Mr MARTYN EVANS (10:47 AM) —The Year 2000 Information Disclosure Bill 1999 is very serious legislation and I know the government regards it as such. Indeed, the minister at the table, Mr McGauran, in a former ministerial life, along with his opposite numbers in the opposition, including me, drew particular attention to this problem some time ago. Unfortunately, I do not think any of us have been prompting consideration of this issue early enough to encourage business and individuals in our society to really take the matter as seriously as it needs to be taken.

I think we would all know much of the background to the issue which we face. The story of the two missing digits is an oft repeated one which I will not repeat again here today. However, I recently came across a quotation which is very interesting, not so much because of what was said but because of who said it, just over a year ago, in relation to a discussion on the Y2K problem in the United States. It is a confession from one of the programmers of the day:

I'm one of the culprits who created this problem. I used to write those programs back in the `60s and `70s and was so proud of the fact that I was able to squeeze a few elements of space out of my program by not having to put 19 before the year. And back then it was very important. We used to spend a lot of time running through various mathematical exercises before we started to write our programs so that they could be very clearly delimited with respect to space and the use of capacity. It never entered our minds that those programs would have lasted more than a few years. And, as a consequence, they were very poorly documented. If I were to go back and look at some of the programs I wrote 30 years ago I would have one terribly difficult time working my way through step by step. And to try to infer how one reads a program when there are lots of alternate ways of doing things and all you've got is the code in front of you is not simple.

The person speaking there was none other than Alan Greenspan, the Chairman of the Federal Reserve Board in the United States—not one to be considered a rash or inconsiderate or reckless person in any way whatsoever; indeed, one of the most respected people in the Western world. When this gentleman was learning his initial trade some 30 years ago, he was indeed a programmer, one of those who took great pride in leaving out the two digits. Very clearly, given the nature of that quotation, it is difficult to blame those who did this work at the time.

It also tells us something much more important—not only the reason that this problem occurred in the first place but also the difficulties which people now have in rectifying that problem. As Alan Greenspan said, those programs were not expected to last very long. They were very poorly documented. When you have only got the base machine code or COBOL programming language in front of you, it is very difficult to go back and find all of those problems. That explains, to some extent, not only the nature of the problem but the difficulties which governments and corporations have in tracking down the problems in their code, in rectifying those errors and in being sure that they are not introducing more mistakes into the code that they are repairing. It is a very serious issue to go back and fix Y2K problems and at the same time introduce new errors into programs which have been bedded down for many years and, in some cases, for decades at a time. There is no doubt that the Y2K issue will affect individuals, businesses and governments and it will do so at a local, national and international level. Y2K will affect such wide ranging activities as financial services, transportation, defence, manufacturing, telecommunications, health and safety, power generation and so on. The range of issues that has been detailed is well known to members.

It is very important to reiterate the all-encompassing nature of this kind of problem. It is terrifying to realise that in October 1998 a survey was conducted by US government agencies and they discovered that some 23 per cent of all companies and governments worldwide will not have even started Y2K repairs. With only just over 12 months to go back in October 1998, nearly one-quarter of all governments and business organisations throughout the world had not even started those repairs. In January and February 1999, I think the problem is not much better.

Some 83 per cent of those companies that have not even started to look at this problem yet had fewer than 2,000 employees. It is very much the case that small businesses and small governments of the world and Australia, in particular, have not yet begun to examine the nature of the problem that they face. It is those small companies and, indeed, in some cases smaller countries that will cause most of the international and national difficulties.

There is no doubt that by March 2000 some 30 to 50 per cent of those companies that have not yet begun to address this problem will have experienced one or more mission critical failures. A cost of a single failure will be anything from $30,000 to $A3 million or $A4 million, given that it will probably cost them a day's business to repair those failures. That, of course, will add up across the board.

What are the particular areas that we need to address most urgently that should have already been addressed but still need attention? No doubt, as many across the world have said, it is the electricity generation and water distribution sectors that are probably the most critical. They rely heavily on embedded chips that contain programs in the silicone itself, which makes them particularly difficult to repair and find. As base utilities, they support every other sector in our economy and society. They are particularly important not only for the continuation of the economic life of a nation but also for the very social fabric of the nation itself. It is not the case in Australia, thank goodness, but it is the case overseas that nuclear power generation is a very powerful source of electricity generation for many countries.

