Senator FERGUSON --Some of these questions overlap a bit. Because Senator Cook was not here, I asked you some of the questions that I probably would have asked during--

Senator Schacht --Senator Cook would have referred any questions on Customs to me anyway as the Minister responsible for Customs.

Senator FERGUSON --I will try to sort this out because I had prepared for both of you to be here. In the last hearing, I asked a series of questions arising out of the Midford Paramount case, not the least of which was the Conroy report and the resignation of Mr Kelly. I want to ask a couple more questions in that area. At the last hearing, I asked about the consultations that took place between you and Mr Kelly before he resigned. You said to Mr Kelly that he may choose to seek his own legal advice--that was what you said to me. Why did you suggest that he seek legal advice?

Senator Schacht --That was in terms of what his position was if he resigned as comptroller-general, but not from the Public Service: what all his rights were according to that. I would give that advice to anybody: he was a statutory office holder who had certain rights under the act of parliament. In my view, he should seek legal advice, if he wanted to.

Senator FERGUSON --Was there a suggestion during discussions that the position of comptroller-general might be abolished, as suggested in the report. Was that one of the reasons why you suggested he might need to--

Senator Schacht --No. It was purely to do with a discussion about his own future and where he wanted to go, and so on.

Senator FERGUSON --Well, did you mention at all in your discussions the implications of his resignation and how an inference would or could be drawn from this: Mr Kelly had accepted some of the responsibility for the poor performance of Customs and that that might be a reason why he would need legal advice?

Senator Schacht --No, I spoke to him at the beginning of that week; it was a Monday night, 31 January, and I gave him a copy of the Conroy review for the first time. In that discussion I said I thought he ought to read it overnight and that there was clear criticism in the report about the administration of Customs and as comptroller general--

Senator FERGUSON --You gave him the report on 31 January?

Senator Schacht --Yes, I said that before.

Senator FERGUSON --On 31 January or December?

Senator Schacht --On 31 January, but I did not get the report myself until--

Senator FERGUSON --On 24 January.

Senator Schacht --On 24 January.

Senator FERGUSON --So he only had four days and the decision was made?

Senator Schacht --Well no, I had to give him the report--

Senator FERGUSON --Yes, I understand that.

Senator Schacht --And we had a discussion. Senator Bishop asked if Mr Kelly--or the then Senator Bishop, I should say, now Mrs Bishop.

Senator FERGUSON --Mrs Bishop asked if Mr Kelly suggested the advisers position to you or if you had suggested it to him. And you replied:

When he said he wanted to stay serving in the public sector, as he was entitled to, I thought we could use his skills in the international area.

Can you confirm that it was your suggestion that Mr Kelly might be appointed to an advisers position relating to the international side of Customs?

Senator Schacht --I am not going to try and recollect every nuance of a private conversation, and the private conversation in my view is a matter between the two of us. But I did say that he had expressed a wish not to resign from the Public Service and to maintain his position and, as I have just said recently in a previous question, Conroy commended the Customs Service for its international work, its customs harmonisation work, its work in APEC and so on. I already knew he had considerable expertise and recognition and was well regarded individually by other customs services around the world through the forums where they meet and have conferences. So in view of all this I said that that may be an area he could have an interest in while he maintained his role in the Public Service, as he is entitled to.

Senator FERGUSON --You heard me ask the question of Mr Hollway before when I asked about the duty statement of his new job and at that stage he said the matter was raised in discussions between Mr Kelly and you, the minister. I was informed that the possibility of his coming there had come up and that he then talked to Mr Kelly and asked him whether he could flesh out the idea that we talked about before that had been discussed between you and Mr Kelly. But he said that the idea that had been discussed was not wide enough. So what sort of ideas were you talking about that were not wide enough?

Senator Schacht --Just as I said before, about his role in customs, internationally in customs and associated areas.

Senator FERGUSON --So that was not wide enough for Mr Hollway's purpose?

Senator Schacht --Well, obviously not. But there is no inconsistency in what Mr Hollway has said and what I have said.

Senator FERGUSON --Senator Bishop also asked who suggested that Mr Kelly be paid at the same rate as the secretary and you replied at that time:

I suggested to him that if this was a possibility for being an adviser to the department . . . then that would be a consideration.

