CHAIR —I declare open this public hearing of the Senate Rural and Regional Affairs and Transport Legislation Committee. Today the committee will continue its examination of supplementary budget estimates with the Department of Transport and Regional Services. I propose to call on the program areas according to the format adopted in the new program. Answers to questions taken on notice and additional information for Regional Services, Development and Local Government and Territories and Regional Support should be received by the committee no later than Friday, 19 January 2001. The committee has authorised the recording and rebroadcasting of its proceedings in accordance with the rules contained in the order of the Senate of 23 August 1990.

I welcome Senator Ian Macdonald, the Minister for Regional Services, Territories and Local Government, representing the Minister for Transport and Regional Services. Senator Macdonald is accompanied by officers from the Department of Transport and Regional Services and related agencies.

CHAIR —I ask everyone to speak clearly and directly into the microphones, to assist the Hansard reporters recording these proceedings. I also ask the Hansard reporters to make sure the microphones are turned up loud enough so that we can hear one another talking, because we have problems from time to time with those matters. Minister, would you like to make an opening statement.

Senator Ian Macdonald —No, thank you.

CHAIR —Mr Yuile?

Mr Yuile —No, Chairman.

CHAIR —Senator Woodley, do you have any questions?

Senator WOODLEY —I do, but—

CHAIR —We will go for 15 minutes with Senator Mackay and then I will switch over to you.

Senator WOODLEY —Okay.

Senator MACKAY —I advised the secretariat that I wished to ask a number of questions with regard to the Roads to Recovery formula. As I understand it, the secretariat requested that the appropriate officers would be here. I suggest that, if those officers are here, they come to the table. That would make matters a bit easier.

Mr Potter —I am Assistant Secretary to the Roads Investment Branch.

Senator MACKAY —I have a number of questions with regard to the Roads to Recovery funding allocation. Could you commence by taking me through the formula and how it was determined.

Senator Ian Macdonald —Mr Chairman, we are very happy to do this, but I do not want to create a precedent. It is hardly a matter for estimates at this time. The appropriation bill has not even hit parliament yet, and it is really a matter that should appropriately be dealt with at the supplementary estimates in February, which are intended to inquire into supplementary appropriations. What time are we finishing today?

CHAIR —At 2 o'clock.

Senator Ian Macdonald —I happy for the committee to use its time in whatever way the committee wants, and very happy to talk about this, but I do not want it to be seen as a precedent for the future. It is very clearly a matter for the supplementary estimates, but, if that is how the committee wants to use its time, who are we in this instance to object?

Senator MACKAY —Just briefly, in response, it is unusual, I agree. The reason that we are doing it here is that the bill is already in the Reps, halfway through the second reading, and will hit the Senate next week. The government itself has indicated it wants the bill through by the end of next week. I thought that it would be an appropriate use of this committee's time to deal with issues here rather than waste time in committee. We could ask all these questions in committee if required. I agree that it is somewhat unusual, but because of the fact that the government wants it through we have decided to use this opportunity and this time to ask questions which we also could ask in the committee stage.

CHAIR —Can I just make the point that technically it is outside the estimates process now. The only other comment I would make, because I do not care very much how you use the time, is that at 2 o'clock questions about these estimates that are not answered go on notice. It is up to you how you use your time.

Senator Ian Macdonald —I would just like to say that I am delighted with Senator Mackay's undertaking that the committee stage will proceed without any hassle next week, which make it worth dealing with it today. I think that is a great idea, Senator Mackay, thank you.

Senator MACKAY —It depends on today as to how we proceed next week, I suppose.

CHAIR —Before we go any further, I want to say that Senator Woodley is paired, Senator Mackay is paired, and I am paired, so we do not have to worry about divisions.

Mr Potter —There were two formulas. One was used to allocate the money between states and the other was used to allocate the money to individual councils within each state. The allocation between states was based on the current distribution of the untied FAGs to the states, except that that was then weighted by a factor of 50 per cent road length and 50 per cent population. Once that was run through, some adjustments were made for equity reasons.

Senator MACKAY —What adjustments were they?

Mr Potter —They were rounding up. South Australia in particular I think was the object of that exercise.

Senator MACKAY —Just explain to me how, for example, the existing allocation of 5.5 per cent in South Australia became 8.3 per cent. How did that happen?

Mr Potter —That was a decision the government took.

Senator MACKAY —What methodology did the government use to go from 5.5 to 8.3?

Senator Ian Macdonald —Mr Potter has quite rightly said it was a decision of government. If you are asking me, I can only repeat what Mr Potter said and that is that the allocations to the states were based on 50 per cent population and 50 per cent road length—a figure that was achieved—and then they were adjusted by the government to obtain a fair and equitable result.

Senator MACKAY —What did the government use to determine that adjustment? Did you just pluck a figure out of the air?

Senator Ian Macdonald —I have just told you, Senator.

Senator MACKAY —So there was no methodology to the government's decision?

Senator Ian Macdonald —I have just told you it was 50 per cent related to population and 50 per cent related to road.

Senator MACKAY —Then you said that an adjustment occurred. How did you arrive at the adjusted figures?

Senator Ian Macdonald —They were adjusted to get a fair and equitable result.

Senator MACKAY —But how? What methodology did you use?

Senator Ian Macdonald —What I consider is a fair and equitable result is a judgment I make, I guess.

Senator MACKAY —So it was entirely a decision, Mr Potter, of government?

Senator Ian Macdonald —No. Mr Potter has already told you it was a decision of government, so it is no use asking him.

Senator MACKAY —You are very defensive about this, Minister.

Senator Ian Macdonald —It was 50 per cent related to road length and 50 per cent related to population.

Senator MACKAY —I understand that, but then there was an adjustment beyond that which actually changed the historical allocations. What variables did the government use to change the historical allocations?

Senator Ian Macdonald —Mr Potter was wrong when he said that it related to the original system of distributing the grants. The historical formula that you talk about was not used. No-one can explain to me how the untied road grants under the FAGs system used today happened. We eventually found someone who was around at the time the Hawke government introduced it, and I am told there was a fair bit of political determination on how that formula was got. It has never been changed because nobody quite knew why it was there—nobody could explain it—and it was difficult to change something that had been entrenched in time. We still apply that formula for the identified but untied roads grants part of the financial assistance grants to local government. This is an entirely new program and the amounts going to the states, as you will see from the appropriations bill—it has been introduced—are based on 50 per cent road length and 50 per cent population, adjusted to achieve some equity and fairness.

Senator MACKAY —What did the government use to establish equity and fairness?

Senator Ian Macdonald —The judgments people make.

Senator MACKAY —The government just decided, for example, in South Australia's case, to increase the historical allocation of 5.5 to 8.3?

Senator Ian Macdonald —I have answered the question. I disagree with the question you have just asked, but I am not going to repeat, yet again, what I have told you twice already.

Senator MACKAY —So the historical formula was not used; it is a whole new formula?

Senator Ian Macdonald —It is a formula.

Senator MACKAY —It is a new formula?

Senator Ian Macdonald —It is a new program, for which there is a formula based on road length and population.

Senator MACKAY —So it is a new formula?

Senator Ian Macdonald —It is a very, very fair formula.

Senator MACKAY —It is a new formula?

Senator Ian Macdonald —Yes.

Senator MACKAY —Given that it is a new formula, Minister, are you able to provide the committee with any information as to what underpinned the new formula in terms of the interstate allocation?

Senator Ian Macdonald —We have already been through that four times now.

Senator MACKAY —We can go through it again.

Senator Ian Macdonald —Road length and population.

Senator MACKAY —Beyond road length and population, there were further adjustments, as you just said, in relation to what you termed as equity in relation to the states. What underpinned the new formula in terms of the decisions?

Senator Ian Macdonald —Senator, you have asked that question four times now. The fact that you ask it a different way does not mean you are going to get a different answer. I have explained that, and I am not going to keep explaining. You might want to keep asking the question, but I am not going to waste my voice explaining the same thing.

Senator MACKAY —I think I have my answer: it is a new formula, the historical formula was not used and, as far as I can see, there was no methodology underpinning that determination. Unless you wish to illuminate me otherwise, that is the only conclusion I can come to.

Senator Ian Macdonald —What you can see is of no great consequence to me. You are welcome to your view and opinion. It is a great program for Australia.

CHAIR —Minister, I thought you said it was 50 per cent road length and 50 per cent population.

Senator Ian Macdonald —It is. I have said that four times. If Senator Mackay cannot understand it after four times, she is not going to understand it after five, six, seven or eight times.

Senator MACKAY —I do not think that sledging is necessary. Minister, you also went on to say that there were adjustments that the government determined—and Mr Potter made this very clear—beyond the fifty-fifty in terms of population and road length. I asked you what underpinned those adjustments. Are you refusing to answer the question?

Senator Ian Macdonald —I am not refusing to answer. I have answered it four times now. I am not going to keep answering it.

Senator MACKAY —What is the answer?

Senator Ian Macdonald —You have an answer—have a look at the Hansard.

Senator MACKAY —Give me an answer again, just so I can get it down again. I understand the 50 per cent road length. I understand the 50 per cent population. What I want to know is what underpinned the formula beyond that. You have already alluded to that. You said that there were adjustments in terms of regional disparities. You said it is a brand new formula. You said it is not based on the historical formula. What underpinned the methodology in relation to the government?

Senator Ian Macdonald —Mr Chairman, if there are any questions the committee has to ask that we have not answered five times already, I am very happy to answer them. Otherwise, we might as well stop the committee and go home. I am not going to keep repeating the same answer time and time and time again.

Senator MACKAY —You may not regard it of particular moment, Minister, but the people in the Northern Territory—who have traditionally, under the old formula, got a percentage allocation of 3.2 per cent and are now down to 1.6 per cent—regard it as important. They would like to know what underpinned the government's decision to reduce the percentage.

Senator Ian Macdonald —I refer you to the previous answers.

Senator MACKAY —Do you care about the people in the Northern Territory? The fact that they have—

CHAIR —That question is not—

Senator MACKAY —Okay. What policy parameters underpinned the decision to reduce the percentage in the Northern Territory?

Senator Ian Macdonald —I refer the senator to my previous answers.

Senator MACKAY —In Western Australia there was a slight decrease. In South Australia there was a major increase. There was also a major increase in Queensland.

Senator WOODLEY —We need it.

Senator MACKAY —I think everybody needs it. There was an increase of 18.7 to 20.8 in Queensland. In Tasmania there was a major decrease. Based on the old formula, which the government did not use, the percentage went down from 5.3 to 3.3. That is a two per cent decrease. What rhyme or reason was there behind this? None. That is the answer, isn't it?

Senator Ian Macdonald —Mr Chairman, I refer the senator to my previous answers on this.

CHAIR —Could I ask a question on formulas and what have you. I guess all of us attend a number of local government meetings and I have certainly attended them in all states. There have been consistent complaints regarding the formulas that have been used and I have had consistently put before me, and I want to ask if this is the experience of the minister, that it would be much fairer if Australia had adopted one that was based roughly fifty-fifty on population and road length. That is an historic position that has been put to me consistently. Is that your experience, Minister? Is that part of the reason we have got the change of formula?

Senator Ian Macdonald —It is, Mr Chairman, and thank you for the question. Everywhere I go, people say to me, `What's this old formula based upon?' I have asked the same question, both when I came to this position and when I was in opposition. Nobody could ever tell me. We eventually found someone, so I am told, who remembered the 1991 formula. It was a decision of the then Labor government, picked straight out of the air on no basis whatsoever, I understand, and adjusted in 1991 for purely political purposes. That is all back in the realms of history. I cannot guarantee that that account is right. It is certainly unfair. Nobody could ever tell me quite how the formula came into being. That formula exists and will continue to exist until changed. With this new program, what we wanted to do was base it on a fair and equitable distribution. The fairest and most equitable way that we could work out was something that took into account the length of road dealt with by local authorities throughout Australia and adjusting that by the number of people who are in those areas and who use the roads.

CHAIR —Is the total road length used based on a combination of national highways, state roads and local roads or is it just based on local roads?

Senator Ian Macdonald —I would just have refer to Mr Potter for the technical details of that.

Mr Potter —It is local roads, Senator.

Senator MACKAY —Minister, you regard the allocation as fairer. You have made that statement in terms of your brand new formula which had no reference to the previous formula. How is it fair for the Northern Territory to get a decrease from 3.2 per cent to 1.6 per cent?

Senator Ian Macdonald —On the fifty-fifty split, the Northern Territory would have got $17.9 million. We thought that they were perhaps entitled to a little more so we increased it to $20 million.

Senator MACKAY —Right, but historically, under Labor's formula they got 3.2 per cent. Under the coalition's formula they get 1.6 per cent of this money. How is that fairer?

Senator Ian Macdonald —You say `under Labor's formula', correct? If it is Labor's formula perhaps you can tell me how it came into being, because nobody else can. Whatever the Northern Territory, or anyone else, got under the previous formula, if you can tell us how that came about I would be most grateful because I have been trying to find out for five or six years now and nobody has been able to tell me. If you can, then you will do me and everyone else a service.

Senator MACKAY —What I am asking, Minister, is this: if you are going to determine a brand new formula, and you have already said that it is, with no reference to the previous formula—which is what I suspected and which has now been confirmed—

Senator Ian Macdonald —Well the Prime Minister told you that two weeks ago.

Senator MACKAY —in terms of transparency, what I am interested in knowing is, is there anything you can give me that I can take back to people and explain how this brand new formula operates, rather than beyond the 50 per cent road length, beyond the 50 per cent population? Do you understand what I am getting at?

Senator Ian Macdonald —Well, Senator, the fairest way to distribute road money, in the government's view—and it is road money—was to take into account the length of local roads, and we all know that they all need a lot of attention. That is one element. The other element, of course, is that people count: the number of people who drive on the road and which roads are more often used.

Senator Ian Macdonald —The fairest way to distribute road money was, in the government's view, to take into account the length of local roads—and we all know that they all need a lot of attention. That is one element. The other element is that people count: the number of people who drive on them and which roads are more often used. So the government came to the view that the fairest way to deal with a brand new roads program was to determine it on the basis of population and road length. I suppose you could have had 60 per cent related to roads and 40 per cent to population. You could have had 20 per cent related to roads and 80 per cent related to population. The government chose that the easiest, the fairest, way was to say, `We'll allocate 50 per cent on the basis of roads that are within the jurisdiction of local authorities, and 50 per cent based on the population.' The judgment of the government is that the fairest way to distribute road money is to look at length of roads and the people who use them. We adopted that formula. We got to certain figures. You have raised the Northern Territory. Using that very fair formula, which I and the government stand by, we got to $17.9 million for the Northern Territory, but we thought that was a little bit light, and $17.9 million is not a good figure, so we upped that to $20 million.

Senator MACKAY —So you just rounded it up?

Senator Ian Macdonald —No. It is an extra $2.1 million for the Northern Territory, which we thought was fair and equitable.

Senator MACKAY —Okay. But the new formula of 50 per cent road length and 50 per cent population was not strictly adhered to, as you say, was it?

Senator Ian Macdonald —In a couple of instances it was adjusted.

Senator MACKAY —In which instances was it adjusted?

Senator Ian Macdonald —Tasmania went up; Northern Territory went up; ACT went up. South Australia actually, on that formula, came down, but you are not complaining about that, so that will not worry you. Western Australia went up—

Senator MACKAY —I am not complaining about anything; I am just trying to get some answers.

Senator Ian Macdonald —Queensland went up; Victoria went down; New South Wales went up.

Senator MACKAY —How does this new formula of the government's on 50 per cent road length and 50 per cent population impact on people who live in remote communities?

Senator Ian Macdonald —The whole local government distribution—and it is distributed within the state on a local government basis; each state local government grants commission has its own formula for distributing it—I can go through if you have three hours. But perhaps I will just refer you to the pages in the local government annual report that is tabled in the parliament and which no doubt you have read, and so you will not need to ask me about that. The local government grants commissions distribute it. But I have to say, as a view on how independent state local government grants commissions distribute their money, that they are heavily weighted in favour of the more remote and rural areas. But that is a decision for them, basing it on national principles in the federal act, which was an act of the Hawke or Keating governments which—and I was the shadow at the time—I would have to say we supported. It is based on those principles, but each state Local Government Grants Commission determines its own formula.

Senator MACKAY —We will get to that. I appreciate that; that is fine. How was the road length measured? For example, did it include sealed and unsealed roads or planned or proposed roads, or existing roads?

Senator Ian Macdonald —The state grants commissions currently have an assessment they use, and it is all local roads, as I understand it. I am told that, to assess the lengths, all the state grants commissions actually adopt the same principle, which includes sealed and unsealed—all roads.

Senator MACKAY —So it includes sealed roads and unsealed roads. Did it include proposed roads or existing roads?

Senator Ian Macdonald —Existing, I would think; yes.

Senator MACKAY —So it was sealed and unsealed and existing.

Senator Ian Macdonald —Existing, sealed and unsealed.

Senator MACKAY —Right.

Senator Ian Macdonald —You said sealed and unsealed and existing. There are not three categories there. They are all existing roads in two categories: sealed and unsealed.

Senator WOODLEY —My questions are pretty parochial, I have to admit: they are to do with Queensland. I am very interested in the gulf roads, the Atherton Tablelands and other inland shires. That is my abiding interest. You may need to take these on notice, and I am perfectly happy about that. One of the big issues—and I am sure Senator Macdonald is well aware of this—in all of those inland areas, particularly in the north, is the problem of the beef roads that we built many, many years ago and that in a lot of cases are single-lane bitumen. The fact is that there has been very much an increased use of those beef roads, particularly by tourists. We get some pretty unenviable competition between tourists and what I used to call `road trains', but I know they have different names now. Tourists and road trains unfortunately are not a good mixture.

Senator Ian Macdonald —A lethal combination.

Senator WOODLEY —But they are increasingly coming into contact with each other in many of these areas of Queensland. What account was taken of that in the allocation of funds? What funds have gone into upgrading those particular beef roads? If I could get some feel for that, it would be very good. But they may be questions you need to take on notice.

