CHAIR —I welcome Commissioner Palmer and officers of the Australian Federal Police.

Senator COONEY —I have been asked about the difference between the tax position of the Australian defence forces and of the Australian Federal Police in East Timor. As I understand, you know about this, Minister. On the face of it, that does seem to be discrimination, disparity, unfairness or whatever the appropriate word is. Are we making any move to see that the AFP officers are treated the same way as the ADF people?

Senator Vanstone —I should say that you are correct in what you say, except they are on quite different rates of pay. But I do not want to say any more at this stage than that the matter is under close consideration. Senator Cooney, if there is to be a change, straight after I ring Commissioner Palmer, I will ring you, okay?

Senator COONEY —I just want the record to show that I have done all I am supposed to do by my constituents.

Senator Vanstone —Let me take the opportunity of putting on the record, as I have done before, that I have great respect for the defence forces. I think they are doing a fabulous job up there, but let us never forget who was there first, who was there unarmed, who was there to ensure the vote was conducted properly and did so and who was there afterwards when - to put it mildly - all hell broke lose.

CHAIR —As we have put on the record several times.

Senator Vanstone —Yes. But some people are slow learners.

Senator COONEY —Yes, I agree with that.

CHAIR —Did you mean me, Minister?

Senator Vanstone —No. Sorry, Madam Chair, definitely not. I know the high regard in which you hold the AFP. I want to mention the UN CIVPOL people and, in particular, Alan Mills, who was in charge of them.

Senator COONEY —Who has appeared before this committee.

Senator Vanstone —Yes, he has indeed. It is not unreasonable to make the suggestion that, but for their participation and that of the Australian contingent, East Timor would not be in the situation in which it is now. As you recall, there was a point at which the UN had reportedly made a decision to pull out. It is my view that that decision was not adhered to as a consequence of Alan Mills and the other CIVPOL people who were there. So don't imagine for one minute that the contribution they made is in any respect underregarded by anybody I know.

Senator COONEY —I think you are right, particularly about wandering around there without any arms. I do not know how people survive that.

Senator Vanstone —Just to make it clear, that was at the time the Federal Police preference. They have a long history of these civilian police arrangements, and they have not been armed on any of them. One ended up with some arms, but that was a United States arrangement. I think it was Haiti. That may change in Timor as we shift from one type of role to another type of role where the CIVPOL people start acting as local police or are at risk. Of course, that was always provided for: should the situation get dangerous, within an hour we could have appropriate weapons for all the CIVPOL people, not just the Australians. They are stored in Darwin. But that may change. I personally would expect that it would as a consequence of the role changing.

Senator COONEY —This is certainly an event that you would put on a board in your officeas, I hope, Mr Palmer hasto acknowledge an outstanding piece of work by the Federal Police.

Mr Palmer —I have one additional point with regard to the unarmed situation. Even in hindsight, it is the view of the vast majority of our people who were there that they were best protected by being unarmed. It was obviously a measured and balanced call and a difficult one to make, but they felt they would have been at greater risk and greater threat being armed. That was our assessment before they went, and that was the vast majority of their assessments upon return - that they were much better protected, despite the huge difficulties and dangers, by not being armed.

Senator COONEY —I was just thinking of wandering down the street at night without arms in that atmosphere. It would have made my knees quake, to say the least.

Mr Palmer —The most daunting situation for them was having to stand impotent, with or without arms, because of the lack of lawful authority, in a law enforcement sense, watching crimes being committed in front of their eyes. That was a difficult issue.

Senator McKIERNAN —I am concerned about how I should ask the questions after reading the commissioner's letter to the acting chair of the committee dated 9 December 1999. I thought it was quite an extraordinary letter to be sent to a parliamentary committee. I am just wondering how you might like us to ask further questions in this committee proceedings, bearing in mind that you were not present at the last round of hearings, Commissioner. What is your advice to me? You are aware of the letter I am talking about?

Mr Palmer —The letter was intended to be an overriding letter for the answers we provided to you in detail. If I could pick up the issue made about my non-attendance -

Senator McKIERNAN —That is a minor one in terms of the content of the letter.

Mr Palmer —What concerned you, Senator, about the content of the letter?

Senator McKIERNAN —I quote part of paragraph 6:

The Hansard record suggests that Senator Bolkus may have been confused and thought these amounts were fully inclusive of all the Tough on Drugs initiatives, leaving a gap of some $56 million.

Over the page - and this is the part I find most offensive, and I think most senators would find it so; it is not just because we are party colleagues - your final paragraph states:

With the benefit of hindsight, it might have assisted a more accurate overall understanding of the AFP's reform program, funding and other issues if the questions put forward on 1 December had the advantage of a coherent framework.

It really is going beyond the pale, I would have thought, for a person in your position to reflect on us in our positions - we are undertaking the task that has been given to us by the parliament and by our constituents - in that manner.

Mr Palmer —It was not intended to reflect on you but rather to reflect on us. That is why I was going to come back to my attendance. It was intended to indicate that, had we been in the position to put a better contextual understanding to the overall environment, the reality of the situation would have been better understood. It seemed clear to me from a reading of Hansard that there was confusion over the appropriation of the money, and that was caused by the fact that, in terms of us responding to the early questions, we did not provide the appropriate contextual framework against which a better understanding of that situation might have arisen.

There was a relevance with respect to that response and my attendance. As you know, I am ordinarily at these Senate estimates committee hearings. I have made the decision since the time of my appointment to come of my own volition and not by direction, despite the fact that, ordinarily, previous commissioners had not attended. It seemed to me that it was appropriate and necessary that I do, and I have made a point of doing so. We have not, however, ordinarily been at supplementary estimates. I have not attended supplementary estimates and I have not done so because of the perceived lack of need to do so in terms of the nature and the range of questions that have been asked. I think, prior to this particular hearing, there had only been very few questions asked over the previous five years at that supplementary process. I apologise for fact that I was not here in terms of what occurred on that day, but there was certainly no intention to be offensive and I apologise if in fact offence has been taken. This is by way, I guess, of an explanation of how I think the problems occurred that led to so many questions being asked and taken on notice.