You also said:

I indicated that as he had been paid rate and still had two years to go, I could understand that he would like to be continued at that rate.

Can you confirm that the issue of Mr Kelly continuing to receive that package of $177,000 was raised by you at the meeting that you raised that issue?

Senator Schacht --I do not think it was raised anything like that. I just made it clear that if he wanted to continue in the Public Service, as he was entitled to, and there was a particular job that was acceptable and appropriate for him and that was approved by the appropriate processes, as I said before, his determination of what would be an appropriate salary would also have to be discussed within those appropriate processes, which they were. My remarks that he would like to continue at the same salary and that sort of thing--

Senator FERGUSON --I can imagine that.

Senator Schacht --Would be an obvious thing to say. I do not think that even you, Senator, or too many others are going to volunteer to take a salary reduction, no matter what.

Senator FERGUSON --Why did you not just advise him of his options? He had three options at the time: he could say as comptroller-general; he could resign from the Public Service; or stay in the Public Service at a deputy secretary's level. Why did you not just offer him those options?

Senator Schacht --I told him that his options had to be discussed with appropriate officers, not with me.

Senator FERGUSON --Before you discussed it with Mr Kelly, had you sought advice about his options?

Senator Schacht --I had had a very brief discussion with my own staff leading up to the meeting. I cannot recollect whether I had discussions elsewhere before 31 January to any extent. I may have. But I was very cautious until I had a chance to speak to Mr Kelly himself about his own future.

Senator FERGUSON --Did you have any discussions with Mr Hollway about salary level?

Senator Schacht --I may well have had on the afternoon to let him know that I was going to speak to Mr Kelly. I took a view that I had to have discussions quite appropriately with Mr Kelly first on any matters of substance as he was the head of Customs and I was the Minister responsible. I thought that was where most of the discussions should start from.

Senator FERGUSON --At the last hearing, Mr Hollway said, `I see Mr Kelly operating under me as a deputy secretary or as an associate secretary might. . . '. Do you believe that it was putting Mr Hollway in an unenviable position to suggest that someone working under him should receive the same salary?

Senator Schacht --No.

Senator FERGUSON --You do not. Does it happen in any other departments?

Senator Schacht --I think there are people who are paid as advisers on a short-term basis for a set contract who do receive more money than the head of a department. I cannot give you examples, but I think that is true.

Senator FERGUSON --When you suggested to Mr Kelly that he discuss the possibility of maintaining a secretary's salary package with the Public Service Commissioner, did you consider at the time that the package included a $6,700 responsibility loading?

Senator Schacht --I never got into any of those details in my recollection of the discussions I had with Mr Hollway.

Senator FERGUSON --You knew there was a responsibility loading in the salary?

Senator Schacht --No, I cannot recollect that I did. I just said, `Whatever he is paid has to be approved through the proper processes, including by the Public Service Commissioner'.

Senator FERGUSON --Just to go back over it, you did not really discuss with Mr Hollway whether he thought it was appropriate for Mr Kelly to receive the same package?

Senator Schacht --I discussed it with Mr Hollway. I did not speak to Mr Ives, myself. I said to Mr Hollway and I said to Mr Michael Keating that what he should be paid ought to be appropriate to the job. Any judgment about it should take into account his present salary and that he had two years to go as comptroller-general--those things should be taken into account, if necessary. I did not get down to describing the package itself. It was not my function, not my duty and not my proper role.

Senator FERGUSON --When you suggested to Mr Kelly that he might like to discuss maintaining his salary level with the Public Service Commissioner, did you know that a determination would be required to maintain that level?

Senator Schacht --Well, I knew that there would have to be some decision taken that would be gazetted or recorded. I did not know the details: I have to confess that I did not know that it was a disallowable determination in either House of the parliament. That I have to admit. I did not realise and no-one mentioned it to me.

Senator FERGUSON --Neither did I, actually.

Senator Schacht --No; I suppose not until someone tipped you off. Because it was such an unprecedented move, Senator Ferguson, I do not think anybody else--

Senator FERGUSON --No, we have been over that. It is not unprecedented.

Senator Schacht --The particular individual case, as far as we are aware and as far as our advice, is an unprecedented one and I think it came as quite a shock to senior public servants that a determination properly arrived at with due process would be disallowed by the Senate.

