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Foreign Affairs, Defence and Trade Legislation Committee
30/05/2018
Estimates
DEFENCE PORTFOLIO
Department of Defence

Department of Defence

I now welcome back Senator the Hon. Marise Payne, Minister for Defence. I also welcome back the Secretary of the Department of Defence, Mr Greg Moriarty; the Acting Chief of the Defence Force, Vice Admiral Ray Griggs; and officers of the department. Minister, would you like to make an opening statement?

Senator Payne: No.

CHAIR: Mr Moriarty, would you like to make an opening statement?

Mr Moriarty : No, thank you.

CHAIR: CDF, would you like to make an opening statement?

Vice Adm. Griggs : No.

CHAIR: We will commence on program 2.8, but I understand that the deputy chair has a couple of questions arising from yesterday's testimony that he would like to do first, so I call Senator Gallacher.

Senator GALLACHER: Minister, just following up on the discussion yesterday regarding Mr Johnston's appointment as the Defence Export Advocate, after the lunch break yesterday Mr Dewar advised that Mr  Johnston's rate of pay is somewhere between 2½ thousand and 4½ thousand per day. Has any advice been received overnight that would allow you to provide the exact figure to the committee?

Senator Payne: I am not aware, but I'll ask an official.

Mr Dewar : No, there hasn't been.

Senator GALLACHER: Is there any difficulty with sourcing the figure, or is it that you just don't want to tell us?

Senator Payne: It's the issue we were discussing yesterday in relation to part-time appointments and the variation in the rate plus the approach the government takes to not place specific amounts on the record in the event that the individual concerned, whoever it may be, is seeking other similar roles. Is that correct?

Mr Dewar : Yes.

Senator GALLACHER: I understand the discussion around this. So the proposition is that you know the figure but you're not providing it to the committee?

Mr Dewar : Yes.

Senator GALLACHER: Minister, yesterday afternoon, when officials were unable to confirm how many days work Mr Johnston has completed to date, you undertook to find out and bring it back to the committee. Are you able to provide an update on how many days Mr Johnston has completed to date?

Senator Payne: I don't have that as of now. I did undertake to do that. I am expecting to be provided with that advice and, when I receive that advice, I'll provide it to the committee.

Senator GALLACHER: Throughout the day?

Senator Payne: As I've said, when I receive the advice, I'll provide it to the committee.

Senator GALLACHER: I don't want to be pedantic, but will it be a particularly onerous task to work out how many days

Senator Payne: I understand that Dr Kearnan may be able to provide it now.

Dr Kearnan : I asked the department to check yesterday: Mr Johnston has done four days of work.

Senator GALLACHER: Four days?

Dr Kearnan : Yes.

Senator GALLACHER: Does Mr Johnston's contract specify a minimum or maximum number of hours of work?

Dr Kearnan : No, it doesn't. It's as required by the department.

Senator GALLACHER: Mr Dewar, in the Defence Export Advocate position statement that you read out to the committee, you outlined that part of Mr Johnston's role is to provide advice to ministers and departmental staff. Has Mr Johnston provided any advice to ministers or departmental staff to date?

Dr Kearnan : The work that Mr Johnston has done to date has been to come to Canberra to attend when we launched the Defence Industrial Capability Plan and to do a number of calls. Then he came a second time, as I mentioned yesterday, to do a state and territories forum on exports.

Senator GALLACHER: Does the contract envisage how advice would be transmitted: written letters, email?

Dr Kearnan : It could be a combination.

Senator GALLACHER: Minister Payne, have you met officially with Mr Johnston in his capacity as export advocate?

Senator Payne: No.

Senator GALLACHER: How many meetings has Mr Johnston had with ministers and officials in his role as Defence Export Advocate; is that none?

Dr Kearnan : He has met with Minister Pyne and he's had a number of calls just in terms of preparation for the new role; the exact number I'd have to take on notice.

Senator GALLACHER: Thank you very much for that.