Senator McKIERNAN —I am not pretending to speak on behalf of Senator Bolkus, but had this letter been directed to me and the questions that I had asked, the first place I would have taken this would have been to the chamber of the parliament. I would have let the Senate itself deal with it because I do believe that it is offensive. I believe it has gone beyond the bounds in terms of how witnesses should respond to senators. I have always taken the view - and I am only speaking personally and, as I said, not on behalf of Senator Bolkus or anyone else - that we, from this side of the table, should treat the witnesses on that side of the table with respect. I have endeavoured to do that and I expect the same thing to be reciprocated. Quite frankly, Commissioner, I did not think there was reciprocity in the content of this letter. I believe it was offensive in the way it was framed. I believe that it was offensive in the sense that there was time to think about the content. We can all make inadvertent comment on the record as the record is reported second by second. But when one gets time to think about things, usually one is a bit more careful in the language that is used. It seemed to me, when I first read this, that this was a considered response by you, as head of the Australian Federal Police, to an opposition spokesman on this committee. I do not think that is called for, quite frankly. If you are now reflecting on the content of the letter and the manner in which I have taken this matter, I am more than happy to hear from you. I do not wish to proceed with the matter any further and waste any more time of the committee, but I do not want to hinder your chance for an opportunity to respond.

Mr Palmer —I would only respond in one way. If you have taken it that way, I apologise. It was honestly and sincerely not intended that way. That is my first comment. All I say by way of corroboration of that is that I simply stand on my record over the last five years. I have treated this committee process very seriously when different governments have been in office, always endeavoured and, I think, very largely answered questions without notice directly, and always shown complete respect in the way that I have done it. So the letter is completely out of kilter in terms of the impression that you had of it with my history, I would suggest.

Senator Vanstone —Madam Chairman, if I might just add to that. I am sure that Senator McKiernan will give Commissioner Palmer credit and see that, by his past performance, his indication of what he intended by the letter will be taken at face value. There was a difficulty at the last estimates. I acknowledged that at the time. The right people were not there. That meant that when questions were coming from all different directions it was harder to put them in a context. I personally think that what was intended was a simple statement of fact that, if the questions had perhaps followed a different presentation, it would have been easier for the second level of officers to give the committee the information that was being sought. When you have the first level of officers there, it is easier to handle the questions in any event. As I say, I am sure that Senator McKiernan will understand that Commissioner Palmer has always treated these committees - and when I have been on them in a reverse situation - with great respect. He certainly did not intend the letter to be taken in the way that Senator McKiernan has regrettably taken it. I agree with everything Senator McKiernan said about the respect that should be shown to these committees by ministers and officials appearing at the table. I simply offer the other side and say that, similarly - if not more so - respect needs to be shown by senators not to the minister at the table - although that would be nice, but it is not expected because politics being what it is, you take your chances; it is wishful thinking, actually - but at least to the officers. They do not have a capacity, generally speaking - the more junior officer you go - to answer difficult questioning. I have particularly in mind some senators - not you or Senator Cooney - who have a habit of asking a question, listening to the answer and then, two or three questions later, paraphrasing that answer with some slight changes by saying, `Oh, you have just told me such and such.' This frequently leaves a junior officer in the position of having to think, `Now do I challenge a senator publicly or do I just let go because he has slightly misunderstood.' It has in the past got to the point where I have had to raise that at the committee meeting. I ask you to bear that in mind with other senators. If you ever see that happening, I hope you will agree that it is an abuse from the other side.

CHAIR —Shall we return to questioning, Senator McKiernan?

Senator McKIERNAN —We can indeed, thank you. I have a couple of questions concerning page 89 of the portfolio additional estimates statement about the extra $200,000 initial funding for the Commonwealth Heads of Government Meeting to be held in Canberra in December 2001. It states that the $200,000 received in 1999 will be used for acquisition and upgrade of equipment, training of personnel and security planning. Can you enlighten us as to what is happening with that in the light of other decisions?

Mr Keelty —The AFP has sought $200,000 through the additional estimates for essential pre-planning activities for tasks expected to be required of the AFP in Brisbane now that the CHOGM meeting has been moved there. The resources will be directed towards the planning processes associated with CHOGM. Some travel was undertaken in relation to security planning. A trip was undertaken to APEC in New Zealand and also to CHOGM in South Africa, which represents the expenditure so far. We are now in the process of reviewing what the impact of the move to Brisbane will be and we will be looking at that in light of the 2000-01 budget.

Senator McKIERNAN —Will there be additional funding sought for this initial planning?

Mr Keelty —No, as I understand it, that money has already been provided for.

Mr Kelaher —I think there will be additional cost to the AFP in their preparation for and participation in CHOGM, but this is the very early preparatory work, so we will not be seeking to increase the $200,000 this financial year. As we build up next financial year, I am sure that we will seek additional appropriations.

Mr Palmer —I think initially the forecasted expenditure, had it been hosted in Canberra, was in the order of $15 million. That is the figure that springs to mind. I think that has been reassessed in the order of three to four in terms of it now being located in Brisbane. It will obviously still have some close personal protection and other federal law enforcement obligations associated with it, but we will get a better feel for those figures. We are now in negotiation with Queensland Police about the complementary roles between ourselves and Queensland Police, but obviously Federal Police will still have some particular obligations no matter where CHOGM is hosted.

Senator McKIERNAN —Do I understand you to say that there will be a diminished role for the AFP in the conference in Brisbane because the state police will effectively undertake that role?

Mr Palmer —They will undertake the static security, which is the main cost in terms of overall logistics security. We will be responsible for the security of attendees in certain circumstances. That will bring with it certain costs, but it will not cause the infrastructure cost if it had been held in Canberra.

Senator McKIERNAN —Will any of that $0.2 million expended here in Canberra be no longer needed? In other words, was any of the money wasted?

Mr Keelty —No.

Mr Palmer —The answer is categorically no.

Senator McKIERNAN —Below that is a figure of $0.7 million, which has been provided for security during the visit of Her Majesty the Queen next month. Is that all that is going to be expended on security? I would have thought that security would cost a lot more than that, or does Her Majesty bring her own security with her?

Mr Palmer —She certainly brings her own security with her, with whom we will work closely, of course. She is travelling the states extensively during her time here. Much of the daytime security will be provided by state police in the places to which she goes. Although we will have a role, our estimation is that $0.7 million will cover the costs of our obligations with regard to her visit.