Senator FERGUSON --Did it not ever occur to you that issuing a determination for a single Public Service member would look like special treatment for Mr Kelly? Did that not ever occur to you?

Senator Schacht --The inference you have tried to put on it did not occur to me. I was aware that Mr Kelly would be a special consultant--by definition a one-only consultant--adviser to DITARD in a particular area. It is not unusual in the Commonwealth Public Service or state government, that such people are appointed under a set contract for a period to perform a particular duty. There is nothing unusual about it and all governments, state and federal, Labor and Liberal, from time to time have used similar devices to appoint people where they see fit. I think that is quite a legitimate activity of government. It is open, it is transparent and it is debatable and we have had the debate about it ad nauseam now.

Senator FERGUSON --If you had not suggested to Mr Kelly that he discuss this with the commissioner, would the commissioner have unilaterally made the decision, presumably at Mr Kelly's suggestion, that the salary be maintained?

Senator Schacht --I think that the discussion with the Public Service Commissioner involved not just Mr Kelly speaking to him; first of all it probably involved Mr Hollway and Mr Keating in discussions with him as well--as is appropriate. There is nothing sinister about that.

Senator FERGUSON --At the last hearing I asked when you first saw the Conroy report, which was forwarded to you under cover of a letter dated 31 December--I remember your saying that. You answered that it was formally presented to you in discussion with Mr Conroy and Ms Ryan on 24 January. Are you saying that your office was in receipt of the report over three weeks before you first saw it?

Senator Schacht --Yes. I was on leave.

Senator FERGUSON --I did not know you got leave!

Senator Schacht --The Prime Minister insists that every minister every year takes two weeks consecutive leave, and it is a rule that you cannot break. I think it is a very good rule. My wife is thoroughly in support of it. We had a holiday in Perth and then we had two weeks off, and my wife absolutely insisted on it.

Senator FERGUSON --Could you make it a rule for opposition backbenchers too?

Senator Schacht --When I was a backbencher in government, I did not have the same rule, but that is a rule that the Prime Minister insists on. So that was the reason. I did not come back to duty until that Monday.

Senator FERGUSON --Your first meeting with Mr Kelly was on 31 January, was it not? You told us that before.

Senator Schacht --That was a Monday, was it not?

Senator FERGUSON --It probably was, yes.

Senator Schacht --I just want to check it. That was on the evening of Monday the 31st.

Senator FERGUSON --I can remember it because I think the test cricket was on in Adelaide, and you started sitting a bit early. Mr Kelly's resignation was announced on 8 February.

Senator Schacht --That was the day the Conroy review was tabled in parliament and made public.

Senator FERGUSON --Did everything happen--that is, the decision to appoint Mr Kelly as an adviser to DITARD and the decision to issue a determination--between 31 January and 8 February? Did everything happen in that one week?

Senator Schacht --As far as Mr Kelly--

Senator FERGUSON --Between 31 January, your first meeting with Mr Kelly, and 8 February, did the decision to appoint Mr Kelly as an adviser to DITARD, the decision to issue a determination and all of those other things relating to Mr Kelly's appointment all happen within that one week?

Senator Schacht --I think the decision did, yes. I am not sure that the completion of the determination took place by--

Senator FERGUSON --It was about the 10th or something, was it not?

Senator Schacht --Yes, but I think it was a couple of days later. But it did all take place; we have a very efficient public sector here.

Senator FERGUSON --It is almost a record, you know.

Senator Schacht --I am a very hard-driving minister on these matters, to make sure everything is done properly and the timing is correct. I have got to say that we had a view in my office, as well as the department--as had Senator Cook, my ministerial colleague--that people knew that the Conroy review had been finished. In view of all the publicity on this issue of Customs during 1993, we were getting lots of queries in from journalists and from members of the public. There was growing interest, of course, in Customs itself: what was in the report; when it would be released; what the government attitude was, et cetera. So yes, we did act quickly in that period.

On the day we tabled the report I announced that I accepted the general thrust of the report, as well as that Mr Kelly was standing down from the position of Comptroller-General. I think that was expeditiously and properly done. In the circumstances, I want to congratulate both the customs department and DITARD and also my own office for the way they worked through that very careful process to make sure it all worked well, as it did.

