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ESTIMATES COMMITTEE E
DEPARTMENT OF INDUSTRY, TECHNOLOGY AND REGIONAL DEVELOPMENT
Program 1--Industry, Technology and Regional Development
- Committee Name
ESTIMATES COMMITTEE E
DEPARTMENT OF INDUSTRY, TECHNOLOGY AND REGIONAL DEVELOPMENT
Program 1--Industry, Technology and Regional Development
- Sub program
- System Id
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Table Of ContentsPrevious Fragment
ESTIMATES COMMITTEE E
(SENATE-Thursday, 26 August 1993)
- Start of Business
DEPARTMENT OF TOURISM
- Program 1--Tourism
- Program 2--Bureau of Tourism Research
- Program 3--Australian Tourist Commission
- Program 4--Executive and support
- Senator Schacht
DEPARTMENT OF INDUSTRY, TECHNOLOGY AND REGIONAL DEVELOPMENT
- Program 4--National standards
- Program 3--Australian Manufacturing Council
- Program 5--Textiles, clothing and footwear
- Program 6--Automotive industry
- Program 8--Marine science
- Program 12.0--Office of Northern Development
- Program 10--Nuclear science and technology
- Program 7--Anti-Dumping
- Program 9--Customs
- Program 11--Scientific and industrial research
- Program 1--Industry, Technology and Regional Development
- Senator FERGUSON
Content WindowESTIMATES COMMITTEE E - 26/08/1993 - DEPARTMENT OF INDUSTRY, TECHNOLOGY AND REGIONAL DEVELOPMENT - Program 1--Industry, Technology and Regional Development
Senator FERGUSON --I have a couple of general questions particularly in relation to the Purchase Australia Office. I prepared these questions before any dining room tables came into the public spotlight. During the additional estimates committee hearing in May I asked some questions about the Purchase Australia Office, under subprogram 1.3--Light Industries. This subprogram does not appear to exist any more and I cannot find any reference to the Purchase Australia Office. I am wondering under which subprogram I can ask some questions.
Senator Schacht --I have been informed that it is under the Department of the Arts and Administrative Services. Did you ask questions of us?
Senator FERGUSON --Yes, under subprogram 1.3--Light Industries.
Senator Schacht --It is now under subprogram 1.2--Industry Liaison.
Senator FERGUSON --I will ask questions when we get there.
Senator Schacht --There may be some difficulties, as Senator Ferguson just indicated. The structure of this report, in titles of divisions and so on, reflects the new restructuring of the department. Some titles that we have been used to in years gone by have disappeared and have appeared under new titles. The new structure is in operation and we have to get used to it as soon as we can. So do not be backward in asking where something has disappeared to.
Senator FERGUSON --I could not find it.
Senator Schacht --That is the reason. I understand that `Industry Liaison' has taken over `Light Industry'.
Senator CHAPMAN --With reference to the program performance statement, the science and technology budget statement and budget paper No. 1, could the department provide estimated expenditure in each program, subprogram and element referred to in the program performance statement for each of the four years to 1996-97? I am looking for the four-year forward estimates.
Senator Schacht --Is this for outlays?
Senator CHAPMAN --Yes, projected outlays.
Senator Schacht --We have dealt with all the others already, apart from program 1--the Department of Industry, Technology and Regional Development. Page 8 has a program structure for the Department of Industry, Technology and Regional Development which branches into four areas: policy and coordination, industry liaison, enterprise development and state offices. Do you want it broken down in those four divisions?
Senator CHAPMAN --Yes.
Senator Schacht --The outlays for the next four years?
Senator CHAPMAN --Yes.
Senator Schacht --Is that as far as you want to go?
Senator CHAPMAN --Ideally, I would like to go right across the department.
Senator Schacht --The others underneath that--industrial property and the Australian Manufacturing Council--we have already dealt with today.
Senator CHAPMAN --We have dealt with them as individual departments but I thought I would ask that as an overall question.
Senator Schacht --For DITARD and for all of those others as well?
Senator CHAPMAN --They come under DITARD.
CHAIRMAN --You have already asked that question separately for a number of them, have you not?
Senator CHAPMAN --Some of them, I have, but not for all.
Senator Schacht --You are now asking us to provide the lot irrespective of where they are in the total portfolio. I have been advised to draw your attention to page 12, the outlays summary table from 1992-93 through to 1996-97. Is that of any help? It has listed program costs, excluding running costs. Running costs are underneath.
Senator CHAPMAN --That is not the total outlays, is it?
Senator Schacht --It is the total outlays.
Senator CHAPMAN --They are not broken down by programs.
Senator Schacht --On page 13 there is the measures affecting programs table, by programs or subprograms. Program 1.2 is extension of the book bounty. The table reflects the estimated effect on outlays from 1993-94 through to 1996-97. That is per program.
Senator CHAPMAN --That gives all variations, does it? That is not all programs?
Senator Schacht --`Measures' means new programs. It changes.
Senator CHAPMAN --Ideally I would like that table for all programs.
Senator Schacht --I have just been advised by the secretary that the portfolio resource summary table, at the bottom half of page 12, deals with program 1 through to program 12. It covers all the various organisations. We could provide you with a breakdown of the outlays up to 1996-97 for each program--program 1 through to program 12. Is that what you are after?
Senator CHAPMAN --That is partly it. Then can you do it with subprograms within those programs?
Senator Schacht --It is the definition of a subprogram. We have just given you a breakdown of the outlays for AIMS. I have just tabled the document. I think we have given you a breakdown of the outlays for ANSTO, and you have asked for a breakdown of the outlays for CSIRO.
Senator CHAPMAN --What is left?
Senator Schacht --A lot. I do not want to be difficult and I am not trying to be secretive about the outlays.
Mr Stevens --If I could give an example. Within the department we have four subprograms in that overall program but the actual budget allocation is a total allocation for the department--for example, running costs--which is then split between those four subprograms on a yearly basis. So we may well change what we will do next year. We do not have a detailed outlay now of what we will do next year or the following year in that respect. So it is very hard to give you what you are seeking to that level of detail.
Senator CHAPMAN --To what level of detail can you provide it?
Senator Schacht --We have just explained that we can do it by program, many of which we have already gone through. We just cannot estimate the subprograms you are talking about within program 1 because, as the secretary has just explained, many of them will change. We will provide that information. I am not trying to be difficult, it is just a sheer function of where we are at with the subprogram level. You would want us to argue that those subprograms will have to change from time to time within the four-year period as circumstances and demand change.
Senator CHAPMAN --Can you provide an explanation of the connection between each of the programs, subprograms and elements listed in the program performance statement and the allocations made in budget paper No. 1 relevant to the department and those in the science and technology budget statement. I guess it is a matter of reconciling the program performance statement with the budget statement?
Senator Schacht --Apparently we can do that for you. We will do that by next Thursday.
Senator CHAPMAN --Can you also explain to the committee how the funding breakdowns in the summary table, which follows the summary notes at the start of the science and technology budget statement, were arrived at?
Senator Schacht --Which page?
Mr Stevens --It is after the summary table.
Senator CHAPMAN --Yes, the funding breakdown of the summary table.
Senator Schacht --What are you now raising with us about that summary table?
Senator CHAPMAN --How the funding breakdowns were arrived at.
Senator Schacht --That summary table covers a lot of other portfolios. It is not just the industry portfolio. It has DEET, Health, DPIE and Defence all mixed in there. Are you asking us to break that down?
Senator CHAPMAN --How the figures were arrived at across the program performance statements of each department.
Senator Schacht --They were arrived at by the ERC and the budget process. After all the argy-bargy, cabinet decided this is what the allocations were. That is what we slogged our way through through most of July and August. There are a few buckets of blood down the back of the room if you want to see them.
Senator CHAPMAN --Can you explain the relationship between the headings there and the program performance statements?
Senator Schacht --There is no relationship at all. I hope we are talking apples and apples here on the same table.
Senator CHAPMAN --We do not have one here.
Senator Schacht --Is this the one you are talking about? It is called `Summary table: Commonwealth support for major programs of science & innovation'. Although this is a summary of science expenditure generally--
Senator CHAPMAN --Across the portfolios?
Senator Schacht --Across all portfolios. Our portfolio only covers some of those areas. Co-operative research centres come under the Department of the Prime Minister and Cabinet. As Minister Assisting the Prime Minister for Science, I administer that area. Industry R&D & Incentives is administered by the Department of Industry, Technology and Regional Development, as is CSIRO. AIMS and ANSTO would be included in Other R&D Agencies. Not all of those programs are administered by the department.
Senator CHAPMAN --What I wanted was the relationship between the funding. For example, for CSIRO estimated outlays are $468.8 million and in the program performance statement it is $461.2 million.
Senator Schacht --This is a good stab in the dark. The fourth footnote in the Science and Technology budget statement states:
4. Includes funding through DPIE for Australian Animal Health Laboratories and through DIT&RD FOR the Kraft Pulp Mill study.
It may be that those two items are in there to get it to $464.1 million and we did not put it in ours. We will go and check it.
Senator CHAPMAN --Of those other items, which ones come under your department?
Senator Schacht --The Australian Research Council does not. Other higher education R&D does not. Cooperative research centres is administered by the Department of the Prime Minister and Cabinet. I have responsibility for that in another portfolio. I will not be turning up at Prime Minister and Cabinet estimates, I can tell you. I have done my penance here today. The next one, Industry R&D & Incentives, is administered by Industry, Technology and Regional Development. For the year 1993-94, it is $495.6 million.
Senator CHAPMAN --Where is that in the program performance statement?
Senator Schacht --You might notice that it has gone down by 15 per cent. That is because the income tax deduction, 150 per cent for R&D, will be less because the company tax rate has dropped from 39c to 33c. That means the deduction is worth less.
Senator CHAPMAN --In the program performance statement, where does this come under this department?
Senator Schacht --It would be under 1.3 in the yellow document. This document only covers outlays. The R&D tax concession is revenue forgone. It is in the overall budget documentation, budget paper No. 1. If you can juggle all of those 10 books together in the air and get them to come down face up, and the right way around, you are probably doing better than I am.
Senator CHAPMAN --I think that that was the nature of the problem, trying to reconcile the three documents.
Senator Schacht --As Dr Bell has just explained to me, this is why we very conveniently produce this document each year, so that you can create mayhem here at the estimates committee with a question. We are reviewing it next year.
Senator CHAPMAN --Do any others come under your department?
Senator Schacht --Going further down, CSIRO, of course, and then Other R&D agencies, which would include ANSTO and AIMS plus a few others. There are a lot of others in that Other R&D program, but certainly AIMS and ANSTO are in there.
Senator CHAPMAN --To get the forward projections for each of these headings questions would have to be asked of each of the separate departments?
Senator Schacht --Absolutely. So you will have to front about three different estimates committees. Good luck and goodbye.
Senator CHAPMAN --If you react like that, I will keep you here longer.
Senator Schacht --I am just being helpful.
Senator CHAPMAN --For the items under your responsibility, would it be possible to get the estimates of the real change in expenditure between 1993-94 and 1996-97 for each year?
Senator Schacht --The real change in the outlays? Real actually happens, in my view.
Senator CHAPMAN --Real is related to inflation. You have your estimated outlays against the estimated rate of inflation.
Senator Schacht --That is a matter I will take on advice. I am not sure that we can do that. It is not because we do not want to; I am just not sure that it is available to do.
Senator CHAPMAN --Has there been any change in the amount of research--
Senator Schacht --That is especially so when you use a phrase like `real change'. I am not quite sure what the inflation rate will be in four years time. Under our good stewardship of government, it will probably be half a per cent. If you mob get in, it will probably be 15 per cent.
Senator CHAPMAN --It is more likely to be the other way around. Has there been any change in the amount of research contracted out to the private sector since the Block report was released?
Senator Schacht --Where have you jumped to now? This goes back to the DITARD portfolio itself; right?
Senator CHAPMAN --Yes.
Senator Schacht --Are you asking about the Bloch report in relation to our portfolio itself or generally? I am told that the Block report--it was before my time--was wider than just our portfolio area.
Senator CHAPMAN --Just the impact on your portfolio.
Senator Schacht --I think that might have been a more relevant thing to ask CSIRO, but they have gone. For the sake of being cooperative, I will seek advice about it.
Senator FERGUSON --I refer to the two tables on pages 21 and 29. How much of the $107 million for the policy and coordination subprogram for 1993-94 will go to the Office of Regional Development?