Senator Ian Macdonald —I will start and then I will ask Mr Potter to correct me, if needs be. I have the same interest in this as you do, and so I have made some inquiry over the time. Many of those development roads were roads that the Fraser government introduced years ago in what was a very good beef roads scheme that they started off. The funding under the beef roads scheme or the development roads, as I understand it—and Mr Potter will correct me on this—finished some time ago as a program. Now most of them would be classed as state arterial roads and therefore are the responsibility of, in your case, the Queensland government. Some of them—and you mention the gulf—such as the road from Cairns through to Normanton now, are sealed all the way. Some of it is brilliant road surface, as you would know; some are still the old narrow, beef roads that are being worked upon.

Those decisions are principally decisions for the Queensland government allocating its priorities to assessments. I get lots of calls, as you do as well, Senator Woodley—because I know and acknowledge that you travel out in those areas, as I do and as Senator Crane does, by road. They are well used locally. They are getting to be dangerous. But they are principally responsibilities for state governments. Perhaps I could ask Mr Potter to correct me or add to anything I have said in relation to those beef roads.

Mr Potter —I cannot correct you, because I am not sure of the facts myself, but I can add something to that. I would imagine that they mainly would be state arterial roads but, to the extent that they were not, if they were local roads, they would have been counted in the formula. The bill, as it is drafted, does not require councils to spend money on local roads. So if it was within a council area they could, for example, do a joint funding program with the state government to upgrade those roads or to make whatever improvements they thought fit.

Senator WOODLEY —But you had not specifically in this new program taken account of that, because it is outside your bailiwick?

Mr Potter —To the extent that they are state controlled roads, no, because the program is not aimed at state controlled roads.

Senator Ian Macdonald —If I can just add to what Mr Potter has said, in the Diamantina shire, the road from Bedourie to Birdsville is a state road, but the Queensland state government flat blank refuses to do anything with that; so the Diamantina Shire Council is using its FAGs under the continuing FAGs system to actually repair a state road, because the only way they can get from one part of the shire in Bedourie to the other part in Birdsville is if they fix the state roads. So they will be able to use this money to continue that, and I think the gulf shires will be able to use this extra boost of money to attend to the state development roads, the state arterial roads, if the state government refuses to do so. But they were not taken into account in the formula.

Senator WOODLEY —I guess that is getting to what I was trying to find out. My questions were not clear enough. That is pretty reassuring. I dip my lid to what the shires do with the money they get—it is quite amazing—particularly those inland shires.

Senator Ian Macdonald —Senator Woodley, you would also be aware, as one who travels those areas a lot—again, Senator Crane would know this from Western Australia—that this additional boost will allow councils to plan with certainty for the next four years. It will allow them to put on new employees to do this extra road work. I know you know that in many instances the council grader drivers and road repairers are the mainstay of many of those towns.

Senator WOODLEY —Yes, sometimes it is their main employment.

Senator Ian Macdonald —Indeed. As well as being a roads program, it is also very much, in many of those cases, an employment program.

Senator WOODLEY —I presume this would be the same answer, but I will ask it anyway. One of the other big issues with roads in that area—and it particularly applies to the Atherton Tableland—is the increased sugar industry production on the tablelands and the increase in the use of the roads by sugar trucks—particularly, for instance, the Palmerston Highway to bring cane to the South Johnstone mill. I wonder again about the damage that is being done to those roads, because of a new use of them by the sugar industry, and whether that has had any influence on the thinking of the government in this new roads program.

Senator Ian Macdonald —Again, a very good example. Ever since I have been the minister, the most constant thing councils have asked me for is assistance with local roads—and, again, you are aware of that. The Atherton Tableland shires came down and saw you, me and a lot of people about 12 months ago with that very point that you raise. Certainly the case they put encouraged the government, when we were able to start thinking about spending extra money on roads, to look at how it should be done. Indirectly if not directly, what is happening on the Atherton Tableland with the sugar trucks was very much in the government's mind when this program was introduced.

There are some forest roads down in South Australia that I think were in a very similar position, and in Western Australia, and there were also some dairy roads in Victoria and New South Wales with very much the same thing—new industry uses for local roads which were never anticipated when they were constructed for the horse and buggy. So this was very much in the government's thinking. In the Atherton Tableland, the Palmerston Highway will not be in this, because that is obviously a state arterial road and it is not too bad. But certainly all the roads that the trucks run off that they have been absolutely slaughtering in the last 12 to 18 months will be roads that will get money out of this program.

Senator WOODLEY —That is good. My final question is one again that you and I have been interested in. That is the east-west highway—or the west-east highway, depending on your perspective, I guess—the Boulia-Alice Springs- Laverton Outback Highway. Is that part of the considerations?

Senator Ian Macdonald —Senator, as you know, I have driven it actually from Townsville to Perth, right across the centre. Some of that would be state arterial. Some of it would be still classed, I think, as local road.

Mr Potter —Yes, it is.

Senator Ian Macdonald —I would hazard a guess—and I think I could almost take a bet, only you would not be a betting man, Senator Woodley—that the Boulia Shire Council will be using part of this money on the Boulia to Tobermorey section of the road. The part of that road that is classed as local road will certainly be in the formula. I am not sure whether Mr Potter could help me. Is that Boulia to Tobermorey road a state or a local road?

Mr Potter —I thought it was entirely a local road, but I could not say that for sure.

Senator Ian Macdonald —If you were interested, we could perhaps take that on notice.

Senator WOODLEY —Yes, if you could.

Senator Ian Macdonald —Senator Woodley, we will give you an account of what part of the road from Boulia to Laverton is local road and what is state arterial.

Senator WOODLEY —That would be good.

CHAIR —I have two questions. The first one is about cost shifting by the states—taking money from local roads and maybe or maybe not spending more on state roads. Is there anything in the formula or the arrangements which—if not stop cost shifting—limit it to the absolute minimum? I would hate to see the states destroy this program.

Senator Ian Macdonald —Mr Chairman, we are very concerned, as you are, about that. The states have shown a propensity over a long period of time—and they show the propensity in a bipartisan way, I am ashamed to say—to cost shift wherever they can. As best we are able, we will be ensuring that, when the federal government increases money, the states do not decrease it. There are two states that give absolutely nothing for local roads. One is Tasmania, regrettably. They can hardly cost shift because they do not pay any money now—and you cannot pay less than nought. In the other states, we are doing what we can. The Prime Minister has written or is writing to all the premiers indicating that states should not reduce their amounts. In fact, we are calling upon the state governments—without much success from what I read in the paper—to actually match, as they did with the salinity and clean water program, federal government funding for local authorities, which would be a huge boost for local roads. In the legislation and the regulations that follow there will be requirements for local authorities to indicate that they will not stop planned roadworks or use this new money for those planned roadworks and then use the money they were planning to use on roadworks to employ media consultants or run political campaigns against the federal government, which the Brisbane City Council—

CHAIR —Or building halls.

Senator Ian Macdonald —or building halls. It is a road program. A lot of things need doing in Australia, but there is only a certain amount of money. This program is for roads, and we are determined, as best we are able, to make sure the money is spent on roads.

CHAIR —My second and last question relates to this. Let me put it this way. You have heard me arguing this in our committee structure, and certainly Minister Anderson has. Out of the three levels of roads, there is a poor cousin, and that has been local roads. Certainly in Western Australia the state roads system—and we have a special levy, as you know, over there—has done a fantastic job, and then there is the national highway. But we have had this poor cousin sitting on the side. In the south-west of WA—Senator Woodley touched on this marginally—our grain harvest has more than doubled in 10 years, but there has been the same amount of money for the same roads doing twice the work. That has been a big problem in terms of maintenance. In fact, some of the roads are dangerous now, with road trains and so on operating on them. What I want to know is whether that has been a consistent problem or position put by all the states. I know Western Australia's position, but has the issue of this extra workload that has been forced on the roads—whether because of increased grain production, which is widespread across Australia, or other things—been raised? Is it consistent across the states, or are there other reasons in some states in terms of the local government road funding program?

Senator Ian Macdonald —Again, it certainly is something that has been brought to our attention by, I think, most states. I am certainly aware of Queensland, New South Wales, Victoria, South Australia and Western Australia. You quite rightly say that in Western Australia you and many of your colleagues have raised this issue over time. What it is really all about is that new and bigger machinery is needed as the world gets smaller, as you have to get bigger to survive. There is bigger machinery and there are bigger trucks travelling on the local roads in Western Australia to get the wheat crop out to the ports, and the roads simply were not built for it. It then becomes, I guess, an argument about who should be responsible for those roads. In our system of roads in Australia, as you know, federal government looked after federal highways, states looked after arterials, local looked after local. But, of course, these days, the export wealth of the country actually starts on the local road, so there is perhaps the argument that the federal government, which gets the tax from the exports, from the income earned, should put a bit more into it. That is why we have been able to look at that, and, with the good management of the economy, we have had some money that we have been able to invest. That is how it has come about. It is, as you say, as a result of the greater use of these local roads by increased activity, principally farming and mining activity.

Senator MACKAY —I think the tax windfall as a result of petrol prices may have assisted in relation to the funding that was available, but that is not a question.

CHAIR —It is also not true. The tax take has gone down.

Senator MACKAY —I do not think so.

CHAIR —There has been a reduction in the use of fuel. I am not going to debate the matter, but that is a fact.

Senator MACKAY —Are you saying there is no tax windfall as a result of increased petrol prices?

CHAIR —I am talking about excise.

Senator MACKAY —GST?

CHAIR —I am talking about excise.

Senator MACKAY —What about the petroleum resource rental—

CHAIR —I have not seen the figures on GST.

Senator MACKAY —I have.

CHAIR —I shall find them privately and give them to you.

Senator MACKAY —That would be very helpful, because we cannot get them from the government.

CHAIR —Excise has gone down.

Senator MACKAY —The petroleum resource rent tax this year alone is an extra $500 million, plus company tax.

CHAIR —Ask your question, please. If you want to raise this little side issue, you can, but 2 o'clock is getting closer.

Senator MACKAY —What role did the state grants commission formula play in the process?

Mr Potter —You are talking now about the distribution between councils?

Senator MACKAY —Correct.

Mr Potter —The split up between councils followed the formulas and the processes that the state grants commission used.

Senator MACKAY —Which version of the formulas were used?

Mr Potter —This is where I have to—

Senator Ian Macdonald —Let me answer this. In the last assessment of the state grants commissions, which was 2000-01, the proportion that councils got under the 2000-01 state local government grants commission allocations was the figure adopted to increase the percentage by whatever the state percentage was—whatever the state funds were. My first assistant secretary says `less any special payments', but really those special payments were part of the South Australian and Western Australian state grants commissions formula. We have absolutely adopted that exactly as it. We have gone out of our way to do exactly what they have done. So, without needlessly complicating it, in South Australia they have a 15 per cent pool, which they allocate according to formulas they adopt. We have adopted that entirely. In Western Australia I think they have a seven per cent special pool. Again, we have simply adopted everything they have done this year, so there can be no argument about boondoggling or anything else.

Senator MACKAY —So the state grants commissions did not make the calculations; the Commonwealth made the calculations. Is that correct?

Senator Ian Macdonald —No. I will explain that again. Within the state, in the year 2000-2001, each State Grants Commission makes an allocation to councils, basing it on whatever formula they use.

Senator MACKAY —I know that.

Senator Ian Macdonald —Whatever that figure was, that is the proportion that council got of the new money.

Senator MACKAY —But it is normally the State Grants Commission that would make the allocation. Were the state grants commissions consulted in relation to this allocation?

Senator Ian Macdonald —It is their allocation. It is exactly theirs; it is no-one else's.

Senator MACKAY —You are missing my point. Normally the State Grants Commission would make the allocations. In this case, the federal government has used a 2000-01 allocation and allocated itself. Were the state grants commissions consulted in relation to the allocation?

Senator Ian Macdonald —What do you mean by allocation? Do you mean actual payment or fixing of the figure?

Senator MACKAY —The determining.

Senator Ian Macdonald —The fixing of the figure.

Senator MACKAY —You said the money is going direct to councils.

Senator Ian Macdonald —I just want to make sure we are talking about the same thing when you say `allocation'. You are saying the fixing of the figure.

Senator MACKAY —Yes.

Senator Ian Macdonald —All right. This current year the state grants commissions have made an assessment for every council in Australia. We have adopted that entirely and said, `Of the new money, that is your share.' We have adopted that entirely, except in South Australia and Western Australia where they have this 15 per cent and seven per cent special pool. The 15 per cent of the extra money and the seven per cent of the extra money will go into this special pool and be dealt with as those two state grants commissions have always dealt with it.

Senator MACKAY —I understand what you are saying. The Commonwealth has used a formula that the state grants commissions would normally do the allocation. At this point the Commonwealth has simply used the previous formula and done the allocation.

Senator Ian Macdonald —No. This is within the state. The state grants commissions have in this current year made an assessment for every council in Australia.

Senator MACKAY —Yes, I know that.

Senator Ian Macdonald —We have precisely adopted it.

Senator MACKAY —`We' being the Commonwealth. That is right. That is what I just said. As I understand it, the government has said that the grants will be paid directly to local government.

Senator Ian Macdonald —That is right.

Senator MACKAY —How does it currently work and how will it change?

Senator Ian Macdonald —Currently it goes via the state governments. Under the appropriations bill, should it be passed, the cheque will go direct from the Commonwealth to each individual council.

Senator MACKAY —So in this instance you are basically bypassing the states.

Senator Ian Macdonald —Strictly speaking, yes. Except for a more complicated double handling procedure, the practical impact is negligible. It will be quicker this way. The practical effect will be not greatly different.

Senator MACKAY —Back to the State Grants Commission methodologies which were used by the Commonwealth to determine the intrastate allocation, there is nothing in the bill to indicate that that was the methodology that was used. Is that likely to be clarified when it gets to the Senate?

Mr Potter —You are quite correct, Senator. The bill allocates the amounts that the government announced.

Senator MACKAY —The bill does not actually cite the State Grants Commission allocations.

Mr Potter —No, it cites the announcements that the government made. I am not sure where you are leading, but I cannot see why it should, basically.

Senator MACKAY —I am just asking a question. Under the previous system, which I guess is ongoing—we will have a dual formula for a while, I suppose—the grants were untied. The states were effectively a post box, if you like, Mr Potter, and it was provided. Now it is going direct to local government. What checks and balances have the government introduced in relation to that?

Senator Ian Macdonald —I will ask Mr Potter to answer the second part of your question about what checks and balances. I am not sure that Mr Potter is an expert on the first part of the question. It is irrelevant anyhow. The second part is the one you want answered.

Mr Potter —Thank you, Minister. The bill allows the minister to draw up conditions. They cover things to require that the money is spent on roads by the councils, to properly account and audit for them, to give proper recognition to the Commonwealth. They are listed in the bill, but I cannot recall the remaining ones. They are essentially to ensure the money is spent for the purpose for which it is given.

Senator MACKAY —Could you find that section of the bill and advise me of the conditions?

Mr Potter —Certainly. It is in section 7(2) of the bill. The conditions, which have not been drafted yet, are going to require that the money is used for roads expenditure, that the councils properly account for it, and that the councils maintain their current level of funding, and that they give due recognition to the Commonwealth through signage.

Senator MACKAY —So what is the level of discretion there at ministerial levels?

Mr Potter —By councils?

Senator MACKAY —What is the level of ministerial discretion there?

Senator Ian Macdonald —Absolutely none.

Mr Potter —It also goes on to talk about what happens if those conditions are breached in terms of recovering the money or withholding the next instalment. Subsection (4) does not limit the minister to those particular conditions. Certainly, as I understand it, it is the minister's intention to not intervene beyond those areas.

Senator MACKAY —But the bill does not specify that, does it, Mr Potter?

Mr Potter —No, it does not.

Senator MACKAY —No. So at the moment it is the minister's intention not to interfere with the submissions that are produced by councils to him, but the bill does not provide for no ministerial intervention, does it, Mr Potter?

Mr Potter —The bill does not give the minister the power to approve or disallow the proposals that are put up to him. We intended asking the councils to advise us what they were going to spend the money on, but there is no power of approval or disapproval under the bill, as there is for national highway projects, for example.

Senator MACKAY —There is no power of approval or disapproval.

Mr Potter —Yes. It basically has to be spent on roads.

Senator MACKAY —I understand that. So let us say that local council X puts a proposal up to Minister Anderson through the due processes of that council, whatever those processes may be—they vary. The proposal goes up to Minister Anderson directly, one presumes, because there is now direct funding. Minister Anderson is able just to tick it off. Is that correct?

Mr Potter —If it is going to be spent on roads, yes.

Senator MACKAY —Is there any capacity for Minister Anderson to send it back? Is there anything precluding that in the legislation?

Mr Potter —As long as it is going to be spent on roads, no.

Senator MACKAY —But you just said it is the minister's intention to provide the tick, but where in the bill does it say that it will be automatic and non-discretionary?

Mr Potter —It says the conditions require that the money be used for road expenditure. There is no corresponding part of the bill that says the minister approves this proposal or disallows it.

Senator MACKAY —That is a pretty broad criterion.

Mr Potter —Yes, it is.

Senator MACKAY —But within that criterion—obviously they will all meet that criterion, I would have thought—what power does the minister have? If the minister has difficulties with the proposal that a council puts up, given that it obviously will meet that criterion, what discretion does the minister have then, under the bill?

Mr Potter —In terms of altering that program, none.

Senator MACKAY —Where does it say that in the bill?

Mr Potter —It does not say that he does have that power; therefore, he does not. He cannot do it.

Senator MACKAY —It does not say that he does have that power; therefore, he does not?

Mr Potter —Yes.

Senator MACKAY —Provided it meets—this is a very important point for us—that one criterion that the money be spent on road funding, the minister has no power to alter a proposal by a council?