Senator FERGUSON --During the past few weeks there has been the debate--last week--about whether Mr Kelly has been unfairly judged by the Senate, and you have raised the issue of a denial of justice to Mr Kelly and stated that the Conroy report made no criticism specifically of Mr Kelly. Why, then, did you say at the last hearing that, in the light of the Conroy report, you `believed we needed a change at the top' of Customs and that, once Mr Kelly had read the report, `it would be best' that he resigned?

Senator Schacht --That is the difference. What I was saying in the Senate the other day--which is quite different from what you have just said--is that if you wanted to use the suggestion you made about resolution of both houses of parliament, you have got to show gross impropriety and such similar failings--which are, properly, criminal offences--in order to have someone removed. There was no suggestion in the Conroy report of gross impropriety on the part of Mr Kelly or any other officer. There was criticism of administrative deficiency, which is a world of difference away from such matters as gross impropriety. Therefore, I think that he was denied justice, from the fact that the Senate voted by majority to reduce his salary, and very much on the basis that they were judging him in terms of such things as gross impropriety, rather than of administrative deficiency within the service itself. That is why I think he was harshly treated and, in the circumstances, he never had a chance to put his own case.

Senator FERGUSON --You have said the Senate has unfairly judged Mr Kelly. But by you suggesting yourself to Mr Kelly that it would be best if he resigned, are you not unfairly judging him as well? This is the same report.

Senator Schacht --In the terms that I discussed with Mr Kelly, and in view of the Conroy review about the criticism of the administration, I have not walked away from that criticism. I have accepted it, and I think Mr Kelly has accepted some of the criticism, as have some of the Customs staff themselves. Certainly, in the meetings I have had with over 2,000 Customs staff, an overall majority of them accept some of the criticism, although they also reject some of it.

Senator FERGUSON --Yes, I understand that.

Senator Schacht --I think some of it has been inflammatory, unfair and not backed up by fact. It has just been description. I think there is an element of truth in that, too, of course.

Senator FERGUSON --I accept that, too.

Senator Schacht --I think that in the circumstances--with the report saying that a turning point is needed in the thrust of Customs, and talking about making cultural change and so on--it is not unreasonable that the government would, without in any way suggesting that Mr Kelly acted with impropriety or anything like that, from time to time make a judgment that there should be a change in the secretary of a department or the head of a service--even one as important as Customs.

Senator FERGUSON --Minister, in hindsight, do you think it is satisfactory that under the Customs Administration Act it would appear extremely difficult, if not impossible, either to dismiss for incompetence the Comptroller-General--whoever that might be--or to suspend him while any serious allegation might be investigated? In hindsight, do you think that that is satisfactory?

Senator Schacht --These are interesting philosophical issues about public administration which I think are quite legitimate to be debated in Parliament at any time, in looking at the structure of government departments and considering whether you have a statutory body and statutory office holders--vis-a-vis

secretaries of department and ministerial responsibility. I have to say my personal view is you can have 20 statutory office holders but, when something really goes wrong, in the end the public comes to the minister first.

Senator FERGUSON --That is true.

Senator Schacht --It is true. In my own view, that is the way it should be. I accept that that is parliamentary democracy. I therefore have some view that, even as statutory office holders exist, the right of ministers to have a say about what they are doing and about their performance should be paramount, because the ministers are responsible to parliament. Being responsible to parliament really is the absolute synthesis of democracy. I suspect we will be having a debate some time in the next 12 months on such issues to do with the restructuring of Customs, and about whether the head of the Customs department is a statutory office holder and what powers that head has; and about what powers the minister has to direct, or to ask the head to stand down--or to move on, when there is a set period of appointment.

Senator FERGUSON --How long before the recommendations are likely to come forward from the report?

CHAIRMAN --I am sorry, but if--

Senator Schacht --I suppose this is getting a bit boring for some other senators.

CHAIRMAN --There are other matters. I do not want to try and infringe on Senate Ferguson's right to ask questions in respect to this particular program.

Senator FERGUSON --We have drifted off.

Senator Schacht --We are working on all that material now for the cabinet submission. I would think that in one form or another it will be due in the next few months. Those issues will certainly be in the public debate.

CHAIRMAN --You have officers here who are waiting. I want us to direct the questions more directly to them.

