mr Neuhaus—In fact, they are informal groupings as such. They are not established in the charter, so there is some flexibility with them. Over time, countries have, as Mr O’Sullivan was saying, used these groups and countries are used to being in various groups. While you have raised the problem of the Asia-Pacific, and there may be at some time in the future the possibility of a different group emerging there, in other groupings like Latin America and Africa, the countries are quite pleased with the arrangements, so there has been less pressure from those areas. There is some tension in the east Europe group, as the changes happen in east Europe, as to who should belong in the east Europe group and who should belong in the west Europe group. Once again, that has not been resolved. Senator SCHACHT—Is there a geographic dividing line on east and west Europe for the purpose of that or is it just that the old Eastern bloc is in east Europe?

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Mr Neuhaus—That is how it was established originally. Senator SCHACHT—It still is the same. Mr Neuhaus—It is still those groupings. Senator SCHACHT—When you say there is no formal recognition, do the groups ever actually have an informal meeting to do that terrible thing that Senator MacGibbon said— factional organisation to arrange a vote? Mr Neuhaus—Frequently, in New York, at least monthly, they discuss the carve up of various positions and which countries will be candidates and so forth. Senator SCHACHT—It is marginally civilised? Mr Neuhaus—I think it is quite civilised. Diplomats are meeting, after all. Mr O’Sullivan—Can I just point out that I have been reminded by two of my colleagues that, in fact, this set of distinctions or groupings that operates in New York in the UN is not precisely paralleled everywhere in the UN system. In UNESCO, for instance, Australia is in the Asia group. In the CD in Geneva—which is not really, strictly speaking, a UN body—there is a western group which includes Japan. So there are different models around the UN system; it is not uniform. CHAIR—Senator Hogg. Senator HOGG—I just want to take you to the outlook in the portfolio budget statement on page 43. About midway down it talks about this: Enhanced protection of Australia’s interests under the Basel Convention on Hazardous Wastes and negotiation of a Pacific Regional Convention on Hazardous Wastes. It is the latter part, of course, that I am interested in. When are the negotiations going to take place? Where is the convention for the development of a Pacific regional convention? Do we know who is going to be involved? And what sort of priority does it have? You finally got a guernsey. Mr Lamb—Thanks to you, Senator Hogg. I was coming to the chair as you asked your question. Was it about the dot point on the Basel Convention on Hazardous Wastes and the Pacific regional convention? Senator HOGG—Yes, I am interested in the negotiation of a Pacific regional convention. What sort of priority will it have, who will be doing it, who will be involved and so on? Mr Lamb—It was completed at the South Pacific Forum last year and opened for signature by the forum. It is known as the Waigani convention on hazardous waste. It is an initiative that came originally from Papua New Guinea and was supported by the other Pacific island countries that were not parties at the time to the global Basel Convention on Hazardous Wastes. After we spoke to them to find out exactly what they wanted to do—because one of the aspirations we first had was that we should persuade them of the value of becoming party to the global convention—it became clear that they had serious infrastructure problems. They are very small, they have very few people in their environment departments or hardly any people in those parts of their government which would manage the movement of hazardous waste. What they needed was a simplified version of the global convention. What we did, together with other countries in the region like New Zealand and with some work from the United States and a lot of assistance from the Basel secretariat itself, was to help them with the drafting of what became the Waigani convention, which replicates the main

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 482 SENATE—Legislation Tuesday, 24 September 1996 substantive obligations of the Basel convention, but in a way which is essentially usable by the Pacific countries and which installs the SPREP—the South Pacific regional environment program—as the effective managing agency within the South Pacific context, of the convention’s objectives. So it has been open for signature. Where Australia was represented at most of the negotiations by me and some other people from the Environment Protection Agency and from the department, when the convention was complete and open for signature, we—and I think all but one of the other countries in the region—signed the convention. My memory tells me—we would have to check that for you— that one of them did not sign at the time. That was not because of the Basel convention itself but because of other issues which they wanted to looked at in the management of hazardous wastes themselves. The convention has not yet been ratified by Australia or, indeed, by many of the others. I think Papua New Guinea has ratified it. It does not enter into force until it gets—from memory—10 of the regional countries becoming parties to it. It will function effectively for us at the global level as a regional convention which will simplify our own dealings with the countries in the South Pacific region and implement for us, and for others outside the region, a prohibition on the importation of hazardous wastes into the developing island countries. It will make it easier for us in structural and management terms to receive wastes that may need to come to Australia for reprocessing from those countries because the regulatory provisions that the islands will use will be the simplified ones when they send to Australia. We will have our own processes here adapted to that. So, in the internal negotiation and consultation with Australia, we have spoken not just to the non-governmental communities in Australia but also to the states and territories about the simplified arrangements and the way they will allow for the importation of such wastes as may come from those island countries. Of course, there will be very little waste. A country like Kiribati does not generate a great deal of hazardous waste. Senator HOGG—I just want to take the next dot point: . Stronger coalitions with like-minded countries through which Australia can enhance the effectiveness of its participation in international environmental meetings. What international environmental meetings are we looking at? Is there anything that we have specifically in mind or is this just a broad aim, a broad goal? Mr O’Sullivan—The specificity relates a bit more to the front end of the dot point than to the second point, if I can put it that way, Senator. Senator HOGG—Who are the ‘stronger coalitions’ with and who are the ‘like-minded countries’? Mr O’Sullivan—In March last year, we initiated a new coalition of Southern Hemisphere temperate climate countries called the Valdivia group, after the town in Chile where the first meeting was held. The countries that are part of that group are South Africa, Argentina, Chile, Uruguay, New Zealand and Australia. It has proved, perhaps surprisingly, effective. It has struck a nerve in each of those countries and meetings have been held around the margins of many of the international environmental meetings. There is a very extensive calendar of such meetings and we find— Senator HOGG—Based on that group? Mr O’Sullivan—No. Across the international community, there is a wide range of international environmental meetings and we have found that this group has been an effective

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 483 area for caucusing because we share environmental characteristics in common with them, because of our physical location and the temperateness of our climates and so on. It so happened that in March of this year Australia took over the chair of that group. Senator HOGG—Thank you very much. Senator SCHACHT—In the annual report, it has a subheading under 1.7 on international organisations that goes on for several pages. Are you ruling that as part of that we can discuss human rights and related issues? CHAIR—Yes. Senator SCHACHT—Yes, okay. Sitting suspended from 4.00 to 4.19 p.m. CHAIR—The committee will resume. I have been handed some questions on notice from Senator Brian Harradine and I propose to incorporate those. Is that the wish of the committee? There being no objections it is so ordered. [The questions appear at the conclusion of today’s proceedings] We are looking at subprograms 1.7.1 and 1.7.2. Senator Schacht, you were in the process of questioning. Senator SCHACHT—We talked before about UN reform, mainly about the Security Council reform or restructuring which might not necessarily be called a reform but certainly a restructuring. The other vexed issue is the actual reform of the management structure and practices of the United Nations. I think there is, by and large, a bipartisan view within the Australian parliament about the need to reform the management, although there might be degrees about how you do it. First of all, has the new government made any public statements about the management reform of the UN—about getting more transparency about budget outcomes, about the bureaucracy itself, about the ‘mushroom club’ being properly transparent in employment practices, et cetera? Mr O’Sullivan—The answer is yes, although the degree of formality of those statements is varied. That is to say, since the new government has been in office the foreign minister, Mr Downer, has made comments when he has been in New York, for instance, but also at various functions in Australia he has made comments about the need to improve the management performance of the UN. The most formal statement, however, will come when he addresses the General Assembly next week. Senator SCHACHT—But it is expected it will be on the same general theme? Mr O’Sullivan—Yes. Senator SCHACHT—I suppose the real question, which probably has been asked every year and will be asked for the next 20 unfortunately, is how is progress going? Mr O’Sullivan—The answer can be given in several different ways. First of all, in the UN itself—the central headquarters in New York and the secretariat—we think there have been some elements of progress. For instance, the person who is now the Under Secretary-General for Management, Mr Connor, who was formerly a CEO of Price Waterhouse, is a qualitative improvement on previous occupants of that position. That has meant that things which are common in the Australian public sector and, as I understand it, the Australian private sector— such as proper structures of organisation, proper statements of objectives, proper monitoring, proper review procedures, and so on—are now being put in place. In fact, a former senior officer in the Public Service Commission, Mr Brian Gleeson, is now on secondment in New

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York helping to put some of those things in place. So there are some elements that are positive, Senator. However, one has to say almost immediately that, against those positive elements, there are entrenched practices which are extremely disappointing from an Australian point of view. There is a whole lot of featherbedding, back scratching—the whole set of practices that are well known—and, frankly, when you get out— Senator SCHACHT—Just refresh my memory. Mr O’Sullivan—I would not think that was detail which the committee would want me to go into. Senator SCHACHT—Yes it would, actually. Mr O’Sullivan—But what I was going to say was that when you get out to Geneva and places beyond it is very interesting, to my mind, that even the relatively piecemeal reforms of the New York system do not seem to be reflected in places such as WHO or FAO, for instance. Australia has traditionally been, and under this government is still, extremely disappointed that better performance is not achieved in those organisations. And we are saying that, and we are trying to do something about it by introducing specific proposals. Senator SCHACHT—I will go back to some detail. On the management side, first of all, are the staffing arrangements such that once you are in you are there for life? Mr O’Sullivan—Yes, or subject to— Senator SCHACHT—Subject to your not burning the place down, or shooting three kids on the way home from work or something. I suppose you might only get suspended for a couple of days off if you did that, but if you have burnt the place down it might be a bit harder! Do those agencies—you mentioned WHO and FAO—have separate work practices from the UN in New York, the structure at the General Assembly? Mr O’Sullivan—Their work practices, in some respects, would be different. Our— Senator SCHACHT—I should say the tenure, or the contract of tenure and permanency. Mr O’Sullivan—They would tend to be similar; that element would be very much the same. But our dissatisfaction with those particular organisations does not relate to a variation in structural sorts of elements. It relates to the fact that they are lacking, in our view, in a culture of achievement; they do not have an outcomes orientation; they do not deliver better health outcomes in the case of WHO;, they do not deliver better agriculture outcomes in the case of FAO; and yet they consume Australian taxpayers’ money at a considerable rate. We want to see a greater correlation between the fact that we put money into those organisations and their production of outcomes that we think are achievable and realistic. Senator SCHACHT—I have raised this question with the previous government so this is bipartisan. When would we get to the stage of saying, ‘Instead of putting our money into the FAO and the WHO, we are going to go bilateral. We will actually put the money into our country program where we can take some control for the allocation, rather than let you jokers run off with it and we do not know what the outcome is, cannot measure it and cannot get a report back to our Australian taxpayers saying that for whatever X million dollars went in, X number of people got taken out of poverty, got improvements, et cetera’? Mr O’Sullivan—That is a very tough political judgment which would be made by the cabinet, of course. But, quite frankly, I think that under the tight budget circumstances that we are now in the issue of reform of the UN is being correlated much more closely with the

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 485 issue of the performance of the agencies. We have to keep an eye on that, Senator; we have to keep on reporting to our minister about that. But it is obvious that there is not a huge distance between the two propositions—that there has to be performance if there is going to be money put in. By the way, we do not link on a sort of one-on-one or completely linear way payment, as it were, and performance. We think the fact that, for instance, in some cases the United States has cut its budget contributions has led to reforms, so that we do not think that just urging the United States to pay up its money, for instance, as we do is a substitute for real reform. Senator SCHACHT—What is our contribution to FAO? I cannot find the figure in the PBS. Roughly, what is the contribution to WHO and FAO? Dr Leader—The FAO is about $7.5 million— Senator SCHACHT—Seven and a half million a year. And WHO? Dr Leader—It is not in our portfolio. Mr O’Sullivan—I think it is about $13 million altogether, including off budget contributions, but I would have to check on that. Senator SCHACHT—So it is about $20 million across the two of them per annum? Mr O’Sullivan—We would have to check— Senator SCHACHT—Anyway it is a significant amount of money— Mr O’Sullivan—It sure is. Senator SCHACHT—compared with contributions we make in direct country programs. Many countries we do not give as much to, and many individual programs are a lot less on our bilateral basis, so it is significant. Have you any indication with FAO or World Health, which are two examples you gave, that our representations about this measurement of outcomes, about actually seeing improvement, are having any effect? We will start with the bloke at the top—and they are always blokes, I suspect—the Director-General of the World Health Organisation and the same at the FAO? Mr O’Sullivan—I think you are right to start at the top because we think leadership of these organisations is a crucial ingredient in any reform process—that if you do not get impetus from the person leading the organisation you will not get any change. So we also think that looking at the person who is leading these organisations is a sensible thing to do. In the case of WHO—which I know better than I know the FAO—Australia has, through its executive board member, developed a paper that is aimed at reform and specifies in quite elaborate detail the issues that we want to see changed, how we want to see them changed and what ought to be done. That paper was tabled at the last executive board meeting and is now, as it were, part of the debate in the WHO. Senator SCHACHT—Could you take it on notice that we would like to get a copy of that? Mr O’Sullivan—Yes you can, sure. Senator SCHACHT—And, to put it bluntly, was that paper also directed at the removal of the director-general? Have we been blunt enough to say that this is the problem—leadership at the top—and there should be a change? Mr O’Sullivan—We did not quite put it in those terms, I think, but we— Senator SCHACHT—Send in the transcript of this so that you can see that some of us are raising the question.

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Mr O’Sullivan—We did, however, move at the last board meeting that the term of the director-general should not be extended beyond two terms. Since the current director-general is now completing his second term it would have been fairly obvious what our intentions was. Senator SCHACHT—Good. Senator MacGIBBON—You are taking us through a narrow band; you want to get into UNESCO and a whole lot of other things as well. I am delighted that, at last, the view of Foreign Affairs has changed, because when I was saying these sorts of things 15 or more years ago it was the ultimate heresy. But the waste was just as bad then. Mr O’Sullivan—And frankly, Senator, we would say in support of that proposition that in some areas world health outcomes have improved, but many areas have gone backwards in those 15 years. Senator SCHACHT—You have mentioned reform of FAO and World Health. Senator MacGibbon has raised UNESCO. That is in the same bag, I presume—you want reform in UNESCO management? Mr O’Sullivan—I might just get Mr Neuhaus to tell you about a review we are doing of all these specialised agencies. But the answer to your question is: ‘Yes, but not as much.’ That is to say, we think that the change which took place several years ago, to Director-General Mayor, led to some improvements there. Senator SCHACHT—A new director-general? Mr O’Sullivan—Yes. Senator SCHACHT—Okay. Which one did you say had the two terms which were about to run out—World Health? Mr O’Sullivan—Yes, the World Health Organisation. Senator SCHACHT—To put it bluntly, is the problem that there is a majority of countries who are not interested in the reform process because it makes tougher outcomes on the delivery to them? Mr O’Sullivan—You could get some advice on that from the department of health, but my sense is that the answer to that question is no. The problem is not that so much; the problem is the process. Senator SCHACHT—The process of the election? Mr O’Sullivan—The process of getting a new director-general, and getting someone to nominate who fulfils the statutory requirements and who is capable of being supported across a wide range of countries. It is an extremely complex process, unfortunately. Senator MacGIBBON—The big thing is getting accountability out of these people. You get a director-general appointed—WHO always had a Russian for years and years; I do not know who the head of it is now—and you had all these subordinate positions and other countries knew they were going to get a position on the ladder so no-one was prepared to move against it. At the end of the day, you could not get accountability out of anyone for performance—they were inviolate. Mr O’Sullivan—If I can comment on that, I think that is quite correct. One of the frustrations we have had has been that even on quite minor details of budget we have been facing a lot of deliberate obscurantism in trying to get information, even from the secretariat, that we think ought to be available to us as an executive board member. As I was saying before to Senator Schacht, just as in the issue of the break-up of groupings, for instance, on

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 487 election matters that varies across the UN system, so the degree of interaction and accountability amongst the secretariats varies enormously, and it is a big problem. CHAIR—Perhaps, Senator Schacht, if we have all agreed that this is a very bad situation and some solutions have been suggested, we could move on? Senator SCHACHT—Certainly I will move on. It may mean that at some stage in the near future Senator MacGibbon and others with me on the Joint Committee on Foreign Affairs, Defence and Trade may ask for a briefing to that committee. Mr O’Sullivan—Sure. Senator SCHACHT—We actually might have it in camera. This is under privilege—they cannot shoot you or sue you for saying things here—but if you would feel more comfortable in an in camera hearing of the joint committee, that might be a place where we can go through more detail about it. As I say, I do not think there is much doubt that there is a strong bipartisan view. If we want to get confidence in the community about foreign aid contributions from taxpayers these things have to be cleared up, otherwise I suspect, unfortunately, that the Pauline Hansons of the world may start winning more devotees to their view if they knew of some of these examples as a reason to reduce foreign aid money. Can I now turn to human rights? Mr O’Sullivan—We would be very happy to brief the JCFADT on the review of the UN agencies that we are undertaking. If that is the wish of senators, we would be happy to do so. Senator SCHACHT—Right. Could you send us that recent material that you have been involved with on those various agencies? It would be useful for members of the committee. Mr O’Sullivan—Yes. Senator SCHACHT—This refers to the information contained in the annual report on pages 127 and 128. It says that during 1995/96 the department made 323 new representations on human rights matters to 67 foreign governments. Are there other cases which are second and third representations and which could be added to that figure of 323 so that, in effect, during 1995/96 the number of representations—including second, third, fourth and fifth representa- tions—on individual cases totalled more than 323? Mr Barker—The figures that we have provided are figures for representations which are generated on behalf of the Amnesty International Parliamentary Group. The figures represent the number of individual cases. A case may comprise a number of individual persons and there would be occasions on which we would follow up those representations. There would also be many occasions on which representations on human rights issues are made which are not specifically generated by Amnesty International representations but which arise through our regular monitoring of human rights situations in different countries around the world. Some expressions of concern would be made by Australia’s diplomatic representatives and other representatives, quite apart from the Amnesty International cases themselves. So, yes, the overall figure would be higher. I also want to point out that the figure that you have there is a financial year figure. Senator SCHACHT—Yes. Mr Barker—The figures for the most recent calendar year are more in the order of almost 500. Senator SCHACHT—Does that number of 323 represent 323 individual people for the financial year?

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Mr Barker—No, it would represent more than 323 individual people. It would represent 323 cases which have been brought to our attention by Amnesty International through its urgent action system. Sometimes they might bring to our attention the situation in Chechnya for example, so you are talking about a rather large number of people. Senator SCHACHT—Yes. I presume you probably will be requested to provide this at some stage in the near future to the Human Rights Subcommittee of the Joint Committee on Foreign Affairs, Defence and Trade for the work that they may want to do during this term of the parliament: I wonder if it is possible to provide to the committee a list of the individual cases? You may want to put a caveat on it that it has to be in confidence so that you put nobody at risk. I am aware of the fact that sometimes you could publish somebody’s name and you might actually put them at bigger risk with some of the nasty regimes around the world. Is that possible? Mr Barker—I think so. It might take a little time because of the way in which they are entered into our database. Senator SCHACHT—Yes, I understand this, and can you include those others that the department itself initiated because of the policies of the government and the department. Mr Barker—We could provide information on some of those but we do not in all cases log those into our database. There would be some representations taking place for which we do not have a formal record in the sense of the database that we keep. Senator SCHACHT—Why is that? Mr Barker—Because you will find representations are made by posts, sometimes, on their own volition. For example, if you have a situation in Rangoon and some— Senator SCHACHT—And they do not automatically send it back to you? Mr Barker—They will advise us that representations have been made but the database that we use is essentially for the Amnesty International urgent action cases. There are also representations which may be made by ministers, for example. What we have captures a large number of the representations that are made but not all of them. Senator SCHACHT—Might I suggest that I think that the database should take up the representations by ministers and by posts. That ought to be recorded because I think it enhances the reputation of the department in the numbers of representations you are making and the role which the Australian government of any persuasion ought to be proud of. Mr Barker—I agree entirely with that comment, Senator, it is simply the logistical problems we have of chasing up every individual case and making sure it is entered on the database. Senator SCHACHT—In the paragraph on page 127 it says: Issues raised include torture, detention without trial and the use of the death penalty. The use of the death penalty is still an issue to be raised as a human rights matter. Has there been any change in policy due to the change of government on the issue of the death penalty? Mr Barker—There has been no change in policy. Senator SCHACHT—Good. Just for the record, because I think it is often useful to have it on the record, concerning the use of the death penalty, do we from time to time continue to raise this issue with the United States of America? Mr Barker—Yes, we do. Senator SCHACHT—In the last financial year?

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Mr Barker—Yes. Senator SCHACHT—Not that I want to single out the United States but as we discussed over a cup of tea, Mr Barker, it is often useful to be able to tell some more recalcitrant regimes in the world that we are quite agnostic on the issue of raising human rights abuses, and that we even raise it with the United States of America which I, personally, have used with a former general in Burma who was somewhat startled to hear that we did raise it with the United States of America. It made it very difficult for him to slide out from under, in an intellectual sense. He still did, but it made the point. I do not want to compromise anything the department is doing but are there any particular successes you have that you would like to put on the record? I think that where you have successes that do not compromise somebody, put them at risk, it ought to be published. It ought to be on the record because, again, I think it gives heart to both Australia and the groups that are raising these issues within our own community that occasionally the good guys win. Mr Barker—Certainly, I agree with that. I would prefer to have a think about which would be the appropriate cases. Senator SCHACHT—Certainly, take that on notice. Mr Barker—There is also the caveat that it would be rare that a case would be one in which only Australia had made representations. Frequently these are made by many people and governments from all over the world. Senator SCHACHT—In the representations of the 323, is there any problem in providing the breakdown per country to us? Mr Barker—We can provide that per region. Obviously, if we provide you with a list of the individual cases, that will make it clear what country was involved. Senator SCHACHT—Okay. That is fine. Although it will become apparent from the list you provide to us, during the 1995-1996 year, was there any particular country that unfortunately— Mr Barker—Was top of the pops, you mean. Senator SCHACHT—Yes, topped the pops or showed an increase in human rights abuses. Do a number of countries stand out in the area of human rights abuses? Did any country unfortunately get the Brownlow medal, or something, for variation—we really should not use those terms? Mr Barker—If I could just point out that the Amnesty International cases are generated by Amnesty International in London. Obviously, they do not refer to all cases of human rights abuses that are taking place throughout the world, and Amnesty has its own reasons for wishing to focus on certain countries, certain regions and certain situations. I could check but, from memory, the countries which seem to generate the largest number of Amnesty International urgent action cases are Turkey, Colombia and Mexico. Senator SCHACHT—I would not have picked any of those three—Colombia, Mexico and Turkey—I must say, in the last 12 months. Mr Barker—Of course, some of this would also have to do with the availability of information. Senator SCHACHT—I understand that. Well, when the figures come through—the information about the individual 323—it will be apparent from just reading the list what those cases were in those three countries in particular.

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Mr Barker—Yes. Senator SCHACHT—I understand that Turkey is interested in joining the European Community: has the European Community made it clear that the level of human rights abuse which you mentioned is really going to have to be addressed and overcome before they can legitimately seek membership of the European Community? Mr Barker—I am not familiar with the details of discussions between the European Union and European countries and Turkey, but I can say that the issue of Turkish human rights record is a recurrent issue between Turkey and European countries as Turkey seeks closer integration with Europe. Senator SCHACHT—Is the human rights abuse in Turkey dealing with minorities such as the Kurds, Armenians et cetera or is it overwhelmingly political in dissent to the various governments on the scene in Turkey? Mr Barker—I think it reflects to a very large degree the situation of Kurdish action. Senator SCHACHT—In Colombia, is it the same: is it political or is it the treatment of minorities? Mr Barker—Well, it is not a question of minorities as such. Once again, I would want to hasten to add that I am not an expert on such a complex situation as Colombia, but many of the human rights abuses there appear to be caused by paramilitary groups which are targeting human rights activists, peasants and labour union types of people. There is a complication of the narcotics trafficking activity and that sort of thing going on in Colombia, and it is often very difficult to know who is responsible for what. But it is more a mainstream political activity on the part of peasants and people who are targeted by the— Senator SCHACHT—And Mexico was the same with what might be described recently as the Zapatist insurgency in the south? Mr Barker—Yes, I believe that a lot of the activity in Mexico relates to the problems with regard to indigenous peoples in Mexico, but there is also a wider spread of cases of human rights abuse occurring there. Senator SCHACHT—Is there any country that has showed a significant improvement in reducing human rights abuses in the last year or so? Mr Barker—That is a rather difficult question, Senator. I certainly could not relate it to the number of cases that come through in the human rights urgent action system but, if we could look at it over a somewhat longer period than one year, there have been significant improvements in human rights observance in many countries throughout the world. Senator SCHACHT—By and large, are they countries that have gone through the process of having some sort of electoral process for the restoration of democracy? Mr Barker—Yes. If we look back, say, over a 15-year period, we have seen a total transformation in Latin America in terms of the institution of democratic government. We have obviously seen the same thing in central and eastern Europe, in many countries of Africa and in some Asian countries. Overall there has been significant improvement. Senator SCHACHT—On page 128, halfway down it mentions: . . . the report of the Tripartite Working Party on Labour Standards which was presented to the Minister for Trade in January 1996 and tabled in June 1996. In the area of children’s rights, the Department led an Australian Government delegation to Asia Pacific consultations for the World Congress Against Child Sexual Exploitation in Bangkok in April to prepare for the World Congress which will take place in Stockholm later in the year.

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I do not think there is any doubt. It seems to me that any normal person would say that this is one of the most horrendous areas. Quite rightly, it is getting more publicity. What are our expectations for the Stockholm conference? Obviously, there will be lots of good speeches made about how dreadful this exploitation is. Will we get to a stage where we will have some sort of international arrangement which countries will be asked to sign? What will we expect to get out of the Stockholm conference? Mr Barker—The Stockholm congress has already taken place. It took place at the end of August. It adopted a— Senator SCHACHT—It says ‘which will take place in Stockholm later in the year.’ This is a bit out of date or the tense is wrong. Mr Barker—Later than the time of drafting the report, I think. The congress adopted a declaration and an agenda for action. There is a great deal of activity taking place internationally on the rights of children. A lot of it has focused this year on the congress. There is other activity also taking place in the context of the Commission on Human Rights in relation to drafting of international instruments. Work is being undertaken on the drafting of an optional protocol to the rights of the child convention covering child sex exploitation. I do not have a copy of the declaration and the agenda for action here, but I could certainly get one for you. The congress was able to give a considerable profile to this issue. It has involved NGOs to a considerable extent and this has been particularly the case in the Asia-Pacific region where the NGO ECPAT has been particularly active. This has resulted in what you might call strengthening of the networks. Overall I think the assessment has been that the congress was successful in giving a higher profile to the issue and in bringing it to the attention of governments in a more forceful way, but obviously action on such an issue is one for longer term. Senator SCHACHT—Was the congress a UN arrangement? What sort of standing did it have other than the good nature of the issue that it was taking on? Mr O’Sullivan—We will get Mr Lamb to give some more detail, Senator. It is my understanding that the congress was organised by the Swedish government, UNICEF and a coalition of children’s rights NGOs in concert. Mr Lamb—That is right, it was organised that way. It sprang out of work that was done in the commission on human rights by a special rapporteur who was appointed to look at the issues affecting children at large. The special rapporteur is a man from Chulalongkorn University in Bangkok, Professor Vithit Munthabhorn, who knows Australia well. He came and looked at Australia as one of the selected group of countries he examined to see the way in which children and their rights were being appreciated in different parts of the world, in different regions. He presented a report to the commission that lead to a stimulation of wider government interest. That led the Swedish government to offer to host the congress. Queen Silvia of Sweden took a particular interest in this. She was behind a lot of the stimulatory work that was done in Sweden. They then formed a further alliance with ECPAT, the organisation that Bill just referred to, which spread out to other organisations, including DCI—Defence of Children International— which is also well represented here. The outcome of that was that, at this end, because of Australian interest which was in part stimulated by Professor Vithit and Swedish interest at the other end of the planet, if you like, we then worked closely with Sweden in the preparation of what might happen regionally.

