Australian Bureau of Agricultural and Resource Economics and Sciences

[10:00]

CHAIR: I welcome officers from both ABARES and BRS.

Senator NASH: On the issue of the carbon dioxide trading system, there were recently some comments from Professor Ross Garnaut about carbon trading systems overseas, which have crashed so badly they are next to useless. Can the department give us an update of their view on that particular commentary, given that Professor Garnaut was held in such high regard in the development of the carbon trading system?

Senator Ludwig: You are entitled to ask them a question. I think you are eliciting a view. You are entitled to ask me my view.

Senator NASH: You are correct. I should have asked you, Minister. Can you give us a response.

Senator Ludwig: We remain quite committed to the carbon price, unlike those opposite. We actually think a $1.7 billion land sector package will benefit agriculture right across fishing and forestry and agriculture more broadly. To that extent, questions around climate change can be directed to the Climate Change Department, but I am quite happy to engage in this. We also have EU linking, which I think provides the opportunity for a greater pool of carbon credits being available.

If you look at what is called the DOIC—the regulator—a range of methodologies have been approved for abatement and sequestration activities. All of the demonstrates to me that there is significant action and interest in the land. We have within this portfolio three major responses, which are Filling the Research Gap, Action on the Ground, and Outreach, to advise people of the opportunities under carbon abatement. And of course agriculture, as you know, is excluded from its emissions. Together, if you talk to rural people who participate in the carbon abatement opportunities you will find great interest.

Senator NASH: I will get to that later. ABARES is not the appropriate place, but I will come to that later, Minister. You have raised a very good point. With the $23-a-tonne-figure, if the tax falls to less than that how is the government going to ensure the viability of the $23-a-tonne-figure?

Senator Ludwig: I think these questions do fall within Climate Change, but given that I represent it in the Senate I do have some memory of the answer to these questions. We are confident that the price we have set, which does not come in, as you can appreciate, until 2016—the period will be relative to the world market. These things do move substantially. There have been places where they were $53 a tonne—that is my recollection and I am happy to be corrected on that. But ultimately, in our view, they have set a realistic price. And, of course, that is a matter for Treasury modelling, as well, which has predicted that, and we are confident in Treasury modelling.

Senator NASH: I appreciate your answering the question even though you do not believe it sits here. Is any work being done on the impact of the carbon tax on irrigators in the farming sector?

Mr Morris : Our work has focused on three main sectors of industry. We did the initial analysis of the impact of the carbon price on broad acre farmers and dairy farmers. Then, recently, we extended that to look at the impact on vegetable farmers. Clearly, most vegetable farmers would be irrigated. So, in that sense, there has been some consideration given to irrigated farmers. Also, many dairy farmers are irrigated. But we have not gone the next step and tried to segregate our dairy farmers who are irrigated versus those who are not irrigated.

Senator NASH: With regard to the dairy sector, where is that particular piece of work at in terms of the impact on dairy farmers?

Mr Morris : That was released in December 2011. We published a report on the possible short-run effects of a carbon price scheme on Australian agriculture. That was in advance of the carbon price coming into effect. In terms of the numbers, we looked at the impact of the $23 a tonne in 2012-13, and then we looked at the higher tax that would apply in 2014-15. In terms of the short-run impact—the 2012-13—for dairy producers we saw that the economic value of dairy farm production would decline between 1.1 and 4.3 per cent. In dollars—

Senator NASH: Before you go on, what was that specifically attributed to. Was it electricity costs? In regard to the work you have done there, what caused the drop in productivity, as it relates to the carbon tax?

Mr Morris : There were two elements to the research that was done. One element was the direct impact of the carbon tax on inputs into farming, particularly on things like electricity, for example, but also other inputs that might be affected by the carbon tax. As the minister has said, agriculture is exempt in terms of their direct emissions, so we are talking about the indirect effects on them. Part of it was due to the impact on input prices. The other part was due to the higher prices that processors would be paying for their input costs, and some of those costs would be passed back to dairy producers.

Senator NASH: Some! I suspect it would be the great proportion.

Mr Morris : In fact, it is very difficult to work out exactly how much will be passed back to farmers versus forward to consumers versus absorbed by the processors themselves. We did a range of scenarios from 100 per cent pass back, through to none of it being passed back. The more an industry is exposed to international forces, and the more prices are set on world markets, obviously the more difficult it is to pass it forward to consumers. That will influence the amount of pass-forward and pass-back, and certainly that will influence it for dairy.

Senator NASH: I suspect it is easier for the processors to pass the pain back to the farmer than pass it forward to the consumers.

Mr Morris : It depends. If you have a highly domestically oriented market, for example horticulture, where prices are probably more determined on the domestic market, you probably find that for an additional tax or price that is imposed in one sector of the processing chain there is more likelihood of some of it being passed forward and some of it being passed back. Whereas, the more the prices are determined by international market factors and set on international markets, the more likely it is it will be passed backwards than forwards.

Senator NASH: That was at the end of 2011. Having done that will you be doing any follow-up work—I am just talking specifically dairy at the moment, but I am interested across a whole range of areas? What you did was hypothetical on what was going to come. Will you now have another look at it and reassess it, now that we have practical on-the-ground implementation of this, to see if you were indeed correct or if it has shifted at all?

Mr Morris : We have not made a final decision, but it is possible that we will do that. The best time to do that would be probably later in this calendar year or early next year, when we actually have some survey data from dairy farmers. We do our surveys each year and we will be collecting the 2012-13 information from dairy farmers in the second half of this calendar year. Once we have that information we will have some real data to have a look at.

Senator NASH: You would have had that data at the second half of last year, though, wouldn't you? Are you saying that is not enough time from the implementation to get the data?

Mr Morris : We would have that information for 2011-12 but not for 2012-13, which is the relevant period in terms of—

Senator COLBECK: Right, so it is for the previous financial year?

Mr Morris : Correct. We have forecasts for this year. Some of our numbers are based on our estimates, our forecasts of what income is going to be. But, in terms of having real data from farmers, we really need to wait until the second half of this year to have a better idea of that.

Senator NASH: Okay. Obviously, as you were saying, this particular bit of work was the hypothetical bit, but where is the kick-in point for when ABARES start to measure real data from the legislation?

Mr Morris : The numbers we give are based on real data in the sense that they are based on previous farm-level data. But, in terms of actual impacts on electricity prices and things like that, it would be, as I say, probably the end of this year when we have actually collected the data. Obviously, we are still within the 2012-13 financial year at the moment, so even farmers do not know the full extent of their cost impacts this year.

Also, in analysing that data, there will be some issue in terms of how electricity prices are being influenced by a range of factors. Clearly, the carbon price would be one factor impacting on electricity prices, but there are a whole range of other factors that are impacting on electricity prices; so there will have to be some analysis of how much carbon prices have impacted on electricity prices versus the whole range of other things that force electricity prices to rise.

Senator NASH: Absolutely, that would need to be taken into account—but it is fairly obvious, isn't it, that if you do not have a carbon tax there, you do not have that component of the increase attached to those costs for farmers. That is an additional impost. Thanks, Chair.

Senator COLBECK: I will carry on, because I want to talk about some of those issues as well. You talk about pass-through as part of your conversation, and not knowing is getting passed by the processing companies to the supermarkets and how much is getting passed back to the farmer. Do you take into account discussions and comments from the supermarkets who have said, 'We are not interested in accepting any costs because of climate change; we've got our own costs to deal with—it's going to have to be borne within the system'? Are you following that sort of conversation that is being had? My recollection is that the cost to Woolworths alone was $63 million, so they were looking to absorb that within their business rather than pass it on to consumers, but they were not interested in taking anything from anybody up the line. Has that been factored into any of the calculations or any of the work that you have been doing?

Mr Morris : At this stage we have not made a judgment as to whether zero per cent was passed back or 100 per cent was passed back; we just—

Senator COLBECK: You made projections.

Mr Morris : We just provided the numbers, which is why we had the range of impacts for the different farm sectors—ranging for dairy, as I think I said, between about 1.1 per cent and 4.3 per cent. That range was dependant on the extent of pass-back—whether it was zero per cent or 100 per cent—by the people in the chain who were passing that cost factor back.

Senator COLBECK: Okay. What are the sorts of inputs that go into the survey data from the dairy farmers?

Mr Morris : If you are talking about how we collect our surveys—

Senator COLBECK: Yes. And you mentioned the differentiation between an irrigated dairy farm and a non-irrigated dairy farm. Whether or not you differentiated between those two would be a fairly significant factor. I was talking to a farmer last week who runs six irrigators and has a $40,000 per quarter power bill. That was the one thing that he was squealing about—it was crippling him; he was not sure whether he could continue to operate his irrigators, but he knew what that meant in the context of this stage of the season and what it was doing to his numbers. He was down the drain by 4c a litre, once he had done his conversions and calculations, from butter fat and protein. I think his cost of production was about 38c and he was getting paid 34c. He had a friend down the road who was getting 28c when he did his conversions. So there is a lot of pain out there in the dairy industry nationally at the moment. I am just interested in what data you are going to collect when it comes to that survey. I am genuinely interested in what sort of information goes into the inputs and how it is assessed. I appreciate that you are doing it on a financial-year basis, and the benefit over the long term in the numbers for that. But, meanwhile, we saw 500 farmers in Victoria earlier in the year, and rumblings of something else happening in southern New South Wales at the moment. I know my guys at home are awfully grumpy too.

Mr Morris : We survey about 300 farmers a year, and we have been doing that for a number of years. It is funded partly by the department and partly by the dairy industry.

Senator COLBECK: Through the levy?

Mr Morris : Yes, Dairy Australia uses some of the R&D levy funds to assist us on that. They have been doing that for a number of years. We do face-to-face interviews with farmers to collect that information, and we collect the full range of financial and physical information from farmers. So, as it stands now, we are the only Australian government organisation that collects both the physical and the financial information. That places us in a pretty good position to do an analysis of what is happening in the dairy sector.

While I said we do not actually have the 2012-13 data as yet, because we are part-way through the year; when we do our collections, we try and get a little bit of an indication from the dairy farmers as to what is happening and what they plan to do during the course of this year. So, when we did the survey collection during the second half of last year, we did ask them a few questions about what is happening—but obviously that is not the final data for the year. So, when we published preliminary numbers in the December agricultural commodities, we did have some numbers on the dairy industry in there. So we are reporting all the time on what is happening for the dairy sector. Some of the information you have just provided there, that basically income has gone down for farmers in the dairy sector, is reflected in the numbers that we produced in December. So, for 2012-13, for farm-cash income, we showed a decline—this is an average for Australia at this stage—from $149,000 in 2011-12 to $92,000 in 2012-13. In terms of the farm business profit indicator we saw a reduction from $69,900 to negative $11,000. So that really does indicate that the lower price—and we were forecasting a reduction in farm-gate price—

Senator COLBECK: But I think your projections show that the price was falling off over the next couple of seasons while production continued to grow a little bit.

Mr Morris : Yes. So we had 42c per litre for the last financial year. This financial year we are forecasting 39c per litre. So, obviously, there has been quite a reduction in price—about seven per cent off the top of my head. There have also been some increases in input costs. So, in combination, the lower prices and the higher input costs are resulting in those income numbers. Of course, a lot of the lower prices are being driven by world prices for dairy products coming off the boil.

Senator COLBECK: Yes, I understand that. And the farmers generally understand what the drivers for their product are, particularly in dairy—they are pretty switched on in relation to that. Their concern is particularly their energy costs. As I said, this guy with $40,000 a quarter is copping $4,000 a quarter on top of that additional cost because of the carbon tax. That is part of the discussion that—

Senator Ludwig: If you have those figures, that would be helpful. One of the challenges is that—

Senator COLBECK: Senator, I am actually going out to collect—

Senator Ludwig: Let me finish this quickly. One of the challenges if people bandy about a range of electricity costs which are associated with the carbon price, without any analysis of the percentage of the bill and then what percentage of that electricity input is into their overall operating costs, and putting all that into perspective, is that it can seem (a) on the high side or (b) on the low side—depending, of course, on what their total operating electricity costs are. But, again, without putting it in that context, I think people can get the wrong impression that there is a high cost. That is the only reason I raise that.

Secondly, of course, is that we know that the majority of the increased costs in electricity have been through states and territories raising electricity prices over the last three or four years. That is clear when you look at the data. Before the carbon price came in, electricity prices from poles and wires and investment in infrastructure have been reflected in electricity generation costs which have been passed on to both consumers and businesses. I make that point because if we are going to bandy about figures, I think we should put them in context.

Senator COLBECK: I think the guys I was talking to understand the context pretty well—in fact, they understand it very well. They were not complaining for no reason and they also spoke about the fertiliser costs. The numbers are stacking up pretty well and the projections in the ABARES report indicated that this is where we might be. We have had a lot of conversations with ABARES about the impact of the carbon tax, particularly on dairying, and I appreciate their work. Their numbers have been confirmed not only by other calculations but by people like the Farm Institute. I go back to your report in relation to vegetables, because you have done some work on horticulture.

Mr Morris : That is right.

Senator COLBECK: It shows the short-run impacts on vegetable farms to be just under three per cent and gross value of production increasing at about two per cent per year. In a simple calculation that means that the carbon tax is wiping off that two per cent gain and taking it backwards by about one per cent over that cycle. If the impact of the carbon tax is three per cent and you are increasing productivity values by about two per cent, that leaves you at minus-one per cent.

Mr Morris : The number we have in terms of the impact on the vegetable industry is ranging between negative-0.7 per cent and negative-2.1 per cent. Those were the numbers we reported for 2012-13. Perhaps the three per cent you are recalling is the 2014-15 number which is negative-0.8 to negative-2.9 per cent. Remembering, as for the dairying discussion, for the vegetable industry we are also reporting a range, because the processors may not fully pass back the cost of the carbon price to farmers. The negative-2.1 is at the upper end of the range. As I mentioned, for an industry which is more domestically oriented there is probably more opportunity for processors to pass some of the cost forward than in an industry where the price is set by international market factors. Vegetables is probably one of those. Without knowing for sure whether it is at the upper or the lower end of the range, there is a range of negative-0.7 to negative-2.1 per cent.

Senator COLBECK: When you say 'domestically oriented' for the vegetable industry, are you talking particularly about the fresh sector of the vegetable industry?

Mr Morris : Yes, because there are obviously imports to the market, but a large proportion of those are at the process end.

Senator COLBECK: Have you done an assessment of how they impact the broader returns on vegetables? The reality of dairying is the thing that underpins the entire industry price is the global market price and then you have variations of that based on transport and other local factors. How does that align with the vegetable sector where you have an element that is imported going into processing? That has led to the cessation of processing in some areas because of competition. How does that impact on the broader horticulture sector and the fresh market?

Mr Morris : When we talk about processing we talk about packing as well, so there are some additional costs in the packing sector. We have looked at the costs through the chain, both packing and the processing side of things, and looked at the proportions of production which go to the various areas on different parts of the chain. We have taken into account all of those things as well as things like the impact of refrigeration costs and so forth that have been built into that analysis. All that is talked about in the report in a little detail—it was not a very long report—so that information is contained in the report.

Senator COLBECK: One of the other things you reported in the report was the reluctance of vegetable growers to get involved with export. About 80 per cent of them believed it was too difficult or time consuming. Do you have anything more on that than what you had in the report? I found that to be quite an interesting point. Given the discussion that we continue to have around imports and exports of vegetables and other food in particular, can you give us a little bit more information on that? I noticed that for the first time in your reporting you were reporting on the export of vegetables into certain markets. That has not appeared in your numbers before, so obviously you are looking at it a bit more closely. What came out of that conversation?

Mr Morris : I do not have much more detail on what came out of the interviews with the farmers, but I can certainly talk about our work more generally. That work suggests that there are significant prospects for growth in the export of fruit and vegetables to the Asian region. It suggests there are opportunities for our producers to try and export more to that region in the future. The prospects seem to be particularly good for, obviously, the fresh sector. We seem to have more of a comparative advantage in that sector than in the process sector. Again, the middle to higher end of the value chain is where we are likely to have some success. Our fruit and vegetable exports into markets in Asia and the Middle East tend to be at the higher end of the scale already—putting boxes of fruit on planes and things like that. I have visited the United Arab Emirates a few times. When emirates started flying into Australia that created a whole new market for exports of fruit and vegetables from Australia into that market because we were able to put fruit and vegetables into the holds of aircraft. Some of those broader trends in passenger movements and trade opening could be quite beneficial to exports of fruit and vegetables into those developing markets.

Senator COLBECK: Has there been any work done on changing the perception or view that it is too difficult or time consuming to get into those markets?

Mr Morris : I think that is probably a job for Horticulture Australia Ltd to look in terms of their marketing efforts. We have certainly done work looking at opportunities, and we are doing further work at the moment. At the outlook conference last year we looked at demand prospects to 2050 and talked about some of the things I just talked about in terms of potential growth in fruit and vegetables. At the outlook conference this year, on 5 and 6 March, we will be looking at, again, demand to 2050 and what might be driving that but also at some of the supply-side factors. It will be an opportunity to have a bit more work out on the table on longer term prospects. We have also recently been funded, as part of the Asian century white paper outcomes—although that is funded through our department—to do a major study on what Asia wants. We will be looking in a bit more detail at what sorts of products Asia might want in the future. That will hopefully feed into information for our industries in terms of making their marketing plans going forward.

Senator COLBECK: Do you want to do your wild dogs, Senator Back?

CHAIR: Is this a new dance of the Liberal Party? Only because Senator Heffernan's not here I thought I would throw that in.

Senator BACK: I am glad you did! Mr Morris, I take you to your planned biosecurity deliverables 2012-13, under which one of your projects is 'wild dog management in Australia—a landscape approach', as you describe it. You would be aware now of the enormous impact of wild dogs in our sheep and goat industries and increasingly in our cattle industry. Also, I recently had feedback on our native animal species being attacked in pastoral areas in WA. Can you tell me where you are with progress in examining the impediments that exist to appropriate wild dog management?

Mr Morris : You may be aware that ABARES administers, on behalf of the department, the Australian Pest Animal Research Program—APARP—and has been doing that for a number of years. Under that program there is quite a number of projects funded on wild dog management, including quite a number on appropriate control measures and that sort of thing. For the projects that are completed, there is information on our website, which goes into quite a bit of detail on the impacts of wild dogs and potential control measures. So, that is the main area of our work. We have also done a bit of work ourselves. Unfortunately I do not have a whole lot of detail in front of me on where that work is up to, but I am happy to take that on notice and give you more detail later on.

Senator BACK: I am particularly interested to know what programs, if any, involve cooperative funding between the Commonwealth and the states. I would also appreciate it if, in providing that on notice, you have any observations or recommendations in terms of management of national parks and public lands. The overwhelming evidence coming to us—I learnt this this morning from New South Wales, and I know it well in relation to the pastoral areas of Western Australia—is that whatever efforts farmers or pastoralists themselves are making on their land are as nil, because the equivalent work is not being undertaken in national parks and other areas. So, if you could do that I would be appreciative.

Also, if time does not permit, perhaps you could also take on notice what progress you may have been making with regard to the social and economic impacts of a foot-and-mouth disease outbreak—whether you have any updated information on that. Finally, I notice you are also doing some work on rabies risk assessment. Knowing now that we seem to have a fairly significant incidence of rabies in Bali in monkey populations and dog populations, and given the number of Australians visiting Bali and being bitten, I was wondering whether you have any advice for us in terms of where you might have been in that particular project as well.

Mr Morris : Certainly we have a number of projects underway for the biosecurity area of the department, which is doing risk assessments of potential outbreaks of a range of different pests and diseases. So it is a relatively new area for ABARES, starting to get into those risk assessments. We have done quite a bit of work on foot-and-mouth disease, and I am happy to provide you with that information.

Senator BACK: Thank you.

Mr Morris : In terms of working with the states and territories, quite a number of the projects under the program I mentioned earlier—the APARP—have actually been done by the state departments of agriculture, particularly the New South Wales department and the Western Australian department, and also with other bodies, such as CSIRO and universities. We would be happy to table the list of successful projects and so forth at the appropriate time, if you wish.

Senator BACK: Yes, thank you.

Dr Ritman : In addition to APARP, we undertake some social science projects on wild dog management, looking at Queensland and New South Wales, which we will include in that list of projects. In that list, I would draw your attention to one from CSIRO that has been funded to look at estimating the success of vertebrate pest eradication and control programs. So, that project addresses your earlier question about the success of eradication programs.

Senator BACK: You make an important point on the social impacts, as Northern Goldfields right across to the Murchison in WA now is just catastrophic, and it is far more than just the animal welfare and the economics; it really is having an impact socially.

Dr Ritman : Yes.

CHAIR: Mr Morris, you were going to table a document for the committee, on the successful projects, so we will take you up on that offer.

Mr Morris : Yes, we will make a photocopy of the relevant part of it rather than giving you the other bits and pieces.

CHAIR: Thank you.

Senator SIEWERT: I just want to very quickly follow up on wild dogs issues, but I will not traverse the issues that Senator Back has gone over. What liaison are you doing with SEWPAC on the work you are doing on the impact on biodiversity, as Senator Back just touched on, of (a) wild dogs and (b) control measures? Is that included in the work that is being done?

Mr Morris : Under APARP we fund a number of different organisations to do that research, so it is very likely that some of them are actually liaising with SEWPAC. But we would have to check on the extent of that liaison. I might just ask Dr Ritman if he is aware of anything in particular.

Dr Ritman : Through the Vertebrate Pests Committee there is joint representation from the department and SEWPAC. When we table the list of APARP projects, these projects are to look at research on nationally applicable control measures that are applied to agriculture. Whilst they might have some applicability in the non-agricultural sectors, they are targeted at agriculture. But I am sure the biodiversity considerations are part of those projects.

Senator SIEWERT: I am looking at the impact, both from the perspective of not only how you decrease the impact of wild dogs but also what impact control measures have on biodiversity? Is that particular element included in the projects that are focussed on agriculture?

Dr Ritman : Definitely, and I will give you an example. There is now a commercial product called PIGOUT which is a delivery mechanism for pig baits that was originally funded through the APARP program. If you can imagine a hollowed-out bone or cylinder, within which you can stuff an appropriate poison that can be delivered out of an aeroplane or flung out of the window of a car. It has been designed to be of a particular size that pigs can bite into, but small marsupials do not access it. It is a delivery mechanism particularly targeted at agricultural pests and not at our endangered species and other native fauna.

Senator SIEWERT: I will look at that list and will probably come back to you with some questions on notice. I want to move on to climate and extreme weather adaptation. I am aware of the conversations that we have had earlier about the impact of carbon tax. I am interested in any ongoing work around impacts of reduced rainfall and increased temperatures on profitability in regions, and I am particularly focussed on the south-west of WA. What ongoing work have you got there?

