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FINANCE AND PUBLIC ADMINISTRATION LEGISLATION COMMITTEE
FINANCE AND PUBLIC ADMINISTRATION PORTFOLIO
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FINANCE AND PUBLIC ADMINISTRATION LEGISLATION COMMITTEE
FINANCE AND PUBLIC ADMINISTRATION PORTFOLIO
Senator ROBERT RAY
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FINANCE AND PUBLIC ADMINISTRATION LEGISLATION COMMITTEE
(SENATE-Friday, 24 November 2000)
Content WindowFINANCE AND PUBLIC ADMINISTRATION LEGISLATION COMMITTEE - 24/11/2000 - FINANCE AND PUBLIC ADMINISTRATION PORTFOLIO
CHAIR —I declare opening this second day of public hearing of the Finance and Public Administration Legislation Committee. On 9 May 2000, the Senate referred to this committee for examination the particulars of proposed expenditure for the year ending 30 June 2001 in respect of the portfolios of the Prime Minister and Cabinet, Finance and Administration and the parliamentary departments. The committee held hearings on 22, 23 and 24 May 2000 and reported to the Senate on 22 June 2000. The hearing today is supplementary to the budget estimates hearings. It is the second day of consideration of those matters notified to the committee secretariat in writing as required by standing order 26(10). The committee concluded supplementary hearings for the parliamentary departments and the Prime Minister's portfolio on Wednesday, 22 November and today it moves to the Finance and Administration portfolio.
We will begin with general questions of the Department of Finance and Administration and then proceed through the departmental output groups in the order listed on the program. The department will be followed by the Australian Electoral Commission and then the Office of Asset Sales and Information Technology Outsourcing. The committee has set 19 January 2001 as the date for the submission of written answers to questions taken on notice. I remind you all that this committee is continuing to monitor the format of the portfolio budget statements and would welcome any comment on that documentation. I welcome Senator Ellison, the Special Minister of State, who is also representing the Minister for Finance and Administration this morning, and also officers from the Department of Finance and Administration. Senator Ellison, do you wish to make an opening statement?
—There is no opening statement, Mr Chairman.
CHAIR —In that case we will proceed to general questions.
Senator ROBERT RAY —I ask how many questions were taken on notice by DOFA and its agencies in the budget round estimates last May.
Ms Mason —I am informed that there were 58 taken on notice from the last committee. Eight were tabled by Senator Sherry out of session and there was a further question. It was a total of 65.
Senator ROBERT RAY —How many of these questions were answered by the very generous deadline of 28 June?
Ms Mason —There were none answered by the due date.
Senator ROBERT RAY —Can you give us an indication when the bulk of the questions were answered?
Ms Mason —The bulk of them—64—were answered by 5 September.
Senator ROBERT RAY —Do you have an explanation as to why 28 June deadline was not met and it was not until 5 September that answers were provided?
Dr Boxall —My understanding is that the bulk of the questions had been prepared by the department, but they were not submitted until all questions were done.
Senator ROBERT RAY —Could you take that into account next time, because this has been a matter raised with you either at this committee or others. You do not have to wait until you have every answer ready.
Dr Boxall —My understanding of the protocols of the committee is that the ministers table the answers, and so the department's policy is to endeavour to have the questions completed as soon as possible. The minister then decides when they will table them.
Senator ROBERT RAY —Minister Ellison, do you know how long the answers that were forwarded to your office sat there before they were sent on to the committee? Do you have any idea of the time that elapsed between when the department—
Senator Ellison —No, I would have to check on that.
Senator ROBERT RAY —Do you think it was an extraordinarily long time or a very brief time?
Senator Ellison —As I said, I will have to check on that because it may have been that we received different answers at different times.
Senator ROBERT RAY —You would concede, though, that 5 September is a long way after the deadline. This time there were not as many taken on notice as in the past.
—I think you have to remember that we had a round of estimates that was somewhat unusual. We had four hearings of estimates in a period of about six months as well as February and May. There were still questions on notice that we were still catching up from the previous estimates. This is one of the problems when estimates occur so close in time to each other. The period of 29 June, compared with the estimates dated 23 May—which you describe as generous—is just a couple of days over a month. I can only say that that is not much different from the norm. The previous estimates hearings and the frequency of them placed demands on the department. You will recall that in relation to Employment National there were many questions on notice which had to be answered. That taxes the resources of the department.
Senator ROBERT RAY —I notice one or two other departments had the courtesy, when they did not meet the deadline, of notifying other committees and apologising. You never thought of doing that?
Senator Ellison —That is something we can take on board for the future.
Senator ROBERT RAY —You are aware that the next deadline is 19 January. Do you regard that as unconscionable or unachievable?
Senator Ellison —I am happy to say it is a bit more than a month. Taking into account the Christmas break, I think that is reasonable, but a 60-day period is a more appropriate time. I understand some other places do have that provision. I do think that the month that we have is insufficient for the numbers of questions on notice that you often get.
Senator ROBERT RAY —I see. Have you ever refreshed your memory about the division in the Senate on this matter, in which the coalition and the Democrats voted for a 30-day rule in the Senate and the Labor Party voted against it? I don't suppose you have gone back and looked at that.
Senator Ellison —No, I haven't.
Senator ROBERT RAY —It was just a good idea at the time, was it?
Senator Ellison —No, that is my view about the 60-day rule—or 60-day time limit. There is another 60-day rule.
Senator ROBERT RAY —Yes, we happen to coincide on that. I also say to you that if there are questions of real complexity, I understand that 19 January would be impossible. What I am suggesting is that if the bulk of the answers come in, you do not wait for the very complex one to come in. You send the rest on and then you put in an interim answer, like you did on the telecard matter, saying, `Look, this is hard to get together. We want to go back and check with members.' I think that would be a much better modus operandi for you.
Senator Ellison —As I said, Senator Ray, we will certainly take that on board. The chairman said at the outset that the committee is always looking for ways to improve how estimates are run, and I think that that is a reasonable suggestion.
Senator ROBERT RAY —Are there any unanswered questions at this stage?
Ms Mason —No, Senator, there are not.
Senator ROBERT RAY —You did try to get in the final answer by yesterday; I put that on the record. Moving to another subject—
Senator FAULKNER —Before you move on, I have a question on questions on notice. Do I understand you to say, Dr Boxall, that there is some form of departmental protocol also in terms of the submission of answers to questions on notice to ministers. Obviously drafts are prepared in the department, as we all understand, and they go—as you correctly say—to ministers for approval or otherwise. But has the department itself got a protocol in relation to waiting for all draft answers to be completed before a brief in relation to questions on notice go to ministers? I just wanted to check the departmental processes.
Dr Boxall —Sure, Senator. We do the answers as soon as we can and forward them to the office. We do not wait to do them in bulk.
—I assumed that was the case, but I think the Hansard record might be a little misleading in that regard, so I think it was worth clarifying.
Dr Boxall —Thank you for clarifying that.
Senator ROBERT RAY —So no doubt our expert in taking down questions on notice is up to one; that is, what was the time delay between you receiving those answers and forwarding them on to the committee. Could I move to another subject raised here previously. It refers to the blatant forgery of a letter that appeared in the Canberra Times on 21 October, purporting to be from an officer of DOFA, Mr Lembit Suur, and it was clearly a malevolent attempt to embarrass him. The next day he stated that the matter had been put in the hands of the Federal Police. I was not sure whether it was an individual or the department who had put it in the hands of the Federal Police. If it was an individual I will not pursue the question, but if it was the department, I want to know whether you have had some report back about it and whether the matter has been finalised.
Dr Boxall —Mr Suur did that in his individual capacity.
Senator ROBERT RAY —Okay. It was unclear, from the article in the Canberra Times the next day, who had put it in the hands of the police.
Dr Boxall —It was definitely Mr Suur himself.
Senator ROBERT RAY —That is fine. While we are on the subject, Minister, do you recall putting out a press release, E20/00, headed `Labor accuses AEC of not doing its job'? That was posted on your ministerial web site. Do you recall that?
Senator Ellison —Yes.
Senator ROBERT RAY —Can you explain why it suddenly disappeared off the web site when it usually takes six months for something to come off?
Senator Ellison —I cannot. I did not give any instructions for it to be taken off.
Senator ROBERT RAY —I think it disappeared about five minutes after the Solicitor General's opinion came out. So you did not direct it?
Senator Ellison —No, I did not.
Senator ROBERT RAY —Oh, well. Some junior woodchucks probably thought it was in your best interests to remove it.
Senator Ellison —Perhaps we can leave that to the AEC when they appear later this afternoon. I think, Senator Ray, it is not appropriate in general comments to go into detail—
Senator FAULKNER —Your web site has nothing to do with the AEC.
Senator Ellison —No, it is the question of the press release and its detail. I think that is what Senator Ray was alluding to.
Senator FAULKNER —No, I thought he was asking about your web site.
Senator ROBERT RAY —We declared 600 runs in front on that one. If you want to reopen the innings, feel free. Senator Ellison, I wanted to ask you—because I think the comments were made generally not just about MAPS—whether you agree with your colleague Mr Jull that your department is as bad as ever?
Senator Ellison —I do not think it is as bad as ever. I think the Department of Finance and Administration does a good job.
Senator ROBERT RAY
—Do you agree with Mr Jull when he said, `I think it must be the whole administration of the department and some of the systems they have got in there,' and `My suggestion would be that maybe we've got the same personnel in there and maybe there should be some changes in administration'? You do not agree with Mr Jull on that either?
Senator Ellison —He is talking about personnel, no doubt, when he was the minister. I was not around then and I cannot comment.
Senator ROBERT RAY —No, he was not.
Senator Ellison —He said `the same personnel as then'. The area that the Department of Finance and Administration deals with is a vast and complex area. It is an area which places great demands on the department—and would on any department. No administration is ever perfect, and there are always ways of improving it, but I think the Department of Finance and Administration does a good job. It deals with a vast area of government.
Senator ROBERT RAY —In checking Mr Jull's claims, Dr Boxall might be able to help us. How many SES officers who worked for DAS the day before it was abolished continue in your department today? Mr Jull is basically saying, `The crew I worked under are all still there.' I had the impression that a few had left.
Dr Boxall —There are not many SES officers in the Department of Finance and Administration who were with the former DAS. At a rough count, I think five people who came from the former DAS, who were SES at the formation of DOFA, are still with us.
Senator ROBERT RAY —That was out of about 50, was it not?
Dr Boxall —I do not know. That figure sounds roughly right. There are other officers—
Senator ROBERT RAY —Who have moved up—I understand that.
Dr Boxall —But, roughly, there are five.
Senator ROBERT RAY —So Mr Jull is dead wrong again. That is my comment, and I do not ask you to respond. Minister, has Mr Jull actually written to you in the last few months outlining complaints about the Department of Finance and Administration?
Senator Ellison —No, he has not written to me. I have just checked with the officials, and he has not written to the department either.
Senator ROBERT RAY —So he is able to go on AM and blast you all but he has never put a written complaint to you, raising these systemic problems?
Dr Boxall —That is correct.
Senator ROBERT RAY —Minister, are you aware that Mr Jull claimed—and this is the same sort of critique that he was doing—on 26 October that he had no knowledge at all that he had a telecard? Could you take on notice when Mr Jull was first issued with a telecard and whether it was ever renewed?
Mr Fisher —We have signed receipts for telecards by Mr Jull in 1990 and 1991.
Senator ROBERT RAY —When he was made Minister for Administrative Services, he would have been given the member's entitlement book and the minister's entitlement book, wouldn't he? I was, at least, and I am sure you were, Minister.
Mr Fisher —It is normal practice.
Senator ROBERT RAY —You did not deliberately delete out the section on telecards for the 18 months he was minister, did you—or did they, Minister?
—Not that I am aware of.
Senator ROBERT RAY —It is probably more appropriate to deal with this when we are considering MAPS but, as Mr Fisher is here, I thought I would get it out of the road. In the same critique, Mr Jull claimed that one of his staff had failed to have private health insurance payments deducted by the department, hence was not covered for six months. We have no interest in naming the staff member or going into those details, other than to ask the officials—through you, Minister—did the department muck this up or not?
Dr Boxall —That critique is without foundation, Senator Ray. Mr Fisher will give a more detailed response.
Mr Fisher —I have written to Mr Jull indicating that I have had the two specific matters he raised investigated and, to the best of our records, we can find no foundation in the claims that he has made. In relation to the discussions with his staff member in October, officers asked the staff member at the time whether she could recollect having submitted documentation at any earlier date and she was unable to do that. Our records indicate that her request for deductions from her salary was first made in late October and the issue was resolved within a day or two—in late October.
Senator ROBERT RAY —I have just one more question in this general area. I think that shortly after Mr Jull's critique Mr Causley did a doorstop and also attacked the administration of the department. Did he ever put in a written critique to you, or criticism of the department, that could be responded to prior to him doing that doorstop?
Senator Ellison —I do not recall a letter from him, but I will check with the officials to see whether the department has received a letter.
Mr Fisher —Not to my knowledge, Senator.
Senator FAULKNER —Would you say that these comments that Mr Jull has made have had an impact on morale in the department, Dr Boxall?
Dr Boxall —They are not helpful, especially as, after investigating them, we discovered we have yet to see any foundation to them. Mr Fisher has written to Mr Jull pointing out these issues and raising it with them. We decided to do that because we thought it was important, for the morale of the officers in the department, that management was seen to be responding to these in a measured way.
Senator FAULKNER —Has Mr Jull responded to that written communication?
Mr Fisher —I wrote to Mr Jull's staff member some weeks ago and I wrote to Mr Jull this week. It would be too soon to expect a response.
Senator FAULKNER —Hearing what you say, Dr Boxall, about that comment, can you make a more general comment for me about how morale is in DOFA? That is one matter that has received some publicity, but there has been the IT outsourcing independent inquiry and the issue of Mr Reith's telecard. I think the committee would be interested in hearing from you, as secretary, Dr Boxall, in a more general sense, how you feel morale is in the Department of Finance and Administration at the moment.
Dr Boxall —I would like to give a fairly lengthy and fulsome answer to this question because it has raised a number of issues—IT outsourcing, the telecard issue and the comments by Mr Jull that have just been explored by members of the committee.
—I did use those as an example, but what I am focusing on—and I do not want to curtail your answer—is the general issue of staff morale in the department. We may deal with some of these other issues in more detail later and we might save time by focusing on the morale question. But I am genuinely interested in the morale question. I do not want to curtail your answer in that regard.
Dr Boxall —In general, morale in the department is remarkably high. For example, we have staff forums every two months. The turnout at the last staff forum was the highest ever. We are getting roughly 300 staff, out of 800, turning up at the staff forum to hear a short speech from me, ask questions and have questions answered. What is remarkable is that the issues which you have just raised, which I will address, have been raised and the staff have held up remarkably well. In some cases where staff have been targeted by name by the media—not by the opposition, I might add, or by government members—we have put in place special processes of counselling and things like that to make sure that they know they are being supported. As you might imagine, a number of staff who are in DOFA now were in the former DAS when we had the travel rorts affair. They are a little concerned and do not want a repeat of the same experience, so we have moved to deal with that.
The quality of staff is very high. We are getting unsolicited inquiries from members elsewhere in the public sector and in the private sector to transfer into DOFA, or to come to DOFA. We monitor staff departures each month and just about every month the ranking of staff that depart is lower than the average, which means that staff that are not necessarily poor performers but who may not be as well suited to DOFA tend to leave, and we get people to come in. There is no question that the morale of DOFA is extremely high and that we are holding up during a difficult period. I have said that in the introduction to the annual report.
We have dealt with the issue concerning Mr Jull, and Mr Fisher has responded to that. In the case of the telecard issue and Mr Reith, the staff, in my view—Mr Fisher, Mr White and Mr Gavin, supported by others—performed exceptionally well and briefed Senator Ellison and Mr Fahey. We have managed that very carefully. We dotted all the i's and crossed all the t's in Mr Reith's telecard issue. We have nothing whatsoever to hide. We followed the internal protocols to the letter. The IT issue is very interesting. I can answer it now or we can deal with it later.
Senator FAULKNER —I know it will be dealt with later in the committee so please answer only my question in regard to any impact on staff morale. The specifics will be dealt with later. Senator Lundy and others will be engaged in that. I do not want to waste time. Please respond in relation to morale because that is the focus of my question.
Dr Boxall —Attacks on the department and on me in the media recently are without foundation and I will go into the details later, if you like. Not surprisingly, that does have some impact, but we believe we are managing that, at the margin. If those attacks continue, it might make it more difficult to hold good performers, but so far we are holding up well. The staff realise that I am not responsible for the implementation of the IT, even if some other people do not. It is the province of the Office of Asset Sales and IT Outsourcing. I have never been responsible. I am not responsible. The Office of Asset Sales and IT Outsourcing is an executive agency that reports directly to the minister: it does not report through me. Staff realise that, so they are able to discount some of the media commentary.
The other thing that staff realise is that the IT policy is government policy and, indeed, stems from meeting our commitments which were put out before the election in 1996, developed through the 1996-97 budget process, when I was not even in the department, and developed further in the 1997-98 budget process when I was in the department. To suggest that any change of course in IT policy—if the government were to decide that—is a reflection on the department is completely wrong.
Senator FAULKNER —Thanks for that comprehensive answer. Listening to this as, I hope, a comparatively objective observer, I suppose the impression I have is that you have taken a little of this criticism personally, Dr Boxall. Would that be fair?
Dr Boxall —No, that is not right. I have taken it as the head of the agency—of the impact on the head of the agency.
Senator FAULKNER —At least one article I read indicated that you had cut short your own long service leave to return to work. I think there were suggestions made that perhaps this was because of the difficulties facing the department. I am not saying that the department was in crisis, but that you had been instructed to do that because of the issues that we have just been canvassing.
Dr Boxall —Not at all. I was not instructed to return from my long service leave.
Senator FAULKNER —So that story about the long service leave was wrong, was it?
Dr Boxall —I am not sure which one you are referring to.
Senator FAULKNER —To be honest, I do not have it in front of me. You raised the press speculation.
Dr Boxall —While I was on long service leave I did not read a lot of newspapers.
Senator FAULKNER —You are lucky—but it is our job, you see.
Dr Boxall —The point to make is that it is clear that there is a misunderstanding. I did not cut short my long service leave. What is more, I think I came into the office only three times for relatively short periods during my long service leave—twice to meet with my staff on matters relating to the Reith telecard issue. On the Friday afternoon before I was due back I went in to get a debrief and hit the ground running on Monday. So let us call that two times. I think it is remarkable and testimony to the depth and quality of my management that the Secretary to the Department of Finance and Administration can be away for three weeks and we can have the Reith telecard issue break in the press, the IT outsourcing issue and the issue of the phantom meeting of portfolio secretaries and yet the department was able to manage.
With respect to returning from long service leave and doing things on long service leave, my long service leave was applied for and approved some time around Easter—in other words, six months in advance—because I was planning to go to America to visit my brother and friends and I wanted to lock in the airfares. In the end, I did not go but I still took the long service leave. As you know, there was a portfolio secretaries meeting held while I was on long service leave. Portfolio secretary meetings are, in general, pencilled in for the first Wednesday of the month. I scheduled my long service leave so that I would be at work on the first Wednesday of October. As it turned out, it is probably the first time since I have been secretary that it was postponed to the second Wednesday of the month. So I sent my acting secretary. There were two items on the agenda, and IT outsourcing was not one of them. My acting secretary and two other acting secretaries were asked to leave when the second item on the agenda was discussed, and they did that. When they were asked to leave there was no indication to them that IT outsourcing would be discussed, and my acting secretary returned to the office. The secretaries' meeting discussed IT outsourcing without my acting secretary and without the Acting Secretary to the Department of Foreign Affairs and Trade. However, the Acting Secretary to the Department of Health and Aged Care was called back into the room because he was apparently in the building. So suggestions in the media to which you may be referring, Senator Faulkner, that I was invited and did not turn up or that I was invited at all are completely bogus. Obviously, the backgrounding of the Canberra Times journalist is without foundation and the Canberra Times journalist has been misled; hence the people who read the article were misled.
Senator FAULKNER —From the information you have provided in evidence before the committee, if you or the department feel aggrieved by the reporting that you refer to—and I certainly read the article and many others would have too, I am sure—
Senator ROBERT RAY —They probably believed it at the time.
Senator FAULKNER —Dr Boxall, given that you are aggrieved by this, did you take steps to correct the record at all?
Dr Boxall —I am doing that right now; I am correcting a record right now.
Senator FAULKNER —So you are using the forum of the Senate estimates committee?
Dr Boxall —Yes. I think that is appropriate. It is all on the record, and it is full information.
Senator ROBERT RAY —It is better watched than the Canberra Times probably.
Senator FAULKNER —Better watched than the Canberra Times read? I doubt that very much. What are your administrative arrangements in your absence, Dr Boxall? I think we all know that you have an elegant sufficiency of deputy secretaries. Many other departments are jealous about the number of deputy secretaries you have really, so who does the job?
Dr Boxall —Actually I have zero deputy secretaries.
Senator FAULKNER —I thought you might say that.
Dr Boxall —It is true. I have seven general managers who report to me. The seven general managers and I comprise a management board. The acting arrangements tend to be rotated, and they are approved by Minister Fahey in each instance. During my recent long service leave, Alastair Hodgson was the acting secretary.
Senator FAULKNER —So Mr Hodgson was the acting secretary you refer to in relation to the secretaries' meeting?
Dr Boxall —That is correct.
Senator FAULKNER —Regarding the issue of the agenda item that was discussed in the absence of Department of Finance and Administration officials, I think I understand correctly that there was one agenda item, but correct me if I am wrong. Did I hear you correctly?
Dr Boxall —I have been through the papers. My understanding is that the meeting was postponed a week. We were given a few weeks notice of that, but I did not see any need to change my long service leave arrangements. There were two items on the agenda. Mr Hodgson appeared in my stead, which is normal practice, and they discussed the first item. When they got to the second item, Mr Hodgson and the other two acting seretaries were asked to leave. When the portfolio secretaries discussed the second item, they finished that discussion. They then moved on to IT outsourcing, so in a sense it was added to the agenda. My acting secretary, and for that matter the acting secretaries of foreign affairs and trade and health were not told when they left the room that there would be a later discussion on this matter.
—I did hear that, and I appreciate the further explanation. I think what you are saying to us is that, if your acting secretary and perhaps one or two other senior Commonwealth officers had been around, they may well have come back for the discussion on IT outsourcing. Is that the interpretation I should place on this?
Dr Boxall —That is completely correct. There is no question that, if my acting secretary, who is less than a five-minute drive away from the meeting venue, were called up and told, `We are about to discuss IT,' or `We've just started discussing IT, please come back,' he would have come back.
Senator FAULKNER —I hear what you say. Even though it would probably be interesting to delve from time to time into the matters that are discussed at these secretaries meetings—although we have never really done that at Senate estimates committees; after all, as you say, every now and again we can read it in the Canberra Times so why ask about it here!—I assume it was the Secretary to the Department of the Prime Minister and Cabinet who asked these officers to leave the room.
Dr Boxall —He is the chair—
Senator FAULKNER —I know that.
Dr Boxall —and he asked them.
Senator FAULKNER —Therefore it was the Secretary to the Department of the Prime Minister and Cabinet who did not ask them to come back?
Dr Boxall —The Secretary to Department of the Prime Minister and Cabinet did not ask them, and neither did anybody else.
Senator FAULKNER —Thanks for providing that information. Before we leave this general question of morale, you did mention counselling for staff.
Dr Boxall —That is correct.
Senator FAULKNER —To what extent have you depended on those sorts of services and have you sought—which would be appropriate, I assume—outside assistance from counsellors? This is not unusual. There is a lot of debate at the moment, as you would appreciate, about these sorts of services being provided to parliamentarians. I am not being critical about this, I am just trying to establish the extent to which you have looked at this and how you are providing those services to staff. What is the approach? I assume what you are saying is that this is above and beyond the services that would normally be provided—this is how I understood your comments—because of pressures that have existed over recent months.
Dr Boxall —That is basically correct. This management worked with the Acting General Manager of Corporate to make sure that we had additional services on tap. Perhaps I could turn over to Jan Mason for a minute.
Ms Mason —Senator, we do have an employee assistance service available to any of our staff who may need some counselling assistance. I took the step of contacting staff members involved in the telecard matter and drew their attention to the availability of the service. Because the use of the service is confidential, we do not necessarily know which staff members took advantage of that service, but we did make sure that they were aware that it was available so that they knew they were supported by the department.