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One of the outcomes of that was that, because of Professor Vithit, an Asian regional meeting was held in Bangkok—I think in June—to which the countries of the region came. From that came the belief in Thailand and the Philippines that they were countries where there was a particular problem of, if you like, imported child abuse coming from child sex tourism and what have you. By that time Australia had enacted its own child sex tourism legislation. We were identified by a number of the non-governmental organisations as one of the countries that was a good, shining example for others to follow in the adoption of the right kind of legislation, the punishment of child sex tourists. Sweden did similar things, although the civil law system in Sweden lends to a different kind of process for prosecuting offenders who commit crimes outside the national territory of the country itself. We worked closely with Sweden in monitoring the way in which legislation might come to have an impact on abusers and abuse. So the conference was held outside the UN but with the link, that Bill Barker described, to the optional protocol being drafted by the parties to the Convention on the Rights of the Child. The outcomes will be presented from the Stockholm conference and its declaration to the general assembly of the UN, we think by the Swedes, in work that will go into the third committee—the social and humanitarian committee of the assembly. For our part, we decided that there needed to be widespread community consultation about the preparation for the congress. We linked with the NGOs in the same way domestically as they were being linked by the Swedes to the international endeavour. We had an event which the NGOs themselves described rather grandly as ‘the Australian national consultation’, which was held in the main committee room in this building. About 70 members of the non- governmental community came from right around Australia to this meeting. We invited the Swedes to come and to present a report on what they intended to see happen at the congress. From that, we were able to help make sure that the length and breadth of the Australian non- governmental community was just as switched into the exercise as governments were through the production of material. On top of that, the conference organisers decided that there should be a home page in the Internet on the congress and on the preparations being done for it. We helped a little bit with the presentation of Australian material that could go into that Internet home page. There is an Internet document that represents some of the findings from the Australian NGO community. We also invited the state governments to take part in the Australian national consultation, and several of them did. The result of that was that one of the states was selected by the group of them—the states and territories—to provide a state and territory representative on the delegation. What we intend to do next is to have a debriefing national consultation with the NGOs and the states and territories and other agencies that are represented from the federal level—and there are many. The inter-departmental committee that meets federally has got about six or seven departments that take an active part in this. From that, we will look at what sensible recommendations might be made back to government about the way this partnership of federal and state NGO representatives might work further to achieve the aims of the Stockholm declaration that are relevant to the Australian context. Not all of them are because, of course, some give particular emphasis to problems in developing countries or in different regional contexts. But all in all it has been a good conference and a good example of the way you can get the whole community marshalled to do something useful in the multilateral setting. CHAIR—Senator, do you have any more questions on this section?

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Senator SCHACHT—I have one last question. When do you expect the additional protocol to the UN convention will have a chance to be adopted? Mr Lamb—It is very hard to say. I think it may take a couple more negotiating sessions. I might note that we are reporting to the parliamentary treaties committee about the progress on that. We have said to the treaties committee that, although the Stockholm declaration is not a treaty, we would like to report that declaration to the committee as well so that it knows the length and breadth of the multi-lateral endeavour on these issues. Senator SCHACHT—If there were a treaty created or the protocol were added, which treaty would it be? Mr Lamb—It would be a protocol to the Convention on the Rights of the Child. There are two protocols in negotiation for that convention at the moment: one to deal with these issues and another one to deal with children in armed conflict. Senator SCHACHT—If it were a protocol to the Convention on the Rights of the Child and we were to accede to it—all that sort of phraseology—under the existing High Court definition, that would give the Australian parliament some extra power to deal with issues of this matter, I would imagine? Mr Lamb—I do not know that it would add materially to the power that the federal government has now under the convention. What it would do is tighten the obligations on countries that have not yet done what they need to do. The general opinion in Australian legal circles—although the Attorney-General’s Department would give you a more definitive answer—is that we already have legislation in place that complies with everything that is already in the draft instrument. Senator SCHACHT—I congratulate the department on its work in that area. Not only does this issue have bipartisan political support; I am sure it has about 99.999 per cent of the Australian population’s support—probably even Ms Hanson’s as well. I wish to turn to the United Nations and the Multilateral Development Bank Procurement Section. Are you willing yet to estimate whether the significant increase which is mentioned in the third paragraph is a blimp in the long-term trend or whether it is a big jump that we could further build on? Mr Cotton—Senator Schacht is correctly reading from the draft annual report. I emphasise two things: it is a draft and it does cover a slightly different time frame than the one in the PBS documents. Mr O’Sullivan—Senator, you raised some of these questions at the briefing to the JCFADT a few months ago and we prepared a little report that we sent over to you. There is no further information that we have that is not in that report. CHAIR—Thank you very much for that. Perhaps, Senator, you could take it away and read it. Senator SCHACHT—I certainly will do so. Now that you have set such a high standard, Mr O’Sullivan, I hope it does not come back to haunt you. CHAIR—That disposes of all your questions then, Senator, does it? Senator SCHACHT—The final question I have got is on the Commonwealth. I do not want to take too much time with this, Madam Chair. Since the end of apartheid in Africa, has the Commonwealth organisation found a role for itself that we believe is going to be really relevant in having an influence on international issues? CHOGM can meet and any time world

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 494 SENATE—Legislation Tuesday, 24 September 1996 leaders meet that is a useful forum, just for getting to know each other. Post-apartheid, what are the areas in which the Commonwealth can perform a role that is going to enhance international relations or improve the betterment of the people of the Commonwealth or the world? Mr O’Sullivan—I think the answer that the government would give to you, Senator, is that it depends a bit on not pitching expectations too high and, on the other hand, not so low that it becomes irrelevant. One particular area where we think the Commonwealth has done good work—especially in Africa, but more broadly—has been in the area of promoting good governance and the issues related to supporting legal frameworks and legal education. So, provided the expectations that we have of the Commonwealth are realistic and we urge the Commonwealth to proceed in ways which match its resources and its capacities and in areas where not much else is going on from the multilateral system, then we think that it has a real job of work to do. I think there is some legitimate answer to your question. Senator SCHACHT—How much are we spending on the Commonwealth? Mr O’Sullivan—We contribute about $10 million per annum, I believe. Senator SCHACHT—That is to the administration of the Commonwealth secretariat? Mr Neuhaus—No, that is more in the order of £2 million, Senator. But then there is $10 million to the Commonwealth fund for technical cooperation, which has an extensive development aid capacity. It is not a lot of money in relative terms. We are the third largest contributor to the Commonwealth. In respect of its role in good governance, the Commonwealth has been particularly active on the issue of Nigeria of late. Although Australia is not a member of the Commonwealth Ministers Action Group on that, we have certainly encouraged the work they are trying to do in that country and with some other west African countries. Senator SCHACHT—I appreciate that all those little things help, but it does seem that there is not quite the same focus that there used to be when there was the apartheid issue to deal with. Mr Neuhaus—I think we could accept that as a general point, because there was a very big issue for them to deal with. Only recently there has been a report of the British parliament on the Commonwealth. There was a seminar in Canberra in late August to discuss the future of the Commonwealth and to discuss many of the issues that you are raising. Senator Reid was at that discussion. The view of that discussion was that the Commonwealth still continued to be a relevant institution, one with a modest role but one that has also increasing commercial connections that can be made use of. As I think the former Prime Minister said, the Commonwealth we may not have brought into existence if it did not already exist, but there is some value in keeping it going. Senator SCHACHT—That is all the questions I have got on that topic. CHAIR—We will now deal with 1.7.3—nuclear policy; 1.7.4—strategic assessments; 1.7.5—peace arms control and disarmament; and 1.7.6—nuclear safeguards. Senator COOK—On page 42 of the yellow book under the heading ‘Outlook’ the first dot point says: Completion and publication of the Report of a Canberra Commission on the Elimination of Nuclear Weapons. Has that objective under ‘outlooks’ not been achieved? Have you not published?

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Mr Cousins—Yes, Senator, that was published and made public on 14 August. Senator COOK—As the shadow minister for foreign affairs Mr Downer was sharply critical of the Canberra Commission wasn’t he? I think he said, ‘It is nothing more than a stunt. It is a naive and childish exercise.’ I think those were his words. CHAIR—Is that a question? Senator COOK—Yes. Is that what he said? Senator Short—I do not know, I do not have a transcript. We can check that for you. Senator COOK—That is my understanding of what he said. Certainly, it would be within the knowledge of the department to know whether, without being certain as to the precise language, he was critical of the Canberra Commission. Without confirming the exact words, was he or was he not critical of it at its inauguration? CHAIR—I would understand that the department takes notice of what the minister at the time says, rather than what the shadow minister at the time says. Senator COOK—I think the department has a wide knowledge of what is happening in the field. Senator Short—Do you have a question that leads on from that, Senator Cook? Senator COOK—Yes, I do. Senator Short—What is that one? Senator COOK—Answer this one first. Senator Short—I cannot. As I said, we could take it on notice. Mr Cotton, do you wish to add anything? Mr Cotton—I am not very well placed to add too much to this other than, if I have understood the burden of your question, it is to the extent that: did we as a department understand the former opposition spokesman on foreign affairs to have made a comment along the lines that you have outlined to us and are we prepared to make a comment that that could be interpreted as being somewhat critical of this particular procedure? I will pass over to my colleague, Mr Jones. Mr Jones—This issue was raised at a press conference given by Mr Downer associated with the release of the Canberra Commission report on 14 August. The sort of issue that you raised was asked of him and he gave an answer in some detail. We could provide you with the transcript of that press conference, which might satisfy your interest on that. Senator COOK—It would be interesting to see what he said. When the shadow part of his title vanished, he became the minister. In an interview on the Seven Network’s Face to Face program on 17 December 1995, Mr Downer commented: . . . I do believe the Canberra Commission is nothing more than a political stunt . . . I am unpersuaded that the Canberra Commission can achieve anything but a newspaper headline. I don’t think it’ll seriously contribute to ridding the world of nuclear weapons. Senator Short—Something that Mr Downer or anyone else said when they were in opposition and are now in government really has no bearing so far as the department is concerned. We are looking at the estimates of the department for 1996-97 and, quite frankly, I think it is inappropriate to be asking the department to comment on remarks made by a member of the opposition months before this government came into office. So I think that the department should not be required to deal with such questions.

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CHAIR—No, I agree with that, Senator Short. Senator COOK—My understanding of the procedure is that the questions are formally to you, Minister, and you may require the department to answer. Senator Short—I do not require the department to answer. Senator COOK—Does the department have a record of that transcript? Since it has a transcript of post-election, does it have a transcript of this one? Senator Short—It sounds as though it is unnecessary for them to provide it, because you already have it. Senator COOK—So you are confirming that this is an accurate quote? Senator Short—No, I am not at all. I would not have a clue what Mr Downer said on 17 December 1995. I assume that, if you have a transcript from which you are reading and it is an official transcript, then I am believing what you are saying. If you have a transcript, then that is fine. It is quite inappropriate to ask officers of the department— Senator COOK—I am asking you. Senator Short—I have nothing more to add. Senator COOK—Are you an adherent to the somewhat cynical view, Minister, that where you sit depends on where you stand—that is, when you are in opposition you can say one thing and when you are in government you can say another? CHAIR—Senator Cook— Senator MacGibbon interjecting— CHAIR—Order! Senator Short—I think you are getting yourself onto dangerous ground. Senator COOK—I am asking you to answer for yourself, Minister. CHAIR—Order! Senator Cook, you have asked the department, through the minister, to answer a question, and the minister has indicated that he thinks it is most inappropriate for the department to answer that question. I concur with that view; therefore, I rule that question out of order. Senator COOK—Well, I am interested in that view, Chairman. Perhaps I can test it another time. I do not know that it is entirely your role to defend the minister since we are here as a committee of the Senate interviewing the executives. However, let us set that debate aside for another time, and I will be delighted to participate in it. In view of your answer, Minister, or your lack of an answer, can you tell me what the government’s present attitude is to the Canberra Commission and its report? Senator Short—Perhaps Mr Cousins can look at that. Mr Cousins—Thank you, Senator. The government considers that it is a practical and useful report from an independent commission which should make a substantive contribution to international debate on nuclear disarmament. It has already distributed widely, all around the world, many thousands of copies of the report through our diplomatic missions. It was made public in Australia and made available to NGOs. It will be presented to the Secretary-General of the United Nations within a week by the Minister for Foreign Affairs. It will be presented to the Conference on Disarmament in Geneva in January when it begins its 1997 session. The subject matter is being discussed with key countries, including all the nuclear weapons states.

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Senator COOK—I might say I concur with that conclusion of the government, but that is hardly a view taken by the government—that the commission was ‘nothing more than a stunt’ and that the report was a ‘naive and childish’ exercise. Senator SCHACHT—I just hope that nobody sends the Secretary-General a copy of Mr Downer’s transcript of what was said in December last year, when he was shadow minister. It might be a bit embarrassing. Senator COOK—It also means that the government does not take the view that this report will not make a contribution, that the Canberra Commission has served a useful purpose internationally. I take heart from your answer, Mr Cousins. The work of the Canberra Commission was supported by a Canberra based secretariat, wasn’t it? Mr Cousins—That is correct, Senator. Senator COOK—What personnel resources were employed by that secretariat? Mr Cousins—There was a secretariat which comprised an assistant secretary SES 1 level officer, a senior officer grade B, a senior officer grade C, an ASO 6 and an ASO 4. It was also assisted by a graduate administrative assistant. That was the core secretariat. Senator COOK—Roughly six people? Mr Cousins—Yes. Senator COOK—Were the secretariat staff all DFAT officers? There was no other departmental— Mr Cousins—They were all DFAT officers, but the secretariat was assisted by other officers in the department and a senior officer from the Department of Defence. Senator COOK—Defence were in there. Is that secretariat still in existence? Mr Cousins—I believe it will cease on the 30th of this month. Senator COOK—On 30 September? Mr Cousins—September. Senator COOK—Why would that be? Why would you end it? Mr Cousins—The secretariat and the commission itself were always seen as having a particular function and a particular lifespan. When the commission was established by the previous government it was to produce a report to present to the Australian Prime Minister in August 1996. The work of the secretariat did not finish at that point because there was a number of issues to do with media interest, NGO interest and distribution of the report, and of course over the last few weeks bills have still been coming into the secretariat for payment. So its life was extended. Most of the officers in the secretariat have now finished their work, but one or two are still there and they will finish on the 30th. Senator COOK—In view of the delight that the government has expressed with the support and the significance it sees that the report contributes to international debate and the step of presenting the report to the Secretary-General, is there not seen to be any ongoing role for Australia in this field? Does it all end with the report? Mr Cousins—The fact that the secretariat comes to an end does not reflect the fact that the issues are quite central to the work of two branches of the International Security Division. Before the Canberra Commission was established those issues were dealt with by the International Security Division. Now that the specific work of the secretariat has come to an end, those issues will also be dealt with in the future by the division.

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Senator COOK—They have folded back into the— Mr Cousins—They folded back into the division. They never left the division in that sense, but they come back. Senator COOK—They had a degree of autonomy from the department for the purposes of serving the commission. How many people are on it now? Mr Cousins—We have a Nuclear Policy Branch with approximately 13 people. They deal with the nuclear proliferation aspect of nuclear weapons. Then there are another 11 or 12 in the Peace, Arms Control and Disarmament Branch, which deals with the disarmament process of existing nuclear arsenals. There are a number of people across those two branches who work on the issues. I do not have a precise breakdown of the numbers, but we would be looking at six to 10 officers working on various aspects of the problem of nuclear weapons. Senator COOK—We have heard the government’s view of the findings of the commission and the value of the report. Did the report attract any international comment? Did other governments or government agencies or universities or commentators in this field remark upon the report? Mr Cousins—The report was widely remarked on in a positive fashion, both at government level and by NGOs and academics. As you will appreciate with a report of 100-odd pages, when it was first issued recipients focused on the executive summary and they wanted to study it. Initial reactions were quite positive. That did not necessarily mean that readers agreed with everything that was in it. It was widely seen as a good contribution of new thinking on a very important subject. Senator COOK—Would it be fair to say—I am trying to get the right use of English here; I do not want to lurch into hyperbole or into underselling it—that it achieved international acclaim among expert commentators? Mr Cousins—I think in general parlance it certainly did get a lot of interest. There have been previous reports of this nature, but this was one which was sponsored by a government. Senator COOK—Apart from the distribution copies of the report and the tabling of it at the United Nations General Assembly, what are the government’s plans now to promote the Canberra Commission report more widely? Mr Cousins—The issues covered by the Canberra Commission report, as I said before, have folded back into the division’s work. That work is quite an active program. There is the first committee of the General Assembly, which will deliberate on these issues during October and November. The conference on disarmament will resume in Geneva in January. We have a very active program of discussion of these issues with other governments. Over the coming period a lot of time will be spent discussing the issues with other key countries on disarmament and the nuclear weapon states to see what is possible to do next year. You will appreciate that we are in an environment of change with the US elections, et cetera, so what is possible next year on these subjects will not become clear until we get into the new year. When we do get into the new year, there are two major processes. One is the conference on disarmament in Geneva and the second is resumed meetings of the members of the nuclear non-proliferation treaty. They all meet for about two weeks around about April. These issues will receive a lot of attention there. Senator COOK—That is a very worthwhile answer as to what an action program might be. What about promoting the findings of the report itself? Do you have any plans to do that

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 499 in the specific sense of ‘the report’ and its existence? Is it going to hit the shelf in the AGPS bookshop? Are there any other promotional activities we are going to look into? Mr Jones—It is already on the Internet and widely being drawn down. So it is available internationally. Being distributed through that means that in addition the hard copies that we have sent out have gone right around the world. When it is handed over to the UN Secretary- General in a week or so copies will be given to all delegations in New York at the same time. So it is getting very wide propagation. Members of the commission—the commissioners themselves—are running their own promotion campaigns because the report is not only sponsored by the Australian government but also belongs to the commissioners who produced it. Many of them are quite active in spreading the findings and recommendations of the committee in their own countries. For example, in one case there was a parliamentary process of some kind in Sweden. In the UK there have been several articles in leading papers by commissioners drawing on the report of the commission. There is a program of work pursued individually by the commissioners which is spreading it quite widely. Senator COOK—Take this on notice by all means if you do not know, but off the top of your head, do you happen to know how many visits to the web site there have been to access the report on the Internet? Mr Jones—No, not off the top of my head. Senator Short—You haven’t clicked into this report? Senator COOK—No, Minister, I haven’t clicked into this report. Have you? Senator Short—No, but you are very keen on the report. I expect a click very shortly. Senator COOK—I might just take the bookstore copy and read it. I am a bit like Barry Jones—if it is not in a book, I have trouble believing it exists. I think Mr Cousins has set out an action program which involves making representations in multilateral forums as well as making representations to foreign governments and to ascertain their considered reaction to the report. In its report the Canberra Commission argues that the first step in a process of phased, verified reductions in nuclear weapons must be an unequivocal commitment by the five nuclear weapon states to the elimination of nuclear weapons. The commission also proposes that negotiations should begin immediately for such a commitment, made at the highest political levels, by the nuclear weapon states, and the international community as a whole. I think I have got this quote from the report right. It says: This commitment would change instantly the tenor of debate . . . It would transform the nuclear weapons paradigm from the indefinite management of a world fraught with the twin risks of the use of nuclear weapons and further proliferation, to one of nuclear weapons elimination. Negotiation of the commitment should begin immediately, with the aim of first steps in its implementation being taken in 1997. Does the government support this key aspect of the Canberra Commission’s report? Mr Cousins—It is a very powerful paragraph in the report. If the nuclear weapon states were prepared to do that, I think that it would have the sort of effects that the report sets out. CHAIR—Senator, given that this series of questions is on the existing document, would it be possible to have these questions put on notice? Senator COOK—I am almost to the end of them, as a matter of fact, and it might be quicker if we did it that way. I would not mislead you.

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CHAIR—How many more questions? Senator COOK—These are all scripted for me. I have got about four more questions. CHAIR—Please proceed. Senator COOK—Has the government made positive steps to encourage the nuclear weapon states to make such a commitment to kick-start the movement towards the total elimination of nuclear weapons? Mr Cousins—We have certainly drawn the attention of the nuclear weapon states to the report and there are discussions over the next number of months where that issue will be followed up. Senator COOK—The purpose of those is to seek the endorsement of its key finding, is it, by the nuclear weapon states? Mr Cousins—We have regular discussions on security and disarmament issues with a number of countries and also our embassies have, as part of their ongoing work, liaison and discussion with host governments. That is a process which will be going on quietly, privately, to see what way forward there is. Senator COOK—I understand the process, but is the objective as far as Australia is concerned in those discussions to get them to commit to the efficacy of that recommendation I referred to and take that course of action? Is that what you are trying to achieve by that process? Mr Cousins—The objective is broader; it is to try and move the nuclear disarmament process forward. If that proved to be a measure on which there was support from the nuclear weapon states and it was seen as a practical way forward, that would be certainly there as part of the discussion. But the broader issue is moving the whole nuclear non-proliferation and nuclear disarmament process forward in ways which are best calculated to achieve early results. Senator COOK—Will we be putting up a resolution to the UN General Assembly? Mr Cousins—No, it is not our intention to put a resolution forward at the General Assembly. It is more an approach, as I said, contributing this new thinking to the international debate, raising the issues with the states more directly concerned and trying to find what is a practical way forward which will produce those early results. Senator COOK—But we would be in a unique position, having commissioned this report, this report obtaining world recognition, the distinguished members of the panel proselytising the findings abroad, a process being there—we would be uniquely placed, and in fact some might argue expected, to take a lead in the UN General Assembly in some tangible way of proposing a resolution, wouldn’t we? Mr Cousins—The subject of nuclear disarmament has long been on the United Nations General Assembly’s agenda and it will be discussed in the first committee. There have traditionally been some resolutions on nuclear disarmament and we expect that there will be some this year. It is the government’s judgment that this particular year running a resolution on the Canberra Commission report would not necessarily help to contribute to furtherance of those proposals as we move into next year and that the approach is more to go through a period of quieter, more private diplomacy to try and find a way through the highly political shoals of this issue to produce some action next year which will indeed move it forward. The public emotions of debate do not always produce the forward movement which it would appear on the surface they would contribute to.

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Senator COOK—Australia did good work on the comprehensive test ban treaty. Mr Cousins—It certainly did. Senator COOK—You say that the government has made a decision not to pursue a resolution of the General Assembly. Was that a decision by the minister? Mr Cousins—It is a decision by the minister in consultation with other relevant ministers. Mr Jones—It is essentially a question of tactical judgment on how to ensure that the commission’s report has ongoing relevance and validity. The judgment is that if you rush to a resolution quickly in this assembly two things might happen. One is that, once the debate is over, the resolution is over, it tends to give the message that the commission’s report has been focused on and dealt with, and that is the end to it. The second thing is that, of course, when you come to a debate like that and a vote on a resolution, countries which may have some reservations about some part of it will vote negatively or abstain. Tactically it seems better not to provoke that negative reaction to it but rather to keep it on the table for a longer period, including taking it to the Conference on Disarmament next year. Senator COOK—I understand that argument, and certainly it is an interesting argument, but equally could you not say that if Australia proposed a resolution on this it would, to a large extent, undercut India’s refusal to sign the comprehensive test ban treaty? Mr Jones—It might depend on what the reaction to the resolution was, of course. It might have the opposite effect, too. Senator COOK—Of entrenching the Indians? Mr Jones—Yes. Senator COOK—They claim to be pretty damn entrenched at the moment, don’t they? They are the only ones, aren’t they? Mr Jones—Opposed to the CTBT? Senator COOK—Yes. Mr Jones—They are the only ones who did not support it in the Conference on Disarmament. Mr Cousins—A number of non-aligned countries are committed to a more radical approach to nuclear disarmament than the Canberra Commission proposed. As the Canberra Commission resolution would not necessarily be in line with non-aligned policy, we cannot assume that we would necessarily get wide support from the non-aligned movement. Senator COOK—What is the government’s policy concerning the contingency of another country proposing such a resolution, endorsing the report of the Canberra Commission, calling on the NWS and other states to give an immediate commitment to the elimination of nuclear weapons? What would we do then? Have we thought about that? Mr Cousins—That is a hypothetical question, but we have seen no sign of any other country wishing to do that. Obviously, in the first instance we would discuss with that country what its ideas and proposals were. Senator COOK—If someone else gathered their skirts and started to run with it, we would be very interested in catching up with them? Senator Short—As Mr Cousins said, it is hypothetical, but if that sort of situation arose or appeared to arise then obviously it would be a matter for consideration at the time. CHAIR—I think that is about four questions, Senator Cook.

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Senator COOK—It is coincidental that you should say that, Madam Chair, because I have concluded my list of questions. CHAIR—Thank you very much for that. Senator COOK—I have some questions on the International Court of Justice, concerning the legality of nuclear weapons, but if I may I will put those on notice. CHAIR—Very good. I would appreciate that. Senator COOK—In that case, as far as I am concerned I am happy to go to 1.8. Senator Short—Madam Chair, just before that, I have been given by officers of the department a copy of the transcript of the press conference with the Minister for Foreign Affairs and Trade on the occasion of the release of the report of the Canberra Commission on the Elimination of Nuclear Weapons, on 14 August 1996. There are some interesting things in there. CHAIR—Could you table those. Senator Short—We would like to table them. CHAIR—Thank you. Senator COOK—I would be very interested to see them. They stand in stark contradistinc- tion to what was said— Senator Short—No, it actually contradicts quite strongly, Senator Cook—you might like to read it yourself—the very false impression that you gave to this committee in terms of what you said that Mr Downer was purported to have said back in last December. You might read it with interest. Senator COOK—You can’t get away with that, Senator Short. Senator Short—You have a read of it. Senator COOK—He said those things last year. It is on the record, it is irrefutable. You can’t get away with that type of remark. Senator Short—Have a read of it. CHAIR—I also wish to table a piece of paper, on the Middle East peace process, which I understand comes from the water resources working group. With the agreement of the committee, I will table that. Do you have more questions on 1.7.3, 1.7.4, 1.7.5 or 1.7.6, Senator Hogg? Senator HOGG—Yes. With reference to 1.7, where are we going with the banning of antipersonnel landmines? Mr Cousins—You would recall that in April there was a conference of the members of the inhumane weapons convention, and that that conference agreed on some tighter restrictions on landmines for antipersonnel landmines. There are a number of consequences from that. One is the ratification of that protocol by Australia. More widely, there is follow-up action to support the government’s announcement of 15 April that Australia would support a global ban on the production, stockpiling, use and transfer of antipersonnel landmines. A conference has been called in Ottawa for 3 to 5 October, which Australia will participate in. The Canadian government has called it as a meeting of pro-ban states to develop a strategy for pursuing a global ban and preparing a draft resolution for consideration at this year’s UN General Assembly. That is the main focus of activity at the minute. Senator HOGG—Who will represent us at the Ottawa conference? Do we know yet?