Mr Morris : I might start on this one and then ask Dr Harris to add a little bit as well. Most of our work in the past has been a combination of things, looking at things like impacts of the carbon tax and impacts of climate change in a very broad sense. We are now starting to move our program a bit more towards the adaptation, recognising that over the next 30, 40 or 50 years, no matter what we do now, we are still going to have those changes taking place, so it is well recognised that farmers are going to have to adapt regardless of what we do to try to mitigate the impacts. We are starting to move our program more into the adaptation side of things, but we are at the reasonably early stages of that in terms of putting anything on the table today. Certainly, over the next year or two we should be able to start providing a lot more information on that. I might ask Dr Harris to comment. He has been working on some of these areas and adapting our program in this area. I will see whether he might have anything to add.

Dr Harris : One of my tasks has been to champion the early stages of this proposed adaptation research program. It is going to be housed within a branch that focuses on climate change and variability, but it will cut across all aspects of the bureau's main research areas. It will also interact with scientists at the Bureau of Meteorology, CSIRO and others. There is an enormous range of possible work that can be done here and part of the task is to narrow it down into a set of feasible projects, but it also requires a reasonably plausible amount of scientific underpinning and then some degree of economic analysis and modelling. It is almost such a big palette of issues that it is hard to give a more specific answer at this early stage, but that is a major direction that we are moving in.

Senator SIEWERT: What is your timeline for the development of the project and funding resources available for the project?

Dr Harris : I would call it a program rather than a project. The program, at this stage, is getting underway in preliminary work which is, as much as anything else, scoping work, and that is going to happen over the next 12 to 18 months, with particular products emerging from that as research findings and analyses. But I would guess, in terms of more formal analysis and modelling, it would be over the next two to three years.

Senator SIEWERT: What sorts of products? You mentioned the word 'products'?

Dr Harris : 'Outputs'.

Senator SIEWERT: Yes. I don't care what you call them. What are you going to be producing at the end? Western Australian is going to be at the front end of some of these changes to our agriculture, especially in the south-west. In fact I would suggest we are seeing that already. At an inquiry we had last year CBH said they are changing their infrastructure as a result of the impacts of climate change. There are already doing that. So we are starting behind the eight ball. What are you going to be producing?

Dr Harris : Simple answer: one of the products we would be doing is monitoring how farms adapt, and our survey program would assist us in doing that. But more importantly the fundamental question is: what is the role for government in providing information to assist farmers in the adaptation process, to analyse alternative risk management strategies, but also the role of government as provider of R&D and provider potentially of infrastructure that might facilitate farm regions—the sorts of infrastructure that farmers would not provide onfarm but might be important for farm regions to adapt? Those are examples.

Senator SIEWERT: I think there is a very important role that we need to be playing in R&D. How soon will that be rolling out into applicability?

Dr Harris : There are two kinds of question at least that come to mind there. One is a general assessment of the R&D needs that might be required under adaptation. The second one is the specific kinds of R&D that might be required, which is a combination of science, economics and social science and probably will require a lot of work with scientists outside ABARES. So that second one is probably a good couple of years, I would say. But a sort of scoping study of assessment of principles and the quantum of R&D that might be required might be a little earlier.

Mr Glyde : Senator, I am just wondering if I might intervene to clarify the nature of the question. You are really asking about specific R&D that particular farm sectors might do in order to better adapt to changing climate. I was just going to add to Dr Harris' answer. The standing council on primary industries has within it a research RD&E framework, and one of the cross-cutting elements of that framework is a strategy in relation to climate change. All of the RDCs, or almost all of them, participate in that cross-cutting strategy that describes what each of not just the RDCs are doing but also universities and state governments as well, and that provides the strategy for the research work that will be needed on the adaptation side. That might also be the sort of information I think you are looking for. We are more than happy to provide that strategy and progress reports to you.

Senator SIEWERT: I am trying to look at what role you are playing in that process. I am going back to the question of funding for this process.

Mr Morris : I think it is fair to say that, as Dr Harris has indicated, we are developing a program of work in that area. We would like people to fund it, so part of our financial position in terms of how we operate is that we get some money from direct appropriations—and the development of the program work I suppose at the moment is being funded through appropriations—but in terms of any major work that we would want to do in the future we would be hoping to get some sort of funding from either the Department of Climate Change and Energy Efficiency or supplemental funding from our own department. So, at this stage, we are trying to develop the ideas, and then, in terms of the outputs, it will depend on what people are willing to fund going forward.

Senator SIEWERT: Thank you.

CHAIR: Thanks, Senator Siewert. Senator Edwards, I am sorry, I only have one more minute, so if you could quickly throw a question out there, if it is that burning. Otherwise I would invite you to put them on notice.

Senator EDWARDS: Mr Morris, last time we spoke, we talked about crop estimates and I urged you to reforecast down your grain crop estimate for last year. Who won the bet? Do I owe you a lobster or do you owe me a case of beer?

Mr Morris : I do not think I took the bet, but it is probably just as well for you that I did not because we did revise down slightly but not by very much. In terms of the wheat forecast: in September we were saying 22.5 million tonnes, in December we were saying 22 million tonnes, so it was about right. Of course, the previous year it was 29.9 million tonnes, so that is quite a dramatic reduction from the previous year but in terms of our forecasts there really has not been a lot of change. In June, before we even knew what was going to happen we were saying in 24 million tonnes, so we were expecting quite a reduction—

Senator EDWARDS: But it turned out to be 20.8 million tonnes, didn't it?

Mr Morris : I do not think we have a final number yet.

Senator EDWARDS: My bird is—

CHAIR: I will have to make this the last question.

Mr Morris : We will be putting our—

CHAIR: Senator Edwards! Don't spit the dummy if your mates have taken all your time. I am not going to put up with that sort of carry on. Get your act together in your party room then come back to me. Don't carry on like a kid. We have run out of time. Sorry to interrupt you, Mr Morris.

Proceedings suspended from 10:46 to 11:00

CHAIR: In continuance of Senate estimates with DAFF, I now call officers from Climate Change. But I believe Mr Metcalfe has some answers for us.

Mr Metcalfe : Yes. Earlier today we were asked a question by Senator Colbeck as to whether or not the published staffing figure of 5,119 includes ongoing, non-ongoing and casual staff. The answer is yes, it does. That is our total headcount as of 31 December 2012.

Senator NASH: I have some questions around the Carbon Farming Initiative. I want to talk about Henbury Station. In July 2011 $9 million of taxpayers' money went into the purchase. Has the department received a proposed methodology from Henbury?

Ms Gaglia : That question was directed to the Department of Climate Change and Energy Efficiency.

Senator NASH: So under climate change and in this department we deal with the Carbon Farming Initiative. Which bit of Henbury do you have anything to do with?

Ms Gaglia : We do not deal with Henbury Station. It is actually the Department of Sustainability, Environment, Water, Population and Communities that has responsibility for that.

Senator NASH: So there is nothing at all under the Carbon Farming Initiative to do with Henbury that sits in your department?

Ms Gaglia : That is correct.

Senator NASH: Why is that?

Ms Gaglia : The Department of Climate Change and Energy Efficiency has portfolio responsibility for implementing the Carbon Farming Initiative. What our department does, and our role, is to assist them with the development of offset methodologies and to roll out programs that assist the Carbon Farming Initiative, like the Carbon Farming Futures program.

Senator NASH: So you assist them in the determination of how they are going to run the program, but that is it?

Ms Gaglia : And with some of the policy issues around the CFI, that is correct.

Senator NASH: What policy issues are those?

Ms Gaglia : We helped with the development of the legislation. We are working with them on policy issues around leakage and how to set baselines for different methodologies.

Senator NASH: If I have questions about the measurement of soil carbon in the Carbon Farming Initiative, does that come to you guys?

Ms Gaglia : That would be directed at both us and the department of climate change. We have the research into soil carbon.

Senator NASH: But I suspect that is not in this particular part of climate change—or is it?

Ms Gaglia : Yes.

Senator NASH: I want to talk about camels. The Carbon Farming Initiative specifically identifies feral camel management as an activity that should be able to generate carbon credits: is that correct?

Ms Gaglia : Correct.

Senator NASH: I understand that there was a proposal for a project from Northwest Carbon. Is that correct?

Ms Gaglia : That is correct.

Senator NASH: Correct me if I am wrong, because the last thing I do is believe media reporting, but it gives us a place to start: was Northwest Carbon's proposal rejected?

Ms Gaglia : It was, Senator.

Senator NASH: On what basis?

Ms Gaglia : I understand that the Domestic Offsets Integrity Committee rejected that methodology on the basis that there was not enough data provided by the applicant in relation to the abatement and the setting of baselines.

Senator NASH: Has there been, as I expect there would have been, an assessment of methane emissions from camels?

Ms Gaglia : I understand that is the case, Senator.

Senator NASH: If there is an average amount of methane coming from a camel, where is the difficulty? Why would this particular proposal have been rejected? If they are talking about culling the camels, that will obviously stop that methane emission, because the animal is dead.

Ms Gaglia : The DOIC is an independent committee and their reasons for rejecting any methodology are on the Department of Climate Change and Energy Efficiency's website.

Mr Tucker : This is one of those areas we cross over with the department of climate change. They manage and support that Domestic Offsets Integrity Committee. We provide advice into it, so the question of how the committee is operated and some of the detail of their considerations would be best directed to that department.

Senator NASH: We will have a bit more of a crack at it here, since there is some crossover. What is your understanding of the lack of information in the proposal?

Ms Gaglia : It was mostly around the setting of the baseline—where you actually start the reporting of abatement.

Senator NASH: Can you explain that for me? We have camels running around in the middle of the desert, doing what they do with their back end and we are trying to stop that—

Ms Gaglia : I am not that familiar with that particular methodology. I have never had anything to do with that—

Senator NASH: Why would you not be? This has been one of the big things. The minister would know it has been one of the difficulties, and I will agree.

Senator Ludwig: They need to set baselines. It is an independent regulator and they do need to provide sufficient information. To give you some understanding, it is very important to set a baseline for an emission. You cannot simply assume that an animal emits a certain amount of methane per day, per year, per life cycle, because it depends on the fodder, the type of input, on its location. It depends if it is fed on grass and so on. You have to take all those things into account and then you have to have some way of measuring the methane emission. In this instance there is a lot of work being done by universities, where they isolate a particular animal, work out their baselines—how much methane it emits and use that data to project forward over its life cycle what it may emit. They are the technical aspects. I am not familiar with this particular one, but I suspect in trying to set baselines and that data they may need to do a little more work by the sounds of it. It is not impossible to comply. They do need to provide information to the regulator. In providing that information to the independent regulator, I encourage you to check and talk to the independent regulator as to the information they need. I am always keen to see methodologies approved. So, if there is more information that needs to be provided to DOIC, then they should undertake that work.

Senator NASH: From what you have just said, Minister, it sounds extremely complicated and extremely difficult.

Senator Ludwig: No, it is not. A number of them have been approved. I would not want to leave you with that. That is why I say that in establishing baselines and the methodology if there are deficiencies—and they do have to meet certain standards—

Senator NASH: No, I get that.

Senator Ludwig: You can't just make them up and send them out and say, 'These will operate.'

Senator NASH: I understand that completely, Minister. When you say there are a number of them that have been approved, are you talking about similar projects or just in general about the methodologies?

Ms Gaglia : In general. There have been 11 methodologies approved.

Senator NASH: There has not necessarily been one like this. What I am struggling with is the fact that the Carbon Farming Initiative specifically identifies feral camel management as something that may be appropriate to apply for under the CFI, and yet the DOIC, or whoever it is that makes the assessment, says that there is not enough information, but there seems to be no collective information within the department to provide some assistance. I mean, we are going around in circles. You are expecting them to come up with something, surely the department could have some guidelines on this baseline stuff.

Senator Ludwig: No, they do not make this up. Has the request been made to the department to provide this information?

Ms Gaglia : No, no request has been made.

Senator Ludwig: So there has been no request. Do not close the loop when it has not been requested. As I always said, the first port of call is the independent regulator, the DOIC. I have not seen the report, I have not seen the information. Have you? It may be helpful to make sure we are talking about facts. The question should be directed to the Department of Climate Change and Energy Efficiency in the first instance, but we are always happy to assist people in meeting their obligations to achieve methodologies, because we are keen to see, as you are, our methodologies approved.

Mr Tucker : Two methane methodologies have been approved: one for piggeries and one for dairies. As the minister said, it is best to go into the detail, but my understanding of the current approval of methodologies and the difference with the camel methodologies is that, obviously, with piggeries and dairies you actually know how much stock you have and you can measure very readily the output, whereas camel numbers are not well known across Australia. There certainly are estimates. The estimates move up and down, depending on the climatic conditions across Northern Australia. So I suspect some of those factors may have played into the discussions around that particular methodology.

Senator NASH: Why would that be an issue? One would imagine that the amount of methane coming out of a camel would be a reasonably standard rate. Whether you have got two camels or 2,000 camels, all you have got to do then is multiply their back ends to get where you are headed. I do not see how the number of camels really impacts on a methodology, because all you do is multiply the work—and I take the minister's point that that work has not been done and needs to be done—but the numbers surely do not matter that much because it is just a multiplication exercise.

Mr Tucker : It does depend on diet, just as feedstock does to other animals. But you are sort of getting beyond our level of competence. We are trying to assist, but it is best that details go to the particular department.

Senator NASH: You are assisting very well. Perhaps I could ask you to take on notice—in so far as you can assist, and certainly from the perspective of this department—given the ranging nature of the feral camels, how would you expect there to be a determination on the feed type as you have been talking about? Perhaps you could also ascertain for us the reasons for the rejection.

Senator Ludwig: That question may in fact be better put to the climate change department. We will see what we can provide.

Senator NASH: In so far as you can, if you would not mind. I will certainly put it to the other department as well. I do very much appreciate your assistance.

CHAIR: If I can just get an indication of how long or how many questions we have, because Senator Rhiannon has questions and I know you do, Senator Colbeck. Is there anyone else for this division—climate change?

Senator NASH: I have got another five minutes, but I am happy to come back if Senator Colbeck would like to proceed.

CHAIR: We have got an hour, if you want to finish. Do you want to finish?

Senator NASH: All right. The other area I just wanted to talk about was the measurement for soil carbon. We have had some discussions previously. I think there was still some work being done on getting an appropriate measurement process. Have we got any further on that since last we were discussing it?

Ms Gaglia : One of the things we discussed last time was the cost of measurement as well. Where we are with that is that the CSIRO have been working with 10 laboratories around the country in wanting to see whether they could roll out this new technique and get consistency across those laboratories.

Senator NASH: This is the new infrared spectroscopy.

Ms Gaglia : That is correct. They expect to have that testing completed by the end of this month, and they will report on it that in March. Then we will have a better idea on whether the technology can roll out quite easily and consistently throughout these different commercial labs. If that is the case then we would expect to see the labs taking up this technology in the future.

Senator NASH: Who will do the costing on that?

Ms Gaglia : The costing that we talked about last time of bringing in the analysis down from $,1000 a sample to $40 a sample was based on the estimates that CSIRO have if they were actually doing the measurement. One would expect that, if you have got 10 commercial laboratories around the country coming on board with this technology, we would actually see a drop in that price.

Senator NASH: What is it currently? If somebody has methodology ticked off and they are currently doing it, what is the cost to measure it today?

Ms Gaglia : The cost comes down to the sampling and the analysis. The sampling is how many samples you have to take for a methodology. At the moment, because we do not have a soil carbon methodology, we do not know how many samples will be required. The department of climate change is working on that with the CSIRO and I believe shortly they will have a sampling protocol that will be applied to any soil carbon methodology. That is one aspect of the cost and the other aspect is the analysis. That is what we have been talking about in terms of analysis coming down from $1,000 to $40.

Senator NASH: That is one of my problems with it. As you say, we do not have the soil carbon methodology yet, but we are approving methodologies for these projects under the CFI although we do not know how the carbon is going to be tested or how much it is going to cost. Is that correct?

Ms Gaglia : No, we have not approved any soil carbon methodologies at this point, so no projects in soil carbon have been approved either.

Senator NASH: Have any been bowled up to be approved?

Ms Gaglia : No, projects cannot be approved until there is a methodology in place, so until there is a soil carbon methodology approved there will not be any soil carbon projects approved.

Senator NASH: So it is a bit of hurry up and wait and see.

Ms Gaglia : Yes.

Senator NASH: Who is going to be responsible for payment? Is it is the project proponent?

Ms Gaglia : I imagine so.

Senator NASH: You imagine so?

Ms Gaglia : It depends on how they set up their projects—whether they are working through aggregators, whether they are doing the project themselves—but in the end they will have to undertake the sampling and getting the results through for the audit report.

Senator NASH: The department is not going to foot the bill for the measurement?

Ms Gaglia : That is correct.

Senator NASH: How much does it cost to get these 10 departments to do the testing of the spectroscopy?

Ms Gaglia : The CSIRO are doing that. We have not had to pay them to work with these 10 laboratories.

Senator NASH: It is still taxpayer money from somewhere. One thing I have been trying to get my head around about the CFI is what the process is going to be. There is measurement of the soil carbon, and an increase in the soil carbon under the CFI would result in a return to the proponent of the project. Am I right so far?

Ms Gaglia : Yes.

Senator NASH: For what period of time and how often will that soil be required to be measured to see if there is any further increase or any decrease?

Ms Gaglia : That comes down to what is specified in the methodology. One of the options being looked at is whether or not we do modelling, so for a certain period of time—whether it is 10 or 15 years—you model what is the increase in soil carbon in relation to the practice in place. Then you do sampling at certain intervals to back up what the model has predicted, which would reduce the amount of actual sampling that you would have to do.

Senator NASH: What happens if the soil carbon decreases for some reason?

Ms Gaglia : If it is through action like a drought, for instance, then you would stop being credited until the soil carbon levels build up to where they were before that natural occurrence.

Senator NASH: What if they do not build up again?

Ms Gaglia : If you do not do anything to change your practices, in theory your soil carbon should increase.

Senator NASH: There is an awful lot of theory in this, isn't there? Why has it taken so long? When did the legislation for the CFI go through?

Ms Gaglia : If I can correct you on that, the CFI came into place in December 2011. In less than two years we have had 11 methodologies approved.

Senator NASH: There were only four until very recently, but go on.

Ms Gaglia : When you look at the development of offset markets around the world, it has taken over two years for any of those offset markets to get their first methodologies approved. We are actually quite a long way ahead.

Senator NASH: Under the CFI obviously there is no soil carbon methodology yet. What other methodologies are there for carbon farming, things that do not involve an increase of carbon in the soil, which we have not got to yet because we do not have a methodology. What things under carbon farming in general have been approved?

Ms Gaglia : At the moment there are three methane capture methodologies, two for piggeries and one for dairies. There is also an environmental planting methodology and there is a savanna fire management methodology.

Senator NASH: If we have all those—and I appreciate we are saying others are being slower, but others being slower than us is not really a good answer—why has it taken so long and why are we only now getting the 10 departments to do the work on the soil carbon?

Senator Ludwig: One of the important things you also need to recognise is that the methodologies are usually put forward by proponents who want to provide a methodology. You can go to their website, and I think it provides a really good overview of methodologies. It also provides the methodologies that were not endorsed, so it deals with the methodology that you raised in relation to the feral camels. There is management of large feral herbivores in the Australian rangelands. There was an application by NorthWest Carbon Pty Ltd. That is why I went back to the earlier answer I gave. That is why the role of DAFF is filling the research gap, providing those funding initiatives for people to develop methodologies. That is why we also fund for action on the ground so that we can demonstrate sequestration activities, and we can encourage that. And if you look at the range of work that is being done I think it is quite significant. Those ones that have not been approved are certainly ones where the proponents can take the report—because we provide a report, which I would encourage you to go and have a look at, as to why they were not approved. I will not take the opportunity of running through some of the questions you asked earlier, but the answers are in the report that I have had the ability to just cursorily look at.

And of course these are working through very quickly. If people put methodologies forward then we are very keen to have them go through the process and get approved, because they do add a significant benefit to farmers who can use these methodologies. And once one is approved—if you take the piggeries, for instance—it means that all piggeries are approved, so 600 or 700 piggeries across Australia can participate in that methodology. So, just because there are 11 does not mean that there are 11 only; what it means is that once a methodology is in place, many businesses can participate in those methodologies, and I think the work to date has been very good.

Senator NASH: I have one last question. Have you taken into account, in trying to come up with some sort of measurement for the soil carbon, overseas experience? Have you looked at what is being done in the US?

Ms Gaglia : Yes, the researchers have been looking at that. What we are doing here is actually superior, in terms of trying to get the measurement costs down, to what is happening overseas.

Senator SIEWERT: I just want to follow up on the theme I was asking ABARES about, and that is on what work is being done for climate adaptation and extreme weather events—and what projects you are running and how far they have progressed. In particular, I am interested in the south-west of Western Australia.

Ms Gaglia : One of our programs, Filling the Research Gap, which we had opened and closed at the end of January, has a large adaptation component. So, we will be funding adaptation projects under that. But at the moment we are just going through the assessment of those applications, so I cannot make any comment about what kinds of projects we might be focusing on.

Senator SIEWERT: Is that the first round of projects you have done under that particular issue?

Ms Gaglia : Under Filling the Research Gap, it is the first time adaptation has been addressed; that is correct.

Senator SIEWERT: When do you expect to have completed the assessment of the project?

Ms Gaglia : We expect that to happen in the coming months.

Senator SIEWERT: So, what is your time line for announcement? Perhaps I could put it that way.

Ms Gaglia : We hope to have recommendations to the minister within the next couple of months.

Senator SIEWERT: And how many project applications did you get?

Ms Gaglia : We received approximately 234.

Senator SIEWERT: From what types of organisations?

Ms Gaglia : We had research organisations, industry organisations and some community groups as well, I think.

Senator SIEWERT: Was that for the whole of the research?

Ms Gaglia : That is correct.

Senator SIEWERT: So, how many under the adaptation element?

Ms Gaglia : Off the top of my head, I think there were around about 60, but I am not 100 per cent sure on that.

Senator SIEWERT: Were they area specific or for the whole of Australia?

Ms Gaglia : The whole of Australia.

Senator SIEWERT: So you cannot tell me how much was focused in the south-west of WA?

Ms Gaglia : Not at this stage.

Senator SIEWERT: The rest of my questions are pointless until we see the outcomes of the funding applications.

CHAIR: I have never heard that from a senator before.