Senator FAULKNER —I appreciate the confidentiality issues, and that seems to me to be absolutely proper. At some stage will you get an indication from those providing these services the extent of usage of the service? Or is that also effectively a matter that you would consider to be in confidence?
—We do receive aggregate reports on usage of the service, but it would not identify the individuals—
Senator FAULKNER —I appreciate that. The point of my question is whether at some point, given that these services have been made available, the department, at least at a senior level, would have an understanding of whether there has been more demand for the services and whether that would be information that would be available to you.
Ms Mason —Yes, we would know in aggregate terms whether or not there had been an increase in use of the service over the period in which it was likely to be used by people affected by the telecard issue.
Mr Fisher —As the line manager in the area where people have had the opportunity to use the services, we have a pretty good idea, in terms of managing people at the workplace, about the stresses they are under and the extent to which they are using the services that are available. I can confirm that an increased number of our staff over the last couple of months have had recourse to the counselling and support that are made available. The take-up on a range of programs that the department has had in place for a bit over a year, in relation to work-life balance and improving the quality of the workplace—such as fitness programs, stress counselling and stress-relieving techniques—have been increased and people have been using them much more than they normally would.
Senator FAULKNER —Thanks for that, Mr Fisher. I think you would understand, Dr Boxall, that I am not being critical about the offering of those services. Quite the contrary; I applaud the action that you are taking.
Dr Boxall —We do understand that, Senator Faulkner.
Senator FAULKNER —In all this, there is some good news, isn't there, Dr Boxall. I did read in the Canberra Times that you won an outsourcing award.
Dr Boxall —That is correct—on behalf of the department.
Senator FAULKNER —What is the nature of the award? Do you get a little certificate, a trophy or just a pat on the back? How does it work?
Mr Fisher —I might be in the best position to respond to that question.
Senator FAULKNER —Did you collect it on Dr Boxall's behalf?
Dr Boxall —He did.
Mr Fisher —I was lucky enough to collect the award. I can assure you that the award is a very attractive crystal device.
Senator FAULKNER —Did you hand it over?
Mr Fisher —I certainly did—and I paid excess baggage on it as well. The main thing about the award was the international recognition of Australian government reforms and the part that DOFA has played in it and the recognition from an international judging panel that the Australian government has demonstrated some models that are seen as successful in other parts of the world.
Senator FAULKNER —Yes, but it was a departmental award, was it not? Dr Boxall said that he accepted on behalf of the department. You say that it is an Australian government award, but it was actually for the Department of Finance and Administration, was it not? Have I misunderstood it? That is how I read it.
—In a narrow sense it was an award to me because I was nominated. But in a broader sense it is an award for the department. I think what Mr Fisher is saying, and I agree with him, is that it actually has a spill over in terms of kudos for the Australian government. People in the US do not tend to distinguish between a department of finance and administration and other departments; they just think the Australian government is doing it and they do not even distinguish which side of politics happens to be in power.
Senator FAULKNER —I am not suggesting that.
Dr Boxall —I did not say you were. I am just saying that, viewed from the perspective of the US, it is an award which has a positive public relations benefit for Australia in general.
Senator FAULKNER —As I understand it, that is part sponsored by PricewaterhouseCoopers. That is right, isn't it?
Mr Fisher —It was part sponsored by PWC and a firm called Corbett and Associates. The award was made by an independent panel, including academics, journalists and industry leaders.
Senator FAULKNER —PWC, of course, run DOFA's outsourced corporate services.
Dr Boxall —That is not quite right. They are our strategic partner for human resources—part of the corporate services.
Senator FAULKNER —I have another question in relation to consultants. In the annual report I noted and appreciated the glossary of terms that was provided. I think that sort of thing is helpful. I was looking closely at the definitions of consultant and contractor. I assume, Dr Boxall, that you are obviously satisfied with those definitions. As I say, I think it is useful to have them there and I think they are helpful for all of us. In the annual report the department, of course, provides—as it is required to—a dollar figure in relation to individual consultancies. That is correct, isn't it?
Dr Boxall —Yes. Which page are you on?
Senator FAULKNER —The glossary appears—
Dr Boxall —I have the glossary. The definitions are based on the Department of the Prime Minister and Cabinet guidelines.
Senator FAULKNER —In one of the appendixes in the annual report there is a dollar figure in relation to consultants, isn't there?
Dr Boxall —Yes. There is a table, on page 68, of consultants by outcome.
Senator FAULKNER —When you look at the contractors, you get a list of contractors but you do not get a `dollarised' figure—a figure that attaches to those various contracts. Where do I find that?
Mr Bowen —If you look at the third column, Senator, on page 68 and onwards, you find a list of consultants. The first column gives you the consultant, the second gives the nature of the consultancy and the third gives the expenditure.
Senator FAULKNER —I know.
Mr Bowen —Maybe I have misunderstood.
Senator FAULKNER —I apologise if it was not clear. I was drawing a distinction between consultants and contractors. If I did not make that clear, I apologise. That is the point I was trying to make.
—I think I understand. On page 76 there is appendix C—competitive tendering and contracting. I think your point is that there are dollar figures in the consultants' table and there are no dollar figures in appendix C.
Senator FAULKNER —That is right. I may not have made that clear, Mr Bowen.
Mr Bowen —I jumped in too quickly.
Senator FAULKNER —I have been accused of jumping in too quickly myself on occasions, I might say.
Dr Wright —The information you are seeking is available on the GaP system, while it is not in the report—that is, the government gazettal system which gazettes all purchases over $2,000.
Senator FAULKNER —What you are saying to me is that that is all publicly available.
Dr Wright —Indeed, Senator.
Senator FAULKNER —I suppose the comment I make in response is that it is not available in the annual report.
Dr Boxall —Senator, we have followed the guidelines here. If your question is will we go to the GaP system, dig out the figures and give them to you, the answer is yes.
Senator FAULKNER —I would appreciate that. That is one element of it, but there is also the general transparency issue. I am not critical of the way that you have presented the list of consultants that Mr Bowen refers to—far from it. It is well-presented and easy to read—that is, if anyone can understand these outputs, which about five people in the whole of humanity do, but you can still work your way through it. I am not critical of that at all, but I do make the point that there is a clear distinction between consultants and contractors. These definitional questions seem to me, at best, marginal.
Dr Boxall —I do not think there is a problem here, and I am not suggesting that you are saying there is a problem. We have followed the guidelines. We are more than happy to go and dig out the relevant information and attach the appropriate dollar figures which are publicly available to the list in appendix C. We will take note of your comment that maybe, in terms of transparency, it would help if that was in the annual report next year.
Senator FAULKNER —I am going to show my accounting ignorance here, so you will be able to jump down my throat, I am quite sure.
Dr Boxall —I am not planning to do that, Senator.
Senator FAULKNER —I can be absolutely satisfied, regarding the information available for contractors on the GaP system and consultants published in the annual report, that that includes cash and accrual amounts?
Mr Staun —It is an accrual accounting system. Whether it be the actual cash or the amount that is incurred in the period, it recognises the expenditure on consultants or contractors during that financial year.
Senator FAULKNER —Take your group for example, Mr Bowen. Can you disaggregate how much your section might have spent on consultants in the last 12-month period and how much your section may have spent on contractors in the last 12-month period? Is that an easy thing for you to do?
Mr Bowen —I can do it very readily. I can give you the figures on consultants because they are sitting there in the annual report—
—Yes. But how would I go to the contractors issue?
Mr Bowen —You would have to go to the system that Diana Wright talked about, the consultancy register, which is publicly available. But we can pull that information out very quickly. I have that information as general management information.
Senator FAULKNER —I think you understand the point I am making in terms of transparency. There is a definitional question here, and beyond that it goes to a transparency issue. I am not suggesting that you have not closely followed the guidelines in this regard, but the Department of Finance and Administration is expected to be a leader in the public sector in this. I would not want to see, effectively, consultants hidden by being defined as contractors. It seems to me to be, at best, a pretty hazy old definitional distinction. So I could be assured of that, couldn't I, Dr Boxall.
Dr Boxall —Definitely, Senator Faulkner. As you have acknowledged, this is the definition which is put out in the Prime Minister and Cabinet guidelines, and we are following those. We take your point that it would be easier to compare, and more readily accessible, if we extracted the figures from the GaP system and put them in the equivalent of appendix C. We will note that for next year.
Senator FAULKNER —Thanks for that. We might address that at a later stage. I think there is an interesting issue here in the way this material is reported to the parliament, and I might follow that through. What is the status of the GST unit within DOFA?
Mr Bowen —The GST unit is now essentially disbanded. There is still a residual capability to provide advice on notional tax issues as they arise, but that will be more on an issue by issue basis.
Senator ROBERT RAY —When was it disbanded?
Mr Bowen —It has been in the last couple of months, I guess.
Senator ROBERT RAY —Am I right in remembering that you absorbed all the costs for this?
Mr Bowen —We did.
Senator ROBERT RAY —So you will be offering them up next budget round, no doubt.
Dr Boxall —Senator Ray—
Senator ROBERT RAY —Don't answer.
Dr Boxall —It probably is a useful time to make the point that DOFA will be subject to a pricing review in preparation for the next budget round, and that sort of issue would be taken into account.
Senator ROBERT RAY —When we last discussed the GST unit, no-one in it had read—other than in press reports—the Gartner Group enterprise-wide report card. Has anyone from the now-defunct GST unit been able to follow up?
Mr Bowen —I am afraid I cannot answer that.
Mr Hutson —No-one who is presently within the group has followed up the Gartner report. My recollection of the last hearing was that Mr Thorn, who was then head of the GST unit, had read both Gartner reports, and he answered questions on them at the last hearing.
Senator ROBERT RAY
—That could be a better recollection than mine. I was looking through the Hansard the other day, and it was not my impression, but I will accept that. Just a couple of rounding out questions: how much was paid to Deloitte Consulting for the survey work they did? If you cannot readily put your hands on it, by all means take it on notice.
Mr Hutson —I am informed that it was $1.5 million over the project.
Senator ROBERT RAY —Are those surveys confidential, or could the committee have a look at them? Of course, you can refer that to the secretary and the minister before you answer.
Mr Hutson —I am not aware that there is a problem with providing them, but we will take that question on notice.
Senator ROBERT RAY —If you can provide them, please do so. If you cannot provide them, could we have an explanation as to why? I do accept that they may not be providable.
Mr Hutson —Can I clarify the question? When you say you want to see the surveys, do you want to see the blank surveys that were sent out, do you want to see the returns that came back or do you want to see the results?
Senator ROBERT RAY —In order, I would like to see the returns that came back, then the results and then the blank forms. I am sure you will consider that in descending order of importance and I may end up with a blank form. I have no more questions on the GST one.
Senator FAULKNER —Mr Bowen, the figures you gave me on the unit—I think I asked about the staff numbers in the unit previously—did that include both full-time and part-time officers?
Mr Bowen —It included some external people on a contract basis. I do not know whether they were part-time.
Senator FAULKNER —So it did include external consultants and/or contractors, to use the new terminology?
Mr Bowen —From recollection, it included a number of full-time DOFA staff, some of whom were moved in from other areas to work on it and have now returned to their original area, plus contractors. From recollection, most of them would have been full-time, but this is information we are happy to get for you.
Senator FAULKNER —I am just trying to make sure I get the full picture. I am worried about the possible weakness of our own questioning at the table because of this distinction between consultants and contractors. If you tend to use the generic grabble phrase when we have talked about consultants—which I have certainly comfortably used, and I think that goes for other senators at the table—I do not want to have missed the boat because you have some of this mob buried in there as contractors.
Mr Bowen —I can expand on it slightly with the information that I have. There were 10 DOFA staff and six contract staff. Deloitte Consulting provided consulting advice on surveys. Those contractors, as I understand it, would have been engaged as individuals on individual contracts.
Senator FAULKNER —But they are described as contractors.
Mr Bowen —They are contractors under the terms of the PM&C guidelines. They are in there doing a job: they are not providing advice on the management of the department.
—I am not saying this is deliberate, but you can see why you start to get a bit of a misleading picture here—if my colleagues at the table and I naively start to talk about consultants and some of these characters are, in fact, contractors. Today we have established a new estimates terminology. We are always going to add the word `contractors' now whenever we talk about consultants because we do not want to miss the boat—unless Dr Boxall can come up with a useful collective noun for us that we can throw into the mess. If you can do so, Dr Boxall, I would appreciate it. It is not only your group, Mr Bowen, that had legal and accounting services on GST issues from outside contractors or consultants, was it? Some of the other groups in the department would have had that, I assume.
Mr Staun —Yes. For instance, the Financial Management Group also had their own internal exercise in preparing for the GST and employed consultants in that process.
Senator FAULKNER —Would it be possible for the committee to be provided—I assume this is something that can be done pretty easily—with a total figure, maybe broken down by groups within the department, of the costs of GST or GST related contractors and consultants? This is in the area of legal and accounting services, or whatever. Is that something that can be provided relatively easily?
Mr Staun —Within the department itself, excluding the whole of government GST unit, I can give you the figures now on contractors and consultants. An amount of $584,000 was spent on contractors and an amount of $780,000 on consultants—a total of $1.364 million. Our total implementation cost was $1.482 million.
Senator FAULKNER —What is that for?
Mr Staun —That is for the department of finance itself in terms of implementing the GST.
Dr Boxall —That is to implement the GST for DOFA. The GST unit, as you know, is a whole of government unit. Mr Bowen can give you the figures now on the total, including for contractors, consultants and staff.
Mr Bowen —It is a total of $2.849 million.
Senator FAULKNER —Do you know how many of those are consultants and how many are contractors?
Mr Hutson —Of that amount, $590,000 was employee expenses. The figure for consultants and contractors was $2.110 million.
Senator ROBERT RAY —Do you have a split between consultants and contractors, or is that just a globalised figure?
Mr Hutson —I have a globalised figure for the consultants and contractors.
Mr Bowen —What we do know is that $1.5 million of that was for Deloittes, who are the major consultants. I think there was $0.8 million for Ernst and Young. You are looking at a relatively small amount for contractors.
Senator ROBERT RAY —Indeed.
Dr Boxall —There are only six contractors in the GST unit. It is a relatively small amount. It is like paying six salaries.
—Can I just sum up this contractor issue with a question I would like you to take on notice, if you can. You may well have taken part of it on notice anyway. Can you provide, for the benefit of the committee, a list of the contractors that were engaged by DOFA—I think Dr Wright indicated she was going to do that anyway, but I want to fine this down, if I can—for the financial years 1997-98 through to 1999-2000, those three financial years, including the sort of information that you have usefully outlined for the consultants in the annual report? I think you were suggesting, Dr Boxall, that that is a comparatively easy thing to do and you would be happy to do it.
Dr Boxall —In principle, yes, but I think it is worth while exploring a couple of things so that we make sure we answer your question and we do not have a huge burden doing so.
Senator ROBERT RAY —I would like to make one point. If you take a question on notice and then afterwards have a definitional problem, you should feel free—and I am sure the minister would give the nod to this—to ring our offices to clarify the question. It may save a lot of time.
Dr Boxall —Thank you, Senator Ray, we will do that. One point I would make, Senator Faulkner, is that, as you would appreciate, DOFA was formed in October 1997, and questions which go to what happened in DOFA in 1997-98 tend to take much more time to compile because we have to dig out what happened for three months in the former DAS. If there could be a little bit of flexibility on how we answer the question for 1997-98, that would help.
Senator ROBERT RAY —Why don't you take it from October 1997 or whatever the cut-off date is?
Dr Boxall —Why don't we try to do our best and then consult with your office?
Senator ROBERT RAY —Yes.
Senator FAULKNER —My concern, Dr Boxall, is that I think a lot of us have been operating under a misapprehension—not only in your department but also in others. When I looked at that glossary I did start to worry a bit. I then looked at the page after the consultants at the contractors and thought to myself, `Frankly, here is a hole you could drive a bus through,' and I thought I had better do something about closing it.
Dr Boxall —With respect to contractors, it is my understanding that the material on the GaP system is for contractors of over $2,000. There would be very few contractors which are less than $2,000. To be honest, I think it would be particularly helpful if we could just provide information on those over $2,000. Clearly, if you have an individual who works in the department for a couple of months, they will be above the $2,000 limit. So it is not as though you will be missing out on much.
Senator FAULKNER —That is fair enough. Perhaps you could provide the numbers of those from $1 to $2,000—for example, that there were X number below $2,000.
Dr Boxall —Yes.
Senator FAULKNER —I assume you are going to identify them anyway if you do the search. If that saves a bit of work, that is fine.
Dr Boxall —We have a fairly clear idea of what you want, so we will proceed to prepare that material and consult with your offices in the event that we have a—
Senator FAULKNER —We do not like putting a huge amount of unnecessary work on departments. If it takes a bit of time I think we would understand. It may be something that can be looked at in the future. If we start to work through the definitional question we may obviate the need for this. I suspect it is a matter for us as much as it is a matter for you.
Senator ROBERT RAY
—My final general question came out of discussions I had with the Department of the Prime Minister and Cabinet on Wednesday. I have been trying to get hold of whether there are guidelines on ministerial entertainment and hospitality. The indication from PM&C was that it may, in fact, be the Department of Finance and Administration that issues those guidelines.
Mr Gavin —There may well have been some misunderstanding in the discussion that you had with PMC, but I will explain to you what I understand to be the situation. In the ministerial handbook, which is provided to all ministers and which is very similar to the handbook that in fact was provided to you, there is a section in the front which breaks up in a fairly broad functional way what the ministerial and parliamentary services group provides and what the portfolio department provides. As you would know, there are some areas which can be grey and, indeed, travel is one. There is also a document prepared by the Department of the Prime Minister and Cabinet which deals with official hospitality, and that appears as an appendix in the handbook. The discussion on Wednesday appears to have oscillated a little between those two parts of the handbook plus, as I understood it, an internal document that PM&C may have produced. The appendix provided by the department of PM&C dealing with official hospitality essentially says that it is the minister's own call and that it is for each minister and each department to put in place appropriate procedures.
Senator ROBERT RAY —That is what I thought it was, until I had that discussion on Wednesday. So just to confirm: DOFA does not put out generalised guidelines to other departments on this.
Mr Gavin —In respect of ministers that is absolutely true.
Senator ROBERT RAY —I will not pursue this any further. I note that the auditor will be looking at this, Minister. You understand my view is that there should be some universal code to protect ministers. I am not sure who the lead department on that should be—whether it is yours; I doubt it is yours; I tend to think it should be PMC—but I think there should be a universal code. In the end, it protects ministers, and it does not do them any harm. There is a different methodology from department to department and a whole range of different behaviour because of that methodology. Hopefully, at some stage, we will get to address it. I acknowledge that the previous Labor government did not address it—I put that on the record—and I think they should have. There were certainly differences in hospitality claims from minister to minister—I now know that, but they also are within your government, and I think at some stage it should be standardised.
Senator Ellison —No doubt the Auditor-General might have a look at that.
Senator ROBERT RAY —I am sure he will. I think that is the end of general questions.
Senator FAULKNER —I just want to touch on one issue really related to something we spoke about earlier in relation to the morale issue in the department. There have also been, as you would appreciate and know well, Dr Boxall, a handful of pretty well publicised fraud cases in relation to former departmental employees.
Dr Boxall —Two.
Senator FAULKNER —Well, that is a handful—a small handful. I was going to say `a couple', but you can never tell in this business if there is something that you know that we do not know, you see, Dr Boxall.
Dr Boxall —Thanks, Senator Faulkner! Senator Faulkner, you will know everything that we know.
—I am sorry. I was going to say now I know on this issue that there is at least not another case that you know of that I do not. So I appreciate that. I have not thoroughly read the annual report yet, but I assure you that by the next estimates round when we are dealing with annual reports I will have read them. Are the two cases touched on in any general sense at all in the annual report? I could not quickly see it, but I may not have been thorough enough in my reading. Can I just check that. Obviously, we will give the annual report a lot more attention at the next estimates round, as you would appreciate.
Ms Grear —We have one matter which is ongoing and has been ongoing for a period of time, which you are probably well aware of.
Senator FAULKNER —To sum that up, there are two cases, as Dr Boxall says. One is finalised and one is not finalised.
Ms Grear —That is right. One matter is finalised this financial year, with the officer being actually sentenced on 13 September.
Senator FAULKNER —We could go through this chapter and verse but I do not intend to. I am just asking specifically whether this issue is addressed at all in the annual report.
Ms Grear —No, not as such.
Senator FAULKNER —Can the minister, secretary or someone let me know why that was deemed to be the appropriate course of action?
Dr Boxall —My understanding is that the alleged fraud which has been outstanding and is ongoing was mentioned in last year's annual report, so there was nothing further to say on that until it is completed, and that the fraud which has been finalised was done earlier this financial year, so that will be in next year's annual report.
Senator FAULKNER —What about the question of any potential liability?
Dr Boxall —This is covered in the portfolio budget statement, included in the statement of fiscal risks. This is what happens with outstanding cases not just in DOFA but in Defence and elsewhere. It is covered in there, and I am advised that it is in the statement of fiscal risks on page 430 of the Budget Strategy and Outlook, Budget Paper No. 1. It is not included specifically in the PBS, because the main purpose of the portfolio budget statements is to explain requests for funds and this does not require an appropriation. So the short answer to your question is that it is included in the statement of fiscal risks, in the budget papers.
I am informed that on page 104 of this year's annual report there is a general mention. It says:
The department is currently engaged in legal action seeking recovery of funds misappropriated during 1997-98. The quantum of funds which may be recovered is not able to be reliably estimated.
That is the alleged fraud which is ongoing.
Senator FAULKNER —Can I just flag with you that at the next estimates round—I do not want to do all that today—I might raise with you how you deal with the question of performance pay in relation to senior officers in those areas. I am not suggesting in any sense any responsibility, but I wondered how you deal with that issue in general. I might raise that in the next estimates round, in those groups where there might have been unpleasantness.
Dr Boxall —We will be ready to deal with that.
CHAIR —Are there any further general questions?
Senator FAULKNER —I have none.
CHAIR —In that case, we are up to output group 1.1.
—Mr Chairman, can I just clarify that that means that committee members want to ask questions on outcome 1 and then on outcome 3 and not on outcome 2, or not necessarily?
Senator ROBERT RAY —Outcome 2 was the GST unit, and we jumped the gun on that.
Dr Boxall —So people from outcome 2 can return to the office.
Senator ROBERT RAY —Yes.
CHAIR —We are on output group 1.1, Budget/Ownership advice to government, including Employment National.
Senator SHERRY —I have a couple of matters relating to Employment National. Have the departmental officers read the annual report? You have a copy there I notice.
Ms Coombs —Yes, we have.
Senator SHERRY —When did you receive a copy of the report?
Ms Coombs —I will just check the exact dates for you.
Senator SHERRY —While you are doing that, do you or does anyone from the department, representing shareholders, read the report before it is officially released?
Ms Coombs —Yes, we did.
Senator SHERRY —Before it was released?
Ms Coombs —Yes. We received a copy of the draft annual report on 12 October.
Senator SHERRY —Have you looked at page 8 of the report? The reason I draw your attention to that page is it says:
The number of directors meetings including meetings of committees of directors held during the financial year and the attendance of each of the directors is as follows:
Then there is a blank page.
Ms Coombs —There was a printing error in the printing of the annual report. The company have lodged an erratum with the minister, for tabling next week we hope.
Senator SHERRY —Did you read this report before it was released? I think you said you had.
Ms Coombs —In the draft that we received the table was in the report. The table went to the printer but for some reason when the annual report was printed the table was omitted.
Senator SHERRY —In the report, on page 25 under directors remuneration, it indicates that one of the directors was receiving—this is the salary bands—between $310,000 and $399,999 in the year 1999. My assumption is that would have been the general manager?
Ms Coombs —The managing director, yes.
Senator SHERRY —In the column for the year 2000 it shows that one person is receiving between $540,000 and $549,999. Is that the general manager?
Ms Coombs —We understand it to be the former managing director, yes.
Senator SHERRY —That is a very substantial increase in pay—in the order of two-fifths or 40 per cent, isn't it?
—Yes, that is right. As we understand it, it relates to the separation payments of the former managing director under his employment contract.
Senator SHERRY —So the separation payments are included in that pay level for 2000?
Ms Coombs —As we understand it, yes.
Senator SHERRY —Do you have a breakdown of those separation payments?
Ms Coombs —No, we do not. That would be a question for the company. On the basis of previous questions that we have put to them in that regard, they would probably not release that information on privacy grounds.