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Mr Cousins—It will be an officer in my division, the director of the conventional and nuclear arms control section. Senator HOGG—What sort of riding instructions will he be taking to that conference? Have they been— Mr Cousins—His overall guiding instructions are from the decision of the government, of the Ministers for Foreign Affairs and Defence, of April which is that we support a global ban and we will work together with other countries to try and find a way of gaining and building momentum for that objective, first of all through the United Nations General Assembly. We would also support work beginning next year in Geneva in the Conference on Disarmament. Senator HOGG—Are we taking any practical steps now, internally in the nation, to progress the banning of the antipersonnel landmines? Mr Cousins—The two practical steps which have flowed from government decisions over recent months have been, firstly, the imposition of a unilateral suspension on the operational use of antipersonnel landmines by the Australian Defence Force, and action announced by the minister on 5 May to institute a demining program, or further money for a demining program, for Cambodia and Laos. That is worth $12 million over three years. It is an AusAID program. Senator HOGG—When does that program start in Cambodia, or has it started already? Mr Cousins—That is an AusAID program, but I have some information that AusAID has provided. The assistance will include $9 million over three years for the United Nations development program Cambodia Mine Action Centre project; $800,000 for Australian Defence Force technical assistance to that project, including three technical advisers and one communications expert; $1.2 million for non-governmental organisations—UNICEF, World Vision and Red Cross—for activities in mine clearance training and support for landmine victims; $900,000 over three years to the UNDP trust fund for unexploded ordnance clearance in Laos; and additional small activities in mine awareness training particularly for school children. They are the elements of the program. Senator HOGG—And when is that effective from? Mr Cousins—I do not have any specific information on that. It is part of their program this financial year, but we will ask AusAID to provide some information to you. Senator HOGG—That is the only question I had on 1.7. CHAIR—In that case, we will proceed to 1.8. Subprogram 1.8—International legal interests Senator COOK—The subprogram objectives on international legal interests, at the last dot point on page 44, say: to provide advice on administrative law relevant to the operation management of overseas posts and of the Portfolio domestically. Earlier this morning in this hearing I was asking some questions about a fraud that was committed at the high commission in Nairobi. I do not wish to cook my cabbages twice, so I will not go back over the details of that, but was this section in any way involved in giving advice on the Nairobi fraud? Mr Vincent—The legal office provides advice to the rest of the department on a range of administrative law matters, including any disciplinary matters that might be pursued by the department. I would not really want to go into any detail because I think that—

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Senator COOK—I am not asking you for the character of the advice, I am just asking if you gave it. Mr Vincent—These are private matters, but we do provide advice to the portfolio, supplemented as necessary by advice from the Attorney-General’s department. Senator COOK—We heard this morning that there were four officers involved, 27 charges were laid, and the officers had their own legal representation. You were involved understand- ably in offering advice to the inquirers and to the inquiry that was held. My understanding from the answers this morning—and I am trying to cut this short—is that there were two investigating officers, sequentially, and then there was an inquiry based on the charges that were laid out of those investigations. At what stage did you get called in? Mr Vincent—The inquiry officer and the authorised officer work quite independently. If they wish to seek legal advice from our administrative and domestic law area we provide it, but whether they do so is entirely up to them. I do stress that they work quite independently. Senator COOK—Did they seek it from you? Mr Vincent—I prefer not to answer that, Senator, because I do believe that this goes to private matters. I was not present this morning when this matter was raised. Senator COOK—I am not trying to trap or trick you, Mr Vincent. If it is a private matter and if that is the answer, I will rest on this line of questioning, but before I do so, I am not asking you to talk of advice that you may have given as in-house lawyers, other than to the investigating officer appointed by the department to investigate these charges. It seems to me that whether you gave advice to the departmental investigator is not a matter of privacy—the content maybe, and I am not going to go to that— Mr Vincent—Senator, I think I will just have to check with my colleague, Ms Lyndall McLean, on that point, if I could. Senator COOK—Yes, sure. Mr Vincent—Within the legal office, the officers in our administrative and domestic law unit work quite independently. They consult either the legal adviser, Chris Lamb, or myself as necessary, but we do not seek to interfere in their work, because they are, once again, acting quite independently. In fact, I understand that such legal advice as was required was sought from the Australian Government Solicitor in the particular case you mentioned. Senator COOK—Not from you? Mr Vincent—We passed the request on to the Australian Government Solicitor. Senator COOK—You were the conduit. Mr Vincent—We do that in a range of cases. Senator COOK—Yes, sure. But you were the conduit in this case, you were not the adviser. Mr Vincent—That is correct. Mr Lamb—In these sorts of cases or in cases where the Australian Government Solicitor or the Attorney-General’s department has the carriage of the matter for the Commonwealth, it is normal for those who seek advice to go directly there. Senator COOK—Yes. Mr Lamb—We do not normally involve ourselves in these sorts of issues, other than on, if you like, ancillary points such as whether we should seek a waiver of immunity so that evidence can be presented in a foreign court, et cetera—those kinds of things.

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Senator COOK—I see. Mr Lamb—So there is not normally a function for us. There are highly skilled professionals working on these issues in the Attorney-General’s department or the AGS office, and it is better done there. Senator COOK—Can you just set me right on one matter of law here? Australian diplomats in a post like Nigeria would enjoy diplomatic immunity from local prosecution if there were a criminal offence committed, would they? Mr Lamb—That is correct. Senator COOK—That is why the emphasis on investigation within the department bears more onus than it might ordinarily bear? Mr Lamb—It would depend on the nature of the criminality that was alleged. If domestic criminality were alleged in a country, then what we would always look at would be the question of whether the domestic jurisdiction in which the events took place was the one that was the best place for that trial to take place, if there were to be a trial. We would then consider whether it would be valuable to seek a waiver of immunity. The immunity does not belong to the officer, it belongs to the Commonwealth. Senator COOK—I see. Mr Lamb—So the immunity would be waived by the Commonwealth. It is not for the officer to decide whether he or she ought to maintain the immunity. It is for the minister, in the case of diplomatic immunity under the Vienna Convention on Diplomatic Relations, to conclude as to whether that should or should not be held. It is not only immunity from suit, it is also an immunity that extends perhaps to preventing people from giving evidence in a court in another country, and subjecting themselves to the jurisdiction to that extent. So we would look at whether the immunity should or should not be waived, and we would make a recommendation to the minister, who would then make the decision. Senator COOK—I see. Let me be quite careful in asking you this question. Let us put aside, for the moment, the whole issue of questioning that I was following concerning this allegation about Nairobi. Mr Cotton—Perhaps if I could just intervene. As you would imagine, I am fairly reluctant to do so. But in the instance you were just talking about, the concern that we were at is that it was Australian funds that went missing, and we are trying to determine how they went missing. We are seeking to determine that under Australian law and the Australian Public Service Act processes, as we described this morning—the authorised officer process and the inquiry officer process. Mr Lamb is talking about events occurring in a foreign jurisdiction and the application of diplomatic immunity or otherwise in that jurisdiction. Mr Lamb—That is right. Senator COOK—I understood that. Since we are engaging in this discussion, let me just make my position very clear, because these are sensitive matters, and I would like to be very clear on them. I do not want to refer to this particular incident, but I am seeking a question of general understanding. If, in country X, there is a fraud in an embassy, because of the diplomatic relationship that would not be treated under the domestic law of that country, but if it were an Australian company in that country, it would be. The distinction here is that there is a special degree of diplomatic protection which places more onus on us to make sure we regulate our affairs. That is the point.

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With this international legal section that we are talking about now, is your role, Mr Vincent—if you are the right person—to advise whether or not there should be waiver of immunity from prosecution or of the giving of evidence in a particular case, or is that something that the Government Solicitor does? Mr Cotton—Waiver of diplomatic immunity would normally be a decision, as Chris Lamb mentioned, by the minister on the basis of a recommendation from us. Senator COOK—So you are the recommending body? You make the recommendations? Mr Vincent—Yes, in consultation with Bob Cotton’s area, obviously. Senator COOK—Of course—after you have considered all the information and informed your mind appropriately so that you are at a stage where you can feel confidence in your recommendations. You do all the things necessary to come to that point, I assume? Mr Vincent—Yes. Senator COOK—Harking back to the Nairobi fraud, there were four officers of the department charged and there were 27 charges laid. The first two officers involved by the department investigating this were investigating. The third officer involved by the department was, in a way, adjudicating and making a finding as to whether those charges were supported—that is my understanding of this morning’s discussion. He concluded, at the end of the day—for a series of reasons, as I understand it—that the charges were not sustained or that they were not to be pursued further. In arriving at that finding, did that officer, under his own motion, have access to legal advice? Did he seek advice from you or did he seek advice from the Crown Solicitor? Mr Cotton—I might just ask— Senator COOK—I do not suppose you can comment in terms of— Mr Cotton—I might just ask Ms Lyndall McLean to what extent we can answer that question, given the fact that the process you are describing, as we said this morning, is one carried out by the inquiry officer at that point. That inquiry officer has complete discretion as to how they should carry out that stage of the process. Of course, it is entirely open to an inquiry officer to seek legal advice and, indeed, to seek other advice from whomever they may wish. I might just see whether my colleagues can say whether, in this instance, firstly, we are able to say whether such advice was sought and, secondly, whether in fact it was. I am just trying to get across whether in the— Ms McLean—I should explain that my branch, the corporate evaluation branch, is the area responsible for doing the investigations. As you rightly identified there are two stages. There are the investigating officers—the authorised officer and then the inquiry officer—who, as you termed it, adjudicate or substantiate or otherwise the findings. You are right in saying that the inquiry officer can go and seek legal advice independently in trying to determine his findings. As I mentioned this morning, it is available to the inquiry officer to go to our own legal area, to the Australian Government Solicitor, to Attorney-General’s or to others that he may choose to help him reach his own findings. In this instance I understand that the inquiry officer did, indeed, seek legal advice—although we would really have to check with him directly—in reaching his decisions, because he himself was not a trained lawyer. Senator COOK—I see. Mr Vincent—I can confirm that one of the officers of the administrative and domestic law group did, as I recall, give advice to the inquiry officer. I have no details of the extent of that

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 507 advice because, as I said, that area works fairly separately as a discrete unit. Again, it is up to the inquiry officer to seek such advice and it is then given to the inquiry officer. Senator COOK—Okay. There were four officers concerned: were two of them high commissioners? Mr Cotton—Perhaps that is for me to answer. Yes, it is correct to say that they had held the position of high commissioner in the High Commission in Nairobi. Senator COOK—As I understand the evidence this morning, after the inquiry the finding was that charges were not sustained for a series of reasons. Are the reasons here publicly available? Mr Cotton—I think the answer to that is no, I do not think they are publicly available. Ms McLean—May I add here that, in the normalcy of the discipline proceedings, if the charges had been upheld and a penalty imposed, then that would move into the public domain. But in this instance, because the inquiry went through and the charges were not upheld and indeed, there is no bad mark, I suppose you could say, against those officers, privacy considerations prevent us from putting out the details that were made against them in the investigation and also the detail of the findings. Senator COOK—For most of my professional life, I would more likely have been arguing the case for the officers than arguing the case for the other side in this, but I am here as a senator making an inquiry. I just say that but I am not wanting to intrude in areas of privacy where there is a large amount of money such as this and a number of charges such as this. But there is also an argument to say that, if these charges are dismissed, at the end of the day the only person facing the potentiality of a conviction is the non-A-based officer. Who was responsible on the A-based side for this, and what were the reasons for the dismissal? There is an argument to say that ought to be a matter for the public to be aware of, without intruding necessarily into the privacy issues. It may be there is a conflict of two principles here; I am not sure how you resolve it. That is my point. Is ‘dismissed’ the right word or were they found ‘not to be proven’? CHAIR—Senator, do you have a long line of questioning still to go on this? We are due to break for a meal very soon. Senator COOK—No, I am just about at the end, actually. CHAIR—Very good. Senator COOK—Is ‘dismissed’ the right word? Mr Cotton—They were found not proven, I suppose. Ms McLean—Unsubstantiated. Senator COOK—I have not gone to what exactly the charges were but, from what we have heard this morning, they related to charges of negligence of some sort by these officers failing to exercise proper scrutiny and supervision of more junior staff. I can understand how possibly those charges would be not proven but a lesser level of negligence might be proven. Was there any decision, once these charges were not proved, to act against these officers in any way— given, as I understand it, they were the senior officers at the post at the time in which the fraud occurred? CHAIR—I think we did canvass these issues to some extent this morning, Senator. Senator COOK—That is right, we did.

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Mr Cotton—I think I would have to say the answer to that is absolutely not. Senator COOK—So, there is no further— Mr Cotton—No. Senator COOK—That is fine. CHAIR—Is that the end of your questions in that section? Senator COOK—It is the end of my questions on that subject. CHAIR—On that subject, yes. Senator COOK—At this point. CHAIR—At this point, then, I have some questions on notice from you, Senator Cook, which I will— Mr Cotton—I apologise for interrupting, Chair, but we just have one point of detail which it would be convenient for us to update Senator Cook on as we were talking on the matter of the Nairobi case. CHAIR—Yes, please do. Mr Cotton—We did convey to you this morning, Senator, the fact that the formerly locally engaged staff member was currently in detention. Ms McLean has since checked that matter and I think she will advise you that that person is currently not in detention, but on release on bail. Ms McLean? Ms McLean—That is correct. I went back to check the detail at lunchtime and he was released on bail of 500,000 Kenyan shillings with an added surety of another 500,000 shillings that he will not disappear. So, he is not in detention. Senator COOK—How long is he out on bail? Ms McLean—Actually it was since last year. My information this morning was incorrect, I am sorry. Senator COOK—He is not incarcerated awaiting a trial? Ms McLean—He is not incarcerated, no. Senator COOK—There is a bit more justice in the Kenyan system than I thought there was this morning. Mr Cotton—That I do not know—Kenyan shillings? Senator COOK—I have not asked for the exchange rate. It would sound an impressive sum if you were a Kenyan. CHAIR—Senator Cook, there are some questions from you on notice. I seek the agreement of the committee to incorporate those. There being no objection, it is so ordered. [The questions appear at the conclusion of today’s proceedings] Sitting suspended from 6.03 to 7.10 p.m. CHAIR—We were looking at subprogram 1.8, international legal interests. Senator COOK—I have a few questions on law of the sea. In fact, I and some of the officers were having an informal chat about this just after we broke for dinner. My understand- ing of the law of the sea covering the EEZ, the 200-nautical mile limit, is that Australia has the first opportunity to exploit the resources in the EEZ. But if we do not exploit the resources

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 509 to the sustainable level of those resources, foreign powers can come and exploit the resources between what we do and the sustainable level. Mr Vincent—That is correct but, that said, the controls that the coastal state still has over granting access, even in those situations, are enormous. There is a whole range of considerations that a coastal state can take into account before allowing any other country in to take any surplus stock. I will not go through the details but, if you looked at articles 61 and 62 of the United Nations convention you would see a long list of conditions. I suppose that what I am saying is that the coastal state has enormous control over access to its EEZ. If, say, a country came to Australia and said, ‘We don’t think you are utilising stock in your EEZ, we want to come in and have access to the surplus’, the first question we would ask is, ‘On what basis are you making that judgment?’ They would obviously then have to give us the evidence they had about what the stocks consisted of before the whole issue came up. It is really much easier, in a practical sense, for a country that wants to fish in our zone to come to us and say, ‘We would like to fish in your zone for this particular stock’ and then do a deal with us, just as the Japanese have done in terms of access to our zone for tuna fishing. In realistic terms, there has never been a case that I am aware of, since the law of the sea convention came into effect, where a country has kind of muscled in, shall we say, on the EEZ resources of another country. Senator COOK—But it has been in effect since 1994. Mr Vincent—But the principles have been around since the start of the negotiations of the convention in 1958, I think. Senator COOK—But with pressure on world fisheries, the rising living standards of the middle classes in Asia and the change in their dietary habits, one would expect that there would be increasing demand for access to wild fisheries in the world. Australia, with the second largest ocean territory because of the EEZ, would be a prime target, given our proximity to the region and all the rest of it. It is a matter of fact, so I will not pursue this line of questioning, but could you provide me with a copy of what the qualifications are that the coastal country, the coastal power, can exercise to prevent access before access is in fact mandatory and, in the event of dispute, what the dispute settling mechanism is as to the level of sustainability? Mr Vincent—Yes. As we mentioned just before, there is an international tribunal for the law of the sea which has just been established. But we have not decided yet whether we will submit ourselves to its jurisdiction. There is of course the International Court of Justice, if there were a dispute. But, as I say, I think it is unlikely. Coming back to your first point about increasing pressure on access to resources of the oceans, you are absolutely right. That is why Australia has to put in place—this is a favourite issue in our legal office—an oceans policy. We will have to, in the longer term, look to getting a better handle on or better data on the fish, the living resources in our EEZ, just simply because our EEZ, as you say, is so large. Senator COOK—That is an issue well beyond DFAT. That involves DPIE, DIST and the science agencies—the lot. Mr Vincent—Chris Lamb has just mentioned to me that there is a commission for the southern blue fin tuna secretariat that has just been set up in Canberra to manage the southern

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 510 SENATE—Legislation Tuesday, 24 September 1996 blue fin tuna agreement under which the Japanese gain access to our zone in payment for a fee. Senator COOK—Thank you very much. Senator SCHACHT—Are we up to section 1.8.1—‘International agreements, resource law and law advising’? It is on page 151 of the draft annual report. There is a section in a box entitled ‘Treaties secretariat’. CHAIR—No, I do not believe this has been covered. Senator SCHACHT—Before the election and leading up to the election the Liberal Party, led by a couple of senators, made great play about the fact that treaties were being signed without proper scrutiny by the parliament and decisions being taken, obviously by the constitutional power as upheld by the High Court, that treaties could be signed which then overrode state legislation, obviously because of the well-known Franklin River case. Senator MacGIBBON—The Teoh case; don’t forget that one. Senator SCHACHT—I am not aware of the details of the Teoh case. Senator MacGIBBON—I would not be surprised. Senator SCHACHT—Promises were made that this arbitrary decision by the federal government would be amended on the election of the new government. A statement was made on 2 May by the Minister for Foreign Affairs announcing parliamentary reforms to the treaty making process. I read the statement very carefully. Despite all the hoo-ha about increased consultation, in the end the executive government of Australia held to itself in absolute terms that, even after all this consultation, it would then make the final decision about what treaty it would sign or not sign; isn’t that correct? Senator Hill—I think that is basically correct. It is a consultation procedure to enable the legislature to participate in the process, to be informed of what the executive government intends and to therefore obviously bring its influence to bear— Senator SCHACHT—But that was not the policy promised by the coalition before the election. It was indicated in very strong terms that the federal government would put in a process whereby if in the end, after all the consultation, there was not an agreement they would not accede to the— Senator Hill—I would need to go back and check the record, but I think you are wrong. I do not think that we have ever accepted— Senator SCHACHT—I concede, Minister, that there may have been some slippery writing that left people like Senator Kemp, who was a devotee of this particular matter, for a long time saying how eager the federal government was to sign these— Senator Hill—Maybe it is that you have slipped over it. Senator MacGIBBON—How many treaties did they sign—900, 1,500? Senator Hill—Endless. Senator SCHACHT—If you were in government over a period of years, Senator MacGibbon, I would imagine— Senator Hill—Frustration. Senator SCHACHT—that you would sign a similar amount. Senator Hill—Our process enables participation by the legislature—

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Senator SCHACHT—But, in the end, the legislature cannot stop you from signing them. Senator Hill—both before signing and before ratification, as I recall it. Senator SCHACHT—But, in the end, if you disagree with the views from the consultative process, including the treaties committee—I understand that there is also an announcement that there would be a discussion at COAG about it—if you disagree with what all the state governments say, you will still hold to yourself the absolute right to say, ‘Bad luck, we are signing this treaty.’ Senator Hill—I do not know that the criticism of the parliament was so much wanting to go down the American road as wanting to be informed before Australia became bound, in other words, before the executive increased the legislative capacity of the government through the treaty making process. The parliament wanted to know and wanted to have the opportunity to voice its attitude. As I understand it, the process has been set up— Senator SCHACHT—I am not arguing if the process has been set up— Senator Hill—I can think of a couple of instances where it is meeting at the moment on proposed treaties, so the parliament has now got an active role to play in the process. Senator SCHACHT—Yes, but you are not putting legislation through the parliament to say that that consultative process, if it disagrees with the executive, can stop you acceding to that convention, are you? Senator Hill—No. You tell us what our policies are. Senator MacGIBBON—I want to make one point before we get the official view on this. Surely the fact that the executive government set up the second largest committee in the parliament—after the Joint Committee on Foreign Affairs, Defence and Trade oversight of the whole of the treaty process—is a very good example of the bona fides of this government to stop the willy-nilly, unsupervised signing of treaties for short-term political gain that the previous government indulged in. Senator SCHACHT—A great dorothy dixer. I thought the job of the big committee was to, first of all, pinch resources out of the joint foreign affairs committee and to make that less effective on such things as the Human Rights Subcommittee. Secondly, I thought you made it a big committee so that all those new backwoods men and backwoods women who have views not dissimilar to people like Pauline Hanson could all get a guernsey on the committee to start shouting and screaming— CHAIR—Come on, Senator! Senator MacGIBBON—Senator, the redneck party of Australia was decimated in the election. Senator SCHACHT—I thought the more legal outcome was to give a guernsey to everyone who had been swept up with the emotion that this evil process was going to be stopped. Well, it has not been stopped; it just takes a bit longer for the government to say, ‘Cheerio, we are going to do it anyway.’ Senator Hill—That is your interpretation. Senator SCHACHT—The statement made it very clear. I said it in the parliament when the statement was tabled and noticed that neither you nor anyone else on the opposition side disagreed with it. You went to a great length— Senator Hill—I put down the statement in the Senate.

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Senator SCHACHT—Yes, I know, and I debated it. When I made these points, you did not seem to answer them. Senator Hill—What was the additional point you wanted to make? Mr Lamb—Only that the government gave an undertaking that, after two years of watching the way the process worked, it would be reviewed. So the question of what would need to be done by legislation would be able to be looked at then. The government decided that it would introduce the process as it did by administrative means and then see over the period of two years what might need to be entrenched, if anything, by legislation for the future. Senator SCHACHT—We will see that review. I have to say, Mr Lamb, I would imagine that if there is a review and it leads to the idea that state governments have a final say over the top of the federal government, good officers like yourself will die with your leg in the air at the idea that a Queensland or Northern Territory government can hold up their session of the foreign policy area of the Australian government, and quite rightly. We know what the review will do because that is working very well—the consultation— Senator Hill—So you commend the policy as it has been implemented. Is that what you are saying? Senator SCHACHT—No. I am just saying that if there is going to be a review in two years time, the review will not change anything because, unless you are completely devoid of any commonsense, you will not give up the power absolutely to sign treaties. You would be bonkers if you did. CHAIR—Senator Schacht, would you frame it as a question? Senator SCHACHT—I did. CHAIR—Was that a question? Senator SCHACHT—Absolutely. A very potent question it was too, Madam Chair. CHAIR—I must have missed it. Mr Lamb—Could I offer a little bit more of my answer to the question please, Madam Chair, because the process that was announced on 2 May has not yet been completely introduced. The next stages of it are the first meeting that will take place at the Treaties Council, which is the adjunct body to COAG, on 15 November in Brisbane. Senator SCHACHT—Adjunct to COAG! Who is kidding you? The Treaties Council of COAG is like another subcommittee. It will disappear inside COAG like everything else does. It is like quicksand on a dark night. People disappear into it and are never seen again. Senator Hill—The states have an interest in seeing that it does not. Senator SCHACHT—You will make sure it disappears into the darkness of quicksand. CHAIR—Senator, you are continually making statements without framing them as questions. If you have questions on this topic, would you ask them! Senator SCHACHT—I am just making it clear that the nuances of my questions have probably been missed by the chair, Madam. CHAIR—By everyone, I suspect. Senator KEMP—Madam Chair, I have a question. Senator SCHACHT—Here we go. Here is the man who beat up this issue for two years and then got done by the Prime Minister on 2 May.

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Senator KEMP—He was the man who beat up this issue for five years and had large numbers of Labor people joining his ranks. You are sole exception to this. Senator Cook is too. Okay, you are the two exceptions. But I have a question. Is it correct that under the arrangements— CHAIR—Senator Schacht, Senator Kemp has the floor. Senator SCHACHT—The only other thing Alexander Downer has ever won was against you. Senator KEMP—As I was saying Madam Chair, I do have a couple of questions. The new arrangements will increase the difficulties, I assume, for governments to make secret treaties. I refer to the notorious example of ILO convention 158, which was signed and ratified hours before an election. Am I correct in assuming that under these— Senator COOK—There was nothing secret about that. Senator KEMP—There was no press release. Senator COOK—There was absolutely nothing secret about that at all. Senator KEMP—No press release at all. Senator COOK—Come on. Senator KEMP—No announcement was made. I put to you— Senator COOK—It was a public process. Senator KEMP—I put to Mr Lamb that these new arrangements will make it far more difficult for governments to involve themselves in secret treaty making, in that we have seen some prize examples under this government. Senator SCHACHT—Well done on that dorothy dixer there ! Mr Lamb—The arrangements in place make it necessary for any treaty to be adhered to to be notified to the parliament before that can happen, and for it to lie with the parliament for 15 sitting days. It would be possible to do things differently if there were a particular urgency attached to a treaty. There are cases where urgency will arise. But the urgency, when it does arise, will also have to be notified to the parliament by the minister responsible for the portfolio area of that treaty and that statement too would be debatable. Senator SCHACHT—Is it a disallowable instrument? Mr Lamb—No Senator SCHACHT—Then it is a joke. It is just information, a different form of press statement. Senator KEMP—Senator Schacht, you are extraordinarily confused on this issue. You seem to think on the one hand— Senator SCHACHT—You call it a disallowable instrument. Parliament has got no power. Senator KEMP—we have not gone sufficiently far enough and, on the other hand, you wish to have no change. Senator SCHACHT—No. Why do you not— Senator KEMP—Make up your mind. What do you want? Senator SCHACHT—You got done. Even Downer could do you. CHAIR—Do you have more questions?

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Senator KEMP—Yes, I have some more questions. CHAIR—Senator Kemp has the floor. Senator SCHACHT—Even Downer would have the commonsense of not making a disallowable instrument. Senator KEMP—Just so that you get the point clarified, for example, with that notorious treaty which Senator Cook is obviously so supportive of. Senator COOK—I am just a member of it. Senator KEMP—You might be able to shed some light on it later on, Senator Cook. Under those arrangements, it would be impossible for a government to sign and ratify a treaty without the parliament first being notified. Is that correct? Mr Lamb—It would be technically possible if there were a particular urgency attached to a treaty for the government to move, but that would have to be able to be justified by the government to the parliament and to the community. One of the other things that we will be doing—and we are now about half way through the process—is making sure that all treaty information and materials are out there fully available in the public domain through the Internet. That process is going very well. It has already started to generate a good deal of public interest in treaties that Australia has yet to sign or ratify. There is a good deal more public scrutiny, I think you could say, of treaties than there has been before. Australia is perhaps ahead of the field on this. Other countries are now looking at what we are doing in the publication of treaty information and how they can possibly learn something from what we are doing. Senator KEMP—Which particular countries are examining our new procedures? Mr Lamb—I would not like to say things which would sound too patronising about other countries. If you do not mind, we could talk about that separately. I am not sure that all other countries would like to be named as countries that have yet to make available material to their own public, but a couple are looking at what we can do. We are also looking at the possibility of putting a draft resolution to the UN General Assembly this year, which would have a lot more UN commercialisation treaty information made available through the Internet, so that it can be accessed by business groups, academics, NGOs and the public. Senator KEMP—Are there any arrangements by which we can learn more of the particular cases which have been appeals from Australia to UN committees of which Senator Schacht is such a strong supporter? Mr Lamb—That information is available on the Internet. All of the decisions of the Human Rights Committee are on the Internet. Senator COOK—How about the actual progress of Australian domestic cases which, as a result of the initiative of Senator Schacht and his colleagues, can now be appealed to the UN? Can we get information on those particular cases that are currently before the UN committee? Mr Lamb—Those cases are held confidential by the UN committee’s rules until such time as it enters a view as to what might happen. Senator KEMP—Has the government got any plans to ensure that more information is available to the public on those cases?

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Mr Lamb—The government has proposed to the Human Rights Committee that the confidentiality rules that are imposed on the information be relaxed and the committee itself is now considering how it should handle that. Senator COOK—When would we expect to receive a response from the committee? Mr Lamb—I think the next meeting of the committee at which this might be considered is due in March, but I am not certain of that. Senator KEMP—Does the same arrangement or request also apply to the other two UN committees which Senator Schacht is so enamoured of? Are we also seeking that that confidentiality does not apply in those cases as well? Mr Lamb—The request went in the first instance to the Human Rights Committee established under the International Covenant on Civil and Political Rights. It has not been addressed to the other committees but it might yet be. It depends on how the Human Rights Committee decides to act before we decide where we need to go next. Senator KEMP—If any of you have any information at the table, can you tell us how many Australian cases are currently being considered by UN committees? Mr Lamb—I do not have that with me, I am afraid. We could get that back for you. Senator KEMP—I put that on notice. If it is possible to get a brief description of each case, that would also be appreciated. Mr Lamb—We will provide what we can. Senator SCHACHT—Has the Tasmanian case about homosexual rights been before that committee yet? Did that go to the committee on human rights? Mr Lamb—A few years ago? Senator SCHACHT—Yes. Mr Lamb—Yes, that went through the Human Rights Committee. Senator SCHACHT—What was the result of that appeal to that committee? Mr Lamb—I believe that the government of the day decided that it was necessary to put legislation through the parliament. Perhaps ‘desirable’ would be a better way of putting it. Senator SCHACHT—And the legislation went through? Mr Lamb—Yes. Senator SCHACHT—In the end, I think it went through the Senate without a division. Mr Lamb—I was not here that night. Senator SCHACHT—I think the then government in opposition, now the government, decided to duck and weave and make sure there was no division, so they were not embarrassed by it. Mr Hill—Has that got something to do with these estimates? Senator SCHACHT—No. I am just following Senator Kemp’s query about appeals to UN committees. Senator KEMP—I am just asking a straightforward question and you— Senator Hill—You provoked him. Senator SCHACHT—I did not provoke him at all. CHAIR—Do you have you any further questions, Senator Schacht?