Senator SIEWERT: They are not pointless; they are pointless in that I will not get an answer.

CHAIR: That can be hypothetical. Senator Colbeck and many of your colleagues have questions. Do you want to lead?

Senator COLBECK: I will pass to Senator Back.

Senator BACK: I want to quote from a speech from Mr Ross Garnaut in Beijing on 31 January:

We should acknowledge that trade in emissions entitlements has struck some large practical problems. Within the European … trading system, the many regulatory and fiscal interventions are forcing much larger reductions in emissions than carbon pricing. These together with slow growth in economic activity and the realisation of unexpected opportunities for low-cost abatement have caused permit prices to fall to levels that are well below the economic cost of emissions …

He refers also to New Zealand's scheme:

Already New Zealand’s emissions trading scheme has prices close to zero through allowing unlimited access to credits …

I do not know if you have read Mr Garnaut's speech. If you have, could you tell me what impact you think that will have on your advice to government in terms of the programs you have been outlining this morning?

Senator Ludwig: Firstly, I think if you are going to read from a speech, you might want to table it so the officers can have the whole speech available to them. Secondly, I think you are now asking for an opinion about government policy and not something that officers here should reasonably answer. Thirdly, by and large, if it is a policy issue around climate change, I am happy to have a stab at it, but I suspect Mr Combet would much prefer that it be directed to his department for a comprehensive answer in respect of a policy question. They are the three points I make. If you have direct questions about this portfolio in respect of its work in this area, I am happy for them to answer. I am not sure that is the question you asked.

Senator BACK: I really was going to a continuation; I am quite happy to provide the full text of Mr Garnaut's speech. I do have a question for you. But it was to do with offsets. Mr Garnaut went on to say:

The low prices raise questions about the effectiveness of the emissions trading system. Although controlled in quantum, use of offsets at very low prices … has pushed prices even lower.

I am not questioning the officer here in terms of policy. Given the fact that offsets are so critical to the activities we are discussing, I am very interested to know what will be the impact, if the price collapses, on the activities the department is engaged in in climate change?

Senator Ludwig: Again, that is a hypothetical question. You are asking for a future unascertainable impact. What I can say is that Treasury modelling predicts and is consistent with what will be the future price of carbon in the market. Nothing has changed. Treasury modelling is still available to you to have a look at. The price of carbon has fluctuated broadly in the EU, as we know. My recollection is—and I stand to be corrected—but I think I have said in parliament that it has been as high as about $53 a tonne and it is down to $10 or $11. But we are confident and the Treasury modelling predicts that the price on carbon will be $23 a tonne when introduced in 2016.

Senator BACK: For clarification, Minister Combet actually gave an assurance last year that he was confident of the Treasury modelling predicting a $29 a tonne carbon price in 2015-16—not $23 but $29.

Senator Ludwig: Well, we have set it during this period as being $23, as you know, and I will always defer to Minister Combet for his prediction there. As I said to you at the outset, these questions should be directed to Minister Combet, because I am running on recollection from a range of information that has been put out there in the public domain. So I do defer to Mr Combet on this issue, now that you have pointed out that my recollection is at odds with his.

Senator BACK: Can I then ask you, based on Garnaut's comments about the collapse of the system—with the European trading scheme now less than $4.55 per tonne—his statement that New Zealand's emissions trading scheme is now close to zero, what direction would you give to the department to go back and redo its figures in the climate change space, armed with that information?

Senator Ludwig: Again the answer to your primary question still is: we are confident of the Treasury modelling. It still is there, it is still a very good piece of work, and nothing has changed that would suggest the Treasury modelling is wrong.

Senator BACK: Even though Garnaut was effectively the architect of the scheme, Garnaut is now admitting that it has collapsed or is in the process of collapsing, you are still confident?

Senator Ludwig: I cannot recall whether I have read that entire paper, but I am confident that Treasury modelling remains accurate.

Senator HEFFERNAN: This is one of the largest ongoing fraud cases in Europe.

Senator Ludwig: We know your view, Senator Heffernan. You remain a climate change sceptic—

Senator HEFFERNAN: Say that again?

Senator Ludwig: We know your view, that you remain a climate change sceptic—

Senator HEFFERNAN: That is bullshit—

Senator Ludwig: unlike your party—

Senator HEFFERNAN: I have always supported the proposition, because I am a bloody farmer—

CHAIR: Senator Heffernan, you can defend yourself—

Senator HEFFERNAN: You are absolutely ridiculous—

CHAIR: I am saying you can defend your position without the colourful language. I know it is all smoke and mirrors for those poor devils who might be watching this—

Senator HEFFERNAN: Everyone on this panel knows I am not a cynic. But it is the largest case of ongoing fraud in Europe.

CHAIR: Senator Heffernan, now we have clarified that. Thank you very much. Senator Back, you have the call.

Senator BACK: That does raise the questions I was asking, and I will take the minister's advice and then take that up in estimates appropriate to Minister Combet's portfolio.

Senator COLBECK: We talked to you once before about some work the CSIRO was doing in relation to review of state and territory codes of practice for plantation management. It was supposed to be finished by July 2011. Can you tell me where that is at—whether it is finished?

Ms Freeman : I might take that on notice. I may be able to get that to you shortly. I am just not precisely sure of the exact status of that one.

Senator COLBECK: We will have to come back to that topic. I want to go on to the forest contractors exit package. We asked in question on notice 43 about the ability of an individual to take the exit package and the family still continue in the business. You said you had received no formal allegations around sale of a business within the family and the family continuing to operate. You also said in the response to question on notice No. 43:

… there were no conditions placed on the sale of a business or of business machinery to a family member.

However, the business entity if sold could not access native forest contracts.

Would it be possible for someone to sell their equipment to a family member, receive an exit package and then go to work for the family member if they sold the equipment?

Ms Freeman : Yes, as I understand it, they can. I should say that DAFF has, since the October estimates, received three allegations. Two of them have been investigated and it was found that there has been no matter of fraud with regard to their application. Both of those have now been referred as part of our compliance program for that exit program, and we will be looking to make sure that people are complying with the terms of their deed. So we will be doing follow-up on that as part of our compliance activities for that program. The third matter is currently being investigated by DAFF's fraud and ethics area.

Senator COLBECK: Sorry, but I completely lost that in all the background noise.

Ms Freeman : Just to confirm: there have been three allegations. Two of them have been investigated and it was found that there was no case, and the third matter is still be investigated.

Senator COLBECK: Still being investigated?

Ms Freeman : Yes. Just to reassure you, on the two cases that were looked at by our fraud area with regard to allegations made by individuals the people had not acted fraudulently as part of their process of putting in their application or the claims that they made in their application, but, as part of the compliance activities for this program, we will be making sure that people are sticking to the terms of their funding deeds.

Senator COLBECK: So there is a continuing monitoring process?

Ms Freeman : Yes.

Senator COLBECK: Effectively of those allegations?

Ms Freeman : It is with regard to all recipients of the grants.

Senator COLBECK: So the compliance review process is being applied across the board to all of grants under that program?

Ms Freeman : Yes, it would apply to all—

Senator COLBECK: It has become an element of your day-to-day operations?

Ms Freeman : Yes, as part of the normal program.

Senator COLBECK: Would it be possible for a person that received an exit package to subsequently have a level of ownership of another business in Tasmania or another state or territory?

Ms Freeman : I would have to check—

Senator COLBECK: I know there is a distinct difference between in Tasmania and other states. I think that is something we should put on the record to start with.

Ms Freeman : Yes, that is correct. So this was regarding people exiting the Tasmanian sector?

Senator COLBECK: Yes. So they could not take a share in another Tasmanian business?

Ms Freeman : I would have to confirm this to be sure but, if there have been commitments made to exit native forest contracts, regardless of the business, depending on what they are working on, there would be commitments made for whatever business they are involved in. The exit was in relation to native forest contracts.

Senator COLBECK: Yes.

Ms Freeman : I think to be really clear, what someone may or may not do as part of that, they have met a condition of a deed to not operate that business and they have withdrawn those contracts that they had with native forest. So depending on what they are or are not doing speculatively with another business, I think it would depend on the terms of the deed that that other business may or may not be involved with. So it is a bit hard to answer that conclusively.

Senator COLBECK: I think I understand what you are telling me. Is the one that is still being investigated at a different stage or a different type of process to the other two?

Ms Freeman : No. We just received that one subsequent to the others. It is purely a timing issue.

Senator COLBECK: Okay. Are you currently rolling out any other funding under the IGA process?

Ms Freeman : From this department or this portfolio, no.

Senator COLBECK: So who is dealing with the process for sawmill exits?

Ms Freeman : The Tasmanian government.

Senator COLBECK: So all that funding has been allocated to the Tasmanian government?

Ms Freeman : Yes.

Senator COLBECK: So what liaison do they have with you around that?

Ms Freeman : This department offered some assistance in the design of the program guidelines—looking at some of the principles that you might put into that. That was really our engagement, at the request of the Tasmanian government some months ago. Since that time, it has really been a matter for the Tasmanian government.

Senator COLBECK: So there is no reporting back to the Commonwealth government as part of this process of how that is progressing and applicants and those sorts of things?

Ms Freeman : If you will bear with me, Senator, notionally, the formal arrangement was that it was a matter to be administered by the Tasmanian government. We have been kept abreast of applications and where it is up to, and I can certainly provide you with those details. But it really is a matter for the Tasmanian government.

Senator COLBECK: How much money has been paid out? Do you know?

Ms Freeman : I will take that on notice of where it is up to.

Mr McNamara : The regional saw millers program has closed and bids have been received, but my understanding, on checking with the Tasmanian officials, is that no funds have been paid out as yet.

Senator COLBECK: How much have we paid to the Tasmanian government?

Mr McNamara : The funding provided to Tasmania as part of the intergovernmental agreement is $15 million for that particular program. Senator, can I go back to an earlier question to asked about codes of practice?

Senator COLBECK: Yes.

Mr McNamara : The Commonwealth is still in consultation with two states, Queensland and South Australia. We expect that those consultations with those states will be completed in the next two or three months and at that point we will write to all the various state forestry ministers to seek agreement to the codes of practice.

Senator COLBECK: Can you just run past me again please?

Mr McNamara : CSIRO has done the work on the codes of practice. In terms of the report that we have received from CSIRO, or that the states have received from CSIRO I should say, both Queensland and South Australia are still in discussions with CSIRO and we are awaiting the completion of the outcome of those discussions which we expect to be in the next two months or so. At that point we would write to the various forestry ministers in each state and territory seeking their agreement to update the codes of practice.

Senator COLBECK: Is the CSIRO document available?

Mr McNamara : It is still in draft until those discussions with the outstanding states are finalised. At that point it will be a document that is published.

Senator COLBECK: So, South Australia and Queensland. This work was supposed to be done in 2011. What has been the key cause for the delay?

Mr McNamara : It was quite a large piece of work to actually update all the codes of practices for all the various states and territories. CSIRO has certainly put in a significant effort to get that work done. The report that it initially did has gone through a number of drafts with the various states. Obviously state governments have also changed in that period. It is a very complex piece of work, but as I say we are down now to having two states left. In terms of those two states my understanding is that the issues still to be discussed are fairly small, so I think we are at a point where we are pretty close to getting this finalised.

Senator COLBECK: Effectively what we are doing is redrafting the guidelines for plantation forest codes of practice across all states?

Mr McNamara : No, Senator. My understanding is that what we are doing is checking to see whether those codes of practice still meet the requirements as set out by the government, and CSIRO is the body that is undertaken that assessment.

Senator COLBECK: What are the requirements of the government? Where would I find that information? If we are trying to see whether they all meet those requirements, there must be some benchmarking and there must be some documentation that underpins that work.

Mr McNamara : There is documentation but I do not have it with me. I could take that on notice.

Senator COLBECK: Where would I find that?

Mr McNamara : It would be on our website, and we will table a copy later on.

Senator COLBECK: If it is on the website I can chase it down through the weblink. That is fine with me. We expect that that should be available fairly soon.

Mr McNamara : Yes, we do, Senator. As I said it is a complex piece of work.

Senator COLBECK: I want to go back to the Tasmanian IGA process again. Have there been any conversations in relation to that process around the recent fires in Tasmania, and do they impact on the qualification of any of the people involved in that process? There is one particular sawmill that has been impacted by the fires that a number of us have an interest in. Would the loss of that facility actually impact on their eligibility under the scheme? Do you know?

Ms Freeman : We are certainly aware of some of the impacts of the fires down south on a number of recipients. We have had no formal contact from them yet so it is a bit hard to ascertain at the moment. We are certainly aware of the impacts, but, in terms of their compliance with it or any impact it might have on their ability to meet the requirements—not at this stage. My colleague might have some more intelligence but that is my understanding at the moment.

Senator COLBECK: Is there a requirement for the Tasmanian government to, for example, be talking to you around the design of the scheme? It is a fairly catastrophic loss that this particular facility has suffered. Fifty years of businesses do not exist anymore.

Ms Freeman : There are a few things. One is obviously the natural disaster relief—

Senator COLBECK: And I know that Tasmanian government is managing it.

Ms Freeman : Yes. I think there are several things that are impacting here. One would be the Natural Disaster Relief and Recovery Arrangements, which are also applicable in Tasmania at the moment. So there would be a number of things taken into account.

Senator COLBECK: And there are a combination of things that will apply through this process. I understand that. But, regardless of my view of the IGA process, it is there and it is happening. What happens around this program could be very material to the wellbeing of that business operator into the future.

Mr Tucker : As you said, it is a Tasmanian run process but it is something we are obviously keen on in terms of delivering the outcomes that both governments have agreed to. I think it is probably fair to say, too, given the current circumstances in Tasmania, we have been a bit reluctant to harass our state colleagues, given that they have a lot of things on their plate at the moment, as do the communities there. It is something we will be discussing with them as soon as we get an appropriate window to have that discussion.

Senator COLBECK: I think that sentiment is probably reasonable, but asking that sort of question I do not think would be regarded as harassment. Senator Thorp just said to me, 'Is anyone going to contact him to find out where they are at and what they might be looking to do?'

Ms Freeman : Officers from our division have been in touch with the Tasmanian department checking on the wellbeing of the individuals in question and have had discussions; I am just not aware where it is up to at the moment. There certainly was, immediately after the fires and subsequently, conversation between officials on those particular parties. I am just not sure where it is up to now.

Senator COLBECK: I don't know how much further to take this. This whole IGA process has impacted on the business obviously. The huge pile—and I mean huge—of sawmill waste that had not been able to be disposed of because of some of the things that have occurred through this process actually became a real problem for them during the disaster; it went up like a bomb and exacerbated perhaps the issues that were faced in the immediacy of the catastrophic fires. As we talked about at the outset of the hearing this morning, getting some of these things sorted out in a timely way can actually make a real difference. I think I will leave it there.

In respect of the broader market for timber and timber products, I noticed in the ABARES stuff that was there earlier that there is a projection for an increase in sales of wood fibre out of Australia and an increase in price next year. How has that been considered as part of this overall process? Largely what has happened is that there has been a transfer of product out of Tasmania, basically because of logistical issues, into other states. How has that been considered as part of the overall process? We have been told that there is a structural change in the market. The structural change has basically been that it has moved out of Tasmania and into other states. Has any advice been given as part of this overall discussion around the future of the industry in Tasmania about those sorts of factors—the future demand and prices?

Mr Tucker : Our role can be seen in a number of ways. One is a policy advice role in terms of the matters that you were talking about and an analytical role, such as ABARES has done in those reports, and we will obviously provide those considerations to the government for its decision making. The other clear role we have in this is to implement the agreement between the two governments that has been entered into, and we have a particular program element in there.

As you say, much of the circumstance in Tasmania is due to essentially the global commodity market for forest and timber markets. Those markets will change all the time. Principally our effort at the moment is obviously giving effect to the agreement between the two governments and continuing to monitor international circumstances in the markets so that we can also provide that into future policy directions.

Senator COLBECK: With respect to some of the information that has been put into the report between the governments into the IGA process, particularly the work that has been done under the West committee, I asked in question 4445 about peer review of that information and you said that the terms of reference did not require peer review. It concerns me that a lot of the data that came out of that is now being relied on for certain purposes, but there is some significant question mark over some of that information, particularly the assessment process of conservation values—and that has been demonstrated by some work that has been done by the Institute of Foresters.

Are we doing any oversight or review of that? If the information that has come out of that process is not right and there is no formal peer review process, history would indicate to me that it will tend to become regarded as fact whether it is or not. How are we aligning that sort of information and dealing with the information that is sort of sitting there as part of that process and ensuring that it does have some efficacy and perhaps some peer review? I think even Professor West has indicted that it needs peer review. Are we doing anything or are we just leaving it sit there?

Mr Tucker : At this stage our effort is obviously into delivering the elements of the agreement. In terms of the process that was decided upon, that process was agreed between the two governments in terms of the way it would followed. We do not have any resources that we are putting into analysis of the data behind that agreement. If it is in relation to whether the particular areas have the conservation values that are of a concern, SEWPAC, the Department of Sustainability, Environment, Water Population and Communities may be doing something, and would need to do something, I presume, in relation to any future World Heritage nomination. But, in terms of our work, we are dedicated to—

Senator COLBECK: Just to interrupt you there: it is not a 'future' World Heritage nomination. The problem is that there has been a nomination made but without any review of that information. It seems to me that the whole process is going ahead in spite of the information—that there is agenda there and it is being run and it does not really matter what else goes on around it. In fact, it has almost been there since day one when the environment groups said to one of the participants in the then roundtable, 'If you don't go along with this we will do to your business what we did to Gunns—and that is stuff your business.' So it has not been a negotiation; it has not been anything but a process which gives the environment groups what they want—and the more they cause conflict, the more they get. Why aren't we doing something to look at the efficacy of the information that has been put forward? No resources? Is that the answer?

Mr Tucker : We obviously follow the decisions of the government of the day. The government of the day has decided to proceed with that nomination and it has also, through the effect of the Intergovernmental agreement, tasked us to deliver certain elements, and we are doing so.

Senator COLBECK: Is RFCS dealt with as part of this?

Ms Freeman : Yes.

Senator COLBECK: Given the current circumstances in Tasmania both in relation to forestry and also more broadly in the rural community, as well as the high impact in the rural community, has there been any requirement, demand or thought about resources into the Rural Financial Counselling Service in Tasmania to deal with that? Has there been an increase in demand of the service?

Ms Freeman : Obviously, following the floods and the fires throughout various states in Australia we have been working closely with our providers in those affected states to monitor the wellbeing of farmers and small-business owners and their families. Often the RFCS is the first point of contact for a lot of those people, and we have been talking to all our providers, checking on what they have been hearing on the ground. They have been checking up with their clients on how they are, so we have been actively engaged both in response to the fires initially and now the floods, talking to all our providers. Indeed, some of them have been affected.

They have been helping people get into the areas to assess the damage and the losses. Also, in terms of the measures that are available under the NDRRA, the Australian disaster relief payment and the tax measures, they have been applying assistance to clients to help them fill in the application forms for assistance. They have also been attending the recovery meetings that are around participating and relevant task forces and committees, and going to the bushfire and flood recovery centres to ensure that people are there. There has been an active effort to work with the providers.

Some states have offered: when the fires were on in Tasmania the South Australian providers actually rang us up and offered to send counsellors down to Tasmania. We extended that offer to the Tasmanian provider and they said they were right for the time being, but we are continuing to monitor that very closely.

Senator COLBECK: Have there been any issues for what are effectively rural businesses but which do not strictly qualify for the service to be able to be assisted through this process as well? What happens to those people who fall outside the fringes?

Ms Freeman : FaHCSIA also provide services on the ground, and in the flood-affected areas in particular. We have had a whole range of services that have gone—if people do fall through the cracks there is a range of measures in place as part of the NDRRA response. If people do not strictly qualify for the RFCS there is a range of others: there is a 1800 number, there is a financial counselling hotline and FaHCSIA offer the Commonwealth financial counsellors. They have also had temporary officers—for example, the Queensland Rural Adjustment Authority has set up client liaison officers. We have also had ATO staff, and RFCS staff from elsewhere in Queensland have been responding. There has been quite a concerted effort to meet the demands to assist people.

Senator COLBECK: Is there a formal coordination process across this?

Ms Freeman : We have quite clear arrangements between ourselves and the providers. It has been a matter of regularly keeping in touch with them, asking if we need to move people around. We have been touching base with them all on what they are seeing in demand for services. Certainly, as you would expect, there has been an increase in demand following the severe flood and fire events, but at the moment people are saying they are okay working with their existing resources.

Senator COLBECK: What impact has that had on the waiting times, and what is the size of the Tasmanian waiting list at the moment?

Ms Freeman : I would have to take that on notice; I honestly do not know.

Senator COLBECK: If there a KPI around that I would be interested.

Ms Freeman : I could give you some fairly general figures about the demand for the service more generally. It is roughly 7,000 to 8,000 a year across the country. Part of the service includes, for example, providing direct assistance and working with recipients of our transitional farm family payment. They are a direct client, so we have roughly 360 or 370 across Australia on that hardship payment at the moment. That would be a normal part of their client base. I could tell you what they are for Tasmania, but I would just have to take it on notice as I would not know the specifics.

Senator COLBECK: That is fine. When was the funding last reviewed for RFCS?

Ms Freeman : It was announced in 2011-12 that funding would go till 30 June 2015. For when it was actually last reviewed I would have to check my notes.

Senator COLBECK: My notes tell me 2007.

Ms Freeman : The government basically announced in May 2011 nearly another $55 million to cover the program up until 30 June 2015.

Senator COLBECK: What about the quantum, though, in terms of what was costing to do business?

Ms Freeman : The quantum of clients has actually fallen, partly in relation to the fact that there are no areas currently in an exceptional circumstance. I think that is one reason. The other is that we have a database that actually monitors the number of clients that we have. That database has changed, partly because we were double counting if someone came in and out of the system twice. So it is hard to say, but the numbers are roughly half of what they were a number of years ago. I think it is also important to note that the nature of the business or their engagement with the RFCS would be quite a different when they are not helping people in terms of their EC applications or whatever. Both the business and the number of clients have changed.

Senator COLBECK: What is the cycle of reporting that you receive on that?

Ms Freeman : I would have to take that on notice for this specifics. But, for example, they are audited regularly, we would set up biannual meetings with them where we actually go through what is happening in terms of—

Senator COLBECK: The reason I ask is—and it is more of a radar type of thing—we had a conversation earlier about some of the rumblings coming out of the dairy and horticulture industries at the moment, and I just wondered if any of the information that you might have been receiving back from RFCS was indicating that there is a level of concern or issue around viability of those business types. So there might be something happening here that we need to have a look at, and the external indicators would be that there might be something happening there. What feedback are we getting through RFCS? People are telling me the banks are being harder on them at the moment—that sort of stuff.