Mr Stevens --On page 29 there are two programs listed for regional development which are administered by the Office of Regional Development. The regional employment and economic development program and regional development program are under `Other services' on page 29. In addition to that, there is some administrative money for the office of about $1.755 million, giving a total figure of about $3 million.
Senator FERGUSON --How many staff work for the Office of Regional Development?
Mr Stevens --It is building up at the moment. We expect there to be about 25 in a couple of months time.
Senator FERGUSON --On page 29 appropriations are listed for the Newcastle economic development program, the regional employment and economic development program and the regional development program. Are they separate to or part of the funding of the Office of Regional Development? I guess you part answered that in your first answer: they actually are part of the Office of Regional Development.
Mr Stevens --Some program money has been allocated by the government in addition to some running costs which go towards running the Office of Regional Development. These are actually program costs that you see here on page 29.
Senator FERGUSON --On page 24 one of the strategies for the Office of Regional Development is given as developing `a series of collaborative regional development projects'. How much work has been done in this area?
Senator Schacht --It is just beginning. We are just establishing the regional development program and process and the administrative structure inside the department in line with the government's election commitments. I do not know what stage we are at, but we are just developing them. That is why you are seeing the increase in funding to take account of the fact that these are new initiatives.
Senator FERGUSON --Can you give us some idea of the sorts of projects the office is looking at? If it is only just starting, I want to get some idea of the sorts of projects.
Senator Schacht --We will give you some general comments about the programs.
Mr McCarthy --We have two programs transferred across from the Office of Local Government. One program is concerned with assisting in restructuring enterprise development in those areas that have been adversely affected by Australian National rail. Another program is a component of a program from the Office of Local Government that is concerned with enterprise initiatives at the regional level. These two programs have just been transferred across from the Office of Local Government and are quite small programs. We are in the process of incorporating those into the office.
Senator FERGUSON --Are you talking about programs rather than specific projects?
Mr McCarthy --Within the programs there are projects. Some projects are helping with the development of regional economic models or regional enterprise initiatives arising from proposals that have arisen from the regions. A number of our proposals have been submitted to the department and will be submitted to the minister for his approval.
Senator FERGUSON --Has any agreement as to how you will proceed with regional development been reached yet between the state and territory governments?
Mr Stevens --There has been a lot of discussion since we took over this responsibility in March-April this year. There has been a range of discussions between my department, all state departments and a number of local governments about our approach to regional development. No formal agreement has been reached, but a number of initiatives have been agreed to. For example, a ministerial council to cover regional development has been established. It adds to the functions of the existing council on industry and technology and it will be able to assess some of these issues on a ministerial Australia-wide basis. So no formal agreements have been reached, but there has been a fair bit of discussion and consultation on the approach we should be taking.
Senator FERGUSON --The only reason I asked the question is that it would seem to me to be more responsible to seek the advice, cooperation and agreement of people who are closer to the areas in which the development needs to take place rather than trying to drive it from here. I think that is why there needs to be some sort of agreement between the states and territories.
Mr Stevens --A number of processes are happening in the regional development area at the moment which affect that. Mr Kelty is leading a task force which is consulting with almost every region in Australia at the local level on these very issues. That task force will report back to the federal government in December this year. At that stage, we will be able to assess our approach to regional development. The cabinet will have a look at that report and other reports and make a judgment about its approach to regional development. The programs we are talking about here are very small, which tends to predate the March transfer of functions to this department. So we are consulting very widely at the moment about the future direction of the program.
Senator FERGUSON --What criteria were used to choose the members of this task force and its chairman? I am not critical of Mr Kelty's abilities, but I just wondered what specific criteria were used to select the chairman of a regional development task force and what expertise he would have in this area.
Senator Schacht --I will read the names of the people on the task force: Bill Kelty, who is the chairman; Councillor Paul Bell, who is the Chairman of the Queensland Regional Development Strategy; Margaret Bowman, who is a former member of the Hunter Region University Council; Norm Cameron, who is the Secretary of the Regional Australia Now Movement; Lindsay Fox, who is the Chairman of the Linfox Group; Stephen Howard, who is the Executive Director of the Committee for Melbourne; Margaret Lehmann, who is from Peter Lehmann Wines Pty Ltd in South Australia; Stuart Morgan, who is Chairman of Western Aerospace Ltd; Graham Ogilvie, who is Managing Director of Australian Newsprint Mills Ltd; Councillor Peter Woods, who is President of the Australian Local Government Association; and Neville Stevens, who is the head of the department.
I think that is a pretty broad range of people. I do not think we will run into the problem experienced by the Australian Tourist Commission which was raised this morning. The government made the judgment that the committee should comprise a range of people with backgrounds and interests. You may remember that over the past 12 months or so Mr Kelty and Mr Lindsay Fox, on their own initiative, went around areas of Victoria, particularly the regional areas, trying to promote and encourage industry to offer jobs to young people. That was recognised as being a very worthwhile initiative, and they were quite effective. This indicates that both those gentlemen are pretty interested in an outcome in this area. I would have thought that the overall mixture of that task force is as good as you will get in view of the challenge facing it. You could put up names of many other good people, but I would have thought that, despite the fact that Bill Kelty happens to be Secretary of the ACTU, he is also a well-known Australian--
Senator FERGUSON --I understand that and I have taken it on board. Given that the Office of Regional Development has recognised the importance of private sector investment in regional Australia, I thought it may have been more appropriate to choose a chairperson from the private sector with private sector experience.
Senator Schacht --Bill Kelty worked with Lindsay Fox. I do not think Mr Fox would be described automatically as a fellow traveller with the trade union movement in Australia, even allowing for Mr Fox's friendship with Mr Kelty--and they do not barrack for the same football side in Melbourne either. There are plenty of other people: Steven Howard, Executive Director, Committee for Melbourne; Margaret Lehmann, Peter Lehmann Wines Pty Ltd; Stuart Morgan, Western Aerospace; Graham Ogilvie, Australian Newsprint Mills Ltd, which has a major manufacturing plant in regional Australia at Albury-Wodonga. That is a pretty reasonable mixture. I agree with you that there are always plenty of other good suggestions about who can go on any committee, but I think the government has it pretty right with that mix.
Senator FERGUSON --Do submissions to this task force close this coming Tuesday, on 31 August?
Senator Schacht --It has been extended to 30 December.
Senator FERGUSON --Do you know how many submissions have been received so far? Have they been numerous?
Senator Schacht --About a dozen so far, I have been told.
Senator FERGUSON --Did you expect more submissions than that?
Senator Schacht --I would have hoped for more. We can still expect a larger number by the extended date. I give a lot of organisations the benefit of the doubt that they needed more time to prepare and also to get used to the idea that the federal government is serious about this regional task force. Members of the task force are now visiting, not together as a bunch but in ones and twos, different parts of Australia for discussions. I can table a list of visits that started on 9 August. For example, on 27 August visiting the Sydney regional organisations will be Woods and Bowman from the task force. On 29 August Ogilvie and Morgan will be at Kununurra. On 30 August Ogilvie, Morgan will be at Broome; and Lehmann, Cameron and Stevens will be at Mount Gambier and Portland. On 31 August Lehmann, Cameron will be at Port Lincoln; and Ogilvie and Morgan will be at Karratha. And the list goes on. Some visits are still to be confirmed, and they have a question mark next to them on this list. When you look through the list you will see that not much has been missed out.
Last Friday night I was in Geelong, which the task force will visit on 8 October. I was addressing people over dinner, and the Chamber of Manufactures was very enthusiastic. The people there are preparing for the meeting very well. As those meetings take place, I expect that that will encourage submissions. Whatever the deadline is, continuous submissions will come in as people get hold of what is going on. We will have to accept that as a good outcome, and we do not have to be too dogmatic about a closing date.
Senator FERGUSON --Bearing in mind that you have extended the closing date, when in the 1993-94 period would you expect the task force to report?
Senator Schacht --It has been announced by the minister that he expects a report by December of this year.
Senator FERGUSON --When in 1993-94 can we expect the report on `factors affecting private sector investment in regional development'? Who is preparing that report?
Mr Stevens --That report has not yet been commissioned. The federal government gave some money in the budget to commission it. We are in the process of calling submissions to select people to do this work. We would expect the timetable to be the end of the year or early next year for the report.
Senator FERGUSON --Why do we need two reports? Why could the task force not report on the private sector investment?
Senator Schacht --I think that the private sector investment has a technical aspect about it rather than a more general approach. I think that you need to get technical advice and assessment. I think that is a reasonable difference.
Senator FERGUSON --At this time of the night the last thing I want to do is cover any ground that we have already covered today, but the draft annual report says that the Office of Regional Development will be carrying out an analysis of regional impacts of government policy. We traversed quite a bit of this ground this morning when we were talking about tourism and fuel taxes and things like that when it comes to government policy, but prior to the delivery of the budget did this office provide any advice of any discriminatory effect of increased fuel taxes and other policy decisions taken in the budget?
Senator Schacht --As a matter of general principle, we are not going to. The discussions and the papers prepared for the budget process are confidential to cabinet, so I am not going to comment on that.
Senator FERGUSON --Would it be likely that the office would be asked to provide advice in the future?
Senator Schacht --I think you can take it as said that any minister who is involved in the budget process, in preparing for that process, will seek advice accordingly; but, as I say, the details of that advice are confidential to the cabinet process. In our department it can be taken as said that, where appropriate, ministers will seek advice from those appropriate sections of the department that deal with those areas that they are seeking advice about. So if it is an issue of regional development, or whatever it might be, the minister may choose to seek advice coming up through the system, but that advice remains confidential in the budget process.
Senator FERGUSON --It is very hard to believe that you would have taken any advice when it came to the impact of a wine tax in regional development.
Senator Schacht --I am not going to confirm or deny what level of advice came from where because it is confidential to the budget process.
Senator FERGUSON --And it can be taken or ignored.
Senator Schacht --Of course. Ultimately, cabinet makes a decision based on wider parameters than any particular piece of advice from one department. That is the cabinet process. I call that good government--other people may not, but I cannot think of anything that beats it.
Senator CHAPMAN --It might be reasonable to claim that any particular advice given to cabinet in the budget process is confidential, but I do not necessarily accept that it is confidential as to whether a department, or an organisation, or a group was asked to give advice.
Senator Schacht --I thought I answered that by saying that one can naturally presume that in the budget process ministers, in discussion within the cabinet about the range of proposals--and those proposals have been debated--will seek advice from their department, or may seek advice from their department where appropriate for their particular position. But, when you start asking whether we sought advice about increased excise on the wine industry or on petrol, I think you start moving away from the principle of cabinet confidentiality for the budget process.
Senator CHAPMAN --I do not think so. We are not asking what advice was given; we are asking whether advice was formally sought. I do not mean informally around the cabinet table. Was formal advice sought from the department on that issue?
Senator Schacht --The normal budget process is that when ministers from the various departments have proposals that are circulated for discussion with ERC they will seek advice and discussion with their advisers in their department and act accordingly. That is as far as I am going to go.
Senator FERGUSON --This is in the annual report; I am not talking about the papers in the annual report. The Office of Regional Development is now managing--and I think we spoke about this earlier--the Australian National rail regional enterprise development program to encourage diversification in the regions of South Australia affected by the introduction of the National Rail Corporation. Five projects are under way in South Australia, and they are mentioned. As to the first project, can I ask to what point the feasibility study into oyster spat production in Port Augusta has progressed and how much did the study cost. Have you got any idea how far it has progressed? You may not have the costs on hand.
Senator Schacht --We do not have that information here. We can take that on notice.
Senator FERGUSON --Yes, and maybe the others too. Can you explain the program to train regional development practitioners? I find `regional development practitioners' strange words to use. I wonder what they will do and where they will work. I just do not know what is meant by training regional development practitioners.
Senator Schacht --That was a program transferred from the previous portfolio when the Office of Local Government transferred to us.
Senator FERGUSON --Did it select the word `practitioner'?
Senator Schacht --It sounds like it.
Senator FERGUSON --What do you mean by an `assessment of international market opportunities for targeted regions in South Australia'? International opportunities for what, and what are the targeted regions? Can I get an answer on notice on that if you do not want to answer it now. Was that transferred too?
Senator Schacht --We will take on notice all of those points down there.
