- Parliamentary Business
- Senators & Members
- News & Events
- About Parliament
- Visit Parliament
STANDING COMMITTEE ON ECONOMICS
INNOVATION, INDUSTRY, SCIENCE AND RESEARCH PORTFOLIO
Australian Nuclear Science and Technology Organisation
- Committee Name
STANDING COMMITTEE ON ECONOMICS
Department of Innovation, Industry, Science and Research
Australian Nuclear Science and Technology Organisation
- Sub program
- System Id
Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Table Of ContentsDownload PDF
Previous Fragment Next Fragment
STANDING COMMITTEE ON ECONOMICS
(Senate-Tuesday, 3 June 2008)
INNOVATION, INDUSTRY, SCIENCE AND RESEARCH PORTFOLIO
Australian Nuclear Science and Technology Organisation
Commonwealth Scientific and Industrial Research Organisation
Australian Institute of Aboriginal and Torres Strait Islander Studies
Office of the Chief Scientist
- Australian Nuclear Science and Technology Organisation
Inspector-General of Taxation
Australian Office of Financial Management
Australian Bureau of Statistics
- Inspector-General of Taxation
- INNOVATION, INDUSTRY, SCIENCE AND RESEARCH PORTFOLIO
Content WindowSTANDING COMMITTEE ON ECONOMICS - 03/06/2008 - INNOVATION, INDUSTRY, SCIENCE AND RESEARCH PORTFOLIO - Australian Nuclear Science and Technology Organisation
CHAIR —I welcome the staff of ANSTO. Senator Eggleston?
Senator EGGLESTON —Firstly, I believe that, apart from ANSTO’s Chairman Ziggy Switkowski offering to resign in the light of the RP’s antinuclear stance, I have a media release here from Minister Carr that came out the week before the budget making public the decision by ANSTO’s chief executive Dr Ian Smith that he had decided not to accept the offer of an extension of his contract. That media release came out a week before the budget. It decimated ANSTO’s finances. Senator Carr, was Dr Smith aware of the pending cuts, and did this affect his decision to leave ANSTO, do you think?
CHAIR —I am sorry, I forgot to invite an opening statement. Do you wish to make an opening statement?
Dr Cameron —No.
Senator Carr —I am sure Dr Smith would have been advised of the nature of the budgetary arrangements, but his decision to leave ANSTO—and I can say this as a direct result of personal conversations with him—had nothing whatsoever to do with the budget.
Senator ABETZ —When was Dr Smith advised of the budgetary cuts to ANSTO?
Mr Paterson —He would have been consulted as part of the normal budget process. I cannot give you a discrete time.
Senator EGGLESTON —So he would have been aware of them; that is the point we are trying to make. So he must have known they were coming?
Mr Paterson —No, you cannot conclude that.
Senator ABETZ —In that case, can you tell us when he was told? You can take it on notice.
Mr Paterson —We will take it on notice.
Senator EGGLESTON —Could you advise the committee how the process for finding a replacement for Dr Smith is proceeding? Has the department found it difficult to find a replacement, given the budget cuts to ANSTO, making it a far less attractive kind of job?
Senator Carr —The normal process will be followed. It is true that filling this particular vacancy historically has not been easy. That was the case on the last two occasions, to my knowledge, during the term of the previous government.
Senator ABETZ —It will be even more difficult now with the budget cuts because anybody who takes on the job will have a very difficult task in trying to balance everything up surely?
Senator EGGLESTON —In fact, ANSTO has announced the loss of 10 per cent of its work force and a restructuring of the organisation. Would you be good enough, Minister or Mr Paterson, to outline what the restructuring will produce and the specific details of what positions are to be axed?
Senator Carr —The implementation of the budget changes is a matter for ANSTO, including the operational matters that occurred prior to the budget.
Senator EGGLESTON —All we are asking for is an outline of the restructuring.
Senator Carr —And I am asking the officers to respond.
Dr Cameron —There were two sets of pressures on the organisation that resulted in this reduction. The first was the changes in the budget, which we have talked about a number of times. The second relates to some underlying pressures for the organisation. We are an asset intensive organisation. We provide a number of large assets which are used by scientists all over the country. Because we operate those assets we have operating costs. We were aware that for the year ahead those costs were expected to increase between six per cent and eight per cent. In fact, one of our large costs, electricity costs, were predicted to increase by 20 per cent. We had to take into account the anticipated increases in costs for the year ahead and that combined with reductions in the budget meant that we had to take action sooner than we had originally planned to do so.
Senator EGGLESTON —You have a reduced budget and increased costs. You are talking about taking action. But can you give us some indication of what programs ANSTO will cut or reduce and what are the details specifically of the costs that will be saved by doing that?
Dr Cameron —Yes. We have identified that there are two sides to the organisation: there is the operational side and the research side. In the operational side we have identified a number of systems and activities whereby we believe by synergies and efficiencies we can reduce costs. In some cases that does mean reduction and delays in activities in forward years. In the research side we have had, through our own process and through an external advisory committee process, a review of our research portfolio and indicated a number of those research areas that we will cease or reduce in size.
Senator EGGLESTON —Could you give us an indication of what those areas are specifically?
Dr Cameron —Not at this stage, because we are working that through with the institute heads. But clearly those areas that relate to utilisation of new research for OPAL will be unaffected. We think those are important as our core activity, and they will continue. They will be looking at some of our other research portfolios in environmental search and materials research.
Senator EGGLESTON —Are you not prepared to give further details of what is involved?
Dr Cameron —We have not yet worked out all those details, and I should explain why. We have done this reduction process in two stages. The first stage is a voluntary reduction process. We have offered voluntary redundancies to people. We are still processing those offers and, until we know the outcome of that, we will not know how many we might need to reduce in an involuntary process later on. The process that we will go through is to look at those offers of redundancy and the areas from which they come and determine whether or not they create the size of reductions that we need in the areas that I have identified earlier.