Ms Freeman : I think there are a couple of things. One is, as I said, we meet formally with all the CEOs and chairs twice a year, and through that we get quite good formal intelligence on where demand has moved or the nature of that demand. I met with all the chairs and CEOs in Adelaide in September last year and have sought their input into the development of the national drought reform program and the view of their clients—what is their sense of the needs of their clients over time going ahead and where there might be particular hotspots. They have been asked for their input for development of that policy moving ahead on the basis of the clients that they have and on the basis of either geographically as well as some of the factors affecting the long-term viability across industry types.

Senator COLBECK: I have one final question and I do not know whether it applies here, but it is related. Has there been a meeting of the Agricultural Finance Forum in recent times?

Ms Freeman : There is one scheduled for June. Let me just take that on notice as it might be even sooner. I just do not know it off the top of my head, but there was certainly one where the minister met with them.

Senator Ludwig: We have got one scheduled shortly. I do not have a date in my head either. We wanted to have them regularly, so we had one last year and we will have another one shortly. We also had an opportunity of sitting down with the Treasurer at a financial forum that he had convened as well, so I participated in that. In particular, there were representatives from right across Queensland. There was dairy, there was Growcom. There was a range of financial institutions also available there. It is one of those areas that I continue to keep on my radar.

Senator COLBECK: I did see some reporting on that.

Ms Freeman : Mr colleague Mr Koval from the ag productivity division will be able to answer that question when the next finance forum is scheduled.

Senator COLBECK: Let us put him on notice. If you could give us a schedule of what has happened over the last couple of years.

Ms Freeman : Certainly.

Senator HEFFERNAN: As I understand it, you give advice to SEWPaC on the climate change area under this portfolio. You are not responsible for the climate change policy area, but you give advice to SEWPaC.

Ms Freeman : And the Department of Climate Change and Energy Efficiency.

Senator HEFFERNAN: In the advice that you give, have you bothered to do a cost-benefit analysis on the agricultural side following the recent phenomenon of seriously hot fires which completely destroy the landscape. You cannot put stock in to reduce the fuel load and you have not got the resources to do cold burns in any proportion that is required? Have you bothered to figure out, which any person with half a brain could figure out, what happens when a hot fire goes through? If you go on the road in the Snowy from Adaminaby to Talbingo, you will see whole valleys of mountain ash stone dead, like bloody graveyards. Do you give advice that says perhaps we ought to consider other options and advice on why fires are getting bigger when the gear is getting better? It is almost like football now: fires are a TV event with a helicopter, with half the water they drop evaporating before it hits the ground. Also, have you done a cost-benefit analysis on the encroachment on agricultural land of national parks that have now become a breeding ground for dogs and pigs. As Senator Back and others would know, wild dogs have become a serious problem—

Senator Ludwig: I do not mean to interrupt the flow. I know time is precious. I would like maybe one question followed by another question followed by another question, so the officer at the table can respond.

Senator HEFFERNAN: Because Senator Rhiannon is having kittens, perhaps you could take that on notice or give a brief answer. Have you done a cost-benefit analysis?

Mr Tucker : Not to our knowledge. We will have to check with our ABARES colleagues.

Senator HEFFERNAN: Why not?

CHAIR: Mr Tucker, you are taking that on notice, which you did offer, Senator Heffernan.

Senator RHIANNON: Minister, have you been involved in any talks about the closure of the Eden chip mill owned by South East Fibre Exports?

Senator Ludwig: I will check, but I do not have any clear recollection of that.

Senator RHIANNON: So you will take it on notice if there have been any informal or formal talks?

Senator Ludwig: If I have, I do not recollect. You asked me whether I have been involved. My recollection is no. Just in case it involved another entity or another name, I will check my records.

Senator RHIANNON: Is there anyone from the department who has been involved in such talks?

Mr Metcalfe : I recall visiting the facility as part of my familiarisation program with the portfolio back in December. Certainly to my recollection there were no discussions of that nature. I was there purely to familiarise myself with the forestry industry in the south-east.

Senator RHIANNON: As you were there to familiarise yourself, are you aware that there have been a number of media reports in the area of the possible closure of the mill, and is that something that you are acquainting yourself with?

Mr McNamara : We are aware of reports of some downsizing of the staff in that particular mill. We have not had any formal discussions with SEFE.

Senator RHIANNON: I understand that the New South Wales government is revising logging licence conditions, which could mean that areas of old-growth forest and rainforest currently in special management zones and thus protected in state forests would be opened up for logging. So it is with regard to revising the conditions. Is there any discussions with the New South Wales government about these changes and would such changes be a breach of the RFA?

Mr McNamara : We have not been in discussions with New South Wales with regard to that. Land planning, as you would be aware, is a state matter by constitution. The case would be that the New South Wales Department of Primary Industries would be in discussions with the Environment Protection Agency within New South Wales, and those discussions would be ongoing. We have not been involved in those discussions at this point in time.

Senator RHIANNON: Under the RFA, if considering such a revision would breach the conditions, would that trigger the requirement for discussions?

Mr McNamara : What you are saying is that it would breach the RFA; I am not sure that it would breach the RFA. The RFA provides for adaptive management, so what it actually provides for—it is a long-term 20-year agreement. Certainly when the RFAs were put together it was recognised that views on forest management and views on environmental management could well change over the course of that 20-year period. What the RFAs provide for is an ability for state laws to change, adapt and evolve over that time and the RFAs remain current. So, if the practices that are being undertaken within state forests are consistent with the current state laws, then that also means they are consistent with the RFAs. So I am not sure that the proposition you are putting forward is correct.

Mr Tucker : I will add to that reply. Yes, RFAs are to be adaptive instruments, depending on how circumstances change. But state governments also have certain commitments in those regional forest agreements. So it is slightly hypothetical—I do not have it in front of me—but certainly, if they were considering arrangements which may affect those commitments, we would expect a discussion.

Senator RHIANNON: Back to issues to do with SEFE again. In October last year, there was information about a sawmill biomass study being undertaken. I understand that a little bit over $73,000 went to SEFE for that. When will this report be released to the public?

Mr McNamara : The report has been published on the DAFF website.

Senator RHIANNON: Thank you. Are there any export controls over the export of wood pellets made from native forest wood?

Mr McNamara : I would have to take that on notice. We should be able to get an answer back this afternoon.

Senator RHIANNON: Another one to take on notice with that: for whole logs or wood chips that are destined to be used for energy purposes, including electricity generation, are there any controls with respect to export or generally?

Mr McNamara : Under the Export Control Act that there is a requirement for saw logs over two tonnes for licencing, but under two tonnes it essentially falls to state legislation.

Senator RHIANNON: Could you take that on notice, please. I want to ask about the exit strategy package for the Tasmanian forest contractors. DAFF has put many millions of dollars into this. Could you provide a final list of grants that have come under that scheme?

Ms Freeman : It is up on our website. But we are happy to provide that to you.

Senator RHIANNON: Thank you. Minister, in relation to the fraud inquiry—with respect to the package paid out to some companies in Tasmania—at the last Senate estimates you explained that no charges were laid by Federal Police and no report would be published. Is the reason that no charges were laid because some of the original recipients paid the money back?

Ms Freeman : Can I just clarify which program you are talking about. Senator Colbeck asked a number of questions about the intergovernmental agreement contract exitors program and we talked about allegations of fraud in that. So I just want to clarify—

Senator RHIANNON: A fraud inquiry commenced in February 2011, and one of the companies it covered was Kasun Pty Ltd. The minister explained at the last estimates that there would be nothing further done about this, and I just want to clarify: is part of the reason for that that some of the money was paid back by companies; and, if so, what and how much?

Ms Freeman : I will take that on notice.

Mr McNamara : I want to confirm this with you, Senator. There have been a number of grants programs run in Tasmania over the last five to six years. I was wondering if you could perhaps provide us with some more detail. Which particular program was that grant provided under?

Senator RHIANNON: I will give the website that I am picking it up from. If you look at the response that the minister gave at the last estimates, it will clarify what program that we are talking about. We had an exchange. The minister said: 'No charges were laid by the Federal Police and no report will be published.'

Senator Ludwig: I am happy to take that on notice and get back to you.

Senator RHIANNON: I want to go back to an RFA in western Victoria. That RFA notes that while the review process will not open the agreement to renegotiation both parties may agree to some minor modifications to incorporate the results of the review. There are enormous developments in that area. We have seen the phasing out of commercial logging in the region, there is a recommendation of the five-year review to cancel the agreement, a large number of nationally significant species are in the area, there are moves by the state government to reopen sensitive forest areas for new logging and changes being made by the state government to water down the protection under state law. These are considerable changes. What steps will the federal government take to revisit the western regional forest agreement?

Mr Tucker : I can answer in the general sense—I do not have that agreement in front of me. In answer to one of your previous questions we said that the RFAs are documents that adapt to changes in circumstances. Clearly, if there are intentions or decisions that may affect state commitments then we expect a discussion around the content of the RFA. There is also the regular process of examination of the delivery of the RFA and the review of the RFAs as we get towards the end of their 20-year span. In each of those circumstances, we have the capacity to revisit the commitments in a regional forest agreement. Governments of the day, as they have chosen to do in the case of Tasmania, can also reach other agreements if that is their policy position. I do not know the specific circumstances of western Victoria but there are a number of opportunities or occasions available to change those agreements.

CHAIR: Thank you, Mr Tucker. We have gone over time. I request that you put the other questions on notice, Senator Rhiannon.

Proceedings suspended from 12:17 to 13 : 18

CHAIR: Mr Metcalfe?

Mr Metcalfe : Thank you Chair. I have some responses to some of the issues that we took on notice earlier. I think Mr Aldred has one as well. Senator Nash asked about two figures that appeared in a document. One was in relation to properties the department maintains in Broome, where we have a number of staff. The figure 59,000 was one that she queried. I can confirm that the 59,000 figure is the annual rent for one of the residences that we maintain in Broome. She also asked about the figure 387,000 and I can confirm that that is the rent and associated costs of maintaining our office in Broome for the period of five years to 2016.

During the session on Climate Change Division, Senator Rhiannon asked whether the lack of follow-up by the Australian Federal Police regarding fraud allegations under the 2010-11 Tasmanian Forest Contractors Exit Assistance Program was as a result of money being repaid to the department. I am advised that no money has been repaid to the department from that exit assistance program.

Senator Colbeck asked what standards the states plantation codes of practice were being reviewed against. I understand that the states codes are being assessed against the national plantation principles and those principles are on the DAFF website. I can give the senator the particular reference if he would like it.

Thirdly, Senator Rhiannon asked when the south-east fibre exports bioenergy research project report would be published. I am advised that that is on the department's website and I can give the senator that particular reference as well. I think Mr Aldred was also going to add to something.

Mr Aldred : I was going to answer one of the questions that the secretary has already covered.

[13:20]

CHAIR: Thank you. It is great to see you coming back so early with answers to questions taken on notice. We now welcome Border Compliance and the Post Entry Quarantine Program, formerly known as Biosecurity Quarantine and AQIS.

Senator COLBECK: I want to go to Operation Hayride. We have had a few discussions in relation to that. My question goes to cost recovery. My understanding is that it is a cost recovered process—that the operations of these particular operations, and I think that you have two or three running, all form part of the overall overhead and that they are all cost recovered.

Mr Chapman : That is right. They fall under the part of the organisation that is funded through cost recovery. Even if the actual activities do not occur a fee or charge, the targeted campaigns are funded by our cost recovery arrangements.

Senator COLBECK: How is that allocated? How does the cost recovery process work?

Mr Chapman : It is an overhead for the import clearance program.

Senator COLBECK: Okay. Is there an annual allocation made against that or is it something that is balanced on an annual basis, depending on the level of activity, and then built into the fee structure when they are worked out on that annual basis?

Mr Chapman : The fee structure that we have across the whole range of our fees tries to ensure that we have sufficient revenue over a period of time to conduct all the work that is required to manage biosecurity at the border. The targeted campaigns are given a notional budget within that broad bucket for their activities through the year, but that needs to get adjusted, depending on what turns up in the course of those activities.

Senator COLBECK: Operation Hayride, from recollection, was about 14,000 hours and about $850,00 was what it ended up costing.

Mr Chapman : I would have to check on the figures. We provided some answers to questions on notice about this. Operation Hayride was expensive because of the large amount of follow-up work that we had to do and the number of premises that we had to visit.

Senator COLBECK: It is accepted that it was a fairly extensive exercise. A bit over 100 tonnes of stuff was searched out, I think.

Mr Chapman : It worked out at the end at 132 tonnes. That was what we ordered into quarantine. Following that, there were assessments made as to whether it needed to be seized, destroyed or re-exported. But it was a significant recovery operation.

Senator COLBECK: Where any other expenses incurred as part of that process by anyone else that was part of the operation? Were importers, for example, responsible for transport, storage, treatment or destruction of the non-compliant goods? Who bore those costs?

Mr Terpstra : Individual industry participants bore the costs of destruction of non-compliant goods if those were detected. They bore the costs of storage for goods where there was a dispute as to the testing outcome or while things were being tested. Costs for the diversion of their cargo to a suitable facility so that it could be inspected by DAFF were borne by the performance targeting and effectiveness program allocated budget that Mr Chapman was referring to earlier.

Senator COLBECK: So you really do not know the full cost of the operation because you do not know what costs were—or were they charged back? Was it a charge-back process or were they just required to pay for that themselves as part of the operation?

Mr Terpstra : Those would have been commercial costs that were administered by the owners of particular facilities that those operators normally engage as a part of their cargo clearance processes. Those are not costs that are actually administered or visible necessarily to the department.

Senator COLBECK: So the figures you have given us were specifically in relation to costs that you incurred as part of your internal processes or ones that you might have borne as part of an activity that you have undertaken?

Mr Terpstra : Correct.

Mr Chapman : That is right. The costs are staffing costs and the other costs that we referred to in the answers that we provided to you.

Senator COLBECK: You said, in question on notice 165, that Operation Hayride was undertaken without standard operating procedures. Has there been any assessment of the efficiency of that process and whether or not there has been any cost to either the department or to industry, given that there were not operating procedures in place?

Mr Chapman : Could you repeat the question, please?

Senator COLBECK: In question on notice 165 you indicate that Operation Hayride was undertaken without standard operating procedures—I suppose, given that it was perhaps a bit of a surprise that this stuff was there in the first place—has there been any assessment of the costs, to either the department or to industry, by virtue of the fact that there were not any standard operating procedures in place?

Mr Chapman : No. As you said, Operation Hayride was the first of these major recovery exercises following illegal importations that we did. Our first priority was to ensure that we got as many non-compliant goods back as we possibly could. So, while it was a successful operation, it was a learning exercise for us. We have been able to provide the cost to the department of conducting the operation but we have not done an assessment of the costs that might have been borne by individual industry participants. We have not tried to assess whether it would have cost less had there been standard operating procedures in place. But, as we advised, since Operation Hayride and the fact that we now have an ongoing rolling campaign of these target inspections, we have procedures in place.

Senator COLBECK: Has there been any feedback from industry in relation to this whole process in the review of the cost-recovery guidelines that are underway at the moment?

Mr Chapman : Not in relation to the cost-recovery guidelines. I think it is fair to say that industry is very supportive of us taking this approach of targeted campaigns and trying to identify those people who are deliberately trying to get around the system. So we articulated that in a publication which we put out in November last year, the Imports Compliance Statement, which really outlines that we are trying to make sure that we have a more vigorous approach to identifying and dealing with those who are non-compliant and, on the other side of the coin, that those operators who are highly compliant and can give us confidence that biosecurity risks are being managed have a lower regulatory touch on them. It has not entered into the discussion about cost-recovery, but industry's overall approach is that this is a good thing for us to do.

Senator COLBECK: No-one has made an representations about the fact that this part of the process is actually being cost-recovered or about where responsibility for its payment might be?

Mr Chapman : No. Not that I am aware of.

Senator COLBECK: So everyone is content that they are paying the bill for that?

Mr Chapman : Us conducting activities to verify compliance—and we have a whole range of activities that do that—is accepted as a legitimate cost of ensuring compliance at the border. As I mentioned before, there are specific fees and charges we have for certain activities. For instance, if we inspect goods or if we conduct an audit, the person whose goods we inspect or the recipients of that service get a direct charge. Over and above that there is a fee for every container that comes into the country; there is a fee for every full import declaration that we assess. They are very broad based—and they are not very large—and they are the ones that provide the funding for this sort of activity.

Senator COLBECK: What is the allocation in your budgets across the board for these sorts of compliance activities? And I presume they would then get built into those broader charges that everybody has applied to them.

Mr Chapman : I will have to take that on notice so I can give you something that covers off the range of the compliance activities we conduct; it goes across targeted campaigns and it goes across our cargo compliance verification and the investigations that we do as well which are actually appropriation funded. So there are several elements to it and I will have to advise you on notice how it is broken up.

Senator COLBECK: Is it possible to give it to us in that level of detail?

Mr Chapman : We can say what the allocated budgets are for those areas, yes.

Senator COLBECK: We have already discussed that about 14,000 hours were spent in the overall process of identifying and retrieving that 132 tonnes under Operation Hayride. Can you tell me how much of that time was spent working through paperwork to track the product? We had a conversation earlier about whether or not any of your computer systems were involved in that process. It appears that it was largely a manual process.

Mr Chapman : Yes.

Senator COLBECK: Can you give me a sense of what proportion of that time might have been undertaken doing that sort of work?

Mr Chapman : I will have to take that on notice too. I suspect that we will only be able to give you a ballpark figure. In tracing the goods, it was very much an iterative process, because in the course of following up the information that was given to us by the importers and the QAP operators, we would get extra bits of information and we also identified that there were some people who were trying to, even at that stage, bypass the system. So we would go in again and find something else. So we can give you an estimate of how much time was spent, but it will only be an estimate.

Senator COLBECK: In that context, have you done any further work on requiring QAPs to have a traceability process? Is that something that is being built into the upgrade of the systems we are talking about?

Mr Chapman : I do not believe so. The quarantine approved premises have to keep information about the goods while they are under quarantine control but once they are released from our control and what happens to them when they are onsold is not something they are required to keep or something that we would normally pursue, especially when you consider the number of goods that come into the country which are at some stage subject to quarantine control and get onsold and onsold. In this case though we made use of their commercial records as to where they sold it. After that, it was a process of interviewing people and finding out where it had gone, because it might go to a wholesaler and then to a retailer—

Senator COLBECK: Like a Christmas tree down out through the system.

Mr Chapman : Exactly.

Ms Mellor : It is certainly something that we have looked at and thought about—end use—to see whether there is a regulatory regime that is possible there. There has to be balance. We are talking about right up the illegal chain versus everybody.

Senator COLBECK: Potentially big and costly.

Ms Mellor : Cost is an issue.

Mr Chapman : Mr Terpstra has just advised me that one of the issues we had was that, because of the fraudulent nature of the activity, and because people were trying to hide that, much of the information we had was not accurate or was sometimes misleading. That was another complicating factor.

Senator COLBECK: Hence the need to go back over it, and over it, to continue to interrogate where things are at and to try to find out exactly where you were heading to.

Senator BACK: Can I ask one supplementary question? Faced with the incredible costs that we have just had discussed in the questions and answers, my understanding is that the company director who pleaded guilty was given a 12-month sentence, which was suspended and he entered into a $500 three-year good behaviour bond, and the company was convicted and fined $15,000. Is that the sum total of their costs apart from their legal fees? Did they meet the department's legal fees?

Mr Chapman : They were not the department's legal fees. The prosecution was conducted by the Commonwealth Director of Public Prosecutions.

Senator BACK: So the taxpayer only pays once?

Mr Chapman : I assume so, yes.

Senator BACK: There was no cost allocated against the defendants?

Mr Chapman : I am not sure about the legal costs there because we were not handling it at that stage. As far as the imports were concerned, they lost all the goods, obviously. The quarantine approval was revoked and there have been two jail sentences handed down—one in this case; one in another case—and there are other matters still pending.

Senator BACK: This one was suspended. What about the other one?

Mr Chapman : The other one was time to serve. I can get the details of that in a moment.

Senator BACK: Mr Terpstra, you were quoted as saying that the prosecution reflected the serious penalties that industry and individuals faced. On my reading of it, I am afraid I cannot agree with you about a $500 three-year good behaviour bond in lieu of prison and the company being fined $15,000 against the risk of Korean meat coming in at a time when there was a foot and mouth disease and an avian influenza scare, unless there are other penalties imposed that are not apparent here.

Mr Terpstra : Senator, if I may, there were two prosecutions: one on 5 October 2012 when one particular director received a 12-month suspended sentence and a three-year good behaviour bond and the company was fined $15,000; and the second on 30 November 2012 when their director was sentenced to 2 years and 11 months in prison with a non-parole period of six months. So he did get jail time for that. The company was fined $60,000 in that particular instance.

Senator BACK: That person is behind bars at the moment?

Mr Terpstra : Absolutely.

Mr Chapman : One thing I might add—I believe it was in the first case—was that one factor taken into account was the amount of information that the person being prosecuted provided. It was that information which enabled us to find the other people who had been involved and to trace the groups. My understanding is that that was taken into account in the sentencing, but, of course, we do not have a role or a say in the sentencing.

Senator BACK: And there has been no capacity to recover any of the costs for the many hours spent in tracing the products and getting rid of them.

Mr Chapman : Not beyond the answers I gave to Senator Colbeck.

Senator COLBECK: Specifically related to those, what is their status and their capacity to continue as an importer?

Mr Chapman : There are several aspects to that. First of all, in relation to them importing goods, we have what we call 'supplier importer profiles'. Those are profiles we put on particular suppliers or particular importers or any combination of the above because we have a lower level of confidence that they are complying with biosecurity requirements. That basically results in higher inspection levels. While they might be able to continue as an importer—we cannot prevent them from doing that—we can check what they are doing more carefully.

Perhaps more importantly is their role as a quarantine approved premises. Following Hayride, we revoked a couple of QAP approvals. Some others were not renewed and some were voluntarily relinquished. Other ones where there was, if you like, a lower level of non-compliance are now subject to much greater levels of scrutiny and intervention by us, which has an impact on the way that they conduct their business, of course.

Senator COLBECK: Moving on to the performance targeting and effectiveness program, are the minutes of the DCCC meeting 61 on 7 May 2012 going to be made available, noting that the minutes of meeting 62 already are available? Were there any issues there?