Senator FERGUSON --If I provide you with a list of these projects, can you take them on notice. The other one concerns the compilation of mineral sensitivity matters for the northern Spencer Gulf.
Senator Schacht --I will take the whole lot on notice and we will get back to you.
Senator FERGUSON --Will funding be provided in 1993-94 for these projects to continue if necessary? This is the report for 1992-93.
Senator Schacht --I will have to take that on notice too.
Senator FERGUSON --Okay. I am prepared to leave those on notice.
Senator CHAPMAN --Regarding the equity in the Australian Technology Group, can you provide me with a breakdown of last year's expenditure of $30 million?
Senator Schacht --Someone asked before about the Bloch report. The Australian Technology Group is a direct consequence. The $30 million was a one-off appropriation under the One Nation statement to be the equity base for ATG. Its basic purpose is to fund and provide assistance through grants, loans and investments to companies to commercialise their technology, their scientific inventions and so on.
ATG is a fully registered company under the purview of the rules and regulations of the Australian Securities Commission, and it will lodge its annual report shortly outlining all its expenditure. It recently appointed its chief executive. I have had discussions with the chairman of the board and with the chief executive and have indicated that, although it is a totally operating private company with a one-off $30 million contribution from the Australian government, it is still not unreasonable, in view of the fact that Australian taxpayers put the $30 million up, to take questions here about the general activities of ATG. It is the view of the government that in the immediate future it would want the company privatised or floated so that it is no longer the sole shareholder as it is now.
Senator CHAPMAN --Does the Australian Technology Group basically have to be self-sustaining from that capital?
Senator Schacht --That is the aim, yes. It has been told that it will receive no more than $30 million.
Senator CHAPMAN --Does it have to fund from that amount any investments it might make as well as its operating costs?
Senator Schacht --Yes. It is in the same situation as a company which has been formed and raised $30 million equity on the capital market, the stock exchange or wherever.
Senator CHAPMAN --Can you give me any information about what the Australian Technology Group has achieved to date?
Senator Schacht --Its achievement to date is its establishment and the appointment of a chief executive about six weeks ago.
Senator CHAPMAN --Who is the chief executive?
Senator Schacht --Bob Harbour, who was a senior scientist research developer--that is my description of him--with Du Pont in America. He was recruited after a very extensive search carried out by a head-hunting international firm. It searched throughout the world for a person with the particular requisite skills and experience required to be the chief executive of this organisation. It has taken some time to find the appropriate person, and we believe we now have him. The proof of the pudding will be in its eating.
Senator CHAPMAN --Is a list of its board members printed somewhere in its annual report?
Senator Schacht --Dr Bell, who is sitting next to me, is a member of the board, so he should be able to help you with their names.
Dr Bell --The board comprises Don Bourke as chairman, John Curtis, David Deplitzki, David Williamson and me.
Senator Schacht --The majority of those members are businessmen.
Senator CHAPMAN --Is it possible for me to have a copy of the terms of reference of the regional development task force, as well as the estimates of the cost and timing of its report?
Senator Schacht --Yes; I cannot see why not. We will table it straightaway.
Senator CHAPMAN --Does the report of the task force include a list of its members?
Senator Schacht --It includes a list of its members in the back of it.
Senator CHAPMAN --What is the estimated expenditure and scope of the report on factors affecting private sector investment in regional development? Who will make this report, and who has been consulted?
Senator Schacht --I thought we answered those questions in response to a question from Senator Ferguson.
Senator CHAPMAN --Okay. So that is on the record.
Senator FERGUSON --I have a couple of questions arising from page 28. Why do you estimate on page 28 that almost another $5 million will be spent on salaries and payments in the nature of salary? Have staff numbers increased so as to warrant that increase?
Mr Stevens --There is a number of examples there. In this particular figure we have actually incorporated in this financial year the cost of a 27th payday for all those in the department. The cost of that 27th payday is $1.3 million.
Senator Schacht --It only happens every few years that there are 27 pay periods within a year.
Senator FERGUSON --Did you say the cost of the 27th payday amounts to $1.3 million?
Mr Stevens --The cost of the 27th pay you are talking about is $1.3 million. There is a national wage case payment of $580,000 between the two years. There has been a carryover. We did not spend all the money that we allocated last year and we will be able to carry over some $940,000 into this year. The other main areas include additional money given to us for regional development because of a new function--$680,000. There has been an expansion of the ASTCON network--the Australian science and technology councillors--and there have been three new posts set up in Asia: Indonesia, Republic of Korea and Malaysia. That is worth $600,000.
Senator FERGUSON --How much was the carryover, did you say?
Mr Stevens --It was $940,000.
Senator FERGUSON --In the line before the appropriation is $21,133 and the actual expenditure is $21,017.
Mr Stevens --The difference is that the carryover referred to is for the whole department, not just for that particular item. So the $25 million incorporates a carryover to other areas of the department.
Senator FERGUSON --But it is going into salaries?
Mr Stevens --No, it is a salary carryover in other subprogram elements, not simply program 1.1.
Senator FERGUSON --Why do you estimate a 65 per cent increase in the amount spent on legal services?
Mr Stevens --It is partly because of having to pay the Attorney-General's Department for advice that used to be free.
Senator Schacht --Again it is this issue, right across all the portfolios, of cost recovery of legal advice from the AG's Department.
Senator FERGUSON --But you spent only $26,000 of the allocated $91,000 on compensation and legal expenses last year. Why do you estimate you will spend $94,000 this year?
Mr Stevens --Sorry, that is the wrong item. I am told that that is a standard item which the Department of Finance very kindly gives us each year--about $91,000 plus a deflator--and the actual expenditure varies from year to year depending upon relevant events.
Senator FERGUSON --They give it to you hoping you do not spend it?
Mr Stevens --I guess that is right.
Senator FERGUSON --On page 30, the resources table lists payments in respect of the national interest business. In the May additional estimates I asked questions about national interest business under subprogram 1.5, `International'. I gather that subprogram does not exist any more?
Mr Stevens --No, that is part of the reorganisation of the department; that program has been incorporated now into the policy and coordination area of the department, subprogram 1.1.
Senator FERGUSON --In May, Senator McMullan was advised that an extra appropriation of $20 million was sought to cover payments in respect of national interest business and about $8.4 million was owing due to Egypt's debt to us for the sale of wheat. Is that right?
Mr Stafford --A $20 million additional appropriation was sought last year; $8.4 million related to the debt in Egypt.
Senator FERGUSON --Looking at the resources table on page 30, does this mean that $58.8 million was paid to EFIC in 1992-93 to cover national interest business?
Mr Stafford --That is right.
Senator FERGUSON --How much of that $58 million relates to failed or rescheduled wheat sales?
Mr Stafford --Of that $58 million, $9.8 million related to interest costs for the refinancing of interest debts in Russia. It dealt with wool, mutton and wheat--I do not have a break-up between wheat and wool and mutton--but the bulk of it was wool and mutton.
Senator Schacht --That is $30 million, is it?
Mr Stafford --An amount of $9.8 million of the expenditure last year related to Russia. For Egypt, there was $11.1 million relating to the sell-off of the debt and interest on the rescheduled debt, and $36.1 million related to claim payments on wheat sales to Iraq.
Senator FERGUSON --Does the amount of money relating just to wheat sales represent the 80 per cent of the debt that is insured? Is this money then passed through EFIC to the Australian Wheat Board and the wheat farmers using the pool system?
Mr Stafford --No. The $36.1 million in Iraq related to 80 per cent of the claims of the payments that were falling due last year and that was paid to EFIC and passed to the Wheat Board.
Senator FERGUSON --So farmers bore the other 20 per cent loss?
Mr Stafford --That is true, on the payments that were falling due last year. I might add that in the case of Iraq we have now paid claims totalling just on $500 million.
Senator FERGUSON --I understand that, but the farmers are actually still bearing 20 per cent. They are only getting 80 per cent back, are they not?
Mr Stafford --Yes.
Senator FERGUSON --Why do you estimate you will only need $35.4 million this year?
Mr Stafford --Because we will have finished paying claims in Iraq. We do not need anything for Iraq as there will be no further claim payments. We will require additional funds to meet the interest costs on the refinanced Russian debt and we will also need some money for interest shortfalls on the refinanced Egyptian debt.
Senator Schacht --I point out that of the $35 million, $30.8 million is for Russia to cover the interest shortfalls on refinancing national interest claim payments for wool, mutton and wheat exports, which are in default, and to cover anticipated losses associated with a countertrade arrangement for the repayment of wheat debts?
Senator FERGUSON --Is Russia the only country that has defaulted on wool and mutton?
Senator Schacht --According to my information, I think it is--anticipated for the next year.
Mr Stafford --The only ones on the national interest.
Senator Schacht --Yes. Egypt is wheat, $2.9 million; there is one on Vietnam, $1.6 million, to meet claims as a result of overdue payments on loans for a vegetable processing project and an abattoir.
Senator FERGUSON --I think that was mentioned last May, was it not?
Senator Schacht --Yes.
Senator FERGUSON --I think that covers what I wanted. Can you explain on page 31 the entry there for national interest premiums? I just do not quite understand that.
Mr Stafford --When national interest cover is provided the exporter is required to pay a risk premium. That risk premium, where national interest cover is involved, flows from EFIC to the government.
Senator FERGUSON --So the exporter is paying that premium?
Mr Stafford --The exporter pays the insurance premium.
Senator FERGUSON --I had not seen that line before. Has that been the policy, for exporters to always pay premiums?
Mr Stafford --Yes. The item has been there since the early 1960s.
Senator FERGUSON --Has it always been called national interest premiums or did it come under some other name?
Mr Stafford --No--national interest premiums, I think.
Senator FERGUSON --I just have not come across this term, `national interest' before. I thought it came under a different name before?
Senator Schacht --I think it has been called that for ages.
Mr Stafford --Revenue items became separated from the rest, I think.
Senator CHAPMAN --Just following up Senator Ferguson's question on the Iraqi wheat debt, what action has been taken to try to recover that debt?
Mr Stafford --There is no action. The non-payment is a result of the United Nations sanctions against Iraq. The debt cannot be paid and we have taken no action to pursue the debt because it would be in contravention of the UN sanctions.
Senator CHAPMAN --To get the money from Iraq is a contravention of UN sanctions?
Mr Stafford --That is right. Part of the UN sanctions against Iraq is that the banking systems cannot process payments.
Senator CHAPMAN --Are there no offshore Iraqi assets that can be frozen, seized or taken possession of?
Mr Stafford --They are frozen, but we cannot get them.
Senator Schacht --They are all frozen.
Senator CHAPMAN --What happens when the UN sanctions are lifted? Can you then pursue the debt?
Senator Schacht --Hopefully we will get our money.
Mr Stafford --I am not too sure as to whether they will pay.
Senator CHAPMAN --So it is not written off; you hope it is a deferred payment.
Mr Stafford --We would expect to get payment in the fullness of time.
Senator Schacht --There may be some other significant changes in the Middle East to get the money.
Senator CHAPMAN --On page 33 there is reference to the ministerial briefing document `DITAC Overview' being produced. Who produced that and at what cost? Were any consultants used in the production of the document? Could we have a copy of the document?
Mr Stevens --It was a document which was produced by the department; consultants were not used in its production. I do not know what its cost is, but it would be very low because it was all done in-house. It was produced as a summary of departmental programs and issues. It was done as part of our preparation for the election campaign, for incoming briefing.
Senator CHAPMAN --Would a copy of that be available?
Mr Stevens --I believe so.
Senator CHAPMAN --Similarly, was the `DITAC Key Information Booklet' also produced in-house and without consultants?
Mr Stevens --Yes.
Senator CHAPMAN --Could you provide the cost of both of those documents?
Mr Stevens --I can provide the publishing costs, but obviously many of the staff were involved in doing the work and I could not provide the actual cost.
Senator CHAPMAN --Pages 33 and 34 make reference to 14 international agreements, arrangements, forums, missions, collaborative activities and so on. Can you tell me what, if anything, has been achieved through these arrangements?
Senator Schacht --Are you talking about the whole of that page? You have mentioned 14. Have you just counted them up?
Senator CHAPMAN --Yes. In the annual report, is there any more detail about what has actually been achieved with those collaborative arrangements?