CHAIR: We will now move on to program 2.8, Australian Defence Force Headquarters. Senator Gallacher, do you have questions?

[09:08]

Senator GALLACHER: I don't think I have anything on 2.8.

CHAIR: That concludes examination of program 2.8; officials can be released. My thanks for that. We now move on to program 2.9, Capability, Acquisition and Sustainment.

[09:08]

Senator GALLACHER: Projects of Concern: do we have the appropriate people?

Senator Payne: We have Mr Gillis.

Mr Gillis : I will probably be calling Mr Greg Divall as well.

Senator GALLACHER: Can you confirm what projects are currently on the Projects of Concern list? The last published list was on 1 February.

Mr Gillis : Air 9000 Phase 2, the MRH, Multi-Role Helicopters

Senator GALLACHER: I've got phases 2, 4 and 6.

Mr Gillis : I am sorry. It's 2, 4 and 6; you are correct. JP2008 Phase 3F; AIR5431 Phase 3, the Civil Military Air Traffic Management and Control Systemsome of these are under consideration for removaland AIR5431 Phase 1, the Deployable Defence Air Traffic Control and Management System.

Senator GALLACHER: So that's the four that I've got?

Mr Gillis : Yes.

Senator GALLACHER: Has JP208 Phase 3F been removed or moved off? Has there been an announcement to that effect?

Mr Gillis : No, not that I'm aware of. We have signed a deed of settlement with BAE. That has now been remediated from a Project of Concern level but, at this stage, it's under consideration. It's one of those stages where we're close to the end but there are still some aspects that we need to finalise.

Senator GALLACHER: So there are no additions to the list, and JP208 is sort of in resolution, is it?

Mr Gillis : Yes, it's in resolution. We've signed a deed with BAE which partially removes some of the requirements and there's a significant reduction in cost.

Senator GALLACHER: So, if we go to the AIR900 Phases 2, 4 and 6, the MRH 90 Multi-Role Helicopters, Mr Fairweather stated that he was expecting to get final feedback on the Electronic Warfare Self Protection suite before the middle of the year. We're now in May. Is there any movement there?

Mr Fairweather : Yes. The testing into the electronic warfare support system has been undertaken and completed. The report has been written. The capability managers are now reviewing that report to understand whether the capability will meet the contemporary threat levels. The indications are positive so far on that report. That's due to be finished in June or July, when we can make a final determination.

Senator GALLACHER: To understand this issue, is it right to say that the OCM2, the Operational Capability Maritime, is dependent on the outcome of this testing?

Mr Fairweather : That's one of the outcomes. There are some other issues, one of which is the new hook for the aircraft that is being developed by industry so it can lift NATO-standard loads on embarked vessels.

Senator GALLACHER: What does the new hook do; does it restrain it or does it use the carrier

Mr Fairweather : It's for underneath the helicopters for lifting external loads, particularly in port onto ships where the hook needs to be able to work with NATO-standard slings for our NATO partners.

Senator GALLACHER: So we're expecting the clearance, if you like, for want of a better word, in June or July?

Mr Fairweather : The EW system will be June or July. The hook is going to go into quarter 1 or quarter 2 next year. That's the point at which we should be able to remove it off the list.

Senator GALLACHER: From the layman's perspective, the Operational Capability Maritimedoes that mean that it's restricted to flying off vessels?

Mr Fairweather : No, it's not currently. If they're going to lift loads, it takes a little bit longer in how they lift the loads.

Senator GALLACHER: It's still operational

Mr Fairweather : The hook is a little bit more difficult to use on a ship.

Senator GALLACHER: So the testing has been completed and a report has been written?

Mr Fairweather : The report has been written and it's being reviewed by the capability managers.

Senator GALLACHER: Are you able to say what the outcome of the testing was?

Mr Fairweather : Yes. It meets the design standard of the aircraft at the time of contract and it meets the contemporary threats. It's quite technical and a lot of it is somewhat classified in its outcome.

Senator GALLACHER: What does this Project of Concern mean for Navy in operational terms?