Mr Chapman : No. We can make those available. Historically, the minutes of those meetings have been available to industry members through the DCCC if they wish to see them. We recently took a decision that we thought should be overtly transparent, if you like, and put the minutes of all the meetings and the papers up on our website. If you wish to have copies of minutes of earlier meetings, we are very happy to provide them.

Senator COLBECK: Okay. So it was post meeting 61 that the decision was made to put them up and so that is why things post there are up but not things prior?

Mr Chapman : That is what I remember. It was not an issue that we agonised over a lot. It is my view that we should make as much information as we can publicly available. Having it on our website means that all of industry can see what is going on in those meetings, not just a select few.

Senator COLBECK: Is it correct that the budgets for both Abercorn and Balmain went over budget and that the estimate budgets did not include staffing costs?

Mr Chapman : We provided information in answers to questions on notice last time on this. In both cases, the overall costs were higher than we had initially estimated. But, as I think we answered, it is a bit hard to tell beforehand what the costs are going to be because you cannot tell beforehand the degree of non-compliance and file action that is going to be required.

Senator COLBECK: Okay. Why would the budgets have excluded staffing costs? Why wouldn't you have included staffing costs as part of the budgets for those?

Mr Chapman : The staffing costs are, if you like, a constant. PTEP exists all the time. The staffing costs are a constant there. What we are trying to look at are the additional costs of a particular campaign. You raised a—

Senator COLBECK: So it comes back down to where they are focused as part of whichever operation. Your budget is $2.5 million for PTEP. That is for the resources required for that consistent number of staff to be applied to that program.

Mr Chapman : That is right.

Mr Metcalfe : What we are saying is that the staff are there anyway available to do the activity. The budget for a particular program involves costs above and beyond that. If there was a question as to what the total cost of the operation then that would probably include the staffing costs, I imagine. But if the question is what the budget for the operation is, then the answer is what above the standing resource that we have.

Senator COLBECK: Okay. That is fine. So when you are allocating costs to a particular program—and we went through this stuff with Hayride—what is the calculation for staffing costs as part of that process?

Mr Chapman : At the end of the targeted campaign, we will ascertain how many staffing hours were spent in designing and developing the campaign. That will potentially include people from a number of areas. With the actual campaign, there are staffing costs involved in conducting inspections and any follow-up work that might be required. Does that cover it?

Mr Terpstra : Essentially, there also may be testing and analysis of particular goods required to determine if they are in fact goods from a particular animal type—

Senator COLBECK: They are what they say they are.

Mr Terpstra : et cetera if those facts are being contested. There is also some invoicing that we get from a number of these independent examination facilities that we use from time to time where these inspections are undertaken. They are commercial operators independent from the normal supply chain of the entities that we are interested in looking at. Transport costs, storage costs and other costs are passed on to us by those operators as part of the campaign work.

Senator COLBECK: In respect of determining the $2.5 million for PTEP, how is that number derived? Is that a number that you came up with as an agency or is it a number that came up as part of the consultation process with the DAFF Cargo Consultative Committee? How is that determined?

Mr Chapman : That is the cost of the staff in the program. We determine how many are required to undertake the activities—

Senator COLBECK: Hang on. I thought that we had determined that it did not include staff because the staff are there already. I thought that the $2.5 million was to be applied for external things other than staff, which are there anyway.

Mr Chapman : The $2.5 million is the staffing cost of the people in the program.

Senator COLBECK: I think that we are at variance.

Mr Metcalfe : I think that I may have—

Senator COLBECK: I thought that we are on a reasonable program, Mr Metcalfe.

Mr Metcalfe : I think that I may have tried to be too helpful. I might just clarify that.

Mr Terpstra : The $2.5 million budget for PTEP is the total cost of running that program, including salary costs and on costs for all of those staff. The issue on which we have some confusion is when a campaign budget established. The campaign budget does not include salary dollars. It includes all of the extras, if you like, over and above the salaries. But that campaign budget comes out of the total $2.5 million allocation that DAFF allocated for PTEP.

Mr Metcalfe : I am sorry for any confusion that I caused. You were originally talking about a question that had been answered on notice, so we had just better double check that we are quite clear about what is in and what is not in that particular figure.

Senator COLBECK: We talked about Operation Abercorn and Operation Balmain. Their budgets excluded staff costs. We are all on the same page with that. What I need to get an understanding of now is what proportion of the $2.5 million is staff costs and what proportion is for allocation to particular operations, given that my understanding now would be that those staff are there all the time and that would be a particular unit that would be applied to operations when and as they occur.

Mr Chapman : It might be easier for us to take it on notice so that we can spell it all out.

Senator COLBECK: I was expecting you to say that.

Mr Chapman : I do not want to cause any confusion or fail to answer the question in the most helpful way. It might be useful if we can provide you an answer that says, 'Here are the staffing costs, here are the overheads and here is how we take into account setting up budgets for particular campaigns.'

Senator COLBECK: Okay. That sounds fair.

Mr Terpstra : I offer another piece of clarification that might add a little confusion in the short term but that confusion will also be explained in that answer. Not all of that $2.5 million budget for PTEP is allocated to the development and execution of targeted campaigns. There are three other major components of work in that program that we will provide some independent numbering on. There is the post-quarantine detection area, which is a routine area that looks after any reports of items that are identified by members of the public that should not be here and that we need to sort out. There is also a small operational intelligence capability. There is also some staff allocated to the management of the profiles that Mr Chapman mentioned earlier. I think we have given evidence previously that there are in the order of around 4,000 different profiles in our IT systems.

Senator COLBECK: We are running out of time. I just want to go on to the IER. And can you tell us the current status of the IER and how much it might have dropped this financial year?

Mr Schaeffer : The IER is forecast to be around $10 million by the end of this financial year.

Senator COLBECK: How much has it dropped this financial year? What is the projected change?

Mr Schaeffer : Just to confirm, you are talking about the Import Clearance Program? We forecast it to change from $24,688,000 to $10,402,000.

Senator COLBECK: You are on track to come to that line. What is that being spent on?

Mr Schaeffer : Essentially, the arrangement is that, given the fees have not changed in this program since 2008-09 and the fees have been stable for a number of years, the first three years of that time frame since 2008-09 is basically an arrangement with industry where the fees are set at a point where it averages over those three years. Given that we are into that fourth year now, we are paying for the operational cost of that program and we are absorbing the costs that are associated with that program, so it is paying for all costs.

Senator COLBECK: What is the base level that you want to see the IER come down to?

Mr Schaeffer : We have an agreement with the industry to maintain that level at around 10 per cent. But, as you know, it fluctuates based on activity.

Senator COLBECK: So, 10 per cent would leave it where?

Mr Schaeffer : Currently at about $18 million?

Senator COLBECK: Would it mean a change in the fee structure to get it back up to $18 million?

Mr Schaeffer : It could to, or it also could mean a change in the cost base.

Senator COLBECK: What you mean by that?

Mr Schaeffer : There is a number of initiatives under way for efficiencies throughout the department which would impact on this program. It may be that they might impact the costs in that program.

Senator COLBECK: How confident are you that that might occur?

Mr Schaeffer : I have no confidence at this time. One of the possibilities is to either increase fees, one of the possibilities is to reduce costs or a mixture of both.

Senator COLBECK: I would like to stick with the no-confidence stuff at the moment.

Mr Metcalfe : It sounds like a technical accounting term.

Mr Schaeffer : The level of confidence to meet those figures that I have stated is pretty high. I would be quite confident that we would get to the reserve balances that I have stated here.

Senator COLBECK: But I am trying to get a sense of whether you will meet them via efficiencies, and I am taking from your answers that your confidence in reaching them through efficiencies is lower than it is in reaching them via increased fees.

Mr Schaeffer : No. There is a whole range of things that happen through the program, including cost increases as well. For example, our staff will get a pay rise under the enterprise agreement, so we have to manage that within the program along with a number of other cost increases, some of which have been mentioned today. Things come up and we have to manage that throughout the whole available resources that we have.

Senator COLBECK: Could you give me a sense of some of the efficiencies?

Mr Chapman : As I said, we are trying to make our business more efficient. We are looking to reduce costs in areas where we get better value for what we do. One example would be, as you have asked in estimates before, that we are doing lower levels of intervention in areas where there is very little risk, where this is not much to be found. That is a way that we can do one of two things: one is redirect the staff who are doing that to another area where we get a bigger bang for our buck; another one is where we reduce staff numbers and therefore costs. There are lower costs for industry in doing that. They are able to move goods through faster. They are no longer paying inspection fees. One of the things we have found in the changing of our focus in the last couple of years is, perhaps ironically, that in lowering our intervention levels we are also having an impact on our revenue because we are not performing some of the activities that generated fees that we did in the past. At the same time, we ramped up things like the targeted campaigns, which do not generate fees in themselves but they are critically important to us having a good approach to managing biosecurity at the border. So we are continuing to focus on how we can ensure that our activities are as efficient as possible, that they are focused on the right things, but we also need to think about the revenue that we get as well.

CHAIR: Senator Colbeck, I will have to--

Senator COLBECK: We still have not had an example of the cost efficiencies.

CHAIR: No, I am listening intently for that answer but, unfortunately, we have run out of time. I have to thank the officers from Border Compliance. We must roll on; time is tight today. I call Biosecurity Plant.

[13:56]

CHAIR: I welcome Dr Findlay.

Senator RUSTON: Excuse me for not being absolutely sure, but I have two lots of questions relating to Plant. One of them is in relation to the import risk analysis and the other is about export certification. Do I have the right group to speak to?

Ms Mellor : Import risk analysis goes into Plant. Then, when the food division comes, that is the export side but we support them with the science. So, it is the same people, different section.

Senator RUSTON: If I just stick to—

Ms Mellor : Stick to imports now.

Senator RUSTON: Following on discussions that we had in the hearing on Friday, when we were questioning the Chairman of the Eminent Scientists Group, I asked what the process was by which an application to import produce to Australia was assessed. He gave me an outline. The question was: at what point does the department engage the Eminent Scientists Group in the further assessment of risk analysis.

Ms Mellor : The Eminent Scientists Group is used when the department does an expanded import risk assessment, which is covered by regulation 69A of the quarantine regulations. That is the only time it is formally engaged in the 36-month IRA process.

Senator RUSTON: Recently, I think at the end of 2009, there was an approval for Japanese mandarins to be imported to Australia.

Dr Findlay : Yes.

Ms Mellor : That is correct.

Senator RUSTON: It was not determined that there was any need for the Eminent Scientists Group to have a look at this particular importation request.

Dr Findlay : The risk assessment for unshi mandarin from Japan was undertaken as a standard risk assessment and the standard process does not include ESG oversight or assessment.

Senator RUSTON: What would have determined the fact that this particular importation request was standard?

Dr Findlay : There are a range of considerations that go into whether a risk assessment is undertaken as standard or expanded, the critical ones being whether the science is contentious and the importance of the import for our stakeholders domestically.

Senator RUSTON: Obviously, the determination of the department was that it was not contentious, despite the fact—and I have got a whole heap of information here—that would suggest that there was a huge amount of concerns expressed by a number of respected scientific organisations in relation to this particular importation approval. At what point do you disregard the evidence that is being provided by the industry or other scientific groups outside of your internal people that assess these importation requests?

Dr Findlay : I would not say that we disregard it. Both processes take full account of all technical information that we receive. The difference is that in an expanded process the eminent scientists group looks at stakeholder submissions and they look at the technical evidence in front of them and then make an assessment about the work that the department has done. On the standard side of the process, as the unshu mandarin assessment was undertaken, we still take full account of all submissions that were received, but we do in-house assessment of the relevance of that information.

Senator RUSTON: What was your response to the then citrus organisation, which I assume would still would have been under the guise of Australian Citrus Growers, in terms of their submission, when they said that they were seriously concerned about the exposure to the Australian citrus industry from the potential import of this product into Australia?

Dr Findlay : I will go back and have a look at the submission that they put in in 2009. It is four years ago now, so I would like to refresh my memory of that one.

Senator RUSTON: Basically, what they have been saying is that the area from which these mandarins are being grown is an area that, if not a citrus canker area, is certainly immediately adjacent to citrus canker and there is citrus canker in Japan. It is the industry's view that that is the case. Would you say that, in granting an import licence for this fruit, that it is actually a change in policy by the department to allow this to happen?

Dr Findlay : I would not say it was a change in policy. Each risk assessment is judged on the merits of that import proposal from our trading partners. In this instance, if my memory serves me correctly, the area that unshu mandarin are able to be exported from Japan covers just a 25-hectare area. For 40 years Japan has been undertaking surveillance and assessment and they have never found citrus canker. So it was our judgement, given the level of confidence we had in the surveillance programs that Japan had in place, that technically we could not ban that trade from that area.

Senator RUSTON: What you are saying is that the concerns that were expressed by the citrus industry were unfounded.

Dr Findlay : I would not say unfounded. But when we looked at the level of confidence that we have in the work that Japan had undertaken over a 40-year period, we could give ourselves the confidence that trade could be undertaken from that area and still protect Australia and keep Australia safe.

Senator RUSTON: Would you say that the conditions that you applied to this importation were as strong or as stringent as the conditions that we applied internally in Australia when we had a citrus canker outbreak in Queensland? We had a whole heap of conditions around that. So you are saying that, despite the fact that this 25-hectare area does not technically have citrus canker at the moment or there has not been any detection, we had much stricter guidelines, did we not, around how we dealt with Queensland citrus transfer than we are necessarily applying to the Japanese situation where we are actually importing.

Dr Findlay : Those differences are entirely appropriate, given that in Queensland we knew that citrus canker was present in the area. So it was appropriate that the measures for the interstate movement of citrus be much more stringent than in a place where we know that citrus canker has not been found for 40 years.

Senator RUSTON: Would you say that the application of the requirements that we placed on Japan were as strong or as stringent as the criteria that were placed on the importation of these particular mandarins from other countries such as the USA or New Zealand?

Dr Findlay : From that area, yes.

Senator COLBECK: I turn to horticulture sector fees and charges. In the cost recovery impact statement, fees and charges are based on an eight-hour day and 40-hour week, but the enterprise agreement stipulates 37½ hours per week. Does the fact that there is a discrepancy create any consequences for industry?

Ms Calhoun : This was a question on notice in the last estimates. We pointed out that this needed to be corrected in the current export control fees orders. At the moment the rate for the daily and weekly are not being charged out—we are charging it at the quarter-hourly rate, so exporters are not disadvantaged.

Senator COLBECK: What actions are being taken to redress this?

Ms Calhoun : We are currently looking at whether there are any savings in having someone at the premises for a whole day or a whole week and whether we can pass these savings on to industry. We will then put new fees through the system.

Senator COLBECK: Is there a difference between the quarter-hourly rate and the daily or weekly rate, or do they effectively equalise out? Or are you getting around the problem by charging by the quarter hour?

Ms Calhoun : The intent of the daily rate was that it was charged at the quarter-hourly rate for 7.5 hours per day and the same with the weekly. When the fees and charges were calculated it was seen that there were no savings in having someone at the premises for a whole day as it was the same as having someone on a quarter-hourly rate at a cost recovery.

Senator HEFFERNAN: What is the loading on the quarter hour versus the full day? What is the dollar difference in charging by the quarter hour or charging by the day?

Ms Calhoun : There is no dollar difference; it is the same rate.

Senator HEFFERNAN: Direct division.

Ms Calhoun : Yes.

Senator COLBECK: When did you first become aware of the anomaly?

Ms Calhoun : Shortly after the orders were tabled.

Senator COLBECK: Effectively the way to get around it is charging by the quarter hour rather than using those consolidated rates.

Ms Calhoun : Correct. We have not charged those rates out at all, so no-one has been disadvantaged. We have not charged the daily or the weekly rates out, because we are aware that there is an error in them so we have used the quarter-hourly rate.

Senator COLBECK: Has that incurred any additional cost for you in the administration of it?

Ms Calhoun : No.

Senator COLBECK: In the cost recovery impact statement there was an estimated demand reduction of 20 per cent in the number of registered establishments as of July 2007. What has been the result of the process?

Ms Calhoun : For horticulture establishments or plain export establishments? In regards to horticulture establishments, we have written to every establishment which is over 500. At this stage we have had only 10 establishments indicate that they will not continue with their registration.

Senator COLBECK: So it is running at five per cent not 20 per cent at this stage.

Ms Calhoun : Correct.

Senator COLBECK: Have you been given reasons for their non-renewal?

Ms Calhoun : No, we have not been given any reasons, but anyone that has come to us we have looked at whether they have exported previously. Some of them were not using those facilities. We are aware that there is an issue with the nursery industry and the cost to them, so each premises that approaches us we are looking at the most cost-effective way for them to operate and if there are any alternative ways that they can continue to export.

Senator COLBECK: So, as a proportion of the nursery sector, how many are expressing concern there?

Ms Calhoun : We have had two express concern in the nursery sector, and we have a total of 45 registered.

Senator COLBECK: So that is still running at about five per cent?

Ms Calhoun : Correct.

Senator COLBECK: Can you tell me where the IER sits in relation to the horticulture sector?

Ms Calhoun : As at 1 July 2012, the IER was reverted back to zero, and we are running back on a cost recovery track, so the IER will be calculated out at the end of this financial year. So, at 1 July last year, part of the $6.5 million that was provided by the government to support the horticulture sector was used to wipe out the deficit sitting in that IER. So it is currently sitting at zero dollars.

Senator COLBECK: What was the deficit?

Ms Calhoun : $1.658 million.

Senator COLBECK: What is the target level for the IER?

Ms Calhoun : Projected for this year?

Senator COLBECK: No. We talked before about how there was a target of having it at, I think, 10 per cent—I think that was the number we were talking about before.

Ms Calhoun : The target would be 10 per cent—deficit or revenue—where we would be looking at whether we needed to readjust the fees.

Senator COLBECK: So, what is the annual expenditure that that 10 per cent would be set off?

Ms Calhoun : It is approximately $1 million.

Senator COLBECK: And that is the annual operating costs?

Ms Calhoun : Plus or minus 10 per cent.

Senator COLBECK: Or, is that the level that the IER would be set at?

Ms Calhoun : That is the level of the IER.

Senator COLBECK: So, your $10 million programs set the IER at $1 million?

Ms Calhoun : Yes.

Senator COLBECK: In questions 182 and 184, there was some discussion about several models being developed to support the impact assessment process. Is it possible to get access to the various models that were considered?

Ms Calhoun : That was throughout the consultation through the horticultural ministerial task force. They were papers that were provided.

Ms Mellor : They were provided to the ministerial task force, and we can provide those on notice.

Senator COLBECK: Okay; thank you. In the answer to question on notice 182, you said that moving to a reduced establishment fee and increased inspection fees would result in needing to change pricing more frequently to cope with over- and under-recovery. Isn't that actually the purpose of the IER?

Ms Calhoun : There are two elements, I guess. It is about having an appropriate cost recovery framework in the first place that meets your supply and demand throughout the year. That was the element of splitting it between the administrative costs and then back through to your audit and inspection costs. So we need to ensure that we have a base there. Regardless of what the activity level is, there is always a base of work that needs to be undertaken, and we wanted to ensure that we had enough money to continue with that base. And this model is aligned to other export sector cost recovery models.

Senator COLBECK: In respect of the establishment and management of the IER, are over-recovered funds segregated for use in the sector from which they are collected? I think we have asked this question before and not got an answer.

Ms Mellor : Horticulture fees apply to horticulture activities. Is that what you are asking? We do not cross-subsidise activities across different IERs.

Senator COLBECK: I turn to question on notice 186. We asked about the industry consultative committee for horticulture, and it was indicated it would be settled in November 2012. Have we finalised that committee?

Ms Calhoun : We are in the process of finalising that committee. It is taking a little bit longer than expected. But, as you would be aware, the horticulture sector is quite diverse, and we have been trying to make sure that we have the right representation on that committee. We did not get that from the initial applications that were sent back, so we have been actively working with the relevant sectors to make sure that they will have a voice on the committee.

Ms Mellor : The issue here is to make sure that the individuals are representative. Some of the individuals who have come forward were representing their own business, as opposed to representing a sector of the industry.

Senator COLBECK: That is the reason for not having it finalised; wanting to get full representation across the industry, finding people who are prepared to do that across all of industry. How close, how far? How long is a piece of string?

Ms Mellor : Put it this way, it came into my office a week or so ago and I just need to go through the due diligence and make sure that those representatives meet the requirements, and I think we are very close.

Senator COLBECK: Thank you.

Ms Mellor : Senator Ruston, you asked about exports. The Assistant Secretary at the table with us now is the export horticulture person, and I just wondered whether your questions related to export horticulture?

Senator RUSTON: Specifically, export certification.

Ms Mellor : It is probably best at food when that set of people are policy people as well, without knowing your question.

Senator RUSTON: It is the horticultural sector that has raised the issue with me, but I am sure it is a more general question. But I am quite happy either way, whichever suits you.

Ms Mellor : This Assistant Secretary will still be here when the food people are here.

Senator RUSTON: Okay. I am happy to wait until then.

Senator EDWARDS: My questions relate to the white grain research and funding supported by GRDC and the South Australian Grain Industry Trust.

Ms Mellor : That is not biosecurity. It is probably agricultural productivity later this evening.

Senator EDWARDS: Somebody will get shot, that is it.

Ms Mellor : It is very late tonight.

Senator NASH: Ginger and Fiji: where are we at with that? There was some reporting—and I do not always take reporting on face value—that DAFF were going to visit Fiji to look at the conditions. Is that correct?

Dr Findlay : That is correct. On 22 January we put the final import risk analysis out, and the process that follows that is that we have to work with the exporting country to make sure that we have confidence that the measures that are required as a result of that risk assessment can be implemented and have been implemented. The next step is working with Fiji to make sure that happens.

Senator NASH: It is to go and have a look and make sure?

Dr Findlay : Correct.

Senator NASH: Do you have any indication of when that might take place?

Dr Findlay : I do not think we have a formal time line in place for that yet, but we have commenced work with Fiji on the initial stages of establishing an appropriate work plan.

Senator NASH: My recollection was that the pest list from Fiji was not extensive initially. But I think—correct me if I am wrong—that the department's view was that the processes that were going to be a place would take care of any pests even if they did turn up anyway. I am putting it very colloquially but is that correct?

Dr Findlay : Through the risk assessment, the first stage that we go through is a pest categorisation process that identifies all the pests and diseases that may be of concern. Then we use a process to ascertain whether they are actually a quarantine pest. At the end of the risk assessment process, there were two pests that gave us some concern. One was Radopholus similis and the other virally nematode, and the second one was the yam scale. The measures are written to make sure that we have confidence that we can protect Australia from those two pests.