Mr Potter —That is correct. There are other conditions there as well. I am talking about the maintenance of their current expenditure, et cetera, that they properly account for the money and that proper recognition is given to the Commonwealth.

CHAIR —We have been going 50 minutes on this matter, which is technically outside of the estimates before us. I suggest we wind this up at quarter to and go back to the estimates.

Senator MACKAY —It is not technically outside the estimates.

CHAIR —Yes, it is.

Senator MACKAY —We can seek advice on that.

CHAIR —The appropriations are not before the Senate yet.

Senator Ian Macdonald —It is quite clearly outside. I am working on Senator Mackay's undertaking that this will avoid all of this in the chamber. Whilst this is tedious now, at least I am comforted in the fact that we will not have to go through it all again next week.

CHAIR —I made that comment at the start. I think we have had a good discussion and I think it has been useful, but we do have other things we need to pursue.

Mr Potter —Just to elucidate this a little better, proposed section 6(1) of the bill says:

Subject to this Act, each amount set out in the published list is payable to the funding recipient concerned.

That is a guarantee, if the parliament passes the bill, the money will be paid.

Senator MACKAY —While that says that the money will be paid, it does not actually guarantee that it will be paid in the way the councils put the submission to the minister, does it?

Mr Potter —What you are talking about is the actual work that is being carried out. When the government sends the money out, it will not be saying, `You have to spend this money on this project.'

Senator MACKAY —That is not what I am saying. If a council puts forward proposal A and it goes to Minister Anderson for approval—and you are saying there is no process for approval in the bill, and there is no process for disapproval—what does he do with it? Can he approve it? He cannot approve it, according to you. So what does he do with it? What is the process?

Mr Potter —It is part of the process to assure the Commonwealth that the money is going to be spent on roads.

Senator Ian Macdonald —It is part of the accountability process.

Senator MACKAY —But there is no process for approval.

Senator Ian Macdonald —It is an accountability thing. If the local government says, `We are spending it on these roads,' then all of their electors, all of their voters, and everybody else, including the Commonwealth, will know that it is going there. If they then spend it on a media unit, they will know that too.

Senator MACKAY —Coming back to the fundamental criterion, which is road funding, when a council puts a proposal up to the minister about roads—

Mr Potter —It is not really a proposal. We are going to ask them to notify us of how they are going to spend the money, basically.

Senator MACKAY —Minister Anderson's second reading speech says:

Local government bodies must also provide the minister with a proposal for the expenditure of their grant ...

What is that, if it is not a proposal?

Mr Potter —That is a proposal, to be quite correct, Senator.

Senator MACKAY —So when a council sends a proposal, according to Minister Anderson's second reading speech, what does Minister Anderson then do with this proposal, if he does not approve or disapprove?

Mr Potter —He would note it.

Senator MACKAY —He would note it. So who approves or disapproves, given it is a proposal? Who has the determinative power?

Mr Potter —If the bill is passed, the minister will be obliged to make the payments.

Senator MACKAY —Therefore, he will have to approve it, will he not? If it is a proposal, it has to be approved.

Mr Potter —No, he would be approving the payment.

Senator MACKAY —That is right.

Mr Potter —And that is what he will be doing under the act, but he will not be approving the particular proposal that the council put up. The question is, I suppose: what happens if a council does not put a proposal up?

Senator MACKAY —What happens in those circumstances?

CHAIR —They would not get their money.

Mr Potter —I do not envisage that happening, to be honest.

Senator MACKAY —Subsection 7(1) of the bill states:

The Minister must, by notice in the Gazette, determine the conditions that apply to payments under this Act.

What are those conditions?

Mr Potter —He has not determined them yet. That clause goes on to spell out the particular areas that are considered, but it has not happened yet.

Senator MACKAY —Presumably, when a council puts a proposal to the minister, there are conditions in the Gazette which will determine the nature of their proposals. Would that be a fair comment?

Mr Potter —Only to the extent that it has to be spent on roads.

Senator MACKAY —But that is not what it says. You could reassure me and give me the response now, I suppose. You have just said the minister has not determined it yet. It says:

The Minister must, by notice in the Gazette, determine the conditions that apply to payments under this Act.

That is not yet determined. The only thing we have is that it must be spent on road funding. So why is that proposed section there?

Mr Potter —It is there to enable him to require councils to provide us with audited statements of expenditure that they have spent the money on roads.

Senator MACKAY —So the conditions that apply to payments will comprise what?

Mr Potter —Certainly those matters there.

Senator MACKAY —Anything else?

Mr Potter —Yes, but at this stage we do not intend that it would go beyond those. I guess the only one that is not there that the minister has talked about is that we would ask for a proposal or some information as to what their program of works is to use that money.

CHAIR —Just to get a point clarified: with the normal auditing annual report processes and so on which apply to all appropriations for accountability and transparency and all these things, will they apply to this program the same as all other appropriations and expenditures carried out?

Mr Potter —It will be required, as with other programs, to account and provide an audited statement for the expenditure.

CHAIR —So the Auditor[hyphen]General will be overseeing the whole process, or the Audit Office? That is probably a better way of putting it.

Mr Potter —Yes.

Senator MACKAY —Returning to this issue of determining the conditions that apply to payments under this act, when will that be promulgated in the Gazette?

Mr Potter —I would imagine just as soon as the minister can.

Senator MACKAY —Mr Potter, it seems to me, and on advice that I have got, that there will be considerable discretion at the ministerial level in determining which projects will be funded and which projects will not.

Mr Potter —How will that happen, Senator? I am not quite sure.

Senator MACKAY —I am putting to you that it seems like that to me. Can I ask you whether you feel that that is correct or incorrect. And, if so, why?

Senator Ian Macdonald —What Mr Potter is saying is no, that is not correct. That is Senator Mackay's assertion. Do you agree with her assertion or don't you?

Mr Potter —No, I don't.

Senator MACKAY —Why don't you agree with that assertion?

Mr Potter —Because the government is undertaking to make this money available to councils, and it will do so on a timing schedule that will be specified. The conditions are there to ensure that the money is spent on roads, and those conditions I spelt out earlier.

Senator MACKAY —But where does it say that the minister has no discretion in relation to the proposals—which we have now established is what they are?

Mr Potter —Because the act obliges the minister to pay the money to councils, so he has to do that.

Senator MACKAY —It obliges him to pay the money to councils; it does not say that he cannot say to a council, `I don't accept this proposal.' Where does it say that?

Mr Potter —Supposing he said, `I don't like this particular road you are going to spend the money on.' They would say, `Well, under section 6 of the act, you are obliged to pay us the grant.'

Senator MACKAY —Eventually.

Mr Potter —Yes, he has discretion as to timing, but not as to the particular project.

Senator MACKAY —But it does not actually say that he has no discretion in relation to the proposal that a council puts up. It does not say in the legislation, or in the minister's second reading speech, or in the ex mo, that the minister has no discretion; it does not say this. It does not say that the minister has no discretion in relation to the projects that are put up.

Senator Ian Macdonald —Mr Chairman, I think we are going on a matter of simple interpretation of statutes. The act also does not say that Mr Anderson can go home tonight and go to sleep, but he does that. If it is giving him a power, it will be mentioned in the act—this is as I understand it.

Mr Potter —Exactly; I was just about to say that, yes.

Senator Ian Macdonald —If it is not mentioned in the act, then it means he cannot declare war on Russia either. Just because it is not mentioned in the act does not mean to say that that is the situation.

CHAIR —There is no discretion given to him in the legislation or the bill.

Senator Ian Macdonald —No. I think Mr Potter has explained that as best he can. If any of us cannot understand it from there, I am afraid no amount of repeating—

Senator MACKAY —I understand it only too well. Let us just move to the same example again. A council makes a proposal to Minister Anderson as a result of the deliberations of a particular council. It goes to Minister Anderson. Minister Anderson, you say, Mr Potter, is obliged to simply give it the tick and pay the money.

Mr Potter —Yes.

CHAIR —Providing it is for expenditure on local roads.

Mr Yuile —Yes; or to build.

CHAIR —If it is to build a hall, he could say no immediately.

Senator MACKAY —I understand all that. So, provided it meets that one criterion, which is that it has to go to road funding, the minister is obliged to simply give it the tick.

Mr Potter —Yes.

Senator MACKAY —But the act just says that he is obliged to make the payment.

Mr Potter —Yes.

Senator MACKAY —They are two different things.

Mr Potter —All I can say is, as the minister has explained, if it was intended that the minister would approve or disapprove projects, we would have put that in the act. I do not think it is good drafting practice, from a legal point of view, to have some sort of hidden or subtle power like that for the minister. It is not the intention.

Senator MACKAY —I do not intend to table this, but I have some advice in relation to the legislation, which I am using. In relation to the greater metro versus rural and regional divide: how was that arrived at?

Senator Ian Macdonald —That is not mentioned in the act.

Senator MACKAY —It is in Minister Anderson's release.

Senator Ian Macdonald —It might be in Minister Anderson's release, but it is not mentioned in the act.

Senator MACKAY —So you are not intending to answer questions on Minister Anderson's press releases about this issue?

Senator Ian Macdonald —Each council in the act will have an amount. Nothing could be clearer. If you want to add up all the things, you will find out what metropolitan councils are getting. If you want to add up what all the remote councils are getting, you can add that up. You do not need us to do that. You do not need Mr Anderson to do it. You do not need me to do it.

Senator MACKAY —You are missing the point, Minister. My question was: what determined the divide between greater metropolitan distribution and rural and regional distribution—not the dollar figure, but how you actually determined it. Any idea, or no idea? It is Mr Anderson's portfolio.

Senator Ian Macdonald —I guess Mr Anderson worked on some councils being metropolitan and some being rural and some being remote. You might work on some. You might have a different view. Senator Crane might have a different view. It is immaterial to the grant. It might be an interesting semantic discussion about assessments of what council fits into what category; I do not know. It is certainly not relevant to the act and certainly not relevant to estimates, and it takes the matter nowhere.

Senator MACKAY —If it is not relevant to the act, why did Minister Anderson put it in his press release of the 27th of this month?

Senator Ian Macdonald —I do not know.

Senator MACKAY —You represent Minister Anderson. You are here to answer questions on behalf of Mr Anderson.

Senator Ian Macdonald —I have no idea what was in his mind.

Senator MACKAY —You have no idea what determined the greater metropolitan distribution versus the rural and regional; you just do not know, do you? You are only a government minister.

Senator Ian Macdonald —You are saying, `Why did Mr Anderson do that?' I do not know.

Senator MACKAY —You do not know?

Senator Ian Macdonald —No.

Senator MACKAY —As you are a government minister who represents Minister Anderson, what underpinned the decision on that divide between greater metro and rural and regional?

Senator Ian Macdonald —Senator, how many times do I have to explain this to you?

Senator MACKAY —You do not know, do you?

Senator Ian Macdonald —It makes absolutely no difference to the act, the government's appropriation, what each council receives, or how much. You add them up yourself. If you want to know, you work out what you think are metropolitan councils and then you will find out what they are getting.

Senator MACKAY —It is not a numerical figure.

Senator Ian Macdonald —The act sets out precisely what each council in Australia will get.

Senator MACKAY —Look, if you do not know, you can take it on notice.

Senator Ian Macdonald —I certainly will not be taking it on notice, Senator. I have answered the question as far as—

Senator MACKAY —You have said that you do not know. That is what you have said.

Senator Ian Macdonald —I have said I do not know what is in Mr Anderson's mind.

Senator MACKAY —It is not in Minister Anderson's mind; it is in his press release.

Senator Ian Macdonald —You said, `Why did he do that?' I do not know.

Senator MACKAY —What underpinned the government's decision regarding the divide between metro and rural and regional? How did the government make that decision? I am not asking for a dollar figure; I am asking for the methodology.

Senator Ian Macdonald —There is no government decision.

Senator MACKAY —You do not know, do you?

Senator Ian Macdonald —There is no government decision. How many times do you have to have that explained to you? You must be able to understand that. The only government decisions are the ones we have been through.

Senator MACKAY —You just do not have a clue, do you? You do not know, do you? You do not know.

CHAIR —Senator Macdonald has answered the question; he said there is no difference.

Senator Ian Macdonald —I have answered that. I do not know what you are talking about—but then I would not be alone on that, Senator. Very few people could understand. You simply cannot understand these things, and nothing we can tell you will help you any better to understand.

Senator MACKAY —Do you have a copy of Minister Anderson's press release handy?

Senator Ian Macdonald —No.

Senator MACKAY —You do not have a copy of the minister's press release in relation to the Roads to Recovery statement. Is that right? You have not got a copy of the press release?

Senator Ian Macdonald —I refer you to my last answer, Senator.

Senator MACKAY —You do not have a copy of the minister's press release.

Senator Ian Macdonald —I refer you to my last answer.

CHAIR —Can we go back to the estimates? We have now spent some time on this.

Senator MACKAY —This is utterly pathetic. It really is.

CHAIR —It is not. Please withdraw that. That language is unnecessary. It has nothing to do with estimates.

Senator Ian Macdonald —Please do not, Mr Chairman. I think people will make up their own minds on who fits the description `pathetic'.

CHAIR —I want to stay on the substance of what we have before us.

Senator MACKAY —It is a germane question because, in Minister Anderson's press release—

CHAIR —Please go to the estimates.

Senator MACKAY —In Minister Anderson's press release, he has a table on the dollar figures for the Roads to Recovery Program and it has columns headed `State/Territory', `Roads to Recovery: Greater Metropolitan Distribution', Roads to Recovery: Rural/Regional Distribution' and `Roads to Recovery: Four year total'. All I am asking—

CHAIR —You are wasting your own time. I have read Minister Anderson's—

Senator MACKAY —You are ahead of Minister Macdonald!

CHAIR —No; Senator Macdonald has read it as well.

Senator MACKAY —All I am asking is this: what methodology underpins the divide between greater metro and rural and regional?

Senator Ian Macdonald —There is no divide in the government's decision, or in the legislation before the parliament, or in what should be the subject of this estimates committee in February. There is no metropolitan rural divide—no, no, no metropolitan or rural divide. I cannot say that any clearer.

Senator MACKAY —Let us go back to this then. I will read it out, seeing that you do not have a copy of Minister Anderson's press release in front of you. In this table, it says under `State/Territory' for New South Wales Roads to Recovery that the greater metropolitan distribution is $85.5 million. Then it has another column, which is called `Roads to Recovery Rural/Regional Distribution'—and for New South Wales it has $254.5 million. Then the Roads to Recovery four-year total is shown as $340 million. How was the figure of $85.5 million arrived at; and how was the figure of $254.5 million arrived at?

Senator Ian Macdonald —Point out to me where that is in the legislation or in the estimates before the committee or the estimates that will be before the committee in February and I will answer it, but I would hate to try to interpret your press releases. That is not what this committee system is about. If you can show me where that is mentioned in the act, in the appropriations or in any of the estimates committee material, I will answer it. If you cannot, you can have the argument with yourself, but do not waste my time, please.

Senator MACKAY —Your job is to actually answer questions.

Senator Ian Macdonald —Can you show where it is in the act or the appropriations?

Senator MACKAY —Are you seriously suggesting you are not going to answer questions on Minister Anderson's press releases?

Senator Ian Macdonald —Most definitely, and I am not going to answer questions on your press releases.

Senator MACKAY —This is not my press release.

Senator Ian Macdonald —That would be impossible.

Senator MACKAY —This is not my press release. This is Minister Anderson's press release.

Senator Ian Macdonald —I probably—

Senator MACKAY —I am asking you a question about Minister Anderson's press release.

Senator Ian Macdonald —I have answered it. I have said I am not going to. That is an answer.

Senator MACKAY —On what basis are you not going to?

Senator Ian Macdonald —Because it is not part—if you can show to me where it is in the act, in the appropriations when they eventually get to this committee in February, or in any material related to the appropriations, then I will answer it, but if you want me to answer what you mean in your press releases, nobody could do that.

Senator MACKAY —I did not ask you about my press releases.

Senator Ian Macdonald —If you want me answer what time Mr Anderson got up this morning, I cannot answer that. If you want me to answer what Mr Anderson wrote to someone about yesterday and the day before, I cannot answer that, and I will not be answering it. It is not part of the appropriations. If you want to keep asking the questions, ask away. Fortunately, we have another three hours to go, and we will be finished. If you want to spend three hours asking the same question, which is not related to the appropriations, go right ahead, but you will not get an answer because it is not part of the appropriations.

Senator MACKAY —I understand why the government wants to cover this up. I understand, Minister, why you do not want to answer these questions. But I would like to point out to you what you are doing by refusing to answer the question. You can say, `I don't know,' which is probably the truth, or you can say, `I will take it on notice,' but you cannot say it is not germane. It is within the standing orders.

CHAIR —Can I make the observation that we have now been an hour and 12 minutes on a matter that is not technically before this committee. I have allowed general discussion because it was useful and it cleared up a lot of points. But when we get into the detail of appropriations which we do not have before us, I have no book on those appropriations on which I can operate, and I am going to rule those questions out of order totally.

Senator MACKAY —I want a private meeting of the committee.

CHAIR —I do not think we should continue.

Senator MACKAY —I want a private meeting.

CHAIR —About relevance?

Senator MACKAY —Correct. About your decision to rule these questions out of order.

CHAIR —We have no material before us on that.

Senator MACKAY —I have said I want a private meeting.

CHAIR —Let us have a private meeting.

CHAIR —For the information of the minister and those at the table, we have just had a very useful discussion with one of the clerks, Cleaver Elliott. He advised me that the ruling that I gave before we had the break was wrong. The fact is that, if there is a piece of legislation or a press release or something relating to government expenditure, that can be examined in these estimates. I understand Senator Mackay wishes to continue to ask further questions on that particular matter. It does raise a number of other questions that we will have to address at our committee meeting. When we put down things to deal with about past appropriations that we had to deal with, how are we going to manage our agenda in the future? I will certainly put that on our agenda to be dealt with. It is obvious now that there is going to be a significant amount of stuff that will have to be dealt with as questions on notice and we will not have the advantage of discussion on these matters. I will now hand over to Senator McGauran, who will be acting as chair of this committee. I invite Senator Mackay to continue asking her questions.