Senator McKIERNAN —With regard to additional estimates, has any security funding gone to Australian Protective Services with regard to that? Do you work reasonably closely with the APS? Will they be involved in any way with the royal visit?

Mr Palmer —I cannot specifically answer what the arrangements are. The ACT police region is handling the specifics of much of the infrastructure of her presence within Canberra. I am not aware of the detail of that. I am not aware of the detail of any funding allocations either. Mr Keelty may be able to assist.

Mr Keelty —The only comment I would make is that in the Queen's visit, which will be from 17 to 31 March, it is planned that the Queen will visit every state except for South Australia and Queensland. She will use Government House as her base. Knowing that the APS is present at Government House, I imagine that there would be some involvement with the APS. There is always ongoing liaison between the AFP and the APS.

Senator McKIERNAN —The APS is appearing shortly. With regard to the Ayers review and that $50 million, I regret to say that there is still some confusion. At the last estimates, the AFP supplied figures indicating that at 30 September 1999 some $14.7 million in savings were found. The AFP believe that they are on track to reach the $50 million mark in the three-year period specified. In the table of internal efficiencies supplied from the last round of estimates, which I have here and I can provide to you, the AFP listed a sign-off of the change agreement as leading to the $14.7 million in savings. Yet the AFP has also indicated that the new certified agreement, which is supposed to be part of the implementation of the change agreement, will be totally funded from within existing resources. One of the elements of this funding is internal efficiencies identified through the AFP reform program amounting to approximately $55 million up to 2001 and 2002. Is this an example of double-counting?

Mr Palmer —Mr Kelaher can respond to that.

Mr Kelaher —I take you to question on notice No. 40. I think you have it in front of you. Perhaps you were looking at it when you asked that question.

Senator McKIERNAN —I have 19 and 21. No, I do not have it.

Mr Kelaher —Question No. 40, to which we responded a few weeks ago, included in it the statement that $14.7 million had been saved up until 30 September. A related question which was asked - question No. 41 — dealt with what areas of savings were required by the Ayers review. We provided a tabulation of the areas in which savings were required to be provided. I now take you to a further question that was asked, which was question No. 44. It dealt with how we would fund the certified agreement. In the detail we provided in answer to question No. 44, we provided a little table, which showed how the certified agreement would be funded and the source of the funds. I can spend a little more time on this. You will find that the table in answer to question No. 44 identifies savings that are different from the savings required by the Ayers review. So there was, I assure you, no double-count.

Senator McKIERNAN —I am comparing the two attachments. I have now found both questions on notice, Nos 40 and 44. I am comparing the attachment from No. 40 to the detail on No. 44.

Mr Kelaher —Look down the list in the attachment to No. 40. It shows where savings are to take place, which are in property, rationalisation and commercial support et cetera. If you look at the bottom of the table on question No. 44, you will see that the savings are different. In relation to question No. 44, which is the funding of the certified agreement, you will also see that the savings are very much about focusing in on work practice and remuneration reform. To a very large extent, we have been able to completely finance the new certified agreement from those savings.

Senator McKIERNAN —I need a bit of time to look at this further. Rather than delay the committee now, I will move on. I have another general question relating to the fringe benefits tax and its implementation. Is there any negative impact of the FBT on AFP personnel? I am thinking in particular of housing and motor vehicles. The fringe benefits tax will be implemented on 1 July. Are there any negative impacts upon AFP personnel due to its implementation? I am talking in particular about housing and the taking of a motor vehicle to a place of residence at night which, for some police forces in the country, has been deemed to be taken into calculations assessing their income.

Mr Kelaher —This matter is under action by us at the moment. Dispensations have been given in the area of FBT to some police forces for specific situations. There is no dispensation of that nature for the AFP at the present time, although we have sought from the Treasurer agreement that, under circumstances where an operational vehicle is taken home and garaged in between operations, that will not be treated as an FBT liability disclosed on the group certificate of an employee. The AFP would, of course, meet its FBT obligations and pay the bill, but we have sought to have that cost not reflected on the group certificate of the employee.

Senator McKIERNAN —I understand that exemptions were granted to Defence Force personnel, but I did not think any exemptions were granted to any of the police forces. Can you identify which police forces might have been given dispensations or exemptions?

Mr Kelaher —We did not spend a lot of time trying to find parallels with other police forces. We felt that in our own right we had a reasonable case to make. We made it on that basis, not by drawing comparisons. As you would appreciate, where the military have received a dispensation, their situation is also unique.

Senator McKIERNAN —What do you mean by dispensation? I am trying to get the words correct.

Mr Kelaher —There is no question that the AFP will be required to pay FBT on vehicles not used directly in operations. We have sought the Treasurer's agreement that under the next step of FBT legislation, where we have paid an FBT liability, we have sought that it not be disclosed on the group certificate of the individual if all they did was take the operational vehicle home in between operations.

Senator McKIERNAN —Has that yet been agreed to with Treasury or the tax office?

Mr Kelaher —We have not received advice of the agreement.

Senator McKIERNAN —Your understanding is that some police forces have been granted that dispensation?

Mr Kelaher —I do not know. I have not gone looking. I would say that if they had received any dispensation, it would have been on the basis of a unique case. If it had been a more standard agreement by the tax office, we would already be benefiting from it, and we are not.

Senator McKIERNAN —The state police forces have officers that are stationed outside general metropolitan areas. Are any AFP personnel in a similar situation?

Mr Kelaher —Absolutely.

Senator McKIERNAN —So the housing question comes to bear as well? Have representations been made to the tax office or Treasury with regard to housing and the fringe benefit implications on them for AFP personnel?

Mr Palmer —I can partly answer that. We understand that the Police Federation of Australia is making representations on behalf of policing nationally with regard to these issues. Again, we do not know the outcome of that. We are aware that they are quite aggressively making those representations in terms of housing, vehicle use and other related FBT issues.

Senator McKIERNAN —State police forces are making representations, certainly they are in Western Australia to me, on the implications for their membership. I have not heard about the federal scene. Have you made any representations with regard to this? They are your people, after all.

Mr Palmer —Mr Kelaher was addressing that in his earlier answer.