Senator EGGLESTON —Does that mean in effect that your research activities will be governed to some extent by what residual staff you have got?
Dr Cameron —No, we have made it very clear that whatever we do will not affect our strategic direction as an organisation. It will not affect our core activities. So the reductions that we made will be in areas that are more peripheral to our core activities, and we will make sure that we do not do anything that would undermine our core skills base as well as an organisation.
Senator EGGLESTON —One of your core activities is the production of isotopes for use in medical imaging. Would you like to tell us whether the production of medical isotopes, radioisotopes, will be affected?
Dr Cameron —That is essentially part of our activity that we regard as core. We will not be doing anything that would affect our ability to supply nuclear medicines.
Senator EGGLESTON —We heard in the last lot of budgets that because of the rebuilding, was it, or the problems with your building that were going on, you had cut isotope production. Have you restored that to previous levels and are you still importing isotopes?
Dr Cameron —We are still importing some of our bulk isotopes. With the restart of our OPAL research reactor we are beginning to get back to a process of producing indigenous supply. But in terms of our bulk isotope, which is molybdenum, it will be some months yet before we are in a position to supply all of that.
Senator EGGLESTON —Is that meeting the demand around Australia from Australian hospitals and so on for medical isotope supplies?
Dr Cameron —I think in general terms, yes. Unfortunately, when you are importing, you get times when the deliveries do not arrive. They are offloaded from aircraft, or the production facility overseas does not supply you what you need. We have one of those approximately every two and a half weeks. We then have an emergency protocol arrangement with the nuclear medicine community in which we will allocate on a priority basis to them. There are times when we are not able to do it as we would like. I think it just emphasises the need for us to have an indigenous supply of radioisotopes.
Senator EGGLESTON —What is your set of priority guidelines? When you say you are allocating isotopes on a priority basis, what does that mean? Do you send them to Canberra and Sydney and Melbourne perhaps and not to Brisbane and Perth and Hobart?
Dr Cameron —No. What we have done is get together an advisory group. That advisory group come from all over Australia and they determine with us what the supply should be. That relates to priorities they have in terms of patient treatment and it also relates to the timescales as well. It is not always Sydney gets first and Brisbane gets second or whatever. We do it based on their advice.
Senator EGGLESTON —The key word I heard there was ‘always’. That means quite often you do it on a geographical basis rather than a medical or condition basis; is that what you are saying?
Dr Cameron —No. It is a complicated decision process. I think it has to take into account geographical supply as well. If you are trying to get maximum usage out of isotopes then the sooner you get them to the place that they are used, the more activities will be available and therefore the more patient doses can be delivered from those. We take that into account. But we also very much take into account what the patient needs.
Senator EGGLESTON —Are there any nuclear medicine facilities around Australia that are particularly disadvantaged by the fact that you are not producing isotopes?
Dr Cameron —I think in general terms we are doing very well, because we are working very hard to supply all the needs. But there are times when groups get disadvantaged. What the actual numbers and locations are I am not able to say at this stage. I could find out that information.
Senator EGGLESTON —Who do you find make the most complaints about not receiving adequate isotope supplies?
Dr Cameron —Sorry, could you repeat that?
Senator EGGLESTON —Which centres complain most often about not receiving adequate supplies of radioisotopes for medical purposes?
Dr Cameron —That is not information I have with me.
Senator EGGLESTON —Perhaps you could take that on notice. Would you be good enough to do that?
Dr Cameron —Certainly.
Senator EGGLESTON —Could you also please outline the objectives of the collaborative nuclear research program? What were the intended benefits of this program for Australia?
Dr Cameron —The nuclear collaboration fund was a fund set up under the previous government to enable ANSTO to collaborate with the universities and encourage the development of some research in universities related to future generations of nuclear power reactors. This was to encourage both students and programs in those universities that would provide some backup support in terms of the long-term research needs.
Senator EGGLESTON —Did you make the decision to cut that program yourself or was that cut by the federal government?
Dr Cameron —That was cut by the current federal government.
Senator EGGLESTON —That might well reflect the policy on their part not to proceed with research into the possibility of establishing nuclear power plants in Australia. Would that be a fair comment?
Dr Cameron —I think it was the stated policy of the current government during the election process not to proceed with those activities.
Senator EGGLESTON —So this government is not going to go down the pathway of looking into the possibility of nuclear power stations in Australia. I think that is very interesting. We have talked about radioisotopes, but what about ANSTO’s medical research programs, apart from the production of isotopes and research that you were conducting? Are they affected?
Dr Cameron —I think there will be some minor effects to that program, but overall that program will be maintained.
Senator EGGLESTON —Specifically what areas of medical research are you engaged in?
Dr Cameron —We are engaged in a number of areas of research. Obviously we are engaged in areas that relate to diagnosis and treatment of cancer. We have quite a large research program in neurodegenerative diseases such as Alzheimer’s and Parkinson’s et cetera, and we have an area of research looking into diseases of the brain generally.
Senator EGGLESTON —So these cuts have reduced your capacity to carry out that research?
Dr Cameron —No. As I said earlier, we really have not got to the point of making those decisions in the research areas.
Senator EGGLESTON —But they may reduce your capacity?
Dr Cameron —Yes. But we would regard that activity again as pretty core to us as an organisation, so it is unlikely that we would contemplate significant cuts in those areas.
Senator EGGLESTON —But you cannot rule it out. It is an area that you will have to consider in the light of your financial situation, so that may mean that some of those research programs may not be as well funded as they might have been in the past had these cuts not been imposed on you.
Dr Cameron —It is an area that we will have to consider. But, as I say, we regard that as a core activity for the organisation and we have made a fairly strong commitment that we will not reduce our core activity.