Senator Schacht --You raise a not unreasonable question. In conjunction with other agencies, we are going to prepare an annual compendium on the S&T, the agreements that we have, the treaties and the arrangements government to government around the world to see where we are at with each of them. Each year we will review what they are doing and make that information available to those areas of the community to whom it would be of interest. Then those people in the community who are interested may themselves come forward to say, `Under this S&T agreement with such a country we would like to suggest that we could participate as an agency or have an idea to do some collaborative work in conjunction with that agreement'.
One of the things that we ought to look at--we want to have discussions with DFAT about it--is the building up of a register for the Australian government on the level of these agreements, treaties and memoranda of understanding being signed government to government and also between Commonwealth agencies and other similar agencies in other countries so we get a much better picture of the collaborative arrangements that we have going, where they are working and where they are not. All the indications are that international collaboration on S&T is going to expand and become a much more important part of our international relations, particularly in the economic field where we need to have access to technology transfer and so on. We need to have these areas more comprehensively monitored than they are at the moment.
On page 49 of the annual report we have made some comments about some of the arrangements. For example, we talk about the FAIR program, which I was involved in this year. I think it had some success and is now building up to a serious collaboration arrangement in areas where our expertise and the French expertise can match together for mutual advantage. Each other year one country hosts a delegation from the other country to the discussions. This year the French came to Australia. In April of next year we will be sending a delegation to France. After some slowness in getting going, we have now sorted ourselves out a bit and decided what we can do together. That is starting to develop with some potential. That is one example.
About six weeks ago I participated in discussions with Japan under the S&T agreement. That has been going on since about 1980. Each year we have exchanges of scientists and science administrators from each country to discuss collaborative arrangements in research programs. Again, that was a pretty successful meeting. There are programs of research working, which both sides get mutual benefit out of.
Hopefully within the next few months, if not early in the new year, we will sign an S&T agreement with the European Community. As I understand it, Australia will be the first country that the European Community will sign an S&T agreement with, which will be some achievement. It will be a recognition that even though we are on the other side of the world the European Community is trying to be serious about its relations with Australia. I suspect it also reflects the fact that we have probably given them such a belting around the head about the GATT discussions, et cetera, that they want to show us that they are not totally antagonistic towards us because of their agricultural policies, et cetera.
Senator CHAPMAN --Is the funding that is required for these various arrangements the funding that is shown on page 29 under `International Science and Technology Co-operation Programs'?
Senator Schacht --Yes, that would be part of it, but not totally, I understand.
Senator CHAPMAN --Only part of it?
Mr Stevens --Yes, it is a great bulk of it. There is another small component within `other running costs' for international collaboration. It is about $600,000, I think, from memory. That is the bulk of it there.
Senator CHAPMAN --Does all of that $5.4 million for this year go into those arrangements, plus some additional money?
Mr Stevens --Plus additional arrangements, yes. There is a whole range of particular projects which might be done outside these particular umbrella arrangements.
Senator CHAPMAN --Is the cost of this shared between Australia and the countries involved?
Senator Schacht --As I understand it, in most of them the standard feature is that we pay for our part of the research and they pay for their part of it. If they are putting more research into the collaboration program, they will be paying more. If we put more in, we will pay more. But that is the usual arrangement for most of these agreements.
Senator FERGUSON --How many people work on the women's desk in the women on boards and committees programs?
Senator Schacht --As you can see, they are all behind us. A lot.
Senator FERGUSON --I was going to ask: are they all female?
Senator Schacht --Could Fred Clark stand up to show that we have at least a token presence?
Mr Stevens --It is actually a function, rather than a desk as such, and there is about half a person who would be--
Senator FERGUSON --Half a person?
Mr Stevens --Per annum, yes.
Senator FERGUSON --So it is just a function, and that is all.
Mr Stevens --Yes.
Senator FERGUSON --It sounds good, I must admit.
Senator Schacht --It is a very good program.
Senator FERGUSON --How does the women's desk promote women's interests in departmental programs? Can you give us an example of how it does that if you have got a half a person doing it?
Mr Stevens --We will ask the half a person to come along and let you know the answer when we can find her.
Senator FERGUSON --Quite seriously, I just want to know what is done.
Mr Stevens --In regard to that, I take the view that women's interests are not something that is just looked after by half a person on a women's desk. The whole department, as all the government agencies have been asked to do, has taken account of these aspects and every aspect of government policy, so that when people are looking at, for example, membership of boards they would be looking for, in many cases, relevant women to go on those boards. They would be seeking that advice from a range of agencies, including agencies outside the department. So that function of promoting women's interests is done widely across the department.
Senator FERGUSON --What are some of the relevant activities that the women's desk monitors and reports on? The third paragraph states:
The Women's Desk function is responsible for promoting women's interests in departmental programs and the monitoring and reporting of relevant activities.
What on earth does that mean? I did not write it, I only just read it out.
Mr Stevens --One of the areas from which advice would be sought, for example, would be our human resources area, our staff development activities. We would seek advice from women in the department about their particular requirements in that respect. Departmental training and recruitment are other areas where we would be seeking advice. There is a small informal group of women who meet regularly and provide that advice to various committees in the department.
Senator FERGUSON --What is the latest information available on women's membership of boards, committees and advisory bodies?
Senator Schacht --From our department? We do not have it here.
Mr Stevens --I think it is in the annual report. I am just trying to find the right page and appendix.
Senator FERGUSON --There was something else in your annual report which might need a little explanation. The annual report says:
The Australian Industrial Property Organisation is covered by the Department's Women's Desk.
What is that referring to?
Senator Schacht --I think it means that, and I hope this is right, IPO, the Industrial Property Office, which is part of the department--though, as you have seen today, it has a separate line in the paperwork and so on--as far as this issue is concerned, is covered by the activities of the women's desk in the department. That is just an efficient administrative procedure because all the staff of that section of the department, IPO, are all departmental personnel.
Senator FERGUSON --If I were to put the list of these questions I have just asked you on notice, would it be possible to get some brief answers down? There are a couple of other questions regarding women's matters, which will require only brief answers.
Senator Schacht --Put them on the record, as we may be able to answer them straight off.
Senator FERGUSON --How is the science and technology awareness program `particularly' targeted at women? Page 246 of the annual report mentions two programs--the publication entitled Technological Change--Women in Technology and the exhibit entitled `A history of the future--women in Australian science and technology'. We have not been able to identify too many women at present.
Mr Palfreyman --Our science and technology awareness program, which is funded to the tune of about $1.7 million this year, does contain some programs affecting women and girls. It is trying to increase their participation in science and technology, particularly in courses involving science and engineering. It is basically a publicity program which is trying to encourage women and girls to participate in those programs.
Senator FERGUSON --It seems that page 40 places far more emphasis on the role of women in the department than is really due, because of the number of people involved. When you talk about women's desks and everything else, it seems as though it is placing far too much emphasis on it, which is not the reality.
Senator Schacht --I take note of your comment about the description on page 40 and the reality. I do not think that is an unfair comment.
Senator FERGUSON --I thought we were going to get another semi-department when I read that.
Senator Schacht --No. We are not that advanced yet. But I take your point that a quick reading of that section entitled `Social Justice' could lead one to believe that there might be more resources going into these programs than there actually are. I think that is a reasonable comment you have made. We ought to be a little less fulsome and enthusiastic about writing these things, vis-a-vis the actual expenditure of resources. We will take note of that for next year.
Senator CHAPMAN --Which companies have been assisted in their bidding for offshore infrastructure work, which is mentioned on page 41?
Mr Stevens --What we are saying there is that we are developing initiatives to assist these companies. The actual program has not started. We have been working with the companies, and a major report has been undertaken to see what we can do to help them bid together for a major consortium.
Senator Schacht --It was the Duff report to the senior executive of Fletcher Jones. Some of the major players in the Australian construction industry have indicated that, when bidding for contracts overseas, instead of bidding against each other, it would be of great help if they bid together with some indication of Australian government interest or support of their bid, because they find most of the other companies that are bidding from elsewhere in the world do have that sort of approach, which makes a big difference in the success of the tendering in those countries.
The CIDA program is one of the initiatives that have come out of it, and we are interested in seeing it further developed. There are a number of difficulties in getting a structure up that works properly, that still allows a competitive industry in Australia but a consortium approach where people have open access to it in order to operate overseas to the advantage of the Australian construction industry and obviously to the advantage of Australia.
Senator CHAPMAN --What is being done to raise the level of R&D performed by construction firms?
Mr Farrow --There are two elements to raising the level of R&D performed by construction firms: firstly, the code of practice to be put out by the Construction Industry Development Agency will cover requirements of firms bidding for public sector work in Australia; and, secondly, under the Construction Industry Development Agency, an R&D task force has been established to develop a program to raise the levels of R&D in Australian firms.
Senator CHAPMAN --To what extent is research and development in the pharmaceutical industry being inhibited by the failure to increase funding for factor F grants?
Senator Schacht --As I understand it, the funding we got in the budget--it was not an increase--means that the existing programs will continue. There is still money in the existing program to provide additional assistance over the next number of years for the so-called factor F program. There is still an uncommitted $300 million available, but clearly the greater demand from pharmaceutical companies will be unable to be met by that $300 million.
We still believe the program will be effective in encouraging the development of an export pharmaceutical industry in Australia which will reach probably $2 billion of exports by the end of the decade and establish Australia within the region as a major manufacturer and exporter of pharmaceuticals to the fastest growing market in the world--the Asia-Pacific.
Senator CHAPMAN --Can you provide any relevant information or statistics as to the impact of factor F funding on development and export activity in the pharmaceutical industry?
Senator Schacht --I have been advised that to date the factor F scheme has achieved almost $1 billion in increased activity since 1988. Currently, new participants in the scheme are predicted to increase new activity by over $5.7 billion during the remaining years of the program. This activity includes over $380 million in additional investment, $2 billion in additional exports and $320 million in additional high quality research and development activities.
Senator CHAPMAN --Would it be possible to have the estimates of the funding that will be provided under the factor F program through to 1999?
Senator Schacht --Yes.
Mr Stevens --It is in the forward estimates of the budget papers for the next three or four years.
Senator Schacht --We can provide those figures.
Ms Clark --The estimate for 1992-93 is $65 million, and we spent $51.8 million. The estimate for 1993-94 is $125 million and the program will run out to about $150 million a year in the last three years of the program depending on how companies perform.
Senator CHAPMAN --All of that funding shown as assistance to the pharmaceutical industry will go to the factor F.
Ms Clark --That is correct.
Senator CHAPMAN --I have another question in relation to the factor F program in relation to the Auditor-General's report on that. Audit report No. 26 tabled on 4 May 1993 reviewed the delivery, monitoring and administration of payments under the scheme. The audit disclosed that a number of participating companies had not achieved their pro rata performance targets; policies and procedures need to be developed and strengthened in the areas of withholding progress payments, granting of extensions of time and repayment of excess payments. What action has been taken on that audit office finding?
Ms Clark --The majority of those recommendations have been implemented since this department took over the program from the department of health in January 1991. We pay progress payments one quarter in arrears. That avoids the problem of any perceived overpayment. We have also implemented the other recommendations that you have mentioned. A procedures manual is in place, and we have addressed all the procedures suggested by the audit office.
Senator CHAPMAN --What commercial opportunities have been taken up by the Australian Space Office?
Dr Boyd --There has recently been at least one example of an Australian company being able to take up a commercial opportunity by contracting with a company in the United States to provide equipment for satellites. It did it entirely off its own bat, unsupported by us, but it resulted directly from previous programs.
Senator Schacht --You do not have to be that frank about it. We did not help them.
Dr Boyd --I think it is very important that we are able to do that, because it resulted from previous support by us.
Senator Schacht --Good. This ought to go on the record, only because I visited the firm yesterday. Mitec in Queensland provides cutting edge world technology microwave equipment to a satellite manufacturer for satellite use. It did it in a world competitive tender. A firm that started with a handful of people is now employing 150 people and has a turnover in excess of $10 million. That is a very impressive outcome from a group of people who left the university environment just over a half a decade ago and started out on their own. It is a good example of taking science and intellectual property out of the universities and commercialising it and getting a success.
An interesting comment that John Ness, the managing director, made yesterday was that the very first contract the company got was with the then OTC, which was willing to give it a start and a chance to provide some equipment. It was successful and that got it going. It proves the old adage that you need to have a sympathetic kick-start from Australian purchasers who have a little foresight. The company met the quality and cost provisions. But if it had not been given that chance, it would not be where it is today; it would have folded and never got off the ground, so to speak. So that is one example, which I suppose at this time of the night might be enough.