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Senator SCHACHT—No, I think I have done pretty well on that so far. Senator Hill—Pretty damning, I would have thought. CHAIR—Senator Schacht, have you finished your questions on subprogram 1.8? Senator SCHACHT—I might come back to it in a moment. CHAIR—Senator Cook, do you have some questions? Senator COOK—I have a couple of questions. Can you or one of the officers, please describe to me the process by which ILO conventions were adopted by the previous government? Mr Lamb—The ILO conventions were handled by the Department of Industrial Relations as a functional issue. They only came to the Department of Foreign Affairs and Trade when they were ready to go through the formal executive council processes. I suggest that it would be better to put that question through the other portfolio. Senator COOK—It is probably the best answer, Mr Lamb, for Senator Kemp’s peace of mind. The process, I can tell you, was a process that was open and transparent, and therefore it would be impossible to have a secret adoption of an ILO convention as you have proclaimed, Senator. Senator KEMP—I have a follow-up question. Is it possible for you to table the press release which announced the signing of ILO convention 158? I have asked this question three times before and it has never been tabled—never announced. Senator COOK—You have never asked it. Senator KEMP—Yes, I have. Mr Lamb—I am not certain where it was issued from at the time. It might be that that will also have to be directed to the department that issued the release. Mr Vincent—This was the one on the unfair dismissals. Senator COOK—Yes, of course. Senator SCHACHT—I have a further question. Recently, it was announced by the government that the arrangements for Pine Gap were extended for another 10 years. Is that an international arrangement or agreement that has to come before this new fairy floss arrangement? Mr Vincent—I think there is some exemption for national security about that. Senator SCHACHT—Is it exempt? Mr Vincent—I believe it is. I really would want to check this, but I believe that is an MOU, which is an agreement of less than treaty status. Technically, it does not need to go through the treaty process. I would like to check that. Mr Lamb—The terms of reference of the treaties committee, which were established by the parliament, say that the treaties or the international legal binding instruments that are done between states, either bilaterally or multilaterally, or other documents referred by a minister or a house of the parliament, are the ones that come forward. So it would be available to a house of the parliament, if they wanted to do so, to refer a document of less than treaty status to the committee for scrutiny. Senator SCHACHT—That is a good point. So far there has been no indication that the Minister for Defence has referred the extension of the Pine Gap agreement to the committee for consideration?

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Mr Lamb—There have been no documents of less than treaty status referred to the committee for consideration. Our understanding is that the government is interested in looking at— Senator SCHACHT—On behalf of the government, will you consider referring the memorandum of understanding for the extension of the Pine Gap treaty announced by the defence minister about a month ago to the treaty process for discussion? Mr Lamb has announced that it is available. Senator Hill—It sounds as if it may well be beyond the terms of reference of the— Senator SCHACHT—You just said that the minister has the power to refer such a document. Mr Lamb—I might make a further note: if it is a bilateral document one would have to take account of the degree of confidentiality that the other party attributed to the document before you could feel free to— Senator SCHACHT—It is not secret. You are talking about it now. Has the treaty with Indonesia been signed? Is that being referred to the treaties committee by the new government? Mr Lamb—Which treaty? Sorry, there are several. Senator SCHACHT—The security treaty with Indonesia. Mr Lamb—That has been through the committee. Senator SCHACHT—It has been through it? Mr Lamb—Yes. Senator SCHACHT—What was their view? Mr Lamb—The committee decided that they might wish to revisit the treaty in a year’s time to see how experience had shown that it had operated. They can do that. Once tabled, it can be examined at any time. It does not have to be examined in the 15 sitting day period, but in fact it was. Senator SCHACHT—So, at some stage, under this process, it can have a look at it and it can comment about it, but the government is not bound by any decision of the committee? Senator Hill—The point is that in the future such a treaty, if that is how you describe it, could not be signed in private or in secret. Mr Lamb—It would not be able to be ratified until it had the scrutiny that is available over 15 sitting days. Senator SCHACHT—It can be signed first, though. Mr Lamb—It can be signed, but the other thing that has happened with bilateral treaties is that the government has decided it will not allow single stage bilaterals to be done in future. They will have to have the double stage of signature first and ratification later—with a 15 sitting day period before ratification can take place, unless there is a special urgency circumstance. That does happen with some. Senator Hill—It sounds like a very worthwhile reform. Senator SCHACHT—It is no reform at all. We are not opposed to consultation— Senator KEMP—Not half you weren’t.

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Senator SCHACHT—All I want to say is that you campaigned on this for three years. You misled half the Liberal Party that they would be able to stop it, that the parliament would be able to stop it and that the rednecks in state governments would be able to stop it. Senator KEMP—No, that is not correct. Senator SCHACHT—That is what you campaigned on. That is the impression you gave. Even Alexander Downer did you in. That is the most extraordinary thing of all. Senator KEMP—Not at all. Senator Schacht, what was campaigned on was the need for greater scrutiny of treaties— Senator SCHACHT—I will have to put a notice up and congratulate— Senator KEMP—Just because you stand up in the parliament and read out a speech that Laurie Brereton has written, you think that that is the definitive— Senator SCHACHT—No. That is not true. You have been done by Alexander Downer. I rest my case. Senator KEMP—You read it word for word—Laurie Brereton. You are the only one in the parliament— CHAIR—Order! Senator SCHACHT—Alexander Downer, who has stuffed up everything else in foreign affairs— CHAIR—The committee will come to order. Senator Schacht, do you have any more questions under subprogram 1.8? Senator SCHACHT—I have some questions on component 1.8.2, which is about international and domestic litigation. I find the annual report of the Department of Foreign Affairs and Trade a bit more helpful in the breakup compared with the PBS. I know this was written a while ago, but it says in the annual report on page 155 under the heading ‘Advisory opinion on the legality of the use of nuclear weapons’ that the court’s opinion was due to be delivered in early July 1996. I think that occurred, didn’t it? Mr Lamb—Yes. Senator SCHACHT—It was declared a victory for both sides, if I remember rightly. Is that right? I heard someone on the radio claiming a great victory in favour of nuclear disarmament as a result and someone else saying it did not really matter. Do we have a firmer view from Foreign Affairs—particularly with your expertise, Mr Lamb—on who won? Mr Lamb—There were questions placed on notice, I understand, about that under the previous item in 1.7. We do not have the equipment with us to answer them here now. Senator SCHACHT—Do not worry. No, I did not realise that. That is all, Madam Chair. Subprogram 1.9—Information and Cultural Relations Senator SCHACHT—Can someone from the department help me. In the PBS, in the portfolio overview, table 1.2, I actually cannot find 1.9. CHAIR—Subprogram 1.9 is information and cultural relations. That is divided into 1.9.1, Overseas cultural relations; 1.9.2, Overseas information; and 1.9.3, Historical documents on foreign affairs. Senator SCHACHT—What page are you reading that from? CHAIR—Page 6 of the PBS.

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Senator SCHACHT—Sorry. I am to trying find the outlays in staffing by subprogram element. CHAIR—It is on page 9. Senator SCHACHT—That is what I was after. I notice in the outlays that the budget has been cut by just under $5 million and staffing has been cut from 113 to 87. Can someone point out to me where the cut of nearly $5 million is outlined in the description on pages 46 and 47, because I cannot quite see it. I may have missed it. Mr Rigg—Senator, are you referring to the— Senator SCHACHT—In 1.9 on page 9 you say that outlays for 1995-96 actual $28 million. For 1996-97 the budget is $23 million. That is a cut of nearly $5 million. It also says on page 9 that staff have been cut from 113 to 87. When I turn over to the description on pages 46 and 47 in the same document, I am trying to find an explanation of the actual cut of nearly $5 million—to what programs and the figures. My quick observation is that I cannot see it, but I may have missed it. Could you explain it to me? Mr Rigg—There is a table for this particular program on page 16 under ‘Significant variations to portfolio outlays’. You will note that there is one item there involving a reduction of $8 million to cover the cessation of the market Australia program. That is the most significant change in that program from the 1995-96 actuals to 1996-97. Senator SCHACHT—That means that, if you take that $8 million out, the budget went up $3 million. Mr Rigg—There were other factors that affected that program. As we have said in response to earlier questions, this is an amalgamation of a number of work unit contributions to this particular program—not only the work done by the division concerned here in Canberra but the work done at the 83 posts and work done in the state offices. But the most significant change that affected this program was the cessation of the market Australia campaign which involved a reduction of $8 million. There are a number of other factors that affected that. When we prepared these figures we factored in reductions in the information branch, including the withdrawal of a number of public affairs officers from overseas which would be reflected— Senator SCHACHT—On page 46 under ‘Performance forecast 1996-97’, under the subheading ‘Strategies’, can you point out to me where there is a paragraph describing the cessation of the market Australia campaign, or is it in another section? Mr Rigg—The proper place for the changes to resources is in the front of the document under ‘Significant variations to portfolio outlays’. Senator SCHACHT—We will just go through those early pages. Can you describe to me whether it is on page 17, 18 or 19. I am trying to find a description of the cessation of the market Australia campaign and I cannot seem to find it in your document. Mr Rigg—The funding that was provided for that program had a sunset clause, and, in fact, the funding finished in 1995-96, so the department no longer had that— Senator SCHACHT—Wouldn’t it have been useful to put in the paper here, even in the section here on subprogram 1.9, a dot paragraph saying that the market Australia program, which is an $8 million reduction, is taken out because it is a sunset program, the period of the program had run out and therefore it was an automatic reduction? Mr Rigg—That was a measure from several budgets ago; it has nothing to do with the current year’s budget or last year’s budget.

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Mr Cotton—I will just intervene, Senator. I think the point is a fair one in terms of presenting the material to senators in this document. If it is not easily accessible or understandable, it deserves a bit more additional work and information. Senator SCHACHT—I would appreciate it if you could take it on notice. As I read through 1.9 of your annual report—pages 156, 157, 158—I am trying to find market Australia. I can find everything else—Celebrate Australia, Experience Australia, Australia and India, New Horizons, Australia’s Relations with Thailand, Alternative Realities, Australia Week in South Africa, I am not going to attempt to pronounce Seasons of Kunwinjku, even Forthcoming Events Abroad, but no mention of that. I think it should have been reasonable to expect, even though it was sunset, the period of the four-year program or three-year program. I presume in the outlays the $8 million has been taken as a saving from the total budgetary document? Mr Rigg—No, the program funding finished in 1995-96—it was not renewed. Mr Cotton—Technically, that was the former financial year. The program finished, the funding finished and that was it. This is a document which is seeking to look ahead for the current financial year. But I take your point that a bit more explanation might have been given. Senator SCHACHT—Could you send me some information about the background to the $8 million, what the program’s success and evaluation is? Mr Cotton—I think that is a question which we may address this evening, if that is the way you want to do it. Senator Hill—You want to know— Senator SCHACHT—The program has run out, $8 million has been spent, there is no more $8 million: do we have an evaluation of the program, its success or otherwise? Senator Hill—Obviously within the priorities we decided that here was an area in which we should make a saving. Senator SCHACHT—Yes, that is what you are saying now, but that should clearly be in the outlays as a saving. Mr Cotton—No, the program finished at the end of last financial year, Senator. Senator SCHACHT—They are saying it has run out. Senator Hill—As a result of the restructuring there is an overall saving. Well, that is what your brief says. Senator SCHACHT—Thank you very much—can we table that? Mr Varghese—Senator, perhaps I could add a couple of comments. The market Australia program was funded for three years and that three-year period ended with the 1995-96 financial year. Senator SCHACHT—Ended 30 June? Mr Varghese—That is right. We have not finalised completely the evaluation of the program, although we already have a number of indicators of its performance. They are divided up amongst a number of categories. The program itself was designed to increase awareness of Australia as a provider of sophisticated goods and services and a large but by no mean exclusive component of it was an advertising campaign in four east Asian markets which took examples of Australian technology and innovation and projected a message of Australia as a provider of sophisticated goods and services. The evaluations we have done so far include a tracking study and we are still waiting for the after-picture. We had a benchmark study in two of the markets and we are waiting for the conclusion of those.

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Senator SCHACHT—Good to hear. Will we have, by the time of the supplementary hearings in October, that evaluation? Will the two of you be available for the estimates committee? Mr Varghese—I hope we will, yes, Senator. Senator SCHACHT—I accept, even though Senator Hill might have a briefing that says something— Senator Hill—No, I was referring to quite a different part of the program. Senator SCHACHT—Mr Cotton got you sorted out real quick. Senator Hill—He was right and I was wrong. Senator SCHACHT—So, with the $8 million gone, that leaves us then with a $3 million increase in the program. Where is the $3 million being spent, in view of the fact that there has probably been pretty much a slash and burn attitude to a lot of the foreign affairs department’s budget across the line but this ends up with a $3 million increase? Mr Rigg—No, that is not the case. As I said, a number of other factors affected the change from last year to this year; a significant amount of funds were carried over from last year to this year. Senator SCHACHT—How much? Mr Rigg—Something in the order of $3 million. Senator SCHACHT—So you got Finance approval to carry forward $3 million unspent from 1995-96 to 1996-97? Mr Rigg—Yes. Senator SCHACHT—Do you mean to say that Finance agreed to that? Mr Cotton—Departments are allowed to carry over up to 10 per cent of their running costs under Department of Finance running cost guidelines. Senator SCHACHT—$3 million on $20 million or thereabouts is more than 10 per cent. Mr Rigg—No, the department as a whole. Senator HOGG—It is very difficult to interpret your figures. There needs to be a better way of explaining the way you are dealing with these figures. Mr Cotton—I acknowledge the comment. Some of these figures are hard to access. As we have explained on several occasions, a program activity brings together several areas of spending activity to consolidate it into one. I think I am correct in saying that these particular documents are required to be formulated under fairly strict guidelines by our colleagues in the Department of Finance—indeed, we acknowledge your point—and sometimes material is not as accessible— Senator HOGG—And you will express our frustration to them? Mr Cotton—We will certainly express your frustration to the Department of Finance. Senator SCHACHT—You can still answer with information you have with the experienced officers at the table. I even got the same admission from the head of Treasury, Ted Evans, on Treasury documents saying that the tables did not have all the information and the quality was not up to the standard that he would have expected. So you are in good company if Treasury concede the point about it. The $3 million was rolled over. What was underspent then last year in 1995-96 that meant you had $3 million left over to roll over in 1996-97?

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Mr Varghese—The main component of that $3 million relates to the funding for the major country promotion in India in October-November of this year. The reason for the rollover was that, originally, the $3 million funding for that promotion was provided in the previous financial year. We had decided to hold the promotion in October-November 1996 and, therefore, we received approval to carry the funding over from the previous financial year. So it was just the timing of that large-scale event which accounted for most of the carry over. Senator SCHACHT—Why was it delayed? Mr Varghese—It was not delayed. The original allocation was for an integrated country promotion; it was not country specific. The government then needed to take a decision about where to hold it. The decision was taken to hold it in India and the best timing for that promotion in India was considered to be October-November 1996. Senator SCHACHT—Was it clear at the time that it might not be spent in 1995-96? Mr Varghese—It was allocated for 1995-96, but we had indicated quite early to Finance that the promotion would be held outside of that financial year. Senator SCHACHT—If we compare it with last year, does that make it about dead even on the budget? Mr Varghese—The program itself will actually be running at a lower level in 1996-97. There have been a number of cuts to it. One is in the restructuring of the public affairs function which over a full year would yield savings of $4.7 million to the program, but it will not yield all of those savings in 1996-97. It will yield savings of that order in a full financial year. There have also been some cuts to the funding of some of our bilateral foundations and councils of about $100,000 for each of those foundations. In addition there has been the one per cent efficiency dividend and the 2 per cent across-the-board cuts. So the program itself will be running at lower levels in 1996-97 than in 1995-96. Senator SCHACHT—Where on page 46 and 47 of the PBS is that actually described? Mr Varghese—Sorry, can you— Senator SCHACHT—In the PBS, in the document we are working on for estimates, page 46 and 47, 1.9 describes this program in ‘Information and cultural relations’ and it has performance outcomes for 1995-96. Now that you have explained it to me, I see the first dot point talks about Australia-India new horizons. Is that the $3 million? Mr Varghese—That is right. Senator SCHACHT—Going through the performance forecast for 1996-97 strategies and outlook, can you point out where these cuts are having an effect on particular parts of the program? Mr Varghese—The restructuring of the public affairs program will apply to all of our public affairs activities overseas. So they will have some implications for virtually each of those dot points that you see under performance forecasts in 1996-97. Senator SCHACHT—The second dot point ‘Deepen appreciation of Australia’s advanced scientific, technological and industrial capabilities’ does not actually describe a cut. It says ‘Deepen appreciation’. CHAIR—I am reading it also and I can see things like dot point 4 ‘including the most effective ways of public presentation’, and further down page 47 on dot point 4 ‘to arrange targeted performing and visual arts events’, and so on. I can see that this involves a more

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 523 effective focus on these areas that the officer is talking about. All of that would involve cost cutting. Senator SCHACHT—I thank you for your assistance, Madam Chairman. CHAIR—That is all right. Senator SCHACHT—I would have thought that, no matter what amount of money we were spending, we would surely arrange to have it targeted anyway. Even if you have $50 million for the program, you do not actually say, ‘We are going to spread it around like confetti at a mad drunk’s party.’ You would say, ‘We are targeted in a most effective way,’ irrespective of the amount of money. I took it as read that all programs are the most effective public presentation—‘Targeted to performing and visual arts events’. I took it that, whatever the amount of money, we would do that as a matter of course, surely. Mr Cotton—The three things that Mr Varghese has mentioned, the cessation of the market Australia program which we referred to before, the decision to abolish the international public affairs branch which we debated at some length on Thursday and, indeed, the reductions in the grant and contribution out of this division’s management, are all decisions which were taken and put into effect in the last part of the last financial year and so are working through into this financial year. But the way in which this document is drafted sounds a bit taken as given and we now work off a lower base with these sorts of activities. Maybe that is part of the reason. Senator SCHACHT—Could you provide me with the list of where the cuts are occurring and put a dollar sum next to it. How much will those cuts total? Mr Varghese—The cuts in the public affairs program, the restructuring of the way in which we do international public affairs, will total in a full financial year about $4.7 million. That relates to restructuring the way in which we do that work back in Australia, including contracting out parts of it and localising a number of our Australian based public affairs officer positions overseas. Senator SCHACHT—So all the cuts relate to the Public Affairs Division being restructured as activities in the broader scope— Mr Varghese—A large proportion of them do, but there are other cuts, such as to the foundations. Senator SCHACHT—Could you list those for us? Senator Hill—We went through them all three days ago. Senator SCHACHT—I think that was the day that I was at another estimates committee. Senator Hill—We went through all the Public Affairs Division, who was coming home, et cetera. CHAIR—Senator, could you read it in the Hansard? Senator SCHACHT—I am glad you pointed that out to me, Minister. I do not want to cause unnecessary work for the officers. I just think that in future this ought to be a bit more descriptive in the section. Senator HOGG—I want to go back to the table on page 9 that Senator Schacht referred to earlier. Looking at the staff years, there is a difference of 26. Am I to interpret from what you are saying now that those staff years are really spread over a number of programs? Mr Rigg—No, they are not spread over a number of programs; they are spread over a number of work units, including the Public Affairs Division and work done at the 83 posts

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 524 SENATE—Legislation Tuesday, 24 September 1996 and the seven state offices and work that may be done in other divisions that contributes to this particular program. The aggregate of what all of those respondents are telling us yields that difference. The estimated actual staff years for last year is 113 and is forecast to be 87 for this financial year. Senator HOGG—So we really cannot do an analysis of where those 26 staff years have been lost in this particular subprogram? Mr Rigg—We could break it up between the Public Affairs Division, the posts and the state offices. Senator HOGG—We would not know physically though how many people were being made redundant out of this process. Mr Rigg—You could not draw that inference from this. It might simply be that the same people in posts, for example, were spending less time on these particular duties compared with other things that they might do. These figures represent the aggregate of whole people in some cases and parts of a person’s time in other cases. Senator HOGG—I just cannot recall if we asked for a total breakdown by the whole portfolio of where people were losing their positions. Mr Cotton—Last Thursday I spoke in broad terms of the whole department’s likely impact on total staff numbers. I gave those figures last Thursday. Senator HOGG—I am just trying to recall whether we asked for a breakdown by post and by classification. Mr Cotton—We cannot really do that yet because the divisions themselves have not yet worked out the way in which they are going to adjust to a new lower salary. Senator HOGG—Will this be done in time for the supplementary estimates? Mr Cotton—Perhaps we should have a bit more of a talk to you and see if we can get the questions a bit more precise before we come back to you. Senator HOGG—Yes, I would like to explore this and maybe bring it up again in the supplementary estimates. I do want to find out where the people are physically being removed from in your system so that I can get an appreciation of the impact of the cuts on your ability to deliver service. When you read the 26 there—not that it is 26 people; I know it is staff years—you cannot translate it into that program. Mr Cotton—We will take that on notice and we will come back to you on that. I think it is more helpful to try to address it as a total departmental wide phenomena. We can break out for you where we think these particular movements are going to take place. Senator HOGG—And where the impact will occur within the various subprograms. Mr Cotton—We will certainly try to do that. Mr Rigg—To a certain extent, the impact on programs is as revealed in these tables at the time that these figures were prepared in aggregate terms for the department as a whole. From program 1.1 down to the end of 5.2 our figures indicate that there will be a reduction of 180 staff years. That is an aggregate for the department as a whole and is consistent with the figures that we gave you the other day on the total expected redundancies. Senator HOGG—Further, Mr Cotton, could we have some idea of the various levels at which these redundancies are occurring. Mr Cotton—Yes, we will try to do it on that basis.

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Senator HOGG—Still on 1.9, on page 47, the fourth dot point says: Contributing appropriate and cost effective cultural relations activities in the Year of South Asia initiative in 1997. Do we have a specific allocation for that? If so, what is it? What are we contributing to that program besides money? Mr Quinn—The planning for the Year of South Asia is still developing, but we have allocated a notional amount of $50,000 from the Canberra end plus additional allocations to the south Asia post to assist with a modest cultural program. The core of this activity is a trade and investment promotion. I know that Mr Fischer plans on making a visit to the region with a very strong trade focus so that the cultural activities would run in parallel and reinforce that visit program. We have a contract with Musicaviva and with Asia Link to assist with regional touring activities in fine music and visual arts. We have asked them to look at opportunities to develop activities in those south Asian countries that will reinforce Australia’s profile and update our image there. We have a number of plans for activities during that period, including touring some Aboriginal art exhibitions that the department owns that we can do at a relatively modest cost. There is also a proposal to look at a film event. There are some activities relating to cultural heritage in Sri Lanka and other activities that we are planning. We have not finalised the details. We only recently received our budget bottom line so we have been doing our calculations over the last fortnight to juggle funding to provide a quantum to support that program. Senator HOGG—Is this our promotion or are we dovetailing in to someone else’s promotion? Mr Quinn—This is our promotion. This event features in the coalition trade policy document as a major initiative. Obviously, the India promotion is the introduction for that major push into south Asia next year. CHAIR—That concludes program 1. The suggestion has been made that at this stage we should look at program 5, Executive and DFAT Corporate Services, given that I understand the majority of the remaining questions in the portfolio are in this section. After program 5 we will revert to programs 2, 3, 4 and 8. [8.12 p.m.] Program 5—Executive and DFAT corporate services Subprogram 5.1—Executive direction Senator HOGG—On page 67, at the second dot point, it says: the Executive and its individual members will carry out these rules through: It then lists a number of points, the fourth of which says: periodic review and evaluation of performance, resources and priorities of Divisions, State Offices and posts; What criteria are used to judge the outcomes? Mr Cotton—That refers to the very regular annual program of what we call post evaluation review each 12-month period. This is a very full and detailed evaluation by the department and its senior management and senior executive of the performance of each post’s activity over the previous 12 months, and also making a judgment about the appropriateness of its objectives and goals and such like for the next 12 months.

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This is a process which takes a fair amount of time and effort by the posts themselves and a fair bit of work by the relevant geographical or functional divisions. Particular assessments are made about post performance, and these are then fed to the senior executive, as is described here, to actually then make the final judgment about the post and its performance in all its major activities. This will pick up policy work, management issues, particular multilateral activities and so forth. It is very much one of the major activities of the senior executive of the department. Senator HOGG—What are the criteria that you use? Do you have a standard set of criteria or does it depend on, for example, the performance forecast that you have set for that particular post? Mr Cotton—Essentially, I might ask Mr McLean to give us the detail, but each post is required to set out its objectives clearly, the way in which they are designed to be achieved, and the ways in which we think those objectives can actually be measured to see whether or not they have been achieved. We have a five-point rating scale, ranging from outstanding, essentially, to unsatisfactory, which is the way in which we seek to rate the performance of all posts. Senator COOK—When we started this whole process many moons ago, in the opening questions I asked about the administrative circular that the secretary of the department, Phillip Flood, had issued, which was reported in the Australian of 29 August. We asked a number of questions on that. I do not propose to repeat any of those questions, but I announced that because I want to ask some additional questions on that now. Firstly, is the department giving consideration to the establishment of any new overseas posts? Mr Cotton—I think it is appropriate to say at this time that there is no current consideration being given to the establishment of new posts. Senator Hill—We debated this subject for some time on the first day of these hearings. Senator COOK—I know, but these are additional questions. These are questions that were not asked then. CHAIR—These are new questions? Senator COOK—Yes. The report in the Australian refers to co-locations of missions with Canada. I know this has been an issue that the department has been interested in for a while. Is it true that we have co-location with Canada in Bridgetown in Barbados? Mr Cotton—Yes, it is true. Senator COOK—Are any other co-locations being considered at the moment? Mr Cotton—From memory, we have co-location arrangements with the Canadians in Phnom Penh. I think it is one Canadian officer. We have a New Zealand officer located with us in the mission in Vienna. We have proposals currently under way to examine co-location arrangements with New Zealand in the mission in Geneva. So proposals are either in place or are under consideration. From time to time we do have a look at any other co-location opportunities. So it kind of works in a number of ways. Senator COOK—Was that administrative circular that was reported in the Australian on 29 August a circular to all staff? Mr Cotton—Yes. Senator COOK—Is it a classified document?

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Mr Cotton—I do not believe it is a classified document. I believe it was given wide distribution in the department and given wide distribution to posts overseas. I think that, almost at the same time, the secretary spoke at a major meeting of all staff as well. Senator COOK—Can the committee have a copy of it? Mr Cotton—I do not see any particular reason why not. The document is available and I might table it this evening. Senator COOK—Thanks very much. Has the secretary or any other DFAT executive officer issued any other administrative circulars concerning cost savings within the department, either prior to or after the budget? Mr Cotton—Yes. A series of circulars have been issued in the department, particularly prior to the production of this circular in late August, going right back I think, at least to the March- April period. The design of the circulars is that we try to communicate with our staff and keep them very fully informed as to the thinking of the senior executive as we are required to go through a series of decisions on resource adjustment and the various decisions we are required to take in that context. I think we would have put out at least three or four other circulars in that whole time frame. They are essentially circulars designed to set out for staff and to give them as much information and material as we are able to give at any particular point, bearing in mind that at that earlier time it was prior to any budget decisions which could then be made public. Senator COOK—Can the committee have copies of those circulars? Mr Cotton—Certainly. I will check those out and see which ones we have. Senator COOK—Thanks very much. What resources have been allocated for the preparation of the government’s white paper on Foreign Affairs and Trade? Mr Cotton—I might ask my colleague Mr Jones to have a seat at the table and say a few words on that. Senator Hill—We answered some questions on that on the first day as well. Mr Jones—The answer is still the same, Senator. We have a secretariat consisting of Peter Varghese, a band 1 officer, and three writers who are working with him. There is an administrative support person as well. Senator COOK—I see. I have another couple of questions on this. I propose to put them on notice. [The questions appear at the conclusion of today’s proceedings] CHAIR—Thank you for that. Senator SCHACHT—This may have been covered on the first day when I was not here. Could I just try my luck. CHAIR—If they have been asked, could I request that they not be asked again. Senator SCHACHT—I am referring to what is in subprogram 5.1. Under ‘PERFORMANCE OUTCOMES 1995-96’, at the first dot point it says: Achievement of the sub-program’s objective was measured by the extent of Ministerial satisfaction with the quality of Departmental advice on portfolio issues, with the administration of the Department and with the services provided to Minister by the Department. Details are given below and elsewhere in this document. Was the minister satisfied with the level of advice given to him about the process of trying to appoint Miles Kupa as ambassador to Indonesia?