There are a whole range of countries which rely on nuclear power generation to the extent of some 25 or 30 per cent of their electricity. For example, in France, Belgium, Sweden, Switzerland, Hungary, Korea, Japan, Germany, Finland and Spain more than 30 per cent of the electricity comes from nuclear power. In the United States it is over 25 per cent. So while it is unlikely that any Y2K related problem would cause any catastrophic failure of a nuclear power plant along the lines of Chernobyl or Three Mile Island—such things are almost physically impossible in the case of modern nuclear power plants in the Western Hemisphere—the reality is that Y2K related problems in non safety critical areas could well cause a shutdown of some of those plants.

The issue here, in raising those issues about utilities and the widespread nature of this issue, is not to promote undue cause for concern. Some survivalist types in the United States have recently come forward in the media and, indeed, some of the Christian Right have sought to exploit this for almost financial and religious purposes in the United States—a very dangerous trend, I believe, and one which causes completely unnecessary panic. The reality is that this is the first time we have faced mission critical failure across the board on the same day.

The world, and our modern technological societies in Australia, the United States and Europe, are well used to the idea that individual systems will crash. Who has not gone to the Qantas or Ansett desk only to be told that the computer is down and you cannot get your flight confirmation immediately? Or who has not gone to some banking institution and discovered that their ATM is down? What do you do? You go to the other airline, you go to another ATM, you go to another bank, you make do until tomorrow—whatever; there is always a way around that problem.

This is the first time, however, when all of those mission critical systems will fail simultaneously, if they are going to fail at all, but on the same day. And of course that makes life somewhat more difficult, because lightning storms in the United States and ice on power lines often contribute to the catastrophic failure of individual systems. Canada and the eastern seaboard suffered that only very recently, as we all saw in the news. The consequences of this are severe for those who live in the district—not to understate that at all—but the reality is it does not have a flow-through effect to the rest of the system.

If some of these systems fail at the same time, however, the reality is that this will put an undue burden on other systems which are Y2K compliant, which are functioning; they will attempt in the normal way to supply the missing power, for example, but, because the demand will be too great, they will experience power surges, and catastrophic failure of the system is a possibility—a remote possibility, but a possibility. I do not say that because I want to engender the kind of panic which those survivalists in the United States do in fact want to engender. I say it because I think it is very important to understand the kind of flow-through nature of this business.

We are engaged in a very digital world. We are engaged in an interlocked world, economically as well as physically and electronically. That means that we have to be very sensitive not only to what our fellows in business and government are doing but to what people down and up the supply chain, the customer chain, are doing, to what other countries are doing, because failure in one location, failure in one business, will result in problems for others. If only 20 per cent of businesses, for example, are not compliant at the end of this year, then that can have enormous problems for the other 80 per cent. I will talk in a little more detail about some of those chips in a moment.

We do have to look in great detail at what is happening not only in our own sectors but across the world, because even though Telstra may be Y2K compliant, Optus is almost certainly much more Y2K compliant because its equipment is all much more recent. For that reason alone, Telstra has a problem that Optus does not, and that other carriers do not, because much of Telstra's equipment has been there for many, many years—long before the problem became a public problem. Indeed, Telstra faces an enormous task to get its systems fully Y2K compliant. I am sure that, of all telecommunications organisations in the world, Telstra is well-equipped, if not the most well-equipped, to achieve such a conversion. I have little doubt that Telstra will make enormous strides to this effect by the end of the year and will only experience failure in isolated places. But a telephone connection has two ends. Indeed, many of the connections will be in countries outside Australia and many of those other countries may not have the same degree of success.

The same is true of the banking system. Very large banks in the United States and throughout the world have made enormous progress in remediating their systems. To give an example of the problem, and to look at the US economy, the powerhouse of the world at the moment, the reality is the big banking systems are making very good progress and will no doubt be almost fully Y2K compliant; but with the small banks, the community banks and the small town banks, in the United States—of which there are very many—very few of those will be fully Y2K compliant. All of those connect with the Federal Reserve system; all of those deal with each other. And a single failure by a bank in the United States will have flow-on effects in the system. If they fail, others move throughout the system, the computer systems are affected, the demand for cash is affected and the consequences are much more serious. So while we look at the large organisations and say, `Yes, tick, they are Y2K compliant,' the reality is that it is often going to be the smaller organisations which cause that kind of real problem.

Although the world at large is moving very well to address this problem—certainly in the Western democracies—the reality is that we will face problems in other countries. The same is true of air traffic control. I am almost completely certain that no plane in Australia will suffer catastrophic failure as a result of Y2K. The reality is, though, that some of our Qantas and Ansett planes that fly internationally will no doubt have to exercise some care about where they want to land in case some of those other countries are not Y2K compliant. KLM, a very major airline and one which has a very good reputation in a country which is also one of those undertaking most of the work in Europe about Y2K, was very concerned about flying in the new year, not because they fear for their systems—they do not particularly, for they have put a lot of work and effort into them—but because they are concerned about where their planes might be expected to land and what will be happening with other people's systems.