Senator EGGLESTON —If that is possible. Have there been any alterations to your personnel training program? I believe you had a program to train medical scientists to administer radioisotope doses and work in hospitals around the country concerned with nuclear medicine. Are those training programs affected by these cuts?
—I think you are referring to our Nuclear Futures Graduate Development Program. Our Nuclear Futures Graduate Development Program was part of an initiative we developed, and funding for that was actually cut from the organisation. We did, though, reprioritise our activities and we did still go ahead with that graduate program. We think it is fundamental as an organisation such as ourselves to continue to refresh. You need young people coming in with the ability to train them and for them to be future leaders in the field. That program will go ahead. We have taken a decision because of funding to not proceed at the rate that we had originally intended for that program. But we believe a graduate program is again fundamental to us.
Senator EGGLESTON —But it will be a reduced capacity, will it?
Dr Cameron —I think we will not be doing it every year in the way we had originally intended. Sorry—we will not be doing it at the level we had intended each year, but we certainly will be maintaining our graduate intake program.
Senator EGGLESTON —Will you be meeting the demand around Australia from your program or will we have to open a special category of special visa for an area of unmet need for skilled migrants?
Dr Cameron —I think you understand that there is no nuclear engineering training in Australia at all at the level that we would really need, so we do rely on bringing in young graduates and training them ourselves and, if necessary, using overseas programs for that training. That is, as I said, fundamental to the organisation. We need to continue it, so we have reprioritised to make sure that we continue.
Senator EGGLESTON —What I am getting from you is that the training program will not meet Australia’s domestic need and will have to seek to bring people in from overseas to meet the needs for these people to work in hospitals administering radioisotopes for medical imaging and treatment; is that a fair summary?
Dr Cameron —No, I do not think it is possible to say that. I think really we are talking about the refreshment of core skills in the organisation, and we need graduate intake to make sure that we maintain the ability to operate our reactors, our facilities and our research program. We believe that the program we have in place will do that.
CHAIR —Senator Milne?
Senator MILNE —Firstly, I would like to ask about the operating losses. Can you explain what they are? Are we still looking at a five-year value of $89 million or is it more than that, forward estimates?
Dr Cameron —Sorry, which losses are we talking about?
Senator MILNE —I was looking at the operating losses and I wanted to know what the portfolio budget statement for the next five years presumes in terms of those operating losses.
Mr Cubbin —The operating losses for ANSTO in the last two years and in the forward years are as a result of the adoption of the equivalent international financial reporting standards. Those losses occur because we need to make provision for the decommissioning and restoration of all of our assets, and the expense for that appears over the future years.
Senator MILNE —That refers to the decommissioning of which reactor?
Mr Cubbin —Of all assets on our site.
Senator MILNE —Can we just go to the OPAL reactor. What has been the capital cost of the OPAL nuclear research reactor in current dollars?
Dr Cameron —I am not sure of the exact number but it is approximately $400 million.
Senator MILNE —Would you be able to provide a breakdown of the costs for each financial year since the project was given the go-ahead by the government?
Dr Cameron —That information is available. It is also worth pointing out that we are funded for depreciation on our current OPAL research reactor. The decommissioning restoration relates to the other assets on our site.
Senator MILNE —Are there any more envisaged capital costs associated with the OPAL project?
Dr Cameron —The OPAL project is essentially at the end of its commissioning phase and we think over the next year it will move into field operation. It will then be an operational expense for us and we will deal with that as part of our normal budget process.
Senator MILNE —Are you saying you are not envisaging any more capital costs, just operating costs?
Dr Cameron —Just operating costs.
Senator MILNE —Minister Carr, you were reported on 6 May this year as criticising the former government for signing a contract for the new nuclear reactor, which cost millions of dollars. Was the story accurate? Did you in fact criticise the former government for the reactor contract, and what was your objection to it?
Senator Carr —Do we have the figures on the losses so far? There are a couple of issues. One goes to the question of the warranty arrangements for the construction of the reactor. I understand that there remains disputation on that issue. Then there is the issue of the loss of revenue as a result of the shutdown, and who is responsible for those matters. As I understand it, there remains disputation on those questions. I understand the totals now are in excess of $10 million.
Dr Cameron —Yes, these are two issues that we have to deal with as a result of the extended shutdown of OPAL because of the fuel issue. There are contractual issues with the constructor, obviously, and we are pursuing those negotiations in terms of what is recoverable to us under the contract. The contract is generally, though, a performance based contract. There is unlikely to be any compensation for the shutdown period per se. However, we are also pursuing insurance arrangements under our business continuity insurance to see if it is possible to recover costs in that way.
Senator MILNE —You are saying that the shutdown cost us $10 million?
Dr Cameron —I think it is probably more than $10 million when we add it all up. But to understand how much it actually costs, we do have to resolve those issues of the contract—what is recoverable under the contract and what is recoverable on insurance. When we have those issues resolved then we will be able to say what the actual cost to the organisation was. But, yes, there had to be a cost to the organisation.
Senator MILNE —You said it is likely to be more than $10 million. How much more—can you give me a ballpark figure?
Dr Cameron —What we know, for example, is that the import of radio isotopes has cost us about $5 million for the year. Additionally, the reduced income from irradiation is probably another $5 million. We have had to purchase new fuel, which is about $2 million. We know these are costs that we have to deal with as part of our budget.
Senator MILNE —So we are talking about $22 million?
Dr Cameron —Those costs—$5 million, $5 million and $2 million—add up to $12 million.
Senator MILNE —So it is $10 million-plus. Minister, can you or ANSTO tell me whether the reactor contract was standard commercial practice? It seems to me that whoever wrote that contract and agreed to it has not served the Australian people particularly well.