Senator SHERRY —But the department would be aware of those separation payments as the shareholder.
Ms Coombs —I am not aware of the breakdown of the separation payments.
Senator SHERRY —You are not, but is anyone in the department aware of them?
Ms Coombs —Not that I am aware.
Senator SHERRY —With respect to the abnormal items which go to the cost of restructuring, on page 17 there is a comprehensive list totalling $79 million. Does the department have any knowledge about whether there are any further abnormal items?
Ms Coombs —I believe the company have flagged in their annual report—at the bottom of page 17 at note 5—that as part of the $79 million they have provided for costs of $22 million. It is the last figure of the disaggregated costs for restructuring.
Senator SHERRY —So that is the `$22 million and $76,000 costs provided refer note 14'?
Ms Coombs —Yes.
Senator SHERRY —With abnormal losses and losses of this size, what strategies does the department have to manage the ongoing fiscal risk arising from Employment National.
Ms Coombs —As you would be aware, the government has provided $56 million in the 2000-01 budget in terms of equity support for the company over the next three years. In order, I guess, to manage that underwriting function, the government has also put in place a letter of comfort that has certain arrangements attached to it.
Senator SHERRY —I am aware of the letter of comfort. Isn't that an open-ended letter of comfort?
Ms Coombs —The letter of comfort is, but there are arrangements attaching to the letter of comfort—for example, at the moment, monthly reporting, authorisations of large amounts of expenditure and entering into contracts—that have been put in place by our minister to try to manage that fiscal risk.
Senator SHERRY —That is to manage the fiscal risk, but we do not know what the upper limit of that fiscal risk is, do we?
Ms Coombs —We have made an estimate, and that estimate is $56 million.
Senator SHERRY —That is so far.
Ms Coombs —Yes. We have no information at this stage that suggests that it would be other than $56 million over three years.
Senator SHERRY —As I understand it, the letter of comfort itself does not contain a limit of $56 million.
Senator SHERRY —In what circumstances would that open-ended letter of comfort be withdrawn?
Ms Coombs —That is a matter for the minister. I cannot speculate on that.
Senator SHERRY —Minister, in what circumstances would that open-ended letter of comfort be withdrawn?
Senator Ellison —That is not really my area. I would have to take that on notice and pass it on to the Minister for Finance and Administration.
Senator SHERRY —It is just that there is tens of millions of dollars of loss involved in Employment National and it strikes me as unusual and perhaps discomforting that the letter of comfort is open ended.
Senator Ellison —I do not think I can take the matter any further, Senator Sherry. I will convey your question to the Minister for Finance and Administration.
Senator SHERRY —Was any advice sought from the Australian Securities Investment Commission in terms of compliance with the Corporations Law leading up to the minister directing his board to accept the JN2 contracts?
Ms Coombs —Sorry, would you clarify the question? As far as I am aware, we have not spoken to the Australian Securities and Investment Commission.
Senator SHERRY —At all?
Ms Coombs —At all.
Senator SHERRY —On any matter?
Ms Coombs —On any matter. Sorry, if I could clarify it in relation to a number of questions that you asked about document registrations with ASIC. We did talk to them in that regard.
Senator SHERRY —Has ASIC raised any issues with the shareholder?
Ms Coombs —Not that I am aware.
Senator SHERRY —No matters at all?
Ms Coombs —Yes.
Senator SHERRY —You have said you raised some issues that I had raised and perhaps other senators might have raised in respect of ASIC. Have you received a response to all of those?
Ms Coombs —Yes, we did and we used them in our answers to the questions on notice for 2 May.
Senator SHERRY —Given the company's liabilities exceed its assets by $60.2 million, I assume, given your previous answer, that ASIC have not issued any advice about whether the company should continue trading or not?
Ms Coombs —Not that I am aware.
Senator SHERRY —You say that you are not aware. No other officers are aware of any such advice?
Ms Coombs —No. I would point out that the Australian National Audit Office have signed off the accounts on a going concern basis.
—In other words, they are satisfied that that criterion was met.
Senator SHERRY —Certainly my central concern now is that the company recorded a loss of $92 million, it has closed 50 offices, retrenched 1,000 staff and written down assets by $13 million. The abnormal items are $79 million. These are very large sums of money, and it is supported by the open-ended Commonwealth credit through the minister's letter of comfort. Those are the ongoing concerns I have.
Dr Boxall —We appreciate that. As for the issue of Employment National, just to recapitulate, the minister for finance is the sole shareholder of Employment National. They entered the Job Network tender round in late last year and they did not win nearly as much business as they thought they would. Indeed, they won very little business.
The government removed the board. Since then the Department of Finance and Administration has supplied a number of directors to Employment National. The directors supplied by the Department of Finance and Administration and the director who works in the Department of Transport and Regional Services have managed to stabilise the company. So the government, having made a decision for it to continue to trade and to continue to operate the company—which they have announced—say the officers, through their duties as the directors of the company, have managed to stabilise the company and to still manage it and that we are confident that this will be managed within the provision in the budget, namely the $56 million ongoing. We have a situation where the government has made a decision to continue with Employment National and we have responded to that decision by assisting to manage it through this period such that it is now consolidated as a smaller operation. Very shortly, no doubt, the interim board will be replaced by permanent directors and the company will continue to operate with the protection which was in the last budget of the $56 million over three years.
Senator SHERRY —Just following on from that Dr Boxall, you mentioned the appointment of permanent directors. Do you have any information about when those appointments will be made?
Dr Boxall —That is under consideration by the government and I would anticipate an announcement shortly. But, as you appreciate, the timing of that announcement is for the minister and the government.
Senator SHERRY —This is a company that was established by this government within the employment structure that this government in fact created—that is correct, isn't it?
Dr Boxall —That is correct.
Senator SHERRY —Thank you, I have finished with Employment National. I have a couple of questions relating to monthly financial statements. I have here a copy of Minister Fahey's media release for the Commonwealth government monthly financial statements for the months of July, August and September of this year. My understanding is that up until May of this year the department web site posted the monthly financial statements for each month—is that correct?
Mr Bartos —For the first half of the first year of accrual budgeting, statements were published quarterly, and thereafter monthly.
Senator SHERRY —When did the monthly postings begin?
Dr Boxall —January was the first month.
Senator SHERRY —And they continued through until May of this year?
—That is correct. And then of course the June monthly statement is the final budget outcome.
Senator SHERRY —Yes. But then we had the July, August and September statements released as one on, according to the date on this press release, 16 November.
Dr Boxall —That is correct.
Senator SHERRY —Have you moved to quarterly rather than monthly?
Dr Boxall —No; we are still preparing monthly statements. Of course as you would appreciate there are pros and cons about whether an organisation would proved a monthly statement for July, given that it is the first month of the year; nevertheless, we did do that. We produced ones for July, August and September and the government decided to publish them on 16 November.
Senator SHERRY —So there was not a monthly publication for those three months?
Dr Boxall —No, because the government decided to consolidate and put them out on 16 November, but we still produced the monthly statements.
Senator SHERRY —So it was a government directive to publish those three months on a quarterly basis?
Dr Boxall —Not so much a government directive; a government decision.
Senator SHERRY —Can I have an explanation for this government decision, Minister?
Senator Ellison —Can I say at the outset that we would anticipate that these statements will be published monthly. The first quarter of this financial year saw the transition of the new tax system, and of course that has been a big transition, a one-off, if you like. The Treasurer and the minister for finance both thought it was wise to let that transition be bedded down so that the estimates for tax revenue might be more reliable as well. Therefore it was thought best to publish the reports at the conclusion of that quarter.
Senator SHERRY —My understanding is that there are monthly figures published for GST collection to date. Is that correct?
Senator Ellison —I think that is up to Treasury.
Mr Prior —There is a note to the monthly accounts which refers to GST, but I am not aware of any other publication.
Senator SHERRY —I may be wrong on that. I will double-check it with Treasury. It is intended to go back to monthly publication. When will we be reverting to the monthly publication of financial statements?
Dr Boxall —Huge progress has been made in terms of preparing the monthly statements and the monthly consolidated accounts, such that this year the final budget outcome was prepared and printed and the whole box and dice done within three months—within 90 days of the end of the financial year—which is a huge reform which DOFA and the agencies, working with the ANAO, because it all had to be audited, have managed to achieve. In terms of the monthly statements, we are able to get those prepared well within 30 days of the end of the month. As I say, the actual decision as to when to put it out is a government decision. What I am saying to you is that, because we have made major advances in this area over the last 18 months, working with Treasury and the other agencies, we are able to have this material ready within 30 days.
—That is useful information. I accept that you are able to do that within 30 days, and obviously accurately, but the important issue is the publication of those figures on a monthly basis.
Dr Boxall —That is correct, Senator. We have noted your questioning and we will relay your questioning to the Minister for Finance and Administration.
Senator SHERRY —Are you able to throw any further light on when monthly publication will be resumed, Minister?
Senator Ellison —Immediately.
Senator SHERRY —I now turn to some matters relating to Telstra. Page 122 of the Mid-year economic and fiscal outlook lists proceeds from the asset sales program. In the first column, for the year 2000-01—$6.305 billion—what asset sales does that include for that year?
Mr Bartos —Proceeds from asset sales is under cash received—investing activities.
Senator SHERRY —It may be better illustrated elsewhere in the document, but there is not an index and I could not find it easily. I have just used this figure.
Mr Bartos —That will include a range of asset sales. You indicated that your line of questioning was in relation to Telstra—
Senator SHERRY —I will get to that in some detail.
Mr Bartos —and does include an estimate in relation to Telstra and anticipated future sale of Telstra.
Senator SHERRY —That figure would obviously include receipts in respect of T2 sales for 2000-01, wouldn't it?
Mr Bartos —Yes, Senator.
Senator SHERRY —I am just looking at that year. It would not include any figure for the government's proposal to sell the next tranche of Telstra, would it?
Mr Bartos —Not in 2000-01, no.
Senator SHERRY —That would be in 2001-02 and beyond?
Mr Bartos —There is inclusion in later years. The government has determined that it does not wish to release the actual detail of the proposed timing of the sale of Telstra.
Senator SHERRY —There must be some inclusion in 2001-02. I am not asking—certainly not at this point in time—for the timing of that sale. I am not asking for the precise figure, but is there a quantum in that figure of $9,800 million in 2001-02?
Mr Bartos —There is a range of asset sales encompassed by those figures.
Senator SHERRY —I understand that.
Mr Bartos —We cannot indicate whether or not there is an estimate for Telstra in that year.
Senator SHERRY —What about the following year—2002-03?
Mr Bartos —Given the size of that number, this committee can draw its own conclusions but—
Senator SHERRY —I am asking you. Is there—
—As with the previous answer, we cannot actually talk about what years there might be an assumption of the sale of any further tranche of Telstra. It has been a deliberate decision by the government that it does not wish to reveal the details of the proposed timing or any estimate of proceeds of sale of Telstra.
Senator SHERRY —We will get to the issue of timing and more detailed figures. Does that figure of $16.6 billion include receipts from the sale of Telstra? It must do, mustn't it? Yes or no?
Mr Bartos —Again, all I am saying is that we cannot confirm where there are estimates of Telstra. We can indicate to you that there are assumptions in the forward estimates that there will be a further sale of Telstra. As I said earlier, given the size of that number, the committee can draw its own conclusions.
Senator SHERRY —I am not asking you to ask me to draw my own conclusions; I am asking you—
Mr Bartos —I cannot say in what years there is an estimate of Telstra.
Senator SHERRY —Why not?
Mr Bartos —Because the government has decided it does not want to publish that information.
Senator SHERRY —We will get to details a little later—I am not asking for that at this point in time. This seems to me to be a straightforward issue. It must include the sale of Telstra.
Senator Ellison —OASITO might be able to assist you with some aspects of the questions that you have been asking. I think it has been made clear what the government's position is. If you want to go into further detail on this, OASITO might be the output to ask.
Senator SHERRY —What I am going to is the bottom line budget aggregates. There may be some matters to deal with in respect of OASITO later on. These are bottom line budget aggregates that go to, in the years we are looking at, some $26 billion, which is no small change. This has a critical impact on the budget bottom line.
Dr Boxall —My understanding after consulting with Mr Bartos and others is that the government has not made a public statement about its assumed timing—
Senator SHERRY —Their timetable?
Dr Boxall —Yes. That is my understanding.
Senator SHERRY —I understand that.
Dr Boxall —Given that the government have not done that, we cannot do it for them.
Senator SHERRY —I understand that.
Dr Boxall —Mr Bartos has said that he cannot confirm or deny in which year the assumed proceeds of asset sales is in the budget. But he has told you—and you already know this, I think—that the budget is prepared on a no policy change basis and the government's policy remains that it proposes to sell the rest of Telstra. That is reflected in the forward estimates. With respect to the issue about the impact on the bottom line, can you tell me which page you are on?
Senator SHERRY —I am on page 122. I know this is cash flow and I know there are other tables in regard to the bottom line. I have gone to this because it is easier to use.
—Certainly. If the government implements its program to sell Telstra, there is no question that it will have a major increase in the cash inflow. However, it is not likely to have a major impact on fiscal balance because, as you know, the underlying cash position is net of the proceeds of asset sales, among other things, and the fiscal balance does not include the proceeds of asset sales. So yes, it does have an impact on the government's cash position, but the impact on the underlying cash position and on the fiscal balance is somewhat less. It goes to an issue which you have queried before, which relates to the impact on dividend flows and public debt interest.
Senator SHERRY —Yes. Am I right in drawing the conclusion that that figure in the year 2002-03 of $16,600,000,000 in asset sales includes some moneys from the sale of Telstra?
Mr Bartos —Senator, we cannot answer that.
Senator SHERRY —Why can't you answer it?
Mr Bartos —I will tell you why. You have accepted that we cannot reveal the details of the timing of the sale of Telstra.
Senator SHERRY —I have not accepted that.
Mr Bartos —I thought you said earlier that you did.
Senator SHERRY —No, I have some other questions on this.
Mr Bartos —The government has indicated that it does not want to reveal the details of the timing of the expected future sale of Telstra. That also means that we cannot answer a question year by year. We cannot go through and say, `Is it to be in 2000-01, 2001-02 or 2002-03?' until you hit the jackpot. It just does not work like that.
Senator SHERRY —I think you can because you are not revealing the precise date of sale.
Senator Ellison —But you are looking at out years and the question of the timing of the sale.
Senator SHERRY —No, we are not.
Senator Ellison —The officials have explained their situation to you and you can really take it no further. You and your party could assist greatly with the timing of the sale of Telstra. You could have a great deal of influence on that. Mr Tanner I think has a view which supports the government.
Senator SHERRY —So the department is saying that you cannot confirm that there are moneys from the sale of Telstra in the years 2001-02 or 2002-03?
Mr Bartos —We cannot comment on that.
Senator SHERRY —I am not asking for the dates or any detail at this stage.
Mr Bartos —We can confirm that there is an estimate for the sale of Telstra in the forward estimates and we have already done that.
Senator SHERRY —And we have three years of forward estimates—2001-02, 2002-03, 2003-04. Is it in any of those years.
Dr Boxall —It is in some of those years, but why do we not take it on notice, Senator?
Senator SHERRY —No, I am not letting you get away with taking it on notice.
Dr Boxall —We are advised that the government does not want to announce publicly its proposed schedule for the sale of Telstra.
—I understand they have said that.
Dr Boxall —That is the government's position.
Senator SHERRY —Yes, I understand they have said that, but I do find it quite extraordinary that you cannot confirm within those figures that there is an amount—whatever the amount may be, which we have not got to yet—for Telstra sale assets.
Dr Boxall —But we have confirmed that it is in those figures. We just cannot confirm which year it is in.
Senator SHERRY —It is in one of those three years.
Dr Boxall —It might be spread over two years or three years.
Senator SHERRY —I am assuming it is over the three years. Am I correct or not?
Dr Boxall —It is over three years, but it does not mean to say that there is a piece in every year.
Senator SHERRY —Thank you. In a very roundabout way, finally we have an answer to the question.
Dr Boxall —With respect, Senator, I think we answered that a while ago.
Senator SHERRY —I would not have thought that that question was difficult to answer. I am going to some other issues on which I anticipate greater difficulty.
Dr Boxall —With respect, I think that we thought that you wanted us to identify which year—
Senator SHERRY —Yes.
Dr Boxall —And we cannot do that. We do not have any problem in saying that it is in the three years, but we cannot tell you which of the three years and how much of the three years.
Senator SHERRY —Let us go to another matter relating to this. Have you got a copy of Budget Paper No. 1 for the year 1998-99?
Dr Boxall —No, but I remember this issue.
Senator SHERRY —I will test your memory. Would you like a copy?
Dr Boxall —Yes, please.
Senator SHERRY —You now have a copy of page 2/39, budgetary implications of the sale of Telstra, table 11, budgetary impact of the sale of two-thirds of Telstra 1998-99, and then the out years and the details are given there: sale costs, net income. That detail was included in the 1998-99 budget papers. Why can't it be produced with respect to either the mid-year economic and fiscal outlook or the last Budget Paper No. 1?
Dr Boxall —The answer is simple, and I do believe this has been dealt with before. It has also been dealt with when Mr Tanner asked the Minister for Finance and Administration on notice on 3 October 2000 a similar question. The answer is, yes, this material can be provided.
Senator SHERRY —Good.
Dr Boxall —The next bit is that the government decided not to provide it.
Senator SHERRY —My next question is to the minister. Minister, it was provided in 1998-99 and I have given the secretary a photocopy of the information provided. Why isn't it being provided on this occasion?
—I will take that on notice and take it up with the Minister for Finance and Administration.
Senator SHERRY —Surely, Minister, you have got a charter of budget honesty and you have stressed the need for transparency and disclosure of appropriate information with respect to all budget matters. In this case you provided these figures in respect of Telstra in 1998-99 consistent with the charter of budget honesty. Why aren't they being provided on this occasion?
Senator Ellison —The further advice I have is that in relation to the budget papers for 1998-99 it was deemed appropriate to include the information on a one-off basis, and the government has decided that it would not be useful to provide this information for the periods since. As I have said, as to the reasons for that, I would take that up with the minister for finance. But circumstances do change and you have prevailing markets and the like which can influence the decision of governments. I am not saying that is the reason, I am just giving you my undertaking that I will take it up with finance minister and get back to you.
Senator SHERRY —I hope you are not using the excuse of prevailing markets, because I do not seem to recall any criticism at the time these figures were published in 1998-99 from the markets about this information being made public. And I do not seem to recall any criticism of the information being made public having an adverse impact on the sale.
Senator Ellison —I stress that my preface was that that was not necessarily the answer at all but just an indication of how times can change.
Senator SHERRY —There must be reason for the times changing. This is less information being made available to the parliament and the public, isn't it?
Dr Boxall —The point, which I think we discussed at the last Senate estimates, is that this was only published on a one-off basis on 1998-99. For example, it was not published, as you probably know, in 1997-98 or any year up to that. It was published once in 1998-99 and it was not published in the two budgets since. I am just recapitulating the facts. I have answered your question.
Senator SHERRY —I understand that, Dr Boxall. The information there related to T1 and T2—fine; that was what was on the table of parliament and was subsequently approved. We now have as government policy the sale of the remainder of Telstra, and yet we do not have the same budgetary information.
Dr Boxall —That is correct. You had a table on 1998-99 and you do not have a similar table in this year's budget or last year's budget.
Senator SHERRY —I have not finished with this matter yet, but I have a couple of other matters that are related to it.
Senator BRANDIS —Dr Boxall, do you accept that the provision of budgetary information in general is one thing but the provision of budgetary information which might contain market sensitive information is another matter, and that it is perhaps an exception to the general principle?
Dr Boxall —I do, Senator Brandis.
Senator BRANDIS —Was that what you had in mind a moment ago when you were answering Senator Sherry's questions concerning the possible future sale of Telstra?
Dr Boxall —That is correct, Senator Brandis.
—I did not want to rehash this point. Dr Boxall, are you aware of any complaints from any persons involved in the sale process of T1 and T2 about the publication of that material in the budget document 1998-99 having an adverse impact on the sale?
Dr Boxall —That is an issue for the Office of Asset Sales and IT Outsourcing. As I mentioned in an earlier exchange with Senator Faulkner, I have nothing to do with the implementation of that.
Senator SHERRY —I understand that, but you are head of the department and Senator Brandis has raised the issue of commercially sensitive material. I understand the argument; I do not agree with it on this occasion. I am asking you whether you are aware of any advice about the provision of that information in 1998-99 adversely impacting on the sale of T1 and T2?
Dr Boxall —I am not aware of any advice with respect to table 11.
Senator SHERRY —Minister, could I ask you the same question: are you aware of any advice or any view at all that the publication of that material in 1998-99 had an adverse impact on the sale of T1 and T2?
Senator Ellison —I would not be aware of any advice of that sort even if it were in existence. I am not aware of that, Senator Sherry, but I will take it on notice.
Senator SHERRY —Listed on page 26 of the Mid-Year Economic and Fiscal Outlook is the summary of Commonwealth general government cash flow. What is the difference between the headline cash balance and the underlying cash balance?
Mr Bartos —The underlying cash balance does not take into account the effects of sales of financial assets.
Senator SHERRY —I thought that might be the case.
Mr Bartos —Asset sales?
Senator SHERRY —Yes, asset sales. I am back to asset sales again—it did not take me long!
Dr Boxall —To be absolutely correct, the difference between headline cash and underlying cash is net advances, but that is dominated by the proceeds from the sale of equity, such as in Telstra.
Senator SHERRY —How is this four-year total different from the total figure identified from proceeds from the assets sales program on page 122 that I referred to earlier? What accounts for the difference?
Mr Bartos —This is a summary table of the more detailed cash flow information provided later in the Mid-Year Economic and Fiscal Outlook document.
Senator SHERRY —I was referring to the asset sale component on page 122. Dr Boxall touched on it when he referred to it being dominated by asset sales.
Dr Boxall —If I can attempt to paraphrase your question, the difference between headline cash and underlying cash is net advances, which is dominated by proceeds of the sale of assets, such as shares in Telstra. However, there are other issues in there: for example, if the government were to give an advance—in other words, a loan—to a GBE or to give—
Senator SHERRY —Like Employment National?
Dr Boxall —That was an equity injection, if I recall rightly.
Dr Boxall —Or if the government were to give a loan to the community. For example, at the state government level, loans to farmers by state governments is a net advance to farmers. That is the difference.
Senator SHERRY —But the sale of assets is the dominant feature?
Dr Boxall —Definitely.
Senator SHERRY —Can you provide me with a list of the asset sales for each of those years—not the quantum, not the timing, but a list of the asset sales?
Mr Bartos —We can take that on notice.
Senator SHERRY —So you will be able to answer—
Mr Bartos —Basically the answer is yes.
Senator SHERRY —Can you provide the committee with a reconciliation of the difference between the underlying cash balance and the headline cash balance for each year for the items above $5 million in any one year?
Mr Bartos —Sorry, I did not quite understand what you were looking for in that last part of the question with respect to items. We can provide a reconciliation between headline and underlying cash for the Commonwealth.
Senator SHERRY —I will provide you with further information on notice. I have a suggested format that might be helpful to the department. So I will give that to you on notice. I would appreciate that. What assumption has the Department of Finance and Administration made for the retirement of Commonwealth debt from the sale of the remaining balance of Telstra?
Mr Bartos —The assumptions about retirement of debt are actually made by the Australian Office of Financial Management. We have a role in the quality assurance of the estimates, as you know.
Senator SHERRY —Yes.
Mr Bartos —The assumptions in relation to debt take account of the expected proceeds from the further sale of Telstra, in accordance with government policy.
Senator SHERRY —So it is the total proceeds from the remaining sale of Telstra to be devoted to the retirement of debt?
Mr Bartos —The issues of retirement of debt are actually much more complicated than that. They have to be related to when it is appropriate to retire, what tranche of debt, what order and so on.
Senator SHERRY —I understand that. I am just going to this general principle that we know that there is the sale of Telstra in those three out years. You will not tell me what year it is in, but we know it is in there—billions of dollars. We have to put a pin in the paper and try to pick out the particular year, but we know it is in there. On the assumption we are operating under, have the budget papers been prepared on the basis—and we know that the sale is in there—that the sale proceeds will be used to totally retire Commonwealth debt?
