CHAIR --I welcome back the officers from AQIS. Mr Hickey would like to make a statement.

Mr Hickey --Senator Collins asked some questions last night about the human health risk assessments related to cooked pig meat and we undertook to gather some information on that. If you are agreeable I will provide the committee with the information that we have on the issue.

CHAIR --Do you want to table it or speak to it?

Mr Hickey --I will need to speak to it because I just have rough notes. On 14 August 1996, AQIS wrote to ANZFA requesting that ANZFA undertake a risk assessment for the human health issues associated with the importation of cooked pig meat products. That was consistent with ANZFA's responsibilities under the Australia New Zealand Food Authority Act 1991 for the development of assessment policies in relation to imported foods and consistent also with a memorandum of understanding between ANZFA and AQIS which provides that the risk assessment of imported foods for human health considerations will be undertaken by ANZFA.

On 7 January 1997, ANZFA provided us with that risk assessment. The recommendations were that microbiological risks associated with meat products, including pig meat, are significant in terms of their severity and frequency and therefore cooked pig meat should be risk categorised--that has a specific meaning that I will come to in a minute--under the imported foods inspection program and also recommended that cooked pig meat should be tested according to whether it is frozen or chilled product and should comply with a set of microbiological criteria that were set down in the document.

The significance of the term `risk categorised' is that that category of imported products attracts the highest frequency of inspection under the imported foods inspection program. Risk categorised foods are ordinarily sampled and held pending the results of analysis. If the product complies then the shipment is released. The first five consignments from each consignor are inspected against requirements. If the results are satisfactory the inspection intensity drops away to approximately 25 per cent and then approximately five per cent, with the proviso that if, at any time, product does not comply the inspection intensity reverts to one in one.

Because of the perishable nature of chilled product, individual consignors must submit trial consignments of products which are inspected at the rate of one in one for the first five consignments. After sampling, the remainder of the shipment must be frozen and held pending the results of analysis. Once each consignor has established a good compliance history future commercial shipments will be released after sampling. The sampling regime follows from that.

On 28 February 1997, AQIS released its animal quarantine policy memorandum which sought comments on the quarantine and human health risk assessments on imported Canadian cooked pig meat. That document incorporated a summary, not the detail, of the ANZFA risk assessment. Some 30 days was allowed for consultation, but that period was subsequently extended at the request of some respondents. On 8 April 1997, the Pork Council of Australia wrote to us attaching a PRDC summary of the views that had been expressed by CSIRO that were referred to by Senator Collins last night and copied that letter to us to ANZFA on the same date.

We understand that dialogue was initiated between ANZFA and the PCA in April on those issues. In the intervening period AQIS has continued to accumulate comments. On 5 June, when we had satisfied ourselves that we had all comments put together--those submissions which addressed human health issues--we formally forwarded them to ANZFA and that is where the matter sits.

The other question that Senator Collins asked was whether AQIS had briefed the minister on the details of CSIRO's concerns, but the answer is no. AQIS has not seen the specific concerns raised by CSIRO. It has seen the summary of those concerns that are referred to in the PRDC letter. The minister has been made aware of those issues only in very general terms, in response to some questions that were raised initially in another Senate estimates committee which I think raised the question of whether AQIS had expressed concerns about the ANZFA risk assessment. But that advice was only in terms of a question time briefing and only in very general terms.

Senator BOB COLLINS --Mr Chairman, in terms of the statement that Mr Hickey has just made, which is certainly consistent with my understanding of the situation, I think there needs to be one very important matter clarified for the record. That is in respect of when AQIS actually knew that there were major concerns from CSIRO scientists about the matter. I think it just needs clarification. I asked that question last night and Mr Gascoine, after consultation with Dr Wilson, answered that AQIS had known about it for about two weeks. As Mr Hickey has just said--and this is consistent with my understanding--the Pork Council of Australia wrote directly to Dr Wilson on 8 April laying out, I must say in significant detail, the matters that I raised last night--in far more detail than I had.