Dr Cameron —I think it is very hard to have a standard contract, because a reactor is a unique piece of equipment we are buying. We were conscious that we only do this once every 40 years. Therefore, our focus, and I think rightly so, was on getting the best performance out of the reactor that we could. Therefore, when the contract was written, it had a very strong emphasis on getting the best performance in our neutron beams and the best irradiation performance. I think it will still serve the nation very well into the future if we are able to deliver that performance.
Senator MILNE —If we are able to deliver that performance. We have had a reactor that was supposedly to be shut down for eight weeks and it stayed closed for 10 months. It is either poorly designed or poorly managed, or both.
Dr Cameron —I think we would recognise that, in the design of the fuel, there were deficiencies from the manufacture. We now have resolved those deficiencies with the new fuel design. We have to also understand that in the nuclear area we take things very cautiously and very slowly. When we looked at the problem we needed to understand it completely and we needed to make a design change that we were totally happy with. We needed to go through an exhaustive regulatory approval process so that we could give an absolute assurance that there were no health or safety impacts of any changes that we made. Just the nature of the nuclear industry means that any change of that nature takes time. I think it would be right to take time in doing it.
Senator MILNE —It just concerns me that the way the contract was written or not written has led to a substantial cost of $12 million or thereabouts. Can you tell me the expected annual operating cost of the OPAL reactor?
Dr Cameron —Yes, it is about $10 million a year.
Senator MILNE —Does that cover an allocation for future spent fuel management?
Dr Cameron —We are within the operating costs. We will be covering the costs of spent fuel management.
Senator MILNE —Does it cover an allocation for future decommissioning?
Dr Cameron —No. As I said, there is a special provision for decommissioning and restoration, which we have to account for.
Senator MILNE —Is that within the $89 million?
Dr Cameron —Yes, it is.
Senator MILNE —I will come back to that in a minute. What is the provision in your current operating budget for breakdowns, replacement of fuel plates, repair of leaks and that sort of thing?
Dr Cameron —Issues to do with the reliability of the reactor and the components are part of the warranty arrangements with the manufacturer. When there is an issue of that nature we lodge a defect notice with the manufacturer and they are obliged to resolve that particular defect. The costs of the repair or any design change lie with the manufacturer.
Senator MILNE —In relation to those fuel plates and OPAL’s track record, why did the fuel plates need to be fixed?
Dr Cameron —As I said earlier, there was a design deficiency with the fuel plates. This was not a safety issue. It was purely an operational issue for us. It was ANSTO, operating the reactor, that noticed it. We then decided there was a need to have a different fuel design. That is the process that has taken this period of time.
Senator MILNE —Why did you go to France with regard to the plates and not back to the Argentineans? Why could they not fix it?
Dr Cameron —The redesign of the fuel was done by the Argentineans. They are the design authority, so they had to do that redesign process. We then had to look at where we could source the redesign fuel from. The only organisation that could supply what we call a start-up core in the time that we required was the French organisation.
Senator MILNE —Is that going to be covered under the warranty?
Dr Cameron —As I said, we have a number of negotiations still to be conducted with the manufacturer, and we are not able yet to say what the final outcome of those will be. But they are certainly issues we are pursuing.
Senator MILNE —I am just astounded that we could have signed a contract that does not provide for warranty. We are not even at the start-up stage at the point at which this has all had to be dealt with.
CHAIR —Senator Johnston is waiting for questions.
Senator MILNE —On the reactor?
Senator JOHNSTON —On the litigation. Dr Cameron, where are we at with respect to the liability for the loss of our reactor due to the, I think, unstable fuel rods?
Dr Cameron —As I said, there are two sides to this process that we are following. One is we are in very serious negotiations with the manufacturer in terms of what their liability is.
Senator JOHNSTON —Is that the Argentineans?
Dr Cameron —Yes, the Argentineans. Certainly they have a responsibility to fix it, as there would be under any warranty process. Then there are issues to do with what compensation the organisation should receive for the period we were shut down and for the extra costs. That is part of the negotiation that we are going through with the manufacturer, and in addition we are pursuing our business continuity insurance to see if that is another means by which we can recover.
Senator JOHNSTON —Has there been a formal admission of liability by the Argentineans with respect to their fuel rod problem?
Dr Cameron —Yes.
Senator JOHNSTON —There has been?
Dr Cameron —We served a defect notice and they accepted that defect notice and they accepted their need to fix the problem.
Senator JOHNSTON —Does the warranty cover contingent damages, consequential loss?
Dr Cameron —No, it does not.
Senator JOHNSTON —The insurance policy does?
Dr Cameron —The insurance policy may do so.
Senator JOHNSTON —May do so?
Dr Cameron —Depending on the outcome of the negotiations with the manufacturer.
Senator JOHNSTON —Who is conducting the negotiations with the Argentineans?
Dr Cameron —I am.
Senator JOHNSTON —How long do you think they will go on for?
Dr Cameron —I think they have been going for some months now, but we both took the decision that the most important issue for us was to solve the problem and get the reactor back, and that we did not want prolonged negotiations to interfere with that process.
Senator JOHNSTON —And neither should they. Where is the reactor at the moment? I am sorry I missed the first part of your evidence. Is the reactor online yet or not?
Dr Cameron —The reactor is online. It is at full power today.
Senator JOHNSTON —And working well?
Dr Cameron —And, at the moment, working well.
Senator JOHNSTON —Again, when do you think we will have a definitive answer from the Argentineans as to the level of compensation they are going to meet pursuant to the warranty?
Dr Cameron —Certainly over the next year and we think over the next six months.
Senator JOHNSTON —When I come back in November we should have an update.
Dr Cameron —We should certainly have an update on that process.
Senator JOHNSTON —I will save that for next time.
Senator MILNE —In relation to the contract, who reviewed the contract before it was signed? Who in the government? Did it go to the legal eagles?