Senator CHAPMAN --Can you provide full details of the activities of the Australian Space Office, including the progress of planning initiated in observing Australia, cost breakdowns for the development of the space industries development centres program, the establishment of the three communication based SIDCs and full details of the approved space projects completed. They are all referred to on page 55.
Senator Schacht --I think we can. We will provide some and we might have to take some on notice. Senator Chapman will be pleased to know that one of the space centres is in South Australia. The Australian Space Centre for Signal Processing was established at Salisbury's Technology Park. The Space Microwave Centre at Griffith University is an adjunct to Mitec. There is a second one in Queensland, which is a joint venture between the Queensland University of Technology, DSTO and CSIRO's Division of Radio Physics. That is operating as a registered company in the name of Satnav. The centre will shortly sign a contract with a commercial partner, Auspace, for an approved project. So those three are up and running, which is a good start for our space program. We will have to take the rest of the question on notice.
Senator CHAPMAN --Do you have full details of the approved space projects completed?
Senator Schacht --Since when?
Senator CHAPMAN --Page 55 of the PPS refers to approved space projects completed in the last 12 months.
Senator Schacht --Approved space projects were completed.
Dr Boyd --The main item completed was what is called the fast delivery processor, which is a system for processing synthetic aperture radar. It was delivered to the Australian Centre for Remote Sensing and is operating there now. Contractors to the Space Office delivered two significant items of hardware, which are currently being integrated into an instrument in the United Kingdom which will fly on a European earth resources satellite in 1994.
Senator Schacht --That is a run-down of those, with some examples. The major activity of the new space board this year has been to prepare a five-year program for space activity. It will be finished before the end of the year and will focus on a number of areas. Dr Boyd will mention the areas of focus for the space council and our activity that will be in the five-year plan.
Dr Boyd --The big areas of focus are in the earth observation area, where we are looking at both public sector and private sector involvement, noting that some of the activity does still rely on public sector investment in infrastructure. Space communications is probably seen as the exciting and large potential growth area in purely commercial terms. Proposals are being developed in the context of the five-year plan to involve Australian companies--or to assist Australian companies to become involved--in both space and ground sectors of emerging new technology communications systems, basically involving low earth orbit satellites. They are the main ones.
Senator Schacht --I was in Brisbane yesterday and I spent a couple of hours with Professor Stalker. He gave a demonstration in his laboratory of how the scram jet works--it makes an impressive bang--and explained the potential of it. He claims that it is the only one which has been able to effectively measure, in the wind tunnel laboratory, that it works, and that it has actually had an outcome that there was more thrust than drag. Apparently this is the first time that has been measured. He claims that his laboratory is the only one in the world that can actually measure the techniques of the scram jet at this time.
Professor Stalker put forward a couple of what I think are modest proposals about where he may be seeking further assistance within a modest budget. I said that we would look at those and assess the next step. Ultimately they involve a small prototype being blasted off on a rocket. You do not need an enormous rocket to do it; you can do it with a very small rocket. We will have to assess those through the Space Office to see whether within our very modest budget we can provide some assistance. It has to be recognised that quite clearly Professor Stalker and his team at Queensland University should be recognised as leaders in the world, in a number of ways, in scram jet technology.
Senator FERGUSON --You stated that the strategy of the MFP branch is to facilitate the development of commercial industry development opportunities for MFP-Australia and that the MFP branch has established networks and made progress towards the development of commercial business opportunities for the MFP. How is the MFP branch facilitating the development of commercial and industry development opportunities?
Senator Schacht --Mr Trenberth, who is also on the board of the MFP, may be able to answer that question.
Mr Trenberth --The branch in the department works very closely with the development corporation which is based in Adelaide. An example of where the branch is facilitating the development of technology in conjunction with the MFP is that it is currently working with the South Pacific Film and Television Corporation, based in Queensland, to look at the feasibility of a high technology post-production facility. It is doing that in conjunction with the development corporation in South Australia and it is also doing that in conjunction with a number of commercial interests based in South Australia. Channel 9 in the television industry, for example, has an interest in this technology. So the DITARD group is really acting as a broker; putting those people together, facilitating the interaction, and assisting them with the development of the feasibility study.
Senator FERGUSON --That is an example. How many commercial and industry development opportunities have come about through an involvement with the MFP branch?
Mr Trenberth --It is very hard to say that in quite that way. The development corporation is working broadly in three areas: the environment, information technology and telecommunications, and education. In each of these three areas a number of feasibility studies are proceeding. In some cases the commercial opportunity involves government programs. For example, the department of health has a concept called the health services network which is now beginning to crystallise. This is a major information technology opportunity. We are seeking a way for the MFP to be involved in that and the group in DITARD is working--again with the MFP, the development corporation and the department of health--to broker and facilitate this role. They do this in a number of other areas. For example, in the environmental area they are working to incorporate the appropriate programs and people into some of the environmental programs in the Department of the Environment, Sport and Territories, DEST.
Senator FERGUSON --Is this an example of what you would call establishing your networks or are there other networks you have established?
Mr Trenberth --No, that is the principal network. They are the networks that are referred to.
Senator FERGUSON --What is the make up of the interdepartmental committee, which is referred to at the top of page 44? Which departments are involved? What is the membership?
Mr Trenberth --That is made up of a whole range of departments--just about every one that you can think of. It was set up as a result of a cabinet decision in July 1991 which provided federal government funding for the project. One of the requirements was that an interdepartmental committee be formed to do two things. One was to provide inputs into MFP projects and the other was to monitor the progress of this project on behalf of the federal government.
Senator FERGUSON --What is the membership of that committee? How large is it?
Mr Trenberth --All the departments that would normally come to mind: DPIE, finance, treasury, PM&C, foreign affairs, DEET, DIR, DAAS--
Senator Schacht --It may be better to ask who is not on it.
Mr Trenberth --Pretty well every department is on it.
Senator FERGUSON --You said that it has been set up since 1991; what has it really achieved?
Mr Trenberth --The IDC is really a monitoring body. It reports formally each year to the industry minister. I think it has performed that role in a reasonably adept kind of way. In a sense it was not set up to achieve anything other than doing just that.
Senator FERGUSON --What is the make up of the Commonwealth-state committee?
Mr Trenberth --The Commonwealth-state committee is a committee of Commonwealth officials and, in this case, South Australian officials principally. Again, it is a process or structure designed to integrate the development of the MFP into Commonwealth programs.
Senator FERGUSON --How does this MFP branch provide effective management for the international advisory board.
What is it doing? Is it acting as a secretariat or what?
Mr Trenberth --The MFP has a number of strands. As I have already said, it has the development corporation, which is a domestic group. That corporation has been established under a South Australian act of parliament and has its own board. The MFP also has attached to it a thing called the international advisory board, which consists of people from around the world, principally business people. The IAB has been constructed to provide advice on the internationalisation of the project. The responsibility for managing the IAB--providing the secretariat, calling meetings, looking after the agenda, looking after the distribution of minutes, looking after the distribution of information to the IAB on an ongoing basis--rests with the federal industry department. That is an activity which has specifically been retained by the Commonwealth.
Senator FERGUSON --When is the draft supplementary development plan likely to be completed?
Mr Trenberth --I am not sure that I understand the question.
Senator FERGUSON --I know I am jumping ahead bit but we are talking about outcomes. Page 55, industry liaison, subprogram 1.2, has outcomes for 1992-93 regarding the MFP. It says:
The Environmental Impact Study and draft Supplementary Development Plan were begun.
Mr Trenberth --The environmental impact study in fact has been completed. The supplementary development plan relates to the physical development of the Gillman site, which is the location of the project in South Australia, and that is work in process. The environmental impact study has been completed.
Senator FERGUSON --Is it possible to get a copy of the report of that?
Mr Trenberth --I do not see why that would be a problem.
Senator FERGUSON --Is it possible that the Gillman site is too enviromentally degraded for the MFP to proceed there?
Mr Trenberth --That is not what the environmental impact study suggests. It does identify a number of contaminated areas. The contamination is identified quite clearly, but the general conclusion of the environmental impact study is that the site is eminently suitable for the purpose which is intended.
Senator FERGUSON --I can recall an article in the Australian early this year which said that the degradation at Gillman is on a large scale; that rusted car bodies sit in canal beds, dwarfed by two landfill sites that absorb 750,000 tonnes of domestic waste a year; that a nearby soda ash process facility produces 120,000 tonnes of unwanted alkali grits; and that the cooling water from two power stations affects the Port River ecosystem. It goes on to mention noxious fumigation. Then in January 1993 the Bulletin said that it is an ecological catastrophe, a dump in the literal sense for industrial and domestic waste, and prone to flooding when it is not blown by dust clouds. How much is it going to cost to clean all that up?
Mr Trenberth --That is a question which still remains to be answered in the broad. I can only assert, as I asserted a moment ago, that the environmental impact study suggests that all these problems are solvable. They are solvable in a time frame which fits within the project time frame. The costing of that, I think, will need to be determined as more information about the site comes to hand.
Senator FERGUSON --Can you quantify the `significant progress in defining the scope and nature of MFP projects', which is mentioned on page 55?
Mr Trenberth --Yes. There has been a great deal of progress in that area. As I said earlier, the MFP is working in three principal areas: in the area of education, in the area of information technology and telecommunications, and in the environment area. There is, in each of those areas, a series of projects which have commercial potential, we believe. Some are at the feasibility stage; some have gone beyond the feasibility stage and have attracted commercial partners to them--for example, in one project in the environmental area. Considerable progress has been made, certainly in the last 12 months, principally in the last six months, in trying to define as precisely as we can what the real nature of the commercial opportunities might be, and in trying to find a framework which will attract private sector investment to those projects.
Senator FERGUSON --That same page states that processes were initiated to identify potential MFP projects. What processes were put in place to identify the projects?
Mr Trenberth --As an example, in the information technology area we have articulated a project which we have called the International Software Services Co. The commercial rationale behind that is that Australia has very strong strengths in this area and indeed many of them are located in Adelaide. We believe that there is a substantial opportunity to develop specialised software in this country for international markets. We are currently beginning to articulate the nature of that commercial opportunity--very prospectively as it turns out. In the process we are using the work that is being done--the market development work and the insights that are being generated--to attract commercial partners into this process very early on. Quite shortly we will have a consortium of major companies which will commit to taking this project forward and further developing its commercial potential.
Senator FERGUSON --What did you mean by `There was enhancement of international advisory board member involvement in MFP'? How could the international advisory board on the MFP not be involved in the MFP?
Senator Schacht --Senator Button joined the international board--
Senator FERGUSON --Is that enhancement?
Senator Schacht --Under any definition it is an enhancement.
Mr Trenberth --That is certainly one of the things that we have done. We have also tried to integrate the activities of the international advisory board with the MFP Development Corporation board rather more securely, such that the chairman and the chief executive of the development corporation are now members of the international advisory board. Those are new developments. That is principally what that means.
Senator FERGUSON --What was the outcome of the feasibility study on the MFP Service Utility Co.?
Mr Trenberth --That was very positive. That is a collection of about 20 companies which was put together by KPMG Peat Marwick in Adelaide to look at the possibilities of using some of the environmental waste that you mentioned earlier as feed stock to make products which have commercial potential. A number of companies are involved in that. There are at least two international investors--Lyonnaise Des Eaux Dumez, which is a French company, and the Pohang Iron and Steel company from Korea--as well as a number of very large Australian companies. The pre-feasibility study is complete; it looks very attractive. Most of those companies have now signed up for an expanded commercial study and they are putting real money on the line to do that.
Senator FERGUSON --Where does the MFP Development Corporation fit into the scheme of things?
Mr Trenberth --The development corporation is charged with the responsibility of bringing this project to fruition. In the context of the Environmental Services Co., the MFP Development Corporation is one of the companies in the consortium of 20 which is looking at the environmental project I have just described to you.
Senator FERGUSON --We have talked about the outcomes for 1992-93. What about the outlook for 1993-94? The projects listed refer to the MFP Development Corporation assessing the commercial viability of a series of projects; the international advisory board meeting in November 1993; and the application of appropriate Commonwealth policies and programs to the MFP through the IDC process. Will the MFP branch staff be involved in assessing the commercial viability of these projects or will it just be the development corporation?