Mr Kelaher —We have not made a representation on housing. We have spent quite a lot of time looking at this. I am just not sure whether, in the circumstances by which we provide housing benefits, the benefits are attracting FBT, which would appear on an individual's group certificate. It may be that it has not been an issue for us. That is all I can say. Very few individuals are receiving housing-type assistance in remote locations.

Senator McKIERNAN —Would it only count in remote locations? Would it also count, from an operational point of view, if an officer were transferred from one city to another city to follow a particular task, where housing or some accommodation had to be provided? It will not necessarily be unique to remote localities, would it?

Mr Kelaher —Under those circumstances and the way we provide the assistance, we do not attract FBT. We have a relocation policy. It provides various types of assistance, depending on the duration. I am a bit fuzzy on this now. The FBT is only applicable above a certain threshold in time. Most of our arrangements cut out before that threshold kicks in. That is not a particularly technical explanation, but we have spent quite a bit of time looking at this and advising all our employees on how it might affect them. I have received nothing back from our employees on housing assistance. As I have said, we have received quite a bit on vehicles.

Senator McKIERNAN —If there is anything further you can supply on that in preparation for the next round of estimates in May, I would appreciate receiving it. I return to the issue of the certified agreement and the $50 million. What is the difference between the implication of the change agreement and the certified agreement? Is the certified agreement an element of the change agreement?

Mr Kelaher —No, it is not. In 1995, the AFP entered into a former certified agreement, which carried the internal title of change agreement. That funding, which is identified in the Ayers review, was to fund the initiatives as part of that change agreement. I must correct something; I am sure I misled you previously. When we were talking about those tables in questions on notice 40 and 44, I probably should have explained - I hope this does not cause any difficulty - that the table provided in relation to question on notice 40 dealt with the areas of savings required to be undertaken by the Ayers review. When the federal government agreed that we might apply the internal efficiencies, which we were working on for the Ayers review, to the ongoing running of the AFP and that the federal government would provide a cash injection to fully fund the Ayers review, as disclosed in the table in question 44, there is a line there showing the benefit that we received by being able to reapply those internal savings. Despite my strong statement that there is no double-count, which there is not, there is a line that takes the benefit of those internal savings and shows it against the funding of the certified agreement. We can do so because of the full funding of the Ayers review by the government.

Mr Palmer —As you may remember, we were initially required to achieve $115 million worth of reform initiatives with $65 million of new money. In those reforms, we were to achieve the balance by way of internal efficiencies. Although we were on target, and still are, to achieve those efficiencies, that took away our capacity to use that money for other purposes, such as the funding of a certified agreement. The full funding of the Ayers review gives us the flexibility, as the answer to question 44 shows, to use the internal efficiencies money to assist in the payment of the certified agreement.

Mr Kelaher —I reassure you that we did not make a mistake and underprovide for the certified agreement. My response on double-counting was to try to assure you that we had not underprovided for the funding of the certified agreement.

CHAIR —Thank you for clarifying that, Mr Kelaher.

Senator COONEY —We do not have a structured service any more, do we? You have the commissioner, and agents are contracted. What is the basis of employment in the service at the moment?

Mr Kelaher —The present basis is in transition. By virtue of the substantial discussions that took place in the lead-up to the certified agreement, which involved consultation with the Department of Employment, Workplace Relations and Small Business and the employees, obviously, the AFP sought to bring about an end to the fixed term arrangement of contracting employees. The certified agreement was a vote in favour of bringing that to an end. We have proceeded down that path. The final step in locking that in is the changes to the AFP act which, as you know, we are seeking.

Senator COONEY —People who serve not only in the police force but in any place build up a lot of corporate wisdom. Is there any danger of your losing that under the new system? I understand why you moved away from a structured force; it seems to be the trend. Is not the wisdom that is built up over the years in danger under this system?

Mr Palmer —Quite the contrary. The move to five- and 10-year fixed term contracts, which we entered into in 1990, was done for a very important purpose at that time. It had a very strong integrity component to it. At that time, some of the things we now have available to us, even under current legislation as well as those under proposed legislation, to deal with people about whom we had strong suspicions of corruption, for example, or other malpractice were not available to us so readily. This was an integrity check at the same time. The down side of it was that it gave people no certainty beyond a five- or 10-year term as to their longer term career prospects. As we are finding this year in the absence of the legislation if it were not to go through in time, 1,600 of our 2,900 people are due for the end of their first 10-year fixed term appointment. They may exercise a right, because that is end of their term, to go on to some other employment.

If we were to continue with fixed terms, we would be facing that unless we staggered the appointment terms from then on. And if we did that, it would be hard to establish equity. People would say, `Why do I get three years and you five?' or the reverse. Because of the new regime of integrity checking and the new arrangements embodied and embraced by the certified agreement in regard to drug testing and the move towards declaration of assets and the powers of summary dismissal or proper loss of confidence dismissal subject to review by the commissioner and so forth, we felt we could confidently move back into a more permanent tenure of employment which really gives people much more certainty in terms of longevity while at the same time providing for appropriate rigour, if you like, in the oversight and the capacity to move people on that no longer are suitable from the organisation. But it does provide far more certainty for us as well as for the individual in terms of longevity.

Senator COONEY —Because I would have thought uncertainties could result in a fall in morale.

Mr Palmer —I think it is one of the strongest things in the certified agreement's favour, frankly. There was a lot of concern about the ongoing fixed term appointment arrangement because, obviously, members wished to get access to their money without having to leave the organisation. You see one of the problems with the AFPAS that hung on the end of the fixed term appointments was that you had to leave the organisation to get access to it. So you had a lot of medium aged people -35 to 45 years bracket people, particularly those with young families - who were almost in a sense being influenced into leaving the organisation simply to get access to their AFPAS. This allows them to get access to that and stay in the organisation. Already, significant numbers of people who were indicating they would take their money and run, if you like, at the end of this fixed term appointment in July this year - just before the Olympics - have indicated that they no longer will do that. Having said that, because of the fixed term appointment regime and the fact that we are this year paying out the AFPAS payments to people, and because of the age profile of them, I think it is likely we will lose more people this year than we ordinarily do. I think we have pulled that figure down very significantly by moving away from fixed term appointments. But, frankly, that does depend on the passage of the legislation.