—There have to be a lot of caveats on this. The issue has to do not with retirement of debt per se—the government is looking at reduction in net debt rather than reduction in debt per se. That has been the statement that has been made by the Treasurer. The Treasurer has also indicated that in general terms the result of the further sale of Telstra will be used to reduce debt. But there are all the caveats that you have to apply to that, in terms of the timing of retirement of debt, what other debt instruments might be appropriate to issue, and so on.
Senator SHERRY —I understand those caveats. What I am getting at is: has there been allowance made in the forward estimates for a social dividend?
Dr Boxall —The issue is that any surplus plus the proceeds of asset sales is used to retire debt—and it is actually the retirement of net debt, as you understand, because it may well be that the Commonwealth has receipt of a large amount of funds and it may not be appropriate to retire debt at that time. That is a decision for the Office of Financial Management. In the event that the government decided to pay a social dividend or to have an expenditure program—which has been talked about in the media—that would show up as a policy measure on the expense side. So if it is not in here as a policy measure then there has been no decision taken. In other words, as you know, you cannot just take the proceeds of asset sales and use it to fund expenditure without showing an increase in the expenses line, which of course will reduce your potential surplus.
Senator SHERRY —And it does not that at this point in time?
Dr Boxall —No. For example, when the government came in in 1996 there was the commitment to have the Natural Heritage Trust, which was shown as a separate expenditure line.
Senator SHERRY — And for example, the Natural Heritage Trust was funded by part of the moneys from the sale of T1 and T2 but at this point in time it is not funded on an ongoing basis by the sale from the remainder of Telstra shares. That is correct, isn't it?
Dr Boxall —These are important conceptual issues. In the presentation of the budget, the two key indicators are the underlying cash balance and the fiscal balance. Those are an ongoing concept and you cannot boost or decrease the balances through the proceeds of asset sales. The impact of asset sales on the underlying position is more complex and it has to do with the loss of a dividend stream vis-a-vis public debt interest. That table to which you referred earlier was an estimate of that. To the extent that the future sale of Telstra would generate some sort of positive benefit and hence boost the underlying cash position or the fiscal balance, then obviously that would be money available for the government to fund any sort of expenditure they like or alternatively run a higher surplus. But, as you know, that is of nowhere near the same order of magnitude as the proceeds of the asset sales. It is the difference between a stock and a financing item and an ongoing expenditure item. But even if the government or any government were to say, `We want to have a special program,' for even just a year or two, it would still have to be shown as an expense.
Senator SHERRY —You were actually leading into the next couple of questions.
Dr Boxall —Just to wrap up that answer, the financial assets are excluded from the bottom line—I think we have been through that—and other assets which are non-financial assets do actually impact above the line.
Senator SHERRY —The Office of Financial Management's annual report indicates, on page 150, that in the year 1999-2000 it cost $6.4 billion to repurchase $6.1 billion worth of debt—a premium of five per cent, approximately. What are the assumptions in the budget papers for the repurchase of Commonwealth debt flowing from the sale of the balance of Telstra?
—That is, in effect, what the calculation is on the impact of the public debt interest and what the assumptions are of the phasing of the retirement of debt which give rise to that. That is done by Treasury. They do the calculations of PDI and give them to us. They have to discuss with the Office of Financial Management what are sensible assumptions. Obviously, if there is an issue of bonds maturing in 2005, somebody has to make an assumption about whether you retire that in 2005 or whether you retire it a bit earlier. One would need to make some sort of working assumption on market conditions and things like that.
Senator SHERRY —You mentioned that Treasury does the calculations. Do you have knowledge of those calculations?
Dr Boxall —We have a quality assurance role on all calculations that go into the budget documents, including revenue calculations. I do not think we would have a detailed knowledge. The quality assurance would be to what extent Treasury have followed appropriate procedures and, in a sense, thought through all the things that you are asking. Once we had satisfied ourselves—and in this case with Treasury we did satisfy ourselves—that they had thought through all the implications and the issues, that was the extent of our quality assurance. We do not redo the calculations for them. We do not discuss every possible assumption. The question is whether the budget estimates give a reliable indication to parliament and to the public. As long as we are satisfied that Treasury have done sufficient work, that the PDI estimates are a reasonable, reliable and not a misleading estimate, that is it.
Senator SHERRY —In respect of the sale of Telstra—and you have touched on the issue of the loss of dividends and the reductions in debt interest payments through the debt retirement—that analysis has been done, has it, by Treasury?
Dr Boxall —They would have to do that, Senator, to make the estimate of PDI.
Senator SHERRY —You cannot provide me with that analysis?
Dr Boxall —We are not resisting. We are just saying that we cannot because the government decided not to provide it. The government have reasons for not providing it and we are taking that on notice. Having made an overall judgment that it is not in the interests of the Commonwealth, because of various issues, they decided not to provide it. We simply cannot provide it.
Senator SHERRY —We do know that it is being done but it is not being provided.
Dr Boxall —Exactly, and we have taken it on notice as to why.
Senator SHERRY —Regarding the process of the department of finance deciding to include new policy estimates in the Commonwealth's forward estimates, I think we have had a discussion. I am not sure whether it was with me, but I certainly recall a discussion at these hearings. There was a cabinet submission, final commitment was detailed, the timing of the commitment was specified and it was signed off by cabinet. That is correct, isn't it?
Mr Bartos —The issue is that, where a decision is taken by government, that is then reflected in the estimates as a measure and those measures are disclosed. The timing of those measures is generally specified by government at the time it takes the decision.
Senator SHERRY —We do know the government has taken a decision to sell the remainder of Telstra. That is correct, isn't it?
Mr Bartos —Yes, Senator, it is government policy.
—When was the department of finance informed to adjust the estimates for including the remainder of Telstra?
Mr Bartos —It has been in there for a very long time, since the announcement was made. So it has been in not just the most recent Mid-Year Economic and Fiscal Outlook but in past budget documents as well.
Senator SHERRY —Not in all past budget documents—we are talking about the remainder of the sale of Telstra.
Dr Boxall —My understanding is that the proceeds from the sale of Telstra have been in the forward estimates ever since the government was elected.
Senator SHERRY —Including T1 and T1—are you saying the total?
Dr Boxall —Yes.
Senator SHERRY —Okay. In relation to asset sales more broadly, what authority does the department of finance need to change the estimates?
Mr Bartos —There needs to be a decision by government in order to change estimates. It is the same authority as applies to any estimates change. Where there is a decision by government to sell an asset, that will translate into a change in the estimates.
Dr Boxall —Or a decision not to sell an asset which is in the forward estimates.
Senator SHERRY —A decision by cabinet and announcement by the appropriate minister usually—that is correct, isn't it?
Dr Boxall —Yes.
Senator SHERRY —Dr Boxall, have you looked at the findings of the Besley report?
Dr Boxall —No.
Senator SHERRY —You haven't?
Dr Boxall —No.
Senator SHERRY —Have you, Mr Bartos?
Mr Bartos —In broad terms, yes, and certainly our people have.
Dr Boxall —Sorry, I might say I have actually had a summary of the findings given to me.
Mr Bartos —The issue of that report is disclosed in the Mid-Year Economic and Fiscal Outlook document under the statement of risks on page 158. The statement of risks starts on page 156. On page 158, under the heading `Asset sales—Telstra', there is an indication in relation to that report. The statement of risks, in broad terms, starts on page 156 and the detailed reference to the committee report is on page 158.
Senator SHERRY —Mr Besley's finding was in part that there were still some significant gaps in Telstra service in rural and remote areas. That is in part in that report—isn't it—Mr Bartos?
Mr Bartos —Yes.
Senator SHERRY —In light of the Besley report and the government's response, why hasn't the removal of the remainder of Telstra been removed from the forward estimates?
Dr Boxall —Because the government's policy is still to sell it.
Senator SHERRY —So you are still acting on explicit government policy to sell Telstra?
Senator SHERRY —As a consequence of the Besley report, has the timetable for the sale of Telstra changed?
Dr Boxall —We are not aware of any change in the timetable in the forward estimates. In other words, the timetable underlining the forward estimates is the same now as it was before the Besley report.
Senator SHERRY —So what was the sense of the Besley report? Nothing has changed.
Mr Bartos —The issue there is that the government has indicated what its policy is in relation to both the sale of Telstra and the Besley report. As the statement of risks details, the government is committed not to introduce legislation for sale until its plan of action in relation to the independent telecommunications service inquiry into the adequacy of service levels has been fully considered and made public. But the detail of how and when the government intends to do that is really for another portfolio to answer.
Senator Ellison —Senator Alston is the relevant minister.
Senator SHERRY —We can go to Senator Alston about these matters as well, but I am concerned about the forward estimates. Mr Boxall has just assured me that there has been no change in the forward estimates at all in respect of the sale of the remainder of Telstra.
Dr Boxall —That is correct. There has been no change in the government's policy over the last few months.
Senator SHERRY —There has been no change in the time frame set?
Dr Boxall —Not that we are aware of.
Senator SHERRY —I am not blaming you. It is government policy, which you have to act on.
Dr Boxall —That is correct.
Senator SHERRY —Minister, which was the sense of the Besley report? The time frame has not changed.
Senator Ellison —There has been mention of other ministers being involved here, and the Besley report is not just confined to this portfolio. In fact it provides advice which could benefit other portfolios. It is an across government matter in some respects. The Besley report is something the government will consider. It is not a question of saying that, because you have got this one aspect to the matter that is being dealt with the way that we deal with the forward estimates, there is no point to the Besley report. There are other things in the Besley report which will no doubt be of assistance to the government.
Senator SHERRY —Senator Alston said in a media release of 12 October 2000:
'The Government will not introduce legislation to sell the Commonwealth's remaining shareholding in Telstra ...'
That is a quote of part of that press release.
Dr Boxall —That is consistent with the statement of risks on page 158 to which you and Mr Bartos referred. It says it explicitly here that:
The Government has committed not to introduce such legislation until its plan of action in relation to the independent telecommunications service inquiry into the adequacy of service levels has been fully considered and made public.
—Yes. I am glad you have raised that. Obviously that response by government will take some time. Whatever the time is we do not know yet, but there will be some time line to that. I am just puzzled as to why then, Mr Boxall, you have not changed the estimates in any way in response to the sale of Telstra.
Dr Boxall —Because the government's policy as to the sale of Telstra and the government's timetable for the sale of Telstra have not changed. In the event that, after the government considers the Besley report fully, they decide to either bring forward or push back the timing of the sale of the remainder of Telstra then we will change the forward estimates.
Senator SHERRY —There was a report in the Age of 13 October 2000 indicating that cabinet has put off the sale of Telstra. Minister, can you confirm whether that is correct or not?
Senator Ellison —I am not aware of cabinet's deliberations on this matter and even so I am not in the habit of divulging what cabinet is up to.
Senator SHERRY —I am not asking for the inner workings of cabinet. I understand the protocols. But are you aware of any statement by government putting off the sale of Telstra? I referred to the release by Senator Alston a little earlier.
Dr Boxall —We are not aware of any decision to that effect, but if there were a decision to that effect it would have been recorded as a cabinet decision, it would have come down to the Department of Finance and Administration and we would have acted accordingly and adjusted the forward estimates.
Senator SHERRY —What is the latest date by which the additional equity in Telstra would need to be sold to remain consistent with the budget forward estimates?
Dr Boxall —I think, with respect, that goes to very detailed timing—
Senator SHERRY —No, it does not, with respect. I am not asking you when Telstra will be sold. What I am asking is what is the latest date in order to ensure consistency with the forward estimates.
Dr Boxall —That is definitely a question for the office of asset sales.
Senator SHERRY —Oh!
Dr Boxall —No, seriously, they are the ones who have to work things out. There are all sorts of things with which you are familiar. For example, you have to hire consultants, you have to have data rooms, you have to prepare prospectuses and you have a whole of the procedures like that. They are the ones that can advise you on how long that will take.
Senator SHERRY —Okay, I will go to them on that matter. There are some remaining matters but, given the time, I will place them on notice. Thank you.
CHAIR —We will now take a short break.
Dr Boxall —Can I get an indication of when the lunch break will be?
CHAIR —We did flag 1 to 2, but it could be as late as perhaps a quarter past 1.
Senator Ellison —Mr Chairman, have we finished with output group 1.1, Budget/ownership advice to government?
CHAIR —Yes, we have finished with that. We will resume after the break with output group 3, ministerial and parliamentary services.
Proceedings suspended from 11.36 a.m. to 11.54 a.m.
—The committee will resume with its examination of output group 3.1, ministerial and parliamentary services.
Senator ROBERT RAY —This morning's Sydney Morning Herald reports that they have been quoted a cost for their FOI request in relation to Mr Reith's telecard of $92,550. Is that confirmed?
Mr Gavin —I have not seen the newspaper report but, if it is as brief as that, it is certainly an incomplete rendition of my letter. It said that to meet the full request would cost $95,000 but, if they modified it in a certain way, which I am happy to explain, we could meet it for in the order of $2,000 or $3,000.
Senator ROBERT RAY —Please explain.
Mr Gavin —I need to be fairly careful, as you would understand, because there are provisions in the Freedom of Information Act under which one does not divulge the identity of an applicant or indeed of the request. We may have been through that some years ago in relation to yourself. Supposing there were a request for all the documents held by the department relating to the apparent misuse of the telecard, then that would include a set of documents supplied to us at the time of the departmental inquiry setting out all the numbers from which the telecard was used and to which the calls were placed. The advice we have had is that, to fulfil our obligations under the privacy provisions of the FOI Act, it would be desirable/required that we consult with each of the people at the end of those telephone numbers.
Senator ROBERT RAY —Including those overseas?
Mr Gavin —Yes, indeed. In fact, one of the central aspects of a case that you took great interest in before with the Herald and Weekly Times was one that related to overseas travel. The estimate of the cost for doing that was of the order of $95,000, the idea being that people have a right to preserve their privacy from anyone who suddenly takes it on themselves to make a vexatious type of call linking the person to the alleged misuse of the telecard.
Senator ROBERT RAY —And isn't it the fact that this is why quite often, if we ask a question on notice either through the formal parliamentary processes or here, there is not a requirement for third-party consultation and it is a much cheaper method for the department?
Mr Gavin —I am not comfortable in giving a general view on that. I could give a particular view and that is that, under a succession of attorneys, there has been a view that it is sensible to apply the provisions and the principles of the Freedom of Information Act, even with respect to a question such as yours raised in the parliament. Being an act of parliament, it reflects the will of the parliament, even though there is no obligation.
Senator ROBERT RAY —I will have to check the evidence in another context—when that was explained to me at an estimates committee about the difference between FOI and questions on notice. What you are saying is that in a similar set of circumstances you can negotiate a lesser fee and excise those elements that require extensive third party consultation.
Mr Gavin —Indeed the act requires you to do so. My understanding is that the newspaper reports omitted reference to the way my letter then went on to talk about how they could modify their request.
Senator ROBERT RAY —I cannot recall them saying that, but they did give some other details as to the amount of files involved.
—Is it true that the department either misled the Prime Minister or the Prime Minister's office about the Prime Minister's telecard account or led him or his office to believe that the account was going to be a zero figure instead of the $514 that appears in the answer to my question on notice?
Mr Fisher —The department advised the Prime Minister's office on 26 October that Mr Howard's phone bill was $514.85 in 1996 and zero in the following years. That was done in the process of compiling the responses to your question. The 1996 payments—and I think this is where the public interest arises—were in respect of use of the card in late 1995 and early 1996, before Mr Howard became Prime Minister. We confirmed that with Telstra last night. The department has not paid any telecard bills for the Prime Minister since March 1996.
Senator ROBERT RAY —Minister, on the radio this morning—and I am quoting directly and I think accurately—the Prime Minister said:
I don't know what you do in situations like this - you ask the department - you get it in writing, you use it publicly, then they come along with a different figure ...
That did not happen, did it?
Senator Ellison —What happened was that you had a figure which was for the period 1996-99 and it had potential for misunderstanding, because people would have looked at it and thought that it was a figure that could have crossed those three years and contradicted what the Prime Minister had said. What the Prime Minister said was that, since being Prime Minister, the situation was different from what it had been in the past. So you had a situation where the figure could have been construed as being one which was spread over three years. You will note that, from time to time, payments are footnoted as relating to a previous period. As I understand it, some of the payments here relate to the period prior to 1996—according to what Mr Fisher has said, late 1995. That often happens in tabling. We make it very clear that in tabling some of the figures that you are looking at relate to not only that period but a previous period. There has been a misunderstanding of that figure; people have taken it to be a figure that was across the three-year period.
Senator ROBERT RAY —There is no such misunderstanding with me, and with respect, Minister, you have answered a question that I have not asked. The Prime Minister said on the Neil Mitchell program this morning:
... you get it in writing, you use it publicly, then they come along with a different figure ...
I am asking what he got in writing and whether he has now been given a different figure. I am not asking when the expense was incurred—we might get to that, but it may not even be worth pursuing.
Senator Ellison —The situation is that, if what you are talking about are the two different figures—
Senator ROBERT RAY —No. I will repeat it, because I think there is some confusion.
—You are talking about a situation where the Prime Minister said, `You get one figure, then you get another.' I am explaining that. The situation is that, from the advice that I have, there was a brief, which contained a figure of zero, and then there was another figure of the $500-odd which related to the different periods mentioned. That is what the Prime Minister was referring to. There was some contact between the Prime Minister's office and the department, as I understand it. The Prime Minister's office queried the second figure because they had been told zero in the first instance. This is why we sent these figures out to members and senators—to say, `Look, there is the figure. Do you agree with it?' In this case, there was an initial figure of zero. The Prime Minister is quite right when he says that he was advised of a zero figure. What happened subsequently was that these payments—and I think Mr Fisher has the details of those other payments—were included in the 1996 to 1999 and the figure was $500-odd.
Senator ROBERT RAY —You seem to say that there was a brief and there was the normal routine letter. Let us get to the brief. Did the Prime Minister, or someone else, ask for a brief, when this issue came up, as to what his usage had been since he had been Prime Minister? Have I got that right?
Senator Ellison —No. When I refer to the brief, I mean the initial figures. We had initial figures come out. Much like tabling, you get a set of figures. You then check those figures and, in some cases, alterations are needed. Obviously it is a complex process.
Senator FAULKNER —Let us be clear here, Senator Ellison. I think what Senator Ray is asking is: were the processes that applied to the Prime Minister in relation to the communication concerning members and senators who had been in parliament since 1996, as requested by my question on notice, the same processes that applied to other members and senators, or was there another request for a brief? In other words, was there a special deal for the Prime Minister?
Dr Boxall —My understanding is that the department sent a brief to the Special Minister of State with figures for each member and senator covered by your question. These figures, in a sense, were initial figures and they were sent to the Special Minister of State before the letters were sent out to individual members and senators. What I think has transpired is that in the brief that was sent by the department to the Special Minister of State, against the Prime Minister's name was zero. These were initial figures which were sent to the Special Minister of State. Essentially, that brief was to get clearance to send letters out to individual members and senators.
Senator ROBERT RAY —Clearance from whom?
Dr Boxall —From the Special Minister of State. When the department received clearance to go ahead and send out letters to consult with individual senators and members, a letter was sent to the Prime Minister's office on 26 October which contained the figure of $514.85. I think there has been some misunderstanding because the figure that went out in the initial brief, along with every other member's and senator's figure, was zero, but in the letter that the department sent to the Prime Minister's office, having done more checking in the interim, the figure was $514.85.
Senator ROBERT RAY —The Prime Minister made his statement about zilch use on a previous Neil Mitchell show. I think he was very keen to demonstrate that he had not misled Mr Neil Mitchell so he appeared on his program today. He said:
... what I said on your program and in the previous one was based on what I had been told in writing by the Department.
He was told in writing somewhere, was he?
Dr Boxall —What I have just mentioned to you is that there was only one communication between the department and the Prime Minister's office.
Senator ROBERT RAY —I understand that. We have accepted that.
Senator FAULKNER —But that communication had a figure of $514 in it.
Dr Boxall —That is correct.
—But there was a previous brief which was in writing—
Senator ROBERT RAY —We accept that.
Senator FAULKNER —We understand that.
Senator Ellison —and that was zero and that was communicated by my office to the Prime Minister's office.
Senator ROBERT RAY —I see: the brief was sent to the Prime Minister's office.
Senator Ellison —No, there was a communication. I do not know whether it was initiated by the Prime Minister's office or mine. Nonetheless, on the basis of that written brief, that written advice, the Prime Minister was advised of a zero figure. That is quite—
Senator ROBERT RAY —How was he advised though? Was he advised orally or by email?
Senator Ellison —I will have to check on that, but he was advised. He was entitled to rely on that because it came from a departmental brief.
Senator ROBERT RAY —He was entitled to rely on it, but he says `based on what I had been told in writing by the Department'.
Senator Ellison —The advice that was received from the department was in writing. It was a written brief saying zero.
Senator ROBERT RAY —We know the brief was a written one. Was the written brief sent to the Prime Minister's office or was a version of it sent to the Prime Minister's office in writing?
Senator Ellison —I will have to check on that part of it which related—
Senator FAULKNER —You would know that, surely?
Senator ROBERT RAY —You would know it. Your adviser would know that now.
Senator FAULKNER —Let us go back a step. The department sent the brief to the Special Minister of State. That is what you have said, Dr Boxall. You can confirm that for us.
Dr Boxall —Correct.
Senator FAULKNER —You could confirm for us whether or not there had been a dropped copy to the Prime Minister's office. It would seem unusual, but let us be clear on that.
Dr Boxall —As has been discussed in this estimates committee before, the protocol we follow is that we only deliver briefings and related material to the Special Minister of State with a copy to the Minister for Finance and Administration. We do not deal bilaterally with other senators or members except, as you know, when there is an issue to do with management with your office and you are essentially a client.
Senator ROBERT RAY —That is a good procedure.
Senator FAULKNER —I appreciate that, Dr Boxall. That is why I asked the question. Therefore, I think you can confirm there was not a dropped copy to the Prime Minister or the Prime Minister's office.
Dr Boxall —I can confirm that the department did not give the Prime Minister's office a dropped copy.
Senator FAULKNER —Yes, exactly. Therefore we can focus on this with Senator Ellison.
—I have said I would check on what form the communication took between my office and the Prime Minister's office and whether there was a copy of the written brief in total or in part as it related to the Prime Minister or whether it was verbal advice or email. But I do not have that available. I will check.
Senator ROBERT RAY —Okay. Did this minute make it clear that this was not a final figure for attribution to members and senators?
Mr Fisher —You would be aware, because we also sent the numbers to your office, that our normal process in preparing any information about personal use of entitlements is that it identifies individual senators or members. Our normal process is to compile information based on records that we have and then to send them out to individuals. Before sending them out to individuals, as a matter of course we always let the minister's office know that we have draft numbers and we seek an okay to go to the next step in our process.
Senator ROBERT RAY —I understand that. What I am trying to establish—and that is good information—is that this brief that went to Minister Ellison did not purport to be the final usage figure.
Mr Fisher —I will invite Mr Gavin to respond because it was Mr Gavin's brief.
Mr Gavin —The brief was essentially a vehicle for clearance of the letter that was to go out to senators and members setting out the figures and, in fact, seeking their reaction and confirmation or rejection of the figures. So clearly they were tentative figures.
Senator FAULKNER —We understand that, Mr Gavin.
Senator ROBERT RAY —That is good. Therefore, if it was made clear in the brief and the brief was sent on to the Prime Minister—or a version was sent on to the Prime Minister—he cannot claim today that:
I'm unhappy I was misled by the Department.
It seems from the evidence that there was no misleading. The only figure he could have been given that said `zero' was a tentative figure, yet to be confirmed, from the minister's office. So I cannot see how he is upset with the department.
Senator Ellison —No. It is a question of being advised of a figure and it accords with yours. This is what we did subsequently with all member and senators, in that we asked them to say if this was right. If you are given a figure—
Senator FAULKNER —Yes, but you had a special arrangement for the Prime Minister
Senator Ellison —No, there is no special arrangement.
Senator FAULKNER —Of course there was.
Senator Ellison —No, there is not.
Senator FAULKNER —He got the inside running on the brief that went to you, Senator Ellison.
Senator Ellison —No.
Senator ROBERT RAY —Well, what did he get?
Senator Ellison —He got information—
Senator FAULKNER —Did I get that information from you?
Senator Ellison —I do not think you asked.
—Did anyone else get it?
Senator Ellison —Can I just finish the answer to the first question. The fact is the Prime Minister was entitled to rely on that advice which had come from a brief and which accorded with his office's understanding of the situation. If you are given a figure and you say, `That sounds right. That sounds okay,' then you are entitled to rely on it.