It was the Pork Council, of course, that had sent the material out to CSIRO for review. Of course that correspondence was sent to AQIS, to Dr Wilson, two months ago not two weeks ago. On the correspondence that I have got in front of me, and I might add that has been confirmed by Mr Hickey, AQIS would appear actually to have had this information in front of it for two months, not two weeks.

Mr Gascoine --I am glad to have the opportunity to correct my answer of yesterday. In fact, the matter was addressed to us on 8 April and we received it on 9 April. I think what occurred yesterday evening was a misunderstanding between Dr Wilson and me as we tried to respond to your questions.

Senator BOB COLLINS --Fine. So it is, in fact, two months and not two weeks.

Mr Gascoine --That is correct, indeed.

Senator BOB COLLINS --Thank you. Just on that, in terms of the statement, Mr Hickey, that you have just made regarding not having the detail of the concerns, as fundamental as they are, from CSIRO; and having got them courtesy of the Pork Council: in the last two months, since AQIS was advised of these concerns, has AQIS actually sought the details from CSIRO?

Mr Hickey --No, we understand that the matters were under discussion between ANZFA and the Pork Council, which is where these matters are appropriately being dealt with and were therefore satisfied that the issues were being properly considered.

Senator BOB COLLINS --Where, so far as AQIS is concerned, does the matter sit now?

Mr Hickey --As I mentioned, on 5 June we forwarded to ANZFA copies of all the submissions that we had received that addressed human health issues and we would be waiting for their assessment of those comments. At the end of the day the decision that is taken will be a decision for ANZFA, but, as I understand it, the product is already categorised into the highest risk category. I can only presume that the comments that have been referred to, from CSIRO, reinforce that as being the proper judgment to be made.

Senator BOB COLLINS --I want to go back in a minute to where we left off on fish and fish products. To just clarify that, if the committee wanted to go further into the question of where this is at, so far as ANZFA and CSIRO are concerned, the appropriate agencies to direct those questions to would be ANZFA and CSIRO rather than AQIS.

Mr Hickey --Yes.

Senator BOB COLLINS --Thank you. We were talking about the lack of baseline data in respect of aquatic diseases and so on when we left this last night. We were talking about the complexity and time that will need to be taken to prepare the guide on diseases of concern. I think that is where we left it. Do you think that the provision of education services for the affected industries and the broader community on the quarantine risks associated with the importation of these products, considering how long it will take to actually get a better definition of it, is a key feature of any plan to manage, in an interim sense, the quarantine risks associated with the importation of the product?

Mr Hickey --Yes, I would agree with that. The awareness issues amongst the industries are vital to gaining their cooperation, both in the interim mitigation measures and any longer term risk assessment. Part of the response that is to be produced by the government was the development of a stronger fish health infrastructure generally. In the department, that will involve the establishment of a unit within the fisheries policy branch. It will have a similar role to that of the animal health capacity in the Livestock and Pastoral Division. Part of its charter, obviously, will be extensive contact with all of the affected fishery industries on precisely those sorts of issues.

Senator BOB COLLINS --AQIS has got adequate resources to carry out that task?

Mr Hickey --Will have.

Senator BOB COLLINS --This is with the additional funding?

Mr Hickey --Yes.

Senator BOB COLLINS --I refer to page 142 of the report. Under the heading `Resources', it says that there is a critical lack of resources to undertake aquatic animal research both at the state and at the Commonwealth level. That being the case, I guess, obviously adequate resources to fill that gap are fundamental to any strategy to deal with the problem. The report goes on to state:

Quarantine-related matters are part of a larger issue--research and diagnostic services for fish and shellfish--and any attempt at segregation into the component parts could lead to duplication of effort and inefficiency.

Does AQIS agree with that conclusion?

Mr Hickey --That is one of the conclusions and recommendations that is to be addressed in the government response.

Senator BOB COLLINS --Have there been any preliminary negotiations with other agencies, Commonwealth and state, and research bodies--universities and so on--about the level of research effort that would be required to fill the gap?

Mr Hickey --I cannot answer that question. I would doubt that anyone in AQIS would have had that discussion; that will fundamentally be a role for the expanded infrastructure that I referred to, once it is in place.