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Senator Hill—I think that is a matter for internal consumption. Senator SCHACHT—Hang on. It says it here. Mr Hill—No, that is how the minister will evaluate the achievement of the objectives. Senator SCHACHT—So I cannot ask a question about what you have put in your own document and dot point about the extent of ministerial satisfaction? Senator Hill—You cannot, no. That is correct, you cannot ask us whether the minister is satisfied with advice that he has received. Senator SCHACHT—What did you put it in here for? Senator Hill—I must say, Senator, it has a familiar ring about it. I think it has been in every set of these documents that I have ever read. Senator SCHACHT—I thought he said he was satisfied with the advice he got. Senator Hill—I am sure Mr Downer would say he was satisfied. Senator SCHACHT—So he was satisfied with the advice that he got about the appointment of Mr Kupa? Senator Hill—I do not think it is appropriate for you to be asking matters that are of a very internal nature as to whether Mr Downer feels that he is getting the best advice or whether it can be improved, or matters of that nature. Senator SCHACHT—No, I am asking you. You are the minister at the table. I am asking you on his behalf. CHAIR—The minister has already replied. Senator Hill—I am saying to you that I think it is an inappropriate question. Senator SCHACHT—I think that is a very unsatisfactory answer in view of the dot point that was there. CHAIR—Next question? Senator SCHACHT—Mr Cotton may correct me here. I do not know whether this comes under this program or the next one. I am easy to take it under either. I notice it was mentioned in outlook. At the bottom of 5.1, on page 67, the fifth dot point states: . Through the position of Women’s Policy Officer, continue to provide advice on issues of relevance to women in the Department and to promote awareness of policy on status of women issues. Senator Hill—Is that the last dot point? Senator SCHACHT—It is page 67 of outlook, the fifth dot point down. Senator Hill—Yes, what is the question? Senator SCHACHT—Now that I have read it out, I will bring it to your attention. The question is: what is the percentage of women officers in the SES in the department? Senator Hill—About the same as it used to be, I would think. Mr Cotton—I will ask my colleague, Dr Alan Thomas, to give you a detailed answer. Senator Hill—I think we should ask Gareth over here. Senator SCHACHT—I did, actually. Senator Hill—I did. Senator SCHACHT—I did too.

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Mr Cotton—I think it is fair to say, Senator, that we are below the APS average at that level, but our trend line is improving. Senator Hill—That is the answer we got every year. Mr Cotton—It is good, and it continues to be the case. Senator SCHACHT—You will soon recognise, Minister, that governments come and go, but they stay the same. Mr Cotton—Can we just answer the question for you? Senator Hill—What is the percentage of women in the SES? Dr Thomas—It is just over 12 per cent. The Australian Public Service average is 22.4 per cent. Senator Hill—What was it in the department a few years ago? Dr Thomas—For example, in 1989-90 it was six per cent, now it is 12 per cent. Senator SCHACHT—Is that one officer or two officers? Dr Thomas—No, three. Senator SCHACHT—With the SES sometimes you find that it is only two or three people out of 20. Senator Hill—How many SES officers in the department? Dr Thomas—Females? Senator Hill—No, all up. Dr Thomas—There are 163, but that includes heads of mission overseas. Mr Cotton—How many females? Dr Thomas—Twenty-one are female. Senator SCHACHT—Could you also take this on notice because I will come back at the sub-hearing if I need to? Could you give us the SES levels at SOG B and SOG C? Senator Hill—Fifty per cent of the current deputy secretaries. Dr Thomas—I can give them to you now, if you like. I do have those figures. If you want, I can read them out. Senator SCHACHT—Just read them out. Put them in the Hansard and I will be right. Dr Thomas—Senior officers grade B, there are 27 females in Australia and 18 overseas. Senator SCHACHT—Out of how many? Dr Thomas—Out of 259. Senior officers grade C, there are 81 females in Australia and 23 overseas, out of 343. Do you want them all the way down the ASO scale? Senator SCHACHT—Just send it to me to save time. Dr Thomas—Okay. Basically there is one last figure, Senator. Of our staff, 42 per cent are female. Senator SCHACHT—And they are all at the bottom end doing the slave work, of course. That has always been the case. Senator Hill—There seems to be significant improvement. Senator SCHACHT—It is improving. Is the trend line consistently improving? Dr Thomas—At the senior levels, yes, the feeder groups to SES are increasing gradually.

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Senator SCHACHT—On recruitment of officers, et cetera, are we averaging out over several years that males and females are about fifty-fifty? Dr Thomas—Yes, for example, this year it is about 18 females and 14 males. Senator SCHACHT—The other question on figures is not in the women’s area but may be about background, multiculturally and so on—people with a non-white Anglo-Saxon background who were either born overseas or the first born of people with a non-English- speaking background. Dr Thomas—Generally, our figures are slightly higher than the Australian Public Service average. As of June this year, first generation non-English-speaking-background staff, for example, were eight per cent of DFAT staff compared with a Public Service average of five per cent. Second generation non-English speakers were 14 per cent. Senator SCHACHT—I think you could target some people specifically because of language skills. Their first language offers those advantages. I have one other question, but if it is too difficult to get out I will not press it. Of the graduate groups being recruited, do you have any statistical information about what sorts of academic qualifications they have? Dr Thomas—I do not have it with me, but it is a large variety of disciplines, especially in recent years. We have taken a lot more economics graduates. We take law graduates if we can get them. Including recently, we have taken some business graduates. CHAIR—Senator Schacht, I understand this question was asked on Thursday. I have a distinct recollection. Dr Thomas—We have also made a particular effort to recruit accountancy graduates recently. Senator SCHACHT—Was that put on notice on Thursday? CHAIR—It was explained, as I remember, by the office. Senator SCHACHT—If it is not too difficult, could you provide a couple of samples from the last couple of years of the academic qualifications? Are most people being recruited in that graduate area in their first, second or third year out of completing their academic qualifications? Are many coming in after some experience elsewhere? Dr Thomas—Yes, increasingly they have a second degree or they have worked for a few years. Subprogram 5.2—DFAT Corporate Services Senator COOK—First of all, can I just ask some questions concerning Mr Spender’s appointment as ambassador to France. Is it not the case that, unlike Mr Spender’s predecessors since 1991, Mr Spender has not been simultaneously appointed as non-resident ambassador to the People’s Republic of Algeria? Mr Jones—As one of the predecessors, I can say that it is the case that he is not being accredited to Algeria. That accreditation has been transferred to Cairo. That was related to the fact that our current ambassador in Cairo is a former ambassador to Algeria when we had a resident mission there and had contacts which were very useful to deploy in Algeria. Senator COOK—I think when you were accredited to France you were accredited to Algeria. When was it decided that Mr Spender would not be accredited to Algeria? Mr Jones—The decision was actually the other way round—that is, to accredit the ambassador in Cairo to Algeria after he took up his appointment there, given, as I say, his background in Algeria earlier.

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Senator COOK—Did Mr Spender at any stage suggest that a simultaneous appointment as non-resident ambassador to Paris might be too onerous a duty? Senator Hill—I doubt if he would, but I think the question is inappropriate. Senator COOK—Why? Senator Hill—Surely, communications between diplomats and other officials within the department, or would-be diplomats and officials, must come within some level of internal confidentiality. Senator COOK—It is an expenditure of money. Senator Hill—Why is it an expenditure? Senator SCHACHT—It might be more expensive to fly the ambassador from Cairo to Algiers than it is from Paris to Algiers. Senator Hill—Why do you not ask that question? Mr Jones—If it would help with the answer, as I recall, the decision in relation to transferring the accreditation to Algiers from Paris to Cairo was taken earlier than the decisions relating to Mr Spender’s appointment. It flowed from the appointment to Cairo of the current ambassador, who had previously been the ambassador in Algiers. Senator COOK—So you are saying that this was a decision recommended to the minister by the department prior to a consideration of who filled the Paris post? Mr Jones—It was unrelated to that question, yes. It flowed from the identity of the ambassador in Cairo. Senator COOK—What is the type of car used by the ambassador in Paris? Mr Jones—For some years it has been a Renault Safrane. Senator COOK—Has Mr Spender made any requests about an ambassadorial vehicle? Mr Cotton—Not to my knowledge. Senator COOK—So he has not made any requests? Senator Hill—It is quite generous of you to answer, but I would say that that question is inappropriate too. Senator COOK—Why? Senator Hill—Because surely communications between officers of this department have to remain confidential. If they cannot remain confidential, how could the place operate? Senator COOK—I think the minister is out of order in raising this question for the reason that ambassadorial posts involve the expenditure of public moneys. Senator Hill—I have no problem with you asking whether there has there been an upgrade in car or whether it is more expensive, but that is not the question you asked. Senator COOK—No: has he requested a further motor vehicle? Mr Cotton—As head of the corporate services division, no such request has come to me. Motor vehicle acquisition is very much a part of the particular post activity, and there are set budgets for these things. I might further add that Mr Spender has not yet taken up his assignment. Senator Hill—The effect of these questions is that basically any communication between a diplomat and head office on terms and conditions should be on the public record.

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Senator COOK—Yes. Senator Hill—I do not think that is a way in which a department can operate. Questions as to whether there have been any increases or decreases in the costs associated with an appointment is certainly relevant, but with regard to the communication that takes place between officers there has to be some confidentiality. CHAIR—The question of internal workings and internal communications has been shown previously to be a reason for the minister refusing to give any further details, and I consider that to be a perfectly good reason in this instance. Senator COOK—We might have a difference of opinion then, because my advice is that the ambassador did request a specific type of motor vehicle. That motor vehicle was a Maserati, which is in a category entirely different from what you would normally expect. Senator Hill—You can speculate as much as you like. Senator COOK—I am not speculating Senator Hill—You are speculating. Senator COOK—I am not speculating. I am asking whether you will confirm that or deny that, Senator Hill? Senator Hill—No. I gather that the official said there has been no upgrade of cars. Was that what you said? Mr Cotton—What this official said is that there has been no upgrade of cars. As the senior official in charge of this division, who these matters might reasonably come to, no such request has come to me. Senator COOK—What you have also said is that the ambassador designate has not yet taken up his position. Mr Cotton—Correct. CHAIR—Therefore, Senator Cook, it is speculation on your part to be asking these questions. Senator COOK—It is not speculation on my part. I am putting to the government in the form of the minister at the table that Ambassador Designate Spender requested a Maserati motor vehicle and that request was turned down. Then he sought to make up the cost between the motor vehicle provided and the cost of a Maserati for his ambassadorial duties. Senator Hill—My answer is that I do not know. You have asked me to find out, but I think that is a question well beyond the normal province of an estimates committee. Senator SCHACHT—You have got to be joking. Senator Hill—It relates to plain communication between officers. Senator SCHACHT—If we had said that to Bronwyn Bishop five years ago, she would have been throwing chairs through the windows at that particular answer, and you know it. And you would have sooled her on. Senator Hill—I would have thought that would have been the answer that you would have given. Senator SCHACHT—On the expenditure of funds? Senator Hill—No. There are has been no expenditure of funds. That is the point. You are on a frolic trying to get into the communications of the department, and you know that is out of order. It might be good sport, but it is out of order.

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Senator COOK—No, it is not a question of sport. CHAIR—It is a question that is out of order. The minister has given his answer and I suggest you proceed to the next question. Senator COOK—First of all, this is a committee of the Senate. We are inquiring into activities of the executive. I would suggest, respectfully, that it is not your job to protect the minister from questions of the Senate. CHAIR—I am not protecting the minister; I am commenting on the nature of your question. As it is a hypothetical question— Senator COOK—It is not a hypothetical question. I am asking a direct question, not something which asks: if these circumstances applied, would something else happen. That would be hypothetical. I am asking a direct question. CHAIR—And the minister has given you his answer. Senator Schacht—No, he has not. Senator COOK—He is not going to answer it. Senator Hill—I said that I do not know, but I also said that I think it is outside the scope of an estimates committee. Senator COOK—Will you find out, Minister? Senator Hill—It is not a matter that is related to an expenditure. You have been told that no such expenditure has occurred. Senator COOK—I have not finished my questioning yet, Minister. Senator Hill—As you please. CHAIR—Will you proceed to the next question? Senator Hill—What I am saying is that I know and you know that at the time of appointment of ambassadors, particularly politically appointed ones such as the ones you appointed, there were special terms and conditions negotiated. We were entitled to have those terms and conditions on the table, but what we were not entitled to was the details of any negotiations because they have to remain private. Otherwise such negotiations would never take place. Senator SCHACHT—So when a Masarati comes up— Senator Hill—You have every reason to raise the matter. Senator SCHACHT—We have no reason to mention that he actually requested it. Senator Hill—Similarly, it might be an issue relating to boarding schools for children or whatever. As far as I am concerned, in the negotiations between parties that is something that officers have every right to expect to be kept confidential. When decisions are made that affect the public purse, the public has every right to have that on the record. Senator COOK—What is the government’s response to the request to make up the difference between the price of an ambassadorial vehicle and a Masarati? Senator Hill—That is just hypothetical. Senator Cook—No, it is not hypothetical. Senator Hill—Of course it is hypothetical. Senator COOK—It is my understanding that that is the request that has been made. I am not asking you to conjecture. In the event of your receiving that request, what is the government’s response to it?

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Senator Hill—That is speculation, and I have no response to it. Senator COOK—Are you saying that such a request has not been received. Senator Hill—I said to you that I know of no such request, but I am going beyond that and saying that I believe questions relating to negotiations of terms and conditions, if that is what you are seeking to explore, should remain confidential. Senator COOK—Let me take the first part of your answer. You know of no such request. Senator Hill—Absolutely. Senator COOK—But one would not expect you in the normal course to know of such a request, to be fair to you. Senator Hill—So you will ask me to go and explore the matter. Senator Cook—No, not explore, to find out and report back. Senator Hill—I will see whether on reflection the minister wishes to provide further information. It would be my view that the provision of information relating to the negotiations of terms and conditions of any diplomatic appointment is a matter between the would-be appointee and the department. Senator COOK—I disagree with you. I think this committee does have a right to know what ambassadors designate request of the government and what the government’s response to those requests are. Senator Hill—Let’s see what the minister decides. But I think he would have every right to say that once you start going down the burrow of exploring any negotiations on the terms of staff or— Senator COOK—This is a Maserati, for Christ’s sake. It is not any motor vehicle. Senator Hill—This is a nonsense— Senator SCHACHT—Not a common Commodore. CHAIR—Senator, the minister has given you the answer and I suggest— Senator Hill—This sounds to me to be a frolic of quite exotic proportions. Senator COOK—It is not a frolic. You might wish to demean it by saying that, but then you were demeaning this committee. Madam Chairman, can I say that the minister at the table has declined to answer the question. CHAIR—He has given you an answer, Senator. Senator COOK—No. If you allow me to finish, he has declined to answer the question and I think this is a matter for the committee. I give notice to the committee now that I will seek a meeting of this committee at the conclusion of this hearing to pursue the matter further. CHAIR—He has said that he will go away and check with the minister. Senator COOK—That’s a fob off. CHAIR—That is an answer. Senator COOK—If you wish to debate the matter with me in public now, let’s debate it. He has also said that, in his view, there is no such requirement for the minister to reveal the matter and, in essence, left us with no confidence that we will ever get an answer to it. I do not regard that as a satisfactory end to our inquiry. Senator Hill—I cannot imagine that we would have ever got an answer when we were in opposition, but I do not think we would have been so cheeky as to have asked the question.

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Senator SCHACHT—Minister, if I can just give another example, I remember that for days of hearings there were questions about what Mr Brian Burke was negotiating as his entitlements after he had been appointed to the ambassadorship in Ireland. There were queries about cars and telephone calls and I remember some of your senators, including Sue Knowles, asking for a list of every telephone number—all his telephone bills— Senator MacGIBBON—He ended up in jail— Senator SCHACHT—Maybe Mr Spender might end up in jail. Who knows? Senator MacGIBBON—I do not think there is any possibility of that. Senator SCHACHT—Senator MacGibbon, you should never pre-empt anything. All I am saying is that, when positions were reversed, the endless committee hearings on the estimates dealing with Mr Burke’s appointment went down every possible burrow. Senator Hill—I can remember questions and answers concerning Mr Burke’s cars—what cars were provided et cetera. I have no quarrel with that, because if the expenditure has been made, and there is a public cost associated with it, this committee is entitled to have the details. But that is not what we are talking about here. What we are talking about here is a piece of speculation by Senator Cook in what seems to be very exotic terms—but it does not matter whether it is exotic or not—relating to the negotiations for an appointment. And I think that is unfair to the officers to have their personal affairs explored in that way. Senator SCHACHT—If it is true—and we do not know whether it is—that Mr Spender asked that he would pay the difference between what we would provide for a normal car and what is necessary to provide a Maserati, do you believe it is an appropriate image for an ambassador to an important country to be driving a Maserati? Senator Hill—I would not have thought that it would be good politics for the Australian ambassador to Paris to be driving an Italian car, even within the unity of the European Union. Senator SCHACHT—Well, there you go—you are making a value judgment. Senator Hill—You asked for a value judgment. I am quite happy to have a go at value judgments, but not to delve into any personal negotiations that may or may not have taken place. Senator SCHACHT—If it carried through to the minister it is quite possible, then, that he was advised that he would be stupid to have it. Senator Hill—You are continuing the speculation. CHAIR—Minister, if I could ask a question, have there been any other examples in the history of the department where ambassadors have paid the difference between their entitlement and a vehicle that they wanted? Mr Cotton—So far as I know—and certainly in my own memory, Senator—no. Senator MacGIBBON—Surely, Minister, at the present time, with SES level officers, and the rest of it who are entitled to a car at a certain higher rate, the agreement between the Commonwealth and the officer provides that, if the officer so wishes, they can pay out of their own pocket to buy a more expensive car. And, of course, they lose the equity in that when the vehicle is sold. Mr Cotton—There is a slightly different set of circumstances here, Senator. We are talking on the one hand about what is known as the head of mission vehicle, which is an entitlement for a person who is going to operate in the position of Ambassador or High Commissioner, and that is a vehicle which is made available out of official funds for essentially official

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 536 SENATE—Legislation Tuesday, 24 September 1996 purposes. I could be corrected by some of my colleagues, but there is an entitlement, as an SES officer, also to make private hire of that same vehicle when you are overseas, as part of your SES entitlement. Some officers elect to do that; some elect not to do that. A number who elect not to do that, generally speaking, seek to buy a private vehicle in their own right out of their own funds. Senator Hill—It would be also very difficult in relation to the tax benefits on the car that are given by the host country, too, if you were going to seek to swap it for another car that you would prefer. Senator COOK—That is something that you would take into consideration before making a request of that nature, I imagine. Anyway, the point is that you wish to cover this matter up; the chairman has said that I am out of order. Senator Hill—I do not wish to cover anything up. Senator COOK—No, you are denying the information related to the question I have asked. That is a cover up. You have ruled on this Madam Chair. I have indicated my— CHAIR—I have said that it is a hypothetical question. Senator COOK—It is not a hypothetical question— CHAIR—Because it has been indicated that the appointment has not yet been made. Senator COOK—Well, it is not a hypothetical question, with respect, and I have indicated what action I will take at the conclusion of this hearing to pursue the matter further. CHAIR—Next question on 5.2. Senator COOK—Does anyone know what the current mileage on the existing ambassadorial vehicle in Paris is and whether the vehicle is due for a trade or not? Senator Hill—Well, if we do not, we certainly should be able to find that out and let you know. Do we know? Mr Cotton—No, we do not know offhand, I am afraid. We will have take that question on notice. Senator COOK—I did not think you would. Mr Cotton—But I can find out for you. Senator COOK—Do you happen to know whether it is close to its use-by date and needs to be traded? Mr Cotton—I am sorry, Senator, I have no direct knowledge of the state of the vehicle in Paris. Senator Hill—Mr Jones might know. Senator COOK—No, he has been away for a long time. I would not put it on him. Mr Spender speaks French, does he not? Mr Cotton—Yes. Senator Hill—I understand so. Senator COOK—He is, indeed, reasonably fluent, is that so? Senator Hill—I understand so. Senator COOK—Has Mr Spender undertaken, or will he undertake, any French language tuition at public expense?

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Mr Cotton—Indeed, Mr Spender has been undertaking French language training in Australia at public expense, from the date of his formal appointment with the government. He is currently, I think, undertaking one month in-country assignment in France, prior to taking up his formal diplomatic appointment in Paris. Senator Hill—That is not at all unusual, is it? Mr Cotton—No, it is entirely standard. Senator Hill—Entirely standard, is it not? Mr Cotton—This is the sort of thing that we do for heads of mission, be they career or non- career appointees. Senator COOK—The venue or the location of his in-country training, is that Paris? Mr Cotton—I would have to check with my colleagues. Mike, can you tell me? Mr Ovington—I do not think it is Paris. I think it would be inappropriate to be studying in the same city in which you are going to be formally— Senator Hill—We will tell you. We have got no secrets in relation to public expenditure. CHAIR—Indeed, no. Senator COOK—You are not covering this up, you mean. Mr Ovington—Mr Spender is currently in the city of Vichy, studying at a school, Cavilam. This is a school that other ambassadors have used, although I think not an ambassador to Paris. But we had an ambassador to Geneva who studied at that school within the last year or so. Senator COOK—I regret to say that my geography is terrible: where is the location of this village? Mr Ovington—It is somewhat north of Lyon. It would be in the north-eastern sector of France, roughly an hour’s train travel from Lyon and two hours travel from Paris. Senator SCHACHT—I think it is not north of Lyon. I think you will find it is to the west of Lyon—in the middle. Mr Ovington—It is totally north of Lyon but, whether it is north-west or north-east, I am not quite sure myself. Senator SCHACHT—Lyon is there; Vichy is there. Senator Hill—This is all very interesting, Madam Chair, but— Senator COOK—Over what length of time is this in-country residence at the village of Vichy to be undertaken? Mr Ovington—Four weeks. Senator COOK—How much will it cost? Mr Ovington—The tuition costs will be $6,350. Senator COOK—Is that the cost of the tuition and the residence? Mr Ovington—No, that is just the cost of tuition. The accommodation will be just over $3,500. Senator COOK—For four weeks? Mr Ovington—For four weeks. Senator COOK—Is the accommodation provided in a chateau in this village?

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Mr Ovington—No, it is a serviced apartment in the centre of town about 10 minutes from the school. Senator COOK—How will he make it from his accommodation to his venue for tuition? Is he provided with— Dr Thomas—Senator, I can answer that. He has standard access to the equivalent of an SES car, which is provided to anyone of SES salary equivalent on appointment in Australia or overseas, if they are on official business. Since language training is duty, he is provided with a car for the duration. Senator COOK—I see; what sort of car? Dr Thomas—From memory, I think it is a Mercedes Benz. It is a hire car, I think. So, he has to pay a contribution to that like any other public servant. Senator COOK—I see. And the cost of this tuition is met from DFAT funding, of course; and you can provide us with the cost of the tuition—I think you have provided it to us—and the cost of his residency? Mr Ovington—Yes. Senator SCHACHT—I think Vichy might be a bit bigger than a village. CHAIR—Senator, next question please. Senator SCHACHT—It is probably appropriate that that is the place where the French collaborators had their government in the Second World War. Where are we at with the investigation—I do not know whether this is the correct term—into paedophile activity? Senator Hill—We should be able to give you a report on that. Ms McLean, what is the current position of that investigation? Ms McLean—As you know, Senators, there was a first stage which was conducted by the Australian Federal Police and then, at Mr Downer’s instigation, the independent inquiry was also established under the auspices of the Public Service Commission. Dr Shergold selected Mr Chris Hunt to head up that enquiry. Senator SCHACHT—Mr Chris Hunt. Ms McLean—That is correct. Because it is an independent inquiry, we do not have any staff serving on that inquiry, so I am unable to answer the detail of where they are at, but they are due to report by 1 November. Senator SCHACHT—Is there any idea yet how much Mr Hunt and his inquiry are going to cost? Ms McLean—We made an initial transfer to the Public Service Commission of $1 million which was a rough estimate. We had to look at how many witnesses would appear, costs for Auscript who will be doing the transcription services, and the salaries involved. Mr Hunt is to provide, at the end, through the Public Service Commissioner, a full acquittal for all the expenses. We do not know the full costings at this stage. Senator SCHACHT—And we do not know how many staff he has employed for his inquiry? Ms McLean—I would have to check that, Senator, but I think it is a total of eight: Mr Hunt himself; one legal adviser; a secretary; two investigators; and some administrative support staff. I am not sure of the total number of admin support staff. Senator SCHACHT—Mr Hunt, I presume, has had some legal background.

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Ms McLean—Mr Hunt is a lawyer by training and was previously with the Attorney- General’s Department. He was also the secretary of the ACT Attorney-General’s Department and, for a number of years, the deputy Commonwealth ombudsman. Senator SCHACHT—Has there been any action taken by anybody to stop his enquiry, to suspend it or take action against some of his own activities in the enquiry? Ms McLean—I think you are aware from media reports that one person has taken a Federal Court action against Mr Hunt, yes. Senator SCHACHT—And what has been the result of that Federal Court action? Ms McLean—That is still pending—it is sub judice at the moment. Senator SCHACHT—So it is still pending? Will that affect Mr Hunt’s reporting date of 1 November? Ms McLean—I do not know at this stage. You would have to appropriately address that to Mr Hunt. Senator SCHACHT—Okay. Mr Hunt has been involved in the Federal Court action by someone else taking an action against him— Ms McLean—That is correct. Senator Hill—According to this note it is to be heard on 30 September—is that right? Ms McLean—It is scheduled for 30 September. Senator SCHACHT—Mr Hunt’s legal fees for that Federal Court action: will he be able to take that out of the allocation of $1 million? Ms McLean—Yes, he will. Senator SCHACHT—You have said there was media speculation. I have not seen any detail of it and I do not know exactly the detail of what the action is against him. If court action goes against him and, therefore, damages go against him and costs are awarded against him, does that mean the department would be up for all the costs, including those of the people who have taken the action against him, his own costs and any penalty the court may find that he has to pay? Senator Hill—I do not know that there is any action for damages, but I am not— Senator SCHACHT—I do not know the case, I am just— Senator Hill—It is hypothetical, but if there was an order for costs made against the Commonwealth, then the Commonwealth would obviously have to pay the costs. Senator SCHACHT—I am not asking for there to be any breaking of sub judice but because it may be in the public domain; public documents have been lodged in the Federal Court. Can you briefly describe what is the basis of the action against Mr Hunt based on public documents that have been put to the court? Ms McLean—To my knowledge, at this stage there have been no public documents lodged with the court. Senator SCHACHT—It has been listed for 30 September, I think? Ms McLean—That is correct. Senator SCHACHT—Is that right? An action has been listed in the Federal Court on 30 September. Senator Hill—That is what I understand.