Senator MACKAY —I will just come back to my original question about Minister Anderson's press release and the differential or the quantum that was determined in relation to the greater metropolitan distribution and the rural and regional distribution. My question, Minister, which goes to process is: how were those figures determined?

Senator Ian Macdonald —You have my previous answer to that.

Senator MACKAY —It has been a while—could you refresh my memory?

Senator Ian Macdonald —No, I am simply not going to sit here repeating answers I have given time and time again. You have my answer on that.

Senator MACKAY —What was the answer? I do not think I have an answer.

Senator Ian Macdonald —Look up the—

Senator MACKAY —I do not believe I have an answer to that.

Senator Ian Macdonald —You believe what you like.

Senator MACKAY —Will you perhaps ask Minister Anderson?

Senator Ian Macdonald —No.

Senator MACKAY —You will not ask Minister Anderson?

Senator Ian Macdonald —No.

Senator MACKAY —Will you take the question on notice?

Senator Ian Macdonald —No. If it is related to the appropriations, I will answer anything you like. You can ask what you like, Senator.

Senator MACKAY —I have a point of order, Acting Chair. We have already had a 20-minuite discussion with one of the clerks on this. I would ask you to rule.

Senator Ian Macdonald —Get it right: your discussion has been on the chairman ruling your question out of order.

Senator MACKAY —I will just clarify my point of order. The minister has refused to ask Minister Anderson and has also refused to take the question on notice. I think that is a contravention of the standing orders.

ACTING CHAIR (Senator McGauran) —Your question is not out of order. I can only urge the minister to refer the question to John Anderson, the senior minister, and he may or may not choose to answer the question.

Senator Ian Macdonald —The question has been answered.

Senator MACKAY —Minister, are you going to refer it to Minister Anderson?

Senator Ian Macdonald —The question has been answered.

Senator MACKAY —Are you going to refer it to Minister Anderson?

Senator Ian Macdonald —The question has been answered. Can I just make it clear that, from this point on, the senator can ask as many times as she likes, but I have answered it and I will not be repeating the answer.

Senator MACKAY —I think we might have to take all this back to the Senate again. What are the signage criteria and guidelines for the new program?

Mr Potter —They have not been determined yet. We had in mind something similar to that required for the National Highway Program.

Senator MACKAY —Can you just apprise me of what that process is?

Mr Potter —Basically it requires the recipient of the Commonwealth money to indicate that the money is from the Commonwealth.

Senator MACKAY —Has there been any determination done in relation to how much it is going to cost or who will bear the cost? Who will bear the cost of the signs?

Mr Potter —I imagine it would be funded out of the grant.

Senator MACKAY —So it is the local council that has to bear the cost of the signs?

Mr Potter —Yes.

Senator MACKAY —Is the display of the signage discretionary on the part of the council?

Mr Potter —The minister would have discretion under that condition. Usually these things are not black and white, I guess. The minister has the power, which is spelt out in subsection 3, to hold off the next instalment if necessary, but that is really using a sledgehammer to crack a nut.

Senator MACKAY —I would have thought so.

Mr Potter —With the National Highway Program, it never gets to that point.

Senator MACKAY —In what form was local government consulted in relation to this bill?

Senator Ian Macdonald —We have ongoing discussions with local government about a range of issues, and they form part of the advice the government takes into account in determining any program.

Senator MACKAY —What consultations occurred with local government in relation to this specific bill?

Senator Ian Macdonald —There is ongoing consultation.

Senator MACKAY —Was there any specific consultation with local government in relation to this bill?

Senator Ian Macdonald —Until there is a cabinet decision announced there is nothing specific. I can only say to you that it is a matter that we have discussed with local government, as I said, in the two years since I have been a minister—and, I am sure, a long time before that. Any number of deputations, panels and resolutions passed at regional, state and national local government meetings have all given the government a good indication of what local government would want. You will recall that there was a Moree roads conference held a few months back, and discussion has continued with the ALGA following that conference.

Senator MACKAY —As I recollect, the Moree Roads Congress set up a working group. Is that correct?

Senator Ian Macdonald —I think that is correct.

Mr Potter —That is correct.

Senator MACKAY —Has that working group met with Minister Anderson?

Senator Ian Macdonald —I think it has on a number of occasions.

Mr Potter —Yes, it has.

Senator Ian Macdonald —We met again last week or this week.

Senator MACKAY —This week?

Senator Ian Macdonald —Well, recently.

Senator MACKAY —This week or last week?

Senator Ian Macdonald —This week.

Senator MACKAY —What role did the Moree working group play in relation to the development of this proposal?

Senator Ian Macdonald —It is all part of the advice that the government took into account in coming to the decision it did.

Senator MACKAY —Did they tick it off?

Senator Ian Macdonald —No, cabinet ticks it off.

Senator MACKAY —Was the Roads to Recovery package put to the Moree working group when they met with Minister Anderson this week?

Senator Ian Macdonald —Most definitely.

Senator MACKAY —What was their view in relation to it?

Senator Ian Macdonald —These are judgments. My assessment of their response would be that it was ecstatic. That is my assessment; others may—

Senator MACKAY —You were there, were you?

Senator Ian Macdonald —Yes.

Senator MACKAY —Mr Potter, is the monitoring of the completion of the proposed additional works against the schedules submitted going to be monitored by the federal government?

Mr Potter —Yes, one of the conditions is that the councils have to account for the expenditure.

Senator MACKAY —How will that occur and what will be the time frame?

Mr Potter —At this point our intention is to require them to submit an audited statement within six months of 30 June each year. That is the normal process we adopt for the National Highway Program.

Senator MACKAY —Does the government have any authority to change or influence the additional works proposed?

Mr Potter —Do you mean do they have the power under the act to do that?

Senator MACKAY —We could start there.

Mr Potter —No.

Senator MACKAY —So the act does not provide it. Beyond the legislation, does the government have that capacity?

Mr Potter —I suppose there are always discussions that can take place, but it is not the government's intention to influence in any way the works program or particular projects.

Senator MACKAY —The reporting mechanisms are obviously going to be a bit of an impost for small councils. What mechanism will be put in place to assist small councils in the auditing process, et cetera?

Mr Potter —I do not think it will be an impost because each year every council has to audit their accounts. We had in mind that we would require them to include in that normal audit a reference to these funds. We would just require a copy of that normal audited statement.

Senator MACKAY —The early figures released by the minister's office contained a federal electoral breakdown of local government funding. I think it was put to Minister Anderson in the House of Representatives yesterday that there would appear to be double counting occurring in a number of electorates—to use an example, Brisbane City Council, which of course traverses a number of federal electorates. Is it the case that the figures that were produced in the House of Representatives would seem to be somewhat misleading in that they do not take account of that double counting?

Senator Ian Macdonald —`Misleading' is in the eye of the beholder. As I understand it, those figures were calculated in the same way they have been calculated for more than 10 years. If a council forms any part of a particular electorate, it is included in the total. I think that is actually said in a footnote.

Mr Potter —I think it said `up to' or some words like that. I do not recall exactly.

Senator MACKAY —Yes, `up to' is right. I must admit that it is difficult, Mr Potter, to actually pin it down to an individual electorate, because local government boundaries are diverse and they do cross a number of federal electorates. Does the department have a more realistic breakdown by federal electorate?

Mr Potter —If we asked them what projects they were going to do and the minister had the power to approve them, then he would know exactly where the boundary was, but that is not the way the program is going to work.

Senator MACKAY —If that is the case, why were federal electorates produced in the first place?

Mr Potter —The government asked us to do that, and it is quite normal. It is the same practice we adopt with the National Highway Maintenance Program. Maintenance is done on a state basis. From the state programs we work out on a particular corridor where maintenance money is going to be spent, and the same criteria is applied there as was applied in this case.

Senator MACKAY —What is the difference between the previous formula—the 1991 formula, with its intrastate distribution and untied nature—and this formula? Are you familiar with the previous formula which was untied?

Senator Ian Macdonald —Mr Potter may well be, but it is not his area. The 1991 formula is a formula that is adopted by the local government branch for distribution of financial assistance grants. What exactly was your question—what is the difference?

Senator MACKAY —Yes.

Senator Ian Macdonald —Do you mean in percentage terms?

Senator MACKAY —No, in terms of how it operates.

Senator Ian Macdonald —What we refer to as the historical formula is used for the financial assistance grants—untied but identified roads grants. It is simply an amount. You will see this if you read the bill. The bill just says that the amount that you got last year will be increased next year by factors which are basically the CPI and population.

Senator MACKAY —Previously the allocation was untied.

Senator Ian Macdonald —Within the state—I am sorry.

Senator MACKAY —Intrastate is what I said.

Senator Ian Macdonald —The allocation is exactly the same—intrastate. I thought you were talking about interstate. We have been through this before—it is exactly the same.

Senator MACKAY —Previously it was untied; now it is tied.

Senator Ian Macdonald —That is under the financial assistance grants act, which you will see from reading that act—an act, as I said, introduced by the previous government and supported by the then opposition. That simply says that they are identified for roads but are untied, so councils can spend them on whatever they like but they are identified as roads grants and allocated by the State Grants Commission on specific formulas relating to roads.

Senator MACKAY —Yes, they were untied.

Senator Ian Macdonald —Still are.

Senator MACKAY —They are still untied, are they?

Senator Ian Macdonald —Still those ones, not the new program.

Senator MACKAY —I am talking about the new formula.

Senator Ian Macdonald —They are different programs.

Senator MACKAY —I know that.

Senator Ian Macdonald —I do not think you do or you would not be asking these questions. The financial assistance grants moneys that go go under the financial assistance grants act. They are local government programs.

Senator MACKAY —That is right.

Senator Ian Macdonald —This is an entirely new program. It is a roads program. It is administered by the roads department. But in administering it, the government has decided that the allocations will adopt exactly the formulas used by the State Grants Commission within each state.

Senator MACKAY —That is right. In terms of the previous formula, it was untied.

Senator Ian Macdonald —It is not a previous formula, Senator. It is a current existing formula for the financial assistance grants scheme, which still continues. The formula identifies the amount that each council should get but once each council gets it they can spend it on absolutely everything. They get it on the basis of their roads, but they can spend it on absolutely anything. That is under the existing financial assistance grants act.

Senator MACKAY —Right.

Senator Ian Macdonald —It was in place for the last 10 years and it will continue into the future. This is a completely new program, a completely new act. What more can I explain?

Senator MACKAY —Well, you could answer the question, which is: previously, under the old formula, it was untied; under this proposal the funding is actually tied. Is that correct?

Senator Ian Macdonald —Yes, we explained that. That is correct.

Senator MACKAY —That is all I wanted to know. In terms of some advice I have received from the Clerk of the Senate, the comment has been made to me that the minister clearly has a discretion whether to include conditions about the repayment of funds and has discretion in respect of any other conditions that may be imposed. Would that be a fair summation?

Senator Ian Macdonald —Who would ever attempt to follow the advice one would get from the Clerk of the Senate? Mr Potter would not be in a position to comment on any non-legal opinion, that the Clerk of the Senate might choose to give you. If you ask him his interpretation of the act, I guess he can give it to you. But he cannot comment on some opinion that some untrained person has given—

Senator MACKAY —Some untrained person?

Senator Ian Macdonald —that we have not seen.

Senator MACKAY —I will put it this way: it is contended, Mr Potter, that the minister clearly has discretion whether or not to include conditions about the repayment of funds and has discretion in respect of any other conditions that may be imposed. Do you agree with that?

Senator Ian Macdonald —Again, you can ask Mr Potter if the act says this or that. You cannot ask him to comment on a contention that he has not seen and does not know who has given it.

Senator MACKAY —This is my contention. If you have such a poor view of the people who advise the Senate, I have actually recast the question as being my question.

Senator Ian Macdonald —Can you put it to Mr Potter again, then?

Senator MACKAY —Mr Potter, it is my contention that the minister seems to have discretion whether to include conditions about the repayment of funds and has discretion in respect of other conditions that may be imposed by the minister. Would you agree with that?

Senator Ian Macdonald —Does the minister have that discretion?

Mr Potter —Yes, he does.

Senator MACKAY —Very good. Thank you.

Senator Ian Macdonald —That is an answer that was given about an hour ago.

Senator MACKAY —Interestingly, the list will be tabled in the House of Representatives—and I appreciate this is to be followed up by a notice in the Gazette setting out the correct legal names for the their various councils. I notice that there is no mention of tabling the list in the Senate. I presume that is an oversight. Is that correct?

Mr Potter —I am not an expert on parliamentary procedure, Senator.

Senator Ian Macdonald —What was the question again?

Mr Potter —The act provides for the final list to be tabled in the House of Representatives. The senator is asking why it is not going to be tabled in the Senate and is that an oversight?

Senator Ian Macdonald —Good question.

Mr Potter —I can answer it. I cannot think of any parliamentary reason why that would not be the case, so it is an oversight, Senator.

Senator MACKAY —Clause 11 of the bill provides:

The Minister may publish administrative guidelines in relation to payments under this Act and in relation to the funding conditions.

It seems to me it is not specified how or when these guidelines should be published. What is intended, Mr Potter? Do you know?

Mr Potter —Before the payments are made, we will prepare for the minister some draft guidelines for him to approve.

Senator MACKAY —It says the `Minister may publish'. Is it the intention, Senator, that the minister will publish the administrative guidelines? Will they be made public?

Senator Ian Macdonald —I would have to ask Mr Potter that.

Mr Potter —Yes.

Senator MACKAY —Yes, they will.

Mr Potter —We would have to let the councils know. But, in any case, we would put them on the web site, I would imagine.

Senator MACKAY —You said `before the payments are made'. That is clearly axiomatic. Do you have any idea about the time line in relation to that?

Mr Potter —I can only talk about what we would propose to do: that is, we intend to make payments quarterly in advance.

Senator MACKAY —So when would the guidelines be published?

Mr Potter —As I answered before, in terms of the conditions, as soon as possible.

Senator MACKAY —Let us say the legislation goes through the Senate next week—by the end of the year? When?

Senator Ian Macdonald —As soon as we possibly can. It is the government's goal—there is a real need for money to be spent on local roads, a desperate need, one might say. We want to get the money out and flowing and the roadworks started as soon as possible. It would be the government's hope that it would be paid by February.

Senator MACKAY —February.

Senator Ian Macdonald —That is our hope. It depends on resources and whether that is physically possible.

Senator MACKAY —I appreciate that is a goal. As I understand Mr Potter, we are talking at this point about quarterly payments. Is it permissible for the government to notionally allocate the entire amount over a period of four years and announce it up front?

Mr Potter —The government has announced how much each council is going to get.

Senator MACKAY —No, in terms of the projects.

Mr Potter —The government will not be announcing projects, as I understand it.

Senator Ian Macdonald —We have announced up front this week what each council will get. So everyone will know what they are going to get for the next four years. I suspect—and I have not studied the bill as well as I could—in some island councils where the amounts are very small under the formula we would probably pay a year up front. It actually says that in the explanatory memorandum. Item 15 of the explanatory memorandum says:

The Minister is to have discretion to pay the amount in one or more instalments and the timing of the instalments is also subject to the discretion of the Minister. It is likely that small local government bodies will receive their full entitlement in one instalment.

Senator MACKAY —So it would be, Minister, confined to small councils. Mr Potter, you said that it is your understanding that the government will not be announcing the projects. Do I take that to mean that the local councils will be announcing the projects? Is that correct?

Mr Potter —Yes.

Senator MACKAY —So the government will not be making the announcements.

Mr Potter —As I understand it, no. What the council does and how they make that announcement will be up to them obviously.

Senator MACKAY —I appreciate that. So local council X gets the tick from Minister Anderson and local council X makes an announcement that they have got the funding. The government is not involved in that.

Mr Potter —I think the council, as long as they were sure they were going to spend it on a road, could announce it before they got the money because the minister will not be saying, `I approve this project or I tick this project off.' That will not happen.

Senator Ian Macdonald —Bear in mind, too, Senator, that many projects will be reseals, regravelling, even grading in some instances, or a bit of shoulder widening. It is maintenance and capital expenditure at the discretion of the council.

Senator MACKAY —Yes, that is fine. It is conceivable that Minister Anderson could in fact announce the entire four-year funding up front.

Senator Ian Macdonald —No, we have already done that.

Senator MACKAY —No, in terms of the specific projects. If a council puts up a proposal which spans four financial years to the minister—say, it is the building of a major road—then the minister could say, `Yes, that is fine,' and the council could go off and announce that. It would be a one-up all in announcement over four years.

Senator Ian Macdonald —Yes.

Senator MACKAY —Good. I think I might have finished with this. Anything else we can deal with in the committee stage.

Senator Ian Macdonald —I have your undertaking that there will not be a committee stage, Senator.

Senator MACKAY —You do not have any such undertaking. What I said initially, Minister, if you wish me to clarify, was that what I have attempted to do here today is provide a more expeditious passage to the bill, but it does not mean there will not be a committee stage.

Senator Ian Macdonald —I am disappointed to hear that.

Senator MACKAY —You were talking earlier in relation to the job creation aspects of the Roads to Recovery package. This leads on to my next area. How was that calculation determined?

Senator Ian Macdonald —What calculation?

Senator MACKAY —The job creation aspects of the Roads to Recovery package.

Senator Ian Macdonald —Which calculation, Senator?

Senator MACKAY —I think the minister has a figure of 17,000.

Senator Ian Macdonald —Can you be precise and refer me exactly to who said what and where and I will try to answer it?

Senator MACKAY —The government has contended that the Roads to Recovery package will create jobs in regional Australia. In fact, you had interaction with Senator Woodley a couple of hours ago in relation to this.

Senator Ian Macdonald —I said that earlier, yes.

Senator MACKAY —What is the government's estimated figure for job creation as a result of this program?