Senator ROBERT RAY —I will tell you what he is entitled to as Prime Minister. He is entitled to be told that this is the `preliminary' figure and, if he was not told that, the incompetence is not with the department and not with the Prime Minister but with your office.
Senator Ellison —As to what the Prime Minister has said today, he is entitled to say that he relied on advice which came from written advice and that the situation was that there was a subsequent figure given to his office and there was a query by them in relation to that figure. I also say that the provision of the answer went ahead before that had been resolved.
Senator ROBERT RAY —We just have to get these two points cleared up. He says today:
I'm unhappy I was misled by the Department.
Yet we cannot find any situation where this department has misled the Prime Minister, because they have put `preliminary' unchecked data—it has been put in that form—and there has been evidence led that other procedures had to be made to verify it. So, basically, there is no substantiation of anything you have said here to justify the Prime Minister's claim:
I'm unhappy I was misled by the Department.
Senator Ellison —But I think the brief—and I do not have a copy here with me, but from recollection—was on the basis that members and senators would need to comment on those figures. Naturally, that is what we do. If those figures are adopted, then that is the case, as I have outlined previously.
Senator ROBERT RAY —But why wasn't that explained to the Prime Minister so he did not go out today and say this? Once again we have seen this department monstered publicly that they were being misleading. This is becoming recidivist behaviour.
Senator Ellison —You are quoting to me what the Prime Minister has said today on radio, which could well be out of context. I have not heard that interview nor have I seen the whole transcript of that interview. But can I just say this: those figures were given on the basis of subsequent checking by members and senators, and that is the process we go through.
Senator ROBERT RAY —Mr Chairman, I have been verballed that I may have read this out of context. Let me read the two full quotes. Obviously these are written, having been delivered verbally, so you do not expect the syntax to flow perfectly, and that is not a criticism of the Prime Minister; it applies to all of us. It says:
HOWARD: Let's get this straight. What I said to you was I was told that it was zero. I had been told it was zero. They've now said it has been used a bit. It looks as though the usage could have been mainly—I'm not saying all—but mainly during the time I was Leader of the Opposition—but let me stress I was entitled to use it—I had it and it was used for proper purposes—I'm unhappy I was misled by the Department. I mean—I don't know what you do in situations like this—you ask the department—you get it in writing, you use it publicly, then they come along with a different figure and people in your position say hey what's all this. It's a purely innocent situation.
That is the quote. If you are saying I have a wrong quote or a wrong transcript, by all means say so. Do you want me to put the other substantial quote on the record, Minister? Okay, I will: It says:
HOWARD: The preliminary advice I have, is that most of it was done while I was deputy—
I think `while I was deputy' was an error by him—
the preliminary indication is—most, not all—there may have been one or two calls after I became Prime Minister, but the great bulk ... appears to have been before I became Prime Minister ... This is what I'd been told ... what I said on your program was based on what I had been told in writing by the Department. I clearly wasn't misleading you and your listeners.
We are not accusing the Prime Minister of misleading has listeners, but he appears to be saying on two occasions that he received this preliminary assessment in writing. We again ask: who sent it to him in writing?
Senator FAULKNER —Dr Boxall, you can confirm the department did not send the preliminary assessment to the Prime Minister or the Prime Minister's office or the Prime Minister's department in writing, can't you?
Dr Boxall —Yes.
Senator FAULKNER —So Senator Ray's question stands: who did send it to him, Senator Ellison? Who did send it to the Prime Minister in writing—or is the Prime Minister in fact misinformed?
Senator Ellison —I said to you I am checking on that and as soon as I have that I will let you know.
CHAIR —We are not really moving forward, Senator Ray and Senator Faulkner.
Senator ROBERT RAY —It is of concern, and it was a very, very tough statement:
I'm unhappy I was misled by the Department.
From the evidence we have got, earlier today and again today, the department in good faith put forward its preliminary figures, and suggested that the minister tick off a letter to all members and senators so it can be verified. This was transmitted to the Prime Minister, he claims in writing, which has allowed him to make not an inconsistent statement but a statement that can be misinterpreted. Clearly, that statement he made—zero, zilch, as Prime Minister—is probably correct. But somehow, once the figure of $514 has come out, his credibility is on the line.
CHAIR —We are going to have to wait for clarification through the communication between Senator Ellison's office and the Prime Minister's office. That is the key, isn't it?
Senator ROBERT RAY —Yes, I suppose we should move from the amateur to the professional. Let us move on to Mr Reith's telecard use. I think mostly it is a factual trawl; we will just see if we can confirm some of the facts. If it becomes more adversarial, I will direct my questions to the minister. When was the minister first issued with his telecard? Was that 18 September 1989?
Mr Fisher —My understanding is that a telecard was issued to Mr Reith in September 1989.
Senator ROBERT RAY —But we now know from material that was available that the first call on this telecard was made on 14 March 1993.
Mr Fisher —I do not have records on that.
Senator ROBERT RAY —It was mentioned in the minute of 8 September 1999, I think, or 23 September 1999 in the ministerial briefing. Therefore I thought someone must have checked when the first usage was.
—I think there might be some misunderstanding about information that has been pulled out in the course of the investigations and then used out of context. My understanding is that there are records showing that the card was used for the first time in March 1993, but I am not sure that that was the first time the card was used.
Senator ROBERT RAY —This was 14 March 1993. It may have been used before then?
Mr Fisher —I know that there was a brief that was leaked and put on the Sydney Morning Herald Internet site and that brief on 8 September, which was a couple of days after the investigation started, made the comment that the first calls against the account were in March 1993, but with the huge amount of investigation of the cards that has been undertaken since then, I am not sure that I would want to go on the record as confirming that that was the actual first use.
Senator FAULKNER —Just while we are talking about the issue of the card, Mr Fisher, it might be useful for you—you have indicated the date of issue of the card—to indicate for the record whether the telecard was reissued to Mr Reith, and when.
Mr Fisher —My understanding is that cards are issued and reissued from time to time. In the early nineties, Telstra changed its technologies and all the cards were reissued with a magnetic strip. Our records show that there was a reissued card, I think in 1993.
Senator ROBERT RAY —On 13 August, to be precise.
Mr Fisher —I think that is right.
Senator FAULKNER —And for the record, you might indicate whether the telecard number changed as a result of the reissue.
Mr Fisher —I am not sure the telecard number changed in that time. I want to be careful with my answers. The numbers do sometimes change when cards are reissued, but I do not think that that one did.
Senator FAULKNER —And you might indicate whether the PIN number changed.
Mr Fisher —I would not know, Senator, because we have security arrangements in place to try to protect the PIN numbers, and I do not know what the PIN numbers are.
Senator FAULKNER —I appreciate that. I am surprised you cannot indicate whether the actual telecard number changed, given the approval process that is required on receipt of the cards. Could you have a quick look at that for us?
Mr Fisher —Do you want the actual—
Senator FAULKNER —I am just asking whether the card number—
Mr Fisher —Do you want the number?
Senator FAULKNER —No.
Senator ROBERT RAY —Did it change or not.
Senator FAULKNER —I want to know whether it changed and, if it did, on how many occasions and when.
Senator ROBERT RAY —Too many people have already got that card number.
Senator FAULKNER —It may not be much use without the PIN, however!
CHAIR —Is the question clear?
—Yes, the question is clear. I might invite Mr Gavin, who has been closer than I have to the investigation, to respond.
Senator ROBERT RAY —It is more a general question. It can apply to any member of parliament, not just Mr Reith.
Mr Gavin —I am not absolutely sure which question I am answering but, as I understand it, the number and the PIN number did not change in 1993. It was the technology, as Mr Fisher said, that did.
Senator ROBERT RAY —So it did not change for members of parliament—leaving Mr Reith aside.
Mr Gavin —It has been our practice in the past not to change it, but that is a practice we are reviewing.
Mr Fisher —One of the reasons we are being very careful around this is that the nature of the card changed in the late eighties and early nineties from an FMA card to a telecard, and my guess would be that the account numbers changed at that time but I cannot be definitive in that case.
Senator ROBERT RAY —Mr Reith was issued with his new telecard on 9 September 1993—is that right?
Mr Fisher —I understand that he did get a new card at that time.
Senator ROBERT RAY —Has there ever been another card reissued to Mr Reith subsequent to 9 September 1993?
Mr Fisher —We have no record of an additional card being issued.
Senator ROBERT RAY —I am not alleging there is; I am wondering whether they have an expiry date and it is a regular process.
Mr Fisher —It is getting into technical questions about how time cards work, but my understanding is that Telstra changed how the cards worked at various times through the nineties, and the effectiveness of expiry dates was one of those things that changed. Expiry dates were introduced in the period that we are talking about. But my understanding is that, even though a card might have a notional expiry date printed on it, if the card continues to be used, the account stays open.
Senator ROBERT RAY —That presumes—probably to answer a previous question—that the eight digit number stays the same and so does the PIN, because people do not actually use the magnetic thing unless they are at a public phone.
Mr Fisher —In which case they want to swipe the card—that is right.
Senator ROBERT RAY —But you do not know if the card has been replaced—or, generally, for other members of parliament, unless they have requested it. Do know that, Mr Gavin?
Mr Gavin —My understanding is that there has been no wholesale replacement or, indeed, any individual replacement.
Senator ROBERT RAY —Mr Reith says on the record that he does not recall receiving the replacement card issued on 9 September 1993. Do they have to be signed for?
—We are going back a long way in the department's history. My understanding is that arrangements for issue and receipt of cards have changed a couple of times over that period. The current arrangement is that cards have to be receipted and we maintain records of those. However, the department's records back in that period are patchy.
Senator ROBERT RAY —It was pretty good on Mr Jull this morning. He signed for his. Have you searched for Mr Reith's?
Mr Fisher —Indeed. There has been a pretty extensive investigation.
Senator ROBERT RAY —And he is one of the missing ones in terms of having signed it off?
Mr Fisher —We have no record of Mr Reith receiving the card in 1993, but Telstra have records of the card having been issued and used.
Senator ROBERT RAY —How do you know that that card has been used and just that the previous eight numbers and four PIN numbers have not been used? We are presuming they are the same. Is there some way of saying that this new card has actually been used?
Mr Fisher —Yes. I think it is important here that the instrument is actually the account number and the PIN, not the card. You do not have to have a plastic card.
Senator ROBERT RAY —Yes, I know.
Mr Fisher —We probably need to be consistent with the terminology. What is important is the account and the account number.
Senator ROBERT RAY —So you know that this new card has been used. You have a way of knowing that it has been received and used. This is what is confusing me.
Mr Fisher —Yes. I apologise for my loose terminology. I said that Telstra had records of the card having been used. That was a mistake on my part. Telstra have records of the account having been active.
Senator ROBERT RAY —Yes. So there is no way of showing that this suddenly re-issued card has been received. Evidence that it is used is not evidence that it is received.
Mr Fisher —That is right. We cannot find any record back in 1993 that that card was signed by Mr Reith as having been received.
Senator ROBERT RAY —But he cannot say that he did not receive it either. So it is a stand-off. I think it was mentioned that it is intended to have members of parliament sign for them, to sign for a receipt.
Mr Fisher —The current arrangement is that any cards that are issued now are receipted by senators and members personally. Late last year, we introduced arrangements to ensure that there were much better records about issuing receipt of cards and they have been strengthened further since.
Senator ROBERT RAY —In one of those ministerial briefing minutes, there was reference to use of the account numbers from Mr Reith's electorate office, post the re-issue of the card. Is that correct?
Mr Fisher —Yes, there is a reference in the brief to that.
Senator ROBERT RAY —Would that be because at that time overseas calls directly from the electorate office phone were either barred or heavily restricted so you would therefore use your Telstra card to make those calls?
—My understanding of the arrangements—I invite Mr Gavin to clarify if I get it wrong—is that when the cards were first issued the entitlement did not extend to international calls. The entitlement was subsequently changed to allow for international calls. So, depending on the precise time period, I do not think that the use of the card for international calls would explain your hypothesis that that is why people were making calls from the electorate office.
Senator ROBERT RAY —What I am having difficulty understanding is why someone would make a Telstra account call from their electorate office if it was not international and you could just pick up the phone and make a call. That is what had me puzzled.
Mr Fisher —It is hard for me to comment, for a couple of reasons. One is that it is a personal use entitlement and I can only speculate about how and why somebody might choose to use one of the facilities. The second thing is that there is an active police investigation, which is still open, and probably I do not help by speculating.
Senator ROBERT RAY —I could table 142 transcripts by Mr Reith. The active police investigation and operational matters will not run air, but that was a nice try. We will try to avoid getting too much into the air as it may transgress but, if we err, let me say that there have been people err before us. Mr Reith claimed, when the issue became public, that his use of the card basically ceased when he was issued with a mobile phone. I think that is true for a lot of people. Do you have a record of when Mr Reith was issued with his mobile phone?
Mr Fisher —My understanding is that he was issued with a mobile phone in September 1993.
Senator ROBERT RAY —He said about 1994, but it was September 1993.
Mr Fisher —I am sure one of our officers will correct me if I am wrong, but my recollection is that it was September 1993. We will check and, if I am wrong, we will confirm that before we leave.
Senator ROBERT RAY —He said in one of his interviews that he ceased to use his Telstra card when he was issued with a mobile phone. Is there any evidence that Mr Reith ever used his card after he was issued with a mobile phone?
Mr Fisher —There is a lot of evidence that the card was used and there is evidence about where the cards were used from but, as I say, with a personal use entitlement it is very hard to know who is using the card or who is using the account.
Senator ROBERT RAY —But at one stage, as we will get to later, Mr Reith obviously went through these accounts, did he not, to establish which calls his son may have made or to identify which one he may have made? In that process, did Mr Reith ever identify any calls he would have made from the time of issue of his mobile phone—we think in September 1993—through to 30 August 1999?
Mr Fisher —He has never, to my knowledge, identified individual calls to us.
Senator ROBERT RAY —Mr Gavin might have the corporate memory on this: at the time of issue of these mobile phones, were they issued to members of parliament other than those who were already ministers or office holders?
Mr Gavin —I do not have the corporate memory, but the papers certainly suggest that, yes.
Senator ROBERT RAY —So the practice of having two mobile phones was really after the election of the Howard government, I take it.
Mr Gavin —I cannot comment on the practice. Certainly, I think the ability to have the two phones predates the current government.
Senator ROBERT RAY
—I am puzzled by this because I did not have two mobile phones. I had a ministerial one. I would have thought there would have been a more innocent explanation for what happened—that you would have had 40 mobile phones out there amongst individuals who became ministers, you did not chase up their backbench phones and it went on from there. I do not think it is anything to be condemned, but I assume that is what happened.
Mr Gavin —I think it is more to do with the fact that a minister's entitlements as a senator or member are not somehow expunged by becoming a minister and, in fact, any entitlements as a minister are in addition to the entitlements as a senator or member.
Mr Gavin —There has been a tradition of ministers agreeing not to access it, but—
Senator ROBERT RAY —I see, that was not legally binding on us?
Mr Gavin —No, certainly not.
Senator ROBERT RAY —You won't tell any of your other ministerial colleagues this secret, Minister, please.
Mr Gavin —In fact, the entitlement keeps accruing, of course.
Senator ROBERT RAY —Yes, and halving. I was interested in that because I know that no-one ever said we could have an electorate office phone when we were ministers and I do not see anything suspicious that that policy evolved, because I could imagine you would not want to recall 40 phones and sort all that out. But how you can use two mobile phones at once, I am not sure. One last question on this aspect of the telecard: has Mr Reith been issued with a new telecard with new numbers and a new PIN?
Mr Gavin —We asked Telstra to cancel the card on 30 August last year and to my knowledge he has not had a new card issued. We asked for the card to be cancelled so as far as I am concerned the account is inactive. If I can clarify: I said earlier the mobile phone was issued in September 1993; I have checked with my records and my records say it was in September 1993.
Senator ROBERT RAY —So it was his memory about 1994 that was a bit vague.
Senator FAULKNER —Could you let us know, Mr Fisher, when your records indicate that Mr Paul Reith first used the telecard?
Mr Fisher —From my point of view, I cannot answer that question. As I said before, sitting in MAPS I do not have any ability to identify who is using a card or who has access to the accounts. There was and is a continuing investigation into the misuse of the entitlement and the investigators have, I am sure, extracted information in terms of witness statements and cross-matched phone calls with numbers and so on.
Senator Ellison —I think this could touch on questions which are being asked now by the AFP. Whilst the officials are trying to be very helpful here, there is an aspect, as you said, Senator Ray, of there being this ongoing investigation. So I think we are now transgressing into that area where officials might be asked to comment on who made which call and where and when, and that might be the very subject matter of questioning by the AFP still.
Senator ROBERT RAY
—I just point out that Mr Reith has made many, many comments. He has even identified people who have committed fraud. But let us take it back before the AFP investigation to the period of your activity prior to that. You can confirm that $950 worth of calls attributable to Mr Reith occurred somewhere in the process?
Mr Fisher —I cannot confirm that because I do not have access to that information. The investigation has not been conducted by my area.
Senator ROBERT RAY —No, I am not asking that.
Mr Fisher —As soon as we became aware of the misuse of the entitlement we referred it to an internal investigation unit which is outside my control—
Senator ROBERT RAY —But it is within DOFA, isn't it? Are they here?
Mr Fisher —Not within my control. If I could say, because it is very important in terms of understanding how the entitlement works: even before the investigation, even before 30 August last year, people in MAPS did not have access to itemised accounts. So my people simply do not see and had at the time specific instructions not to look for details of the phone numbers called or phone numbers called from. They simply do not have access to itemised records. It is not that I am being precious. I simply do not know answers to your questions.
Senator FAULKNER —Do we have anyone from the internal investigation unit who can assist us?
Dr Boxall —On this, the $950 is the amount that Mr Reith initially paid?
Senator ROBERT RAY —Yes.
Dr Boxall —What happened was that we had an internal investigation which traced the calls and then, as part of the process of the special committee—this is the protocol: the special committee—we approached Mr Reith with details of all the calls that we had traced and Mr Reith, on reviewing that information, then offered to pay $950, being for calls—
Mr Wight —Mr Reith gave us a cheque for $950, relating to calls attributed to his son.
Dr Boxall —That is correct.
Senator ROBERT RAY —Let us get the methodology very clear, because that is what we are trying to get at.
Dr Boxall —I understand that, Senator. Upon receipt of that cheque, we acknowledged the receipt of that cheque but we did not say that this was the exact amount. Therefore, I think what we are trying to say is that, even though Mr Reith identified $950 worth as being his son's calls, we were not in a position at that time to say yes, that was the exact amount, or no, that was not.
Senator ROBERT RAY —So the methodology used in this $950 was for Mr Reith to go away and do it unsupervised by anyone in DOFA and come back to you with a figure—is that right?
Mr Fisher —I can understand why you are saying that, but perhaps we need to provide more information.
Senator ROBERT RAY —I think it might be useful for you to answer this question: how was the figure of $950 derived?
—The process was that, when the investigation had reached the point where it was clear that the entitlement had been misused, the department wrote to Mr Reith indicating that in our view he was liable for the outstanding amounts—the full amount. We indicated that anything that was outside entitlement should be paid back. Mr Reith subsequently indicated that $950 worth of calls were made by a family member and he was paying that back. We indicated that if somebody wishes to pay the Commonwealth money we will have it and bank it but that was not the end of the matter as far as we were concerned—and we continued to pursue the issue.
Senator ROBERT RAY —I think we can pursue that aspect later, but we are just trying to get to the methodology of who determined the $950. We have established that you did not have a role in that.
Dr Boxall —Mr Reith nominated that figure, based on his perusal of the—
Senator ROBERT RAY —11,000 calls?
Dr Boxall —Yes.
Senator ROBERT RAY —We have no way of knowing when any of these calls were made?
Dr Boxall —That is why I said that we were not in a position at that time to verify whether the figure was accurate or not and we were not in a position to even identify which calls made up the $950.
Senator ROBERT RAY —But if I asked you this question: `Were calls made from Western Australia on that telecard in February 1994?' would you be able to respond to that?
Mr Fisher —Based on information that has been pulled out in the investigation and information subsequently provided by Telstra, the department would be able to answer your question in detail because we have now extracted data that identifies 11,000 calls from 900 locations in Australia and overseas. I cannot answer your question off the top of my head in relation to whether there was a phone call made from WA in February 1994, but we would have that information in the department. I guess there is a question for us about whether we can go to that level of detail here. I understand what you are saying—that there is a lot of information in the public domain and many players have felt free to comment. Nevertheless, the advice that I have had from the AFP and other advisers is that I need to be very careful about intruding too far into use of the telecard in the period that we are discussing, because the police have not concluded their investigations.
Senator FAULKNER —Yes, but what you are saying to me is that, yes, you could answer that question. Am I going to ask a lot of questions like that? No, I am not. That might put your mind somewhat at rest. But I would be interested in you taking that one on notice, and you might have a look at that specifically. But if I asked you, for example, about other locations—Gardenvale, Melbourne or London, just to pick a couple of localities out of the air—you would actually be able to answer it. You have the information.
Mr Fisher —The department has that. I have not personally been through the information, because I have not conducted or managed the investigation. But the department would be able to respond, and I am happy to take your question on notice in relation to February 1994.
Senator ROBERT RAY —I do not think we are going to get to any individual phone calls, so put your mind at rest there. Pattern of use is of more interest. Has the department now been able to establish Mr Paul Reith's pattern of use? In other words, were 95 per cent of the calls made in 1994 or was there a general pattern of use between 1993 and 1999? Have you got the last identified call? I do not want to know the number, but have you got the approximate date of when it was last used?
—I am sure the department would have the last recorded call. But in relation to the first part of your question, the department pursued this investigation to a point where it was satisfied that the entitlement was being misused, that the misuse of the entitlement was very close and there was a likelihood that it personally involved the minister. The issue was then referred to the AFP for a detailed investigation as to the circumstances of the misuse. We did not then, going through our process, get as far as you are asking in relation to any one individual's use of the card on particular days or from particular locations. Our interest in this was to ensure that we acted to follow up on the problems with the card and to pursue it as far as was sensible. Then, when we were satisfied, the matter was referred to the appropriate authorities. But our responsibilities were around the use of the entitlement and protection of public monies under the FMA Act rather than the investigation and prosecution of individuals.
Senator ROBERT RAY —You see, Minister, the reason for asking some of these questions is not voyeurism—it is because Mr Reith has made a whole range of public statements. Our difficulty is in trying to verify whether he has told the absolute truth or variations on it, and this is about the only committee where we can do it. We do not intend to go into the Department of Justice and pursue the DPP or the Federal Police in any detail. We do not think that is on. So questions as to pattern of use were asked here for that reason—to test back on those matters. But I think that is all on Paul Reith, isn't it?
Senator FAULKNER —I have a question which is not about him; it is a general question. If, for example, we were to ask you, `Could you provide the committee with information as to whether there were any operator connected calls from hotels or motels?' you would be able to say that—you would be able to provide us with the information?
Mr Fisher —The department would have the information.
Senator ROBERT RAY —Let us make it more specific. Mr Reith—I do not think I am verballing, but I am sure the minister will interrupt if I am—on the 7.30 Report, on the Tuesday night after this became a public issue, postulated that it was possible that hotel receptionists and operators could have stolen the card number when he made connected calls. So our question is: is there evidence, in that very narrow period of time in which Mr Reith used the card by his own admission, that there were any operator directed calls? Because the actual accounts show a differential between direct dial and operator directed calls. We are interested in whether there is any evidence that Mr Reith ever made an operator directed call from a hotel or motel, or, indeed, in that critical six months in Gardenvale when Ms Odgers may have overheard him. Why you would make an operator directed call from suburban Melbourne would be highly surprising—I cannot think of a circumstance. Do you have any knowledge at this stage on that, or does it have to be checked?
Mr Fisher —My understanding is that the department would have detailed call information that was provided by Telstra and extracted in the course of its investigation into use of the card.
Senator ROBERT RAY —Then I will make that question very precise: given that Mr Reith has said, although it has now been qualified, that he did not use his telecard after he got a mobile phone, is there any evidence of operator connected calls via motels or hotels prior to the issue of that mobile phone? That is question 1 and here is question 2: is there any evidence of operator connected calls from Gardenvale? Because if, in fact, the answer comes back as zero, we can clear all the hotel receptionists and operators in Australia of potential guilt and we can rule out one other aspect of how the card could have got out. So if you could take those on notice, that would be helpful.