Senator NASH: So you will go and check that the processes will be in place to satisfy the department that no nasties are going to come in. What happens if the Fijian processes do not meet your criteria?

Dr Findlay : We will work with Fiji to make sure that they do. If they cannot then we have to wait until they can be met.

Senator NASH: Until they absolutely do.

Dr Findlay : Yes.

Senator NASH: Once that process has happened, there will be a report done by the department as to the compliance or otherwise of the Fijian standards.

Dr Findlay : Correct.

Senator NASH: How long would that take to come out after you make the visit. Is there a normal process over time?

Dr Findlay : There is a normal process. Some countries are very good at getting their systems in place. Others take a little bit more work. We take as long as we need to give ourselves the confidence that the measures have been appropriately implemented.

Senator NASH: If you are not satisfied, will there be an interim report saying that you are not satisfied to this point and then the process will continue?

Dr Findlay : Yes. Our audit systems identify where there are non-compliances or where there are concerns. We go back and work through those to make sure they can be addressed.

[14:21]

ACTING CHAIR ( Senator Gallacher ): I now welcome Food.

Senator BACK: Following the lifting of the ban last year or the year before on New Zealand apples coming to Australia, can you tell us what has been the history of imports of New Zealand apples into Australia? How many consignments have been successful; how many consignments have been knocked back and for what reasons, if any, have they been knocked back?

Ms van Meurs : To talk about the 2012 season, we have had five consignments of New Zealand apples come to Australia—about 57 tonnes. We have undertaken nine offshore inspections of those five consignments and there have been no rejections.

Senator BACK: Nine inspections of five consignments?

Ms van Meurs : That is correct.

Senator BACK: And all nine were done offshore?

Ms van Meurs : That is correct. There were no inspections specifically on arrival. The on-arrival inspections have been done offshore in New Zealand.

Senator BACK: By Australian officials.

Ms van Meurs : By Australian DAFF officials.

Senator BACK: How does that contrast with 2011?

Ms van Meurs : I will have to take that on notice but my recollection was that around 12 shipments. I would have to take that on notice. Again, there were fewer in 2012 than in 2011.

Senator BACK: In 2011 there were some rejections by DAFF officials offshore, weren't there? If you would provide that on notice I would be appreciative.

Senator COLBECK: Just before you do go, I did see a report last week in the media about a desire to increase the consignments coming this year. Have you had any communication with New Zealand or is there any additional work being done over there around that?

Ms van Meurs : Yes. We are preparing for the 2013 season. It is likely to start around April 2013. We have had an initial request for a number of officers to go to New Zealand in April. We do not know the exact numbers yet. That will depend on the commercial arrangements that New Zealand have with their importers in Australia. At the moment we have five valid import permits as of 7 February 2013.

Senator COLBECK: Are there any more applications or increase in activity about registered establishments or import permits?

Ms van Meurs : My understanding is that they have not finalised their establishments for registration as yet. I think in 2012 they had eight. I do not think they have finalised their registrations to date.

Senator COLBECK: But we do not have any indications of what the numbers might be at this stage, just that there are five permits.

Ms van Meurs : Those are valid permits. The permits are valid for two years.

Senator COLBECK: Are there any further applications in process?

Ms van Meurs : Not that I am aware of, but I can take that on notice.

Senator COLBECK: Thank you. Can I now go to baby food. I think we are now back on food. I just want to ask a couple of questions around the baby formula that was being exported out of a backyard into China. My understanding is that it is not illegal to export in small quantities to China. Can you give me a sense of where the parameters around this are?

Mr Read : Under the Export Control Act, prescribed goods are regulated generally above the 10-kilo weight limit. A lot of what you are talking about is product less than 10 kilos.

Senator COLBECK: That is as I understand it. So they were all less than 10 kilos that were being sent over there. Do we have any further information on that particular case? Was any action taken against the person that was exporting? Was he just taking advantage of an opportunity that existed in the market to fill a need?

Mr Read : That is right.

Senator COLBECK: My understanding is that that need was generated by the fact that shops providing the product were closed for a period of time?

Mr Read : I am not exactly sure on the niche need that has developed around that. It may well be that there is a high degree of confidence in Australian packaged baby formula product, and it is that niche that is probably driving that demand.

Senator COLBECK: Can I say to you, having been on a delegation to China late last year, that confidence was expressed to me personally by a mother who was buying a local product, Bellamy's baby food. She was buying that directly because she knew it was safe. That lines up with other things that I have heard. Do we have any sense of what volume was sent as part of that enterprise?

Mr Read : No, we do not. It is very difficult to assess what movement of product has occurred via postal means of small volumes when we do not regulate it.

Senator COLBECK: Were there any investigations taken as to what was occurring? Did we have any conversations, or was it just a media event effectively?

Mr Read : At this time, we are not aware of concerns expressed to us, for example by industry, in relation to this movement in trade. There has been really no impetus to conduct that sort of investigation. The trade, in itself, is not, in a sense, breaching any of the provisions of the Export Control Act.

Senator COLBECK: What about any discussions, conversations or concerns expressed from the Chinese side?

Mr Read : Not that I have heard at this time.

Senator COLBECK: So there has effectively been no regulatory action around that at all, apart from the fact that it is being an issue of public comment.

Mr Read : Apart from the fact that it has been happening, yes.

Senator COLBECK: Part of the broader conversation about baby food and the demand for it was the impact in supermarkets where some of the major supermarkets were expressing concern about their capacity to maintain product on shelves. Any conversations in or around that?

Mr Read : No.

Senator COLBECK: Perhaps, a market opportunity? Going to question on notice No. 178 around the registration of export premises since the changes in the cost recovery process. You indicated on that question that there has been none, or not much, in the way of reduction in registered premises. Can you give us an update on those numbers?

Mr Read : In terms of food programs, no. Equally, at this time, in terms of horticulture, no.

Senator COLBECK: We just had a conversation with the horticulture guys and they talked about there being an expectation in the cost recovery impact statement that there might be a 20 per cent impact. The numbers that we were talking about were about five per cent. So, that five per cent are expressing concern, but they are not necessarily dropping of the system. Is that fair? Welcome back Ms Mellor.

Ms Mellor : Just to make sure that we are covering all of the registered premises. Ms Calhoun will clarify that question. Would you mind asking the question again?

Senator COLBECK: I was just trying to get a sense of actual drop-off; whether there has been actual drop-off, more an expression of concern of cost, or whether people are actually falling of the system? We did talk about a couple in the nursery sector, but are numbers actually been affected or are they just expressing concern about cost and potential for them to drop off? I do not know. I am just trying to get a sense of where it is actually at.

Ms Calhoun : In the horticulture sector we have seen potentially a five per cent drop-off and in the grain sector we have seen no noticeable drop-off.

Senator COLBECK: This is in registered premises?

Ms Calhoun : In registered premises.

Senator COLBECK: There is a drop-off.

Ms Calhoun : Five per cent, but we were estimating it would be an approximately 20 per cent drop-off, so it is less than the estimate.

Senator RUSTON: In terms of the expectation of a drop of registered premises for exports, what was the justification? You were thinking they were going to drop off because they simply could not afford to—

Ms Mellor : Through the process, what we identified were a lot of registered premises that were not operating. They were on the book, but they were not turning over any stock or any activity. We expected to see some movement as the registration process changed.

Senator RUSTON: I have a particular shed at the moment which is an exporter and which has exported for many years—although it only exports one product for six weeks of the year and about six pallets at that—and it has told me that its cost has gone from $500 to $8,350.

Ms Calhoun : It is hard to comment on the premises without knowing what product they are exporting and to what markets.

Senator RUSTON: Limes into New Zealand.

Ms Calhoun : We have a three-tier system that we are moving to for the horticulture sector. The top tier is just over $8,000 but there is currently a rebate in place, so that brings the cost down to $1,800. We are actively working with our protocol markets to ensure that we can get the take-up of authorised officers in those markets, so that we can reduce the costs in forward years.

Senator RUSTON: The authorised officers are not in place as yet?

Ms Calhoun : For a number of markets they are, and we have an number operating in horticulture, but there are still some protocol markets which are the technical, high-end markets that we need to work with to get more acceptance of.

Senator RUSTON: The implementation of the full cost recovery has occurred before the promised reforms in relation to those particular things. is that what you are saying?

Ms Calhoun : Correct. However, the government has given the horticulture sector $6.5million over three years to assist with that transition whilst we continue to negotiate. So there is a rebate in place this year. There will be a further rebate in place next financial year and by that point we hope to have the authorised officer system accepted.

Senator RUSTON: What percentage would that rebate cover regarding the increase in cost?

Ms Calhoun : It differs depending on what tier they are.

Senator RUSTON: Say, it is protocol markets.

Ms Calhoun : At the moment, the cost is over $8,000 and they are only paying $1,800 for registration.

Senator RUSTON: So they have only gone from $500 to $1,800.

Ms Calhoun : Correct, and at the same time the fee-for-service rate has gone down from approximately $60 per quarter hour to $36 per quarter hour. Also, there has been a reduction in the electronic certification fees.

Senator RUSTON: It would not matter whether you are a little shed, in the case of the grower that has spoken to me, or a huge operator that exports hundreds and hundreds and hundreds of pallets of stuff every year; the same cost of certification applies to both?

Ms Calhoun : Yes, because the registration costs are the same regardless whether you are small or big because you need the same systems in place. The amount of work regarding cost recovery is the same. However, what we are doing is working with some of those smaller premises and working out whether there is a different way they could potentially export which would reduce their costs.

Senator RUSTON: Basically, at the moment we have got a situation where there is a really significant disadvantage for small exporters under this current scenario despite the fact in the previous scenario—albeit, not full cost recovery—there was a suggestion that the size of the shed or the size of the exporter had some bearing on the cost that was applied to them.

Ms Calhoun : The registration cost is the base cost recovery for the work that is required.

Senator COLBECK: I refer to the National Residue Survey. I understand that DAFF is now subscribing to the FreshTest database of residue test results—is that correct?

Mr Read : I believe so, yes.

Senator COLBECK: I understand so, too, so we are on the same page. What are the implications for horticulture industries that participate in the National Residue Survey given that we have access to that direct information on the FreshTest database? Can the National Residue Survey use those FreshTest results to provide government to government assurances? My perspective is looking at this in the context of gathering all of this data at farm level as part of our quality assurance systems. I think it is good that the government is now accessing the information. Is there a possibility for a positive cost implication in utilising data that is there anyway rather than having another process that overlays it again?

Mr Read : I understand the question. The element that I will need to take on notice is in regard to the verification of that data and whether the sorts of assurances we are providing government to government can be met from that industry dataset. Where you can take that dataset and verify the integrity of the testing and the methodology sitting around that, and also the international standards relating to the reporting of the residues and they meet those requirements, I would imagine that that sort of approach could be applied, but I need to check that specifically in this context.

Senator COLBECK: What might be needed for that to occur?

Mr Read : I am not an expert in terms of analytical testing of residues in relation to horticulture. But there would be everything in terms of the sampling templates that are used, the analytical labs that are used and the accreditation of those labs. There would need to be a verification program across that. Equally, with that approach applied, does that then meet the expectations of the importing countries where that type of methodology is used? Some countries are particularly strong on the need to have full government oversight of the collection testing while others are more acceptable of the use of alternate providers with strong verification of the systems that are being applied. It will depend also on the country that those assurances have been provided to.

Senator COLBECK: In the context of their quality assurance systems, they are generally—I will not say always—indicators for market access. Say, for example, that GlobalGAP is the recognised standard around certification for the horticulture sector, if that is an indicator for them getting access to the country—and my understanding is that it is, largely, it is the globally accepted certification regime that you have to have if you are going to be involved in an export market—would it not make sense to align those things as closely as possible so that we are not having two sets of costs as part of our efficacy process?

Mr Read : All of that is totally sensible but I again would pick that up in terms of response on notice in the context of the original question.

Senator COLBECK: In the circumstance where it does, is that a potential model for other sectors and utilisation of the data that exists?

Mr Read : There is already a range of industry systems, non-government collection of data and so forth, that are relied upon by the regulator in regard to export certification, even to the point that for example all the labs that are used are not government labs, they are NATA-accredited labs. AUS-MEAT provides a range of services to abattoirs such that we actually verify their provision of those services, and rely upon the quality systems that they are auditing on the companies in relation to those particular aspects. Specifically, that is around labelling provisions and product description and so forth. Where you can use the system that is sitting there, and still demonstrate the integrity of the certification in relation to the reliance on that information, and there is no specific issue from the importing country in the use of that approach, my good understanding is that we do that more often than not. Every time that we can do that, we do it.

Senator COLBECK: The issue is giving them the confidence to the importing country of the efficacy of the information?

Mr Read : Correct. It is the integrity of the data. The integrity of whatever that information is to the importing country that is always a critical point. Often they will come back out to your system and audit the integrity of that system against those attestations that are made to determine whether you are doing what you say you are doing. If they start finding cracks in those assurances, then the integrity of the whole system falls apart. It is thoroughly important to ensure that, where we are using that data, there are good, solid, robust systems sitting behind that well.

Senator COLBECK: I agree with you with respect to that. I do not think that is a question at all. It is a matter of what systems are in place to demonstrate the efficacy of that and if you have got something like a GlobalGAP accreditation system, where you have the audit processes and all those other functions that go along to demonstrating the premises are complying with the requirements, it would seem to me to be a sensible thing to do to utilise data if it were at all possible rather than have another system, albeit government managed, to replicate that information. And that goes for a number of different sources.

I want to go to some figures around the National Residue Survey budget. The closing balance expected for the NRS special account this year is projected to be 13.5 down from 20 in 2009-10. Can you give us a sense of the reason that number is going down? We are talking about a loss of about $3 million in this financial year, and that goes back to questions on notice 194 and 196.

Mr Read : I will talk in general terms. Over a period of time, as you are aware, the National Residue Survey is supported by levying of the various sectors that are those residues sampling surveys are provided for. Over a period of time the revenues collected have in fact been greater than the expenditure requirements of the program. That has led to a reserve sitting in the National Residue Survey. What that has allowed to occur over the last couple of years is either not putting up the expenses of the program and in fact running it at a slight deficit to offset those costs or in fact reducing fees. There is a lot of consultation with all the industry sectors through the NRS on the management of those funds, but this is about trying to ensure that we have sufficient funds there to meet the flexibility demands of the program. Ultimately we do not want to hold industry capital excessively in those trust accounts where we do not need to. So, for all intents and purposes, the approach and the strategy at the moment is to bring those balances back to an appropriate level for the management of those NRS programs.

Senator COLBECK: Do you have a target level?

Mr Read : I think you would have already heard in evidence today that 10 per cent is probably not a bad figure that has been used for the last 10 years on a range of industry fund accounts. Equally, for the NRS it is probably also something the industry sectors would be looking at.

Senator COLBECK: Going back to our previous conversation, there are some industries that are looking at their processes at the moment. They have their industry QA based test systems and they are asking that question and saying, 'Okay, we want to withdraw from the NRS.' Are we actually having conversations with our trading partners about maintaining access? Are the industries actually placing themselves in jeopardy about making these decisions without having a look at the broader picture of particular country access requirements?

Mr Read : I am not directly aware of those particular discussions or circumstances. I am sure they are taking place. What the industry sectors need to be mindful of with those approaches are as I described: the reporting of what the national performance of an industry is in regard to a screen of residues and chemical use, the integrity of that program. If it is seen to be an industry run program, it doesn't matter which importing country generally you are dealing with internationally, they are sceptical to start with when you frame it in that language. So typically, even if it is industry run, it would need the integrity, often of the government direct oversight over that program, to provide the assurances that, yes, this is in fact doing what it says it is doing.

Again, notwithstanding that, there are a range of other examples where that is not the case. Organic has a number of certification bilateral-type international agreements operating where Korea and others will certify private sector certifiers on product. But in the main for your mainstream commodity type products, certainly the integrity of the National Residue Survey is just such a fundamental element of exports—and the one we have established in Australia has served us in such good stead for such a long time—I cannot recall a criticism of it by those importing countries at this stage in respect of the work that they do.

Senator COLBECK: Does that have any implications around the other processes we have been looking at with accepting approved arrangements—that we have been talking about as part of this broader reform of export fees and charges?

Mr Read : It does in the sense that, if we are talking about the NRS, on how those samples are provided to the NRS for testing, the integrity of those sample collection arrangements. If the discussion is then drifting towards the revision of certification to importing countries based on regulated systems operating on those plants, where we are devolving a range of regulatory responsibilities back to personnel on those plants to conduct particular activities, and then provide overlaying that with a verification to again ensure the integrity with which those undertakings are fulfilled, all of those are ongoing presently across a range of products and commodities to a range of countries, and are at different stages of maturity, I would say.

Senator COLBECK: You can give me the following one on notice: current staffing levels and what it has been for the last three years.

Mr Read : In regard to what?

Senator COLBECK: Current staffing level of the NRS.

Mr Read : Yes.

Senator COLBECK: Are there any other new projects relating to residue management that are being implemented at the moment?

Mr Read : I am not aware of any.

Mr Glyde : In relation to the agvet chemical reforms, there is talk of produce monitoring as one of the possibilities that might emerge from Commonwealth-state discussion in relation to the reform of agvet chemical administration. That would be the only thing I would be aware, and that sort of lies outside of the specific NRS responsibilities, but clearly there is an overlapping set there.

Senator COLBECK: Can you explain to me what—and I suppose it is conceptual at the moment—what broadly is being considered in relation to that?

Mr Glyde : It is looking at whether or not we can find a way of reducing the regulatory burden through both the labelling and then the ongoing use of agvet chemicals. Can we find a way, given that it is a shared responsibility between the Commonwealth and the states, as you know? One of the options is to beef up the monitoring as we change the way in which the chemicals are both labelled and then permitted for use, which is administered by the states and the territories. The logic there is that monitoring is part of that, and what is the best way, what is the least-cost way of dealing with this? It is something that the agriculture productivity division has been working on. If you are interested in the real detail I would probably have to defer to them when they come on later on this evening.

But, just in terms of the general policy, what we are trying to do is maintain our well-deserved reputation as a supplier of clean and healthy food. At the same time, we have to, given the competitive pressures in the rest of the world, find the least-cost ways of maintaining that reputation. Whether that can be delivered through government run schemes or industry quality assurance schemes, we do not really much care as long as it delivers the result. As Mr Read has been saying, a lot of it is driven by the preferences of the importing countries; how much do they trust industry run systems? So we have been doing a lot of work to try and find the least-cost ways, right across all of our export products, of delivering that safety net that we can guarantee the cleanliness and health of the food we provide for export.

Senator COLBECK: But aren't we almost talking about duplicating stuff that is already out there potentially? You look at FreshTest, which basically rounds up data from third-party certified labs, the NATA certified labs that we have just been talking about. That collects all that data, and my understanding is that up until very recently the government had not subscribed to that information and so was not aware of it or what was there.

Again, rather than using the data that is there, which from my looking at it could provide a lot of quality information to a whole range of people, whether it is our markets and our government's oversight of that, whether it is the ag and vet chemical companies who look to check on efficacy use, failure rates or otherwise of application—all those sorts of things. There is a whole heap of information that is basically sitting there and is not being used for a number of things that it could be used for. Rather than find new ways to collect and test it, we could utilise that. It is not necessarily an industry-run scheme. It is funded by industry but, as Mr Read has said, the issue is having confidence in the efficacy of that information and data. If you have a quality assurance system sitting behind it—a GlobalGAP or whatever the scheme might be—surely we ought to be trying to reduce the number of these interventions rather than increase them.

Mr Glyde : As Mr Read said, neither of us knows enough about the detail of how that works. We have agreed to come back on notice on that specific question. I was trying to say that we agree with the principle of what you are doing. We are trying to find the least cost way of providing that certainty to both the governments in Australia and the countries we export to.

CHAIR: What we need to do—sorry Mr Glyde—is to send the copies. We have 10 minutes left.

Senator DI NATALE: My question relates to the issue of testing for antimicrobial residues in locally farmed aquaculture. In my question on notice that was asked at the previous estimates hearing, the response I got was that 'a small amount of residue testing, including testing for antimicrobial residues is conducted by some aquaculture sectors to enable access to overseas markets.'. There is a bit more information after that. I am interested in exploring the question of who those aquaculture sectors might be. I just repeat: you state that 'a small amount of residue testing, including testing for antimicrobial residues is conducted by some aquaculture sectors'. Who actually does that testing?

Mr Read : In terms of seafood, a lot of the preliminary tests and oversight registration is conducted by the state regulatory authorities.

Senator DI NATALE: Is that what you mean by 'some aquaculture sectors'? Do you mean the state jurisdictions?

Mr Read : Within that, there will be aquaculture sectors. There will be various bivalve molluscs, rock lobster and prawns and so forth.

Senator DI NATALE: Okay. Also in the question was that part about the purpose of that testing. If this is done at the state level I am not sure how much more information you can give me. You said in your answer 'to enable access to overseas markets'. What does that mean? What is the point of that testing in that sense?

Mr Read : It is a very broad question but within the seafood sector essentially I see two important levels of testing. One is certainly around water quality for a range of aquaculture product; the second is around the product itself. All aquaculture product produced in Australia will need to meet the Australian standard and that will be the responsibility of state regulatory authorities. Depending on the country to which that product is exported, it may well have other testing requirements in addition to what that Australian standard is, and those particular facilities will be export registered. As part of the approved programs of those export registered establishments, they will be required to have systems to have the ongoing monitoring to provide us with those assurances that those importing countries' requirements are consistently met.

Senator DI NATALE: To my knowledge, I do not think there is any market that requires antimicrobial resistance testing—

Mr Read : No.

Senator DI NATALE: so, it would need to satisfy the Australian standard rather than standards imposed by any overseas market?

Mr Read : That is right.

Senator DI NATALE: Apart from access to overseas markets, is there any testing done on the grounds of public health—in particular, the issue of emerging antimicrobial resistance? Is that something that the department would look at?

Mr Read : There has been a range of—there probably currently still is—survey activity that is conducted on imported seafood in regard to the use of a range of antimicrobial chemicals. Obviously, some are permitted and some are not permitted, and various MRLs will stick with those chemicals. That sort of survey work is done, and equally we will have—and I would need to check—certainly through the NRS, a range of surveying around the use of various chemicals that may well also include antimicrobial-type chemicals in that seafood aquaculture sector.

[15:01]

CHAIR: There being no further questions on food, let us go straight to biosecurity policy. What I have done, Senator Macdonald, is this: today's round of estimates is being driven purely through the shadow parliamentary secretary who has control of who will be asking questions on behalf of the coalition. That was my easy out.

Senator IAN MACDONALD: Are the flying fox problems in North Queensland an issue for this department at all, and if so in what program?