Mr Trenberth --They will be decisions which rest principally with the development corporation.
Senator FERGUSON --Will the international advisory board meet only once this financial year in November?
Mr Trenberth --No, the frequency of the meetings of the international advisory board is currently the subject of debate, and so too is the shape of those meetings. For example, there is a proposal that, rather than have the whole international advisory board meet infrequently, we should break it up into regional subgroups and have those groups meet more frequently. That is a matter that is still being resolved. As you said earlier, the IAB will meet again in November this year, having already met once earlier this year.
Senator FERGUSON --It seems crazy that it meets only once or twice a year.
Mr Trenberth --The people involved have to come from around the world. They also perform very strategic functions, so it is not all that silly that they meet only a couple of times a year.
Senator FERGUSON --Apart from applying appropriate Commonwealth policies and programs to the MFP through the IDC process, what else will MFP branch staff be doing?
Mr Trenberth --In the context of some of the projects I have mentioned, I have described the work they are doing. It is very demanding work. Its work flows from the application of the programs that you referred to. The July 1991 cabinet decision had two elements to it: it committed some funds to assist with the construction of the development corporation and it committed the Commonwealth to make available Commonwealth programs and policies to the MFP project. The challenge is to articulate projects which make sense in the MFP context but which build off and are integrated with existing Commonwealth programs. The health services network is an example that fits into that category very neatly.
Senator FERGUSON --Page 56 of the draft annual report states that $40 million over four years is being provided under the building better cities program for the MFP north-west crescent area strategy. What is the north-west crescent area strategy?
Mr Trenberth --The north-west crescent is an area adjacent to the Gillman site. The minister probably knows more about this than I do.
Senator Schacht --It is between Port Adelaide and somewhere else.
Mr Trenberth --It consists of the councils which sit to the north and to the west of the Gillman site. Those councils have an interest in, and in some cases jurisdiction over, the Gillman site. So the money from the building better cities program will go to developing some kind of integrated approach to the development of the Gillman site, with inputs from the councils.
Senator FERGUSON --Is new terminology being used when we refer to the north-west crescent area strategy?
Senator Schacht --It has been referred to by that name for a while now.
Senator FERGUSON --How much of the $40 million has been spent?
Mr Trenberth --I do not know the amount off the top of my head, but I can supply you with it. I know that it is a modest amount.
Senator FERGUSON --What was the money spent on?
Mr Trenberth --It would have been spent principally on some site work. It would be earmarked for the development of the project--the infrastructure and architectural concept of the Gillman site and its integration with the development of the surrounding council areas.
Senator FERGUSON --Is any more money likely to be allocated to the MFP under the building better cities program?
Mr Trenberth --I think it is unlikely in the short term, although it is possible in the middle distance, but $40 million will certainly do for the time being.
Senator Schacht --I understand that the chief executive, Ross Kennan, and the chairman of the MFP, Alex Morokoff, recently had very positive discussions with Brian Howe, whose department runs the better cities program.
Senator FERGUSON --How much of the money has been provided directly to the South Australian government?
Senator Schacht --The money was directed to the program.
Mr Trenberth --No, the better cities money is channelled to the project through the South Australian government.
Senator Schacht --So it is designated to that area; it is not just given to the state government.
Senator FERGUSON --What proportion of the money provided under the program has been spent on the Gillman site?
Mr Trenberth --It is a modest amount.
Senator FERGUSON --Is any of the money allocated to that program allowed to be spent on sites outside the Gillman site?
Mr Trenberth --The money is earmarked specifically for activities associated with the MFP and the north-west crescent strategy.
Senator FERGUSON --There is also a reference to $12.5 million to fund the MFP development board over three years.
Mr Trenberth --I believe that the correct amount is $12.275 million.
Senator FERGUSON --How much of that has been spent?
Senator Schacht --That is all committed and spread over three years. I think we are into our second or third year.
Mr Trenberth --The aggregate of that is made up of $4.385 million for 1991-92, which is spent; and $3.92 million in total for this year, which I think has all been spent with the exception of half a million dollars which is to be rolled over into 1993-94. That would make the amount spent in 1993-94 about $3.7 million.
Senator FERGUSON --What is the total amount of Commonwealth funding that has been provided to the MFP since the project began?
Mr Trenberth --It consists of $12.275 million, which was allocated in the cabinet decision of July 1991; and $40 million of better cities money which has been committed but, as I said earlier, not spent--only a modest amount of that has been spent. It also consists of some smaller amounts of money which have been provided by other government departments to assist with MFP projects. DPIE, for example, has provided funds to assist with the development of some of the environmental activities.
Senator FERGUSON --The annual report also refers to an investment environment survey mission from Japan to look at the site and review possible investment opportunities. What was the outcome of this mission?
Mr Trenberth --That was the Yahiro mission in December of 1991. The outcomes of that mission were twofold: firstly, it resulted in a much stronger relationship between Japan and Australia with respect to the MFP. There is in Japan a body of Japanese businesses and businessmen who keep a watching brief on this project. They work in conjunction with the Japanese industry ministry. It certainly had the effect of strengthening that relationship. Although the Japanese were quite cautious about investing in Australia at that time--and, indeed, cautious about investing in the MFP--I think it basically gave us a clean bill of health in the sense that it added to the imprimatur that the Japanese had already given to the project in some of their earlier investigations.
Senator FERGUSON --I would say `cautious' is a bit of an understatement. The Australian of 13 May this year commented that Mr Yahiro had led a visit by Japanese businessmen to the MFP site which resulted in a report highly critical of the project.
Mr Trenberth --I do not believe that is an accurate characterisation of what actually emerged from that mission.
Senator FERGUSON --What was the outcome of the visit by a mission from the Republic of Korea's Pohang Iron and Steel Corporation?
Mr Trenberth --I said to you earlier that the Pohang Iron and Steel Corporation was an investor in the environmental management project. That was one of the direct outcomes. It has also contributed funds to another project which is still being developed. The Pohang Iron and Steel Corporation is represented on the international advisory board. The chairman of the Pohang Iron and Steel Corporation, Mr Chung, is a member of the IAB. POSCO is extremely bullish about Australia, extremely positive about its relationship with Australia and extremely positive about the MFP. That mission was part of the cement in that relationship.
Senator FERGUSON --The annual report also said that a number of visits to Japan, the Republic of Korea and Taiwan were made during 1991-92 to discuss project opportunities in these markets. Who went on these trips?
Mr Trenberth --I went on the one that included Japan and Taiwan. I was accompanied by a person from the MFP, from the development corporation.
Senator FERGUSON --Who actually paid for the trips--the board or the development corporation?
Mr Trenberth --I certainly paid my fare. I can confirm that.
Senator FERGUSON --Personally?
Mr Trenberth --No, not personally.
Senator FERGUSON --You worried me a bit.
Senator Schacht --There were nearly 10,000 heart attacks all over Canberra at the idea that a public servant would pay his own way. This level of altruism would not be welcomed.
Senator FERGUSON --Do you think a lot was achieved by those visits? Was anything concrete achieved?
Mr Trenberth --The decision by POSCO to invest in the environmental project and its subsequent decision to invest in the information technology project that I described to you, flowed directly from that visit and from discussions I had with the chairman of POSCO while I was there. Taiwan is a longer term issue in the sense that we are just beginning to establish a relationship with the Taiwanese business community--but there is certainly interest in the project. I met with the Chinese federation of business while I was there and its members have invited us to go back and make a formal presentation to the Taiwanese business community on the project. They have committed in turn to send a business mission to Australia. So they are really quite positive.
Senator FERGUSON --Are similar visits planned for this year?
Mr Trenberth --The chairman and the chief executive of the development corporation intend going to Japan in October. I imagine that they would have plans to visit some other countries as well.
Senator FERGUSON --Right. I am trying to be as brief as I can because I am conscious of the time, but I want to go through some things tonight while you are here. The annual report mentions three meetings of the international advisory board: two in Adelaide and one in France. Why did the board meet in France? Was there any particular reason?
Mr Trenberth --The committee in France was truncated. There was a limited number of members.
Mr Stevens --It was a regional meeting.
Mr Trenberth --Yes. Senator Button was in France. IAB members Mr Claude Rameau, who was at the time the Dean of INSEAD, the major European business school; Philip Hughes, who is based in the UK, and Mr B. Svanholm, who is the chief executive of Asea Brown Boveri in Sweden, came to that meeting, I believe.
Senator FERGUSON --Did they meet at all in 1992-93 internationally? This meeting was in 1991-92.
Mr Trenberth --I cannot remember the date, Senator.
Senator FERGUSON --The 1991-92 report mentions a meeting in Nice in France. I was just wondering if there were any in the last 12 months?
Mr Trenberth --No.
Senator FERGUSON --Page 55 of the annual report says that the core site of MFP-Australia is at Gillman. Does this mean that there is a possibility of funds being diverted to sites outside Gillman, such as Technology Park?
Mr Trenberth --As of 1 July this year Technology Park and Science Park are legally part of the MFP. They are now owned by the MFP Development Corporation. That was always anticipated in the act.
Senator Schacht --As Mr Trenberth has just said, the management of Science Park, which is opposite Flinders University, and Technology Park, which is up at Salisbury, are now integrated into the MFP and run by the MFP Development Corporation board. That means that those sites are part of the MFP infrastructure. The state government has announced that there will be some tax breaks for 10 years on those sites.
Senator FERGUSON --Are the federal and South Australian governments now absolutely locked into using the Gillman site?
Senator Schacht --Yes, because the Gillman site is part of the MFP concept. But it should be around the other way. We are not locked into only using the Gillman site--and that is the emphasis we are making. Adelaide, Gillman, Technology Park and Science Park are important to MFP-Australia. This is an international project and one should not see it in terms of pure geography --a building going up on a particular site.
You could say that south east Queensland or the Gold Coast area is part of the MFP because it has now got a connection with the MFP on the media side. If you look at a wider context of intellectual development and international connections, the MFP is developing as it was always conceived to be--an international project of which major parts will be established, if not physically then intellectually, in Adelaide.
Senator FERGUSON --We have got an MFP branch, an international advisory board, an interdepartmental committee, a Commonwealth-state committee, an MFP cooperation association in Japan, an MFP development corporation with a chief executive being paid about $370,000 a year, and no doubt a lot of other state committees and boards. I wonder whether we have not got too many boards and committees and not enough action. What have we actually got for our money?
Mr Trenberth --What we have so far is a first-rate board with some of the--
Senator FERGUSON --If that is all we have got for our money, it is a pretty expensive board.
Mr Trenberth --We certainly have that. We have a great deal of preliminary work done on the project and a great deal of pre-feasibility project evaluation work either done or under way. The environmental impact statement is complete. The development of an organisational structure with skills is in the process of being completed. We have what is beginning to be, I think, a good working relationship with the Japanese business community which is certainly interested in investing in the projects as they emerge. Already we have investor interest from Korea with money on the table and from a number of Australian companies with money on the table. So there has been some progress.
Senator FERGUSON --Capital works were scheduled to start in October last year, but we have not really seen anything yet, have we? When are they likely to start?
Mr Trenberth --I think, in fact, that there has been some beginnings of that in the last month. Some site investigation work has begun as a prelude to beginning to do some of the site works.
Senator FERGUSON --What is your reaction to the admissions by Rod Keller, who was acting chief executive of the MFP Development Corporation, when he was reported this year as saying, `The corporation has substantially under-spent on capital works. It is six to eight months behind schedule and that of the $37.6 million allocated to the MFP in its first year, not much more than $100,000 was spent on staff recruitment and administrative costs'?
Mr Trenberth --There is no doubt that they are running well behind schedule, Senator. There is no question about that. Rod is absolutely right.
Senator Schacht --We would rather them run behind schedule than try to run on schedule and waste the money.
Senator FERGUSON --I understand that. What is your reaction to the comments by the vice-president of Japan's ministry of international trade and industry who was reported this year in February as saying that the ministry was still committed to the MFP but they still wanted to see greater commitment from Australian industry?
Mr Trenberth --Australian industry has not, as yet, made a full-blooded commitment to the project. As I said earlier, there has been investor interest and money on the table in the environmental project. BHP has made a very substantial moral commitment to the project. I think that the work that has been done, particularly in the information technology area, is one of the areas in which I would hope that BHP would ultimately see fit to make a stronger financial commitment.