Senator McKIERNAN —I want to move on to the Commonwealth fraud intelligence database which I think is under output group 3.5 of the program and it follows from some questions that Senator Bolkus asked at the last round of estimates. Specifically it was question No. 56 where he asked about why the Commonwealth fraud intelligence database is failing to meet its objectives. The response was:

Impediments to the successful operation of the Commonwealth fraud intelligence database related to logistical difficulties in the provision of compatible, cost-effective and timely data by a large number of agencies covered by the fraud control policy of the Commonwealth.

What does that mean? What are the `logistical difficulties in the provision of compatible, cost-effective and timely data'?

Mr Palmer —Frankly, there were a range of logistical difficulties. Mr Keelty may have something further to add to my umbrella statement, if you like. One of the real and practical difficulties was the definition of `fraud' as determined within varying departments. It is much more difficult than you may envisage in terms of internal practices that may or may not amount to fraud. There are those matters that should be considered to be fraud prima facie and be put on a database such as this. But we found that, for a range of reasons - such as privacy considerations, for example, within the Taxation Office, and different interpretations - the fraud database was very largely reflective only of social security information and intelligence rather than the wider spectrum of agencies and that there were other ways by which we could achieve probably a better result. Mr Keelty may have other comments he may wish to make.

Senator COONEY —If I can just ask something without going into detail: does most of the intelligence in the area of fraud come from information received? In other words, do you get it from people giving information to the force about other people?

Mr Palmer —The short answer probably would be no, although it comes to us in a variety of ways. With regard to internal fraud - that is fraud that may be committed by people who work within our Commonwealth agencies - that will come to us generally by referrals, but it will be referrals caused by suspicions in terms of their own internal audits or suspicions caused by behaviour patterns and so forth, but particularly through seeing prima facie signs of people misusing their own internal information systems and the like. Others, of course, come to us through the AUSTRAC process. We are more frequently commencing investigations not only into fraud but also into wider crime, including drug trafficking, by following money trails, and AUSTRAC is an important part of that process. And some does come to us through intelligence. We often start an intelligence probe for one reason - for example, suspicion that someone may be involved in drug interdiction or possibly people smuggling - and that may be an attraction initially because of the wealth they appear to have or the money they are moving. We may find that the money is a reflection of fraudulent activity other than other criminal activity. So the answer is there is a range of means.

Senator COONEY —Going back many years now, as you have probably heard yourself, the evidence used to always be: `From information received I proceeded to wherever it was,' and then it may be in the public interest that that not be revealed. It just occurred to me: what sort of tests are made on that sort of information? You mentioned social security fraud, and I was just thinking of people who give the tip-off that can be used - you would know better than I would whether it was true or malicious. Without going into it, are there any tests that you put that sort of information through so that you try to get this balance that you were talking about, which must be a difficult balance to arrive at, between fairness but nevertheless the desire to stop crime?

Mr Palmer —The way in which the information comes to us determines the sort of assessments we are likely to make. We assess all information or intelligence reports we receive and give them a rating, and that rating is geared according to a range of factors which Mr Keelty could expand on. Obviously, anonymous information is not given as high a status as sourced ones, and the nature and background of the person from whom the information is obtained is another. But it is given a rating in the first instance. Frequently, our first step simply is to assess the quality of the information received. It is not a launching pad for an investigation. Indeed, on occasions we have been criticised for only being an assessment phase when people believe, particularly when something is raised in a political environment, that we should be already launching an investigation -

Senator COONEY —In fact, you should have had have had them jailed.

Mr Palmer —Yes, but that would be an improper use of the process. The other aspect is when we get information from another department which may cause a prima facie basis upon which an investigation could properly be immediately launched. They would basically be the three ways by which we -

Senator COONEY —It is the sort of question I was asking about - I do not know if you were here -the contract with Customs where you really have to rely on people like yourself to judge whether or not a fair balance has been struck. So I ask: are you satisfied that the tests that operate within the force are fair tests and fairly administered so that you can get this proper balance between the need to come down on crime and the need to respect people's rights?

Mr Palmer —Yes. At the end of the day obviously it is a judgment call, and I am not suggesting for a moment that on every occasion the people exercising the judgment can be 100 per cent right. It is not that easy. The record really speaks for itself - that it is certainly exercised with fairness - and we really have very few examples of any complaint. Certainly, I cannot remember a situation when we could be accused of too rapidly commencing an investigation. But at the end of the day the investigation may not be successful. Senator, Mr Keelty could give an explanation of the way the referral process between ourselves and social security works, if that is useful to you.

Senator COONEY —I would be quite interested in that, but it was mainly to get an idea of the consciousness. Obviously, there is high consciousness of that.

Mr Keelty —I just point out that the majority of the fraud investigations undertaken by the AFP are fraud investigations referred to them by other government departments. Under the fraud control policy of the Commonwealth, much of the fraud that you were relating to in the first part of your question is dealt with at the departmental level and the checks and balances are done there. We deal with the larger frauds and the more organised frauds, at which time we judge each of them on their merits. We judge the impact on the Commonwealth if the fraud investigation is undertaken or not, the resources that are required to undertake the fraud and the likelihood of a successful prosecution - things of that nature.

Senator COONEY —When would you approach the DPP to get advice about the nature of the investigations? I am not talking about the prosecution stage but at the investigating stages. Would you approach the DPP?

Mr Keelty —We have found through experience that, with the more complex frauds and certainly with the frauds that are going to be protracted investigations, it is better to engage the DPP at an earlier stage of those investigations rather than investigate a matter for some two years, amass a large number of documents and then expect a prosecutor to have to weave his or her way through the brief. So, by and large, depending on the nature and complexity of the fraud and our assessment of the duration of the fraud, we will make an assessment as to when to engage the DPP.

Senator COONEY —Thanks.

Senator McKIERNAN —The commissioner gave what he described as an umbrella response to my question and then was inviting Mr Keelty, if he wanted to, to add more specifics. I do not know if you want to proceed.

Mr Keelty —Sorry, Senator, I just have to recall the question.