Ms Mellor : The government has contributed to the funding of a range of research programs—the Commonwealth government, in concert with the Queensland and New South Wales governments. To that extent, we are part of a Hendra virus steering committee across the Australian government and the states. We obviously monitor—

Senator IAN MACDONALD: Is that out of your department and, if so, which area?

Ms Mellor : Yes. Biosecurity animal. We are obviously monitoring what is happening, and we obviously work with the Australian Animal Health Laboratory and are interested in the development of a vaccine, which has occurred. Interest more so than regulation, though, because the Queensland government obviously—

Senator IAN MACDONALD: Your involvement is the Hendra virus aspect of it.

Ms Mellor : Yes.

Senator IAN MACDONALD: Human health?

Ms Mellor : No, human health is Department of Health and Ageing, and then there is a range of issues that the Department of Sustainability, Environment, Water, Population and Communities has in relation to flying fox populations.

Senator IAN MACDONALD: I will be taking it up with environment about the supposedly endangered species of these animals, of which I saw about 100,000 of them yesterday on the Atherton Tableland at Yungaburra. But that is more of a human health issue than an animal one, but there is the Charters Towers one. Can you tell me anything about it, or just that you are part of a research program being led by—

Ms Mellor : We contribute as the Commonwealth government; Minister Ludwig has made an announcement of $3 million towards the research program.

Senator IAN MACDONALD: Who is doing the research?

Ms Mellor : There is a range of research programs underway. Obviously, there was the development of the vaccine, which was being led by the Australian Animal Health Laboratory, and there has been a range of other studies. There has been tracking of flying fox populations. Hendra is an endemic disease, it is not exotic. Our biggest interest is for our Chief Veterinary Officer to make sure that vets are well across some of the risks and the management of the risks and that horse owners are across the education—how to manage the feeding and watering of horses away from the flying fox populations. The CVO, Dr Schipp, has joined me if he wanted to add anything.

Senator IAN MACDONALD: I will leave it there as time is short, but I do want to come back to BJD later.

CHAIR: In policies?

Ms Mellor : It is in animals.

Senator COLBECK: I want to ask a couple of questions around a recent media article about the United States taking Indonesia to the WTO over plant and animal import rules.

Ms Mellor : That would be trade—WTO issues under trade.

Senator COLBECK: There are no policy implications for us in that?

Ms Mellor : Yes, but they are in the trade policy side of the department.

Senator COLBECK: I will leave my questions until trade then, so you escape that. You are on notice.

Senator RUSTON: I am hoping my question is going to be relevant to policy. In relation to the preparedness of the department for exotic diseases into Australia, one that has been causing a lot of concern in the industry that you know I take a great deal of interest in is greening disease. There are countries that are very close to our border and the disease has a high level of transportability. Are there processes in place and are you satisfied that we would be in a position to be able to react immediately should that happen to fly in on a cyclone or something?

Ms Mellor : We do have a citrus greening response plan. Response plans are generally developed by industry groups under the deed and there is a response plan that is in a mature version at the moment.

Dr Findlay : Under the arrangements that we have in place as lead by Plant Health Australia, each of the industries identify the pests and diseases of greatest concern to them. In this instance, the citrus industry has identified citrus greening as one of those concerns. They have a response plan in place that will dictate and guide us through the first stages of an emergency response, particularly their roles and responsibilities. We also have the emergency plant pest response deed, which determines the roles and responsibilities of state and territory governments and the Commonwealth government.

Senator RUSTON: In relation to certification of budwood, for instance, is that part of the process of our preparedness for this?

Dr Findlay : That is part of our normal nursery stock accreditation and high-risk imports ,and that is managed through our post-entry quarantine arrangements. All citrus budwood coming into Australia goes through a significant period of post-entry quarantine and pest and disease testing.

Senator RUSTON: You are quite satisfied that the processes that have been put in place recommended by the industry are able to be implemented by the resources that are available to you should the horrible thing occur?

Dr Findlay : Yes, I am.

[15:09]

CHAIR: We will now go to Animals, and I welcome the officers.

Senator BACK: I seek guidance as to when we will discuss the matter of the Chibanong abattoir. Do you want to raise that now or later on this afternoon?

Ms Mellor : It is in the live animal exports section.

Senator BACK: Okay. I understand that this area has now been broken up into three divisions or branches: the risk management division, the animal welfare division and the animal export reform branch. Is that correct?

Ms Mellor : In terms of the department's structure relating to animals, we have Animal Division, which focuses on the biosecurity science, so that the Biosecurity Branch has animal import operations, biological imports and marine pests, and then we have an Animal Welfare Branch. We have a separate division covering live animal exports.

Senator BACK: What is that called?

Ms Mellor : Live Animal Exports Division. I should also add that we have an Animal Health Branch led by Dr Biddle, which is our animal health policy branch.

Senator BACK: So of those specifically related to live exports, is it reasonable to ask: is that division dealing with issues associated with the live export trade?

Ms Mellor : The Live Animals Exports Division, as outlined by the Secretary in his opening statement this morning, covers the policy and regulation of live exports. Animal Division still provides some animal health advice, as does the Chief Veterinary Officer in relation to animal health and welfare and advice to that division. I am not sure that I understand what risk management division you are talking about.

Senator BACK: As such, there is not a risk management division.

Ms Mellor : No.

Mr Metcalfe : There is no risk management division.

Senator BACK: But there is within Animal Welfare. So would the group within risk management though be considering live animal exports as part of their remit?

Ms Mellor : We have a risk management branch, a governance division, that is focused on internal risks such as internal fraud, integrity and that sort of thing. The Live Animal Exports Division is the policy setting and regulatory management division. They would look at the risks in live exports. Some investigatory work is done in our compliance area, which sits in broader compliance with specialist investigators, and some of it is done in the division itself. Animal Welfare Branch, which is in Animal Division, is more of a domestic animal welfare policy setting branch within the department.

Senator BACK: What about the Animal Export Reform Branch?

Ms Mellor : They look at the implementation of tranches of reform under farmer and other reform initiatives in live animal exports.

Senator BACK: Could you then explain to me, and thank you for that clarification, the extent to which we are seeing improvements in time frames and efficiencies as a result of this? This was a point made to me recently by people involved in the export process. Their claim is of excessive over-regulation, leading to inordinate delays for exporters getting AEPs—approved export permits—before they can load a consignment, incurring large unnecessary costs reflected in lower prices to producers, delays in getting animals to importers by agreed times, which in turn causes them to miss vital markets in the Middle East, for example the Festival of Ede.

Mr Metcalfe : Senator, that takes us squarely into the work of the Live Animal Exports Division and that is slated to come up next at four o'clock. If possible, we would like to talk about that then, and I am familiar with the issue. I have certainly met with some of the exporters and they have made the same point to me. We would be very happy to talk to you about it but we will have the right people here at four o'clock.

Senator BACK: So the first point in biosecurity—animal export operations, live animal exports—you would prefer we defer that?

Mr Metcalfe : Under item 9, which is the next one, which is due to occur at four o'clock, Chair.

CHAIR: Yes.

Senator BACK: I am happy with that then. We will defer those questions until then.

Senator IAN MACDONALD: I understand that BJD is principally a Queensland biosecurity issue. What is the Commonwealth's role with regard to it and what is the Commonwealth doing if anything?

Dr Schipp : The Commonwealth's role is in relation to export certification. We ensure that animals sent for export are suitable for export and, for that reason, preventing animals that are from properties that have been identified as under suspicion or investigation for BJD from accessing the export market.

Senator IAN MACDONALD: I understand BJD is fairly endemic in many of the countries we export to—is that correct?

Dr Schipp : It is largely endemic across the world, yes.

Senator IAN MACDONALD: If you were exporting BJD infected cattle to one of those countries, there would not be any problem.

Dr Schipp : A large number of countries have specific import requirements relating to BJD. Under the WTO SPS agreement, it is permissible to have import requirements provided that the disease is under some sort of official control program in the country of import. Even if the disease is present in a country, as long as they have an official control program that is permitted.

Senator IAN MACDONALD: What is permitted?

Dr Schipp : To impose import requirements for BJD.

Senator IAN MACDONALD: On notice, could you tell me which of the countries we export the cattle to that have BJD, which of them have protocols which in some way impact our export of those cattle to those countries and whether in view of the Australian government they are relevant and fair? I do not understand but Senator Back may well understand. If they have BJD and you export them BJD, what the heck.

Dr Schipp : We can certainly take that on notice. We have provided a list of those markets publicly and it was in the press earlier this week. But we can take that on notice.

Senator IAN MACDONALD: Minister, you would be aware that many beef producers are suffering, particularly in Northern Australia where BJD is now destroying those that were not destroyed by the live cattle ban. There are some proposals around for some form of government assistance from money that was set aside following the live cattle ban to Indonesia. It does not quite fit the rules but there is I understand money available for that. Is the government considering any help whatsoever to beef cattle producers who were affected by, firstly, the live cattle ban and, secondly by BJD? It is not a question of blame. I am not blaming the Commonwealth for BJD. The industry is in a parlous state. I am wondering if any thought is being given to a program that might assist those cattle producers in the North who are really doing it tough.

Senator Ludwig: As I understand it, there has not been an approach for assistance for BJD. So it becomes a moot point, quite frankly. It is a state based issue. It is an endemic disease and they would normally be dealt with by the states. For instance, WA have a program in place to assist their producers. They have a levy system that provides for support for BJD. I have a recollection of what Queensland is doing. I think Queensland is undertaking some work. I can go and find out what that is, but I am sure you are ably be placed to talk to the Queensland government as to what assistance they are providing.

Senator IAN MACDONALD: With respect, Minister, my question was a broader one. With the BJD and the live cattle ban—

Senator Ludwig: I understand your broader question. I have given you an answer. I have not had a request for assistance of the nature you have described.

Senator IAN MACDONALD: I have written to you on one. It was not related to BJD at all; it was related to something else. The broadness of my question is that the beef cattle industry is in diabolical trouble in the north—for what reason it does not really matter, I am not saying that. I am saying that I know one proposal has been put to you because I have written to you about it. But is the government looking at some sort of package—a bit like you might recall the Howard government sugar package, something like that—that might just save what is looming as dozens if not hundreds of bankruptcies across the north which will put the whole industry back a long time. Are you considering something?

Senator Ludwig: Whether or not I am considering it, certainly I would not announce it here today. If you look at the assistance that we have provided to the industry over the last couple of years, it has been significant, particularly since the suspension of the live animal exports. We provided a significant package then to provide support for producers. I am not going to take it from you. The industry associations that represent the beef industry have not sought assistance. I know you might be calling for it, but they have not sought direct assistance to support them in the field. With all respect to you, I am not going to take at face value what you claim. The industry that are the representative bodies can certainly provide input into policy development of this government if they so choose.

Senator IAN MACDONALD: But, Minister, is it not a fact that the money you set aside following the live cattle export ban has not been fully taken up. In fact, very few producers could meet what I might editorialise as rather odd guidelines. There is money left over in those funds. There has been a proposal put to you which I have written to you about. I did not make the application—industry groups did. What I am saying is that because the industry is in difficulty—and you do not need to accept my view on that, just read the papers—I am wondering if the government has some thoughts on a general package, not necessarily related to the Indonesian ban, not necessarily related to BJD. People are doing it tough and I do not want you to tell me what you are considering, but is the government considering some sort of industry assistance perhaps only a small amount out of what was left over from the live cattle fund that I understand has not been utilised?

Senator Ludwig: Perhaps we can clear up that matter. Any unspent moneys of that package would have been returned to budget. You do not hold them as carryover. I am sure you are familiar with budget rules.

Senator IAN MACDONALD: This is for the current year.

Senator Ludwig: They are still returned. Any unspent funds will be and have been returned to the Consolidated Revenue Fund.

Senator IAN MACDONALD: Even if they are out of this year?

Senator Ludwig: You do not hold unspent moneys.

Senator IAN MACDONALD: No, but you have a program and I assume people can still apply for it.

Senator Ludwig: That date has finished, as I understand it.

Senator IAN MACDONALD: Perhaps on notice, can someone tell me what was actually used of the fund that was announced following the live cattle ban?

Senator Ludwig: The total of the funds allocated was about $12.7 million during 2012.

Senator IAN MACDONALD: Is that what was paid out?

Senator Ludwig: Yes.

Senator IAN MACDONALD: What was the total program that was offered?

Senator Ludwig: I will have to take that on notice. I cannot recall it.

Senator IAN MACDONALD: Thank you.

Senator COLBECK: My questions are around quarantine fees for horse owners.

Ms Mellor : That is us.

Senator COLBECK: I understand that the new schedule of fees commenced on 1 February this year.

Ms Mellor : That is correct.

Senator COLBECK: When was the cost recovery impact statement made available for that?

Ms Schneider : The cost recovery impact statement has been put on the website, but I will have to check the actual date.

Senator COLBECK: It was not there on the 22nd when my staff last looked.

Ms Schneider : We will have to take the date on notice.

Senator COLBECK: What is the usual time frame for the release of the cost recovery impact statement around the increase in fees? Is there a policy around that, when it should or should not be released?

Ms Mellor : I am not sure that there is a specified time frame. I will double-check with our CFO under the cost recovery guidelines of the government. We generally try to get them out as quickly as we can as we consult with industry.

Senator COLBECK: The identified reason was that there was an under-recovery in fees since they were last adjusted. Is that the fundamental rationale for the adjustment?

Ms Schneider : Yes, the last fee increase was in November 2009 and there has been an under-recovery in the period since then. It is an attempt to bring the fees into line with current costs and to recover the debt that has built up since 2009.

Senator COLBECK: What is the level of the debt?

Ms Schneider : It was $1.46 million at 30 June 2012.

Senator COLBECK: Any sense of what contributed to the under-recovery given that it was under-recovering since the fees were last increased?

Ms Schneider : There were lower levels of horse imports than were anticipated at the time the last fee increase was calculated. I think that has been the major contributor.

Senator COLBECK: Can you tell me what might have driven that? Why are we getting lower levels of horse imports?

Ms Schneider : I do not know the answer to that other than the fact that economic conditions had changed over that period and perhaps there was less incentive to bring horses into the country.

Senator COLBECK: Does the cost recovery impact statement recognise non-commercial importation by small breeders and their capacity to pay fees?

Ms Schneider : All imports are treated equally.

Senator COLBECK: So it does not matter whether you are a wealthy country-owning racehorse owner or whether you are someone who is breeding more for pleasure or something else.

Ms Mellor : Mostly, the horses that go into Eastern Creek, which is our facility, are shuttle stallions and ponies. The cost to maintain the service for the horse is the same no matter what sort of horse it is. The racehorses now go through the quarantine approved premises in Werribee run by Racing Victoria.

Senator COLBECK: It is a private facility?

Ms Mellor : Yes, and it is supervised by the department.

Senator COLBECK: Is that having an impact on returns to the government?

Ms Mellor : Racehorses generally need to be at a facility with a racing track that they can train on. The racehorses are going there rather than to Eastern Creek where the racing training facilities were not available anyway.

Senator COLBECK: You have provided me with a wonderful segue way.

Ms Mellor : What I was going to say is that previously there was Sandown. The types of horses coming through us have not really changed that much.

Senator COLBECK: In respect of the new facility that is being built at Mickleham, I understand there has been a proposal put to you by Harness Racing Australia to build a track on site because, as you say, horses really need to have somewhere where they can train and maintain their fitness levels and things of that nature. Why has that become such a difficult negotiation for Harness Racing Australia? Why are we so opposed to an industry coming in, paying all the costs to set up, manage, run and operate, and perhaps facilitate us having access to the sort of facility that we would not have—though the rich racehorse owners can operate but the others cannot? Why is it such a problem?

Ms Mellor : I might reintroduce Dr Colin Grant, who is now the first assistant secretary of post-entry quarantine—another change that was forecast in the secretary's outline this morning. Colin will walk you through that. I note that in that proposition that is being put, there is no doubt that there is a proposition being put of that nature. We currently do not have training facilities in the post-entry quarantine arrangements that we have. This would be a totally new exploration that the harness racing industry is proposing for a very low volume of imports that I think Dr Grant can cover.

Dr Grant : I had to dash out for a few moments, so bear with me if I do not hit your question right on the head in an answer. We met last week with Harness Racing Australia's chief executive. He had approached the department earlier, about a couple of weeks ago, and raised with the department an interest in having a racetrack—

Senator COLBECK: A training track.

Dr Grant : or a horse training track at the new site. We had the meeting with him. He has also had discussions with the department of finance, which is the entity that will build the facility for us. I think it is fair to say that at the end of the meeting we had last week he understood the situation that we put to him which is that the facility, while sitting on a piece of land which is very large, has certain limitations. One of those limitations is a piece of grassland that we are required to maintain and retain under an agreement we have reached with the environment department, SEWPaC.

The other issues that pertain to whether we can have a track or not go to not only the cost of building it—and HRA, Harness Racing Australia, indicated that it was prepared to consider paying for it without knowing precisely the cost—but also the ongoing management of horses and the exercising of horses on such a track. There are a number of implications in terms of liability, occupational health and safety, and the like which had not been factored into the thinking.

At the end of the meeting, the chief executive said that he understood these issues. He asked us whether there was a prospect of the industry sector building its own post-entry quarantine facility—and, of course, there are always is, subject to conditions. He proposed that the location might be Echuca, which does present some quite significant difficulties in terms of location relative to staffing and inspections by the department. Then, latterly in the discussion, we were able to obtain some assessment of the volume that is likely to occur in terms of harness racing horses.

Exclusively at this stage it was about harness racing. At this stage, one horse in Australia's history has been imported for harness racing. While a track of this nature and a post-entry quarantine facility accredited by DAFF could of course take other horses, we left the discussion at that point. So that is where it stands.

Senator COLBECK: One horse.

Dr Grant : Yes.

Senator BACK: New Zealand is excluded.

Senator COLBECK: So when we run the Inter Dominion—

Dr Grant : You are right, Senator Back, it is excluding New Zealand.

Senator COLBECK: Yes, but what happens is that horses go to New Zealand and are quarantined there and then can come here anyway.

Dr Grant : Some can.

Senator COLBECK: Because the facilities are available and because, as I understand it, the costs are lower, we are just happy to be letting them bear the cost and do the work, are we?

Dr Grant : The only issue raised with us on this occasion by Harness Racing Australia was about a French horse.

Senator COLBECK: It could be the opportunity to have something that actually does provide a service and a facility, and it does not necessarily have to be restricted to harness racing, as you quite correctly said. How does this new concept fit with what we had at Sandown?

Dr Grant : Sandown was a post-entry quarantine facility approved and operated—

Senator COLBECK: It was a private facility?

Dr Grant : Correct.

Senator COLBECK: It was not a public facility as we are talking about for Mickleham.

Dr Grant : Correct.

Ms Mellor : It is worth noting—and possibly of value to note in this context—that the department is working on the review of the horse IRA which was forecast, through the Callinan inquiry, to be reviewed at this time. Part of that review includes looking at the post entry quarantine conditions for horses. Dr Cupit, could you quickly specify what changes are forecast that are out for consultation at present?

Dr Cupit : That is correct. We are in the process of reviewing the horse IRA. It is out for public consultation now as a draft. It was released on 22 January for a 60 day comment period. There are a number of proposed changes for a number of diseases including equine influenza, contagious equine metritis, equine viral arteritis, and pyroplasmosis, so there are a couple of changes recommended. The pre- and post-arrival quarantine periods are roughly the same—two weeks before and two weeks post entry. There will be few changes in relation to the requirements, and generally industry is fairly supportive of the draft proposals to date.

Senator COLBECK: Going back to the broader issue: if, by providing the facility that we are talking about, it changes the level of importation rather than people going through New Zealand, doesn't that potentially reduce the overhead to be amortised across the cost-recovery, and, potentially, provide a more economic use for the facility? Isn't that a consideration as part of what we are talking about? We are providing a cost-effective service, and if we provided the accommodation that they are actually looking for rather than what we want to give them, couldn't that potentially provide some cost benefits?

Dr Grant : Are we talking exclusively about horses here?

Senator COLBECK: Yes.

Dr Grant : The government facilities that have been operated for horses since government has been operating in this way have never had access to a training track.

Senator COLBECK: Just because we have never done it does not mean that we cannot do something which facilitates and reduces the cost to everybody for having the broader service.

Dr Grant : The site is 144 hectares. That is a reasonably large site. Once you factor in the amalgamation of all the existing five sites in Australia and all of their facilities, a fairly large proportion of the site is taken up. The rest is there potentially for growth, but the size of a training track that would be necessary does not fit on to the site with the limitations that are there in respect of one piece of grassland that needs to be protected.

Ms Schneider : Could I go back to your question about the date the CRIS was put on the website. We do have answer: it was 4 February.

Senator COLBECK: After the new fees came into effect?

Ms Schneider : The new fees came into effect on 1 February, but the first intake is not planned until 27 February.

Senator COLBECK: My point was around having the cost recovery impact statement available before the fees and during the consideration process of the fees. That is what I was looking at.

Ms Schneider : The industry had been consulted throughout the process through the Horse Industry Consultative Committee and the sub-committee on finance, so they were aware of the proposed increases.

Senator COLBECK: By the same token, I would have thought the cost recovery impact statement would have been a part of that consideration, not something that would arrive after the new fees and charges had been set. If we go to the track, it is, in its broader dimensions, 335 metres by about 184 metres—but it does not take up that entire area, does it?

Dr Grant : It depends on the size of the track, clearly. We have indicated that we do not believe it is achievable on the site. It certainly has not been factored into our costs. The critical issue then is what the costs would be for not only constructing it, but maintaining, managing and operating it when it is needed to be in use for horses. Notionally it would be, if it existed, available to other horses—not just harness racing.

At this stage, the costing for doing that is not articulated in any way because we had not considered it. We had this discussion with the Australian Harness Racing chief executive. It is not something that harness racing has considered regarding its long-term maintenance and management of such a facility. It potentially could be amortised across other horse users of the site, but we have not gone there. We left it open with the chief executive to come up and talk to us again. Last week he seemed to be quite comfortable with the prospect of going back to his industry and saying, 'It doesn't look as if it's achievable, and there may be options for a quarantine approved premises.' That is where we stand at the moment.

Senator COLBECK: My information is that there are plenty of standard breeds coming in, but they do not come to race because there is nowhere to train them while they are in quarantine. So they are coming in for breeding purposes but not for the broader uses or racing purposes, and/or they are coming via New Zealand, which is dealing with it because it does have the facilities. It seems to me that we are putting ourselves out of the game because we do not put the facilities in place.