Senator Ian Macdonald —Has there been a figure announced?

Senator MACKAY —I am asking you.

Senator Ian Macdonald —I have not heard. Does anyone know whether there has been an assessment?

Mr Potter —I think there was in the press release, yes.

Senator Ian Macdonald —We can perhaps take that on notice.

Senator MACKAY —It is in one of the press releases; I can find it. You have to take on notice the government's projected figure for job creation.

Senator Ian Macdonald —What I will take on notice is: have we made an estimation of what jobs might be created and the basis of getting to that? I would assume that councils have rules of thumb. That would be my guess: if we have mentioned a figure, that is how we would have got to it. Anyhow, we will take that on notice.

Senator MACKAY —I have it here somewhere. It is in one of the government's press releases.

CHAIR —It is being taken on notice.

Senator MACKAY —But I can actually provide the figure, if you give me just a minute.

CHAIR —While Mr Potter is looking, why don't you ask the next question?

Senator MACKAY —Okay. Could you also take on notice how that figure was arrived at—

Senator Ian Macdonald —I said we would do that.

Senator MACKAY —if the figure exists.

Senator Ian Macdonald —I said we would do that.

Senator MACKAY —In relation to the recent government response on national competition policy, what input did the department have?

Ms Meakins —Our department contributed to the government response.

Senator MACKAY —I understand that the department made a submission to the Senate select committee.

Ms Meakins —Yes, the department did make a submission.

Senator MACKAY —What involvement did the department have, precisely, in relation to the preparation of the government's response?

Ms Meakins —We were one of a range of agencies that submitted input into that government response, and obviously our input was directly related to rural and regional matters.

Senator MACKAY —What was the nature of that contribution? Was it a paper, or was it an IDC, or what?

Ms Meakins —My understanding is that our contribution was written and in bilateral discussions.

Senator MACKAY —This was agency to agency, officer to officer?

Ms Meakins —Yes.

Senator MACKAY —In terms of that agency to agency, officer to officer contribution, what were the department's views?

Ms Meakins —I do not have a lot of detailed information with me. Could we take that on notice?

Mr Yuile —I do not either. Sorry, Senator: usually on the development of responses to this or to reports and other reports, of course, there are interagency interactions. But it is a question for the responsible agency and the government's decision as to what the final decision is. It is not the usual practice to reveal interagency discussions on a whole range of things.

Senator MACKAY —Not usual practice where?

Mr Yuile —In other departments I have been part of, that has been part of the decision making process of ministers, and—

Senator MACKAY —So it is not usual practice in an estimates hearing: is that your contention?

Senator Ian Macdonald —That is right.

Mr Yuile —In the context of your particular question of what specific officers said to other officers on a report, it is not the usual practice to discuss officers' opinions or what discussions might take place. It is a question for submissions that are made public, obviously, in the context of this ANTS report and then the government's consideration of that.

Senator MACKAY —I really do think it is a job for the chair to make these determinations. But it is and it is not: where it relates to advice to government, you are correct. That is why I asked the question in the way I asked it. So is it okay to be taken on notice?

Senator Ian Macdonald —We will see whether we can provide an answer. I am sorry I was not listening closely, but if it is advice to government, of course, the answer is that we will not be disclosing that.

Senator MACKAY —Mr Matthews is not here. Can I ask why he is not here.

Senator Ian Macdonald —He has more sense?

Mr Yuile —We had a range of other meetings today and, as I understood it, this hearing moved around in terms of the timing. But he had commitments that he had to undertake.

Senator MACKAY —The difficulty I have here is that I have a number of questions in relation to the foundation. Mr Matthews is the only member—

Senator Ian Macdonald —Did you indicate that you wanted him?

Senator MACKAY —Yes.

Senator Ian Macdonald —You did indicate that you wanted him?

Senator MACKAY —You do not indicate that you want the Secretary. You assume that the Secretary will turn up.

Senator Ian Macdonald —In all the estimates committees I have ever been involved with—and there have been more than my own—sometimes the Secretary turns up and, if he does not, his deputy turns up. Mr Matthews regularly attends these things. He is not here today; as Mr Yuile has announced, he has other things. But if you have questions, we will take them on notice. If you did want any specific officer, if you did us the courtesy of letting us know, we would do our utmost to help the committee by getting the particular officer.

Senator MACKAY —Fair enough. I will put a question on notice for the Secretary, particularly in relation to the foundation, because he is the only one who can answer those questions.

CHAIR —At the completion of Friday's estimates I did ask the members of the committee whether or not the officers who were here were the officers we wanted back, and the answer to that was yes.

Senator MACKAY —Mr Matthews—and I do not want to make a big deal out of this—is not normally required. I am not making a point about his not being here. It is just that he is the only one who can answer the questions on the foundation, that is all.

Mr Yuile —He has expressed to me that, if he had known there were questions, he would have attempted to rearrange. He is certainly happy to do that.

Senator MACKAY —I do not know whether anybody here is able to help me. I will start and, if not, we can put them on notice. How about that?

CHAIR —Good.

Mr Yuile —Fine.

Senator MACKAY —We got a fairly detailed response to a number of questions on notice that I put on from the last estimates. In those questions on notice responses, it was stated that details of donations from the foundation must be supplied to the department within two months of the completion of each financial year. Are these details now available?

Senator Ian Macdonald —I do not think it has been going for a financial year yet, has it?

Mr Yuile —I do not believe so.

Senator Ian Macdonald —Who knows about it?

Ms Meakins —We have received details of the donations. They have been received within the department.

Senator MACKAY —Given that codicil, which is the two months after the completion of the financial year, when will they be made available?

Ms Meakins —Are you asking for them to be provided to the committee?

Senator MACKAY —In terms of the responses I got to the questions on notice, it said that details of the donations will be supplied to the department within two months. That has happened.

Ms Meakins —Yes.

Senator MACKAY —Now I am asking: can we have the details of the donations?

Ms Meakins —My understanding is that in relation to the letter from the chair of the foundation to the chair of this committee, there was a range of accountability measures. Seven accountability measures were detailed, and it was made clear that information contained in any one of those seven accountability measures could be provided to this committee. My understanding is that that would extend to the total quantum of donations received but not to the names or amounts from individual donors.

Senator MACKAY —Can we have the quantum or quanta?

Ms Meakins —Yes, you may. For financial year 1999[hyphen]2000, the total amount was $568,110.70.

Senator MACKAY —How many donations does that aggregate constitute?

Ms Meakins —I think that is a difficult question for me to answer. I do not think we should be revealing that, under the terms of the letter from the chair to the chair of this committee.

Senator MACKAY —But, as I understood it, it was to protect the identity of the donors, which I am totally comfortable with. I am just asking how many donations have been received.

Senator Ian Macdonald —The officer has given you her view, Senator, I am sorry.

Senator MACKAY —So you are not going to indicate how many donations have been received?

Senator Ian Macdonald —The officer has given you her view. If you ask me, I will check the advice the officer has given you.

Senator MACKAY —Okay.

CHAIR —Do you want the minister to do that?

Senator MACKAY —Yes; that would be good, thank you, Chair. The details of the grants that have been made by the foundation: do we have those handy?

Ms Meakins —Yes, I have a list with me. I will just locate them.

Senator MACKAY —Can they be made available to the committee?

Ms Meakins —Yes, they have been publicly announced in two separate media releases—but, yes, they are publicly available.

Senator MACKAY —Under the Regional Community Foundations initiative, do you know how much has been allocated?

Ms Meakins —My understanding from the foundation's media release of 16 August was that the total amount granted under that initiative was $270,000.

Senator MACKAY —I am going to the responses to my questions on notice here: have the state governments been consulted in respect of the community foundations?

Ms Meakins —I do not know the answer to that.

Senator MACKAY —Can you take that on notice, please?

Ms Meakins —I think it is a matter for the foundation to deal with.

Senator MACKAY —I understand. This is the dilemma. How are we going to handle this if you cannot take it on notice?

Senator Ian Macdonald —I think Mr Matthews has been through this at previous estimates committees at some length and we have made written material available and we have been very open about what can be and cannot be done. But it really comes back to a basic understanding of what this foundation is. This is a private foundation. It is not a government agency. It has nothing to do with the government, except that the government made a donation of, in effect, $14 million[hyphen]odd. In giving that donation, we required some accountability for the spending of our money and we required that the rules provide for the government to have one nominee on the board. Apart from that, it is really a private foundation that will do its good works in accordance with its constitution.

Senator MACKAY —I appreciate that, Minister. I suppose what I might do is put the questions on notice and Mr Matthews can take them up with the board. Would that be a reasonable course of action?

Senator Ian Macdonald —It is reasonable. I suspect that we have already done that and I suspect he has responded. But by all means—

Senator MACKAY —No, there are additional questions that we have not asked before.

CHAIR —As a `shareholder'—and I put that in inverted comas because I am not quite sure of the status—we would get a copy of the annual report and statements?

Senator Ian Macdonald —The annual report will be publicly available as well as being available to us, and certainly the committee will have it, Mr Chairman.

CHAIR —Thank you.

Senator MACKAY —When will that be available?

Senator Ian Macdonald —Mr Matthews is aware of these things because he is a board member, not because he is secretary to this department. So the officers here do not really have it. We will find that out for you, Senator.

Senator MACKAY —Take that one on notice and I will put the rest on notice for provision by Mr Matthews, who can then take it to the board. What output does the Remote Communities Liaison Service fall under? The reason I ask is that there is not a lot of information in the annual report and I cannot find it in the output section.

Mr Bogiatzis —Page 81 of the Portfolio Budget Statement has it under output group 3, Services to communities.

Senator MACKAY —It is under there, is it?

Mr Bogiatzis —Correct.

Senator MACKAY —We are one year into the two[hyphen]year pilot. What is happening? Can I be apprised of a progress report? Has there been an interim assessment?

Mr Bogiatzis —There has not been a formal interim assessment.

Senator MACKAY —We have heard in previous estimates rounds that an extension of this pilot would depend on budgetary considerations. Is that still the case?

Mr Bogiatzis —That is correct.

Senator MACKAY —The summit steering committee recommended an extension. Is that being considered in the context of the budget?

Mr Bogiatzis —Any extension would be considered in the context of a budget.

Senator MACKAY —So you are not aware of any proposals to expand the pilot at this point?

Mr Bogiatzis —Not at this stage.

Senator MACKAY —At the May estimates we were advised that the on-costs for the officer in Longreach were $270,000. Is that correct?

Mr Bogiatzis —It costs roughly $120,000 per annum to the Commonwealth.

Senator MACKAY —That is to the Commonwealth. What is the aggregate figure?

Mr Bogiatzis —We receive support in kind from Longreach Shire Council, in relation to accommodation and other types of support.

Senator MACKAY —Hence the $270,000 figure in terms of on-costs.

Mr Bogiatzis —It could be approximately correct.

Senator MACKAY —How does the liaison service fit with the Regional Solutions proposal or the section in the Regional Solutions guidelines which says at page 6 that one project which may well be considered would be the employment of a community information officer? Would they be similar or completely different?

Mr Bogiatzis —The Rural Communities program also funded information officers to communities; it would be the same sort of relationship.

Senator MACKAY —So the answer is yes, it could.

Mr Bogiatzis —It could.

Senator MACKAY —Can I get an upgrade on the Rural Transactions Centres program in financial terms? Is the department on track to spend the allocation this financial year?

Senator Ian Macdonald —Was the first question what was the allocation?

Senator MACKAY —No. Is the department on track to spend the allocation?

Senator Ian Macdonald —This program is entirely community driven. The department has the money to spend on any reasonably anticipated call from communities for it, and we are ready and willing as communities apply. You will be pleased to know that I have just signed off on another 16 business planning applications, and we are about to announce a number of new projects.

Senator MACKAY —The budgetary allocation for 2000[hyphen]01 was $23 million, including the underspend roll-over. Is that likely to be allocated and expended in this financial year, Ms Parsons?

Senator Ian Macdonald —It will be spent if there are applications for it.

Senator MACKAY —That is why I am asking how we are going. We are halfway through the financial year. Is the department on track to expend that money?

Senator Ian Macdonald —I guess the answer we could give you is what we have spent to date.

Senator MACKAY —Okay.

Senator Ian Macdonald —But what we will spend in the next seven months depends on what applications come in and on the state of readiness of various applicants to start spending the money they have already been allocated.

Senator MACKAY —That is fine. What is the spend, and what is the allocation to date?

Senator Ian Macdonald —This financial year?

Senator MACKAY —Yes.

Senator Ian Macdonald —I am not sure if we have got that. If we have, we will give it to you; if we have not, we will take it on notice.

Ms Parsons —I can give you details. For the first round this year we allocated $1,584,000. There has been a further business planning round at a total of $53,240 and the minister has just signed off another round of business planning which is $151,876.

Senator MACKAY —So what is the aggregate allocation so far?

Ms Parsons —I have not added those figures up but it is of the order of $1.7 million.

Senator Ian Macdonald —We have given you the three figures; you can add them up, Senator.

CHAIR —Is the rate of application increasing as we go into the program, or is it static, or is it just up and down all over the place? Do you get a rush of applications and then none for a period of time?

Ms Parsons —No, they are steadily increasing.

Senator Ian Macdonald —As we expected.

Senator MACKAY —So far we have allocated $1.79 million for this financial year. Has that allocation all been expended?

Ms Parsons —No, it has not all been put out the door yet because some of the business planning announcements have probably not even been made yet, if the minister has just signed them off. Certainly they will be made this financial year.

Senator MACKAY —How much has been expended to date, roughly?

Ms Parsons —I could not tell you at the moment exactly what has been—

Senator MACKAY —You can take this on notice, if you wish.

Ms Parsons —I can take that on notice and tell you how much has been spent.

Senator Ian Macdonald —Just to be helpful—again this is term allocation—when we allocate money, once the contract is signed do we send the whole amount or do we pay it in instalments as guidelines are met?

Ms Parsons —It depends. Some of the amounts are paid in full up front but some of the proposals actually are seeking money beyond the first year, so there are actually amounts to be paid in future years. Obviously the amounts that we have paid to date depend on whether the contracts have been signed by the applicant.

Senator MACKAY —There is now a new provision for ongoing recurrent funding up to five years as well.

Ms Parsons —That is correct.

Senator MACKAY —We will deal with that in a minute.

Ms Parsons —There has always been a provision to pay beyond one year, so there are a number that have funding beyond this year.

Senator MACKAY —I am with you; that is fine. Can someone give me a run-down on how the field officer network will operate?

Ms Varova —The field officers will be located in regional areas across the nation. They will provide support in the first instance to communities, assisting them in formulating applications, and providing advice on the program itself and how different communities may benefit from it. Similarly, they will perform the role of information provider across a number of different programs if that is required. If communities wish to seek information on programs beyond the RTC program, they will be doing that as well. They will also provide support to those rural transaction centres which are in the process of business planning, establishing the centre or actual first years of operation. That will be primarily as a support to provide expertise and advice if communities so require it and they need assistance of that sort. That is the intent of the network. At this stage we have tendered out the whole project of the field officers. We are presently in negotiation with a preferred tenderer. We are finalising negotiations on a contract.

Senator MACKAY —What is the appropriation for that part of the program?

Ms Varova —There is no separate appropriation for that part of the program.

Senator MACKAY —How much will it cost?

Ms Varova —I am not in a position to disclose that yet because we are actually negotiating, as we speak, with a party. Once that is concluded—and it will be very shortly, within a matter of a week or two weeks—I could take that on notice and provide it.

Senator MACKAY —How many field officers will there be?

Ms Varova —That is part of the negotiations. We are finalising that. If I could take those content questions on notice, as soon as we have the contract in place—you will not have to wait long—we can provide the detail to you.

Senator MACKAY —That is fine. I appreciate that.

Senator Ian Macdonald —It might be better to leave that until the February estimates.

Senator MACKAY —It has been taken on notice. One of the reasons we are traversing this—I do not know whether you are aware of this, and I hope you are not—is that on 11 October when the new changes were announced we requested a briefing from you on rural transaction centres. We had no contact at all from your office in relation to that. I suspect you are not aware of that, which is why I am making you aware.

Senator Ian Macdonald —Could you—not now—indicate for me—this is for my benefit, not yours—when and where the request was made and by whom to whom.

Senator MACKAY —I can give you a copy of the letter. It may not have reached the office. I do not know.

Senator Ian Macdonald —You wrote to me about it?

Senator MACKAY —Yes.

Senator Ian Macdonald —That is for my own benefit. If we have not responded, I will owe you an apology. Let us fix a date as soon as possible.

Senator MACKAY —I really did that to speed this process up. That is why I wrote on 11 October.

Senator Ian Macdonald —Is it addressed to me?

CHAIR —`Senator Ian Macdonald', yes.

Senator MACKAY —It may have got lost in the mail. It was put in the internal mail.

Senator Ian Macdonald —We do not usually lose things.

Senator MACKAY —Not you. It may have got lost in the internal mail at Parliament House.

Senator Ian Macdonald —Can I get one of your officers to phone Ms Staples.

CHAIR —There is a copy of the letter coming. You will have it in 30 seconds.

Senator Ian Macdonald —I am just asking if I could get one of your staff to contact Ms Staples in my office, and we will arrange a time as soon as possible to brief you. What particularly did you want to be briefed on? The new arrangements?

Senator MACKAY —Yes.

Senator Ian Macdonald —Yes.

Senator MACKAY —I think I sent a similar letter on regional solutions as well. I do not have that with me, but we can get you a copy of that as well.

Senator Ian Macdonald —Perhaps we can do both at the same time. Anyway, you let our officers work out the most convenient time for everyone to do it and I will get people from the department along.

Senator MACKAY —Thank you. We might do that, because there are a number of questions that I have that relate to what Ms Varova has indicated is part of the contract negotiations at the moment, and they will be completed within a week, she said.

Ms Varova —That is our estimate, Senator.

Senator Ian Macdonald —I will be making a full statement once the tenderer is selected and the conditions known. It is really a question of when you have time after that.