Senator McKIERNAN —The question was in regard to the response to Senator Bolkus's question about the Commonwealth fraud intelligence database failing to meet its objectives. The response stated:

The impediments to the successful operation of the Commonwealth fraud intelligence database related to logistical difficulties in the provision of compatible, cost-effective and timely data to government.

I asked what those `logistical difficulties in the provision of compatible, cost-effective and timely data' were, and the commissioner gave us what he described as an umbrella response and suggested you might want to be more specific on it. He did raise the matter of the definition of `fraud' and the fact that most of them were social security matters.

Mr Keelty —Obviously, the intention of the creation of the Commonwealth fraud intelligence database was that all Commonwealth departments contribute to the database. The intention there was for the Commonwealth to somehow quantify the level of fraud committed against it. Some of the practical difficulties that emerged out of actually operating the database were that privacy issues emerged and timeliness of data in terms of the database's capability to receive the information. There were also difficulties within some agencies that did not have the capability to actually contribute to the database, which made it very difficult for anyone then to effectively use the data that was coming forward because it was not timely and it was not complete. We have moved on since then in terms of the fraud control policy. I should point out that the AFP was merely the administrator of the database.

Senator McKIERNAN —I appreciate that. I am just trying to get a better understanding of the response that was given in regard to that question. Part of the suggestions contained in the response last time on the day was that no funds had been allocated for a replacement. The answer then went on:

As noted above, the Commonwealth Law Enforcement Board concluded that fraud reporting requirements could best be met by enhanced agency annual reporting requirements and the agency participation in an intelligence forum.

How have those matters of privacy, timeliness and the agencies not being able to contribute been overcome by the adoption of those alternative methods that was suggested by CLEB - or have they?

Mr Palmer —Because it is not coordinated in the same way that it was intended to be under the fraud intelligence database, I am not sure that I am in the appropriate position to answer that, but I would suspect that we have not overcome all the problems. What we did is to allow much more autonomy in the decision making process within departments and within their portfolios through their ministers in terms of their own identification and a description of the definitions and, of course, we allowed for what were otherwise incompatible systems to develop the information for consideration. The decision by CLEB - and that was something chaired by the then Secretary to the Attorney-General's Department - was a reflection of the recognition that the intent intended to be achieved by CFID could not be achieved, that it was not worth a continuation of the resources being used for it in terms of the result we were achieving and that at least as good a result and hopefully a far better result could be achieved by the process you have just outlined. I am not sure that an assessment has been made - not to my knowledge - of the extent to which we have improved the quality of that overall comprehensive data.

Senator McKIERNAN —Is there anybody from the department who can further this matter?

Mr Dabb —No, and in this particular case I do not think the people who will be coming later, which now looks like sometime later this evening, will be able to add too much to this. Senator McKiernan, if I can just take a note of a couple of particular questions on that, I think we can undertake to come back with a bit more information.

Senator McKIERNAN —Yes, if you would, Mr Dabb. You recall what I have earlier asked of how those matters of privacy, timeliness and agencies not been able to contribute have been overcome by moving to these new type of arrangements.

Mr Dabb —Yes.

Senator McKIERNAN —Can you also take on notice - and I think this is what you are suggesting, Mr Dabb - when this intelligence industry forum has been held, if indeed any have been held? What agencies or departments took part in it? What were the costs of the forums? What were the outcomes of the forums? And what was done in response to the recommendations that may or may not have come out of them?

Mr Dabb —Yes.

Senator McKIERNAN —Thank you, Mr Dabb. In the absence of this database, how is the AFP carrying out its responsibility to monitor fraud on the Commonwealth? Do you just respond to queries or have you got a monitoring role where you respond to complaints, I suppose, or tip-offs?

Mr Keelty —Response to complaints is really only one method by which we gauge the level of fraud. We have a comprehensive client liaison program where we liaise regularly with the various agencies and look at the level of service that we are providing to the agencies and through that means maintain a handle on how much fraud is being committed. I should also point out that with the introduction of the reviewed fraud control policy of the Commonwealth, the AFP has participated with the department in a number of presentations around the country with agencies to present the new policy, and that interchange and exchange provides an opportunity to get an understanding of the level of fraud.

There is a third way by which we maintain a handle on the level of fraud and that is through regular agency meetings with the bigger agencies in particular which happens in each state where the agencies have a representation and certainly here with the central office agencies. The AFP produces what is called a Comfraud Bulletin. That Comfraud Bulletin is a mechanism by which we communicate with the Commonwealth government agencies the level of fraud that we are aware of, and agencies also contribute to that bulletin and provide information about the level of fraud that they have an understanding of.

That in the main is how we keep a handle on the situation at this point in time. A lot of it is to do with agency liaison and very direct agency liaison where the other departments have their presence, particularly in the capital cities around Australia.

Senator McKIERNAN —The response last time around also talked about risk management practices across the Commonwealth and the development of fraud prevention, detection, investigation competencies and enhancements. With data matching that occurs between agencies, does the AFP have a direct role in monitoring that data matching?

Mr Keelty —No, Senator.

Senator McKIERNAN —Privacy legislation would keep you out of there, would it?

Mr Keelty —That is correct and the data matching that is done then leads to referrals to the AFP. It is not a matter of the information not being provided to the AFP; it is a matter of the agency recognising or identifying the fraud and then referring it to the AFP. The identification process by the agency can be done by way of data matching.

Senator McKIERNAN —Is that what you mean by the last paragraph, which says that the AFP continues to cooperate with Commonwealth agencies to ensure appropriate information sharing through initiatives such as the National Illicit Drug Strategy?

Mr Keelty —The drug strategy of course is a different issue, but certainly the mechanism is the same and that is through the liaison with the Commonwealth government agencies. The AFP does provide training and also what we call quality assurance reviews where we go into departments that have undertaken fraud investigations of their own right. Through our quality assurance review program we actually give feedback to the departments on the methodologies and the investigations of fraud undertaken by their own departments.

Senator McKIERNAN —It implies in a sense that you also provide advice on the development of information technology applications. That is in regard to data matching, as I understand it. Is it true that you are specialists in that area or am I reading it wrong? I am referring to the last line of your response to question on notice 56 from the last estimates.