Senator FERGUSON --We mentioned earlier the visit of Mr Yahiro, the head of Japan's MFP cooperation association. In an article in May it is reported that he has `lamented the project's extended delays' and was `vague about future support and made no specific commitments to invest in the project'.
Mr Trenberth --Mr Yahiro, as an individual or indeed in his corporate capacity, is not potentially an investor. He is, in a sense, the figurehead of the Japanese interest in this project. Standing behind Mr Yahiro in the MFP--Australia cooperation association are 50 or 60 very major Japanese companies.
Senator FERGUSON --Has the department ever advised the industry minister to pull back the federal government's commitment to the MFP?
Mr Trenberth --Absolutely not.
Senator Schacht --I think we could say that that is a policy issue. As far as I am aware, it has not. All I can say is that--I am the minister responsible for the MFP project--I have never had any indication other than there is strong support in DITARD, as it is now called. The fact that one of the deputy secretaries, Mr Trenberth, is a board member indicates, in my view, the commitment. I think the last 40 minutes of his answers indicate that there is pretty fulsome support at his level and knowledge of it. I personally have seen no evidence out of the department of advice to pull back, not proceed or reconsider. That has never been put to me.
Senator FERGUSON --Was that sort of advice ever given to previous industry ministers?
Senator Schacht --The only previous minister I have spoken to is Senator Button. All I can say is that Senator Button never relayed to me that he ever received that advice. Of course, Senator Button was the key figure in promoting it at the political level. But he never indicated to me that he received contrary advice to his own enthusiasm for the MFP.
Senator FERGUSON --So to the best of your knowledge Senator Button never rejected any advice from the department that the government should pull back?
Senator Schacht --As I say, to the best of my knowledge, that is correct. Everything has to be very carefully gone over and people have to argue the pros and cons of any commitment of any funds anywhere. I think that is just good public policy. Just because someone may somewhere put up the pros and cons of any argument, it should not be taken that people are running cold on it. It just means that you have to put before your minister all the options and all the background, both good and bad, on any project, idea or expenditure.
Senator FERGUSON --Is it also fair to assume that the department would make some sort of recommendation on the evidence that it had before it as to whether it should proceed or not proceed?
Senator Schacht --I am not aware of any advice, and it certainly has not been put to me since I have been the minister responsible for the MFP.
Senator FERGUSON --So you have certainly never had any advice that it should pull back?
Senator Schacht --No.
Senator CHAPMAN --I think it was indicated earlier in answer to Senator Ferguson that in excess of $52 1/2 million had so far been spent or allocated to the MFP, including the better cities program. Was it spent or allocated?
Senator Schacht --It was allocated.
Senator CHAPMAN --How much of that has already been spent?
Senator Schacht --Of that $52 1/2 million?
Senator CHAPMAN --Yes.
Senator Schacht --I think Mr Trenberth explained that. We are going to get you the figure of how much of the $40 million of the better cities program has actually been spent. The $12 1/2 million is committed over three years from 1991-92 or whatever it was. That is committed, although all of it has not been spent because we are still in the period that it was committed to be spent over.
Senator CHAPMAN --As well as providing that, can you provide information on where it has actually gone, what it has been spent on and where it has been dispersed?
Senator Schacht --Yes, we can do that.
Senator CHAPMAN --Would it be possible to have a copy of the articles and memorandum of association of the MFP Development Corporation?
Mr Trenberth --The MFP Development Corporation is not a corporate entity. It does not have articles and a memorandum. It has a separate act of parliament, and I would be happy to provide you with that.
Senator CHAPMAN --Does it have a board?
Mr Trenberth --Yes, the development corporation has a board and the international advisory group of course is a board in its own right.
Senator CHAPMAN --Would it be possible to have that?
Mr Trenberth --Sure.
Senator CHAPMAN --Why did the capital works not commence in October 1992 as was scheduled?
Mr Trenberth --There are all sorts of reasons for that. I think it was a lot harder to construct the organisation than originally intended. I think it is fair to say that the process of constructing the development corporation was probably distracted by one or two events that were under way in South Australia at the time, but I think those hurdles are largely behind us.
Senator Schacht --There is no doubt that since the appointment of the board was finalised and it appointed a chief executive in May of this year I have noticed that there is an absolute palpable difference about the drive and the energy now taking place and the focus on the number of themes and issues, which is a world-away difference from what it was 12 months ago.
Senator CHAPMAN --Is there a revised timetable for the development of the MFP as a result of that delay?
Mr Trenberth --That is one of the issues which is being confronted in the context of developing an overall project plan. That work is currently in process. I am not quite sure what that profile will look like or when it will be available, but I would think that within the next two to three months we will have a much better feel for what the future might look like and what the milestones might be.
Senator Schacht --By the way, the regional advisory board did meet in France last year, apparently.
Senator CHAPMAN --Who undertook the environmental impact statement?
Senator Schacht --We will provide you with that.
Mr Trenberth --Yes. The name will come to me in a moment. It was Kinhill Consultants. The reason I hesitated is that I think Pak Poi Kneebone was involved in that as well, so it may well have been a combination of Kinhill and PPK.
CHAIRMAN --I have a series of questions from Senator Ferguson which have been placed on notice.
Senator FERGUSON --I have some things on Purchase Australia and a couple of others that I am prepared to put on notice; people have been here long enough.
Senator CHAPMAN --What are the allocations for the construction industry reform strategy in 1993-94 and what was spent on it in 1992-93? Is that easily dissectible?
Mr Farrow --The allocation for the construction industry reform strategy is in the industrial relations portfolio. It was $10.8 million over the three-year life of the program. From memory, I think the amount is in the order of $2 million-plus for this year, but I do not have the figure with me at the moment.
Senator CHAPMAN --If the Department of Industrial Relations funds it, what is your role in the program?
Senator Schacht --It is a joint responsibility. We are an industry portfolio. We have a national construction responsibility for the commercial construction industry.
Senator CHAPMAN --Can you tell me what progress has been made with the strategy, including benefits to the industry and dollar savings achieved?
Senator Schacht --We do not want to have to give an answer today. It has been pretty good, but I will ask Mr Farrow to summarise a couple of good points.
Mr Farrow --In the first year in excess of 20 action teams, involving some 250 people from industry, have been working in a wide range of areas developing tools for improvement and performance of the industry, developing a code of practice to apply to the industry and developing and publishing information about model sites within the industry.
Senator CHAPMAN --How many staff are employed on the reform strategy and the code of practice?
Mr Farrow --There are 16 in the construction industry development agency at the moment.
Senator CHAPMAN --Could you provide the level and location of each officer that is employed?
Mr Farrow --I will have to take that on notice. I can say that the main office is in Sydney, with an office in Melbourne.
Senator CHAPMAN --How many firms have so far adopted and fully implemented the code of practice?
Mr Farrow --The code of practice is not yet out. Hopefully it will be out before the end of this year. It has been out for public comment on three occasions now and will go out for final public comment in September.
Senator CHAPMAN --Has anything been spent on promoting that code yet or will that not happen until it is finalised?
Mr Farrow --No, nothing has been spent beyond the cost of distribution for public comment.
Senator CHAPMAN --I move to the agrifood industry program which is mentioned on page 49 of the program performance statements. What is the nature of that 1,187 per cent increase in funding?
Mr Samarcq --It is one of those infamous pox marks or rollovers in the resource processing and environment division. The agrifood strategy was launched last year. It is essentially a matter of it coming on stream, but it took a while to establish the program. The industry program essentially has two elements--an English language and a literacy program--which make up the bulk of the $1,190,000. About $1,040,000 was related to that. The program commenced only midway through this half of the year and only a small amount of the money was spent. It was rolled over, but as of about a week ago, the moneys that were allocated last year have now been committed and a second round of applications is being sought for this year. So we will not see a repeat of that amount next financial year.
Senator CHAPMAN --What are the six additional benchmarking projects?
Mr Samarcq --The benchmarking program has been allocated--it is in the order of $500,000 over two years. This program has only just commenced. Three projects have been funded in relation to looking at developing a better understanding of our relative competitiveness in areas of innovation, production, processors and management in subsectors within the agrifood industries. The three projects that have been funded under the program at the moment relate to the benchmarking of tallow and vegetable oil supplies. For example, Meadow Lea is the key company involved in that. In relation to wine exports, Orlando-Wyndham has been given some funds to look at benchmarking in Australia and internationally. In the pig processing industry, a group of consultants--Hassall and Associates--has been provided with some funds.
Senator CHAPMAN --What was contributed to the Australia-Indonesia agrifood task force?
Mr Samarcq --As you are aware, the government has placed a significant emphasis on Asia, and in particular Indonesia, with a ministerial forum in October-November last year. As a result of that, two working groups were established: one dealing with trade and investment issues and the other dealing with food and agriculture. Within the food and agriculture working group, we and DPIE are the key players. We chair a working group with the Indonesians which looks at transport, storage and distribution in terms of Indonesian industry needs. We provide advice and support to the Indonesians so that they can accommodate an expansion of their industry and at the same time it allows us to export technology know-how as well as fresh and processed product into Indonesia.
Senator CHAPMAN --How much money was allocated?
Mr Samarcq --A very nominal amount. Basically, just three or four officers were involved on an ad hoc basis in that work. It is an early part of the process. We expect the task force to be operating for another six to nine months and to report back to the ministerial forum in July of next year.
Senator CHAPMAN --Have the Indonesians contributed any funds to the work?
Mr Samarcq --In kind, as we have.
Senator CHAPMAN --As yet, has the joint meeting of that task force which took place in Indonesia resulted in any tangible benefits in terms of exports opening up for Australian goods?
Mr Samarcq --It was pitched at two levels. Basically, it was pitched at identifying some of the impediments in getting into the Indonesian market from our perspective and providing advice to them as to how they could contribute to overcoming those impediments. So I guess there was a policy level discussion. We also took an opportunity to talk to about 40 or 50 companies in relation to both exports into and investment in Indonesia. As a result of that, I think about six or seven projects--they are not huge projects--are at least kicking it off. The Indonesians certainly have a very keen interest in learning from Australia. We need to make sure that we are a part of that growth phase in Indonesia.
Senator CHAPMAN --Where was that meeting held and how many departmental officers attended it?
Mr Samarcq --It was held in Jakarta. There was a working group meeting and a task force meeting. The task force meeting was held about four weeks before the full working group meeting. Two officers from DITARD attended that task force meeting--one from my area and one from the international branch, who is an Indonesian specialist. I attended the working group meeting with one of the officers to represent the department in liaison with the Department of Primary Industries and Energy.
Senator CHAPMAN --What level were the officers, apart from you?
Mr Samarcq --On the first occasion, an assistant secretary and an assistant director, which is a Senior Officer Grade C. On the second occasion, it was me as a first assistant secretary and an assistant secretary.
Senator CHAPMAN --Do you know the cost of participation in those two meetings?
Mr Samarcq --I would suggest it was essentially travel and travelling allowance costs. We were there only for three days. I would suspect it was $6,000 to $8,000.
Senator CHAPMAN --I have a question on the funding for Ausmusic.
Senator Schacht --That is sex, drugs and rock and roll for everybody, Senator Chapman!
Senator CHAPMAN --What is the purpose of the $1.2 million dollars, which is a doubling of the funding? What outcome do you hope to achieve with that money?
Mr Stevens --It is not actually a double funding; it is really a full year funding of Ausmusic. The sum of $600,000 in 1992-93 was in respect of the last half of 1992-93. For 1993-94, the full year funding is $1.2 million.
Senator CHAPMAN --What do you hope to achieve with it?
Mr Stevens --Ausmusic has a wide charter to develop education and training activities for new contemporary music talent in Australia and to develop that part of the music industry in both a domestic and, hopefully, an export sense.
Senator CHAPMAN --You say that is only a half year funding. Where did the funds come from for that body prior to that?
Mr Stevens --It was another department.
Senator Schacht --The funds were transferred from DEET to Industry. Initially the funding of Ausmusic was to come partly from the blank audio recording media levy scheme. The legislation was passed, but it was successfully challenged in the High Court. That meant that the government's plans to have Ausmusic funded by a proportion of that levy has not come to fruition. I understand that advice is now being prepared on how a further amendment could proceed to validate the legislation or overcome the High Court's objections to the previous legislation so that Ausmusic would get part of its funding from the levy.