Vice Adm. Barrett : Senator, you'll appreciate that I was released last night, but I was curious and still here, so I'll attend. Mr Fairweather indicated that there are two issues that Navy is dealing with at the moment. One of them is the electronic warfare self-protection. My office at the moment is reviewing that report that has been sent after the tests; we will look at that. It's important to note that the equipment was bought for a contemporary threat several years ago. We are reviewing its suitability in the current threat piece, but I am confident at this stage that in terms of OCM we will be able to accept that.

The issue with the hook: there is a procedure that we put in place to continue to meet the requirements that Navy needs, but that procedure does increase a level of risk on those operating it. So we do seek to have a final solution with the hook, which is being worked by Mr Fairweather's team at the moment. So, in terms of operational limitations, there are some and they are being managed. If I can indicate, we have five MRH embarked in HMAS Canberra today off the coast on its way to Queensland. So we are able to get on with the job, but we are placing some limitations that we have to manage through procedures that I would like to remove by getting the final outcome of the hook sorted.

Senator GALLACHER: From a layman's perspective, do the problems with the hook limit the ability to carry load? Is it in weather or is it in

Vice Adm. Barrett : No. It's the methodology by which you hook up. In effect, you have to put more emphasis on the aircrew men to be able to manage and monitor the load, something that the aircraft itself should be able to do with the hook but can't currently do.

Senator GALLACHER: Is the risk to equipment or people, or both?

Vice Adm. Barrett : Mainly to the people that are operating it. I want to be cautious. The risk is not to human life et cetera; it's just in terms of our ability to operate it safely and successfully. The procedures we have in place allow us to do that, but it is an unnecessary inconvenience that we should seek to do that when the hook should be able to do that itself.

Senator GALLACHER: We're looking forward to resolution in June-July. Is that the expectation with this?

Vice Adm. Barrett : For the EWSP, the electronic self-protection, but the hook will take a little longer because it is a design aspect that has to be looked at by the original equipment manufacturer and the aircraft manufacturer itself and that work is still underway.

Senator GALLACHER: When you say a little more time, is that another six months or a year?

Vice Adm. Barrett : I'll ask Mr Fairweather to brief us on that.

Mr Fairweather : As I said earlier, it's likely to be into quarter 2 of next year by the time that hook is resolved. There are some quite technically difficult issues with the hook having to manage very light loads up to very heavy loads and be able to release.

Senator GALLACHER: If we go to the civil air traffic management system, OneSKY, who's the expert on that?

Mr Gillis : Mr Ivan Zlabur is the first assistant secretary.

Senator GALLACHER: Can we get an update on this project?

Mr Zlabur : It's a project, as you know, to deliver a harmonised civil and military air traffic management system servicing the needs of both the Australian Defence Force and the civilian community. A contract was signed by Airservices with Thales Australia on 22 February and the work is progressing in terms of design.

Senator GALLACHER: It's 28 months behind schedule; is that correct?

Mr Zlabur : Negotiations began in late 2013, so that sounds about right.

Senator GALLACHER: It's had a significant real cost increase?

Mr Zlabur : A government approved real cost increase of $243 million over the Air 5431 phase 3 budget.

Senator GALLACHER: There are media reports saying that capability has been reduced despite the fact that you're paying more money.

Mr Gillis : I think that's appropriate for the Chief of Air Force to answer.

Air Marshal Davies : Throughout the 5431 phase 3 program we've been working with Airservices to deliver an overall air traffic management system for Australia. That, of course, required some consideration of all of the elements in 5431 phase 3, but I'm quite confident that the outcome we have arrived at will provide exactly what we set out to do without any loss of capability.

Senator GALLACHER: Does it involve removing Defence air traffic controllers from Townsville and Darwin and places like that?

Air Marshal Davies : Yes. The current proposal would have the approach elements of both Darwin and Townsville consolidated into a Brisbane control centre. The tower remains in Darwin and Townsville.

Vice Adm. Griggs : It's not the removal of all air traffic controllers in Townsville and Darwin; just the approach.