Mr Keelty —We have a computer crime unit with officers around Australia, and the central office here in Canberra provides input into training for what we call certificate 4 training in fraud investigations by Commonwealth government departments. So we do not actually provide the data matching ourselves, but we provide some expertise on IT and its relationship to fraud investigations through those courses. We also have available to the government departments the computer crime unit of the AFP and the forensic IT area.

Senator McKIERNAN —Thank you for that, Mr Keelty. Commissioner, in your definition of fraud in the opening response to my question you said there were some difficulties with the definition of what is fraud. I thought from a lay person's point of view that it was quite easy to define what fraud is. Without labouring the matter, is it possible to explain what you meant by that?

Mr Palmer —It probably is more an interpretation than a definition answer in that different agencies, obviously because of their differing priorities, will deal with something that we may in a purely AFP environment look at as being prima facie criminal fraud as being something which should be dealt with in another way. The Taxation Office approach to a whole range of, if you like, misdemeanours or inability or refusal to pay would be good examples whereby obviously quite properly within their legislation they exercise discretion in terms of how they deal with something which we may singularly interpret as being fraud.

When we were asking in this process for all matters which were considered to be prima facie fraud to be put onto the database we found that, because we had not fully appreciated their jurisdiction and the obligations they had under their own acts, in terms of just applying our simplistic law enforcement approach to what we thought was a fraud, obviously for a range of reasons a lot of these matters may not be considered to be fraud because they are much better dealt in a revenue collection way as well as for other reasons in another way. That is really I think what was the core problem. It was a good lesson in realising that clearly, in terms of us being effective and properly servicing what we think otherwise might be a good idea, we did have a much better appreciation of the jurisdictions of other agencies and things that will be priorities for them. It was a very important learning curve for us and we became much more valuable in terms of the quality assurance advice that Mr Keelty mentioned that we have since been giving to departments, which we attempt to ensure reflects an understanding of their own priorities and their own obligations rather than simply ours.

Senator COONEY —The main thing with the police is their investigative techniques. Take the immigration department, for example. How much training do you give them in investigative techniques? I can understand the issue that they might interpret their own statute and have to and that is a legal question. But, in relation to the actual techniques of investigation, do you give them much help?

Mr Palmer —Mr Keelty is the best person to answer that.

Mr Keelty —The immigration department, along with a number of other departments, undertake this certificate 4 investigations training that I mentioned earlier, and it is through that training that we impart knowledge of investigative techniques. Of course we are not the sole provider of that training and they can now go to the private sector to receive the same training.

Senator COONEY —Can they? Who is providing that?

Mr Keelty —It is provided through justice studies. It is provided through a variety of institutions around the country.

Senator COONEY —Can they come to you at any stage and ask you about investigative issues?

Mr Keelty —They certainly can and we encourage that where the issues require the expertise that we can provide. I should also point out that it is often the case that the AFP will be used at the early stage of some of those investigations for the execution of search warrants to gather material and then provide advice on how the investigation might proceed. It varies from department to department.

Senator McKIERNAN —I want to move on to output group 4.1 - international services and ask a follow-up question in regard to question on notice 60 from the last estimates. The AFP responded saying that it is not presently involved in joint international investigation teams and that it works closely with many law enforcement agencies without forming joint teams. Is it possible to elaborate further on the budget allocation of $8.1 million, which was an expansion of the Law Enforcement Cooperation Program up to 2002 and 2003 with the objective to improve the level of cooperation and capacity of overseas law enforcement agencies to provide the assistance to the AFP and illicit drug investigations? Is it possible to elaborate on how that money is spent, breaking it down into salaries and other expenditures?

Mr Palmer —The short answer is: yes, it is possible to do it. Whether we are in a position to do it - immediately Mr Keelty is nodding - I think the answer is: yes, we can.

Mr Keelty —I think the answer is related to question 34.

Senator McKIERNAN —I have question 60 here. Question 34 is part of it, but the main one was 60.

Mr Keelty —I understood question 60 to be specifically in relation to joint international investigations. Whilst there is no permanent joint international task force, we have through the Law Enforcement Cooperation Program been able to join with several countries, particularly in Asia, the United States and Canada, and agree on targets, particularly in the area of narcotics investigations. That has been undertaken through the commencement of working group meetings and joint targeting meetings, and that has been quite successful. We have seen the benefits of that through the seizure 18 months ago of 410 kilos of heroin in Sydney, which was a direct benefit of the working group meeting which agreed on which targets we would join on.

Having said that, to answer the other aspect of your question, the Law Enforcement Cooperation Program, in relation to this budget context, is for the rest of the world. There are two law enforcement cooperation programs. One relates to the Asia-Pacific, and for 1999-2000 that has a budget of $1.495 million. I think the one you are referring to, Senator, is the Law Enforcement Cooperation Program for which we were funded in 1999-2000 for $2 million. Expenditure to the end of December 1999 is $47,000, and I think that was part of the answer that was provided to you - that was spent, in the main, in relation to a meeting that occurred in the United Kingdom late last year where the liaison officers from the European and American posts were brought to the one point to develop a business plan for the expenditure under that program. It is envisaged that we will be dividing that program up into categories for expenditure under the business plan where 50 per cent of the money will be spent on operational and representational exchanges, 40 per cent on training and 10 per cent on international crime information exchange.

You asked a question about salaries. In terms of salaries, there are four persons permanently working in what is known as the Law Enforcement Cooperation Program area. They work here in Canberra. But, as each program is undertaken, obviously we use members of our staff and fund them in participating in overseas programs to deal with drug investigations, or in some cases we might fund members of an overseas police agency to come to Australia.

Just by way of example, other things that have been funded under this program - particularly, say, in the Asia-Pacific region where we have, shall we say, less developed police agencies - include providing some equipment and some technology. We have provided things like narcotics test kits where they have not had the capacity to do narcotics tests in the field and things like training for surveillance operatives. In some of those cases we have gone offshore to provide training and in other cases we have brought the people here for training. We have found that, through this joint training exercise, we have created significant inroads, for example, into being able to obtain some priority for AFP investigations in the areas where the targets might be operating.

If I could just explain, the AFP competes with every other police force in the world to obtain priority for investigations or supplementary work to be done by these other agencies to assist the AFP. As crime becomes more international and more global, there is more pressure on international agencies to use their own resources to assist other law enforcement agencies. It is through this program that we have been able to obtain some priority for the investigations that are of interest to Australia.