—You mentioned a little earlier the exchange of correspondence between the department and Mr Reith. Could you give us the dates and, if possible, the general nature of that exchange, please.
Mr Wight —There was a letter from the department to Mr Reith on 2 May 2000 and there was a reply from Mr Reith on 8 May 2000 to the department. There was also a letter to Mr Reith from Mr Hodgson on 19 October, a letter from Mr Reith to Mr Hodgson on 23 October, a letter to Mr Hodgson from Mr Reith on 27 October and a letter to Mr Reith from Mr Staun of the department on 1 November. There was also a letter on 12 May to Mr Reith from Mr Wight and a letter to Mr Reith from Mr Hodgson on 24 October.
Senator FAULKNER —Could you briefly encapsulate the subject areas of those letters. Is that two sets of correspondence, effectively—I think it is, isn't it?
Mr Fisher —It is a series of correspondence. The early letters were around a meeting with Mr Reith on 13 April and foreshadowed the issue of a debit notice for unauthorised usage of the card. Mr Reith's response on 8 May provided a cheque for $950 and indicated that he had referred the matter to the Prime Minister for further investigation. The letter on 12 May acknowledged the receipt of the cheque for $950 and indicated that the department had sought further advice from the Attorney-General's department. The letter of 19 October advised Mr Reith that there was a further amount to be repaid and indicated that the repayment might need to be adjusted to reflect calculations around discounts and so on. The letter of 23 October from Mr Reith requested advice as to the actual costs incurred by the taxpayer. The response on the 24th indicated that amount. The letter of 27 October to Mr Hodgson from Mr Reith provided a cheque for that outstanding amount.
Senator ROBERT RAY —Has the cheque cleared?
Mr Gavin —Yes.
Mr Fisher —The cheque was banked and we provided a receipt for the cheque on 1 November.
Senator FAULKNER —Very briefly on one other matter, you mentioned the special committee. I just want to understand this, Dr Boxall: are those special committees established on an ad hoc basis, depending on the nature of the issue that might be a matter warranting the formation of a special investigation committee?
Dr Boxall —Yes, they are just convened when we have an issue that needs to be investigated, such as this—so we convened it. In the event that we had a similar issue arise in the future, we would convene basically the same committee to deal with that.
Senator FAULKNER —Do you have an SES officer head this up?
Dr Boxall —Yes, I chair it. The other members are the general manager of ministerial services, the special adviser of ministerial and parliamentary services and the manager of internal audit.
Senator FAULKNER —That is what I was trying to check. There is no ad hoc membership.
Dr Boxall —No. There is no ad hoc membership but it is convened from time to time as required.
Senator FAULKNER —I just wanted to check whether there are any changes in membership.
Proceedings suspended from 1.02 p.m. to 2.02 p.m.
—We wish to clarify an answer to a question given this morning, if that is okay.
Mr Hodgson —I wish to clarify a response to a question from Senator Sherry to Ms Coombs on Employment National director's remuneration. In that response, the departmental officer indicated that she was not aware of any detailed information on components of the director's income in the $540,000 to $549,000 bracket. We can since confirm that the department was provided in October with the general breakdown of the components of the director's income. While the details remain confidential due to privacy considerations, the remuneration, as advised, includes both normal remuneration and a separation package. These separate payments include payout of accrued employees' entitlements.
Senator Ellison —I indicated to the committee that I would get back to the committee in relation to the question of the telecard usage of the Prime Minister. I think I can put it in context by saying that when Senator Faulkner's question on notice attracted some publicity, a number of members and senators contacted my office inquiring as to their telecard usage. One of those inquiries was from the Prime Minister's office. Indeed, the officer asked if the information had yet been collated and, if so, what it was for the Prime Minister. At that stage, I indicated that the information had been collated—and when I say `I', I mean my office. I was then asked if that information could be provided in writing. As a result of that request, my office provided an attachment which I had received with a brief. That was provided to the Prime Minister's office. That attachment was in writing. There was nothing to indicate that the figures were draft figures, and the indication for the Prime Minister was a zero figure. The brief that I received indicated that there was attached to it a proposed letter for circulation, and this attachment was indicated to be figures extracted from various members and senators.
As a result of the provision of that attachment to the Prime Minister's office, it was agreed by that office that it would be treated as confidential because it contained other details relating to members and senators. Hindsight shows that it was treated as such. There was no comment or anything in relation to telecard usage by the various members and senators on that attachment. That accurately reflects the provision of the information, the receipt of it by my office and the fact that the Prime Minister was advised that there was zero usage. Subsequently, however, that advice was changed and we have the figure that is on the table which has been provided to the committee.
Senator ROBERT RAY —When? What was the date that this written material was sent to the Prime Minister's office?
Senator Ellison —It would have been after the brief had been received, which I think would have been October. I have just received advice that it would have been after 6 October, so my assessment of early October was right.
Senator ROBERT RAY —So someone from the PMO rings, wanting to check the Prime Minister's usage—is that right?
Senator Ellison —That is right.
Senator ROBERT RAY —What you send to the Prime Minister, of course, is not only his usage but everyone else's usage, that is not yet confirmed by the senator or member concerned.
Senator Ellison —The letter which went out to members and senators invites comment and, in fact, when you look at it, it says:
My purpose in writing to you at this stage is to alert you to the question—
That is Senator Faulkner's question—
and provide you with the opportunity to comment or seek any amendment, or if appropriate request any footnote you consider is required.
It is basically saying, `These figures stand unless we hear from you.' It does not say, `Please confirm.' But the meaning of that letter is, `These figures stand unless we hear anything from you, or if you have a footnote. You might want to have a footnote inserted.'
Senator ROBERT RAY —So you not only sent the Prime Minister his own figures, you sent everyone else's to him.
Senator Ellison —And it was treated in confidence, and these figures are subsequently—
Senator ROBERT RAY —Well explain to me why one of the PM's press officers was up in the gallery pointing the finger at one of my colleagues' usage. It was not confidential at all.
Senator Ellison —I am not aware of that, and there was no public comment that I am aware of in relation to telecard usage. There were comments by various individuals as to their own usage. In any event, this related to a question on notice which was going to be public and was made public yesterday when Senator Faulkner made it the subject of a press release. It was not really anything which was some state secret. It was a matter which was going to be tabled.
Senator ROBERT RAY —Minister, you would be acting absolutely appropriately to respond to the PMO request and forward the Prime Minister's use, albeit it turns out to be inaccurate. What you have also done, before members and senators have had a chance to correct or footnote the record, is you have sent all those details to the Prime Minister's office. That is right, isn't it?
Senator Ellison —It was sent to the Prime Minister's office after we had received these figures from the department as being a record of figures that was held for each individual member and senator.
Senator ROBERT RAY —You see, we had evidence earlier, and I think Dr Boxall nailed it right down when he said—and this is a very sensitive area; MAPS—that he does not forward people's details on to others—only to you. So the department has acted appropriately. We have established that. I think you have acted inappropriately sending other members' information to the Prime Minister's Office before members and senators have had a chance to footnote it or correct it.
Senator Ellison —Senator Ray, what has become public has been the footnoted version, if you like to call it that. The confidence which was agreed to by the PMO has been observed.
Senator ROBERT RAY —You say it has; I say it has not. I say they have misused this information that you have passed on.
Senator Ellison —I cannot recall any telecard usage of any individual member or senator which was otherwise than from that person themselves and that by way of public comment. So what I am saying to you is that the proof is in the pudding. There was no leaking or publication of any article in relation to a certain senator or member as to their particular usage of telecard, other than what they had said to the press themselves, and a number of people did make comment about that.
Senator ROBERT RAY —I acknowledge that the sleazy finger pointing that occurred up in the gallery did not translate itself into any articles, mostly because of the lack of credibility of the person trolling up the gallery with the information.
—This a breach of your protocols, isn't it, Dr Boxall?
Dr Boxall —Senator Faulkner, our protocols relate to the delivery of the material to the Special Minister of State. Our protocols do not go further in terms of what the Special Minister of State may or may not do with the material delivered to him.
Senator FAULKNER —I had a dropped copy to the minister for finance's portfolio.
Dr Boxall —Yes. The standard protocol is that all ministerial briefings that go to the Special Minister of State are drop copied to the minister for finance.
Senator FAULKNER —That is outside the standard protocol.
Dr Boxall —Yes.
Senator ROBERT RAY —Returning to the Prime Minister's comments of this morning, wouldn't you at least acknowledge, Minister—
Senator Ellison —Hang on. The protocol applies to the Department of Finance and Administration. Dr Boxall has indicated that that protocol applies to the department.
Senator FAULKNER —We know exactly what happened, Senator.
Senator ROBERT RAY —It does not apply to you. That is obvious.
Senator FAULKNER —We know what you have done.
Senator Ellison —The protocol that Dr Boxall is talking about applies to the Department of Finance and Administration.
Senator ROBERT RAY —Minister, the next time you are in this position of having a request from the PMO to supply his own figures, could you at least delay the supplying of all the rest of the figures to the office until they are verified or corrected or properly footnoted?
Senator Ellison —I will take your comments on board.
Senator ROBERT RAY —Let us go back to the Prime Minister's statement today: `I am unhappy I was misled by the department.' I do not want to ask you to give the Prime Minister advice or to correct him, but wouldn't it have been a more accurate characterisation for him to say that he was unhappy that he was inadvertently misled by the department?
Senator Ellison —I think the Prime Minister has described the situation and has done so, putting right the record, because what was being published in the press today was not accurate. There was an imputation that in some way he had said it was zero when it was not and he was not entitled to say that. He was saying that he was entitled to say that, and he was. He was relying on advice given to him that it was a zero usage.
Senator ROBERT RAY —Going back to his original prissy statement when he said he had zilch use, zero use, et cetera, the fact is that, when he becomes prime minister, he is given the resources where he never needs to use his telecard. So that bit of pompous boasting was what really set up the unfortunate circumstances of the reporting this morning.
Senator Ellison —It was not pompous boasting. In fact, the amounts on the table that are the subject of Senators Faulkner's question relate to payments prior to him becoming prime minister.
Senator ROBERT RAY —We understand that, Minister.
Senator FAULKNER —It was pompous boasting.
Senator ROBERT RAY
—He was saying, `Since I became Prime Minister, I have never used the telecard.' Well why would he? He has staff with mobiles. If the laptop goes overseas, do think they would use Telstra direct and put a telecard number in and get the four or 10 times cheaper call? No, they just put it into the hotel wall at 10 times or eight times or six times the cost, and no-one ever knows about it. He is in a better position—not that I am—
Senator Ellison —The Prime Minister was answering questions put to him about his telecard usage.
Senator ROBERT RAY —No, he was not. He was throwing someone off the—
Senator Ellison —He was asked questions in relation to that, and it is reasonable—in fact, you would have been the first to criticise him if he had not answered the question.
Senator ROBERT RAY —No, he was caught out boasting. `I've never used a telecard as Prime Minister,' says he. Of course he would not, with all the resources provided to him by his own department—none of which I resent and all of which I think he should have. But he should not have had to make that statement because, in actual fact, the taxpayer is probably being charged four, five or 10 times the cost because he uses this sort of laptop when he is overseas and does not go through Telstra directly.
Senator Ellison —Mr Chairman, I think I have explained the situation.
CHAIR —We have reached the impasse again, I think, on the same issue. Perhaps we could move on, Senator Ray.
Senator ROBERT RAY —I will let Senator Faulkner move on, but I will have the last say. I do not think it is fair to describe this department as having misled the Prime Minister, given the evidence here. I think that was a regrettable statement.
Senator FAULKNER —I did try just before the lunch break to tie up a couple of loose ends that, in my view, were left over from the session. There are just one or two other issues that I would like to touch on in that context, perhaps before we move on to some newer material. I did want to check about the original repayment of the $950, if that is okay, just to double-check the situation. As I understand it, in your evidence, Dr Boxall, you have indicated that—let me try to encapsulate your comments in your own words—basically it was Mr Reith and not the Department of Finance and Administration who determined that $950 was the appropriate amount or the full extent of the first repayment. Is that a fair encapsulation of the situation?
Dr Boxall —Yes.
Senator FAULKNER —In fact, I think you went on to say, `I think that what we're trying to say is, even though Mr Reith identified $950 worth as being his son's calls, we were not in a position at that time to say, “Yes, that's the exact amount,” or, “No, that's not.”' That is the evidence you gave us.
Dr Boxall —That is correct.
Senator FAULKNER —Just so I understand the process—again, I know we have touched on this, but I do want be clear—about how the $950 was established, it is clear from your evidence that it was an amount that was determined by Mr Reith.
Dr Boxall —That is correct.
—Thank you for that. Could we just be clear on the process which led to that $950 amount being established. I think it might be useful for the record if you or Mr Fisher could clarify that.
Dr Boxall —I will introduce the answer and then let Mr Wight pick up the details. When we established the special committee, we had the investigative material before us that had been collected by internal audit. The issue was to basically establish whether there was a prima facie case that there had been misuse of an entitlement. We concluded there was a prima facie case, but we needed to consult Mr Reith to give him a chance to comment, clarify or—in a sense—react to the material that we had collected. Then we set up a meeting with Mr Reith and there was an exchange of correspondence. During that meeting, attended by Mr Wight and Mr Gavin, they went through the material with Mr Reith. After that Mr Reith proffered the cheque of $950 as being what he thought was fair coverage for the calls outside entitlement. I will now hand over to Mr Wight.
Mr Wight —In terms of what exactly happened, the department gave a significant amount of material to Mr Reith in relation to the itemised calls and Mr Reith—
Senator FAULKNER —So when did you do that, Mr Wight? That sort of material would be itemised Telstra accounts et cetera, I suppose, would it?
Mr Wight —Yes, some material was provided on 13 April and the balance of material—if I remember correctly—on 2 May.
Senator FAULKNER —Thanks for that. In broad terms, we are talking here about itemised Telstra accounts—that sort of material. That makes sense. Is that the general sort of material that was provided to Mr Reith on these occasions?
Mr Wight —Yes, Senator, but it may not have been all of the calls.
Senator FAULKNER —No, I appreciate that. I am just trying to get a feel for the nature of the material that you are providing to Mr Reith. And that was—what—communicated through the mail or couriered or whatever?
Mr Wight —The material on 13 April was hand delivered and material was also conveyed by letter, which was also hand delivered—the letter dated 2 May.
Senator FAULKNER —And then there is some form of consultation that involves you and Mr Gavin?
Mr Wight —The next step in the process was a letter from Mr Reith enclosing a cheque for $950 representing the extent that calls were made by a family member.
Senator FAULKNER —Yes, that is helpful. When was that received?
Mr Wight —That is a letter dated 8 May.
Senator FAULKNER —So when is the meeting with you and Mr Gavin and Mr Reith?
Mr Wight —That was 13 April.
Senator FAULKNER —When you say `hand delivered', this is hand delivered at the meeting, is that what you're saying?
Mr Wight —In person, yes.
—Oh, I see. I misunderstood. I thought you were saying that there were two—if you like—separate communications. Well, there are two separate communications, and with the first of those, there is also some sort of discussion that takes place.
Dr Boxall —Senator, just to make it clear, there were two sets of material delivered: one on 13 April and then another with the letter of 2 May.
Senator FAULKNER —Yes, I appreciate the timeline, Dr Boxall. What I would like to ask about is the 13 April meeting that Mr Gavin and Mr Wight attended with Mr Reith. So can you give me a bit of a feel for how that worked?
Mr Wight —Senator, in general terms, we discussed the material we had to give to Mr Reith, and there were general discussions around the entitlement and a range of questions about the administration of the entitlement.
Senator FAULKNER —Yes, so when you say general discussion about the entitlement and your—as in DOFA's—administration of the entitlement, would that be how you administer it and the interface with Telstra and so forth; is that what you mean?
Mr Wight —In general terms, yes.
Senator FAULKNER —Okay, so that is the second element of the general discussions. I think I understand that. What about the first element? I think you said that you discussed the material that you had handed to him. So we understand, of course, that in this 13 April meeting you are also hand delivering background material. How did that work?
Mr Wight —I am trying to be careful not to go into the actual details of the discussion itself. There was a range of printed material that we handed over to Mr Reith at the meeting, and our discussion around that was describing what that material was, answering questions from Mr Reith about that material, and also seeking his view on that material.
Senator FAULKNER —I appreciate the point that you make, that he did not necessarily have all the material because, of course, some of the material came at a later stage to Mr Reith, on 2 May. I understand that. I appreciate that not all the material was available. We have a general understanding of what some of the material was that was available. What level of detail did you work through this with him?
Senator Ellison —I think this is getting into the question of detail of calls and other aspects which could touch on the investigation.
Senator FAULKNER —No, I am not going to specific calls. I am trying to get a general understanding of the level of detail of that interaction between departmental officials and Mr Reith.
Senator Ellison —In a generic sense.
Senator ROBERT RAY —We are not going to the details.
Senator FAULKNER —I can assure you I do not intend to ask about individual calls, if that is what you are suggesting. I want to understand the process, and that is perfectly reasonable.
Mr Wight —We talked about the fact that the department had carried out a preliminary inquiry, that we were at a particular stage, and we believed we needed to talk to him.
Senator FAULKNER —Yes, I understand that. Beyond that, you have itemised material and so forth in front of you. To what level of detail did you go or is it as general as you have just described?
—I think it is important to understand that initially there was not even a perception of a possibility that Senator Reith was connected with the use of the telecard—
Senator FAULKNER —You have just demoted him to the Senate, Mr Gavin.
CHAIR —It is probably not a demotion, Senator Faulkner.
Mr Gavin —What had emerged in the internal departmental investigation and in the analysis of the calls was that his electorate office, his residence and his mobile had all been contacted by use of the telecard. There is a pattern which led in fact, if I might say, to the convening of the members of the committee to really discuss whether or not there was a prima facie case for establishing the committee, and it was decided that the sensible thing to do, given particularly our understanding of Mr Reith's view that the card usage was totally unconnected with him, was to visit him with the evidence in the form of these documents and take him through it to the point where he appreciated that there appeared to be a linkage to him so that he was given the opportunity to reflect on what he had earlier said.
Senator FAULKNER —Thanks for that. How long did the meeting take?
Mr Gavin —A couple of hours, as I recall.
Senator FAULKNER —Mr Wight made the distinction that not all the material was before Mr Reith at this time and that other material came through on 2 May.
Mr Gavin —Yes. What came through on 2 May certainly was other material, but it was in the form of responses to questions Mr Reith had raised. It was not, if you like, more documents relating to the investigation.
Senator FAULKNER —Did you get down to the level of going through every account, for example?
Mr Gavin —No. As I say, it was a meeting with the telephone printouts—the call from and the call to lists plus some material that had been prepared that established linkages. That really was the documentation that formed the basis of the discussion.
Senator FAULKNER —Thank you for that. I want to understand the process here because I think this is important. You have indicated you did not go through every account. You can confirm that too, can you Mr Wight?
Mr Wight —That is correct, Senator.
Senator FAULKNER —So it would be fair to say—I just want to be clear on this—that Mr Reith did not sit down with the Department of Finance and Administration and go through every account. That is what you are saying to the committee—he did not do that at that meeting. I think it is what you are telling us, but can you just confirm that for me?
Mr Wight —Certainly not all the calls were made available at that meeting.
Senator Ellison — But I think it is fair to say that when he paid the $950 he said there might have to be some adjustment to this figure after further discussion.
Senator FAULKNER —That is not my question. He may or may not have said that, Senator Ellison, but my questions are clear—
Senator Ellison —But in fairness to—
—I think the answers are clear and I appreciate the answers. So I know what happened on the 13th. That was the only face-to-face meeting that occurred, as I understand it—but please, Dr Boxall, I would like to be very clear on this—between Department of Finance and Administration officials and Mr Reith prior to the repayment of the $950.
Mr Wight —Yes, Senator.
Senator FAULKNER —Thank you. The only conclusion I can draw, Minister, is that Mr Reith misled the House of Representatives on Wednesday, 11 October when he said:
The fact is that I sat down with the Department of Finance and Administration and went through every account.
We have just heard that that is not right. The Minister has misled.
Senator Ellison —He certainly sat down with the department and there were telephone details there and he has said that there was a figure of $950 and that, no doubt, there would be an adjustment when necessary after further discussions. That is a reasonably accurate description of what took place. The $950 was paid on the information he had available. After further discussion it could well have to be amended. We know the rest is history. Mr Reith paid the remainder of the amount owing. But he did sit down with officials and there was a discussion of telephone records.
Senator FAULKNER —I will ask the officials who were present at the meeting: was there any attempt at the meeting to identify particular calls that might have related to Mr Reith's son. Did you go to that level of detail?
Mr Wight —Certain individual calls were focused upon in the discussion.
Senator FAULKNER —What I am asking is: did you at the meeting identify with Mr Reith those calls that were made by Mr Paul Reith or might have been made by Mr Paul Reith?
Senator Ellison —Again, that is going into a level of detail which could well reflect on the investigation which is still pending. What we are talking about here is the types of calls, the person attached to those calls, the fact of whether that was discussed. That really is getting into a detail which is inescapable, and there is an investigation by the AFP still pending.
Senator FAULKNER —Mr Reith has dealt with these matters in detail, both in and outside the parliament, so it is perfectly reasonable, I would have thought, for me to ask these process questions. They are important questions. We know that Mr Reith has misled the parliament; we do not know at this stage whether it is a resigning offence.
CHAIR —We do not know that.
Senator FAULKNER —We do know that Mr Reith has misled the parliament grievously.
Senator Ellison —No we do not.
CHAIR —We do not know that.
Senator FAULKNER —So I do press my question with the officials, through the minister, about calls relating to Mr Paul Reith. Could I have an answer to that please?
Senator Ellison —The process question has already been covered. We have already had the questions put to the officials: `Did you meet with them?' `Yes.' `Were there telephone records in your possession? Were they discussed?' `Yes.' Various things were put to Mr Reith. We have gone over that. Really, we have reached the end of process and we are now straying past that perimeter of process into detail.
—We seem to be looking at individual phone calls now. I understand you want to find out the process with respect to particular phone calls, but not the individuals who made those phone calls. That is where the line is.
Senator ROBERT RAY —We do not want to go to individual phone calls but, in the several hundred defences put up by Mr Reith that changed from day to day, he was basically implying in that statement in the House of Representatives that he sat down with the officials, went through all the details and came up with the 950 figure. It is fairly apparent from the evidence that he did not get to that detail, that he took the accounts away and self-nominated the 950, not claiming necessarily that it was definitive—I understand that. The implication in the House of Representatives is that he actually sat down and came to this figure with the officials. That is why we are asking the final question: did they have a detailed discussion with Mr Reith about Mr Paul Reith's calls?
CHAIR —The problem is, though, that we are identifying an individual, Mr Paul Reith, and we are looking to identify the particular calls that he may have made.
Senator BRANDIS —I raise a point of order. There is another difficulty, too, and that is that the expression `a detailed discussion' is itself a vague and ambiguous expression which is capable of many meanings. There must be a risk, surely, that to permit a question that is premised on a vague and ambiguous expression could be prejudicial.
Senator ROBERT RAY —Why don't you get Tony O'Leary to get the gallery back down to listen to that point again?
CHAIR —I am just concerned, Senator Faulkner and Senator Ray, that we are going into particular calls made by particular individuals, and we should not go there.
Senator ROBERT RAY —It is okay for Mr Reith to put every excuse, to interfere with all operational matters, to accuse Ms Odgers of being a thief—he can do all that sort of thing. What we are just trying to establish is the veracity of Mr Reith's statements made on the public record, if they are correct or not.
Senator BRANDIS —My point of order, Mr Chairman, is merely this: given the sensitivity of the matter, given the fact that it is the subject of a current investigation and given that motives are being attributed, you at least have to insist, in fairness to those involved, that the questions that are put be put with sufficient precision that the answers to them are capable of being fairly understood so that they are not prejudicial.
Senator FAULKNER —I would like to speak to that absurd point of order.
CHAIR —Please proceed, Senator Faulkner.
Senator FAULKNER —Thank you. I would like to point out to you, Mr Chairman, to the committee and to the minister that we have had two officials from the Department of Finance and Administration who were present at a meeting with Mr Reith—the only others present at the meeting—who have indicated that the Department of Finance and Administration did not go through every account at that meeting with Mr Reith and that there were no other meetings. I have had that evidence from both officials, very clear evidence. Dr Boxall and Mr Fisher gave evidence on this general question before the luncheon break. We know, Mr Chairman, that Minister Reith has misled the House of Representatives. I now want to explore the extent of the mislead, because Mr Reith addresses in the House of Representatives the same issues that I now wish to explore. I do not want to see you involved in a cover-up. I want to explore this now. This matter is in the public interest, it is properly before this committee and I think it will have quite considerable resonance in the community.