Senator BOB COLLINS --There will be, I imagine, a continuing need to draw on overseas scientific expertise as part of this process.

Mr Hickey --Yes.

Senator BOB COLLINS --I guess in that sense your answer to this question will be the same as the last one. The question was, simply, whether that process had begun with any of the other international agencies with which AQIS routinely deals in terms of what is being done overseas in the same area of research to address quarantine issues.

Mr Hickey --The intention--and I do not know whether the moves have actually been initiated--clearly is for Australia to become members of regional and international organisations that deal with fish health issues, including a regional OIE commission on fish health in South-East Asia, which is particularly important in dealing with diseases in aquaculture in that region. Through those sorts of networks, obviously, we build an awareness of who the experts are in relation to particular diseases in particular types of fish products.

Senator BOB COLLINS --I note again that, in relation to this same issue, the task force found that, while most of the states were happy with the legislative regime--the actual laws themselves--they have in place to manage imported products, there were not enough resources to apply it effectively. The particular areas that were identified by the task force were: lack of expert personnel, lack of field staff at border controls, shortage of staff to deal with disease surveillance, monitoring and then lack of resources to deal with eradication in the event of any emergency.

Has any work been done by the federal government in cooperation with the states to quantify the cost of resources--and again I am not talking about research; I am talking about the identified problem of actually resourcing the legislative framework--required to bring the national system up to speed?

Mr Hickey --I can take the specific question on notice. I think it would be true to say that that would be envisioned to be one of the primary responsibilities or one of the first tasks, at least, of a fish health council similar to the proposal to establish a plant health council, similar to the establishment of the Australian animal health council, which is looking at the adequacy of that field and other monitoring and surveillance infrastructure right through the country.

I think the further detailed exploration of those issues will certainly be carried on through the standing committee on fisheries and through bodies such as the proposed fish health council.

Senator BOB COLLINS --I guess also within that process there will be plans put into place to--again I am referring to the report--increase the skill levels of the officers who are already there in fish health?

Mr Hickey --All of those matters that have been referred to in that report will be referred to the various units once they are in place for examination and implementation.

Senator BOB COLLINS --On page 143 of the report under the heading `Funding' it says:

Experience from overseas demonstrates clearly that expansion of aquaculture activities are, inevitably, followed by disease outbreaks with serious socioeconomic consequences.

Are there any officers here who could expand on that statement? I was quite concerned to read that. I do not know enough of the background of it. I will repeat it again:

Experience from overseas demonstrates clearly that expansion of aquaculture activities--

and that is precisely what is happening exponentially in Australia at the moment, as you know; over five years it is going through the roof--

are, inevitably--

and that word `inevitably' concerned me--

followed by disease outbreaks with serious socioeconomic consequences.

Mr Hickey --There have been no reports of widespread disease outbreaks, particularly in aquaculture, which has been an emerging industry in south-east Asia. We can provide you with whatever information you need on those matters.

Senator BOB COLLINS --I would appreciate it. If there are papers available and published, if you could provide them to me I would be interested to read them. There is a draft IRA release for public consideration and industry feedback. What is the current average time being taken by AQIS to carry out a full IRA?

Mr Hickey --There is no simple answer to that. It ranges from 20 years to a short period of time depending on the complexity of the issue involved.

Senator BOB COLLINS --I guess it would be on an absolute case by case basis.

Mr Hickey --Yes.

Senator BOB COLLINS --I am taking a little time with this because I think I can put a fair few of these questions on notice. Can you advise the committee of the volume of imported food that has to be checked each year? I would like to get the figures from 1994. If possible, without going to an inordinate amount of effort, in that breakdown from 1994 to now--and this is from AQIS's perspective of the volume of food that is checked each year--can you break down those numbers by port of entry and the mode of transport used to ship the product into Australia?

Mr Hickey --We will do our best.

Senator BOB COLLINS --Thank you. Does AQIS have a position on the question of the socioeconomic considerations of imports as part of the IRA process being included as part of the normal process?

Mr Hickey --In so far as they derive from the impact of the introduction of a disease and not from the economic adjustment that might follow from the competition from the imports, the answer is--

Senator BOB COLLINS --No, it is the second option that I am referring to.