Senator Schacht --Do you want to get back to Midford? I do not want to encourage you.

Senator FERGUSON --At the last hearing I asked you a series of questions about rumours that were circulating at Customs, and you remember them and so do I. Some of those rumours were placed for the purpose of discrediting the Conroy report. I think that both you and I agreed that many of the rumours were scurrilous, even defamatory.

I certainly do not want to give them any credence. The reason I raised them was not to give them credence, it was to give you the opportunity to put some of those rumours to rest. But I am very concerned about an interview that went to air on the 7.30 Report on 9 March which you may or may not have seen or heard of.

Senator Schacht --I am aware of the one. I think I might have had a small part in it.

Senator FERGUSON --Yes, you did. Have you ever read a transcript of that because it is to do with rumours that were circulated?

Senator Schacht --I watched a replay of it the next day.

Senator FERGUSON --Does it concern you that some staff of the DPP are still defending their decision to prosecute Midford?

Senator Schacht --It does not concern me in one sense, it is their right to have that view, but as I said to Customs when I took over and read the Public Accounts Committee report, the court has decided that prosecution will not be proceeded with after two years of trying or whatever it was. The case is finished legally.

Senator FERGUSON --But there are some people who will not accept that.

Senator Schacht --I suppose that is the case in public life. I noticed after the last election quite a few Liberals did not like accepting the result of the election, but they had to.

Senator FERGUSON --There was no option!

Senator Schacht --I think it is the same for the people in the DPP or elsewhere. The court has made its decision. The DPP recommended to Customs that they withdraw proceeding with prosecutions in Midford after a couple of years or thereabouts, and that is it. As far as I am concerned you close the book.

Senator FERGUSON --That night an ABC reporter said, and this is during the interview:

While Federal politicians are almost unanimous that Customs has to pay for the Midford affair, it is a very different feeling among the Public Service. A number of senior bureaucrats say privately that the compensation should never have been paid, that $25 million of taxpayers' money has been given away needlessly simply to satisfy political grandstanding.

What is your reaction to the views of those senior public servants?

Senator Schacht --I think at some stage Mrs Bishop did suck the lemon a bit in trying to--

Senator FERGUSON --That is hardly the question.

Senator Schacht --No, but I think she did a bit of grandstanding about it for a while. But I believe in the end the Public Accounts Committee report was overwhelmingly a bipartisan report. The committee was chaired by Gary Punch, a government member--

Senator FERGUSON --It was a unanimous report.

Senator Schacht --There were two very minor dissenting reports. That in my view indicates the bipartisan view and the report from such a prestigious committee cannot be ignored. I believe that the government, the cabinet and the Prime Minister accepted the thrust of that report and that is why the Prime Minister appointed an IDC to make recommendations on compensation, as was a major recommendation from the PAC.

I think the government made the correct decision to pay compensation because it is quite clear that as a result of the whole Midford saga a company went out of business and people lost a lot of money. My personal opinion, and I have said this to Customs, is that I can understand the attempt if evidence is there to prosecute, to say that the Midford company was in breach of the rules and laws of tariffs, et cetera, but what I could not understand, and I think this is the nub issue to me, is that before there was even a court hearing Customs separately took a decision to suspend the quota for Midford. By suspending the quota they gravely affected the business of Midford Paramount before there had even been a court hearing to find out whether Midford had been convicted of an illegality.

To my mind that decision to suspend the quota affected the business of Midford and put it out of business in one form or another and that was the reason there was compensation.

Senator FERGUSON --What is your reaction to the inference in that program that the MacDessi family, which owned Midford Paramount, received special treatment from you government because of their membership to the Labor Party?

Senator Schacht --I do not know whether they were members of the Labor Party or not.

Senator FERGUSON --I think it was conceded in the interview that they were.

Senator Schacht --Whether they were members of the Labor Party or not--

Senator CHRIS EVANS --I just have a bit of difficulty with the line of questioning. I do not want to stop Senator Ferguson asking legitimate questions, but it does seem to me that quoting without directly quoting information of unnamed sources from a television program as a basis of an estimates inquiry is taking it a bit far.

Senator FERGUSON --The sources are known.

Senator CHRIS EVANS --I just think we ought to get back to something vaguely related to the estimates inquiry.