Senator GALLACHER: I'm sorry?

Senator Payne: There's a difference.

Air Marshal Davies : There are, effectively, simply two elements to the air traffic control systemthat is, in close to the airfield itself, managed by the air traffic control tower, which you would see as you approach most airfields, and then inside a room below that tower in a separate room without windows, as I think was mentioned during estimates yesterday, there are approach controllers; they do the extended range from that airfield. So, in effect, in a modern air traffic management system, regarding the location of the approach controllersthose that use radar to control the aircraft, not visualit doesn't matter where you sit. So, from us, it is quite appropriate to make the comment that there is no capability loss having the approach controllers in Brisbane, Darwin and Townsville. In fact, the air traffic approach system here in Canberra is controlled from Melbourne.

Senator GALLACHER: I understand how it works, but that's not what you originally planned. This is a project that's 28 months late, has had an additional $242 million put into it and the straight-out allegation is that the capability that you wanted has been reduced in the funding envelope.

Air Marshal Davies : No. I would offer that the situation is not loss of air traffic control capability. This was not the preferred Air Force solution at the beginning of the OneSKY project. But that was based not on air traffic control; it was based on what those air traffic control members would do on base. There was an attempt by me, by Air Force, by Defence, to keep that in play for as long as we could. But, in order to make the project successful, we chose to accept that there would be a modest difference on base in that the air traffic controllers would do roles other than performing air traffic services and that compromise, I think, is a valid one.

Senator KITCHING: I'm on page 125 of the budget measures. It says at the end of the second paragraph: Additionally, contract changes to reflect the agreed de-scoping options will be implemented before the end of 2018.

So they are those changes?

Air Marshal Davies : That's correct.

Senator GALLACHER: Is that the extent of the changes? Is that the totality of the descoping?

Air Marshal Davies : During the conversations with Airservices and Defence and the negotiation with Thales Australia there were other modifications, if you like, from the original design from a Defence perspective. But they are, I would say, relatively minor, and I could give you an example. Let's take RAAF base Amberley as an example. Our preference would be at times to have 12I think it was 12; I'll correct that if I need toconsoles which would allow us to have one more trainee at that console during a particular time. We said, 'What would that cost?' If that cost balance was not valid then we've had to make it 11 stations instead of 12. That's the dimension of the changes during the progress; they're not significant in terms of capability output.

Senator GALLACHER: Is anybody able to identify why the $242 million was required to be injected? Was it simply that whoever started it got it 50 per cent wrong?

Mr Zlabur : The $243 million has a number of components. Because of the delays experienced in the project, $33 million has been allocated to the service life extension to the existing air traffic management system. There was an allocation to the estate and infrastructure group to adjust

Senator GALLACHER: So, if it's 21 months late, the project is not going to come on until two years and a bit later. So you are saying that to maintain the status quo it is costing another $33 million?

Mr Zlabur : $33 million to extend the life of the existing air traffic management system.

Senator GALLACHER: That's directly as a result of this being 28 months too slow?

Mr Zlabur : I believe that's the case.

Senator GALLACHER: So that's $33 million.

Mr Zlabur : Yes. Of that $243 million, $56 million is contingency, which really won't be drawn upon unless we have a contingent event, and the rest is $187 million in cash, which has been disburseda componenton the supply agreement that we have with Airservices for the common component of the CMATS. An allocation has been made to the estate and infrastructure group for facilities work, a component to CIO group for the ICT and networking aspects of the ADF portion of the project and a modest addition to the Air Force cost components.

Senator GALLACHER: I understand how Airservices collects its fees to operate and I understand that it provides a very safe service for international and domestic carriers, the private sector. What's the relationship with Defence? How do you characterise your spend here? It just seems to me that the organisation does this in the private sector as a government business enterprise but, when it interacts with Defence, you end up being 28 months late and $240 million out of budget. Is that an acceptable position, Minister?