Mr Hickey --The answer is no, not in the AQIS assessment.

Senator BOB COLLINS --Can you advise the committee what has happened in terms of formal consultation between the Commonwealth and states in relation to the recommendations of the Nairn report? Have there been any?

Mr Hickey --When the minister released the report in December 1996, there was a SCARM-ARMCANZ meeting--I am just trying to remember the date--earlier this year at which there was general discussion on the report. The minister advised the states at that point that, because of the consultative processes that Nairn had followed, including requesting submissions and public hearings, there would not be a formal round requesting written consultation but that any views that anyone who received the report and read it might want to offer would be taken on board and examined.

There was established at that meeting a Commonwealth-state working group which has been asked to look at those recommendations where joint areas of responsibility are involved in the recommendations that have been made. For example, monitoring and surveillance activities which traditionally have been the province of the states and which attract some detailed attention in the Nairn report are matters on which the states would be formally consulted. That working group has its first meeting tomorrow and has to report back in August at the ARMCANZ meeting.

Senator BOB COLLINS --Fine. The proceedings of those meetings, as I understand it, are still publicly available and are published regularly, so I can get copies of that.

Mr Hickey --The outcomes of the ARMCANZ meetings, yes.

Senator BOB COLLINS --What is happening at the moment with the information given to us earlier about the proposed expansion of the beagle brigade--the sniffer dog program?

Mr Hickey --That is the subject of decisions in the Nairn context.

Senator BOB COLLINS --So that is in there as well.

Mr Hickey --Yes.

Senator BOB COLLINS --Obviously questions of industry contributions and so on will be part of that process too, will it not?

Mr Hickey --Yes.

Senator BOB COLLINS --I want to ask a few questions about the program evaluation of the AQIS grain export program. Has that evaluation process commenced?

Mr Hickey --Yes, it has.

Senator BOB COLLINS --When will it be completed? I would like to know who is doing it too.

Mr Hickey --That is one of a series of reviews of AQIS programs that has been initiated jointly by AQIS and the existing Quarantine Inspection Advisory Council. The export grain review follows a review that has been completed into the dairy export program and is being carried out concurrently with a review that is also being done of the live animal export program.

The nature of the reviews is that AQIS assigns representatives from the policy and operations sides of the organisations to prepare a discussion paper on issues related to the program. QIAC nominates, typically, two or three of its membership to commence a series of discussions with industry around the country on the basis of the issues paper that has been prepared by AQIS. QIAC itself then produces an evaluation report which is taken out to industry for comment and then brought back into the council for decisions about future programs directions. The grain review--

Senator BOB COLLINS --That is the Quarantine Inspection Advisory Council?

Mr Hickey --Yes, that is right. The grain program review is at the point where a draft report by QIAC itself, I think, has been circulated to industry for comment.

Senator BOB COLLINS --Thanks. Can you provide the committee with a list of the membership of the council or is it possible and easy to tell us now who is on it?

Mr Hickey --At present it is chaired by Mr Ed Wright, the grazier-producer from New South Wales. The membership is: Mr John Grigg, a horticulturalist from Queensland; Mr Ian Flack, who was formerly CEO of an export abattoir in Western Australia; Dr Peter McInnes, a grazier from Western Australia; Mr Roger Fletcher, a lamb and mutton processor from New South Wales; and Mr Ken Pritchett, who is a management consultant based in New South Wales.

Senator BOB COLLINS --I assume they are all ministerial appointments, are they?

Mr Hickey --Yes, they are.

Senator BOB COLLINS --Sorry, how many graziers, producers and things are on that?

Mr Hickey --Two, I believe. There are three producers if you count Mr Grigg, who is a pineapple grower.

Senator BOB COLLINS --Okay. The reviews that you have just mentioned across the board: are the terms of reference for those reviews available?

Mr Hickey --Yes, they are. In fact, the process was commissioned by you as minister, I think, during the course of 1995. But, yes, we can provide those.

Senator BOB COLLINS --I thought I would ask in the sense that I can no longer retrospectively authorise the release of the documents. You have got no difficulty with letting us have them?