Senator MACKAY —How is the provision for an LPO to apply for an RTC funding grant going to work?

Ms Parsons —We have not finalised the arrangements yet. We have contacted Australia Post and put some advice to the minister on the way it might be managed.

Senator MACKAY —When do you think that will be finalised?

Ms Varova —I would say shortly. The minister would not take long to consider it, I would imagine, but it is obviously up to him.

Senator MACKAY —What precipitated this change in policy?

Senator Ian Macdonald —Which change of policy?

Senator MACKAY —The specific provision for the LPO involvement in RTCs.

Senator Ian Macdonald —Nothing in particular and everything in general, I guess. We are always looking for better ways to improve on government programs, particularly something that, if I might say, is as radical as this proposal. I do not think governments have ever done anything like this before and we always look to enhancement and improvements. I meet with a lot of people about it. People come in and make suggestions to me and we consider all suggestions for improvement.

Senator MACKAY —The reason I ask, Ms Parsons, is that currently LPOs receive top-up payments from Australia Post—you would be aware of that—in relation to their operation.

Senator Ian Macdonald —I am not sure that we are aware.

Senator MACKAY —Are you aware that LPOs receive top-up payments from Australia Post?

Ms Parsons —Are you talking in relation to whether they have giroPost or just generally?

Senator MACKAY —In terms of being a licensed post office, they actually get remunerated by Australia Post for undertaking that service.

Senator Ian Macdonald —Do you really know this?

Ms Parsons —Yes, I know that. I do not know the details of how they are derived, though.

Senator Ian Macdonald —It is not our area, as you would appreciate.

Senator MACKAY —I understand but it is important in that LPOs now have the capacity to apply for funding. My question is: given that they get top-up payments from Australia Post, how is that going to impact in relation to rural transaction centre funding?

Ms Parsons —Those details are yet to be worked out. We do need to have further discussions with Australia Post and a look at individual cases.

Senator MACKAY —So you have had one interaction with Australia Post but the details in terms of the LPO involvement are yet to be worked out.

Ms Parsons —That is correct.

CHAIR —Ms Varova, did I hear you say that those arrangements are close to being finalised?

Ms Varova —No, I was referring to the rural transaction centre field officer network.

CHAIR —Okay, that is a separate subject. I was just clarifying that.

Senator MACKAY —In terms of your meetings with Australia Post, have there been any discussions on the deregulation of Australia Post and the impact that might have on this?

Senator Ian Macdonald —Again, it is not particularly relevant to our program. Our program is about ensuring people in rural and remote areas have the best access to services possible. The extension to allow post offices to apply was very much conditional upon the fact that they could demonstrate community support. I suspect each one would be dealt with on its individual circumstances.

Senator MACKAY —It is—and probably only to this extent—in terms of the RTC program. It is obviously very important to the regional services portfolio but, given that Australia Post has estimated that the deregulation is going to cut its profit margin by 25 per cent, this would have an obvious impact—and they have stated this—on the number of LPOs that exist. That is why I am quite surprised that they have not raised the prospect of the legislation with the department. I am surprised that they have not raised it full stop.

Ms Parsons —I was not involved in that discussion with Australia Post but I understand that it was not raised.

Senator MACKAY —Has the department of communications raised the Australia Post deregulation with the department in its coordinating capacity?

Ms Varova —No, but when you say `in its coordinating capacity' I think we had a discussion at the last estimates as well that we do not coordinate regional policy across the Commonwealth. Every minister has the prerogative in his or her own portfolio area. What we do is work with other portfolio agencies to ensure that they are conscious of regional perspectives and take those into account in their policy development processes. In short, we are not the final arbiter of regional policy across the Commonwealth.

Senator MACKAY —No, but as I understood it yours was the department that was to be advised if there was likely to be any diminution in service provision in regional Australia. If that is not the case, please correct me, but I thought we actually went through this the other day.

Ms Varova —Yes, but we have not received any information.

Senator MACKAY —That is fine. So Australia Post have not approached you in relation to the deregulation and nor has the department of communications. What was the final cost of the northern Australia summit? You might want to take this on notice.

Mr Bogiatzis —The cost is still being finalised, although we have a general estimate. It will be slightly over $1 million for the entire process, including the preliminary consultations and the forum itself in Katherine.

Senator MACKAY —Is a breakdown of the $1 million available?

Ms Varova —Not by consultation.

Senator Ian Macdonald —Are they finished?

Ms Varova —No, we are still receiving some bills. We do not have the very final figure. It is an estimate at this stage.

Senator MACKAY —Please provide a breakdown on notice.

Senator Ian Macdonald —There will be a breakdown at the end, Senator.

Ms Varova —I will provide a breakdown between the actual forum itself and the consultations. I am reluctant to give you a figure that is only an estimate.

Senator MACKAY —Take it on notice and when you finalise it, let us know. What was the selection process for the two co-convenors of the Northern Australia Summit?

Senator Ian Macdonald —I looked at several suggestions and tried to pick two that were geographically spread apart.

Senator MACKAY —Did the department provide the minister with a list of suggestions?

Ms Varova —Yes.

Senator MACKAY —Which organisations do the two co-convenors represent?

Senator Ian Macdonald —I do not think they represent any. Are you talking about the co-chairmen?

Senator MACKAY —Yes.

Senator Ian Macdonald —I do not think they represent anybody.

Ms Varova —Not as individuals.

Senator MACKAY —If they did not represent any organisation, what was their claim to fame in terms of selection?

Senator Ian Macdonald —We wanted someone who could chair a meeting and keep it moving, and who knew something about Northern Australia.

Senator MACKAY —Presumably they are personally known to you, Minister?

Senator Ian Macdonald —One of them is: Lea Taylor from Rockhampton. He is the former Mayor of Mackay. I am sure he would have been known to you, Senator, with your interest in local government. He was mayor of a very large council.

Senator MACKAY —He is not mayor any longer.

Senator Ian Macdonald —No.

Senator MACKAY —Is he involved in the local ACC up there in Rocky?

Senator Ian Macdonald —I do not know.

Ms Varova —I am not aware of that, Senator.

Senator MACKAY —Minister, you put out a press release: where is the $5,000 sponsorship for the PNG gas project symposium coming from?

Senator Ian Macdonald —Where in our department?

Senator MACKAY —Yes.

CHAIR —Did you say PNG?

Senator Ian Macdonald —The PNG gas line.

CHAIR —It is not pastoralists and graziers?

Senator MACKAY —No.

CHAIR —There are a number of PNGs—a number of acronyms. I hope Hansard has the right acronym.

Senator Ian Macdonald —Papua New Guinea. We are referring to the pipeline coming from Papua New Guinea down the spine of Queensland. The Townsville enterprise offered to run a forum and we agreed to make a small contribution under the Rural Communities program—RCP.

Senator MACKAY —Presumably it is a one-off.

Senator Ian Macdonald —Yes.

Senator MACKAY —How is the virtual gateway proposal going?

Mr Bogiatzis —It is at a very early stage of development. We are looking at the options available to us.

Senator MACKAY —Has there been any money allocated? How much will it cost?

Mr Bogiatzis —We will not have a clear figure until we look at the options, but we are not looking at a very high level of expenditure.

Senator MACKAY —And this will be within internal departmental resources?

Mr Bogiatzis —Yes.

Senator MACKAY —When will the formal response to the northern summit be available?

Mr Bogiatzis —That is being worked on at the moment. We are negotiating a response with individual consultations and to the Katherine forum by about May next year.

Senator MACKAY —Presumably, recommendations emanating from that will be considered in the budgetary context. Would that be a fair comment?

Mr Bogiatzis —Yes.

Senator Ian Macdonald —Some already have been, Senator, I am pleased to say. One of the major calls at the northern forum as well as the regional Australia forum was for local roads. I am delighted that we have been able to meet that call already.

Senator MACKAY —The Northern Territory is thrilled to bits! In the last budget round of hearings, Ms Varova, you indicated that the deferred forum that was to be held in New England was going to be held in December. What is happening with that? Is that ever going to be held?

Ms Varova —I do not know, Senator. It may very well not be. It has been deferred and deferred. The situation has not changed. We are still working with the New South Wales government on that. The processes have extended; their local community consultations, et cetera, at the ground level have gone on. We have met with them regularly—when I say `regularly' I mean every few months to ensure that when they are ready we might be ready. We were hoping that it would be December. It is not. At this stage we have no date. It may be one of those things. Whenever the community is ready, the state government is ready, we can hold it. We are not pushing it ourselves. We were never in the business of imposing that forum, so we are more than happy to wait and do it at their leisure, so to speak. I am not going to give you a date again.

Senator MACKAY —Fair enough. Work in progress.

Ms Varova —Yes, it is.

Senator MACKAY —Ms Varova, you also mentioned at the last estimates a review of the first forum being completed in July. Has that been completed yet?

Ms Varova —Yes, pretty well. I do not know if we have sent it to the minister yet.

Mr Bogiatzis —No.

Ms Varova —We have just received the report.

Mr Bogiatzis —That is correct. We have received an early draft only.

Ms Varova —That is right. So we are working on providing comments to the consultant that we took on board, and when that is finalised we will be providing that to the minister.

Senator MACKAY —Subject to ministerial approval, can you take on notice that we would like a copy of it or at least a summary of the findings and recommendations?

Ms Varova —I will take that on notice.

Senator MACKAY —Thank you. Has the department been involved at all in the announcement of the $10 million flood relief package?

Mr Yuile —Yes, it has. But that is under the territories program.

Senator MACKAY —It comes under regional—the flood mitigation program.

Mr Yuile —It is the Territories and Regional Support Division.

Senator MACKAY —Can you take me through how the department has been involved?

Senator Ian Macdonald —What we are saying, Senator, is that it is the other division. It is for the next lot of officers.

Mr Yuile —That is all I was trying to say.

Senator MACKAY —I was going to move on to local government now.

Senator Ian Macdonald —Senator, in relation to your letter to me requesting that briefing, my Chief of Staff has spoken to every member of the staff, particularly the member of staff who is most closely involved in these issues, and no-one has seen or heard of your letter. We have also got from our correspondence register details of every piece of correspondence we have received from you between July and the current time and that was certainly not received by us. I just want to put that on the record. But it does not alter the fact that we will meet with you at our joint convenience to give you the information you wanted.

Senator MACKAY —I can assure you it was sent, so I think something has happened between our sending it and it being received.

Senator Ian Macdonald —Are you finished with all the regional areas?

Senator MACKAY —No, I may come back to them.

Senator Ian Macdonald —We have two officers who could move on, if you did not have anything else.

Senator MACKAY —It is all in the same pool, as it were. We only have another hour and a half to go.

CHAIR —Senator Mackay has requested a five-minute comfort break, which I think is reasonable.

Mr Yuile —Senator, would you like me to ask the officer involved in flood mitigation?

Senator Ian Macdonald —No, they will be here next.

Senator MACKAY —Just ask them.

Senator MACKAY —I want to ask some questions in relation to the local government component of Networking the Nation. Can somebody give me an update on how that is going?

Senator Ian Macdonald —It is a program of DOCITA rather than us. We help out, introduce parties and put forward some advice to DOCITA, but it is really something you would have to ask DOCITA about.

Senator MACKAY —What is the department's involvement? Purely advisory?

Senator Ian Macdonald —Yes.

Senator MACKAY —Does the department have any information about applications or anything like that?

Senator Ian Macdonald —That is something you would have to get from DOCITA.

Senator MACKAY —This is the local government fund? So NOLG has not been involved in this?

Senator Ian Macdonald —It is Networking the Nation, which is run by DOCITA. The money comes out of that. We have provided advice and we have been involved. They consult us on applications.

Ms Parsons —We have access to all of the applications and we provide formal comment on the applications.

Senator MACKAY —How many applications have you provided formal comment on?

Ms Parsons —I could not give you the answer to that. I think it has varied in the two rounds that we have looked at in terms of percentage. Where we have something to say and some useful knowledge or value to add, we make a comment.

Senator MACKAY —It seems that only $4 million of the $45 million has been allocated to date. Do you have any information in relation to that?

Ms Parsons —No.

Senator MACKAY —In relation to LGIP, the annual report notes that the department provided $2.51 million for local government implementation of the GST last financial year. We have been through the exercise in previous estimates of determining how that figure was arrived at, which was $2,000 per council. We asked previously how this $2,000 was determined. How was it determined?

Ms Parsons —In fact, that was not the only figure; there was a notional amount per council and there were also amounts paid to each of the local government associations, if you recall. The amount per council was purely a notional amount having regard to the number of councils and the amount of money available.

Senator MACKAY —There was a carryover of just under $1 million. Why was that carried over and not allocated or expended?

Ms Varova —I think we discussed this at the last estimates. The minister was keen to have a larger amount of money to allocate in this financial year.

Senator MACKAY —Has the department followed up as to analysing ongoing GST compliant costs for councils, given the LGIP expenditure?

Ms Parsons —We are aware of studies that have been done by some of the associations, but we have not done any work ourselves.

Senator MACKAY —Have you evaluated the money that was provided under LGIP?

Ms Parsons —We have had reports back from the associations as to how they have spent the money and, yes, we are satisfied with the way they have spent it.

Senator MACKAY —But there has been no ongoing analysis of GST compliance costs?

Ms Parsons —No.

Senator Ian Macdonald —Not directly. There is a lot of anecdotal evidence. You would have seen the Warrnambool Standard newspaper article in which the Warrnambool City Council says they have introduced GST without any major cost to ratepayers. They said they spent $3,000 on consultancies associated with it. That is pretty much the thing around the countryside. Most of them were able to introduce it with minimal expense and with, I might say, the help of their state associations, which were the destination for the funds we provided out of the LGIP program.

Senator MACKAY —Ms Parsons, can you give me an update on the LGIP applications which closed in October? How many were received?

Ms Parsons —There were 281 applications received.

Senator MACKAY —When will they be determined?

Ms Parsons —They are currently being assessed and there are panels that have been set up in each of the states and the Northern Territory to short-list the proposals.

Senator MACKAY —Whom did the panels constitute?

Ms Parsons —The constitution on the panels in each of the states is a representative from the department of local government—

Senator MACKAY —The state department?

Ms Parsons —Yes, the state department—and a representative from the Local Government Association; a representative from the IMM, the Institute of Municipal Management; and one of my staff.

Senator MACKAY —They will then make a recommendation to you, and then a recommendation to the minister?

Ms Parsons —They will be putting together short lists from each of those jurisdictions. Then we will be putting together a final short list to the minister.

Senator MACKAY —Has there been any consideration of ratios in terms of, say, rural versus metro, or small versus medium versus large, or fringe versus urban?

Ms Parsons —No.

Senator MACKAY —It is totally open, is it?

Ms Parsons —No, there are no notional allocations by state or area.

Senator MACKAY —The allocation is $4 million for this financial year: is that right?

Ms Parsons —Yes, that is correct.

Senator MACKAY —The PBS indicates $4.49 million.

Ms Varova —That 0.49 is the roll-over from the Local Government Development Program.

Senator MACKAY —Obviously there is no funding for 2002[hyphen]03, so presumably this is the expiration or end of the program. Is the department currently considering what may follow on from LGIP?

Ms Varova —That is a matter for the government's consideration.

Senator MACKAY —Minister, are you considering a further program?

Senator Ian Macdonald —We are always considering programs for local government.

Senator MACKAY —How would you assess the performance of LGIP against the performance targets in the PBS?

Ms Parsons —Are you referring to page 54?

Senator MACKAY —Sorry, I have the wrong one with me. The performance targets in the 1999[hyphen]2000 PBS—

Ms Parsons —We had anticipated originally when we prepared the PBS that there might be a grants application process that year, which is why we indicated a program of that kind. As it transpired, it was decided that the majority of the funds should be allocated to the GST implementation and the roll-over into this year, so that there would be a larger grants program available.

Senator MACKAY —When you say a majority, was any funding allocated other than for GST implementation?

Ms Parsons —No. There were some Commonwealth Commission projects that were funded out of the Local Government Incentive Program last year, including money for the national awards federation, local government and so on. But primarily, funds were allocated for GST.

Senator MACKAY —What proportion were these extraneous activities?

Ms Parsons —I do not have those figures, because it is from the last financial year; but it was a very small component for the Commonwealth Commission.

Senator MACKAY —The department's submission to the Commonwealth Grants Commission raised a number of very important issues and made a number of very interesting recommendations. One issue it raised was the abolition of the minimum grant aspect of FAGs. How did the department come to that recommendation?

Ms Parsons —The department formed the view that there is a conflict between the principle of horizontal fiscal equalisation and minimum grant and there were some arguments that in fact rural councils are being disadvantaged by minimum grant. If you read the department's submission fairly carefully, we did not actually say we think it should be abolished or removed, but we did suggest that it be considered as an option, that there were arguments in favour of its removal.

Senator MACKAY —How did the department feel that regional councils were being disadvantaged under the current system? In what sense were they being disadvantaged?

Ms Parsons —Clearly, most of the minimum grant councils are in capital cities and have, you could argue, sufficient revenue raising capacity through rates, which could reduce their grants to a lower level.

Senator MACKAY —The department's submission also highlighted a problem with a lack of national indicators and data to benchmark economic and social capacity and performance. What is the department doing to rectify this situation, given that it has identified it as a difficulty?

Ms Parsons —The matter was raised at the last local government ministers' conference and we put forward a paper for consideration, but unfortunately it was not supported by other members of LGMC.

Senator MACKAY —Is this at an officer level or a ministerial level?

Ms Parsons —No, there was a discussion at both the officers meeting and the ministers meeting.

Senator MACKAY —So the proposal that was put forward was presumably to establish national indicators and benchmarks?

Ms Parsons —It suggested that there were some measures that might be used to provide some national indicators, yes.

Senator MACKAY —What was the basis of the disagreement? Why did they not agree with that?