—Senator Faulkner, what worries me is this: I accept that some of these issues are line ball and sometimes it is a bit hard to detect on what side of the line they fall. In my judgment, at the moment we are moving from process—and, as you say quite rightly, you are entitled to ask—to specific deliberation, and that concerns me. That seems to me to be on the other side of the line.
Senator BRANDIS —The point in my point of order is this: Senator Faulkner keeps making an assertion as if it were the truth, which it is not, that the minister made a misleading statement. The only basis upon which he can possible assert that proposition depends upon a vague and ambiguous question of his own as to the extent of detail there was in what would have been described as a detailed discussion. My point of order to you is that, given the assertions and the conclusions that are sought to be drawn from the answer to that question, it is absolutely obligatory in fairness to Mr Reith and to others that you insist upon the questions being framed with sufficient prevision that the answers are capable of being answered specifically and not in a prejudicially vague fashion.
CHAIR —Thank you, Senator Brandis.
Senator ROBERT RAY —Are we ready to move on? This is my last question on this to the officials. Did Mr Reith sit down with the Department of Finance and Administration and go through every account on 13 April, the only time they met together?
Senator FAULKNER —This is the fourth time this has been asked. It has been answered in the negative on all previous occasions.
Mr Wight —No, Senator.
Senator ROBERT RAY —I will move on. The minister and officials would be aware that Ms Odgers claimed that her flatmate, Dr Lim, passed on to her a warning from a government representative to cease using the card. I interpolate here. In everything I have read, there is no indication as to the department. This is another question you may not wish to answer, but I am trying to establish the veracity to at least part of that claim. Is there any evidence that Ms Odgers used the card after that two-month period it was with Dr Lim? In other words, you have the six months with Mr Reith and two months with Dr Lim. Is there any evidence that she used the card after that eight-month period in 1994?
Mr Fisher —I have to say that we do not know. There may be evidence or there may not, but we do not know from the investigation that we undertook. We took the investigation to a point where we could establish a prima facie case that there was a misuse of an entitlement involving a senator or member personally. The investigation then escalated and was passed over. The simple answer to your question is that, to the best of my knowledge, the department does not know.
Senator ROBERT RAY —I asked because, according to the Solicitor-General, Ms Odgers' evidence may not be believed because of this claim. I would have thought that if we could establish whether she had ceased to make calls, it may have reinforced it. Thank you for that answer. Given that there were claims in the Melbourne Herald Sun that Telstra files indicate that on three occasions the use of Mr Reith's telecard was flagged, has the department actually checked back with Telstra as to any basis on that story? I do accept that the department did not know on these three occasions, but subsequent to that publicity have you gone back to Telstra and checked?
—The answer is not to my knowledge. We did an extensive search of our files and had interviews with staff from our area and people who had subsequently moved on. We could find evidence of two contacts between the department and Telstra in relation to Mr Reith's phone card—one in July 1998 and one in August 1999—but we could find no others, and we did not talk to Telstra.
Senator ROBERT RAY —I am surprised you did not. I accept that you do not have anything on your files, but I am surprised that, that having got publicity, you did not check it out. Going to the notification of the department by a Telstra employee on 18 July 1998—you mentioned it just then—could we have a description of how that issue was handled?
Mr Fisher —Certainly. There are two issues to keep in mind in understanding what happened in July 1998. I will describe the processes. The first thing is that staff in the department at that time were operating under instructions not to act on itemised details of phone calls that senators and members may have made. There were written instructions to that effect, and evidence in the department that people took that seriously, even to the extent of following the instructions to the letter and destroying and annotating files to indicate that they had destroyed itemised records. So the people at the time were operating under that instruction.
The other issue to bear in mind is that at that time telecard administration was split between different parts of ministerial and parliamentary services. Responsibility for issue and receipt of cards was handled in central office in Canberra and responsibility for paying accounts was in each of the state offices. That is no longer the situation but it was the situation that applied in July 1998.
Our records show that in July 1998 there were contacts between Telstra and our department and a phone call and an email to our central office—remembering that this is not the part of the department that paid the bills. The officer who took the calls followed up the contact from Telstra, did initial investigations against information that would have been available to that officer, and drew the work to the attention of the supervisor. The matter was passed between a couple of officers in central office and in the event the issue was not pursued. The call came in at a fairly low level in the organisation and it probably came in to the wrong part of the organisation. The officer who took the call followed it up conscientiously and matched data against information that was available to that person in doing the job. The issue was not escalated to a management level and the organisation as a whole did not pursue the matter.
Senator ROBERT RAY —The next contact was on 30 August 1999. Who did the Telstra employee first notify that there was a problem?
Mr Fisher —In August 1999 circumstances were quite different and help to explain why there was immediate follow-up. The matter was not pursued in July 1998. In August 1999, Telstra contacted our state office in Victoria and drew our office's attention to aspects of the use of the card. By that time, the department had put in place more integrated arrangements for handling telecards. All of the information for Mr Reith's telecard was in the hands of the person who received the call. That officer alerted their supervisor and made a call to Mr Reith's office with some questions in relation to the use of the card.
Senator ROBERT RAY —So the Telstra employee lets the crew in Melbourne know because they are now centralising. They then ring Mr Reith's office and say there is a problem, and it goes from there.
Mr Fisher —It went from there.
Senator ROBERT RAY —When were you first informed, Senator Ellison, that there was a problem, and by whom?
—My office was first informed in the week commencing 30 August last year, and I would have been advised not long after that—I would say about the beginning of the following week—and then I received the brief dated 8 September.
Senator ROBERT RAY —Was it the department or Mr Reith who informed you there was a problem?
Senator Ellison —No. Mr Reith's office contacted my office, as well as the department, and I think that is outlined in the brief dated 8 September. My office brought the matter to my attention, and of course I received the brief on 8 September. I think you all have a copy of that, or what purports to be a copy.
Senator ROBERT RAY —If you want to table one here at the committee you are welcome to do so. Going back to the initial question regarding Ms Odgers' claim about someone from a government department—not necessarily yours—what sort of searching of the files, going back to 1994, was done to try to establish whether there had been such a call?
Mr Fisher —There was very extensive searching. We conducted an extensive investigation into the use of the card and all available records around it in the latter part of last year and the early part of this year, and when Ms Odgers comments appeared in the press in October we had another look. We also talked to the internal investigators who conducted the investigation just to make sure that we had not missed anything in our search, and they confirmed that they had no record in that period of calls between DOFA and Dr Lim.
Senator ROBERT RAY —When did the matter go to the internal audit group?
Mr Fisher —The issue was referred to audit, I think, on 6 September last year.
Senator ROBERT RAY —And who constitutes the audit group?
Dr Boxall —The audit group is our internal audit unit.
Senator ROBERT RAY —Who heads it up?
Dr Boxall —The manager is Mark Harrison.
Senator ROBERT RAY —How big is this internal audit group?
Dr Boxall —We have Mark Harrison, the manager, plus two full-time staff. We also have an audit committee which is a subcommittee of the management board, but the internal audit group relies on outside people to come in and do special tasks, so there are many more resources than just those three individuals.
Senator ROBERT RAY —Were outside people brought in for this particular task?
Mr Fisher —My understanding—and we have just confirmed it—is that the internal audit unit conducted the investigation using their own resources, but I add that they did receive assistance from Telstra in their inquiries.
Senator ROBERT RAY —How long did this issue sit in the internal audit unit?
Dr Boxall —Basically, internal audit investigated this issue up until the end of February this year.
Senator ROBERT RAY —So they started on 6 September and finished about the end of February?
Dr Boxall —That is correct.
Senator ROBERT RAY —Did they put interim reports in to you as secretary as to how they were going?
—I am not aware that they did put in an interim report to me.
Senator ROBERT RAY —I was not either—it was not a trick question. You are not aware?
Dr Boxall —No, I am not aware. Because there is a lot of detailed investigation in tracing calls and what have you, it obviously took a reasonable amount of time to compile. It was when they had gone through and done a huge amount of investigative work that they were able to prepare reports sufficient for us to take to our special committee.
Senator ROBERT RAY —I see. Minister, even though I have heard part explanations given in the Senate, I am a bit puzzled by why you did not inform the Prime Minister of this problem.
Senator Ellison —This was an investigation being carried on by the internal audit unit. It was, I thought, not appropriate at that time to advise the Prime Minister.
Senator ROBERT RAY —Just an error of judgment, was it?
Senator Ellison —No, I do not accept that. The investigation was not mine or the Prime Minister's to conduct. I had been advised that the matter had been referred to the internal audit unit, and that was the appropriate course of action. There is the protocol, which we have spoken about, which was put in place by my predecessor and which was tabled in the Senate. I believe that was followed. In all things there is a standard procedure where, firstly, you have to ascertain whether there are any grounds to the complaint or problem, and then it is followed from there. That is a standard procedure. The protocol has been in existence since 1998 and was established with the advice of the Attorney-General.
Dr Boxall —Just to clarify the answer to my question before: I did receive an update in October, in the middle of the investigation.
Senator ROBERT RAY —That is a relief. I would have hoped that you would have had two or three updates, though, given the time it took. We will agree to disagree on whether you should have informed the Prime Minister.
Senator Ellison —I dare say, Senator Ray, that if I had told him you would be asking me what I said and what we did and what he did—
Senator ROBERT RAY —I might have. But there is a big unwritten rule in this business, called commonsense. I would always let the Prime Minister know there is trouble brewing.
Senator Ellison —I think we just agree to disagree on that one.
Senator ROBERT RAY —Did you tell your senior portfolio minister that there was a problem?
Senator Ellison —No. I have answered that question. As you know, Minister Fahey is on the record as saying that he was advised by the department some time in April. My view was that, likewise, it was inappropriate to advise him earlier on, on similar grounds.
Senator ROBERT RAY —I see. What happened to the briefings of 8 September and 23 September—didn't they go to Minister Fahey's office at all?
Dr Boxall —No, they did not.
Senator ROBERT RAY —So you do not have a system in place that ministerial briefs go to the senior portfolio minister?
Dr Boxall —We do, but there was a lapse in this instance.
Senator ROBERT RAY
—Obviously it was not deliberate; otherwise you would have told me. What was the nature of the lapse?
Dr Boxall —The issue was that, because of the sensitive nature of it, the officer concerned did not put it on the electronic system. Nevertheless, the practice is that, if a brief were delivered to the Special Minister of State, a copy would be delivered to the minister for finance. It did not happen automatically because it was not on the electronic system. So there was a lapse when it was done manually and they were not delivered to the Minister for Finance and Administration.
Senator ROBERT RAY —I hope that is not a performance pay issue. I have just two other matters on this narrow area. Can you reaffirm for the committee, Minister, that none of your staff discussed this with staff of the Prime Minister's office prior to 8 May 2000.
Senator Ellison —I have answered that, and I checked with my staff and they have no knowledge of any advice of the matter to the Prime Minister's office.
Senator ROBERT RAY —I am not asserting there was, by the way. I just thought I would ask. Is it correct that there was no contact from 6 September 1999, when it went to Internal Audit, until 22 February this year with Mr Reith on this matter?
Senator Ellison —Contact with whom?
Senator ROBERT RAY —Contact between the department and Mr Reith or your office and Mr Reith on this issue.
Senator Ellison —I think the department is best placed to answer that. I can answer from my office separately.
Mr Fisher —I can answer on behalf of the department. To my knowledge, there was no contact with Mr Reith and departmental officials in that period.
Senator ROBERT RAY —And your office, Minister?
Senator Ellison —I understand there may have been some contact of an administrative nature. There was the arrangement of the interview that was spoken about.
Senator ROBERT RAY —This is the 13 April one?
Senator Ellison —That would have been after.
Senator ROBERT RAY —It is 22 February, isn't it?
Senator Ellison —Yes, because Minister Reith has said that he called me, I think, on that day or 21 February, which I can verify. There was an initial contact with my office, as I have indicated, and there may have been some isolated contact with his office asking my office how things were going. There was a comment that the investigation was still pending, but I have no knowledge of that.
Senator ROBERT RAY —In the initial contact with Mr Reith with you and your office—which is barely in this period I am talking about—did you and Mr Reith ever discuss whether the Prime Minister should be informed?
Senator Ellison —No, we did not.
—I just want to follow up on the information that I received before. This goes to the question of the chronology of interaction between Mr Reith and the department, which you indicated before. I think you indicated that on 12 May DOFA had communicated or replied to Mr Reith that DOFA was seeking advice on issues relating to this matter. Am I right in regard to that? That was my recollection—it was a little while before lunch, so I might have got that wrong.
Dr Boxall —That is correct.
Senator FAULKNER —Could you indicate what the nature of the advice was that you were seeking, and from whom. Was this legal advice you were referring to?
Dr Boxall —As part of the protocol, the special committee needs to go through a number of steps. Towards the end of that week, around Thursday, 11 May and Friday, 12 May, we had reached a point with the special committee where it was time to consult with the Attorney-General's Department as to whether the matter warranted referral to the Australian Federal Police for further investigation. This we did. We received a response from the Attorney-General's Department saying that, in their view, it did warrant reference to the Australian Federal Police.
Senator FAULKNER —We might come back to this. Has the protocol been provided previously?
Senator Ellison —I have tabled it in the Senate.
Senator FAULKNER —So that is the protocol that we are speaking of?
Senator ROBERT RAY —No it is not.
Senator FAULKNER —Well, it is not the protocol, but we will not have that debate again.
Senator Ellison —Can I just make it clear: that was an attachment to a brief in relation to the protocol—that describes the protocol. There is no deed or document or determination which is leather bound as the protocol. That is a copy, as I understand it, of an attachment to a brief which dealt with the protocol.
Senator FAULKNER —In relation to the legal advices sought, have you got a document you could tabled that outlines that?
Dr Boxall —I am sorry, that outlines?
Senator FAULKNER —Just the advices that were sought. I am not going to this at this point, I am just going to the process question of the advices.
Dr Boxall —The process is that we reached a point where the committee had to write to Attorney-General's to see whether the matter warranted reference to the Australian Federal Police, and that is in there for an obvious reason. We received a response from Attorney-General's saying that, in their view, it did warrant referral. That is what happened on roughly—
Senator FAULKNER —If you could provide the dates of those two communications, it would be useful.
Dr Boxall —11 and 12 May, the Thursday and Friday of that week. And there was a letter to Minister Reith on 12 May where, as we said, we acknowledged receipt of the cheque for $950 and we stated that we had sought advice from the Attorney-General's. It was really telling him that we were seeking advice—
Senator FAULKNER —You were outlining the protocol process to him?
Dr Boxall —Exactly. Then later that day we received the response.
Senator FAULKNER —We will come back to that.
—If we are going to be technical, it was an extract from a brief, not an attachment, but it was still part of the brief on the protocol.
Senator ROBERT RAY —Your description of it in the Senate, whilst not deliberately misleading, confused everyone. It was only after we read what you had tabled that we understood that it was not the protocol but a summary of the protocol, and then later it was explained to us that the actual protocol never existed. Anyway, it will do—it tells us what we need.
Senator FAULKNER —Just to conclude this, is there another set of legal advice sought in relation to liability? Can you just clarify that issue for us before we move on to something else?
Dr Boxall —No, unless I have misunderstood the question. At that time—Thursday, 11 May—the request to the Attorney-General was simply: given the evidence, given the material, does this warrant referral to the Australian Federal Police?
Senator FAULKNER —Yes, but what I am asking is: at any point did you seek legal advice on the question of Mr Reith's liability for the $50,000?
Senator Ellison —I might point out, Mr Chairman, upon checking the record, that Minister Reith had already written to the Prime Minister asking that the matter be referred to AFP.
Senator FAULKNER —Yes, but I am asking a different question. There was no need to ask that, because that was information we already had on board.
Dr Boxall —At the time we sought the advice from the Attorney-General on 11th and 12th, we did not seek other legal advice as to personal liability. However, when we communicated with Mr Reith in the letter dated 2 May, to which we referred earlier, we did mention that—
Senator FAULKNER —That was the `please pay' letter, if you like?
Dr Boxall —Yes, that was the letter that outlined the issue. We did mention that we did have legal advice available to us with respect to personal liability for the unauthorised use of telecards, if that is what your question is getting at?
Senator FAULKNER —Yes, that is what I am asking.
Dr Boxall —We did have that advice available, but that was, from my recollection, internal advice.
Senator FAULKNER —So that was generated by your own legal person?
Dr Boxall —We have a legal person in MAPS, and that person was available as a resource to the special committee.
Senator FAULKNER —Did the special committee task that person to provide advice on liability?
Dr Boxall —Indeed. We asked his view because, when we were formulating this letter, we wanted to make sure we had the best information available to write the letter.
Senator FAULKNER —And what indication did that communication to Mr Reith on 2 May give about liability in general terms: that there was a serious question of liability? Is that what you are saying
Dr Boxall —I think it would not be appropriate for us to read out a paragraph from a letter between Mr Reith and the department.
—I am not asking you to read out a paragraph from a letter. Members of the committee have now set the precedent of the tabling of legal advice—Senator Brandis likes this to be done—so I have no doubt that it will be tabled.
Dr Boxall —I am prefacing my response by saying that I have indicated that we made it clear to Mr Reith that, in formulating the letter, we did have legal advice with respect to personal liability for unauthorised use of telecards.
Senator FAULKNER —Thank you. On the Brandis precedent, could that advice be tabled? A new precedent was established in this committee on Wednesday of this week.
Senator BRANDIS —Those who were not here may wish to be informed that, in relation to questions concerning Centenary House, legal advice was referred to voluntarily by an officer from the ANAO and I invited the officer, on behalf of the ANAO, to waive any legal professional privilege that might attach to it. He replied in words to the effect that he was perfectly happy to supply the committee with any document that was within the possession or the power of the ANAO. That was a judgment of his. It certainly does not establish a precedent. What the protocol for a department, as opposed to an agency, might be is a matter for the department.
Senator ROBERT RAY —You will be really good when you stop taking yourself seriously. So the answer is no, you will not table that?
Senator Ellison —We are not required to. Senator Ray, you and I have had this discussion before about tabling legal advice.
Senator FAULKNER —Are you or are you not tabling it?
Senator Ellison —No.
Senator ROBERT RAY —But you would table the legal advice of the Solicitor-General. In fact, you gave that to the press before you gave it to anyone else, didn't you?
Senator Ellison —That was a decision that I think was made by the Attorney-General.
Senator ROBERT RAY —I see. Thanks for that consistency.
CHAIR —I have some questions that relate to this particular matter, and I think Senator Brandis has some that relate to MAPS but on another issue.
Senator ROBERT RAY —Hold on, Mr Chairman. We still have plenty left on Mr Reith.
CHAIR —I understand that, Senator Ray. My questions relate to Mr Reith.
Senator ROBERT RAY —Yes, I know they do. But you will come back to us before we go on to other MAPS issues.
CHAIR —I just thought I would flag it. Just prior to lunch, Mr Fisher, in response to a question from Senator Ray you said that departmental officers were given specific instructions not to look for particular phone numbers called. I want to explore that culture for a second. I understand that, in about 1991, some changes came about with respect to DOFA and members and senators receiving itemised telephone accounts. Could you outline roughly what those changes in 1991 were?
Mr Fisher —My understanding is that instructions were issued to DAS staff at the time, in ministerial and parliamentary services, that they were not to access the itemised phone records of senators and members and that, at about the same time, senators and members themselves were assured that departmental staff had been given those instructions and that they would not have access to itemised records.
—Let me explore the history a bit. Some other senators, Senators Conroy and Bolkus, I think, have asserted recently that the reason for those changes in 1991 was due to representations to Senator Bolkus, who was the minister at the time, by then Senator Bronwyn Bishop. This was repeated again in the Senate the other day, I think, on 9 November, by Senator O'Brien. Is that correct?
Mr Fisher —It is hard for me to be definitive on that. I can say that, from our records—as you would appreciate, over the last couple of months we have been interested to establish the basis for the policy approach that was taken—
CHAIR —That is why I am asking the question, Mr Fisher.
Mr Fisher —so we did go and look. In the late 1980s and early 1990s there were numerous representations to the ministers of the day expressing concern about access by ministerial and parliamentary services to itemised phone accounts, concern about the privacy and, sometimes, concern about the security implications of that. I have not been able to establish conclusively that the policy decision articulated in 1991 was the result of representations from Senator Bronwyn Bishop. There were representations from senators and members on both sides of the house.
CHAIR —Could you say that it certainly was not just Senator Bronwyn Bishop who was responsible for the change in that policy?
Mr Fisher —Indeed as far as we can source it, the decision was made in February 1991, which is a little before Senator Bronwyn Bishop's representations in that year. That is not to say that there were not other representations. I cannot prove it conclusively but I can say that the decision predated her representations.
CHAIR —I ask only because there has been a lot of buck-passing in both the Senate and elsewhere on the reasons for the change in this policy. I just wanted to explore that. My understanding is that, in 1995, Mrs Crosio, the member for Prospect, raised this matter. Do you know in what context she did so?
Mr Fisher —I understand that was in 1993.
CHAIR —Was it? You might be right.
Senator ROBERT RAY —Do you think the questions are related? Get them accurate before you give them to him.
CHAIR —Come, Senator, I gave you a very good run.
Senator ROBERT RAY —Show a bit of form instead of reading it out parrot-like.
Mr Fisher —I understand in 1993 the then parliamentary secretary reiterated the advice to senators and members that MAPS staff would not have access to itemised accounts.
Senator ROBERT RAY —I will interrupt you there. Is it now okay to quote advice given to people in executive positions in a previous government? I am not trying to stop it. In fact, I am finding it an interesting precedent. Do you understand the restrictions that we went through at PM&C the other day? I do not object to it, but do you understand the point I am making?
CHAIR —Yes, I do.
Senator ROBERT RAY —You are asking questions about advice to a previous government, and the minister is not intervening to protect one iota and uphold the conventions of government. But please continue.
—I take that on board, Senator Ray. Mr Fisher, have you finished on that?
Senator Ellison —I understand there was a public letter. A letter written to members and senators is not a document of a prior government.
Senator ROBERT RAY —The esteemed chairman asked about advice to Mrs Crosio. If he wants to ask about questions of letters that have gone out, that is fine.
CHAIR —No, it was a circular issued by Mrs Crosio.
Senator Ellison —That is what I thought he was talking about.
Senator ROBERT RAY —It was advice to Mrs Crosio.
CHAIR —I do not think so, Senator Ray. She circulated some advice.
Mr Fisher —My answer is certainly describing advice from the parliamentary secretary at the time to senators and members. I certainly have not commented on any advice that might or might not have been provided to her in her capacity as parliamentary secretary.
CHAIR —It was a public document, wasn't it—at least to the extent that it went to senators and members?
Mr Fisher —It was advice issued to all senators and members.
CHAIR —Thank you for clearing it up, Mr Fisher. During the creation of the format of the monthly management report you still use today, did the Labor minister responsible for MAPS express any concern at that time that members' and senators' telephone accounts were not itemised? Did they express any concern that there was no separate line item for telecards themselves?
Mr Fisher —I would like to be as helpful as I can, but I do not think that I can talk about advice, comments, concerns or otherwise of the minister of the day.
CHAIR —During the creation of the monthly management reports, was there any concern expressed anywhere about the fact that members' telephone accounts were not itemised?
Mr Fisher —If I were aware of advice of that nature, I could not confirm or deny it.
Senator Ellison —Can I just confirm with the Chairman that he is talking about public advice? Was it of the same complexion as the one issued by the parliamentary secretary?
CHAIR —No, I was really asking whether there was any concern expressed by the minister at the time publicly?
Senator Ellison —That is a different story.
Senator ROBERT RAY —But how the officer would know is another matter.
Senator Ellison —I think the officer has taken it as far as he can.
CHAIR —There has been some media speculation recently that it was somehow improper for the 8 September 1999 brief to be sent to the minister. What is your view on that?
Mr Fisher —I am not aware of—
CHAIR —The brief of 8 September 1999 in relation to this matter. I understand there was one on 8 September, and another one there has been media comment on relates to 23 September 1999.
Mr Fisher —I am not aware of speculation or comment in the press that it was inappropriate for us to brief.