Mr Hickey --No, not at all.

Senator BOB COLLINS --Thanks very much. Are there still 10 consultative committees with industry?

Mr Hickey --I would have to count them for you. I do not think we have expanded them.

Senator BOB COLLINS --That was basically my question: there have been no substantive changes to the consultative committee?

Mr Hickey --No. One of the recommendations in the Nairn report is that we review those committees--the number of them, their terms of reference and their composition. That, again, is one of the issues--

Senator BOB COLLINS --So you are doing all that now, too?

Mr Hickey --Yes.

Senator BOB COLLINS --You did warn me in advance, Mr Hickey, that that would be the answer to all these questions. It is all right--we will check it in the next estimates. Can you advise me in a general sense whether AQIS is proposing any substantive changes to the charging regimes for its cost recovery?

Mr Hickey --In a general sense?

Senator BOB COLLINS --Yes.

Mr Hickey --The answer is yes, we are.

Senator BOB COLLINS --The charges are going down, are they?

Mr Hickey --Charges often do go down, yes. On the other hand, charges sometimes go up.

Senator BOB COLLINS --I defy anybody to argue with that statement. What are you doing currently?

Mr Hickey --Me personally?

Senator BOB COLLINS --No, are your charges going up or down?

Mr Hickey --We go through a process each year with industry consultative committees of reviewing the charge rates in the light of outcomes from the program operations in the current financial year. There are adjustments both up and down--seriously--as a result of that process. There will be charging issues to be raised as a result of that response to the Nairn report. In general terms, they will be more about the frequency of inspection than the rate of charge per se. In regard to the meat program, the government announced in last year's budget--that is, the 1996-97 budget--that it was withdrawing any community service obligation support of AQIS's operational activities. That support was withdrawn with consequential charging adjustments for all other industries in the 1996-97 budget and has been withdrawn from the meat industry with effect from the 1997-98 budget.

Senator BOB COLLINS --What is the value of the CSO for 1997-98?

Mr Hickey --I think, from memory, for the meat industry it was--

Mr Macdonald --About $3 1/2 million.

Senator BOB COLLINS --Thank you.

Mr Hickey --The other issue that is relevant to meat charges and which is implicit in the tables in the budget documents is the withdrawal of the Commonwealth subsidy for the meat inspection program with effect from 1997-98. The extent to which those decisions impact on charges is totally dependent on the extent to which we can estimate whether we will be successful with the various reform elements that the government has endorsed. We have a meeting of the charging review committee on meat matters next week to discuss those issues with industry.

Senator BOB COLLINS --There was a press statement by the minister on this matter. I think you referred to the issue last August. He stated that the government would save $3 million in 1996-97 and a further 7.5 in this coming financial year. Are those numbers still accurate?

Mr Hickey --Yes, they were the total amounts of CSO funding going into operational support that were withdrawn across all programs.

Senator BOB COLLINS --I want to ask some questions about the changes to the meat inspection service. Does the new structure follow the recommendations of the industry government steering committee report?

Mr Hickey --Yes.

Senator BOB COLLINS --Can you tell the committee how many meat inspection officers you currently have in AQIS?

Mr Macdonald --I think we advised you in May that it was 774. I do not have the exact figure as of the last pay, but it is probably down about 20 since then.

Senator Bob Collins --That will do. And how many do you expect to have at the end of the four years of restructuring?

Mr Hickey --That really is a highly speculative figure. I am not trying to avoid the question. It is almost entirely dependent, firstly, on the rate of and whether project 2 type systems will be able to be implemented across the industry and, secondly, on the rate of uptake of such systems. It is almost impossible to predict four years out, in my experience, just where that will take us. But I would expect that, if we are able to proceed with the project 2 type models, there would be a very significant reduction in the current numbers.

Senator Bob Collins --Do you know if the situation with charging in the United States has changed to any degree--that is, in the sense that the lion's share at least of meat inspection charges is still funded by the government rather than being a charge to industry?

Mr Hickey --That is still the case. However, there are proposals within the Clinton balanced budget framework which seek the imposition of inspection charges in the forthcoming budget.