Ms Varova —They have not agreed on the basis that—and I think it was really reiteration of what had been put by state governments and the Northern Territory government to the Productivity Commission inquiry—that they believed they should in the first instance develop fully their state level performance indicators, that different states were at different stages of developing those in their own right, and once they had those working at a relatively sophisticated level then there would be more capacity to focus on the development of national indicators. So, all in all, the states were reasonably together on the feeling that they were not ready to use national performance indicators.

Senator MACKAY —Minister, what is your view on the abolition of minimum grants?

Senator Ian Macdonald —I have asked the Commonwealth Grants Commission to advise me on all aspects of the financial assistance grants system. Obviously if I go into this review process with a fixed mind on anything, we have wasted our time in getting the Commonwealth Grants Commission to assess it. So I do not have any view at the moment. I will be the ultimate decision maker, I guess, and the whole process is for the Commonwealth Grants Commission, after seeking input from everybody who has an interest to advise me, and I will then consider their advice and the reason for their advice.

Senator MACKAY —So you do not have a view at this point?

Senator Ian Macdonald —No.

Senator MACKAY —Ho was the departmental claim that removing the minimum grant would increase the equity impact of FAGs determined? Were there any longitudinal studies done? What did you use to assess that?

Ms Parsons —We did not do any detailed analysis, but it was based on certainly looking at the minimum grant councils and the likelihood that they would be able to find alternative revenue raising capacity and, therefore, the redistribution of that minimum grant to other councils.

Senator MACKAY —So it was based on just the aspiration of horizontal fiscal equalisation?

Ms Parsons —That is correct.

Senator MACKAY —When will we see the legislation for local government business enterprises—the income tax exemption?

Senator Ian Macdonald —That is Treasury, I am sorry, Senator.

Senator MACKAY —It may be Treasury, but you have put a press release out saying it is good news for local government, it will provide more certainty for councils, et cetera. Are you in the business of putting press releases out about things you do not know anything about?

Senator Ian Macdonald —I will ask you to repeat your question. I thought you said how it was it going, but perhaps I did not get your question correctly. But I make the other point, as I have tried to make earlier: these are estimates committees, not semantics on various media releases that might be around the place. Can you repeat your question?

Senator MACKAY —It is not semantics. You may characterise your media releases as semantics, but that is not for me to comment. You made an announcement in a press release dated 19 June headed `Local government business corporations income tax free'. We have not seen the legislation. Presumably you know enough about it to put a press release out. Can you just give me an indication of when we are likely to see it?

Senator Ian Macdonald —That is what I thought you said, and they are matters for the Treasurer, who was in charge of that legislation. If I could refer you to the Treasury estimates committee, they will be able to give you that information.

Senator MACKAY —Will you ask the Treasurer where the legislation is?

Senator Ian Macdonald —This estimates committee is about our department. If you want information about Treasury, the way we run these is that you go to Treasury and ask. Otherwise, we can have them all in one and we will have a whole of government estimates, which would be great.

Senator MACKAY —I have no objection to doing that. It is just a bit hard when you put out media releases on issues about which you then refuse to answer at estimates. So you do not know. What role did the department have in the impetus for this legislation? Was the department consulted by Treasury?

Senator Ian Macdonald —I assume that Treasury would have spoken to us. I really do not know. It is really part of the COAG thing, isn't it, on national competition policy?

Ms Varova —I would have to check that.

Senator MACKAY —It is part of the COAG thing?

Senator Ian Macdonald —My adviser reminds me that the Treasurer did write to us about it and we have responded to the Treasurer. So we certainly have had input.

Ms Varova —Yes, it was some time ago. I would have to check that.

Senator MACKAY —The exemption is consistent with NCP, that is certainly true, but it was in, as I understand it, the context of micro-economic reform benefits. That is reasonable.

Senator Ian Macdonald —It is COAG and part of the national competition policy discussions that they have at COAG, which is quite clearly the Treasurer bailiwick. But he wisely seeks our advice.

Senator MACKAY —In seeking your advice, has he indicated to you when the legislation will appear? The government did give a commitment that it would appear this year and we have not seen it.

Senator Ian Macdonald —Again, I can only say you would have to refer to that. We have enough trouble getting our own legislation through, let alone worrying about other departments' legislation.

Senator MACKAY —Minister, in your press release, you have said GBEs will improve efficiency and service delivery. What is your assessment of how the corporatisation of GBEs will do that?

Senator Ian Macdonald —It makes the process more transparent and, therefore, more efficient, and it means that councils will not be hiding—hiding is perhaps not the right word—or will not be confusing payments in one area that really are in fact payments that should be allocated to another area. That is why I say that, as a general approach, it will add to accountability and efficiency. My adviser reminds me as well that the initiative was welcomed by the state associations.

Senator MACKAY —Yes, it was welcomed; they are just interested where the legislation is. That is why I am asking these questions. Also I am advised by them that, in their estimation, the process for the corporatisation of the GBE would take at least six months. Their concern is that if it is not introduced soon it could be up to three years after the government had signalled the intention of introducing the exemption before anything actually happens. That is what they are also saying. You do not know when it is coming up. Minister, you would obviously be aware, as the local government minister, of the concern in the community in relation to mobile phone towers. Is that ECITA's responsibility or can I ask you these questions?

Senator Ian Macdonald —It is ECITA's. It is raised with me at various conferences I go to, and I have passed on some inquiries, but it is really for that estimates committee, if you want the experts to answer them.

Senator MACKAY —There is a major problem—certainly from representations I have had, and I presume you have had the same ones, on the role of local government and the fast tracking issues of mobile phone towers. What is your view as the local government minister about that?

Senator MACKAY —I have explained that it is a matter for my colleague Senator Alston and his department. I share some of the concerns that have been raised with me by various councils. It depends on individual circumstances. There are some instances where issues are clearly—when I say clearly I mean in my amateur's view—inappropriate. But you have to refer these things to the experts and, regrettably, I am not one of those when it comes to matters in other ministers' departments.

Senator MACKAY —Let us try the officers who actually work in the area of local government. What has the department's involvement been in the Australian communication industry forum working group? None?

Ms Varova —I will check that and confirm. One of my staff may very well have an involvement. I am just not aware of it.

Senator Ian Macdonald —We will take that on notice.

Senator MACKAY —What is the department's involvement in the national carrier coordination group to improve the co-location of mobile phone facilities?

Senator Ian Macdonald —I would doubt nothing. Unless anyone here knows anything about it, we will take that on notice too. I would suspect we are not. The representations I get are that a lot of councils do not like them and there are a lot of councils that would dearly love them.

CHAIR —They can pop one at my doorstep.

Senator Ian Macdonald —Indeed, I am sure.

Senator MACKAY —That is not the issue. A lot of them are concerned about the fact that they do not have any determinative power. That is the difficulty.

Senator Ian Macdonald —It is not my legislation.

Senator MACKAY —It is your portfolio, though.

CHAIR —I think the interesting thing about mobile phone towers is that 99 out of 100 complaints I get is because they have not got one.

Senator Ian Macdonald —Yes, but it is something they have to refer to Senator Alston.

CHAIR —Senator Mackay, I am not sure those questions in estimates are for comment.

Senator MACKAY —The issue is the projected plethora of telcos and the number of mobile phone towers and the fact that local government do not have any determinative power—along with community consultation. Has ALGA made any representations to the department in relation to this matter?

Senator Ian Macdonald —I do not recall them making any to me.

Senator MACKAY —No representations to you, Minister, from the ALGA?

Senator Ian Macdonald —Not that I am aware of. Not that my advisers are aware of.

Senator MACKAY —No representations to the department?

Ms Varova —I am not aware of any.

Senator Ian Macdonald —Again, we can take that on notice. Again, I am reminded that sometimes these are raised as resolutions of various local government conferences. They sometimes come to me and, when they do, I pass them on to the appropriate minister for response.

Senator MACKAY —So you have not had any written representations from local government in relation to this matter?

Senator Ian Macdonald —I cannot remember any in recent times, but we will check, as I have said.

Senator MACKAY —Because I have got ones that say `cc Senator Ian Macdonald'.

[1.11 p.m.]

CHAIR —Just in case I forget, the committee will receive additional questions to be put on notice with regard to the estimates before us up until 5 o'clock on Tuesday. That will complete this estimates process. Any other issues will have to be taken up in the normal way. We will take questions from any of the participants, because a lot of people cannot be here today up until 5 o'clock. After that, they will have to go through the normal processes. If they wish to bring something up through the committee, they have to bring it to the committee formally and deal with it that way. I know Senator Woodley has some. If we have a cut-off time, then it is clear and everybody knows where they stand. We move on to Territories and Regional Support. I welcome the officers at the table.

Senator MACKAY —Minister, did you receive a petition on 18 October forwarded to you by the Administrator, Bill Taylor, with over 500 signatures from Christmas Islanders?

Senator Ian Macdonald —On what subject?

Senator MACKAY —It is called `Dear Minister, where is your compassion?'

Senator Ian Macdonald —What is the subject?

Senator MACKAY —It is in relation to the issue of the resort.

Senator Ian Macdonald —Yes, we have received that.

Senator MACKAY —Why haven't you responded to the correspondence?

Senator Ian Macdonald —When are you saying it was sent, Senator?

Senator MACKAY —There are several of these. As I understand, it was forwarded to you on 18 October, I am advised.

Senator Ian Macdonald —We try to turn around responses in about three to four weeks. Sometimes we do not achieve that. I thought I had actually responded.

Dr Turner —I cannot be sure about the date, in particular of correspondence, of the 18 October; but, as you said, there were several tranches of correspondence on the same subject. I had understood that some had been responded to, but I do not have a copy of signed correspondence with me, so I cannot confirm that right now.

Senator MACKAY —What was the nature of the response?

Senator Ian Macdonald —The indication is that it was signed about 10 November, but do not hold me to that. But certainly some time between 10 November and today I have written to Mr Gordon Thomson, General Secretary of the Union of Christmas Island Workers, because I assume he sent me the petition. You ask: what was the nature of the response? If we could find a signed copy of this letter, we would table it for the committee. We will provide you with a signed copy of the letter which gives the response. If you want, I can read it to you now.

Senator MACKAY —Can you summarise it?

Senator Ian Macdonald —It states:

When the lease of the resort was purchased by Soft Star Pty Ltd, the managing director, Mr David Kwon, issued a press release stating that his company intended to continue to provide the limited services available and to upgrade and reopen the resort/casino over the next 12-18 months. Mr Kwon has since written to me giving me his assurance that this is the case. I have asked Soft Star to provide me with a timetable for the intended refurbishing and reopening of the resort.

The terms of the lease permit Soft Star to use the site for a hotel/casino and ancillary purposes. This means that the lessee is allowed, but not required, to operate a hotel/casino. Whilst the lease is current the lessee cannot change the use without the Commonwealth's approval.

I consider it desirable for the casino to reopen. However, Soft Star, or any person who wishes to operate a casino on the site, will have to apply for a casino licence in accordance with the procedures set out in the Casino Control Ordinance 1988.

I would be grateful if you would convey the contents of this letter to your members.

In fact, I think I did alter that to say that I would try to get the letter published on the island to help Mr Thomson ensure that his members did see it. I have signed it, but it is not exactly that letter, but it is along those lines. I have responded fairly recently, I would say, without being precise.

Senator MACKAY —Thank you for that. Has Mr Kwon applied for the casino licence yet?

Senator Ian Macdonald —Not to my knowledge, no.

Ms Kava —No, he has not.

Senator MACKAY —Minister, have there been any discussions with Mr Kwon since May this year regarding the reopening of the resort?

Senator Ian Macdonald —Yes.

Senator MACKAY —With yourself?

Senator Ian Macdonald —Yes.

Senator MACKAY —What was the nature of those discussions?

Senator Ian Macdonald —They were discussions on his company's commercial activities—which is not something I would be disclosing to the world.

Senator MACKAY —What are the conditions in the lease regarding the reopening of the resort?

Dr Turner —I do not think there are any conditions in the lease specific to the reopening.

Senator MACKAY —What action has the department taken to recover the former workers' outstanding entitlements?

Senator Ian Macdonald —We have been through this at every estimates committee. I continue to try to explain to you the law of the land, and that law does not involve the Commonwealth.

Senator MACKAY —Minister, are you aware of any government programs that have been recently announced that may fit the bill in terms of assisting these employees?

Senator Ian Macdonald —Not that would be relevant in the case of a company that went into liquidation two or three years ago.

Senator MACKAY —These people are excluded from accessing current government programs because of the time line? Is that reasonable?

Senator Ian Macdonald —`Excluded' is your pejorative word.

Senator MACKAY —What word would you use? Ineligible?

Senator Ian Macdonald —The government's new initiative—one that no previous government has ever bothered to consider—

Senator MACKAY —That is not right. Don't editorialise; it just prolongs the process.

Senator Ian Macdonald —It is not my department, so we do not have the details. Can anyone remember when it came in? Six months ago?

Dr Turner —Probably a bit more, I think.

Senator Ian Macdonald —Anyhow, it is not my department. You would be as aware as me, Senator; it was the subject of quite substantial media comment at the time.

Senator MACKAY —What are you going to do, Minister, to assist these workers who are still waiting for their entitlements?

Senator Ian Macdonald —I am going to follow the law.

Senator MACKAY —Are you going to do anything?

Senator Ian Macdonald —I am going to do what I can do, what I have authority and responsibility to do.

Senator MACKAY —What is that?

Senator Ian Macdonald —That is the law and, unfortunately, it is nothing.

Senator MACKAY —What are you going to do?

Senator Ian Macdonald —I have already answered that. It is nothing I have any jurisdiction or power over. As much as I would love to wave a magic wand and do this, I do not have jurisdiction, and we are a government that works within the law.

Senator MACKAY —Have you discussed the plight of these workers with, or made representations to, any other ministers?

Senator Ian Macdonald —I think we got advice from the Attorney-General. Different people come to speak to me as constituents. All I can ever do is tell them what the situation is, and that is that the funds are available to repay the entitlements, but the liquidator has been ordered by the courts of the land not to pay them until the High Court has determined an application by the former resort owner. The matter is currently before the High Court. We are not a government that would encourage people to breach the High Court's orders. We believe in separation of powers and all that sort of thing. There has been an order by the court to the liquidator.

Senator MACKAY —I notice that you got some advice, which is good. The Christmas Island laundry was closed consequent to the resort in April 1998. What has the Commonwealth done with the revenue from the sale of the assets of the Christmas Island laundry?

Dr Turner —I would have to take that question on notice.

Senator MACKAY —Can I help you, Dr Turner? As I understand it, the liquidator did not actually liquidate the laundry assets. The Christmas Island Administration, as I understand, sold them at public auction on 25 March this year and the Commonwealth collected $120,000 from the sale.

Senator Ian Macdonald —I have written about this. There is a succinct answer to this question.

Senator MACKAY —Dr Turner does not seem to be aware of it at all—or are you, Dr Turner?

Senator Ian Macdonald —That is why I am assisting Dr Turner by telling him that his department has prepared a letter for me.

Senator MACKAY —That he has some correspondence there.

Senator Ian Macdonald —I think I might have written again to Mr Thompson about it.

Dr Turner —My recollection of the question that you asked me was not whether I was aware of the correspondence but did I know what the department had done with the revenue. It is that question which I think I am taking on notice. But in terms of the general position that you have put to me, whilst I do not have the documents in front of me and I cannot be sure of the dates, I would have no reason to demur from what you have said.

Senator MACKAY —Were you aware that the laundry assets had been sold in March this year?

Dr Turner —I was aware that they had been sold, yes. If you tell me that it is March, I am quite prepared to accept that that is the right date.

Senator MACKAY —Do you know what has happened to the $120,000?

Dr Turner —No. That is the question I will take on notice.

Senator MACKAY —You are not aware of what has happened to the revenue? Does anybody know what has happened to the revenue?

Dr Turner —The revenue will have gone into the accounts of the Christmas Island Administration. But what has happened to it since, I am afraid I do not know without seeking advice.

Senator MACKAY —Mr Thomson wrote to you, Minister, in July requesting you to facilitate the payment of the outstanding entitlements to the laundry workers from the sale of the assets, and Dr Turner does not know where the $120,000 has gone to. As I understand, that was handed to your office when you were there and, as I understand, no reply has been received yet: is that correct?

Senator Ian Macdonald —I said 10 minutes ago my recollection is that I have responded to Mr Thomson about that matter, and in the instance of acting on legal advice as to the Commonwealth's position which I am quite relaxed is absolutely appropriate.

Senator MACKAY —I appreciate that you have said that, but Dr Turner seems unaware of the correspondence. Does anybody have it?

Senator Ian Macdonald —Dr Turner said he would take it on notice. Senator, you would not understand this, but we get thousands of pieces of correspondence every day—

Senator MACKAY —Well, you can remember it.

Senator Ian Macdonald —To cast aspersions on Dr Turner because he does not happen to remember every single piece of correspondence that comes in is inappropriate, I would have thought.

Senator MACKAY —You can remember it, Minister. Is there a copy of the correspondence available?

Dr Turner —I do not have it with me.

Ms Kava —No, we do not have one to hand.

Senator MACKAY —Can that be provided to the committee?

Senator Ian Macdonald —If it does not involve a matter of privacy to the people involved, yes, I will make it available. You seem to have Mr Thomson's file. Perhaps you can help us by giving me my response to him, as well as his letter to me.

Senator MACKAY —I do not have that. That is why I am asking the question.

Senator Ian Macdonald —Okay. We will find the correspondence and, if it is appropriate and does not breach any privacy areas, we will make it available.

Senator MACKAY —Minister, what is the prohibition from using the revenue from the sale of the laundry assets to go towards assisting those laundry workers with their outstanding entitlements?

Senator Ian Macdonald —I think you have the wrong premise, if my recollection is correct; and I think Mr Thomson had the wrong premise. He was basing his arguments in his submissions on the wrong legal premise. But we will find that out. I repeat again: we do not have this correspondence before us. It has been dealt with some time ago.