Dr Cameron —Yes. We received advice from the Government Solicitor about the contract. We also employed an external expert law firm who were able to give us advice on constructing such contracts.
Senator MILNE —So neither’s reputation stands in good stead as result of this, I would have thought, now that we are struggling to recover costs associated with the lack of rigour in that contract. Has ANSTO taken this matter up with the expert team, expert lawyers, and the government lawyer?
Dr Cameron —We have certainly been in touch with the expert law firm to get their advice on how we pursue this issue with the manufacturer. As I said, I think we are a little bit early in making such judgements because we do not know the settlement that will be arrived at.
Senator MILNE —We will be pursuing that with great interest, including the ongoing costs to this expert law firm, no doubt. If we can continue with the light water/heavy water issue in terms of the reactor. ANSTO at the time said that if left unrepaired, the light water dilution of the heavy water, it would ultimately affect the performance of the reactor. What would have been the time line for leak repairs if the fuel plates had not offered another opportunity for shut down?
Dr Cameron —I think it would have been quite extended. There was no urgency on us to take any immediate action because we would have had many months to think about the process, and what we would have done would be to have worked with the manufacturer to determine what was the best repair process, and then we would have programmed in a shutdown at an appropriate time when we could have done that repair. So, again, there were no safety issues to do that. It was just simply a matter of how much flux we were getting, and we would have programmed in our repair process. The fuel plate movement meant that while we were shut down we were able to carry out that repair.
Senator MILNE —Can you tell me what was the cause of the leak? Was it a build quality or a design fault?
Dr Cameron —No, it was not a design fault. We believe the leaks were simply a matter of a welding process that occurred in the vessel, and it left these very tiny little pores or flaws and they were sufficient to allow some of the heavy water to move from one tank into the other tank. So they have gone through a particle injection process to essentially seal those hulls and we have asked them for a long-term solution as well. They are now working on a longer term solution that will allow us to maintain the purity of the heavy water throughout the lifetime of the reactor.
Senator MILNE —Minister Carr, in February you indicated that you were not satisfied or had not been briefed properly on the closure of OPAL because of ANSTO’s interpretation of the caretaker provisions?
Senator Carr —Yes.
Senator MILNE —Now that you are the minister, have you actually sought clarification on those caretaker provisions that applied at the time and hence the refusal to give you a proper briefing, and will you ensure that will not happen next time?
Senator Carr —The circumstances were that ANSTO actually wanted to brief me as shadow minister. The minister, Ms Bishop, refused the permission to ANSTO to provide that briefing. Because it was claimed to be a caretaker convention issue, the briefing did not occur. It is not my intention to deny Senator Abetz briefings, and I do not believe there have been any breaches of that convention in the last six months. I would trust there will not be in the future. In fact, Senator Abetz has had access to agencies without a supervising advisor, which was different from when I was the shadow minister, and those will be the arrangements that we will maintain.
Senator MILNE —I understand that you have indicated that there will be a charter for public research agencies, including ANSTO. Has this charter yet been issued to ANSTO?
Senator Carr —We have circulated proposals to ANSTO. The discussions being had with ANSTO, as with all the other agencies about matters that are specifically relating to the operations, are ongoing. It is my intention to discuss it further with the boards, but to date there has been no indication of any difficulty on those matters. We are now waiting on the agencies to come back to us with any matters that they would like to see in the charters that relate to specific questions concerning individual agencies.
Senator MILNE —So you would expect to have that issued by the next Senate estimates?
Senator Carr —I do not want to pre-judge the pace at which the agencies work on these questions, but it is my intention to have those in place this year. The charters are an important part of the relationship we have with the agencies. The current arrangements under the new regulations require statements of expectation to be lodged. This is a more comprehensive approach to dealing with those types of issues.
Senator MILNE —A couple of years ago the now Minister for Infrastructure, Anthony Albanese, asked for full public disclosure of all radiation accidents at facilities operated by ANSTO. Can you tell me what is the process now that ANSTO has for informing the public about radiation accidents, and is it full public disclosure?
Senator Carr —I will let the officers deal with it.
Dr Cameron —Yes, we have a number of processes in place. Obviously, under the regulations that we are governed by from ARPANSA, which is our nuclear regulator, we are required to disclose to it on an agreed basis any incidents that might occur. We have also agreed in our process of informing our local council about any such incidents and we have taken a very transparent approach. We put out releases on our website of anything which is significant that occurs on the site.
Senator MILNE —So you consider you offer full public disclosure?
Dr Cameron —We certainly provide full details of anything significant that occurs.
Senator MILNE —How do you define ‘significant’?
Dr Cameron —That obviously relates to something that would either have a potential for an impact on site or off site or be likely to attract public attention or media attention. Even though it may not trigger the normal levels of reporting we would still report it, anyway.
Senator MILNE —Would you be able to clarify for me the ANSTO budget figures? There has been quite a lot of discussion about ANSTO having had a cut, and yet it looks to me in the budget that ANSTO gets a 14.4 per cent budget increase, despite a $4 million cut to some key programs and some staff cuts. There are two discussions going on about ANSTO’s funding. Is there an overall 14.4 per cent voted increase for ANSTO?
Dr Cameron —ANSTO is funded against a number of outcomes. Outcome 1 relates to OPAL. That no longer attracts any government funding. Outcome 2 relates to issues to do with spent fuel. Outcome 3 is our general science and technology area. In terms of the budget in outcome 3, the reductions for next year are approximately $4 million. However, we have some additional funding for defined decommissioning activities. Overall it looks like an increase, but it is a special one-off application for a decommissioning program that we cannot transfer into another area. It can only be used for that purpose. But if you take that one-off number aside, then overall the reduction has been $4 million, and on last year it is about half a million difference between 2007-08 and 2008-09.
CHAIR —It is 10.45 and we will break for morning tea at this stage.