Senator Bob Collins --To the best of my knowledge, that has actually been proposed now for about 10 years in the US.

Mr Hickey --Yes, it has. The anecdotal feedback that we get, however, is a greater feeling that it is inevitable if not this year then perhaps next year. So on both the industry and government side there seems to be a much greater awareness of what would flow from the introduction of that sort of charging.

Senator Bob Collins --Thanks. The plan for charges provides for a separation of the accounts of the meat inspection and regulation division. The steering committee report on the meat inspection reform plan estimated the cost of running the division to be $51.4 million in 1997-98. Is that the budgeted figure?

Mr Macdonald --That was the figure identified in the report of the steering committee. It was based on the uptake of project 2--some assumptions about that, which have not come to pass. There has been some delay. So the actual budget outcome for 1997-98 will probably be a bit larger than that--

Senator Bob Collins --The report actually refers to potential for blow-out, I think, doesn't it?

Mr Macdonald --Yes, it does. But it is related to the uptake of project 2 rather than the other reform agenda elements.

Senator Bob Collins --Which are slower--

Mr Macdonald --They depend on industrial reform and things of that kind which are just a bit slower in production.

Senator Bob Collins --What is the current uptake of company inspection?

Mr Hickey --The situation that we are currently at is that we are proceeding with implementation of the full quality assurance systems at the five trial sites. One of those has now, I think, passed its final audit and would be ready to convert to a company based inspection system, subject to its being satisfied, of course, about its market access issues.

We have had extensive discussions with most of the key markets. We have not had any concerns about access expressed to us other than through the United States where, I think, as you know, we are in a more formal process which has involved the gazettal of a federal register notice by the FSIS seeking comments on the Australian proposal by 29 July. Where we go from there of course is dependent on the outcome of that process.

It is of interest in that context that the FSIS itself has in the last two days produced its own document in the federal register, advising of an intention to consider modifications to its own meat and poultry inspections systems, foreshadowing some fundamental changes in the assignment of responsibilities as between government and companies as part of that process. There is a copy of that discussion paper on the Internet if you would ne interested in that.

Senator Bob Collins --I will need to have a copy of yours, because I have had the plug pulled since I am no longer the minister.

Mr Hickey --You would like both, would you?

Senator Bob Collins --Yes, I would, if you would not mind. Can you tell me where the process is at with securing a new agency agreement with the unions?

Mr Macdonald --We are currently in negotiations with the union. A meeting was scheduled for 10 o'clock this morning, but that has been delayed until tomorrow at the union's request. We are due to report back--

Senator Bob Collins --That is okay. I just wanted to assure myself that I wasn't keeping you from it.

Mr Macdonald --No. We are to report back to the Industrial Relations Commission on the 17th, next Tuesday, on the outcome of those discussions. At this stage the union has in fact proposed what are basically untenable arrangements as far as we are concerned, and we are having some difficulty finding some common ground.

Senator BOB COLLINS --I am shocked and dismayed to hear that. Can you tell the committee about what is assumed in terms of the level of demand for AQIS services over the next four years for budget assumptions?

Mr Macdonald --We have tried to build a new price structure that will not produce financially difficult outcomes for us. We are assuming though from our intelligence that there is downside risk in the demand for AQIS services. It is very hard to predict. It is dependent on overseas competitive forces, internal structural changes associated with a live animal export program and weather conditions here in Australia. But our judgment is that, at best, demand for our services will be maintained at current levels. That is the best outcome.

Senator BOB COLLINS --What was the loss in the AQIS meat inspection revenue due to declining demand in 1996-97?

Mr Macdonald --About $5 million beyond what we estimated at the start of the year.

Senator BOB COLLINS --In relation to the charging regime that is to apply in this new system, am I correct in saying that there is a going to be a fee for service and a registration fee that covers everything?

Mr Macdonald --Yes, a fee for service for variable costs, such as the inspectors and the on-plant veterinarians, and a registration charge to cover the cost of our fixed costs structure.

Senator BOB COLLINS --The steering committee--in terms of how this was going to impact on industry--referred, as you are aware, to winners and losers.