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Senator SCHACHT—Do we have a notice of what it is listed as? If it is going to appear there must be some indication, at least in the public listing. Ms McLean—I think these questions would actually be more appropriately directed to the Attorney-General’s Department; because it is an independent enquiry the department has been quite separate from it. But as far as I know from the public record and from the media coverage, the question has been one of bad faith and prejudice against— Senator Hill—It is an action by an individual to try to have Mr Hunt disqualified as head of the enquiry. Senator SCHACHT—Disqualified? Senator Hill—Yes. Senator SCHACHT—I am not prejudging, but if the court found that he was disqualified, would that— Senator Hill—I think— Senator SCHACHT—No, I am not asking you to make a judgement about that— Senator Hill—Okay. Senator SCHACHT—I am going to get back to the appropriation. Would it be anticipated that having to appoint a new—what do you call the person doing an enquiry? Ms McLean—Head of the enquiry. Senator SCHACHT—Would that lead to a further increase in the allocation of $1 million to cover the costs? Senator Hill—I do not want to be evasive, but that is really very hypothetical, isn’t it? Obviously the action has been defended and it starts to get a little delicate as to why the action might be being sought, so— Senator SCHACHT—All I am asking is: $1 million has been set aside at the start of the enquiry— Senator Hill—And the enquiry is— Senator SCHACHT—Continuing— Senator Hill—The enquiry certainly has a distraction at the moment, in that the head of the enquiry has had— Senator SCHACHT—Gets bowled over! Senator Hill—An action brought against him. But we will just have to wait for that to be resolved. Senator SCHACHT—Can I understand, Ms McLean, that the action of bad faith is to do with the work of the inquiry and Mr Hunt? It is not bad faith in something totally irrelevant to his work in the inquiry? Senator Hill—That is right. It is in relation to the matters associated with the inquiry. Senator SCHACHT—Does the public listing name the person who has taken the case against him? Senator Hill—I do not know. Senator SCHACHT—If it is public knowledge, if it has been listed as—

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Senator Hill—I am a bit surprised to hear that it was not on a public listing. Perhaps I should take that on notice and find out. Senator SCHACHT—It is not on a public listing? Senator Hill—I think that was the answer that was given. Ms McLean—There has been an initial court appearance and a subsequent directions date was set. That directions hearing was put aside and I understand that a new date has been listed for 30 September. But I have not seen that myself, so I cannot confirm that new date. Senator SCHACHT—Could you take it on notice and provide us with copy of the listing? Ms McLean—Sure. Senator SCHACHT—I presume the listing, if it is normal, would have the name of the person taking the action against Mr Hunt. Ms McLean—That is correct, it does. Senator Hill—What would you like to know: who has brought the action? Senator SCHACHT—I want to know who has brought the action. Senator Hill—I said we can provide it. I would have thought it would be on the public— Ms McLean—It is public from the first hearing now, which was of Mr Alistair Gaisford. Senator SCHACHT—Is he an employee of the Department of Foreign Affairs? Ms McLean—He is. Senator SCHACHT—He is a full and permanent officer? Senator Hill—Is he an employee or a former employee? Ms McLean—He is a currently serving officer. Senator SCHACHT—Is he based here in Canberra? Ms McLean—He is based here in Canberra but, at the moment, is on suspension from the department. Senator SCHACHT—How long has he been on suspension? Ms McLean—He has been on suspension since 1 March this year. Senator SCHACHT—When did the inquiry start? Ms McLean—The date of the establishment was 29 May 1996. It was formally announced by Dr Shergold. Senator SCHACHT—Shergold on 29 May. Senator Hill—There is also an action by Mr Gaisford against his suspension, so it gets fairly complicated. Senator SCHACHT—I certainly do not want to do anything to prejudice any cases. Senator Hill—No, we do not want to prejudice anything either. Senator SCHACHT—No, I know. If I ask a question, I am quite happy to accept direction, Minister, or from your officers. I was unaware that he had, until you just mentioned it. Is that hearing being held internally with the Public Service Commissioner? Senator Hill—No, he has taken that injunction to the Federal Court. Ms McLean—It is a federal matter.

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Senator SCHACHT—The suspension was published in some document within the Public Service forums, I would presume. Ms McLean—No, it was not. It was an internal action that was advised to Mr Gaisford himself. It is only a temporary suspension. Senator SCHACHT—Pardon my ignorance. When someone is suspended, what is the process of informing other officers he was working with that he is now on suspension and, therefore, cannot perform his duties? Is there some process of a Gazette notice within the department so that people are aware that, if he does not accept his suspension, he is suspended and, therefore, he is not able to perform his duties? Ms McLean—There is not a public form of notification around the department when officers are suspended. Personnel are, of course, involved in my own area. Senator SCHACHT—Does that mean that within the Public Service arrangements— Senator Hill—If an officer is dismissed— Senator SCHACHT—The suspension is confidential? Senator Hill—Do you know? Ms McLean—A suspension is regarded as confidential to the officer. We would not normally advertise that an officer has been suspended, as a privacy consideration. Senator Hill—If an officer is dismissed, it gets gazetted, does it not? Ms McLean—That is quite different, yes. Senator SCHACHT—If, whichever division he was working in, he is suspended and they say not to turn up at work, what do you tell the other people around him? That there is an empty desk? Ms McLean—In all these instances of people who are suspended, the direct supervisors, of course, would be informed. But it is not something that we would generally advertise. Senator SCHACHT—I think there was a process that the desk was not left but disappeared for ever and a day and the missing persons bureau was informed. Your advice to me, and I accept it, is that because he has an appeal within the Public Service against his temporary suspension— Ms McLean—No, the Federal Court action. Senator Hill—He has gone public to take an action against the suspension. Senator SCHACHT—And the department clearly is contesting that. Ms McLean—Very clearly, yes. Senator SCHACHT—When do you expect that result to be heard? Ms McLean—We are scheduled for a further directions hearing next week and then the full hearing of the case is, at this stage, scheduled for 11 November. Senator Hill—There is no technical link between this Federal Court action and his Federal Court action against Mr Hunt. Senator SCHACHT—I accept that. It just came coincidentally. Senator Hill—It was a mild litigation. Senator SCHACHT—Was Mr Gaisford’s temporary suspension the result of any previous investigations by the department?

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Senator Hill—I do not think that is appropriate. You were told that it was a temporary suspension, which would suggest that there is some form of review or investigation taking place. Therefore, I think questions that might probe into that could be— Senator SCHACHT—I accept that. Ms McLean, you mentioned that there had been a Federal Police investigation ‘re paedophilia’, et cetera. Ms McLean—That is correct. Senator SCHACHT—Did that investigation lead to any recommendations to the Director of Public Prosecutions to lay prosecutions against any officer of the department? Ms McLean—Yes, it did, Senator. Senator SCHACHT—Have they now been laid? Ms McLean—They have been laid against one officer. Senator SCHACHT—Is that officer still serving in the department? Senator Hill—I do not want to be unreasonable, but whether a prosecution is launched would not be the business of this department. This department does not launch prosecutions. If a report is made in this instance to the DPP, who decides on the evidence whether a prosecution— Ms McLean—I can clarify. In this instance it is a criminal action which we, as a department, are not directly involved in, but the basis of the laying of a criminal charge is allowed for in the Australian Public Service Act. That officer has also been suspended. Senator SCHACHT—Temporarily or— Ms McLean—Indefinitely, at this stage, pending the outcome of the criminal act. Senator Hill—It is suspended by definition. It is incomplete, isn’t it? Senator SCHACHT—Yes, but you mentioned the other case. I am not trying to connect them at all, but you mentioned Mr Gaisford has temporarily been suspended. If the Australian Federal Police inquiry that was started last year or some time ago has now been completed— Senator Hill—Again, is it appropriate for this department to be reporting on the state of Federal Police investigations? I would have doubted it. Senator SCHACHT—The only reason I ask is: was the Federal Police investigation instigated by a request from the department or the minister of the department? Ms McLean—The AFP enquiry into the paedophile allegations during 1995 was specifically referred to the AFP for investigation by the then secretary to the department by the then minister. Senator SCHACHT—I do not want to get into areas that in any way prejudice the work of the inquiry, individuals’ positions and so on. I am just saying that the department requested the investigation, it seems to me, by what Ms McLean said. Ms McLean—That is correct. Senator SCHACHT—Has that investigation now been completed? Have they advised the secretary to the department that they have now completed their investigation? Senator Hill—If you say yes, that would surprise me. The Federal Police do not report to that department as such.

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Senator SCHACHT—So it has a life of its own. Once it starts, it is not a matter of reporting back saying, ‘We have got no more inquiries to make.’ It is just an active matter on which they will make their judgment from time to time. Is that right? Senator Hill—I suppose so. Senator SCHACHT—Or is it, in this case, as the secretary asked for the investigation, I presume. that the department provided some material and provided the access to officers to be questioned by the Federal Police, as is normal— Senator Hill—As far as you know, has the part the Federal Police were playing been completed or not? Ms McLean—The AFP do have an ongoing interest in the department. The Department of Foreign Affairs and Trade has a formal memorandum of understanding with the AFP which covers a whole range of investigations, not just paedophilia. Any matters that may be of a criminal nature, we can refer to them. If we refer a case to the AFP under the MOU, they will normally report their findings back to us and, of course, if something progresses to the DPP, that is purely within the ambit of the AFP. But if they have findings that have a bearing on the operations of the department, or of officers in the department, yes, they will report back to us. In regard to the first stage, as I suppose you could call it, of the paedophile inquiry, we did receive a report back from the Australian Federal Police last year. Indeed, the findings at that stage were made public on 30 November, as I recall, in 1995. But subsequent allegations do come along and those are, as a matter of course, referred—if they come to the department, to my area—to the AFP. I understand that the AFP also, independently, may receive allegations from external sources and they will pursue those. Senator SCHACHT—Who took the decision to establish an independent inquiry, Mr Hunt’s inquiry? Mr Shergold recommended Mr Hunt. Ms McLean—The minister, Mr Downer, took the decision to establish an independent inquiry. Senator SCHACHT—And went through the normal procedure? Mr Shergold is the head of the Public Service, I think. Ms McLean—He is the Public Service Commissioner. Senator Hill—He gave evidence in another estimates committee last night. Senator SCHACHT—I am glad I was not full-stopping on another committee. Senator Hill—It did not go as long as this one. Senator SCHACHT—With all the attendant publicity there has been on and off about these allegations about paedophilia, has the department detected or received any representations of concern from governments in other countries where maybe some of this activity has been suggested to have taken place? Senator Hill—I do not know what you want to say but, again, as we have said on a previous day, communications between governments should remain confidential. Senator SCHACHT—I am not going to press it, in one sense, but I would ask you to consider raising it with the minister as to whether we are concerned that these allegations of paedophilia have affected our relations with countries within the region. Senator Hill—That is a legitimate question to ask.

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Senator SCHACHT—If you want to take that on notice— Senator Hill—I think I should see how Mr Downer wants to respond to that. Senator SCHACHT—I think you should take that on notice, actually, because if he wants to give a reply it should be a considered reply. I have no further questions, but in view of the dates you have given me, Ms McLean, I suspect that at the supplementary hearings you might be able to give us some information on the outcome of some of these hearings. CHAIR—We still have other programs to go, and I want to stick to the time that we agreed for this section. Senator COOK—Earlier today we talked at some considerable length about the fraud case in Kenya, but indicated that we would ask under this section what detections of fraud had occurred at other Australian posts. Have there been any others, and if so, where are they? Ms McLean—It is my lucky night, isn’t it! In the last two years, 1995 and 1996, we have detected and investigated financial fraud in three other posts—in Apia, New York and Bali. Senator COOK—Were there any prosecutions? Ms McLean—All of them involved locally engaged staff, not A-based officers. In the case in Apia, the locally engaged staff officer was prosecuted and found guilty of the theft, but the court did not order restitution. Senator SCHACHT—How much was thieved? Ms McLean—In that instance it was quite a small amount. She was the acting cashier. We initially discovered a theft of $300 of petty cash. That was picked up immediately, within a matter of days, and she was dismissed. After her dismissal, further investigations found out that an additional $1,250 had been stolen. She had also committed some fraudulent acts on other staff members, other LES. In total, the loss to the department at that time was approximately $1,500. Senator COOK—The others were in New York and where? Ms McLean—New York and Bali. In New York, in July 1995 the staff there detected, again, that the locally engaged cashier had been receipting and banking—but not into the official bank account!—some Commonwealth funds. The total came to $32,904.71, but all of that was recovered. Senator COOK—So this was a series of offences over time? Ms McLean—That occurred over a two-month period. It was both unbanked cheques, totalling $25,000 approximately, and $7,600 in cash. Senator COOK—That was in the Big Apple, New York? Ms McLean—That is right. Senator COOK—What about Bali? Ms McLean—The one in Bali was again a smaller one, over a period of two months. It was the locally engaged cashier yet again, stealing cash money. The total amount was $4,762, all of which was recovered. Senator COOK—Was action taken against the locally engaged person? Ms McLean—She was dismissed. Senator COOK—Was there any criminal action against her for the theft? Ms McLean—In that instance we chose not to pursue prosecution.

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Senator COOK—In any of those three incidents, was any of the A-based supervisory staff subject to charges or investigation? Ms McLean—In all three instances, authorised officers were appointed. I would have to say that, carrying on from Nairobi, we make no bones about being quite strict on the accountability side and we need to actually determine whether any A-based have been responsible. In the Bali case, the authorised officer has not yet made a determination. In the Apia case, because it was picked up within 24 hours, obviously there was not any negligence in that instance. In the New York case, the officers—two LES and two A-based—were counselled as a result of the authorised officer’s findings. Senator SCHACHT—This question may require some institutional memory. Some years ago there was a major case, I believe, with charges against an officer in Chile. Does anyone have a recollection of that? Was that case ever successfully prosecuted? Ms McLean—That was a very long and complex case with a number of charges— Senator SCHACHT—I know this. That is why I am asking. Ms McLean—A number of charges were brought. Some of those charges were upheld and some were dismissed. Senator Hill—From memory, they were all under the Public Service Act. Senator SCHACHT—I see. What were the penalties under the Public Service Act for the ones upheld? Senator Hill—Well, I think it was dismissal. Mr Ovington—I think at that time the penalties were either dismissal or counselling, and I think on that occasion the penalty was counselling, a formal counselling. Senator Hill—It went through a series of appeals. Senator SCHACHT—So at the end the officer was counselled only? Ms McLean—Yes. Senator COOK—My last set of questions is under program 5.2, Corporate services. It is my understanding that on 21 June Mr Miles Kupa wrote to Mr Downer to withdraw as a candidate for appointment as Australia’s ambassador to Indonesia. In his letter, Mr Kupa expressed regret that Mr Downer had not been made aware of the public controversy over the publication of his remarks in 1988 criticising President Suharto. Who actually put the ministerial submission to Mr Downer to recommend Mr Kupa’s appointment as ambassador to Indonesia? Senator Hill—That is an internal matter. There is no matter of public interest involved in that. It is a matter for determination within the department. Senator SCHACHT—There is a fair bit of public interest when it was all over the newspapers for several days, it affected our relations with Indonesia— Senator Hill—There is public interest in the issue that it was withdrawn and there was a lot of press speculation about that, but that is not the question that you asked. The question you asked was the internal steps that led to the indication that he would be appointed, and that is what I am saying is surely something that is within government operations, within departmental operations. Now is not a time to be lynching officials, I would have thought, Senator. Senator COOK—My questions are, of course, to you. You choose to allow the officials to answer them, Senator Hill—that is your responsibility. But, leaving aside my question that

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I have just asked for the moment, let me ask another one. Was Minister Downer advised that Mr Kupa had written this document in 1988 in the advice that went to him to propose that Mr Kupa become the ambassador to Indonesia? Senator Hill—I cannot recall whether Mr Downer was—I will take it on notice and see what response he wishes to give. I do not know. I presume not, from what you have just read from the letter of Mr Kupa. It is half implied in that letter, isn’t it? Senator COOK—I beg your pardon? Senator Hill—Well, you re-read what Mr Kupa said. Senator COOK—He expressed regret. Senator Hill—That Mr Downer wasn’t advised. Senator COOK—Well, I am seeking confirmation: was he advised or wasn’t he? That is a reasonable question to ask. Senator Hill—You could certainly ask Mr Downer that question. He could be asked it here, he could be asked it in the House of Representatives, and I will take it on notice and get his response. Senator COOK—Would you seek information from your supporting officers now? Senator Hill—No, because I think that is something concerning the state of mind of Mr Downer, and I think he has got a right to answer that question. Senator COOK—What was in the written document, though? That does not concern Mr Downer’s state of mind. Senator Hill—What written document? Senator COOK—The written document proposing the appointment of Mr Kupa. Senator Hill—I do not know that there was a written document proposing the appointment of Mr Kupa— Senator COOK—You mean that these appointments are made by informal oral discussions? Senator Hill—Well, they might be made by Mr Downer. Sometimes ministers take responsibility— Senator COOK—Well, let me ask you this question: was there a document that went from the department to Mr Downer proposing an appointment for an ambassador? Senator Hill—I presume that there is internal correspondence relating to the proposed appointment of Mr Kupa, but it is, as you know, not the normal thing for internal documentation of this type to be put on the public record. Senator COOK—I am not asking for the entire document to be put on the public record. I am just asking whether the minister was advised in that document that Mr Kupa had written in 1988 about President Suharto. In view of public controversy, that is a reasonable question. You really cannot run away from that one. Senator Hill—Your question is whether Mr Downer was aware and, your subsequent question, whether Mr Downer was advised on it. Senator COOK—My first question, the one that we have set aside for the moment, was: who wrote the submission that recommended that appointment of Mr Kupa? The second question is: did the document that that person write advise the minister of Mr Kupa’s writings in 1988 re President Suharto?

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Senator Hill—I will take the questions on notice. However, the first one of who recommended this appointment to Mr Downer I would have thought would normally be an internal matter. I cannot imagine circumstances whereby that sort of information is usually put on the public record. I have taken them on notice. Senator COOK—In view of those answers, can you tell me whether it is normal practice for the secretary of the department to write to the minister recommending ministerial appointments? Senator Hill—Mr Jones, do you have a normal practice for these things? Mr Jones—Yes. As a rule, the secretary of the department makes recommendations for head of mission appointments to the minister. The minister sometimes picks those up and at other times puts his own views in. Senator COOK—Did the secretary of the department write on this occasion? Senator Hill—That is something that I think I should explore. Once an answer is given yes or no as to whether the secretary played a role in a particular appointment, then you have the right to ask that question in relation to every appointment. Senator SCHACHT—Why not? It is government expenditure. Senator Hill—No. The consequences of the appointment are. Senator SCHACHT—But if you don’t appoint anyone else— Senator Hill—On that basis, every piece of correspondence is, but we have rules to ensure that the businesses of the department can continue in a way that officers are reasonably— Senator COOK—Let’s cut through this fencing. It is normal practice for the secretary to make recommendations. Ambassadorial appointments, particularly ambassadorial appointments to our nearest and largest neighbour with whom we have perhaps the most sensitive and important foreign relationship, are considered recommendations, one would anticipate, from the highest level within the department and are given due consideration by the minister. Senator Hill—I do not know that Mr Jones quite said that. He did not add the bit about our largest and most important neighbour. Senator COOK—No, I am not paraphrasing Mr Jones, I am saying what I think the reasonable person would say. They would expect that to be the case in a situation like this. Senator Hill—So what’s the question. Senator COOK—That is the question. That is what you would normally expect in a case such as this. Senator HILL—The question therefore, Mr Jones, is does what you have just said about usual practice relate to largest and closest and most important neighbours? Or maybe there are different practices as the importance of the appointment is elevated. Mr Jones—The answer to that is that usual practice is usual practice in that it applies usually. Senator SCHACHT—The script writer for Yes, Minister would like that phrase! How many ‘usuallys’ were there? Three? Senator COOK—Was usual practice followed on this occasion? Senator Hill—That is the question that I think is inappropriate because, as I said, that then gives you the legitimacy to explore the internal aspects of any appointment, and I do not think that this committee has ever had that charter before.

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Senator SCHACHT—Can I just put it this way on what is not usual. You would have to accept that whenever a political appointment is made that is not usual—and that is so whether it is your government or my government. When Michael Baume was appointed and Neal Blewett was appointed there was obviously discussion at the ministerial level with the Minister for Foreign Affairs, who then, I presume, at least rang or sent a note down to the head of the department saying, ‘It is my desire on behalf of the government to appoint Michael Baume’— or Mr Spender or Neal Blewett, whatever the example is. That is a different process which is quite obvious, is it not? But that is usual process for political appointments. I presume the secretary does not send up an idea to Mr Downer saying, ‘This is a usual appointment.’ I presume he did not do it with Mr Blewett’s appointment or whatever. So there are different processes, but they are reasonable to ask. Senator Hill—I think you could argue, and you have done it to some extent already tonight, that in relation to the ‘political appointments’ or non-departmental appointment or—what is the jargon? Mr Jones—Non-career. Senator Hill—With those appointments you are probably entitled to probe a little further, but we do try to maintain reasonable respect for the privacy of officers. Senator COOK—Can you also confirm that the issue of the 1992 controversy concerning Mr Kupa’s reported criticism of the Indonesian leadership was not formally discussed with the Minister for Foreign Affairs, Mr Downer? Senator Hill—That is slightly different to the one that you asked a minute ago. You asked whether there was any documentation advising him, and now you are asking me whether— Senator COOK—Now I am moving to the oral level. Senator Hill—I will take it on notice, but again I think that the extent to which the committee has a right to probe discussions, communications, between the minister and his officers is very limited. Senator COOK—You have taken that on notice— Senator Hill—But I am just telling you that the response that you get may be that it is inappropriate to ask. Senator COOK—We will have supplementary estimates where it may well be that we are forced into asking a question about it. It would have been a reasonable thing to have been drawn to the minister’s attention, would it not, Minister, given the sensitivity of the relationship? Senator Hill—I understand the point you are making, but I could also speculate on some reasons why it may not have been. Senator COOK—I would dearly not encourage you to speculate. Senator Hill—What I am saying is that you might say to me that it was already public knowledge, or at least had been public knowledge. Senator COOK—I did not have any memory of it at the time. But I would have expected if I were in a ministerial seat that someone proposing an appointment would provide all the relevant information to enable me to deliberate upon it. And I would think that is a reasonable ministerial expectation. I think you may even agree. Senator Hill—I think that is correct.

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Senator COOK—This issue would have been a relevant consideration in such an appointment. You may even agree on that. Senator Hill—That is something that the minister reasonably expects to have before him. Senator COOK—I note that you are saying that the other is on notice. In answer to a question in the House of Representatives on 25 June 1996, Mr Downer in relation to the, shall we say, abortive appointment of Miles Kupa said: As a consequence of that, I have instituted new procedures to be put in place so that there is better analysis done of, and consideration given to, people who are being put forward for heads of mission appointments, particularly diplomatic appointments. What are those procedures? Mr Cotton—We answered this on Friday. The senator was asked this by Senator Ray, as I recall, and I subsequently tabled a document for the committee. Senator COOK—Saying what they were? Mr Cotton—Yes, saying what they were. Senator COOK—As I recall, the burden of it was that candidates for heads of mission positions would be required to sign some sort of declaration of personal and professional factors which they would know may stand in the way of such an appointment. Mr Cotton—Correct. Senator COOK—Did you actually table what it is that they are required to disclose? Mr Cotton—Yes. Senator COOK—Does that include pecuniary interest as well? Mr Cotton—No, not in this particular document. All of us, as SES officers, are required to make an annual statement of pecuniary interests and how they might bear on appointments, but this particular document is of the kind that I described on Thursday and that you have just described. Senator COOK—To whom do they apply? Do they cover all heads of mission such as ambassadors, high commissioners and consuls-general? Mr Cotton—It applies to what we call all heads of mission and all heads of post appointments which can be ambassadors, high commissioners, consuls-general, consuls and the like. Mr Jones—In relation to the declaration, if the officer felt that there was a pecuniary interest that fell within the terms of the declaration, they could certainly add it there and, indeed, it might well be appropriate for them to do so. For example, if they had a major shareholding in a major company operating in a country to which they were intended to be accredited, you would think they would draw that to the attention of the minister. Senator COOK—Are there any penalties for knowingly or negligently failing to provide all the relevant information? Mr Jones—It is not a procedure of a formal, legal kind. We have not had to grapple with any cases of that kind yet as it has only just been instituted. But, obviously, if an officer had failed to indicate something which clearly fell within the terms of the declaration, the minister and the department would then draw some conclusions about them. Senator COOK—Senator Hill may wish to cut this question off, but I will ask it and see if he does. Were the new procedures recommended to Mr Downer in a ministerial submission by the department?

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Senator Hill—Again, I would say that that is an internal matter. What is important for the public to appraise is the effectiveness or efficient workings of what has been made public and that is that there are now new guidelines and how they operate. Senator COOK—I note an article in the Australian newspaper says that the submission was submitted to Mr Downer in July. When were the new procedures approved by the minister and when did they come into effect? Senator Hill—We will have to get the exact date for you. Senator COOK—The article in the Australian says that they were notified on 27 August. Mr Cotton—The document that I tabled the other day, which includes the new format and the declaration, is attached to the next cycle of vacancies for head of mission and head of post appointments. This is the first formal occasion, as I recall, on which it has gone into effect since the new procedures were approved. Senator COOK—The article in the Australian says that on 27 August notification of the new procedures was due to be given to DFAT staff with an administrative circular within two weeks—that is, by 10 September. That sounds roughly right; I will not hold you to the precise timing. How many appointments have been made since the coming into effect of this on 2 March? Mr Cotton—On 2 March something else came into effect, but there certainly haven’t been— Senator COOK—How many appointments have been made since 2 March, not the coming into effect of this codicil or whatever it is? Senator Hill—How many changes since the new guidelines? Senator COOK—Let me rephrase it. You are quite right to upbraid me; it was clearly not asked as a question. How many appointments to the heads of mission, consul-general level, have been made by the government since the election on 2 March? Mr Jones—We might have to take that on notice. Senator COOK—Do you know how many and where? Senator Hill—We can get you a list of the appointments. Dr Thomas—A number of them are not at a point where they can be announced publicly necessarily. They have been approved by the minister and they are in various stages of being processed. Senator Hill—So you want the ones that have been announced publicly? Senator COOK—That we know, that we can say. We don’t need Mr Peacock’s one at this stage. How many have been made under the new procedures and who has been asked to sign these declarations? Mr Cotton—I don’t think any have been made under the new procedures. Dr Thomas—Yes, they have—a number have, very recently. Senator Hill—Have any of those been announced publicly? Mr Jones—There would be some. Senator Hill—We will indicate that in the answer. Senator COOK—Has Mr Spender been required to sign a document declaring his personal and professional factors in relation to his appointment? Mr Cotton—Mr Spender’s appointment predated these new procedures.