Senator MACKAY —What is the current state of play with the space base on Christmas Island?

Senator Ian Macdonald —Perhaps it is easier for me to answer that. It is entirely a commercial activity by Asia Pacific Space Corporation Ltd. They are proceeding in various ways towards the establishment of a space launch facility on Christmas Island. The Commonwealth government has been involved in issuing an environmental impact statement containing a number of conditions which have been referred to the company. There is a question between the space people and Phosphate Resources Ltd, the company that has mining leases over certain parts of the area which would be suitable for space launch; and there are negotiations I am aware of between those two private companies as to access to those areas.

From a Commonwealth point of view, there are matters relating to international space treaties with the Russians, but I am not sure whether there have been formal announcements on that yet. There has not. I think they are imminent, but I am pleased that that aspect will be satisfactorily resolved.

Senator MACKAY —I am sorry, what did you say? There are some problems with—

Senator Ian Macdonald —No, there are some issues of international law with space launch intellectual property, I think it is called, which requires negotiations and agreements between the Australian government and the Russian government. Please do not ask me for any details on this, because it is a bit beyond me. That aspect is not our portfolio, but I am sufficiently aware to know that I am hopeful that there will be a resolution of that issue in the very near future.

Senator MACKAY —Was the EIS conducted by the Commonwealth?

Senator Ian Macdonald —It is done through Senator Hill's department as required.

Senator MACKAY —Is that available to the committee?

Dr Turner —It is a public document, yes.

Senator MACKAY —So you can get us a copy. Good.

Senator Ian Macdonald —I am sorry, it is not in our control; it is in Senator Hill's control.

Dr Turner —It is between Senator Hill and—

Senator Ian Macdonald —We will pass that request on to that estimates committee.

Senator MACKAY —Minister, have you spoken with Mr Kwon about the space base project?

Senator Ian Macdonald —Yes.

Senator MACKAY —Are you aware of the intention to use the Christmas Island resort as accommodation facilities for the workers of the project?

Senator Ian Macdonald —I have not been involved in that. That is beyond my—

Senator MACKAY —Is anybody else at the table aware of it?

Senator Ian Macdonald —That is not something we would be involved with. Who people allow into their hotels is hardly a responsibility of the Commonwealth government or any of our departments.

Senator MACKAY —So nobody is aware of that then. Are you aware that, in September, the space project closed its office on Christmas Island?

Senator Ian Macdonald —Yes, I have heard that.

Senator MACKAY —What was your response to that? What have you done about that?

Senator Ian Macdonald —I repeat that the space launch facility is a commercial enterprise by a private enterprise company in Australia, and what they choose to do is really not a matter for the government.

Senator MACKAY —Do you know whether there has been any consultation with the people of Christmas Island?

Senator Ian Macdonald —I do know there has been, but again only through reading the papers and the consultation notices that have gone out. But that is again a matter for the private company involved.

Senator MACKAY —So you are aware of consultations with the Christmas Islanders?

Senator Ian Macdonald —Only from general knowledge.

Senator MACKAY —When did you, Minister, become aware that Mr Graham Nicholls may be undertaking employment with APSC? When was the department made aware?

Senator Ian Macdonald —I cannot give you a date.

Senator MACKAY —When did the department become aware of it?

Dr Turner —A date in mid[hyphen]August. I am not quite sure of the date without checking the record, but somewhere around 22, 23, 24 August—something of that sort.

Senator Ian Macdonald —I guess he tended an resignation, did he?

Ms Kava —Yes, we can confirm that date. I do not have it here. But I think Dr Turner is correct: it was early to mid[hyphen]August.

Senator MACKAY —Dr Turner said 22 to 23 August. I understand that he resigned on 14 August.

Ms Kava —I thought it was about mid[hyphen]August. I do not have a precise date, but we will get it for you.

Dr Turner —It was a Monday that I first heard about it. If the 14th was a Monday, then it may well have been the 14th.

Senator MACKAY —Was the minister concerned that there may have been a conflict of interest in relation to Mr Nicholls' work whilst continuing to occupy the position of secretary on Christmas Island and being involved in negotiations with APSC?

Senator Ian Macdonald —You are asking me whether I was concerned. Is that the question?

Senator MACKAY —Yes.

Senator Ian Macdonald —When I became aware of it, which was ex post facto I think, I was concerned that the proper procedures were followed and the proper propriety was observed.

Senator MACKAY —What did you do to ensure that?

Senator Ian Macdonald —The department handled it long before I became aware of it.

Ms Kava —Perhaps I could explain from the department's point of view. Graham Nicholls was an employee of the department. So when the department became aware of his resignation, the secretary wrote to him providing him with a copy of the relevant guidelines on avoiding conflict of interest, et cetera, in terms of his resignation and the normal conditions of employment, given that he was resigning, and also reminded him of his duties in terms of ex-employees being bound by various confidentiality provisions, et cetera. That was provided to him on 21 August.

Senator MACKAY —The department was satisfied that all of those provisions were complied with as far as he was concerned?

Ms Kava —I think the department was satisfied that Mr Nicholls understood what those were. He certainly indicated that he did. Various procedures were put in place on the island for avoiding situations of potential conflict of interest. He was not to be involved directly in any consultations to do with APSC, et cetera. I think those were the main things. He also set in place procedures for handling of mail. Other people would do it so that he was not exposed to those types of issues. That was handled by someone else to keep him at arms-length from dealings with APSC, given that he was going to be employed by them.

Senator MACKAY —So, in general, the procedures that were put in place were to ensure that he, in his official capacity, had nothing to do with APSC?

Ms Kava —Yes, that is correct.

Senator MACKAY —And you are satisfied that they were complied with?

Ms Kava —There were two occasions, as I understand it, when there could have been a perception of conflict of interest. I am not aware that there was any conflict of interest, but there were two occasions. On one occasion I think Graham Nicholls was asked to accompany a parliamentary secretary who was visiting the island on a tour of the island. Given that the particular parliamentary secretary had responsibilities that were connected to considering the APSC proposal, there might have been a perception of conflict of interest. My understanding is that Mr Nicholls was expressly asked by the administrator to take on that role of showing the parliamentary secretary around the island. It was not for the purposes of discussing APSC. I understand that the APSC matter was not discussed during that tour of the island.

My recollection is that the administrator was involved in another meeting that Mr Nicholls could not attend because of the potential conflict of interest. It is a small island with a fairly small senior staff, so the arrangement was made that Mr Nicholls would accompany the parliamentary secretary. The parliamentary secretary was made aware of the status of Mr Nicholls before the tour took place, so every precaution was taken so that people were informed and that there would be no discussion that would be a conflict of interest in Mr Nicholls's case. It is a circumstance where some on the island may have perceived that as a potential conflict of interest.

Senator MACKAY —Did this tour include the proposed APSC site?

Ms Kava —The island is not very large, and I think the tour would have included all parts of the island. I have not asked that question, but I would assume it did.

Senator MACKAY —Why did the administrator ask Mr Nicholls to do this, given the lengths the department had gone to to ensure that there was not a conflict of interest, and given that this tour occurred some time around 11 to 15 September? Do you regard that as permissible?

Ms Kava —It was a judgment made by the administrator on the basis of having a meeting to attend that was potentially discussing an issue that, as I understand it, Mr Nicholls could not be involved in because of those very guidelines, and of having on the island at that time a parliamentary secretary who, as a matter of curtesy, needed to be shown the island. Normally you are accompanied around the island by a senior person. As I said, checks were put in place to ensure that the person he was accompanying was fully aware of the status of Mr Nicholls. The purpose of the tour was not to discuss or view the potential APSC site; it was a visual tour of the island that is fairly standard for visiting dignitaries.

Senator MACKAY —I understood you to say that one of the reasons Mr Entsch was up there was in his capacity as Parliamentary Secretary to the Minister for Industry, Science and Resources.

Ms Kava —I said that there could have been a perception of conflict of interest because that was his role. I have no precise idea as to why he was there on that occasion, but we could check that for you.

Senator MACKAY —He was not there in relation to any APSC issue?

Ms Kava —I do not know the answer to that.

Senator MACKAY —Given the length the department has gone to in order to ensure no conflict of interest, do you honestly think it is appropriate for the administrator to ask Mr Nicholls to take Mr Entsch around, including showing him the facility? Do you agree with that action of the administrator?

Ms Kava —I do not think that he showed any facility. There is no facility.

Senator MACKAY —But he proposed a site.

Ms Kava —I do not know that he showed him that site. I am assuming that he may have.

Senator MACKAY —You just said that it is a very small island.

Ms Kava —I did say that. It is quite likely that he did see that site.

Senator MACKAY —And you regard this as appropriate, do you?

Ms Kava —As I said, Senator, I believe it was a judgment call made by the administrator and that he took precautions to avoid any actual conflict of interest.

Senator MACKAY —Are you aware of any dealings Mr Nicholls had with APSC or any APSC agent contractor or affiliate after 14 August?

Ms Kava —No, I am not.

Senator MACKAY —So what was Mr Nicholls's role between 14 August and 23 September? How was his job description ameliorated or changed by the procedures that had been put into place?

Ms Kava —His role in terms of his title was that he continued to be the official secretary of the island. A number of procedures and processes were put in place to avoid him having a conflict of interest on issues to do with APSC, including screening of mail, removing himself from any dealings with APSC and also with PRL in terms of discussions on the possible future development and between the administration and Soft Star, which is an affiliate. Those were certainly the arrangements that were put in place. The second matter I referred to, where I said there may have been a perception of a conflict of interest, was when Mr Nicholls was requested to meet. I am told that it was a request to meet in a private capacity with a senior person from PRL at some stage before his resignation took effect.

Senator MACKAY —That did not go ahead I take it because of the conflict of interest provisions the department put into place.

Ms Kava —No, I understand it did go ahead.

Senator MACKAY —How does that fit with the conflict of interest provisions the department put in place? Did he just decide he was a private citizen for that meeting and then go back to being an official secretary after it?

Ms Kava —I am not sure what he decided. But I understand that the meeting did go ahead at the express and repeated request of the senior person from PRL.

Senator MACKAY —Do you regard that as fulfilling the provisions that the department put down in terms of ensuring no conflict of interest?

Ms Kava —It is difficult to be prescriptive about it. I think, given the perception that there could have been a conflict of interest, it would have been better if he had not done that.

Senator MACKAY —Fair enough. Now, Dr Turner, can we finally have an answer to the question that you have been written to about and which has occupied the clerks for many hours in relation to advice as to which minister you were referring to in the estimates way back in February 2000?

CHAIR —Can I just clarify one point on the record? That question or letter was never processed through the committee. It is important that I put that on the public record.

Senator MACKAY —Fair enough.

Senator Ian Macdonald —It has not been raised in several estimates committees since February.

Dr Turner —Through the whole discussion throughout the February to May hearing, I have always been referring to the role of the Commonwealth minister.

Senator MACKAY —Just to take us back to that, the actual words, as I recall, were that one of the issues the Western Australian government drew attention to was what appeared to be the failure to pursue normal public sector recruitment procedures in the hiring of some staff by the shire and the possible and reasonable concerns of the community and, therefore, the minister in the way that the shire appointed its staff. Minister, were you concerned?

Senator Ian Macdonald —I think that I was concerned to the extent that the Western Australian Department of Local Government indicated to me that I should be concerned. I had no independent view of the matter.

Senator MACKAY —So there was no representation made to you by the department prior to representation by the Western Australian government?

Senator Ian Macdonald —No.

Senator MACKAY —That is when you first became aware of it—is that correct?

Senator Ian Macdonald —I think that is the case. I think what Dr Turner read out—and I will get him to repeat it—was about concerns that the citizens and the minister may have. Could you just read that again?

Dr Turner —The minister said that one of the issues that the Western Australian government—and I clarify now that that should have been the Western Australian Department of Local Government—drew attention to was what appeared to be failure to pursue normal Public Service recruitment procedures in hiring of some staff by the shire and the possible and reasonable concerns of the community, and therefore the minister, in the way that the shire appointed staff.

Senator Ian Macdonald —So the Western Australian local government department indicated that there could be a concern by the community, and therefore the minister, about the impropriety. It was the view of the Western Australian local government department that the community might be concerned and therefore that I might be concerned.

Senator MACKAY —So were you concerned in terms of impropriety?

Senator Ian Macdonald —To the extent that the Western Australian Department of Local Government indicated that I should be.

Senator MACKAY —What has happened with all of this, Dr Turner? Was there any impropriety?

Dr Turner —To go back over the sequence of events, the Western Australian Department of Local Government visited the island in March 1999 and conducted their Council Advice Program. The report drew attention to some concerns which, amongst others, included recruitment procedures. The Western Australian Department of Local Government made a follow-up visit to the island in February of this year, in the course of which they completed three separate reports, one of which was a follow-up inquiry into recruitment procedures. They found some comparatively minor concerns which have since been the subject of a report and the shire council has put in place a new policy for its recruitment procedures. As far as I am aware, in negotiations between this department and the Shire of Christmas Island and the Western Australian Department of Local Government, that issue has been dealt with and we have all moved on.

Senator MACKAY —That is probably reasonable. So there were some minor issues identified in terms of recruitment processes?

Dr Turner —Yes, they were things like the need to get the council's approval prior to advertising positions, and those sorts of things.

Senator MACKAY —Pretty minor. Good.

Senator Ian Macdonald —It is a new council, Senator. They have no long experience or culture of operations as a local authority, and the Western Australian local government department have a program where they help councils. We are involved in the program because, as you know, we engaged the Western Australian local government department—and most other Western Australian government departments—to provide their normal services to the Indian Ocean territories.

Senator MACKAY —Sure. After all this there was only an extremely minor impropriety, if that could be characterised as such—that is fine. As Dr Turner said, we move on.

Senator Ian Macdonald —I make no comment about that. I do not know whether it is minor or otherwise. All I know is that the Western Australian local government department have a procedure where they look at things that concern them—

Senator MACKAY —Dr Turner said it was minor, not me.

Senator Ian Macdonald —and they address them and if there was a problem that was not resolved they would eventually have reported it to me for action, but that apparently was not the case.

Senator MACKAY —What is happening with the IOT's air services contract?

Dr Turner —The contract that was due to expire in the middle of this year, in June, has been extended until the beginning of February 2001. We, the department, are still engaged in negotiations with potential providers about a new contract beyond that period.

Senator MACKAY —What will happen? As I understand it, bookings are being taken up to 31 July 2001.

Dr Turner —We have an arrangement with National Jet Systems, the current service provider, who have agreed to take forward bookings up to 31 July. That arrangement includes a provision that, when a new service provider is identified, they are obliged to hand over those forward bookings to whoever the new provider is.

Senator MACKAY —Will there be a new provider post-February?

Dr Turner —I certainly hope so.

Senator MACKAY —I would hope so as well.

Dr Turner —As I said, we are involved in negotiations with potential providers, and those negotiations are yet to be concluded.

Senator Ian Macdonald —I do not want to underestimate the difficulty with this situation, Senator. If anyone but anyone has any solutions or suggestions, we are very keen to take them on board. It is a very difficult position.

Senator MACKAY —I appreciate, Minister, that you have indicated in correspondence to me that it is a complex issue and that it remains a matter of the highest priority. I think we will probably have to deal with this in February. I do not think we can take it any further. I just hope there is an outcome by February.

Senator Ian Macdonald —I certainly hope so. I do not know that I can indicate more than hope.

Senator MACKAY —That is fine. Have all the recommendations contained in the Commonwealth Grants Commission report on the IOTs been adopted and reflected in budget allocations for the current financial year? Are there any outstanding?

Dr Turner —The commission's report does not make recommendations as such; it draws conclusions. For those that have a financial dimension to them, this year's budget includes an additional $2.9 million, which is an update of the commission's advice on how much money was required from the 1998-99 figures to 2000-01 figures. The government has made a financial appropriation to the department to cover that advice from the commission and action is in train or already has been completed to put in place arrangements to deliver the services canvassed by that advice.

Senator MACKAY —Can you take on notice or can you give me details now in regard to the amounts allocated, project by project?

Dr Turner —I can give you a general indication of the way that $2.9 million has been allocated, if that would help.

Senator MACKAY —Maybe take it on notice because I want some detail. That would be good. So just to be clear, I would like the amounts allocated to each of the projects for the current financial year and anything in relation to any out year implications.

Dr Turner —Yes.

Senator MACKAY —For example, in relation to the amount allocated to the contingency fund for each of Cocos and Christmas islands as recommended by the Commonwealth Grants Commission, what are the procedures for the IOT accessing amounts in the contingency fund?

Dr Turner —The contingency reserve for Cocos is $180,000 and the contingency reserve for Christmas is $420,000. That covers industry assistance, apart from tourism, subsidised pensioner airfares, welfare type grants and cultural and recreation type grants. As far as the welfare and cultural and recreation grants go, the essential procedure is that the islands will be able to apply for WA state grants, They will be assessed by the WA agencies, who will then pass on their recommendations, and we will fund the grants from our money. So, essentially, it is sort of tagging on to the WA process. In relation to the pensioner airfares, we are in the process of preparing advice to the minister on exactly how that process would work. But, again, the model is to make it as much like the way the remote areas pensioner airfares operate in WA as possible. In regard to industry assistance, we are still developing some guidelines on how that process would work.

Senator MACKAY —Okay. When will those guidelines be finalised?

Dr Turner —It is hard to tell because there are some issues about accessing funds from other departments that sort of piggyback on how other programs work, so it is difficult to be definitive, but the first quarter of next year, I would expect.

Senator MACKAY —Just to finalise this one question: can you provide any more information on that specific issue of the contingency fund? I would appreciate that. Thank you. I will put the rest of my questions on notice.

CHAIR —Thank you, Senator Mackay. I repeat what I said earlier: if senators have any questions on notice relating to these estimates, they need to put them in by 5 p.m. on Tuesday next. Minister, I thank you and the various people who have appeared before us over the last two weeks. I also thank Hansard and the secretariat. I declare these estimates hearings closed.