Mr Macdonald --Yes.

Senator BOB COLLINS --Can you advise the committee, again in general terms, who the winners and losers will be?

Mr Macdonald --The losers, under that pricing regime and movement from the existing system, would tend to be the smaller participants in the industry because they also take a share of the fixed costs, which are not adequately financed through the registration fee structure at the moment.

Senator BOB COLLINS --Thank you. The minister's press release identifies $44.3 million over four years to `reform the AQIS meat inspection service'. The steering committee report estimated the figure to be $40 million over three years. Can you explain those two figures?

Mr Macdonald --That is basically a shift between years. The calculations that underpin the $44 million in the minister's statement assume some expenditures brought forward out of 1996-97 so it is just a shift between years. There is no fundamental change in the calculations.

Senator BOB COLLINS --Thank you. The committee identified a number of other costs that were associated with implementation of the reform package, which were $13 million for the cost of maintaining staff on the payroll while the prescribed redundancy processes followed. Could you, again in general terms, take us through that process?

Mr Macdonald --That figure is in fact included in the numbers we just discussed. The committee, when it looked at the existing arrangements for redundancy in the Public Service, took account of the experience and the history and the fact that the current system and the current provisions in the various legislation and awards take quite some time to run through. There are statutory periods at the start before the clock starts. Experience suggests that would take up to 12 months, and the calculations made that assumption.

Senator BOB COLLINS --Thank you. The committee report--and I found this very familiar--referred to the fact that AQIS is technically insolvent and trading only through the use of its reserves to meet liabilities. How is that matter being addressed in the budget context?

Mr Hickey --You will see from the budget papers that there is provided for here a separation of the existing trust account into two--one to deal with meat inspection activities and the other to deal with the rest of the AQIS programs. As part of that, there are contingency funds that are being provided for--both trust accounts of $5 million each--and there will be a review of the capital requirements in each of those trust accounts in the additional estimates processes when we have final audited financial statements for 1996-97.

Senator BOB COLLINS --Is there any particular reason why the committee felt it was necessary to address this particular point?

Mr Hickey --Only that the capitalisation of the accounts--to the extent that they were then used by AQIS for various purposes including, say, capital purchases and the like--had the propensity to compete as budget outlays with actual program adjustment activities. The priority has been given to continuing the reform processes but while providing the sorts of liquidity arrangements that are in the budget here, and with another review of the capital requirements for those trust accounts later in the year.

Senator BOB COLLINS --Thank you. I noticed a reference in the steering committee report that `an advantage of a separate trust account is that it would insulate the balance of AQIS's financial operations from any cash problems arising from the reform program.' Is it possible to expand on what problems the steering committee had in mind in that respect?

Mr Hickey --For some years, governments have had a policy of no cross-subsidisation between AQIS programs so we treat each of our export certification quarantine programs, in effect, as independent business units within the overall AQIS trust account. There is no cross-subsidisation in terms of the actual revenue and expenditure performance of those programs one on the other. But whilst we are making significant losses on the meat inspection program, that has the capacity to draw cash out of the trust account that might otherwise have been used, for example, for capital purchases, for IT equipment in airports or the like.

So, to that extent, there can be temporary disruptions to other programs caused by the cash requirements for the meat program. It was felt that the separation of the two accounts in a formal sense, together with the contingency and capitalised funding yet to be assessed, provided the better business basis for us to operate in both accounts.

Senator BOB COLLINS --Thank you. I assume that all these changes are going to inevitably lead to a reduction in AQIS's area offices. Is that correct?

Mr Hickey --Yes, it is. The Wagga office is in the process of being closed, if it has not already been closed, and the Cairns office will no longer support meat inspection activities--it will deal entirely with quarantine activities.

Senator BOB COLLINS --That report still remains operational?

Mr Hickey --Yes.

Senator BOB COLLINS --Are you shutting anything else down?

Mr Hickey --No.

Senator BOB COLLINS --I am just looking at potential regional areas.

Mr Macdonald --We will be rationalising the stores arrangements for the program, but that is not a significant matter.