Dr Grant : From what I understand of the issues, there are about four types of horses that come in. There are obviously private ponies, the number of which is fairly few; there are thoroughbreds that come in for racing, and they generally go through private facilities, Werribee being the main one; there are stud horses that come into standard stud—they are able to come in and they are not expected to train. This has been the first such request of us and it is through Australian Harness Racing. So that is the situation as it stands, and over the last 10 days. The issue was raised with us first, as I understand it, about 10 days ago.

Senator COLBECK: It does not seem as though there is a willingness to take it all that much further.

Dr Grant : There are limitations to the site, physically. We have not gone through the costing and estimated. We have not gone through the operating costings regarding the future. We discussed that with Australian Harness Racing and it has said to us that it understands and it will come back to us if it feels it wishes to.

Senator RHIANNON: I want to go to the model codes of practice that are being converted into animal welfare standards and guidelines. I am interested: because there are so many of them, is the same process being used for all of them, for moving from the codes to the standards and how you engage with people and how you have the review?

Mr Smalley : Thus far there has been a process that has particularly focused on the livestock model codes of practice. That has been done through a model that primary industries ministers agreed to, using Animal Health Australia as the service provider. We have not yet got to the stage of reviewing all of those model codes of practice, but, for instance, there is a different model being used in relation to exhibited animals as they are called—zoos, predominantly. That is being done through the leadership of one of the state agencies and in consultation with industries and welfare groups and is then being brought through a national process.

Senator RHIANNON: Does that mean you have not commenced the reviews on those other models—like cattle, domestic poultry, farm buffalo and all those others?

Mr Smalley : Cattle has commenced and is actually at a stage that is very near to public consultation on a draft consultation regulation impact statement. But the other ones that you cited have not yet commenced.

Senator RHIANNON: So domestic poultry has not commenced yet?

Mr Smalley : Domestic poultry has not commenced yet but the animal welfare committee, which is part of the primary industries ministerial set of arrangements, has put that as a high priority and of interest to the committee. We will be consulting with the industry hopefully at our next meeting and looking to consider how that review should be conducted and over what period of time.

Senator RHIANNON: Is there a similarity with how these are being conducted or do you adapt it for each sector?

Mr Smalley : As I said, there have been differences for different sectors. Thus far the land transport standards, which was the first one completed, and cattle and sheep, which are the other ones that are nearing completion, have been done through that same model of using Animal Health Australia as the service provider. But then zoos has been done differently and we are yet to start any others.

Senator RHIANNON: When did this process start? How long has this been going on for?

Mr Smalley : The process was agreed by ministers in 2006. The first cab off the rank, if you like, was the land transport standards. That process converted six or seven of the previous model codes into a single set of land transport service standards and guidelines.

Senator RHIANNON: So that has taken seven years and there is still a lot more to be done when you look at the list here. Are you trying to speed this up?

Mr Smalley : It would be fair to say yes they are trying to do them more quickly and that was one of the key reasons for the animal welfare committee to have increased its seniority when it was reformed under the ministerial council arrangements in 2012.

Senator RHIANNON: I am hoping you can answer this considering cattle and sheep are nearly finished. What efforts are made to ensure that members of the review panel reflect and represent the entire industry including those who may be looking at addressing animal welfare issues to be consistent with good practice in farming these animals?

Mr Smalley : The process that has been undertaken has given invitation to all of the stakeholder groups that were of interest, particularly in relation to your citing sheep and cattle. In some instances, animal welfare groups decided not to be members of the writing groups. They have participated to date in the reference groups, which are also a part of sheep and cattle. In addition to what has happened in the past, the animal welfare committee has also decided that it ought to review the way that these codes of practice are converted to national standards and guidelines. That review process is hopefully going to start up during the course of the next few months. So that will look at how the process is done, over what time frame and who is involved so that we can aim to do things more expeditiously.

Senator RHIANNON: Can you take on notice, when will that review be done?

Proceedings suspended from 15:49 to 16:00

ACTING CHAIR ( Senator Gallacher ): I welcome officers from the live animal exports division.

Mr Metcalfe : I have one thing come back to assist the matter that we took on notice earlier. Senator Rhiannon asked for a list of all the grantees under the Tasmanian Forests Intergovernmental Agreement Contractors Voluntary Exit Grants program. I am advised that all grants paid for by the department are listed on the grants reporting section of the department's website. The 58 grantees of the program are listed from March 2012 onwards. I have a particular part of the website I can refer you to so I will give that to the secretariat and they can refer it to Senator Rhiannon.

Senator BACK: I refer to the media statement that the department put out on 7 February following an investigation into an apparent or alleged animal cruelty incident at the Cibinong abattoir in West Java on 28 September last year. I understand that on 8 October the department received a complaint from Animals Australia. I made two phone calls when I heard that, one was to Western Australia and one was to Indonesia. I established very quickly that there was absolutely no truth at all to the allegations that were made. I am wondering how did it take four months for the department to investigate and finally report on 7 February that in fact there was no truth to those allegations?

Mr Glyde : When we receive these allegations we obviously take them very seriously. We have to engage in a thorough process to establish the facts of the matter. In this case there is a number of individuals and organisations that had to be contacted to try and establish those facts. In this particular case there was an allegation from Animals Australia that was given to us that was based on some information from an informant. We were obliged to pursue that and to ask further questions to get the detail from both Animals Australia and from that informant. Those things do take time in order to do them to a standard that is going to be acceptable as we go through and implement legislation. In this particular case, the informant was either unable or unwilling to provide that information. We gave them several opportunities and indeed Animals Australia several opportunities to provide more information. The simple answer to your question is that it does take time to do these investigations thoroughly.

Senator BACK: My concern is the very severe press. The Australian on 22 November wrote that the investigator advised that Meat and Livestock Australia representatives on site conducting an assessment at the time were powerless to press to stop the Australian animals being slaughtered according to traditional roping methods—absolutely false. It did not happen. And that this is the third breach of the new live export rules uncovered by Animals Australia this year—another lie. It did not happen. Would you confirm what I established, firstly, there were Australians and the local welfare officer in the abattoir that evening and they had no occasion at all to act. Secondly, that there were Australian animals and that they had in fact been slaughtered according to your requirements. Thirdly and, I think, most importantly, without any interruption or interference or involvement by Australians or others, the local Javanese cattle were actually being slaughtered according to Australian standards without any intervention or interference or involvement by Australians. Far from it being a case where there was animal cruelty, it was actually a prime example of where Australian involvement has lifted standards in Indonesian abattoirs. Did your investigations confirm any or all of the statements I have just made?

Mr Glyde : I might ask the officer who was closer to the particular investigation to make some comments on that. But the bottom line was that there was no reason for us to take any regulatory action; there was no breach of ESCAS or any of the regulations that we administer. I think there is a broader question you are asking us which is about the difficulty of undertaking investigations whilst there is a lot of media going on, and claim and counterclaim, which is another reason why we have to be absolutely sure about our regulatory processes and why we make sure that we do our work based on fact. In the longer run, all we can really do is continue to investigate and, when there are legitimate claims, to publish the outcomes of those investigations and to demonstrate the performance of the new regulatory framework. I will ask Mr Benyei to give a little bit more detail about what we did find and what we did not find.

Mr Benyei : Yes, I can confirm that a number of parties were approached to ascertain the facts. I can confirm that there were some Australian animals in the supply chain at that stage. I can confirm that all animals that were in the supply chain were processed in accordance with Australian requirements. I can also confirm that there are local supply chains that do adopt high standards as well.

Senator BACK: Those are my only questions in that area. I then want to go back, if I may. Mr Metcalfe, in error, I raised some questions under the area of 'Biosecurity—animal' about complaints from industry as to the excessive over-regulation now costing inordinate delays in time and money, demurrage, missing markets et cetera. When I was directed to this section you said that you were able to make comment.

Mr Metcalfe : Certainly I will make an initial comment and others may want to add to that. As you know, I am very new to the area, but one of the things I have had the opportunity to do is have a meeting with some of the key people in the export industry in Perth. I have also met with the National President of the RSPCA. But clearly I will have the chance to meet more people through the industry in the period ahead.

One point that was discussed in my meetings in Perth was a view by the industry that there was an excess of red tape associated with interaction with the department. We certainly stand by the need to ensure that the industry is well and properly regulated, but there is one aspect of effective regulation and there is another as to whether or not our processes have become cumbersome or difficult to access, whether the way that industry needs to interact with us is efficient or not.

In that meeting, I discussed the idea—and I have subsequently discussed the idea with the industry association—as to whether there might be an opportunity for the department and the industry to come together and, essentially in a workshop style, go through the way regulation is actually occurring; for us to be able to see through the eyes of the industry; how we look as they approach us; and for the industry to understand fully the sort of information and issues that we need to deal with. So I think there is a general agreement now that we should come together and have relevant staff meet with people actually interacting with us. There is nothing unusual about this. In any system of regulation it makes sense for the regulator and the organisations being regulated to have discussions from time to time to ensure we are all working to get the best outcomes. So that is certainly something that we are happy to work on with the industry.

We have also talked about whether there should be some form of code of understanding, or some sort of clearly publicised guidelines as to what we expect from you and what you in turn can expect from us, so there is some transparency about the process as well. That is something we will consider in these further discussions.

Senator BACK: Thank you, I am encouraged to hear that. The best example, probably, was even the abattoir we were just speaking of. I think four different companies are seeking its licence under ESCAS, it has had four completely different sets of audits to achieve that—one for each of the respective company—and, as the ongoing auditing process takes place, that will be multiplied by four. I do not think anybody would subscribe to the validity of that circumstance.

I have a final question, knowing that others want to ask questions. At least in the West you will have no doubt been apprised of what is now turning up as a severe animal welfare problem. Just in recent days, for example, there have been two instances. One particular owner, whom I have known for many years, would normally have sold 10,000 to 15,000 sheep and goats by this time of the year, yielding him somewhere between $600,000 and $900,000. He has actually sold 700 sheep and goats, for an income of $70,000. That particular family are facing turning their stock out onto the rangelands and walking off their land.

The second instance is a farm from exactly the same area, on the rangelands—in this case damara sheep, which have no local market. They have been highly successful with exports; they are now denied them—in fact, the only possible market might be the pet food industry.

I do not want to go through them in great detail except to place on record that we are facing, as a result of the drought conditions and the lack of market, a very severe animal welfare circumstance. I do not know if the department is across this, or has any advice or recommendations, but I fear to say that it is something that was predictable and is now happening.

Mr Glyde : Senator, we are aware of the media reports in relation to the claims by the producers. I guess all we can really say is that the nature of the change that we have made to the regulatory regime is quite significant. The extra requirements on exporters now, in order to find markets that will be able to satisfy ESCAS, will by their very nature, particularly in the short term, limit the range of markets we can go to and the capacity of some of those markets to accept animals in the numbers they have previously. It is the sort of thing we would make our Western Australian colleagues aware of. Western Australian departmental officials are aware of that, and they have that responsibility for animal welfare at a state level—it is not necessarily a Commonwealth responsibility, particularly the treatment of animals, in WA. I think it is one of those regrettable things that happen when you do make changes to markets and to the operating environment for producers. We are doing our best to try and make sure that, as the secretary has already mentioned, we streamline and try to reduce the impact that we have. But, at the end of the day, there is still an impact from changing the nature of the way in which the markets work.

Senator BACK: But you are aware that it is costing individuals and the industry tens of millions of dollars? As was also said to me throughout the nineties and the 2000s—and preceding that, as you and I are well aware—that encouragement was being directed at producers to breed to the market, and of course that led to interest in and development of markets for fat-tails and their derivatives. But, really, as we both know, there is no local market—there is no local demand for that type of carcass in Australia. So, basically, all they are doing now is facing them being shot.

Mr Glyde : I am not aware of any other markets, but I am not an expert on sheep either. I think the issue here—and I do not want to in any way downplay the impact on either the producers or the exporters; it has been a significant financial impact on both—is that the policy decision has been taken in the interests of the long run of the industry that the industry does have to operate to the satisfaction of Australians as well. The Australian population and others were concerned about the potential for adverse treatment of animals in those markets and we have taken some action to do something about that. In the long run, I believe that is in the interests of the industry but in the short run I think it is difficult for us to deny that there will not be impacts as we transition to that more sustainable industry.

Senator RHIANNON: Is it correct that there are five complaints currently under investigation by the department to incidents in Kuwait, Pakistan, Israel and Mauritius?

Ms Irwin : Yes, there are currently five investigations on foot.

Senator RHIANNON: One investigation is the Pakistan-Bahrain investigation, isn't it?

Ms Irwin : Yes.

Senator RHIANNON: That was where there was the tragic slaughter of 21,000 sheep. What is the status of that investigation?

Ms Irwin : That investigation is still underway.

Senator RHIANNON: When do you expect that the report will be finalised?

Ms Irwin : All of the investigations are a clear priority for the department. We are working through them. In terms of specific time frames, we are not able to give definite dates as to when they will be finished given the various issues that need to be followed up in each of the investigations.

Senator RHIANNON: Will the reports be made public?

Ms Irwin : Yes.

Senator RHIANNON: Considering the distress this caused the wider Australian public, considering the challenge that the industry has and considering your own workload, which is obviously very relevant here, can you give us some more information about how these are being conducted? You have said they are all priorities. The five of them sound like a lot of work. Is there one that you are concentrating on more? Would not the advice from one help inform the others? Could you give us some more advice please?

Ms Irwin : The department does have an investigations and enforcement division to conduct investigations across any of its regulatory programs. That division plays a key role in advising any program across the department on compliance and enforcement action. Specifically in relation to the way investigations are undertaken in the live animal export program, there are a range of areas in the department that provide expert advice to assist in the completion of investigations. For example, my own division will provide regulatory advice for the regulatory framework that we work under. The animal biosecurity division will provide expert advice for animal health issues that may arise, including advice from the CVO on occasions. The animal welfare branch will provide advice on animal welfare standards. As you can appreciate, there is a range of areas of expertise that may need to be called on depending on what the particular issues are in any investigation on foot.

Senator RHIANNON: Has any of this investigation or advice work been outsourced or has it all been done within the department?

Ms Irwin : To the best of my knowledge, it is all being done within the department.

Senator RHIANNON: Do you want to take that on notice if you are not sure?

Mr Metcalfe : We will correct the record or add to the answer if there is anything more to say.

Senator RHIANNON: I will go back to the question one more time about the time frame. It was such a huge incident. You obviously organise your work and make determinations on how long this work will take. Surely you are able to give some guidelines on when these reports will be finalised and what does take priority because there is variation within these five incidents. Could you provide more details about how you are managing this within the department. Surely that has been discussed in some detail.

Mr Glyde : Senator, you are not the only person that is very keen to know what the time frame will be for these investigations. That is something that I am particularly keen to know and also the minister is always very interested in the timing of it as well. I would make a general comment, which is that you do not know what you do not know until you start investigating.

As we initially discussed, sometimes we have information that comes to light and then when we go back we get further information, and that all has to be assessed. Other times we may not necessarily be provided that information and we have to find other ways to better understand the circumstances that occurred at the time. There is almost always a degree of consultation and investigation with a wide range of parties, not just the person who has made the complaint.

In addition to that, in terms of natural justice, once we have come to a position, an initial finding, we then provide to relevant interested parties our preliminary findings and conclusions and ask if they have any further information to provide. That can then lead on to further legal processes. If, for example, the particular interested party feels that that is the wrong step they might challenge what we are doing. By the same token, they might also provide additional information which will take time for us to assess. Putting all that together, we cannot really guarantee exactly how long these things might take, particularly the natural justice step where we try to make sure that the facts as we have ascertained them are absolutely correct.

Senator RHIANNON: Considering it was revealed in the estimates last year that it had taken more than a month after Minister Ludwig promised an inquiry to kick start the investigation by writing to the exporter Wellard to seek background information, can you assure the committee that similar delays are not occurring?

Mr Glyde : We have an internal process for registering the complaints, making initial inquiries et cetera that we go through, and I can reassure you that we do these as expeditiously as we can. It is really important for confidence in the system that we do undertake these investigations thoroughly but we also do them as quickly as we can.

Senator IAN MACDONALD: We have spoken before on the proposed export of live cattle from North Queensland to the Solomons, and I am curious as to whether all of the Commonwealth's involvement is finalised.

Mr Glyde : I might ask Dr Cupit to update us on the latest stage we are at with that.

Dr Cupit : Last August we had agreement on the animal health protocol, as we reported last estimates, which we had worked on with both the Solomon Islands government and also with the Australian exporters. That has been put in place. It is now up to the commercial parties in consultation with their importers in the Solomon Islands to establish a secure supply chain. It is my understanding that it is still in their court.

Senator IAN MACDONALD: But, as far as the Commonwealth is concerned, all the protocols have been put in place?

Dr Cupit : The animal health protocol, as far as the certification, has been put in place.

Senator IAN MACDONALD: So there is no other Commonwealth requirement; it is purely a matter of commercial negotiation now?

Dr Cupit : The Commonwealth's requirement now is for the supply chain ESCAS requirements to be submitted to us and then to be assessed in accordance with those requirements. The commercial parties have to come back to us for both a notice of intention to export and the ESCAS arrangements, which then has to be assessed, as you would normally do for any other market.

Senator IAN MACDONALD: So that is a fairly set procedure and everybody knows what that involves—except me?

Dr Cupit : There are two dimensions to the Commonwealth's involvement. One would be establishing the animal health conditions and the other now, with the introduction of the Exporter Supplier Chain Assurance System, to have assurance for animal welfare. So, at the moment, I think I would characterise it such that the ball is the commercial parties' court but it will come back to the Commonwealth to consider their ESCAS application.

Senator IAN MACDONALD: And there are certain rules and regulations in relation to the export and if they meet those and do their own commercial arrangements the Commonwealth has no other interest?

Dr Cupit : That is correct.

Senator IAN MACDONALD: Thanks for that. I am not quite sure who would answer this—it is about live export. I seem to recall Mr Ludwig and Minister Emerson promised the Indonesians they would get a $20 million grant to improve the productivity of the Indonesian herd. Is that correct? Has it been paid?

Senator Ludwig: A press release was put out which was part of, as I recall, development money which is in the Trade portfolio, not here. It was about providing support to a range of small farmers. I will get you a brief on that as to where it is, what money has been expended and what programs have been undertaken.

Ms Evans : I will add a small amount to what the minister has already said. This is the project program through ACIAR, which is the IndoBeef' project's $20 million to invest in improving the productivity of Indonesian cattle herd. It is already in train as a project but it is managed by ACIAR. It is not managed by DAFF itself. It is progressing well according to its milestones, as far as I am aware.

Senator IAN MACDONALD: So Foreign Affairs would be the right estimates to enquire further about that?

Ms Evans : Yes.

Senator IAN MACDONALD: It is so progressing, so I guess they can tell me if the $20 million has been paid or is still to be paid.

Ms Evans : It has not been fully expended yet, so where they are up to is in a planning phase. They have established the governance arrangements for it, which include both representatives from Australia and from Indonesia. They have gone through a process of identifying options to do and laying out what they expect to do with the money over the coming years. I think it is a four- or six-year program, so they have laid that out but they have not yet expended the $20 million. I could not tell you how much they have expended yet.

Senator IAN MACDONALD: That came as a result of the live cattle ban, did it?

Ms Evans : It was announced at around the same time but I would not say that there was a direct correlation between them. It is something we have been working on with Indonesia, in any case.

Senator IAN MACDONALD: The minister told us earlier that $12.2 million had been paid to Australian producers following the live cattle ban. Is there any other money that has gone to the Australian producer since the live cattle ban, which might assist them with their productivity or otherwise.

Mr Glyde : There were two programs that were announced on 21 October 2011 to help with the introduction of ESCAS. The first was a $5 million program that would support exporters to deliver improved supply chains. The second element was part of the ODA contingency reserve to eligible countries that import livestock in order to try to improve animal welfare outcomes in those countries. But you are specifically asking about assistance to Australian farmers and exporters. I will ask Ms Schneider to take us through what the current status is with that $5 million program to support exporters.

Ms Schneider : It is a $5 million program. It is reimbursable at the rate of $1 for every $3 expended by Australian exporters. It is available to Australian Livestock Exports business entities and to industry bodies such as Meat and Livestock Australia. To date, there have been six applications from exporters and from MLA. Five were in 2011-12 and one in 2012-13. Those applications total $529,646. We have completed the assessment of those applications. On the amount expended, the two applicants have received reimbursements totalling $191,741 and we are in contact with other applicants seeking clarification on their applications. The total amount of funding applied for is $529,000.

Senator IAN MACDONALD: The minister mentioned before that $12.2 million had been paid to Australian producers following the live cattle ban. Is that the total sum—can anyone tell me—that has gone to Australian—

Mr Glyde : I think we could probably provide the exact amount. I just need to consult with—

Senator IAN MACDONALD: It is about $12 million. Clearly, my point is: Indonesian farmers following a live export ban get $20 million; Australian farmers get $12 million.

Senator Ludwig: That would be an incorrect premise to base your question on because, as we said, there is no direct correlation between the two. One is not from this department. The $20 million is from and administered by ACER.

Senator IAN MACDONALD: It is from the government.

Senator Ludwig: It is about using ODA money to assist in overseas development. Everybody, including the Liberal Party, supports that, unless you have had a change of heart about supporting overseas development aid money.

Senator IAN MACDONALD: But am I wrong in the premise that the government has given $20 million to the Indonesian live cattle people, who were rightly upset at the sudden ban, and—

Senator Ludwig: You are wrong because it is—

Senator IAN MACDONALD: as opposed to that, Australian producers have got $12.2 million. I am really asking: has there been more than $12.2 million—

Senator Ludwig: I have said that you are wrong. Clearly, you are not going to move off that point.

Senator IAN MACDONALD: I do not need to make the point—

ACTING CHAIR: Senator Macdonald, the time now being 4:30, I encourage you to put any further questions on notice.

Senator IAN MACDONALD: on the $20 million. I accept what you say. I am simply asking you, on notice if needs be: is there anything else that has gone to the Australian cattle industry following the live cattle ban apart from the 12 point whatever it was million dollars you mentioned earlier, Minister.

Senator Ludwig: My recollection of it is that the substantive funds—I think it was $12.7 million—have been expended out of a package. There was also, I think, at the time a range of other measures that were addressed, but I would take that on notice rather than speculate.

Senator IAN MACDONALD: If you would take that on notice, I would appreciate it. Thank you very much.

Senator WILLIAMS: Perhaps you could take it on notice to provide details of the total payments to Australians, whether they be exporters or the cow cockies themselves. I would be interested to see if it is as much as the $20 million that was given to Indonesia. It probably will not be.