Senator CHAPMAN --Are you aware that the Auditor-General expressed concerns about the future revenue and, therefore, the ability of Ausmusic to continue as a going concern in the absence of that levy?
Senator Schacht --Yes, and we are also concerned.
Senator CHAPMAN --Do you see this as a one-off thing?
Senator Schacht --I would not say that. The contemporary music industry in Australia is of a substantial size. It has considerable export earnings in various forms. Some estimates approach $100 million a year. It is an industry that gets almost no support directly, yet Australian contemporary music performers, writers, managers et cetera have proved to be very successful in going out into the world with their product. It is of significant benefit to our balance of trade.
Although it happens to be in an area that some people might consider to be not the normal sort of industry that provides benefit to the community, the overwhelming evidence is that it provides excellent employment. It provides not only entertainment to Australians, but it also earns exports for this country--a contribution of around $1 million to Ausmusic. The main feature of the program is to provide training to young people who wish to be involved in contemporary music at various levels in musicianship, in writing and in managing. There are some excellent courses which have been very successful now running in TAFEs around Australia which Ausmusic helped to develop.
Senator CHAPMAN --What was the cost of expanding the export access program, including current staffing and administrative costs?
Senator Schacht --Export access will receive an additional $2 million in the budget this year. Overall it is $8 million over three years--$2 million, $4 million and $2 million over the next three years on top of a current $12 million program.
I must say that this is an outcome of the McKinsey report about the Manufacturing Council, which was talked about earlier today. We are providing access to small and medium sized businesses to enable them to become exporters. In the first 12 months of the program, there was over a 90 per cent success rate, where firms that went through the program got in some form or another an indication of an export order. It had funding of $4 million. That has increased by $2 million this year to $6.2 million. Overall, that makes it about a $16 million program for the period of the program. The other feature about it is that it is administered and run by the industry associations, which I think explains part of its success.
Senator CHAPMAN --Would it be possible to have a copy of the industry innovation program new documentation that is referred to on page 66?
Senator Schacht --It is in draft form, but we are happy to supply it to you.
Senator CHAPMAN --I would also like a copy of the Price Waterhouse consultancy report on the economic infrastructure.
Senator Schacht --On the GIRD grants. It has not been released yet by an R&D board, but subject to its agreement--it commissioned that--by the board chairman and the board, we have no objection to releasing it.
Senator CHAPMAN --Can you tell me the anticipated cost of awareness raising measures relevant to the national industry extension
scheme, particularly those referred to on page 67?
Senator Schacht --There is no specific awareness program as such; it is generally part of the NIES program itself. I do not think that we can break that down for you.
Senator CHAPMAN --Would it be possible to have a copy of the Price Waterhouse evaluation of NIES, which is mentioned on page 65?
Senator Schacht --I cannot see any objection to that. I will give you a copy of it. Senator Chapman, you are going to be flooded with paper some time in the next week or so. I hope that you are looking forward to a lot of reading.
Senator CHAPMAN --Did that evaluation come up with any areas where improvements in the effectiveness of the program could have been made?
Mr Ryan --That evaluation came up with some recommendations about improving the way that we would target firms in the delivery of the NIES product.
Senator CHAPMAN --Can you tell me which programs will be incorporated into the first-stop shops that were announced?
Senator Schacht --One thing we are looking at which we think will be connected with one-stop shops is Businesslink. But we are not committing ourselves to exactly how that will be done because we want to see how it evolves in conjunction with discussions with industry and clients, which is the small and medium sized business sector in particular.
I would have thought that the one-stop shops, in what they will be providing, would also be connected to Businesslink. For example, Businesslink might be able to say to people, `We suggest you go to the one-stop shop to get the information you are after. You'll get it all there in one hit'.
Senator CHAPMAN --Can you tell me the anticipated cost of establishing the one-stop shops, how many there will be and where they will be?
Senator Schacht --In 1993-94 it is $1 1/2 million and in 1994-95 it will be $400,000. So that is nearly $2 million over two years.
Senator CHAPMAN --How many shops will there be and where will they be?
Senator Schacht --We have not committed ourselves to that, and we certainly do not have the locations. That will vary, in my view. I think both Minister Griffiths and I would be of the view that wherever possible they should be plugged into existing facilities at a state or regional level so that you put in the same area other government instrumentalities providing assistance to business. Then it really is a one-stop shop and people do not have to wander all over a suburb to find different areas. I think we can mix it in that way. A lot of the state ministers of small business have said to me that they were very keen to ensure that what they are providing and what we are providing is coordinated so that the punters turn up at the same place and get it in one hit.
Senator CHAPMAN --How many businesses are expected to use the one-stop shops?
Senator Schacht --I hope a hell of a lot.
Senator CHAPMAN --You do not have any figures?
Senator Schacht --Well, there are 900,000 small businesses in Australia. If they all rang up in one moment, we would be in a bit of strife--but they will not. I do not have any figure.
Mr Ryan --NIES itself would have about 6,000 firms a year contact it. It would be only part of the concept of the one-stop shop.
Senator CHAPMAN --How will the businesses know about the existence of the shops?
Senator Schacht --They will be advertised and promoted. We will do it through such things as general advertising, promotion and free publicity. We will also get industry associations in the private sector to promote them. They are very keen and very enthusiastic about the concept. From what I have heard from members of the small business sector in my discussions with them, I do not imagine that we will have much difficulty in getting them, through their trade magazines and their association magazines, to give publicity to it. There is an ever-increasing plethora of small business and commercial magazines being sold through newsagents. I think that all of those magazines will be writing stories about one-stop shops, Businesslink and so on. There is a real enthusiasm in a lot of this area now to promote and explain the access to these sorts of programs.
Senator CHAPMAN --How will the services to shops differ from those provided by the export access program?
Senator Schacht --Export access provides assistance to particular firms. A consultant develops and advises the firm and then signs a commercial contract with the firm to commit it to, say, a three-year program. The consultant takes the firm through the steps of working out whether the product it is producing has export potential. Once that has gone through, there is an assessment of whether the management and the structure of the firm can meet the demands of being an exporter.
The firm is then taken through the next step of picking a strategic export market. Once that has been decided, the firm is provided with the assistance to go into that export market. That assistance could be through one of the export access officers in places such as St Louis, Osaka and the one just opened in Amsterdam, or through the Austrade network, or through attendance at a trade fair, or through being sent to a particular country--Austrade having made arrangements for specific appointments with people in that country who would be interested in purchasing the goods or services of that firm. You are dealing specifically with an export outcome for a particular firm. The consultant, funded by export access, works parallel to the management of the firm and gets it over the hurdles, one by one, to get an export outcome. One-stop stops are to provide a range of services to small businesses and medium sized businesses, including information about how to get into export access, as well as other areas of assistance to improve such things as management, quality and product.
Senator CHAPMAN --What was the source of the idea or the concept for the one-stop shop?
Senator Schacht --The sheer brilliance of this government.
Senator CHAPMAN --Who is going to administer the shops?
Senator Schacht --It has not been decided, but as it is going to be funded through our department we will have a big say in it.
Senator CHAPMAN --What are your expectations of the shops in terms of exports, employment and import replacement?
Senator Schacht --I will tell you this time next year.
Senator CHAPMAN --Can that be quantified?
Senator Schacht --Not at the moment. This approach of a one-stop shop, Businesslink and expansion of export access is very much driven by the responses we have had and the discussions we have had with the small and medium size business sector. We are user friendly these days.
Senator CHAPMAN --Can you provide a list of the recommendations of the McKinsey report on emerging exporters?
Senator Schacht --Absolutely. We will give you a copy. Who has got a copy? Who has got the bible?
CHAIRMAN --You could perhaps take it on notice.
Senator Schacht --We need the New English version which we can all understand. We have not got that.
CHAIRMAN --You could take it on notice.
Senator CHAPMAN --Could you provide information on any action taken in relation to each recommendation?
Senator Schacht --Yes, we can provide that. I think you will find that in the package of budget papers and statements that we put out. If you cannot find it at this hour of the morning, ring my office later today and we will assist you.
Senator CHAPMAN --Do you have an assessment of the impact of the 150 per cent R&D deduction on the level of industry research and development?
Senator Schacht --Yes. It has been operating since 1985. The figures show that we have nearly doubled the amount of R&D. As I said earlier today, the amount of revenue forgone since 1985 has been nearly $2 billion, and at the moment it is running at well over $300 million a year. The BIE is doing an evaluation of it and I suspect that the Industry Commission, when it does its S&T study, will also look at it. I assume that all the other usual suspects who love it and hate it will look at it.
Senator CHAPMAN --Do you have an evaluation of the effectiveness of grants under the industry innovation program that you can provide?
Senator Schacht --We have the Price Waterhouse document.
Senator CHAPMAN --That evaluates this?
Senator Schacht --Yes, and we have offered you a copy of that.
Senator CHAPMAN --On page 64 of the McKinsey report--
Senator Schacht --You said you did not have a copy of it, but you are going to quote from it.
Senator CHAPMAN --I have not got it here. There is a statement in that report that there are over 120 federal and state assistance programs available to small and medium enterprises. Could you give me a list of those?
CHAIRMAN --Not tonight.
Senator CHAPMAN --You can take it on notice. Can you also indicate which, if not all, will be incorporated into the one-stop shops.
Senator Schacht --That has not been decided. I do not think even McKinsey listed the 120, but we will ask if it did. But I would not want to be held to that promise because I just do not know whether they even have those 120 names on their information database. I have to say that I think the number varies from week to week as various state governments and federal governments keep changing the program delivery systems in this area. I would also point out that the structural adjustment committee of cabinet has a process before it at the moment which looks at rationalising a number of these assistance programs to small and medium sized businesses.
Senator CHAPMAN --Can you provide details of the export assistance schemes and other initiatives for which the department is responsible and which are part of the proposed package to encourage more small and medium sized businesses to commence exporting?
Senator Schacht --That is export access. That is the only one in our department.
Senator CHAPMAN --Could you provide the estimate of the expenditure on that for the next three years?
Senator Schacht --I just did.
Mr Stevens --It is $6 million in total.
Senator Schacht --For export access over the next three years, it is an extra $8 million. That is including this year. That is a commitment of how much? That $8 million for export access is on top of how much?
Mr Daine --It was $8 million.
Senator Schacht --So $16 million will be the total commitment. We have now committed ourselves up till the end of 1995-96 to this expenditure on export access. In our target we hope that that funding will give us a chance to assist another 800 potential emerging exporters join McKinsey's magnificent 700.
Senator CHAPMAN --Has any assessment been made of the impact on the assistance provided by the 150 per cent R&D tax deduction of the drop in company tax rate?
Senator Schacht --BIE is doing that but it will have some significance.
Senator CHAPMAN --Included in that BIE analysis, will there be an assessment of how much the tax concession would need to be increased to maintain its real value?
Senator Schacht --Yes. People have already estimated that it should be at least about 180 per cent. I have just been corrected--the figure is 165 per cent, but the report will cover it.
Senator CHAPMAN --Has any analysis been done of the impact of the drop in assistance on industry and industrial research and development activity?
Senator Schacht --What drop?
Senator CHAPMAN --The drop that will come out of that decision.
Senator Schacht --Do you mean because of the reduction in the company rate to 33 per cent? We would have to wait at least a year until we get the actual impact of that in reality terms; so, it is too early to tell.
Senator CHAPMAN --So there is no forecast?
Senator Schacht --Well, the BIE might cover that. But I have to say that it is still conjecture, in a sense.
CHAIRMAN --I table some questions on notice from Senator Ferguson.
Senator CHAPMAN --Can I also table some questions?
CHAIRMAN --Yes, or we could incorporate them. Is it the wish of the committee that they be incorporated in Hansard? There being no objection, it is so ordered.
[Because the incorporation of this material would have unacceptably delayed the production of this Hansard, the material has not been included. Copies of this material may be obtained from the committee secretariat.]
Senator Schacht --Are there any questions about EFIC, other than the ones asked earlier in the day? This is a separate organisation. You did ask questions which we covered. For the record, the EFIC people are available. I think you asked all of your questions earlier.
CHAIRMAN --We did ask some, yes.
Senator Schacht --So there are no questions for EFIC then. Thank you very much.
CHAIRMAN --Thank you very much, Minister. I also thank the departmental officers, Hansard and the secretariat.
Committee adjourned at 2.07 a.m. (Friday)