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Senator COOK—Has Mr Baume been required to sign such a document? Senator Hill—That will be apparent from the answer we are going to give you. Mr Jones—My understanding is that it applies to all head of mission appointments. Senator COOK—But we don’t know whether Baume and Spender signed it. That information is going to be given to us. Senator SCHACHT—Minister, was it true that an indication was given in the press that Mr— Senator Hill—There is some debate as to the extent to which it applies to those who are already in the pipeline as opposed to having been announced publicly. Perhaps we should clarify that in the answer that we will give. Senator SCHACHT—In the time of the last Miles Kupa episode and the speculation and stories in the press about the non-declaration or the fact that he wasn’t apparently advised and the minister wasn’t advised about that episode with Mr Kupa previously, is it true—I think I read it in the press—that Mr Flood, head of the department, apologised to Mr Downer for not providing that information? Senator Hill—I vaguely recall something in the press but— Senator SCHACHT—It was never denied in the press, so I presume some form of note, memo, minute or brief from the head of the department to Mr Downer went forward apologising about it. Do you want to take it on notice? As I say, it was in the press. Senator Hill—So you want to know whether— Senator SCHACHT—I want you to confirm whether there was from Mr Flood a form of apology or explanation which apologised to Mr Downer about that being true—that he had not informed Mr Downer about the background of this episode with Mr Kupa some years before that affected his appointment. Senator Hill—I will take that on notice. CHAIR—I think we will have a 10-minute break. Senator Hill—What do we go on to next? CHAIR—There will be three or four questions on subprogram 5.2. Then we go to consular and transport services. Senator Hill—We do not want to deal with the few questions first? CHAIR—I am happy with that. Senator HOGG—My questions are out of the portfolio budget statement. The third dot point of the strategies speaks about including seeking value for money by the use of consultants and from outsourcing. What savings are anticipated there? What will be the use of consultants? What will be the use of outsourcing? Mr Cotton—This is part of a program that we have to undertake in the department, particularly in the Corporate Services Division. As I mentioned I think several days back, my division is required to reduce its expenditure by 15 per cent. So we are required to be very effective in the way we manage our resources. Some of the ways we will need to seek to do that are by determining whether we can outsource some functions and what those functions might be. One example that people look at, for example, is the way in which some of the personnel services—salaries and the like—are provided. We have to have a look at that. We do make quite significant use of consultants already. Some of that is in the IT area. We will

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 553 also need to see whether there is other consultancy work we can do, particularly in the area of what we call administrative processes and the like. We have done some work with consultants there. Essentially we will be trying to free up the amount of time and effort we spend on basic administrative processes to see whether we can actually free those up and free up our staff to spend more time on more core functions. Senator HOGG—So this is not a clearly identified saving at this stage; it is one that you are hoping to make? Mr Cotton—It is a strategy that we are going to have to use and make use of as we are required to find savings in this division’s operations. Senator HOGG—What sort of charter will you use in taking on consultants? Mr Cotton—First of all, there is a very clear set of requirements one has to go through in looking at consultants and the employment of them. We clearly would want to look at such things as: is this is a function we are unable to do ourselves; is there a way that we might be able to do it better; are there some particular ways of organising and managing our work that we can learn from consultants; and are there ways in which this service can be delivered in a more efficient and least cost way? We are in the business now of trying very hard to find out to what extent we can make savings from our existing processes. Senator HOGG—You have already mentioned information technology and the outsourcing of that. Mr Cotton—In relation to information technology outsourcing, we are caught up very much in the whole of government approach to information technology outsourcing. Initiatives are being taken forward by the Office of Government Information Technology, and there is a very strong service-wide look at the way in which some of the provisions of information technology services might be outsourced. So we need to both go with that and see whether there are things we can also do ourselves to take it a little bit further to improve our efficiencies. Senator HOGG—Can I take you down about another two dot points where you say: . to implement a tele-communications infrastructure that will integrate legacy systems and allow the introduction of new applications through efficient utilisation of bandwidth. Mr Cotton—Yes, that is part of our information technology program where we are seeking to more effectively use our network of international communications and really try to integrate the systems we have—as it says here, inherited with a legacy approach—and to see whether we can introduce new applications across the whole of our departmental operations. We are seeking, in effect, to become more efficient in the way we manage our international communications. We are seeking to bring up and become part of the network of services some of the applications that we offer to our portfolio partners and to see to what extent we can become more efficient in the provision of that particular communications network. Senator HOGG—Can I take you across to the bottom of page 71, where you talk about examining the outsourcing of DFAT’s national communications links. This is all part of the program, is it? Mr Cotton—Yes, it is. Senator HOGG—When these things are specified in these documents, I am not readily able to identify the individual contribution that these are going to make to savings. Is that something that is possible within the department, or is it a guesstimate at best? Mr Cotton—It is a guesstimate. Starting at the top, as I said on a couple of occasions, we are required in the Corporate Services Division to reduce our total corporate budget, and we

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 554 SENATE—Legislation Tuesday, 24 September 1996 have to find savings across the whole of the way we actually deliver our IT platforms. We are seeking to do that within the department. That will require us to find significant savings in the way we actually deliver our IT platform and services. The way in which we take those savings forward also has to tie in with the whole of government approach. We are required to give up savings of $128,000 in the current financial year and $300,000 in the year thereafter. Senator HOGG—How much? Mr Cotton—It is $128,000 in the current financial year and $318,000 in the subsequent out years. Senator HOGG—I assume then that these are the sorts of things that I should look for in your next annual report to see how well you have performed in making these savings. Mr Cotton—Yes, indeed. First of all, this division will have to reduce, as I have said, its total operations by about 15 per cent. We are required to cut our information technology funding. So we are going to have to try to cut the funding to deliver the savings externally to the whole of government and internally to the department, and in that process we have to try to become more efficient. We will need to do that by way of the way we manage our whole IT structures. We have some ambitions that we will be more effective in the way we manage our communications networks and in the way we manage the whole of the bandwidth available to us. Senator HOGG—How will you measure effectiveness versus efficiency? Mr Cotton—That is a very good question, as always, Senator. For us, some of the real tests will be, first of all, having to find the savings targets. Secondly, it will be the client satisfaction with the service that we as a client and as the Corporate Services Division can deliver to the whole of the organisation with the information technology platforms that we provide. Senator HOGG—Does or will that measure appear in your annual report? Obviously this is fairly critical to what you are doing. Mr Cotton—Certainly it should be reported out there. Perhaps it would be best for me to take that question on notice, and I will see what else I can provide to you on that. Senator HOGG—Thank you. CHAIR—There are some questions on notice from Senator Cook. Is it the wish of the committee that the questions be incorporated in the transcript of evidence? There being no objection, it is so ordered. [The questions appear at the conclusion of today’s proceedings] [9.59 p.m.] Program 8—Australian Secret Intelligence Service Senator SCHACHT—Minister, can you explain why there has been a three per cent increase in the budget for ASIS? Senator Hill—We apparently have a volunteer to answer the question. I presume that the answer is that the government has decided to require more of the organisation. Mr Peek—The apparent increase in the ASIS budget for 1996-97, which is implied in the manner it is presented in the budget statement, can be attributed to the multi-year borrowings undertaken in agreement with the department. Senator SCHACHT—The what?

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Mr Peek—The multi-year borrowings. In fact, ASIS has been subject to the same financial stringencies as have applied across the board to other government departments and agencies. The ASIS budget for 1996-97 has decreased in real terms. Senator Hill—So the increase is illusory. Senator SCHACHT—What are multi-year borrowings? This is the core rolling over or something, is it? I have not actually heard that phrase before. Senator Hill—Have we an accountant? Mr Cotton—A multi-year borrow is a facility that you can borrow from the Department of Finance borrow facility. If you are going to borrow more than one year, you are required to pay interest on the borrow and enter into a resource agreement with the Department of Finance. Senator SCHACHT—Are you saying that the increase is because that is the interest payment on the multi-year borrowing? Mr Peek—The situation is that ASIS borrowed against future year allocations from Finance in order to finance in part the move to the new building, redundancy packages and so on. The actual budget appropriation relating to 1996-97 represented a decrease of $2.1 million over the previous year. In other words, it cut off 6.3 per cent. Senator SCHACHT—So when you see $36,104,000 that should be reduced by two per cent? Mr Peek—$2.1 million. Senator SCHACHT—$2.1 million? Mr Peek—On the previous year. Senator SCHACHT—So, effectively, this year $34 million is the appropriation. Mr Peek—No, the appropriation, as I understand it, will be the figure you see in that budget statement. Senator SCHACHT—The $37 million. Mr Peek—But it includes an amount from future years. Senator Hill—In terms of recurrent expenditure, it is reduced by about $2 million from the previous actual. Senator SCHACHT—The previous actual is $36 million, so $34 million is the actual. Have I got that right? Senator Hill—The previous actual is nearly $36 million. Senator SCHACHT—The previous actual is $36 million, and after you take out multi-year borrowing for 1996-97 it is actually $36 million—or roughly $34 million when you talk about the $2 million reduction. Mr Peek—The amount of money that they will actually get is $36 million, but that includes an amount borrowing against future years’ allocations. Senator SCHACHT—The $37 million in the budget is an extra piece of what? Senator Hill—I think that is what we are saying; I think that is the total. Senator SCHACHT—That is actually $37 million. Senator Hill—What is the difference between 37.1 and 36.7? The difference is $400,000 of adjustments.

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Senator SCHACHT—It is down the bottom. The $400,000 less adjustment has got a footnote—footnote 4. There is no footnote. Senator Hill—It is hard to find the four. Senator SCHACHT—I know this is ASIS, but they have done it again—there is no footnote 4. Mr Rigg—That is an error— Senator SCHACHT—The 36.7 total outlays: what is the adjustment? Senator Hill—Can we say what the adjustment of $400,000 is? Mr Peek—Minister, I will have to take that one on notice. I am not sure. Mr Rigg—Generally speaking this is an accounting device—this applies to all programs. As we noted earlier, we are constrained by the Department of Finance to balance back to appropriations as set out in the appropriation bills. There is a footnote in respect of table 1.1 on page 8 which gives some information on what the adjustments refer to. As I understand it, it mainly relates to receipt items and amounts appropriated to the department to cover expected receipts under section 35 of the Audit Act. Senator SCHACHT—So ASIS collects some money? If you cannot answer I will not ask. Mr Rigg—I am not saying that is necessarily the case with ASIS, but that is generally the case for the department. Senator SCHACHT—The mind boggles as to how ASIS collects its money. Mr Rigg—I am afraid I cannot give you any information. Senator Hill—If you want to know what the $400,000 is, we will take it on notice and see if we can give a response. Senator SCHACHT—if you do that, Minister, in my eight years in the estimates committee that is the first time anyone has taken a question on ASIS on notice. Congratulations. It does not mean I will get an answer, but at least you tried. Senator Hill—No, it doesn’t. It is just as well that I said we will see if we can get an answer on it. CHAIR—Thank you. Sitting suspended from 10.06 p.m. to 10.25 p.m. [10.24 p.m.] Program 2—Passport and consular services Subprogram 2.1—Passport services Subprogram 2.2—Consular services Senator SCHACHT—I have a couple of quick questions. On page 50 there is revenue of $61 million for travel documents. Does that include passports and visas? Mr Fisher—No. That is from passport sales. We do not get the revenue from visas at all. That goes to the immigration department. Senator SCHACHT—This figure of the revenue goes into the pot for the running of these services. I am trying to quote my experience as customs ministers where we used to argue about the charging for fees so that it was hypothecated as an arrangement. Is there full cost recovery on the issuing of passports yet?

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Mr Fisher—Yes. There is full cost recovery. Senator SCHACHT—For 1996-97 it is $87 million in the budget and the revenue is $61 million. Have I got that right? The revenue for 1996-97 for passports is $87 million. The total outlays are $46 million to run the passport section, is that right? On page 48 you have running costs, salaries and other program costs, etc. Mr Rigg—Your question about passport revenue, the $87.69 million is the expected revenue from passports this year. The figure of $61.8 million is last year’s figure. That is revenue that is not retained by the department. That revenue goes to the consolidated revenue. Senator SCHACHT—I understand that. What I am saying is you were then appropriated because they use this phrase ‘as an hypothecation’ or something or other. Your appropriation is $49 million for running costs, salaries and other program costs, is that right? Mr Rigg—Yes, that is correct. Senator SCHACHT—If it is full cost recovery, the difference between $49 million and $87 million is nearly $40 million. Otherwise we are making an enormously big profit, are we not? Why is there the gap if we are getting full cost recovery on passports? Mr Fisher—The revenue from passports goes to the consolidated revenue and it does not come to the department. Senator SCHACHT—No, you misunderstand me. You agree that we are running a cost recovery? I might be at cross purposes here. It is cost recovery for the issuing passports, is that right? Mr Fisher—At least. Senator SCHACHT—It costs $49 million for the government to issue passports. Forget which pot of money it goes in and out of. It costs $49 million to run passport and consular services, according to program 2 on the table on page 48. Revenue from passports is $87 million, which is nearly $38 million in surplus. If we are going for full cost recovery, even though it does go straight to revenue and it does not go to you, why is not the passport cost at $49 million so it equals the appropriation cost of running the service? Mr Fisher—Senator, the two exercises were quite different things. Bear with me if I say again that the revenue that comes in is the funds that come from the total sale of passports. The total sale of passports is set by government at a fee. It produces a revenue amount which goes to consolidated revenue, and we have no say in that. Then separately we get an appropriation for this department, part of which we use to run the consular and passports program. But there is no necessary connection between the two, except that, in calculating the fee for an individual passport, it is set at a level which covers the cost of the total program and some more. Senator SCHACHT—Yes, but the ‘more’ is $38 million—nearly double. Mr Fisher—As I said, the two processes are not directly related. Senator SCHACHT—I do not know whether I am going to get this right, but I will guess why the gap is there. I only go through this as a former customs minister, sitting in ERC being pounded to death by barbarians from Treasury and elsewhere trying to gather money. This is a process of equating the cost of providing the passport, visa, immigration, customs service of people coming in and out of the country. The fee is set and all of those departments, not just yours, put in what their cost of running that service is. As I understand, that is how the final fee for passport, visa et cetera was set. So at the end of the day the full range of those

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 558 SENATE—Legislation Tuesday, 24 September 1996 services would be covered by the total revenue from passports and visas. Am I right? If not, someone lied to me in ERC. Mr Fisher—No, the cost of the passport fee is set by government at a certain figure. It is then adjusted year by year to a different figure. That figure, in being set— Senator SCHACHT—To cover the cost of running the service. Mr Fisher—No, to at least cover the cost of running the service. What has happened in the last few years, what you are going to see happen in the next few years, is that total revenue from passports will increase quite considerably because of the greatly increased demand for passports. So you are going to see revenue from passports increase substantially over the next three or four years. The fee for the passport will not increase proportionately. Senator SCHACHT—But isn’t the fee for the passport and visa set to equate with the cost of issuing the passport, the cost of issuing the visa, and the customs cost per processing of each individual person coming in and out, going through the barrier? If not, I must have been sitting somewhere else. Mr Hamilton—Senator, the price of a passport was set some years ago by the former government and subsequently adjusted in accordance with the consumer price index. It is set in the budget context in that sense. This year it has been further adjusted by the government in the context of the budget, and combining that with the increased sale of passports produces that figure. Now, there is no equation that we are aware of that produced what you are talking about. Senator SCHACHT—It might be a waste of time here, but I should ask you to do me one favour before we come back to supplementary hearing. Would you ring Les Jones in Customs at passenger processing and ask him about hypothecation, and come back to us. I will get him tomorrow or the day after at Customs. CHAIR—Right, that has been taken on notice, Senator Schacht. Senator HOGG—Could I just follow on from what Senator Schacht has been asking, because I am a little bit confused myself. If you look at the top of page 49, table 2.2, the first line there is increased funding for passport production and issue, which is $4.27 million. Am I to assume that that is an additional allocation which has been made as part of the budget process, or is that additional revenue that will come in from the fee increases that are happening for passports? Mr Rigg—That represents an additional appropriation that was made to the department this year—the $4.27 million. It is nothing to do with the expected increase in revenue. Senator HOGG—All right, if I can then take you down just under that to where it says ‘Budget measure’. It talks about the implementation of the passport fee increases, the CPI and some other increases that will occur on 1 July 1996. This is to cover the cost of increased passport production. I would presume that that would be a countervailing item to the first entry that I have just drawn to your attention there. Is that the correct way to interpret it? Mr Rigg—The funding was appropriated to the department to cover the forecast increase in the number of passports that the department produces and issues. That was essentially to replace a former arrangement whereby the department was funded according to a formula arrangement and that funding went up and down in line with the number of passports issued. Senator HOGG—But am I to interpret that the increased funding that is being provided for production and issue of the passport will be recouped from the additional costs associated

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 559 with the passport to the individual? If it is on one side of the ledger, therefore it must appear on the other side of the ledger, so where is it on the other side of the ledger? Mr Rigg—The government will be obtaining more revenue from passport issue both from an increase in the fee for the passport and from the expected increase in the number of passports issued. That is reflected in the increase in revenue from $61.8 million to $87.9 million that we spoke about earlier. The amount of money that the department has been appropriated as an additional amount this year represents the additional expected costs of producing the additional number of passports. Senator HOGG—So in effect this $26 million less about $4.2 million has been the additional income. Is that a correct interpretation? Mr Rigg—The net revenue is the difference between $87.9 million and $61.9 million. Senator SCHACHT—That is $26 million in increased revenue, right? Mr Rigg—Yes. Senator SCHACHT—Has that gone up because you are charging extra for passports irrespective of the increased volume? Mr Rigg—As we explained, that is a combination of the price effect and the volume effect. Senator HOGG—That $4.27 million then is somewhere in those running costs. Am I correct? Mr Rigg—The additional $4.27 million was appropriated as running costs, yes. Senator HOGG—Right. Senator SCHACHT—If an ordinary Australian citizen wants to apply for an Australian passport. The increased cost of that passport is only going up by the CPI? Mr Rigg—No, this year, in addition to the CPI, there has been an additional increase. Senator SCHACHT—Where is that outlined? Mr Rigg—On page 49. Mr Cotton—Under that heading ‘Implementation’, which is halfway down the page. Senator SCHACHT—It does not actually say how much it is. It says: . . . small additional fee increases will occur from 1 July 1996, 1 July 1997, 1 July 1998, 1 July 1999 ... What is the fee? What are those ‘small additional fee increases’? It should have been in there. Mr Fisher—It was $14 over a period of about three months. It went up by $4, which was the CPI amount in the period before the budget, and then after the budget it went up another $10 which bought it to $120. Senator SCHACHT—What is it going to go up on 1 July 1997? Mr Fisher—That will be taken, I suppose, in the context of next year’s budget. Senator SCHACHT—Did you put a figure in the outlays? This will go into the outlays in the budget for the next four years; this is a revenue measure. Mr Rigg—I do not have a figure available, but it is scheduled to go up by an amount over and above the CPI. Senator SCHACHT—Do you know what the amount is? You must know what the amount is. You cannot put the revenue in the out years—the revenue increase—to get an accurate figure of the projected budget deficit.

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Mr Hamilton—We costed out the costs of production of passports over the next four years and, because we can estimate how many we will be selling, we know how much it will cost us to produce them. We were concerned about how much we needed to produce that number. The government will decide what price it will charge and, to the best of our knowledge, it has not yet made that decision. Senator SCHACHT—I will ask you to take on notice these questions: what did you advise the Department of Finance would be the impact on the revenue increase in the out years for the next four years—1997, 1998, 1999? Mr Rigg—The estimates are factored into the forward year appropriations— Senator SCHACHT—Just tell me what it is. Mr Rigg—I am sorry, I do not have that information. Senator SCHACHT—That is what I want to find out: please tell us what the revenue increases are in the out years—the estimations. Finance will not let you get away with saying, ‘There’s going to be an increase,’ because they have got to get a figure that— Mr Fisher—Our forecasts for net revenue for 1995-96 was $16.357 million; for 1996-97, $29.506 million—and I am afraid I do not have the figures for— Senator SCHACHT—I suggest that you take that on notice and get back to us with a proper table for each of those years of the increased revenue; and also let us know whether finance has accepted that these are increases that are in the out year revenues. Mr Hamilton—Our figures on revenue are simply a question of multiplying the current price of the passport against the expected number— Senator SCHACHT—You had better explain that too in the answer, with a note that the government can vary it in the subsequent budgets. They then will have to adjust the revenue figures in that year. Mr Hamilton—We could tell you the estimated number of passports to be issued in those years. Senator SCHACHT—You will do that very nicely in the table for me, I think, rather than trying to scribble this all down. What does it cost now for a normal passport? Mr Fisher—It now costs $120. Senator SCHACHT—And it is going up $14 this year, right? Mr Fisher—Yes. Senator SCHACHT—On 1 July or from when the budget through? Mr Fisher—When the budget goes through. On 1 October it will be $120. It was $4 on the first of July— Senator SCHACHT—Does that require legislative change, or are you going to do it and require subsequent legislation to approve it? Mr Fisher—It does not require a legislative change, I think; it is by ministerial announcement in the budget context. Senator SCHACHT—Do you mean to say that there is standing legislation that does not require parliamentary approval to change the charge for the passport? Mr Fisher—I think it is gazetted, Senator SCHACHT—Is it a disallowable instrument?

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Mr Fisher—We will take that on notice and find out. Senator Hill—We will find out what is the form of implementing the change. Senator SCHACHT—Did you say that this new price starts from 1 October? Mr Fisher—Yes. Senator SCHACHT—Seeing as it is now September 24, can you find out whether the instrument has been tabled yet in the parliament? There are 15 sitting days to be disallowed if there is an argument about it. I would also like to know this: now that 15 sitting days are not available by 1 October, if the Senate disallows it, will you refund the people their money? Senator Hill—It has happened before. Senator SCHACHT—It has happened before. We have been through this saga on a number of occasions. Senator Hill—I seem to remember something similar occurring in the wine industry. Senator SCHACHT—Absolutely. They are in a whole range of areas. You had better get that particular point to us, pronto. Senator Hill—There must be a simple explanation. CHAIR—Is that all you want placed on notice for that particular question? Senator SCHACHT—I just want to make sure I have all of this covered. The increases that are taking place over the next four years are to do with the CPI and you say you are absolutely allowing for the increased costs of production. Mr Fisher—The price increases. We have an arrangement with the Department of Finance. They have given us a supplementary amount which is built into our budget base which will cover the increased costs of passport issues. Senator SCHACHT—And then you put up the cost of the passport to— Mr Fisher—We would then have to put that up in the budget context. Senator SCHACHT—What I am trying to get at is that there is no additional increase that actually makes it a windfall gain for the government in revenue. Mr Fisher—Are you talking about future years or this year? Senator SCHACHT—This year. Mr Fisher—This year there has been an increase which reflects the CPI and an increase, as is said here, which— Senator SCHACHT—It is funding for passport production and issue. Mr Fisher—It is the cost to the department of increased passport production. Senator SCHACHT—So the figures that go for the following years are only your estimation of what the CPI would be plus cost of production and are not an extra collection of revenue? Mr Fisher—We do not anticipate having an increased amount from the Department of Finance in future years. We have an arrangement with them, to which they have already agreed, which will cover all those things. Senator SCHACHT—So there will be small additional fee increases for the following years. What you put in the revenues for the out-years are only production costs and CPI. If the government chose in a subsequent budget to do something else, that is fine, but what you have put in is not a windfall tax collection.

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Mr Fisher—Subject to what the government puts in in future years. Senator HOGG—I have a question relating to the next page. You can take it on notice. In the last dot point you talk about meeting performance targets set in the passports annual business plan. Could I have some idea of what those performance targets are. I do not necessarily want them now. Mr Fisher—We do have them, Senator. Perhaps the best thing is to give them to the committee tomorrow or the next day. Senator SCHACHT—In the PBS you actually mention somewhere—I may have missed it—the actual charge for the cost of a passport. When you read this you have every figure except what it actually costs an Australian citizen for a passport. When you have a future implementation paragraph, like on page 49, you make sure that next to those dates you put in brackets the actual figure for the estimated increase. Mr Cotton—Again, as we discussed earlier, that is an entirely fair comment. We will see whether we can take it forward. I am not sure to what extent we can be completely precise about the out-years, but possibly we could give some estimate. Senator SCHACHT—I just wish to ask one last question. You may want to take it on notice. Running cost salaries dropped nine per cent this year. There is a $1.5 million reduction in the outlays for running costs, salaries. In view of the increase in passport production, are we picking that up because of increased efficiency through new technologies, et cetera, or are people just going to have to work harder? I am referring to page 48, table 2.1, annual appropriations, running costs, salaries. It drops from $15.6 million to $14.2 million. The variation is minus nine per cent. In view of the fact that you have an extra allocation of production costs of $4 million because there is more demand, you have salaries, which means less people. How are you picking up handling all the extra numbers with less people? Is it because people are working harder, because of new technology or are people going to have to queue longer and wait longer for the passport to come through? Mr Fisher—Perhaps I will go first and then my budgetary colleague will give you the budgetary answer. First of all, this is both subprograms—both consular and passports. The costs reflect our worldwide operations and therefore some of the costs reflect the lower number of A based staff overseas. Senator SCHACHT—To save time, take it on notice and disaggregate those figures down between passport, reductions and consular. If the salary reduction affects passport services, how are you doing it? Until you break it down, it is a stab in the dark. Senator HOGG—I think this is an exercise I have asked about in other programs. Could you just repeat what I have asked in the other programs. I think that might be the easiest way and then we will have consistency. Mr Rigg—Senator, you did ask a question about the difference between the reduction in running costs, salaries and the staff years in respect of program 1. I apologise that I did not have an answer at the time. Senator HOGG—I just do not want to feel left out at this late hour, that is all. Mr Rigg—I do have an explanation and it relates to the way funds are appropriated to the department—in fact, to all departments. In reality, we receive one appropriation to cover both salaries and other running costs or, in using the term we describe, administrative expenses. The distinction between the salaries part of the appropriation and the non-salaries part is notional these days. That distinction is maintained essentially for the purpose of accounting

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 563 for cost increases. In the case of salaries, we are appropriated additional money when there is a salary increase, but in the case of other expenses we are appropriated in line with general inflation. Senator HOGG—When you say that it is notional, does that mean that there could be wild fluctuations within the total figure but the total figure remains the same? Mr Rigg—There can be fluctuations. Under the running costs guidelines we have the ability to transfer money between salary funds and non-salary funds. In fact, in recent years we have transferred funds from the notional administrative appropriation to the salaries component. If this continues in 1996-97 our salaries expenditure can be expected to be higher than we have shown for this and, in fact, all the other programs as far as I can tell. The administrative expenditure would be lower. So that discrepancy that is shown there between the salaries component of running costs and the staff years—at least the discrepancy shown between the changes in those two amounts—would reduce. Senator HOGG—Do you show this adjustment in your annual report? Mr Rigg—No. As I said, under running costs guidelines we have the ability to transfer. Senator HOGG—Whilst you have the ability, do you somehow show that there has been an adjustment there in your annual report? Mr Rigg—No, we are simply required to go through a process with the Department of Finance requesting a transfer under section 29 of the Audit Act. Under running costs guidelines, that is essentially automatic. Senator SCHACHT—I would like to put a quick question on notice. You say that you expect an increase of 20 per cent in the number of passports—from 800 to 2,000. How many of those are people getting their first passport and how many of those are getting a reissued passport because the old one is full? Senator COOK—On program 2, I have some questions on consular cases. They are about the consular response group, about a current update on the James Peng incarceration and in relation to Justin Fraser who was arrested in Somalia on 29 May. Can I put all of those on notice? CHAIR—Yes, thank you. Could I seek the agreement of the committee to incorporate those? There being no objection, it is so ordered. Senator COOK—I also have a question about requests from the government of the Lebanon to appoint an honorary consul in Adelaide which, it appears, has been declined. I will put that question on notice. CHAIR—All right, I will include that too. Mr Fisher—That would be program 3, Senator. CHAIR—Will you put that on notice for program 3? Senator COOK—We have not reached program 3 yet, so I might just— Senator Hill—We will automatically put it under program 3. CHAIR—Yes. Senator COOK—Okay. [The questions appear at the conclusion of today’s proceedings] CHAIR—Are there any further questions on program 2?

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Senator SCHACHT—I have a question which can be taken on notice if it is not possible to give an answer now. Of the 18,000 consular cases handled, how many were actually people who had been arrested and either been sentenced and are now in a foreign gaol or have been detained for trial? Is that possible to answer? Mr Fisher—Yes. We have at the moment about 390 Australians who have been arrested overseas this year. As at June, there were 148 actually in gaols around the world. Senator SCHACHT—Around the world? Mr Fisher—Yes—that we know of. There are some we do not know of because they have asked that we not be informed. It is not automatic, of course. Senator SCHACHT—That is fine. Do not take it on notice since you have given me the information. Thank you. CHAIR—There are no further questions on program 2. Thank you very much, gentlemen. We will move on to program 3. [10.56 p.m.] Program 3—Services for other agencies Senator SCHACHT—The first question here is that it is a pretty big whack in the outlays or running costs for salaries—down 16 per cent. CHAIR—Assuming that there are not a lot of questions, I propose to take this section in a group—subprograms 3.1, 3.2 and 3.3. Subprogram 3.1—Services to parliament, the media and the public Subprogram 3.2—Services to foreign representatives in Australia Subprogram 3.3—Services to Australian government agencies Senator SCHACHT—Can you give an answer now, or do you want to take it on notice, as to why running costs for salaries are down 16 per cent? I see staff years are down six per cent. What was the major cut in the program so that the cost of salaries were reduced by such an amount? It does not seem to say anything— Senator Hill—Can we give some idea of what services have been cut back? Senator SCHACHT—If it is other agencies, you might have just said, ‘You are on your own now, Sport. We have not got enough money.’ Mr Rigg—As we have explained in relation to other figures, these are compilations from a number of different sites, including our posts overseas, the state offices and divisions in Canberra. These figures simply reflect the totality of what those respondents have given us. In respect of the forecast reduction of 16 per cent in salaries running costs, the answer that I just gave in relation to program 2 also applies here in that we would not expect the final out- come of expenditure this year to diverge from the reduction in staff years by as much as is shown here because we would expect that there would be a transfer of administrative funds into salaries funds during the year. Senator Hill—I am told that there is not intended to be any significant cutback in provision of services to parliament and the media. Senator SCHACHT—This is services for other agencies. Senator Hill—Yes. I am looking at the first one—services to parliament and the media, subprogram 3.1—and I am told there is not expected to be any significant cutback.