The FAA in the United States estimates that its systems will not be fully compliant until 2009, nine years after the Y2K bug first strikes. The reality is that this affects transportation as well. Shell recently tested one of their major tankers and discovered that 20 per cent of the embedded systems in that major oil tanker were not Y2K compatible. Our economy might well be affected by the flow-on effects of the United States slowdown and that would be very catastrophic for people in Australia, if not physically, certainly environmentally.

This goes to show just what an impact the technology has had on our society as a whole. I spoke earlier about the banking system. It was a fact that in May last year not one ATM in the United States was Y2K compatible. I think they have made progress since then, but just imagine how many ATMs there are in the United States and the difficulty of fixing all of those. The reality is that with only just over 18 months to go you would have to ask what chance they have of doing it.

The IRS in the United States is another case. No-one really cares if the government's computer systems that collect taxes break down, but the reality is that it can have economic consequences as well, and economic consequences for Australia as a flow-on in international trade. The IRS has 80 mainframes, 17,000 workstations and 120,000 PCs. It has spent $6 billion upgrading its computer system and it does not work and it is certainly not Y2K compatible. That is the sad fact. While the US government has quite rightly claimed enormous credit for the fact that its social security system is working, its taxation system is not. How you pay social security cheques without taxation revenue, I am not too sure.

The reality is that the costs of this will exceed everyone's expectations, I suspect. We have already heard that the US expects something like a trillion dollars in litigation costs alone. The US has an eight-trillion dollar economy, so we are looking at nearly 10 per cent of the US economy in litigation costs. We have to do what we can to mitigate that. This bill does that. But information is the critical factor that this bill relies on. Members opposite read from a glossy brochure and list a series of critical government instrumentalities and then say that a certain percentage are actually in the assessment phase. But I want to hear from the government itself that 100 per cent are in the successful phase. I do not want to hear about the list that is actually in assessment.

I am afraid that what the honourable member opposite just read out to us does not constitute something which I would regard as a full assurance from the government that its systems are Y2K compatible. The public has every confidence in what this government has done about Y2K. Australia is very much at the head of the pack. Along with the United States, Canada, the United Kingdom and the Netherlands, Australia is right up there. We have done everything that could reasonably be expected. We should have done some of it earlier. I do not want to be trivial about that kind of criticism but it is important. But from the comments that I have heard today—not from the minister at the table, Mr McGauran, but from some of his colleagues on the back bench—some members have not expressed the kind of concern which I would have expected to have heard from members of a government in the Western world in February 1999.

Mr Neville —I will surprise you.

Mr MARTYN EVANS —We should be afraid, very afraid. The reality of this is that it is not going to crash so much on our individual heads—it will not. Australia is well prepared, people can be assured of that, and the government is taking reasonable steps, but I want to know what those steps are. I want to know what the states are doing and I want to know what local government is doing because it is not just the federal government that is critical here. The federal government should be coordinating and helping the states to publicise their activities because they are the ones responsible for much of the economic activity, for the water supply and for electricity generation—activities that are really critical—and we have to know what they are about. We have to know not just because of accountability issues—that is important—but because by the government coming clean, by the government telling the people where it is at, by the government providing that kind of detailed information, even if it does provoke some community concern, that will prompt others in the community, in business and individuals, into action. It will show them that society takes this issue really seriously.

We do not just need the glossy brochure; we need the cold, hard facts of government. We will be critical, but we will not be unreasonably critical if it turns out that there are delays and faults in the system. We just need to know where those are. Even if the results are very good, that is fine, that is an excellent tick for the government, but the reality is that the public will see that and understand the importance of moving forward on this issue.

There is a lot of work still to be done. The reality is that not only software programs but embedded chips are very critical in these systems. They are even more critical. There are six billion extra embedded chips around now than there were, and the number of embedded chips is very vital. It may be the case, for example, that someone's pacemaker is Y2K compatible, but is the doctor's and the hospital's equipment which reads the information from that pacemaker Y2K compatible? These are the kinds of details which obviously will affect the lives of individuals and which will have a carry-over effect throughout the community.

In Australia we are doing very well. We are at the head of that pack. We need to be concerned where our neighbours are. But in order to ensure that Australia sets the right example and this government sets the right example—which is after all the best thing that government can do about Y2K, apart from fixing its own mission critical systems—we need more information.

The opposition's proposals are not unreasonable in that regard. They simply require more and better particulars of the government's activity. We look forward to supporting their activities in this area.