Proceedings suspended from 10.46 am to 11.01 am
CHAIR —I will reopen the meeting with ANSTO. Senator Milne.
Senator MILNE —I was just asking about the one-off. We were discussing that. I was asking about the clarification of the budget numbers, and you were saying there was a one-off payment. Can you clarify the size of the one-off payment and what it is to cover?
Dr Cameron —There is a one-off payment of $12.1 million towards specific decommissioning activities. That primarily relates to the decommissioning of the previous research reactor, HIFAR, but we also have some other decommission activities that we will conduct this year, and for the forward years there is $10 million in the year after for the same process.
Senator MILNE —Is that out of the $89 million?
Dr Cameron —No. The $89 million relates to the provision for total decommissioning. These are some of the activities that would be part of that and we have had specific funding for those.
Senator MILNE —What do you see as the full cost of decommissioning HIFAR?
Dr Cameron —We have previously reported that we expect the full decommissioning cost of HIFAR will be $53 million.
Senator MILNE —Have you been given $10 million for this?
Dr Cameron —Twelve million dollars in 2008-09 against some specific activities that we wanted to carry out.
Mr Cubbin —And none in the forward years.
Senator MILNE —None in the forward years?
Mr Cubbin —That is correct.
Senator MILNE —Where is the rest of the $53 million going to come from?
Dr Cameron —We will have to make an application to government under a new policy proposal for that additional funding.
Senator MILNE —In the forward estimates there is only $12 million this year for decommissioning HIFAR and no money into the future—you will have to apply for more money for that—to a total of $53 million.
Mr Cubbin —I will just clarify that. What happened was when we determined the future liabilities associated with decommissioning, we approached the government regarding funding options. As an interim arrangement we were given an agreement to fund the cash component in the 2007-08 year and in the 2008-09 year while a solution was found on a whole-of-government basis to the whole issue of decommissioning. We received $1.1 million in 2007-08 and $12.1 million in 2008-09 against specific decommissioning activities.
Senator MILNE —Where do you get the $53 million from as being the total cost of decommissioning HIFAR? What is that based on?
Dr Cameron —To determine the total liability for decommissioning and restoration we looked at all our assets across site and what the likely decommissioning costs would be, and we totalled that up. That is the total decommissioning liability and that is what we have to put into our balance sheet at the moment. With regard to HIFAR in particular, there are a number of HIFAR type reactors around the world. These are in various stages of decommissioning and we have used estimates that we derived ourselves from engineering calculations, plus the experience that we find from looking at these reactors overseas.
Senator MILNE —We have got an unfunded liability into the future for decommissioning HIFAR?
Dr Cameron —As yet there is no overall solution to that liability issue.
Senator MILNE —What is the estimated total cost of decommissioning OPAL?
Dr Cameron —OPAL has obviously taken advantage of modern practice and we estimate that is about $30 million.
Senator MILNE —What is the cost of decommissioning the MOATA research reactor?
Dr Cameron —Decommissioning that will be between $5 and $10 million.
Senator MILNE —Is that built into the future costs of $89 million?
Dr Cameron —It is part of the total decommissioning that we worked out for the sites as a whole.
Mr Cubbin —We should explain how this works. It is not a straight correlation because, when you determine the liability for decommissioning, you determine the present value and that is what you show in your balance sheet. Over time you then index that to show future cost and you depreciate it as well. The provision for decommissioning in the ANSTO books is around 160 million to 170 million in current dollars. However, it will be much more than that if you looked at the actual cash expended, but you should understand that it is expended over a period of 50 years so the $89 million that we are talking about in terms of losses is only the indexing impact on that five-year period, so it is what we actually expend in those years.
Senator MILNE —When you gave me a figure back then of what has been the capital cost of the OPAL nuclear reactor in current dollars, I understand that the initial amount that was projected in 1997 was $286.4 million and in the 2006-07 annual report the reactor cost was cited at $474.817 million. I asked a little while ago what was the capital cost in current dollars and I got approximately $400 million. It cannot have reduced $74.817 million in the last two years, so can you perhaps give me a more accurate figure as to what has been the capital cost?
Dr Cameron —It might be better if we provided it, because the budget was made up of three different sections. When we talk about the reactor, there was the reactor construction itself, but then there are the neutron beam instruments that were going to be attached to it and they were considered separately. Sometimes the costs are given with the instruments and sometimes it is not, and that is why there is that variation.
Senator MILNE —I would appreciate if you could provide me with the full capital cost in current dollars breaking down all the component parts so we get a sense of what the cost is in real dollars. I have indicated that I put some questions on notice unfortunately because we are running out of time, but I wanted to ask one question in relation to ANSTO’s current role in the Generation IV International Forum. Former Prime Minister Howard wanted to make a firm commitment to Australia’s participation in Generation IV. Can either the department or the minister indicate to me whether we are proceeding with that; what is our view about Generation IV; what is our commitment to it; and are we still attending meetings?
Senator Carr —I will ask the officers to comment on their involvement.
Dr Cameron —Under the previous government we did go through an initial process of approaching the Generation IV International Forum about membership and we indicated the sort of research that ANSTO does that could be part of their particular program.
Senator MILNE —What was that?
Dr Cameron —It relates mainly to our expertise in waste forms, which is well known internationally, and also to our expertise in materials, particularly materials that are exposed to high temperatures and high radiation environments. ANSTO has a lot of expertise in those two areas. We did make an application for membership last year and all of that process is currently on hold, so there is no activity from our side with regard to Generation IV.
Senator MILNE —Minister, has the government made a decision whether to withdraw that application for membership or are you going to proceed?
Senator Carr —The matter is currently before government.
Senator MILNE —When is the community likely to get a response from government as to whether Australia is going to proceed with the Generation IV application for membership?