As I said before, whilst it would be inappropriate for me to say in a public forum what the direct advantages of this have been, the recent seizures of narcotics that we have seen over the last 12 months particularly is a very good tangible result that we are getting out of this Law Enforcement Cooperation Program. This is why we put forward a submission to extend the program beyond the Asia-Pacific and take it into the rest of the world.

Mr Palmer —Just to add to that, our view collectively is this is probably one of the more important initiatives that we have been involved in in recent years. Our international connectivity, if you like, and credibility is really pretty critical to the effectiveness of almost everything we do. In giving cooperation and sometimes, as Mr Keelty mentioned, aid and training assistance, clearly one size does not fit all. We have two parameters. One is that obviously there must be some potential value in it for us and for Australia, but we must also ensure that in that process, having settled that situation, there is some purpose for us in doing that. We really are tailoring the assistance and cooperation to the needs of the country with which we are doing business. That is why there will not be a similar approach across the board. Sometimes we will be supplying equipment and at other times we will be supplying training or bringing people to this country. It is a case of ascertaining what is likely to have the most effect and open the doors and improve the cooperation, as Mr Keelty mentioned.

Also, of course, as part of this process, and very importantly - and it links in with your question 60 issue of joint international investigations - we are quietly hoping to improve the quality of law enforcement practice in some of the countries where that practice is, by our standards, a little ordinary. This is to ensure that, where we are involved not only in the sharing of intelligence and having people doing inquiries on our behalf but also in doing joint investigations - as we will be before long - the evidence is likely to still be admissible within this country where it has been collected, at least in part, by people from other countries. That is, of course, very much a part of the challenge in this process.

Senator McKIERNAN —You mentioned narcotics testing equipment. Is any other hardware given to other countries in the form of computers, for example?

Mr Keelty —Yes, we have provided computers to other countries. I mentioned technical expertise before, and obviously we would provide some technical equipment to enhance people's capability to undertake their own investigations.

Senator Vanstone —Can I just add a point there. It is not directly on the Law Enforcement Cooperation Program but it fits in with what remarks have just been made. I had the opportunity to say before that, in policing at the federal level - I do not mean to exclude state, but I just do not have enough knowledge of it to make any comment - there is no place for Inspector Plods anymore, if there ever was. The recent intake includes people with a wide range of earlier training, degrees or trade training who clearly have some experience of life and some other life skills to bring in, apart from simply being trained in investigations.

I am just looking at a couple of areas where we have police officers posted, the overseas liaison arrangements. We have a fellow called Brian Iselan in Beijing, who I think has a Master of Strategic Studies. If he was not lecturing in Mandarin, he was at least tutoring in it. In Rome, we have Alex Scott, who I think has done an honours law degree and speaks Italian fluently. In Bangkok, we have people like Federal Agent Mctavish, who has a long experience of this sort of work with the Federal Police. In Hanoi - another post recently established - we have Laurie Gray, who speaks Thai because he was in Thailand before. Last time I spoke to Mr Grey, he had learnt southern Vietnamese because he thought that was where he was going and he was struggling to shift to northern Vietnamese, but I am sure he has managed it. These people play a critical role when the benefits of this cooperation program we are talking about come into play. When we want to get some precedence for our investigations, these people play a critical role, and they are really second to none.

Senator COONEY —The only criticism I make is that there does not seem to be enough of them in the field. I think last time there were about 20 Asian officers around the world.

Mr Palmer —We are now up to 29. We are expanding the program all the time. We have been given some particular initiative funding for that. We have 29 agents around the world in 18 different posts in 17 countries. We are negotiating to move people into two further posts - The Hague on a trial basis and also Bogota in Colombia. We recently moved someone into Rangoon, in Myanmar, Burma, on a six-month trial posting. So the numbers are expanding.

Despite the fact they are small in total number, they are very significant. Really in international terms, we probably are no worse than third or fourth in the world - even including the FBI and the DEA - in the number of countries in which we are represented. There are very few countries that have a more extensive international network than ourselves. The Canadians, the United Kingdom Customs and FBI/DEA have very extensive networks, but we would be behind those right up there in terms of international presence.

Senator COONEY —I would have thought if you are going to have an international trade, you are going to have international crime, as you have been talking about here. Even 29 seems to be, just as an impression, a fairly light number.

Senator Vanstone —I understand what you are saying but, for example, Alex Scott in Rome does not only look after Rome and Peter White in Nicosia does not only look after Nicosia, so there are a range of countries. We are very grateful to the Chinese government that we have a police officer working in the embassy in Beijing, but up until that point we relied on the liaison people in Hong Kong to go across. Similarly, now that we have people in Vietnam, there is not a drain on the Bangkok post to go and do that. So the 29 people do not only work in the one country each.

Senator COONEY —Can I ask a question in that context. There was a small article on page 6 of Tuesday's Age talking about visa fraud in India and New Delhi. There were some allegations made about the way the students were treated and this talks about the rebuttal of that. It talks about the police being called down, but I take it they are the Indian police. That does not refer to the Federal Police in any way, as I understand it. Am I correct?

Mr Palmer —I saw briefly the article you refer to. As I understood, the local Indian police were called, yes, and various allegations were made about the manner in which interviews had been conducted - but not by the Australian Federal Police.

Senator COONEY —The last paragraph says:

In an Age story yesterday, it was revealed that more than 30 students and 10 education agents had been taken from the Australian high commission in New Delhi into police custody in recent months.

Can Australian police act in Australian embassies? I suppose they can.

Senator Vanstone —Australian police operating overseas do not work in an operational sense.

Senator COONEY —But I was wondering whether they could operate in an embassy. I took it to be the situation that it was Indian police, but it had me worried for a while.

Mr Palmer —We would only exercise any police powers in an embassy in regard to Australian citizens, of course, committing offences against Australian law, otherwise we are only involved in any form of investigation internationally with the cooperation and in cohort with the police of that country.

Senator COONEY —Thanks for that.

CHAIR —I believe that completes questions in relation to the Australian Federal Police. Thank you for your time this afternoon. I understand Senator Cooney has one or two brief questions with regard to ASIO and I would like to complete those before we have a break for dinner.

[5.55 p.m.]