Senator FERGUSON --This is the Midford Paramount case.

CHAIRMAN --Order!

Senator Schacht --Could I just say to Senator Evans, that I am not sure, from my recollection, that it was shown absolutely that the MacDessis were members of the Labor Party. I am not sure, from my recollection, whether that was in the program or not. I know that that accusation was flying around. Whether they were a member of the Australian Labor Party or the Liberal Party or any political party, they have the right under justice, and the system we have in Australia, to make their claim and put their case to the government.

I have to say that no matter what political party they may be a member of that should not affect their rights, and it did not affect their rights. The government and the public accounts committee and everybody else took action and had a view that they had been badly treated. That is why compensation was paid.

Senator FERGUSON --I actually agree with the minister. I think it is a ridiculous allegation because it assumes that the Liberal members of the JCPA, including Senator Bishop--

Senator Schacht --I think there was an allegation in the program put around that these people had some sort of connection to Gary Punch and made donations to him, which, as I understand it, he absolutely denied.

Senator FERGUSON --I think those sorts of rumours need to be put to rest.

Senator Schacht --Gary Punch denied it absolutely. I am aware of all those sorts of rumours. I think there are some people around who still do not accept the decision. It is their right not to accept it. I cannot argue with that. The government accepts the decision and we are getting on with the job. The government and I are not going to be diverted from carrying out the reform process of Customs just because there happen to be a few people putting out malicious gossip and rumours and making anonymous phone calls and so on.

Senator FERGUSON --What is your reaction to the statement that was on that program that the case against Midford collapsed because the key witness `changed his story'. That was the quote.

Senator Schacht --If you read the public accounts committee report you find that what happened is that, under cross-examination, grave doubts started to grow about the evidence and the material that those witnesses were giving under cross-examination. That is a matter for the process of the court to make judgments about.

Senator FERGUSON --It is the case, is it not, through the court case it was revealed that Dr Fitzpatrick was not aware of all the facts when he prepared his brief. To his credit, he admitted the mistakes in the witness box.

Senator Schacht --That is what the court process is about and that is why we have courts in Australia and our system, and I thank God we do.

Senator FERGUSON --I only have three or four more questions. This is the last part. Regarding the compensation, do you have any reaction to on that program that you are aware of, the reporter's statement that Prime Minister Keating set up a bureaucratic committee to work out compensation; the committee was specifically directed not to examine whether Midford's acts were lawful; and that the Department of Industry, which has administered the quota at the heart of the claimed loss, was refused permission to scrutinise the claim. Have you got any reaction to that statement?

Senator Schacht --It is true that the Prime Minister established an IDC chaired by the Finance department, as is appropriate, to look at the question of compensation which was a recommendation from the public accounts committee. He also, as a result of the fact that Midford had not been found guilty of anything, said it was not a matter to go over the case, it was a matter to work out compensation, because clearly the PAC had found that the business had been, to say the least, gravely affected.

I think that was obviously very appropriate. Therefore, it was not a case to go over and re-run the hearing because the court had dealt with it. Therefore, the issue that had to be dealt with was what the compensation to be paid was. That committee led through to the Minister for Finance making a recommendation to cabinet and cabinet made a decision which is now public.

Senator FERGUSON --Minister, what was your reaction to the comment that night by Peter Robson from the Public Sector Union who said that this was a sort of get-back on Customs?

Senator Schacht --He said what was a get-back--Midford?

Senator FERGUSON --Yes. He said the whole process was a sort of a get-back at Customs thing.

Senator Schacht --I do not think it was a get back on Customs. I think we had a major public accounts committee report, a bipartisan report, and lengthy debate subsequently. I established the Conroy review in May-June of last year. It made major recommendations after taking public evidence. It is interesting to note that the Public Service Union, the PSU, in their own submission to me have accepted over two-thirds of the recommendations of the Conroy review, so whatever Mr Robinson's remarks as secretary of that union about Conroy or about Midford, I find it interesting that two-thirds of the recommendations of Conroy have been accepted by his own union. I have to say that even Customs itself, Customs and DITARD, have also in recommendations to me overwhelmingly accepted the recommendations in Conroy.