Senator Carr —The whole issue is currently before government and the matter will be resolved in due course.
Senator MILNE —Thank you.
CHAIR —Are there any further questions?
Senator ABETZ —Yes, thank you. We have heard about the cuts to ANSTO. Would it be fair to say that that amounts to about $10.65 million over the forward estimates? I am referring to page 98 of the portfolio budget statement. I am just trying to do a bit of calculation.
Dr Cameron —Yes. There are a number of components. There was the efficiency dividend process which, over the four years—
Senator ABETZ —With respect, we are under time pressure. I think I know what the various categories are and we can be agreed on the categories if we can agree on the total. If the total does not match, then we had better go through it seriatim.
Dr Cameron —That total for those measures is correct.
Senator ABETZ —Thank you very much. ANSTO has certain core responsibilities. One of those undoubtedly would be safety in which you cannot make any cuts. Would that be right?
Dr Cameron —That is correct.
Senator ABETZ —Therefore any cuts that are made would have to be on your research area?
Dr Cameron —Clearly, we will be looking for efficiencies right across the organisation and that may relate to issues such as maintenance on buildings wherein we would delay that process.
Senator ABETZ —It would clearly not be maintenance on the reactor and things like that?
Dr Cameron —Correct.
Senator ABETZ —How much of your budget in percentage terms is consumed in relation to overall safety and maintenance, care and maintenance, or whatever term we want to use for the reactor and the personnel engaged in that?
Dr Cameron —Over 50 per cent of our budget relates to operating facilities and about 35 per cent to research programs. Of our total, we would probably spend at least 10 per cent on safety type issues.
Senator ABETZ —Have we identified the areas as yet in which cuts are going to be made as a result of this decision by the government?
Dr Cameron —In some of the operational areas we have identified where those savings are. In the research areas we are still working through with our institute heads.
Senator ABETZ —In what areas have you already identified savings?
Dr Cameron —We have identified a number of efficiencies by amalgamating teams and providing our support services in a different way.
Senator ABETZ —By amalgamating teams we are talking about teams of, for want of a better term, scientists?
Dr Cameron —No. In the operational side I am talking about mainly support, so we can amalgamate some of our finance teams and our financial support areas. We have also looked at a process by which we can outsource some of our non-core support activities and we believe that will lead to some savings. On the operational side it is made up of a large number of small things.
Senator ABETZ —If you have less money to administer, fewer scientists to employ and fewer research projects to undertake, it would be reasonable to believe that you would therefore need fewer support staff and fewer operational staff for the total operation.
Dr Cameron —That is correct in one sense, but of course we have to run facilities regardless and we cannot reduce that capability to do so.
Senator ABETZ —Or the core responsibilities?
Dr Cameron —Or our core responsibilities.
Senator ABETZ —Yes. How many scientists do you think you will have to let go?
Dr Cameron —We would estimate that probably half the number of people we have announced will be from the science research areas.
Senator ABETZ —Correct me if I am wrong, but we have been told that you are going to have 80 fewer staff—
Dr Cameron —They will be offered redundancies.
Senator ABETZ —be it by natural attrition or redundancies or whatever. Is that correct?
Dr Cameron —That is correct.
Senator RONALDSON —Did you say that 80 would be redundancies?
Dr Cameron —That is correct.
Senator ABETZ —There will be 80 redundancies.
Dr Cameron —We want to go through the process of making the reductions as soon as possible so that we can get back to business. We will be going through a one-off adjustment of about 80 people.
Senator ABETZ —Would it be fair to say that 40 of those would have as a minimum a bachelor degree behind their names?
Dr Cameron —Generally our research staff are made up of two groups. There are the professional researchers and they are generally in the research area.
Senator ABETZ —They usually have letters in front of their names.
Dr Cameron —They have got bachelors and often PhDs as well, but they are supported by technical staff who would not necessarily have those qualifications.
Senator ABETZ —How many people are there that would have letters in front of or behind their names? What I am referring to is degrees in one form of the sciences, be it engineering, science or all the wonderful degrees that you can get in these disciplines these days. How many out of the 80 do you think would be so qualified?
Dr Cameron —When you make reductions in our research areas you expect most of those people to be degree-qualified.
Senator ABETZ —Would you say 40?
Dr Cameron —Approximately.
Senator ABETZ —Yes, approximately 40 will be degree-qualified. You might not be aware of this, but what are the other job opportunities available in Australia for these 40 scientists who, if I might say, could be categorised as seriously bright?
Dr Cameron —Thank you for that.
Senator ABETZ —Not having pursued the sciences at university, I feel quite comfortable in saying that. I took refuge in the humanities, Chair. I am not like Dr Eggleston.
CHAIR —The brighter of us did do sciences, but I do not know if Dr Cameron can answer that.
Dr Cameron —That is a difficult one to answer directly, because some people will have degrees in chemistry and material science and they will be able to find other opportunities. Their specialism will not be found elsewhere necessarily, so they will have to make adjustments.
Senator Carr —There is no doubt that ANSTO is an asset intensive organisation with a very large percentage of its cost being essentially fixed. It is feeling the adverse affect of these changes, which is a matter of some concern to me. While there is $10 million in reductions as a result of the budget, there is $12 million in regard to the cost of the shutdown, so there is a range of factors. On top of that there have been significant increases in operational costs at ANSTO which, as I understand it, is a matter of dialogue between ANSTO and the department of finance. We have seen increases in electricity of 20 per cent, insurance of 33 per cent, procurement of seven per cent and salaries of 4.5 per cent, so it is a complex set of issues that ANSTO management is trying to deal with at the moment. These are not matters just confined to the efficiency dividend.
Senator ABETZ —That is all very kind, but my question was about job opportunities for those who will be losing their employment, and I am not sure how that in any way is responsive. Can I refer officials to the budget papers where ANSTO is canvassed? I dare say I do not have to tell you the page number, but I might need to remind myself. It is starting at page 95. First of all, I would like to ask about the commissioning of the reactor. Is it official commissioned?