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Senator SCHACHT—I see. Senator Hill—So it is another one of these accounting— Senator SCHACHT—Is it services to foreign representatives in Australia, which is part of 3? Senator Hill—There again we are not anticipating any significant cutback. So we believe it is an accounting phenomenon and I think we should give you a proper explanation for it because it is really quite confusing. Senator SCHACHT—The other thing is that running costs go up 11 per cent, which is a pretty big jump of $4 million. At the same time salaries are going down by 16 per cent. This is on table 2.1 on page 53. Overall the appropriations are up five per cent and the staff years are down six per cent. There is nothing in the description that sensibly describes it. Mr Rigg—As I said earlier, the figures for this program are driven mainly by subprogram 3.3, ‘Services to Australian government agencies overseas’. That consists essentially of two different types of services. One is work requested by other agencies of our representatives overseas, and that tends to fluctuate quite widely from year to year— Senator SCHACHT—Concerning this $10 million you have been appropriated in the 1996- 97 budget for ‘Running costs—salaries’ for providing services to other agencies, you are getting the money. Is that right? Mr Rigg—That is part of the appropriation we receive. That is the part of the appropriation we receive that has been attributed to this particular program for salaries. Senator SCHACHT—When you provide these services to other agencies do you recoup as much of the $10 million as possible for this coming year because you are providing a service to someone else and charge them accordingly? Mr Rigg—I was explaining that there are two types of services that we provide overseas to other agencies. The first is by way of policy work, for want of a better description, that other agencies ask us to do on their behalf overseas. The second group relates to administrative services that we provide to their officers located in our missions overseas and their locally engaged staff employees located in our missions. Those services are provided on a user-pays basis. Senator SCHACHT—Shouldn’t there be an estimation somewhere in here, in a separate table, of what you are recouping for those services? Maybe it is there somewhere else and I cannot see it. On page 54, ‘Services for other agencies’, that table just talks about property operating expenses, foldback, salary adjustment and other carryovers. Mr Rigg—The user-pays arrangements came into effect on 1 July 1995, as set out on page 58. From memory, an indication of the amounts involved was given in last year’s portfolio budget statements, but I would have to check that. I can give you an idea of the amounts involved— Senator SCHACHT—You had better not just give me an idea. I think you had better take it on notice and give me a proper answer. I want to return to the annual report, page 184, for the year 1995-96. This concerns service to Australian government agencies overseas. Is that the same thing that we are talking about? Mr Rigg—Yes. Senator SCHACHT—The running costs here for 1995-96 are $50,992,000 and I see that on page 53 of the yellow book, for 1995-96 actual, there is no figure anywhere near the

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$50 million. It is either $53 million or $41 million. When you have there ‘Less adjustments’, is that the return that you are getting? Mr Rigg—Those figures are not final figures in the draft annual report. They are by no means final figures. Senator SCHACHT—On page 53 of the yellow document it says that the total appropriation for 1996-97 is $55.8 million. This is less an adjustment of $12.2 million. Total outlays were $43 million. Is the $12 million the payback you get for providing those services to other government agencies and therefore the total outlays you are expecting in the budget are to be $43 million? The actual for 1995-96 was $53 million. Is the adjustment of $11 million there, making it $41 million, what you recouped for providing those services to other agencies on a user-pays basis? Mr Rigg—That is not the exact figure, no. The figure recouped in 1995-96 was of the order of $8 million. Senator SCHACHT—Where did the other $3 million come from in 1995-96 to make it $11 million? Mr Rigg—The difference is not necessarily attributed solely to this particular arrangement. There may be other adjustments involved there. I should point out that the money that we charge other agencies as a fee-for-service relates to the cost of our provision of that service. In addition to that, the other agencies pick up their own expenses. Senator SCHACHT—I am not worried about that process at the moment. You are just telling me that, for 1995-96, of that $11 million, less adjustment, $8 million is recouped for services provided. But your explanation of where the other $3 million approximately to get to $11.5 million came from, I do not understand. Where did the other $3 million come from? Senator Hill—Why do we not get you an explanation? Senator SCHACHT—That would be a very good idea, Minister. CHAIR—Any further questions, Senator Schacht? Senator SCHACHT—I draw your attention to the fact that the table on page 184, which is only up to 1995-96 actual, has got 1994-95 and then the year gone by. None of the figures, which is trying I think to be the same table, in any way match any of the other figures. Mr Rigg—As I explained, those figures are not final figures at all. Senator SCHACHT—But are these final figures in here? Mr Rigg—These are the final figures. Senator SCHACHT—So when this is finally printed those figures will be scrubbed out and these figures inserted in lieu of them? Mr Rigg—That is correct. CHAIR—It has always been emphasised that this was a draft report. Senator SCHACHT—I know it is a draft report. I am not arguing about that. You are going to get an explanation for this, Minister. That is excellent. Senator HOGG—On page 58 of the portfolio budget statements, at the bottom of the page under the heading ‘Outlook’, the first dot point talks about renewed negotiations with the Department of Industrial Relations on issues concerning the devolved management of LES. Could I get on notice an explanation of what that means and how it will be applied.

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Mr Cotton—We could try a brief answer now and see how we go. I will call on Dr Leader to respond to you. Dr Leader—Currently, locally engaged staff conditions and salaries are set by the Department of Industrial Relations. We are in discussion with that department as to whether those functions will be devolved to the Department of Foreign Affairs and Trade. We would expect to have resolution of that some time during this financial year. Senator HOGG—What is the purpose of having them devolved from the Department of Industrial Relations to yourselves? Dr Leader—For us, it would be mostly a question of— Senator HOGG—Is that a saving? Dr Leader—It would not be a saving as such for us. It would be a question of expedition. It would be much quicker, we believe, for us to do that job ourselves. Senator HOGG—Would that mean people acquiring the skills to be able to do it within your own division? Dr Leader—We already have a locally engaged staff section where a number of the skills that would be needed for this job already exist, so we do not believe it would be a significantly steep learning curve for the department. Senator HOGG—All right. The next sentence goes on to say: Continue to monitor closely the provisions of the Public Service Act to ensure that departmental procedures for handling LES pay and conditions of service issues are given enhanced flexibility and are appropriately reflected in the revised legislation. What is the enhanced flexibility that you are looking at? Dr Leader—Currently, under the Public Service Act, the terms and conditions are devolved to the Department of Industrial Relations. They can be subdelegated to our department. It is possible that with the new Public Service Act there will not be a need to go through that sort of convolution. Senator HOGG—So what is the actual flexibility? Is that the pay and conditions of the people? Dr Leader—Yes. Currently, each salary adjustment is subject to a formal determination by the Department of Industrial Relations, which can take quite some time. And also we are not currently able to employ locally engaged staff other than under the Public Service Act under that determination. It may be possible to get more flexibility if we can get locally engaged staff under a system of contracts which gives us and them greater flexibility. Senator SCHACHT—Under subprogram 3.1, can I ask that you produce a summary of outlays for that program in a form not dissimilar to what is on page 53? You can take that on notice. Also, I would like to ask for notice of performance outcomes for 1995-96 for the estimate of the cost and staff years for the first dot point, the second dot point, the third dot point, the fourth dot point and the fifth dot point. Is that okay? Then I think I would also say the same for 3.2: produce a table not dissimilar to what is on page 53 for services to foreign representatives in Australia. I will wait until you provide me with a table, as I might have further questions about the costs for 1995-96 in that area in the supplementary hearings. Is subprogram 3.3 separate from services for other agencies or is it a part of program 3 on services for other agencies? CHAIR—That is a subprogram, isn’t it?

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Senator SCHACHT—I would like you to break that out of that table on page 53. Is that taken on notice? Mr Rigg—Those figures on page 53 are broken down to a certain extent in the table on page 9. Senator SCHACHT—They are broken down to some extent but not to the extent of running costs salaries, running costs other and whether there are fewer adjustments coming in accordingly. Until you break it down, you cannot get a grip on what is happening with salaries or running costs—percentage increases going up and down, and also staffing levels. Mr Rigg—As I explained earlier, that distinction between salaries and other running costs is largely artificial. Senator SCHACHT—You had better explain why it is artificial in each case because it makes a mockery of the bloody tables you are putting in, to have it there, and there is no note underneath saying, ‘These separations are largely irrelevant.’ You ought to have a note on that. Mr Rigg—We are required to produce them in this form but, as I explained earlier, we have the ability to transfer money between salaries. Senator SCHACHT—Well, put a footnote saying accordingly. I think that is not an unreasonable request. Mr Rigg—That is a standard application of the running cost rules that were introduced by the former government. Senator SCHACHT—Yes, I know. We were always looking for improvement. Perfection was always sought and never actually achieved. CHAIR—I am sure he would be happy to provide that. Is that all that you wish to place on notice? Senator SCHACHT—On those three, yes, instead of going through it laboriously here, in deference to you, Madam Chair. CHAIR—There are no further questions on program 3, thank you, gentlemen. [11.16 p.m.] Program 4—Secure government communications and security services Subprogram 4.1—Australian diplomatic communications network (ADCNET) Subprogram 4.2—Security services CHAIR—We will move on to program 4—Secure government communications and security services, 4.1 and 4.2. Senator COOK—Madam Chair, I have a series of questions relating to the Australian diplomatic communications network, ADCNET. I propose, with leave of the committee, to put them on notice. CHAIR—Is it the wish of the committee that they be incorporated? There being no objection, it is so ordered. [The questions appear at the conclusion of today’s proceedings] Senator HOGG—I am not familiar with all the questions on Senator Cook’s list. I would raise a couple of issues on the ADCNET. At page 61, under performance outcomes 1995-96 dot point 1, ‘ADCNET installation for the remaining posts is a high priority that is dependent on funds availability’, where are those posts that do not have access at this stage?

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Mr Cotton—It is about 20 posts. Senator HOGG—Have the funds become available to proceed with that? Mr Cotton—No, the funds have not yet become available to proceed with that. We are anticipating actually installing ADCNET in a further 12 posts and the balance thereafter are ones where we would not, in any case, seek to install that particular form of ADCNET. Senator HOGG—So how many will not be on ADCNET? Mr Cotton—About 12 will not be on ADCNET at the complete end of the program. Senator HOGG—So how many will be potentially going on ADCNET this year? Mr Cotton—It is best that I take that on notice to give you some fine detail on that. Senator HOGG—Are the funds available? That is the issue. Mr Cotton—We have the ambition to complete the ADCNET installation program. I will get for you those posts where we intend to install ADCNET, funds permitting. Senator HOGG—I take you to the ‘Outlook’, where it says: . Improve the effectiveness of current ADCNET installations by upgrading installations in Australia and at overseas missions to the latest software release. For some 30 overseas missions this will also involve a hardware upgrade. Can I assume that it will be the upgraded system that will be put into the new sites? Mr Cotton—Yes, you can assume that. CHAIR—Are there any further questions? Senator SCHACHT—That was on 4 and that is rolled into 4.1 as well, is it not? CHAIR—Yes, subprograms 4.1 and 4.2. Senator HOGG—Are we on 4.2 now? CHAIR—We are dealing with this program globally. Senator SCHACHT—Is it all of 4? CHAIR—Yes, all of 4. Senator HOGG—I have no questions. Senator SCHACHT—The allocation for security services in the budget for 1995-96 was $19 million but $11 million was actually spent which went slightly down for the coming budget. During the year why was there that big drop in the budget from what was appropriated to what was actually spent? Mr Cotton—I am sorry; which particular table are you on? Senator SCHACHT—I am on page 9 to start off with because there is no table on security services at all. There is a very big drop during 1995-96 of $8 million. Why? Mr Rigg—That figure and two others relating to 2.1 and 2.2 in the 1995-96 budget figure are errors resulting from misattributions within subprograms. The figure of $19.361 million for 1995-96, which was prepared at the beginning of last year prior to the May 1995 budget, is an overestimation, as is the figure for consular services of $2.2 million, and the figure for passport services is underestimated. With changes to reflect those errors, the changes from the 1995-96 budget to the 1995-96 actual in the next column are not as marked as are shown here. Senator SCHACHT—Did you get appropriation in the budget in 1995-96 for $19 million?

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Mr Rigg—We do not get specific appropriations for any particular activity. We get one lump of money. Senator SCHACHT—When you underspent by $8 million, where did the $8 million go? Did Finance take it back? Mr Rigg—We were not underspent by $8 million. The figure we have attributed to security services under 4.2 in that first column in the 1995-96 budget figure was an error. Senator SCHACHT—What should it have been? When the budget was printed last year, the $19 million figure should have been something like $11 million. Mr Rigg—I do not have the exact figures with me but it would have been lower than $19.361 million. As that was the figure contained at the time— Senator SCHACHT—I see. You have put the error there to be honest with us? Mr Rigg—Yes. We have to maintain the figure that was contained in last year’s. Senator SCHACHT—I appreciate that. Finance have accepted that it was not a printing error but a miscalculation in that program? Mr Rigg—Yes, it was an error of attribution between subelements of the program. Senator SCHACHT—But you can assure me that the $8 million was not spent. When you got a total appropriation figure at the bottom for Foreign Affairs, did that have $8 million too much in it as a result of this error? Mr Rigg—No. Senator SCHACHT—If the bottom line were not an error of the total appropriation figure for Foreign Affairs and if it did not have the error of $8 million, and this subline did, that means that somewhere else you adjusted the $8 million. Mr Rigg—As I was explaining earlier, the figure for consular services and the 2.2— Senator SCHACHT—That $13 million. Mr Rigg—The 2.2 is also overestimated and the figure for passport services was underestimated. Senator SCHACHT—That $27 million was then $34 million. That is a difference of $7 million. How much was consular services overestimated by? Mr Rigg—I do not have those figures with me. Senator SCHACHT—I think you had better take those three points on notice and explain to me in the end how you got it all to come out evenly for the bottom line figure for the appropriation. Senator Hill—I think this form of accounting needs a few more explanatory notes. Senator SCHACHT—You are not wrong about that, Minister. Can you follow them? Senator Hill—No. Senator SCHACHT—Thank you. Senator Hill—My greatest comfort is that most of the officials cannot either. Mr Rigg—Including me. Senator Hill—It is not user friendly. That is very clear. Senator SCHACHT—I know that you are not Robinson Crusoe. Even the head of Treasury could not follow his own document and said that the figures were misleading or not to the

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 571 quality he expected or would like. That was the tables and so on. He also pointed out, which I accept, that the hurried nature of producing these documents post-budget is also a problem. I accept that because that is unavoidable. Can I just ask you— Mr Cotton—I have one further comment. The format in which we are required to present the document is also prescribed. Having said that, as we have done earlier, we also acknowledge your points that, within that format, we might be able to make it a bit more readable and a bit more accessible. Senator SCHACHT—I suggest that, even though on page 9 there are two separate lines, you also break that into something similar to the table that appeared on page 59 or the tables for subprogram 4.1 and subprogram 4.2. If I get that and can have a look at it, both you and I might have a better chance at the supplementary estimates hearing. We might be a bit further up to date and we both might have a clearer understanding of it. I accept that these things are somewhat difficult to do in a hurry. My main point is that, when you have a description of a particular point, I think you should have in that description a note as to whether there was an increase. You just have to take a look through this document, where there are tables. In fact, in some of these large ones we have been dealing with there is hardly any comment at all. Take security services, for example, and the performance outcomes for 1996-97. Is it possible that where you have strategies—and security services might not be the best one to look at—on some of the programs you could actually indicate in the description of the part of the program whether there was a cut or an increase within the budget compared with the previous year? It would be helpful to just give the figure. I know you do it on the table at the beginning. There is an example of this in a table on page 11. You pick out some items of significant variations, which is a bit disjointed when they are not actual next to the description. Mr Rigg—They are divided out into the subprograms. Senator SCHACHT—I also think it should not be too difficult to put extra information in those cases. That is why, for example, when I asked those questions on 3.1 about the performance outcomes in 1995-96, I asked for details of what the expenditure was. They are actually identifiable components. Once you get them you can then compare them to the next couple of years. For example, you can look at the 1996-97 strategies for research and draft speeches across a full range of foreign and trade policy issues. If there were a significant change to the funding for that particular strategy or subprogram, I think there could be a further one line to say the budget for that is $2 million; it is down 15 per cent. You might say that is too much detail in the time you have available to produce— Mr Cotton—Yes, I was just about to make that point about whether, in the time constraints we are operating under post-budget to get this material out, it is possible to break out and distribute those figures across the various programs. Senator SCHACHT—I accept that. You can take it on board that—and I think we both agree here—there are some areas here where this is a bit hard to access. It has taken me three days to get on top of some of it. Mr Jones—Could I make a comment that might help explain the somewhat erratic nature of these figures? We allocate our budgets out by work unit, so we allocate funds to a particular division and to particular posts and the post gets a budget to do its business. But this is

FOREIGN AFFAIRS, DEFENCE AND TRADE FAD&T 572 SENATE—Legislation Tuesday, 24 September 1996 presented in program form, which means that we then have to get from those posts their estimation of how much they spend on each of all these programs. They get a lump of money to run their post, but they then have to give back to us their estimate of how much of that goes on to consular and how much of it goes on to speech writing and all of the other elements of the program. Each post makes that judgment each year. Of course, when you put it all together you sometimes get from those estimates, which in many cases are fairly seat-of-the-pants kinds of estimates, results that somehow do not seem to fit together. Senator SCHACHT—I accept that that is part of the problem. Your budget has had major changes up or down—a lot down, unfortunately, for Foreign Affairs in a number areas. There have been significant reductions in some areas, particularly with AusAID. When there was a description of the program, I think it would have been easier to say that there was a significant change, to say there is $10 million off, $15 million off or whatever the figure was— or in some cases, it went up. CHAIR—I take it there are no further questions. I thank the minister and all those members of the department who have appeared before the committee. Senator COOK—Before we finish, I would like to identify myself with the remarks of thanking the minister and the officers. Earlier today we got a transcript of a press conference by the Minister for Foreign Affairs, Alexander Downer, on 14 August over the release of the Canberra Commission report. I do not know whether this is the copy, but the one I have got is missing several pages. It may just be that I have got a bad copy, but can I get the full text of what he said? Senator Hill—Of course. Could I thank the committee, particularly the officers. I understand that it is a record in terms of the number of hours they have had to answer questions and it has been three late nights. We very much appreciate their efforts. Senator COOK—We are obliged at some point to indicate areas where we would be interested in supplementary estimates. CHAIR—Yes, that is correct. Senator COOK—At the various times I have tried to make it plain in the text. It would suit me—and I hope it would suit the committee—if I could come back in the next day or so and indicate the areas. CHAIR—Yes, there are well defined procedures for that, Senator Cook. Senator COOK—I do not know what they are. Senator Hill—We will get the answers to questions to you as quickly as possible. Mr Jones wants the last word. He has got a personal explanation on that photocopy. Mr Jones—In relation to that, the text we handed in was complete, but it was double-sided and it seems the copy you have only has one side. Senator SCHACHT—I would like to thank the officers and say that we are so much in support of what you do and that we have been so interested to sit here for several days asking you questions to help you with your business. Committee adjourned at 11.32 p.m.

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QUESTIONS ON NOTICE The following questions were placed on notice— Senator Harradine to the Department of Foreign Affairs and Trade— Subprogram 6.1—Country Programs I refer to the Foreign Affairs and Trade Portfolio Budget Statements (Sub-program 6.1: Country Programs p.75) where it states: "Australian aid made a substantial contribution to reducing the incidence of maternal and infant mortality and morbidity in rural and remote communities in the Philippines." Could the department provide the committee with details on how this was achieved. Could the department provide details on the "comprehensive program for women’s and children’s health" in PNG as described on p.74 of the Budget Statement. I refer to the FADT Consideration of Additional Estimates Hansard of November 13, 1995 (p246). I requested copies of the review of provincial laws on family planning in China supposedly undertaken by China as part of "new assurances" given to UNFPA (referred to on p.250 of Hansard, 23 June, 1995), a copy of the written agreement between UNFPA and the Chinese government that all provincial laws bearing on family planning will be reviewed within eighteen months from July 1993 to ensure their conformity with international human rights standards and a copy of the proof that was referred to on p.251 that the allegations of coercion made in the Washington Post were false. Mr Kanaley responded (Hansard 13 November 1995) that the review of provincial law "has not as yet been completed" and that it would not likely to produce a review report. In FADT Legislation Committee Additional Information Received Volume 1 May 1996, I was informed that a summary report of the review was being prepared and "has not yet been received (p.151)" but "will be forwarded to the Committee as soon as it is available." The answer on pl71 quotes the State Family Planning Commission as indicating that "most provinces adopted amendments to improve their regulations and that while the improvement of these regulations cannot be accomplished in a short period of time, the changes made so far indicate progress." Without a written report how can we know that this is indeed the case? Please provide details. Subprogram 6.2 A report in the Sydney Morning Herald, 26 June, quotes a spokesman for Mr Downer as saying the Minister banned foreign aid from being used to fund abortions after a review of foreign aid which had resulted in tougher safeguards and extra monitoring to prevent coercion. An earlier report (26 May) in the Canberra Times says Australia’s contribution to overseas family planning programs were "given the green light by the government after a review." The report quotes the Minister as saying the family planning projects funded had been found not be in any way coercive. If these reports are correct, could the department provide the committee with details of the review: the process by which the projects were assessed, the criteria used to assess whether the programs involved coercion or not, the officers responsible for the review. If it is available, could the department provide a list of every family planning/population program assessed and the reasons each was judged in the clear. In the Hansard of 13 November, 1995, p.246, Mr Nicholls mentioned a review of the WHO/HRP program scheduled to take place in 1998. He said that the review might be subsumed because of a possible amalgamation of the HRP with the child health and development program, the adolescent health and development program and the women’s health program. Could the department confirm if that review is going to happen or otherwise and if this amalgamation has taken place and if not when this might happen.

Senator Cook to the Department of Foreign Affairs and Trade— International Court of Justice: Legality of nuclear weapons On a matter closely related to the Canberra Commission on 8 July the International Court of Justice responded to the request put to it by the UN General Assembly for an Advisory Opinion on the legality of use or threat of nuclear weapons.

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In a press release issued on that day (8 July), Mr Downer said that the government would be studying carefully the court’s opinion. What area (or areas) of DFAT is primarily responsible for handling this issue? Has the government completed its study of the court’s advisory opinion? If not, why not? Has the department submitted any ministerial submission to Mr Downer on this issue since the court’s decision? If so, when was it submitted? If not, why not? Has Mr Downer or any other minister or government spokesperson issued any statement or made any public comment on the advisory opinion other than Mr Downer’s statement of 8 July? If not, why not? This was after all a matter of considerable public interest, both when Australia made its oral submission last year and when the court gave its opinion. The former government argued in the oral proceedings of the court in October last year that were the court to give a substantive opinion, then it should find that nuclear weapons are illegal, not merely that the use or threat is illegal but acquisition, development, testing and possession as well. Does the government concur with the position argued in the court by its predecessor? Does the government agree that nuclear weapons are illegal under international law and that the policy of deterrence can only be a temporary necessity while the nuclear weapon states fulfil their obligation to eliminate such weapons? If the government does not concur with the position taken by the former government, what is its position on the legality or otherwise of nuclear weapons? Does the government support the position argued in the court by four of the five nuclear weapons states that nuclear weapons are legal, that there is no general prohibition on the use of nuclear weapons and that the use or threat of such weapons, could be legal depending on the particular circumstances of the case? Alternatively does the government agree with the majority ruling of the ICJ that use of nuclear weapons would be ‘generally contrary’ to the rules of war and international law? What is the government’s understanding of the words ‘generally contrary’? What sort of prohibition is involved? In view of the current state of international law the court could not conclude definitively whether the threat or use of nuclear weapons would be lawful or unlawful in an extreme circumstances of self-defence in which the very survival of the state would be at stake. Does the government agree with the majority opinion of the court? Does the government support the position that the use or threat of nuclear weapons would only be legal in circumstances where the threat of the state is at stake? Subprogram 5.2—DFAT Corporate Services Naming the R.G. Casey building On 17 June, the Minister for Foreign Affairs announced that the new headquarters building in Canberra for DFAT would be called The R.G. Casey building after Richard Casey, a former Liberal Minister for Foreign Affairs. Did the department make any recommendations to the Minister for Foreign Affairs concerning the naming of the new building? Were any alternatives put to Mr Downer? Is it not the case that DFATs Editor of Historical Documents, the distinguished diplomatic historian WJ (Bill) Hudson, argued strongly against naming the new building after Lord Casey? Is it not the case that an official minute written prior to the naming of the building, Dr Hudson, who is the author of the definitive biography of Lord Casey, described Casey as a "very partisan Liberal politician" and commented that Casey was "a very poor performer in cabinet, a mediocre performer in parliament and an indifferent developer of policy"? Were Dr Hudson’s views given any consideration in the process of selecting a name for the new building? Or was the decision to name the building just the personal whim of the Minister?

FOREIGN AFFAIRS, DEFENCE AND TRADE Tuesday, 24 September 1996 SENATE—Legislation FAD&T 575

Subprogram 5.2—DFAT Corporate Services The Corporate Services program has suffered some of the largest cuts within the portfolio has it not— with reductions from $48.954 million in 1995/96 to $42.755 million in 1996/97 and anticipated staff reductions from 306 staff years in 1995/96 to an estimated 238 staff years in 1996-97? On page 10 of the Australian National Audit Office’s performance audit strategy for the foreign affairs and trade portfolio, ANAO identifies management as one of two main areas of risk within the portfolio. Specifically the ANAO says "The Department is likely to face funding reductions of hitherto unexperienced magnitude. The major risk is that the implementation of those reductions will result in loss of expertise and the breakdown of internal controls and management information systems." Is the department at risk of "a breakdown of internal controls and management information systems"? How is it proposed to manage the anticipated loss of some 68 personnel from the Corporate Services sub-program? What measures is the department taking in the Corporate Services program to ensure there is no reduction in the effectiveness of internal controls and management information systems? Program 2.2—Consular cases The department has established a Consular Response Group drawing on resources within the Consular, Programs and Security Division. What are the responsibilities of this unit? (The group has been established to handle particularly difficult and complex consular cases.) What are the resources available to it? Who decides which consular cases are allocated to the group for special attention? What criteria are applied? What cases are currently on the group’s books? Can you provide the committee with a briefing on the origins and current status of each of these cases? Can you provide the committee with an update on the case of Mr James Peng, the Australian citizen detained in China. What representations have been made by the government concerning Mr Peng? What access to Mr Peng is allowed by the Chinese authorities? What is the state of Mr Peng’s health? What is the government’s assessments of the prospects of securing Mr Peng’s release? Can you give the committee with an update on progress in negotiating the release of the Australian pilot, Justin Fraser, who was arrested in Somalia on 29 May this year? What representations has the government made to secure Mr Fraser’s release? Have there been requests from the government of Lebanon to establish a consulate/appoint an honorary consul in Adelaide? Why are there security concerns about this proposal? Are there not consuls and consulates for Lebanon in other states? How is ‘security’ handled in such states? On what conditions can an office be opened? Program 4.1: Australian Diplomatic Communications Network (ADCNET) Could you describe the Australian Diplomatic Communications Network (ADCNET)? What services does it provide for the department and the government as a whole? What is the total cost of the ADCNET project to date? What is the estimated final cost of the project? On page 61 of portfolio budget statement indicates that ADCNET has now been installed at 63 overseas posts. ADCNET installation for the remaining (20) posts is described as a high priority, but is dependent on funds availability. DFAT has 83 posts overseas. Which posts are still awaiting installation of ADCNET? When will these posts receive ADCNET? To what extent will the completion of the ADCNET project, including upgrading of existing installations, be delayed by budget constraints? It is stated that development of the central message switching system was unable to be completed by June 1996 as previously forecast. Why? It is further reported that steps are being taken to resolve a dispute between the prime contractor (BHP Information Technology) and a sub-contractor so that the remaining components of the program can go forward to allow final completion of the completion of the ADCNET project.

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What is the nature of the dispute? What are the steps being taken to resolve the dispute? What delay to the completion of the project has been/ is likely to be involved? On page 10 of the Australian National Audit Office’s performance audit strategy for the foreign affairs and trade portfolio, ANAO identifies information technology systems, and ADCNET specifically, as one of two main areas of risk within the department. ANAO states that experience overseas with systems similar to ADCNET has not been encouraging. Is it not the case that the Canadians abandoned a similar system? Do you know why the Canadians decided not to go down this path? Has DFAT drawn any conclusions from the Canadian experience? The ANAO also comments that the United Kingdom, the United States and Germany have encountered technical problems in the operation of similar computerised communication systems. What is known about the experience of these countries? What lessons have been drawn from that experience regarding the development and operation of ADCNET? The ANAO also comments that early reports from users in the field (gathered as part of ANAO’s audit of small and medium sized posts) suggest that ADCNET may not deliver all that was anticipated. What processes of assessment and evaluation are in place to assess the effectiveness of ADCNET? How can we be assured that we are getting the best value possible from the department’s investments in new information technology? What is the anticipated life of the ADCNET system? How long will it be before the DFAT starts planning for ADCNET’s successor?

FOREIGN AFFAIRS, DEFENCE AND TRADE