Mr Hickey --That is going out of the metropolitan areas into the country, into Dubbo.

Senator BOB COLLINS --Really?

Mr Hickey --Yes.

Senator BOB COLLINS --Mr Hickey, you talked earlier about the pilot studies of the company-based inspections. I wish to ask you a few questions about that. Has it begun in all five of the works?

Mr Hickey --The development of the quality assurance systems has, but they are not operating under project 2 conditions at this point in time.

Senator BOB COLLINS --Budget Paper No. 2 says that the project 2 system has been submitted to Australia's major trading partners. At what officer level has that happened? What countries have been involved and where is the process up to? I am happy for you to take those on notice. Do any of our trading partners have a direct involvement in any of the trials that are currently under way?

Mr Hickey --We will provide you with the specifics but the general answer is that the advice of our intention to move to new systems has been provided at head of agency level. In each case we have invited any nominated official to visit Australia to review the systems. A number of countries including Japan, Korea and Canada have had officers visit Australia and some have visited one or two of the trial sites. Canada, New Zealand and Mexico have agreed to participate formally in an international peer review panel to oversight the evaluation of the trial proposals.

Senator BOB COLLINS --Has there been an estimate made by AQIS of what the net loss of jobs is going to be in meat inspection if at the end of the process all the targets are reached and so on--in other words, how many company QA personnel are going to replace X many AQIS meat inspectors?

Mr Hickey --In terms of the actual inspection tasks to be performed we have a shift of responsibilities from the government to the industry. In that sense there is no reduction in inspection numbers involved at the point at which the transfer takes place. There will be reductions in inspector numbers as part of the other efficiency exercise that Mr Macdonald touched on and that we are seeking to negotiate at the moment. In terms of the actual transfer of responsibilities there will be no job loses. Indeed, the experience of the Herd plant in Victoria and the sorts of messages we have had from a couple of the trial sites indicate that they will end up employing more qualified inspectors on their work force but rotating them through a broader range of jobs than we currently employ in those plants.

Senator BOB COLLINS --I know that this is entirely a state matter, but are you aware of the extent to which company based quality assurance programs have been put in place in domestic inspection?

Mr Hickey --I am generally aware of programs that are going on within the states.

Senator BOB COLLINS --What is the level of progress there?

Mr Hickey --The Victorians commenced in July 1994 with an objective to have mandatory quality assurance systems operating within three years. I cannot give you details of the actual progress in terms of plant numbers and so on but the general reports I have heard from Victoria are that they have made substantial progress down that path.

Senator BOB COLLINS --Would Victoria basically be the front running state at the moment?

Mr Hickey --Yes.

Senator BOB COLLINS --I will put some of these on notice, Mr Chair. I would like to know how much was spent on overseas travel from 1993-94 up until now, year by year. I am happy for you to take it on notice.

Mr Hickey --For all of AQIS?

Senator BOB COLLINS --Yes. What is the allocation for travel for this year for AQIS?

Mr Hickey --I do not know.

Senator BOB COLLINS --Include that in your answer.

Mr Hickey --You mean for overseas travel, not domestic?

Senator BOB COLLINS --No, specifically overseas. I would also like a brief explanation of the purpose of the trips--a one-sentence explanation.

Mr Hickey --For each trip?

Senator BOB COLLINS --Correct me if I am wrong, but I thought that that information was routinely compiled by AQIS on a monthly basis, anyway. Is that right?

Mr Hickey --We have the information available and we can certainly provide it. There is no difficulty with that.

Senator BOB COLLINS --In terms of the acquittals of overseas trips generally, have there been any abnormalities within AQIS in the acquittal process for overseas trips discovered either by AQIS or any external agency auditing AQIS?

Mr Hickey --None that I am aware of.

Senator BOB COLLINS --Thank you.

CHAIR --Do you have any questions you wish to place on notice?

Senator BOB COLLINS --Yes.

CHAIR --That finishes primary industries and energy. I thank the officers from AQIS for coming back today. Thank you to Hansard, the members of the committee and all the support people. We will meet again on Monday night at 8.15 p.m.

Committee adjourned at 12.59 p.m.