Senator FERGUSON --Minister, I would like your reaction to the overall impression of the accuracy of the report, but did you gain the impression that I did that some people from Customs--and I emphasise only some people from Customs--and the DPP have successfully sold their line of government conspiracy and persecution to the ABC?

CHAIRMAN --Senator Ferguson, this may well be a very good discussion that you and the minister might have whilst you are travelling back to Adelaide, but I have got to say that, in respect to the questions relating to the compensation paid to Midford, I do not know what the intention of your questions are because I do not know whether you are attacking the compensation being paid or--

Senator FERGUSON --Mr Chairman, if I could just explain. I do not know whether you were present when all the questions were asked last time but I was concerned, along with the minister, about a number of rumours that were circulating which I believe--and I am sure the minister believes--should have been stopped.

CHAIRMAN --But is it relevant in regards to--

Senator FERGUSON --All have to do with the Midford case. None of them has not been involved with the Midford case.

CHAIRMAN --Relevant to the estimates--

Senator FERGUSON --There was $25 million paid out. Surely when $25 million is paid out in a case it is relevant.

CHAIRMAN --I have got to say. Order! Order! Senator Evans, order! I would have to say that any questions relating to rumour or innuendo or otherwise--

Senator FERGUSON --There is not rumour.

CHAIRMAN --Your question was about rumours, and I have to say we could either deal with specific questions--

Senator FERGUSON --No I talking about them successfully selling their line to the ABC--

Senator Schacht --That is a matter you will have to take up in estimates with the ABC when Mr Hill is before the appropriate committee. We all have our views from time to time about the ABC's accuracy or inaccuracy. By and large I believe they are not too bad but in this case I would not want to overemphasise the impact of that particular segment they had on the 7.30 Report.

Senator FERGUSON --Did the reporter contact your office to interview you for the program? You were interviewed in the program. Your name--

Senator Schacht --I think I was interviewed in the program. I think I did a brief interview.

Senator FERGUSON --You were mentioned a couple of times. Whether it was just a cutout or what it was--

Senator Schacht --I think they interviewed me for quite a few minutes and I think--

Senator FERGUSON --Chopped most of it out.

Senator Schacht --Yes, they discussed the compensation issue itself.

Senator FERGUSON --Are you concerned that this is an actual example of a very few people from Customs ringing up journalists and trying to sell their line long after the argument they are putting has been discredited?

Senator Schacht --It does not concern me too much--not now after I have had the opportunity to go around Australia to each capital city and speak to almost mass staff meetings. I have now spoken to over 2,000 Customs staff over the last five to six weeks in each capital city. I have spoken to the union delegate committee in each capital city, and it seems to me that overwhelmingly the majority of Customs officers and staff from the top to the bottom want to get on with the job of accepting change and reform and making the service better. They feel a bit hard done by that many of them have been unnecessarily affected or smeared by the Midford thing. Everybody in Customs is being blamed for Midford when not everybody, obviously, was involved, but I am much more optimistic now that there is a willingness of an overwhelming majority the staff--after hearing all the comments and questions and their concerns--to get on with the job. But in 4,800 staff you would not be surprised to find at least a few willing to have a different view.

Senator FERGUSON --What can you do to stop the rumours that are circulating?

Senator Schacht --Basically, we should ignore them. I hope that in the end the press will ignore them and we can just get on with the job. The performance of Customs, as they lead the change, will destroy any impact from the malicious rumours that are going around. It certainly does not worry me. You have just got to get on with the job in this game.

Senator FERGUSON --Finally, given the fact that the overwhelming majority of customs officers are highly regarded by you and by the general public, how, in your review of the customs process, will it be possible to identify those people who are circulating rumours and not accepting decisions? You said at the last estimates hearings that that would be one of the problems.

Senator Schacht --There is no way that you can. We are a democracy and people are entitled to their opinion. You cannot guarantee that. However, if people within the service continue to denigrate it and gossip about it with their fellow workers, I would think that in the end their fellow workers will say, `Enough's enough. We want to get on with the job of creating a better Customs service than listening to your poison'. I think that will be the way it gets cleared up.

CHAIRMAN --That concludes the supplementary meeting of the committee to examine matters associated with additional estimates of the portfolios of the Treasurer, Finance and Industry, Technology and Regional Development. I thank the minister and those officers still here.

Committee adjourned at 10.06 p.m.