—Was any direction ever given to DOFA by the Special Minister of State or the minister's staff to stall or delay the investigation?
Mr Fisher —I can answer that one. I am not aware of any instructions from any source about how we should conduct the investigation.
CHAIR —Further, was any obstruction placed in your way by the Special Minister of State or the minister's staff?
Mr Fisher —I am not aware of any obstruction by anybody.
CHAIR —Thank you.
Senator ROBERT RAY —I do not think I will follow up any of those. The decision to list telecard bills on the electorate office phone bill was not as a result of any representations by any members of parliament that we know of. That is separate to not having an itemised account, isn't it?
Senator Ellison —Just to clarify that, are you talking about the monthly report and the fact that it is not disaggregated as opposed to itemised?
Senator ROBERT RAY —The concern expressed by—and I remember it—a number of members and senators back in 1991or whenever it was for an itemised account was privacy, because why should public servants be able to go through it and see every phone call a minister or member of parliament had made? I think that was a legitimate decision. I am going to the decision to include that phone bill within the electorate office phone bill rather than having just a one-line disaggregated account. When was that decision made and why?
Mr Fisher —I will try to be as helpful as I can, but you will understand if I cannot be detailed, given the circumstances. The decision in February 1991 arose out of some advice and, while I cannot talk about the details of advice or review anything as to the deliberative processes, I think it is safe for me to describe broad issues or areas of issues that might have been addressed. My understanding is that the decisions around the format of reports and the decisions around access by staff to itemised accounts were related issues that were addressed around the same time.
Senator ROBERT RAY —I think the claim was made that you would not know if your telecard was being misused. But going from the figures that you have given us in a variety of ways, we know that Mr Reith's telecard for the last four calendar years—in fact, for slightly less than that—came to $42,000. So we can presume that for the calendar years 1993, 1994 and 1995 only $8,000 was spent on it. I think that is logical, if it is $50,000. In reading his annualised electorate committee report—that is, the one that comes out just after July—Mr Reith should have been able to see a massive jump in his electorate office phone bills in at least one of those years. It then may have steadied so you could not detect it. Isn't that true?
Mr Fisher —I will provide an initial answer and then invite Mr Gavin, if he wishes, to expand. I cannot comment on what Mr Reith or his staff should have been able to see. I can say that the monthly management reports included the expenditure and that there are patterns of expenditure, with hindsight, that you can table and patterns of expenditure that jump from time to time.
Senator ROBERT RAY
—I would make a suggestion, Minister, and it may not be possible. The monthly management reports are fine, as they go, but you eventually produce a yearly one, and we have to certify that it was used for parliamentary purposes. We do not certify the accuracy of it because we are not in a position to do so, but we certify that it was for parliamentary use. I suggest that, when you lay out all those categories, you lay out the previous financial year categories with them for the purpose of comparison. Then we might be able to detect if there is a sudden jump, which would trigger in our mind that we should make inquiries. It is just a suggestion that I make for you to take on board.
Senator Ellison —That is not an unreasonable one, Senator Ray; and certainly I will take that on board. I might add that with the telecard matter, I have since made a decision, of course, to disaggregate that from it.
Senator ROBERT RAY —Yes; I think that is good.
Senator Ellison —But certainly your comment is not an unreasonable one.
Senator ROBERT RAY —I agree with your decision to disaggregate the card, especially now. As you know, many people have not used this card until these things arrived; if you are interstate or overseas the use of a telecard is far cheaper than going through any other method through Telstra direct, so they are going to be used again. They were used, then they were not used, and now they are going to be used again; so disaggregating them is a good idea. Going to the protocol—and we want to go through the procedures of the protocol now—were any details of the protocol ever publicly released, Minister?
Senator Ellison —Not to my knowledge, but I will just check with the department. No, they were not.
Mr Gavin —The minister said no.
Senator Ellison —I said no. I have confirmed that: no.
Senator ROBERT RAY —Is there any reason why it wasn't?
Senator Ellison —I am not aware of why my predecessor did not. I was advised of the protocol during the course of this matter—although I was aware of a set procedure. Let me put it this way: when I became Special Minister of State, I was aware that there was a procedure which was followed if there was a complaint or an anomaly—you know how a number of things can arise—and that normally a letter in the first instance can sort matters out, in the vast majority of cases. But this was the first matter that I had dealt with—which I had carriage of—which required the protocol to be followed further and I was advised of the protocol in detail, not only by my office but by the department, after this matter come to light.
Senator ROBERT RAY —It seems to me that the protocol has its origins in an attempt to put objectivity into a situation and avoid partisanship.
Senator Ellison —That was the reason expressed for it, yes—or one of them.
Senator ROBERT RAY —Which is why your should not have sent the Prime Minister all the telecard details before they were verified, but nevertheless! When was the matter referred to a departmental committee?
Senator Ellison —That was not the complaint.
Senator ROBERT RAY —I have just made one, but it does not need to go to the committee. When was the matter referred to the departmental committee under the protocols?
Senator Ellison —I might just correct the record. I mentioned the first matter that I had carriage of; but I did not have carriage of this matter. The investigation was conducted by the IAU, but I clarify for the committee that it was the first investigation of this sort which had occurred whilst I was minister.
Senator ROBERT RAY —That was understood.
—We have been analysing different words and meanings today, and I just wanted to make sure it was clear.
Senator ROBERT RAY —So you should, given the Prime Minister's performance this morning. When did the committee first meet? When was it referred to the committee, first of all?
Dr Boxall —We had a meeting on Tuesday 14 March. This obviously followed the completion of the internal audit investigation at the end of February. So we had a meeting on 14 March, but the first meeting was in a sense a preliminary meeting, but it was not one of the special committee. The first meeting of the special committee was 19 April, which followed the meeting of Mr Wight and Mr Gavin with Mr Reith and his chief of staff on 13 April.
Senator ROBERT RAY —Mr Reith's chief of staff was present at that 13 April meeting?
Dr Boxall —That is correct.
Senator ROBERT RAY —Is that previously on the evidence? We may not have asked.
Dr Boxall —I do not know whether it has previously been put in evidence or not, but it is—
Senator Ellison —I am sorry, what was that point, Senator Ray?
Senator ROBERT RAY —Dr Boxall, in helping us, also mentioned that Mr Reith's chief of staff was present on 13 April. We inadvertently formed the opinion that it was Mr Reith, Mr Wight and Mr Gavin only. So there was a fourth person there.
Dr Boxall —That is correct. There were four people.
Senator ROBERT RAY —So you met on 14 March for your preliminary meeting. Did you make a decision then, according to the protocols, to seek an explanation from Mr Reith?
Dr Boxall —At the meeting on 14 March, which was not really a meeting of the special committee—it was a preliminary meeting—we decided that we should approach Mr Reith and meet with him.
Senator ROBERT RAY —I want to come back to that meeting on 13 March. Then you met on 19 April—did you meet again?
Dr Boxall —Yes. The meeting on 19 April covered both. Part of the meeting was on 19 April and it finished with a meeting on 20 April, but it was all one meeting. The next meeting was Wednesday, 10 May. The next meeting was Wednesday, 17 May. Then there were no meetings for quite a while, because the police investigation was taking place. There was a meeting on Monday, 11 September. There was a meeting on Tuesday, 10 October and another on Thursday, 12 October and—
Senator ROBERT RAY —Just to save you the bother because you are struggling—
Dr Boxall —It will not take long now, Senator—then Thursday, 19 October and Friday, 20 October.
Senator ROBERT RAY —Plenary session there.
Dr Boxall —Wednesday, 25 October, and that is it.
Senator ROBERT RAY —Did the committee seek the advice, as dictated in the protocol, of the Secretary to the Attorney-General's Department as to whether this warranted a referral to the AFP?
Dr Boxall —That is correct. That is what Senator Faulkner and I were discussing before. That advice was sought on 11 May.
Senator ROBERT RAY
—But when was the matter put in the hands of the AFP? We have got conflicting reports from the Prime Minister, Mr Reith et cetera. I thought that was 10 May.
Dr Boxall —The Prime Minister referred it to the Federal Police, I think, on 10 May, but our process continued.
Senator ROBERT RAY —Did you know that the Prime Minister had done this?
Dr Boxall —Yes, because it was made public at the time—so we knew.
Senator ROBERT RAY —Made public—by whom? We did not know.
Dr Boxall —I beg your pardon. We knew but it was not made public.
Senator ROBERT RAY —We knew too.
Senator FAULKNER —Which is now pretty obvious.
Dr Boxall —Senator Ray, I retract the statement that it was made public. It appears that the way we found out was because the AFP approached us.
Senator ROBERT RAY —What I was wondering was why you had approached the Secretary to the Attorney-General's Department on 11 May to see if this required referral when it had already been referred to the AFP by the Prime Minister the previous day.
Dr Boxall —Because we had our own process and we were never requested to stop the process.
Senator ROBERT RAY —I see.
Dr Boxall —And because, as is well known now—I take your point that it may not have been well known at that time—the Prime Minister referred it to the Federal Police and the Federal Police contacted us. Nevertheless, we continued our process and it so happened that the Prime Minister referred it to the Federal Police right in the same week that we approached the Secretary to the Attorney-General's Department. We did advise the Secretary to the Attorney-General's Department that we understood it had already been referred to the Federal Police. So it wasn't as though he was giving us advice without knowing that the Prime Minister had referred it to the Federal Police. Nevertheless, he did give us advice that it did warrant referral to the Federal Police.
Senator ROBERT RAY —So there was never any suggestion to the Prime Minister that he should have awaited your final processes. Why did he jump the gun? That question is to the minister.
Senator Ellison —I was advised that the matter had been referred by the Prime Minister. I am not privy to the reasons for that, but I understand that he did seek the advice of the Attorney-General and that was the advice received from the Attorney-General.
Senator ROBERT RAY —Yes, I understand that. But you have got your processes in place. Why not wait for them to finalise? We have waited seven or eight months already. Why not wait for the next day or the next week?
Senator Ellison —I think the Prime Minister had the advice from the Attorney-General, but in the circumstances it was still appropriate for the special committee to continue its deliberations. It may well be that the committee might have come up with something different, a different aspect.
Senator ROBERT RAY —It would have been too late then, would it not?
—Not necessarily, because it might have also thought some other matters might have been referred. Who knows? It would have been inappropriate for the committee not to have concluded its deliberations.
Senator ROBERT RAY —Was that meeting on 10 October—you have not met for a while—prompted by the Canberra Times article of the same day, or was it long scheduled for that day?
Dr Boxall —That was clearly prompted by the fact that the matter became public on, I think it was, the Monday or the Tuesday.
Senator ROBERT RAY —The Tuesday, I think.
Dr Boxall —It was clearly prompted by that.
Senator ROBERT RAY —So in the end, Minister, it was Mr Reith that went and told the Prime Minister.
Senator Ellison —I believe that is correct, although I am not privy to that.
Senator ROBERT RAY —Well, it wasn't you.
Senator Ellison —It wasn't me, but I understand it was Minister Reith who advised the Prime Minister because that was in the letter—that he was requesting that the matter be referred to the police.
Senator ROBERT RAY —Just to return to the fact, would you remind me—because it slips my memory—what the date was on which you informed Mr Reith that he would be liable for all payments made outside entitlements on the telecard?
Dr Boxall —That is the letter of 2 May.
Senator ROBERT RAY —That is right.
Dr Boxall —We need to be clear. It said that he `may be'.
Senator ROBERT RAY —Yes, `may be'.
Senator FAULKNER —That was from your departmental legal adviser? I assume you mean that it was a departmental officer, do you, Dr Boxall?
Dr Boxall —I do indeed.
Senator FAULKNER —As opposed to a consultant or contractor.
Dr Boxall —Yes—on our staff.
Senator FAULKNER —Given that advice, did you seek any other advice on the liability question to firm up that legal advice that had been provided in house subsequent to the provision of that original advice?
Dr Boxall —Yes, we did get advice as to personal liability much later in the process. I will hand over to Mr Fisher.
Mr Fisher —Following publication of the Solicitor-General's opinion, the department was still in the position that it had moneys outstanding. We sought legal advice as to the responsibilities of the secretary to the department under the FMA Act to recover moneys outstanding, and we sought advice on the liability of Mr Reith in respect of those moneys.
Senator FAULKNER —And who did you seek that from?
Mr Fisher —We sought advice from the Attorney-General's Department and two external legal firms, Blake Dawson Waldron and Phillips Fox.
—Why did you go to three sources of advice? I am not suggesting that second and third opinions were not appropriate but you were certainly covering your bases.
Mr Fisher —The issue was very sensitive. It was one where, clearly, there were views in the public domain, and we thought it would be sensible to ensure that we were not reliant on a sole source of advice.
Senator FAULKNER —This is in relation to the first advice that came from your internal processes. Basically Mr Reith just did not accept liability, did he?
Senator Ellison —He paid the $950, subject to further discussion, which could have been more.
Senator ROBERT RAY —When exactly did he pay that?
Dr Boxall —He paid the $950 on—
Senator Ellison —He subsequently paid the whole bill.
Senator ROBERT RAY —Yes, but when?
Senator FAULKNER —But DOFA wrote to Mr Reith on 9 October and said, `You've got to front up with a lot more money,' didn't you?
Dr Boxall —Your question, Senator Faulkner, was: when did Mr Reith pay the $950?
Senator FAULKNER —That was Senator Ray's question.
Dr Boxall —I beg your pardon. That was attached to the letter of 8 May.
Senator FAULKNER —You sent him a letter on 2 May saying, `Pay up.'
Dr Boxall —And he paid that $950.
Senator FAULKNER —That is right, isn't it, Dr Boxall? In that letter DOFA expresses its view that Mr Reith is personally liable.
Senator ROBERT RAY —`May be.'
Senator FAULKNER —Well, it was personally liable; now it is `may be' personally liable.
Dr Boxall —Senator Faulkner, it has always been `may be' personally liable.
Senator FAULKNER —He may be personally liable—and then he sent the cheque on 8 May.
Senator ROBERT RAY —Are you going through some renaissance of transparency that would enable you to table that letter?
Dr Boxall —There is a real difficulty here, Senator Ray, because this is an exchange of correspondence with a senator or a member with regard to an entitlement and, as you know, there are lots of exchanges of correspondence between MAPS and individual senators and members. I realise this is a rather extraordinary exchange, so I would not be inclined to table the letter at this stage.
Senator Ellison —Mr Chairman, I might just add that it has not been the practice in these sorts of hearings to table the correspondence between the minister—
Senator ROBERT RAY —You just send the information on to the Prime Minister without it being checked.
—But this is dealing with a query on entitlement and, Senator Ray, you would know I have conversations with a lot of members from all sides and they remain personal to me.
Senator ROBERT RAY —I only asked the question; I did not demand that it be tabled.
Dr Boxall —I was just interested in when we might have a break.
CHAIR —I think we will be finishing at 4 p.m. or 4.05 p.m. and resuming another time.
Senator Ellison —Can I just make this point, Mr Chairman; I just want to correct the record.
Senator FAULKNER —Sure, I am in the middle of a line of questioning, but please correct the record.
Senator Ellison —I have been advised by the Prime Minister's office that a check has been made and that there has been no mention made by the Prime Minister's press office in relation to the figures that I mentioned on telecard usage of other members and senators. There had been no mention made until the press release sent out by Senator Faulkner yesterday. The allegation by Senator Ray is denied, and no such activity took place.
Senator ROBERT RAY —And I stand by my allegation. Just for the record I stand by that. I know who the finger was pointed at; I know who pointed the finger. It turned out to be garbage anyway and it was not printed. I am sorry, Mr Chairman.
Senator FAULKNER —From what we know, let us try to briefly summarise this legal advice issue. DOFA writes to Mr Reith on 2 May saying, `Pay up; you may be liable.' I think that is fair. That is correct, isn't it, Dr Boxall?
Dr Boxall —Senator Faulkner, `pay up' is a little cryptic a summary.
Senator FAULKNER —All right, `please pay'.
Dr Boxall —To be specific, we said that, on the basis of our legal advice, he may be personally liable for all the unauthorised use and that `I'—that is the author of the letter on behalf of the committee, not me personally—`therefore proposed to issue you with a debit note for the full amount, less the cost of any calls that were made by you'. So it was not an explicit request to pay up. In a sense, depending on his response, we let it be known in the letter that we proposed to issue the debit notice for the full amount.
Senator FAULKNER —Was the debit notice ever actually sent?
Dr Boxall —No.
Senator FAULKNER —And what would have been the amount of the debit note?
Dr Boxall —It would have basically been the amount that he ended up paying less any calls that he might have identified that were made by him.
Senator FAULKNER —In round figures, the best part of $50,000?
Dr Boxall —Yes, in round figures, $47,000, $48,000, that sort of number.
Senator FAULKNER —Thank you for that. Mr Reith replies on 8 May. He includes a cheque that he says covers his son's calls—that is $950. He works that amount out. I think that is accurate, is it not?
Dr Boxall —To be completely accurate, I think it was calls made by a family member.
—I am sorry, a family member, an amount that he works out. You reply, DOFA replies on 12 May saying that you are seeking further legal advice, and we are just dealing with that question of the further legal advice at the moment.
Dr Boxall —There are two strands here, Senator Faulkner. Yes, we reply saying that we are seeking advice of the Attorney-General about whether it warrants referral—
Senator FAULKNER —I am sorry, I just missed the start of what you said. I will just confer with my colleague.
Dr Boxall —There are two strands here. We were at the stage where Mr Reith had replied with a cheque of $950. We then replied with a receipt for his cheque of $950 and advised him that we were seeking advice of the Attorney-General's Department as to whether the matter warranted referral to the AFP, and we have discussed that. Then much later in the piece, after the Solicitor General's opinion, as Mr Fisher explained in an earlier answer, we then sought legal advice from three sources which Mr Fisher explained. The purpose of that was that, notwithstanding the results of the police investigation and the Solicitor General's opinion, we still faced the issue that we were owed roughly $47,000.
Senator FAULKNER —Yes, but your internal advice was also in conflict with the Solicitor General's advice. You did not accept the Solicitor General's advice, did you?
Dr Boxall —Our internal advice was much earlier in the piece and—I am not a legal expert—it was on a different issue. We thought, based on our internal advice, that Mr Reith may have a personal liability. The Solicitor General's advice, my understanding is, goes to the issues of personal liability after they had received the report of the AFP but nevertheless, notwithstanding that advice, we were sitting there being owed the best part of $47,000 or $48,000 so the question was: what do we do about it?
Senator FAULKNER —Sure.
Dr Boxall —So the committee met and sought further advice about whether we would press the issue with Mr Reith. However, as you well know, in the meantime, Mr Reith indicated that he would pay.
Senator FAULKNER —Yes, but after this exchange of correspondence in May you were still pressuring Mr Reith to pay up, weren't you?
Dr Boxall —We did not press Mr Reith straight after that because things went into abeyance while we had a police investigation.
Senator FAULKNER —Isn't it true that the Solicitor General bought into this because at the end of the day you had one set of advice from DOFA in relation to personal liability and that had been communicated to Mr Reith and Mr Reith, frankly, was doing all he could not to front up. That is not a question to you, Dr Boxall, the minister might care to answer that.
Senator Ellison —It was the Attorney-General, I understand, who obtained the Solicitor General's advice. Remember that it was the Department of Finance and Administration that had that internal advice which was not sought by the Attorney-General. You have heard evidence to the effect that the previous advice, the internal advice of the Department of Finance and Administration, turned on a different point.
—We will explore this when the committee resumes on these issues. But let me say this: the department, because it was dissatisfied with the situation, did not go and get one set of legal advice, or two—it got three. It went to the Attorney-General's Department, to Blake Dawson Waldron, and then to Phillip Fox, and sought advice on this liability question again.
Senator Ellison —You cannot compare that with the obtaining of the Solicitor General's advice though. The Solicitor General's advice was obtained in completely different circumstances. As Dr Boxall has pointed out, the previous advice given by DOFA was from a different point.
Senator FAULKNER —The jigsaw is starting to fit together, Senator.
Senator Ellison —No, there is no jigsaw.
Senator FAULKNER —The jigsaw is starting to fit together.
Senator ROBERT RAY —In relation to this meeting on 13 April, the following account was given in Melbourne on 13 October 2000 in part of that meeting which said—and this is Mr Reith speaking:
Blind Freddy could have seen I was not making those phone calls. I sat down with the department and said, `If you get a bill for a million dollars would you have paid it?' Their answer was, `Yes, we would have paid it.' I said, `Would you have told me?' The answer was, `No, we would not have.'
Is this is a fair summary of the conversation that would throw enormous discredit on the department if it said it would pay a million dollar bill? Is this a fair summary of the discussions?
Senator Ellison —You are going to the detail of what was said; who said what and to whom.
Senator ROBERT RAY —I have not. Mr Reith has gone to this detail, not me. I have not started that. Mr Reith has put on the public record that apparently some bozo in the department has said to him, `Look, if the bill was one million dollars, we would have paid it.' I do not believe that. I could not believe that of this department and you will not give them a chance to defend themselves.
Senator Ellison —It is a different aspect in that what we are talking about is a conversation that the department has had with a member or a senator in relation to entitlements. You have already heard the secretary of the department say that that is not normally divulged. We are also talking about correspondence in that regard.
Senator ROBERT RAY —Yes, but I would argue to you, Minister, at least this: I have not divulged it. Mr Reith has put on the public record a summary of what happened which shows enormous discredit to this department unless it is rebutted. He is quoting here a conversation inside the meeting of 13 April. I am not. I am asking: is that accurate? There were only two officers at the meeting—they are both sitting at the table and we have known them for a long while. I cannot believe they would say anything like that. And you are not going to give them a chance to say no.
Senator Ellison —Senator Ray, the principle has been enunciated earlier that the department does not divulge discussions in detail they had with members and senators. The secretary has covered that.
Senator FAULKNER —Not when it fits up a minister.
Senator ROBERT RAY —I will return to this.
—You cannot point to an instance in these sorts of hearings where the department has come before a committee and outlined word for word what was said between it and a member or senator. It does not matter where that member or senator comes from with respect to political allegiance.
Senator ROBERT RAY —So they can just be verballed at will.
Senator FAULKNER —Can I flag with you, Dr Boxall, that I will be returning to the issue of the legal advices. Could you take on notice the cost for the private consultants and contractors, which you might be able to provide relatively quickly? This is on the advices of liability from Blake Dawson and Phillips Fox.
Dr Boxall —Yes.
Senator FAULKNER —I will return to that issue. There is much more to be explored.
Dr Boxall —Mr Fisher wants to add something.
Mr Fisher —We will certainly take that on notice. In my response earlier, I said the Attorney-General's Department. That was incorrect. I should have said the Australian Government Solicitor, which of course is part of the Attorney-General's portfolio. It was a slip of the tongue; I apologise for that.
Senator FAULKNER —I was not sure. That makes more sense. Thanks for that.
CHAIR —This committee will adjourn till Tuesday evening, pending agreement of the Senate. I am not sure at what time yet. We will let you know what time.
Senator Ellison —It would be nice if we had some input into that. We do have officials to think of. I know we are sitting late that night. Perhaps the committee could liaise through its secretariat with the department.
Senator FAULKNER —We ought to be able to limit the number of officers required.
Senator ROBERT RAY —Our intention would be from 7.30 to when the Senate adjourns, which will either be 10.30 or 11.10 depending on how many yappers we have got on the adjournment.
CHAIR —We can settle that at a private meeting on Monday.
Dr Boxall —Do senators know which areas they would like to pursue on Tuesday? I take it there will be extension of the discussion on MAPS. I do not want to be presumptuous, but I do not know whether Senator Lundy is here to ask questions about IT of DOFA. Is that correct?
Senator LUNDY —Yes, it would be an opportunity to ask questions. If those officers could be present when we are due to start OASITO, that would be fine. Can I just flag that I am currently unavailable on Tuesday night so I will be raising with the committee the possibility of scheduling another time specifically for OASITO and officers involved in finances and IT arrangements.
CHAIR —We will sort this out on Monday, Dr Boxall, and let you know shortly thereafter.
Dr Boxall —Of course we will bring whatever officers are required. If it is about internal DOFA IT, which falls in our corporate area, or about IT outsourcing, which falls with the office of assets sales, nevertheless she might have some questions for us. Is that correct? There are two areas of IT?
Senator LUNDY —That is right.
Dr Boxall —Thank you.
CHAIR —Dr Boxall, Minister and officers thank you very much for your assistance today.
Committee adjourned at 4.06 p.m.