Dr Cameron —We are in the final stages of commissioning, but there is a process that we need to go through of actually applying for it to be converted from commissioning to operation, and we are very close to that.
Senator ABETZ —You anticipate on page 96 that more investment will be required in instrument scientists in future years to meet anticipated demand for neutron-scattering experiments. How are you going to achieve this with the cuts that you are facing? Is that being put on hold, put on the never-never or is it just an aspiration that you hope to achieve one day?
Dr Cameron —We had two approaches. As I said earlier, we believe the utilisation of OPAL is our core activity and we will need to reprioritise other activities to make sure that we do not hinder that process going forward. We would also expect that as the demand for the instrument increases then we would have a good case to go to government to say that we have such a heavy demand that we need supplementation.
Senator ABETZ —I would like to ask you about constructing and operating through PETNET Australia Pty Ltd, a subsidiary entity of ANSTO. How are we going with that?
Dr Cameron —That is a new facility that we are going to construct on our site to supply isotopes. PET isotopes is probably the fastest growing medical use of isotopes. That process began this year.
Senator ABETZ —It is to produce fluoro-deoxy-glucose?
Dr Cameron —FDG—yes.
Senator ABETZ —Yes, I stumbled across that, but I think I can say it.
Dr Cameron —We expect that facility to be operating in the first half of next year.
Senator ABETZ —Have the cuts impacted on that?
Dr Cameron —No. That is a capital funded project, so that is a separate thing.
Senator ABETZ —Thank you for that. On page 100, it states:
In the longer term, some reprocessed waste from previous spent fuel shipments to the United Kingdom and France will be returned to Australia for long-term storage. No funding has been appropriated for this purpose.
Minister, do you think it might be an idea to provide ANSTO with special funding for this particular purpose?
Senator Carr —It is in the longer term. I think there is time. What date are we talking about here, Dr Cameron?
Dr Cameron —2015.
Senator Carr —Yes, 2015. The department of finance is particularly expert in certain areas, but budgets for 2015 do not fit easily into that category.
Senator ABETZ —Be very careful. Tell us about your green car program. When does that start and when does that continue through until?
Senator Carr —Yes, when does it start?
Senator ABETZ —When does it continue through until?
Senator Carr —We have plenty of time, 2015. There is plenty of time for ANSTO to be able to talk to the department of finance about that.
Senator ABETZ —Chances are this will not be your problem in two years time, so we will fix that one. I will move on to page 102. As part of your budget cuts I trust that you will not be reducing the free tours for students.
Dr Cameron —We do have a large number of people who come on our tours. We will again prioritise those tours. We certainly expect that our educational function will be the highest priority for us.
Senator ABETZ —I would invite you to do exactly that because, given the dearth of science graduates in this country, to be able to excite students about facilities such as ANSTO would be very helpful in encouraging more young people into the sciences. For what it is worth, a bit of gratuitous advice, I would encourage you to continue with that program and congratulate you on the 70 per cent increase that you are able to report. I think that is a great result.
On the top of the page, unfortunately, there is a matter of concern. It states, ‘ANSTO is reviewing its graduate program in light of the tighter budget’ and you are ‘placing a temporary hold on graduate intakes’. So on the one hand we are encouraging students to have a look at ANSTO to see all the opportunities that are available, but I just hope they do not ask what the opportunities are of being employed at ANSTO because the answer will undoubtedly have to be that the current government has cut the job opportunities for scientists at ANSTO. Nevertheless, can you tell us what the reduction in graduates would be that you think you will be able to employ?
Dr Cameron —It had been our intention to run a three-year program recruiting about 15 graduates per year.
Senator ABETZ —So 45 in total?
Dr Cameron —Yes, but that does not affect our normal recruitment process. This was a process by which we wanted to have a particular go at bringing in a new group of intake, so we ran the first year of that program and we have put a temporary hold on years 2 and 3, but graduate intake as a normal part of our recruitment will continue.
Senator ABETZ —I am sorry. You were planning for an extra 45 over three years. What has happened to that figure of 45?
Dr Cameron —We have taken the first year and we have put on hold the second and third year parts of that program, but we still recruit graduates each year as a normal part of our program.
Senator ABETZ —Correct me if I am wrong, but on page 108 it states the ANSTO graduate recruitment program funding has been reduced by $6 million over three years. Who made that decision?
Dr Cameron —That was a decision which was part of the current government’s election process.
Senator ABETZ —This was all part and parcel of helping more science graduates being able to stay in Australia, see the wonderful future that awaits the scientists under a Rudd government, and there is now $6 million less to spend on them. Chair, I think that concludes my questioning of ANSTO.
CHAIR —Thank you.
Senator RONALDSON —I have one question following on from Senator Milne’s question. You said the Gen IV application is with government. What is the timing with government? When is it likely that there will be a decision?
Senator Carr —I would not have thought it would be too long. I cannot be any more precise than that. It takes as long as it takes.
Senator RONALDSON —I appreciate it takes as long as it takes. How long is it likely to take?
Senator Carr —I cannot estimate that. I would expect the matter to be resolved relatively quickly.
Senator ABETZ —Do we have a time line?
Senator Carr —No.
CHAIR —Are there any further questions?
Senator ABETZ —It is like the charter letters.
CHAIR —Thank you to the officers of ANSTO. While I ask the officers of the Commonwealth Scientific and Industrial Research Organisation to the table I should say that the committee has agreed that we will no longer need officers of the Australian Research Council and IP Australia, very reluctantly, because although there are questions for them, unfortunately we are running short of time on our program and so we will not have any questions for them today. I believe there are brief questions for AIATSIS after CSIRO.