Senator Payne: The matter has been canvassed at length, as you know, in the Airservices context, and they are the lead on this project.

Senator GALLACHER: There's no alternative. Defence has to deal with Airservices and you have to cop a 28-month delay and a $242 million additional expenditure.

Senator Payne: One of the things that we have been able to do in the period that is the result of the delay is some significant derisking work, which I would be very happy for the officials to discuss because it has been in the face of a delay at least a productive use of the time. Either Air Marshal Davies or Mr Gillis might like to go into some of that derisking work because I think that is important to have on the record.

Mr Gillis : We weren't idle for that period. Thales was tasked with doing a range of derisking work and, with respect to the technology, the interrelationship between the civil system and the military system. The other part of this is that Defence very early on put this on as a project of concern, which is a significant activity for us to do, and then we did not sign a contract until we had understood what the real cost was. This is not a real cost increase on the contracted price; this was a real cost increase prior to us actually signing the contract. So it's a real cost increase against our budget, not against the contract, because we did not sign a contract with Thales until such time as we derisked the range of activities and we fully understood the costs.

Senator Payne: Senator, you'd be aware that we don't take lightly the placing of a project of this nature on the projects of concern list, particularly before it goes into contract. That was a matter which enabled us to deliver a focus on some of the challenges associated with it and the challenges of the engagement with Airservices.

Mr Gillis : Of the, I think, 29 projects of concern we've had since 2008, it's the first time we've done this prior to a contract signature, so it was very significant.

Senator GALLACHER: How does the deployable Defence Air Traffic Management and Control System interact with this, or doesn't it?

Air Marshal Davies : Yes, it does interact. Phase 1 of 5431 will have the ability for us to deploy. If we want to conduct operations anywhere in Australia or with the permission of a regional country and put an air traffic system in, we need the ability to move that. It is totally integratable. It will provide that movable piece of air traffic management around Australia and the region, if required.

Senator GALLACHER: Is operation Pitch Black in the Northern Territory an example?

Air Marshal Davies : It is. It wouldn't go to Darwin or to Tindal. They already have fixed sites. But we could establish it at Delamere, if we wanted. We could establish it at Learmonth or at Curtin, yes.

Senator GALLACHER: And Shoalwater Bay and that sort of

Air Marshal Davies : Yes, indeed, Shoalwater Bay, if required.

Vice Adm. Griggs : And regionally, things like Aceh post the tsunami, for example, where we deployed air traffic control.

Senator GALLACHER: Why was that a project of concern?

Mr Gillis : The project is currently two years late against the initial material release and, we expect, one year late against final material release. We have only expended approximately 20 per cent of the contract and we put this onto a project of concern in August 2017. So again, with a very small number of projects of concern, this is one which we take very, very seriously because of its effect on Air Force capability.

Senator GALLACHER: It's just a delay in getting the capability, there's not a cost implication or

Mr Gillis : No. This is just, I would say, poor contractor performance, and it's as simple as that.

Senator GALLACHER: You know what you want, you've designed it and it's available but you just can't get it on the

Mr Gillis : Yes. I think the company involved has over-promised and under-delivered.

Senator GALLACHER: But you are confident that that is on track?

Mr Gillis : We are going to have a summit in the next month or so with that particular company, which will involve the ministers. And I know that Mr Zlabur's team pays very close attention to their performance. But as I said, we're confident that we will only be two years late in respect of its initial material release.

Senator GALLACHER: What's its capability? If we live in this cyber unsecure world and someone's able to take down OneSKY, would this be able to get a place up and going?

Mr Gillis : The fundamental answer is yes, except in the conversation from yesterday's estimates. We have built a layer of cyber resilience into our systems. But to answer your question, should we have an issue at a particular base or locationand this would go to not just military but to civilian; this is a single systemwe would be able to use the deployable system to fill that gap.

Senator GALLACHER: For civilian and military air space specs?

Mr Gillis : That is correct.

Vice Adm. Griggs : I am just saying: in a localised sense around a particular airport.

Senator GALLACHER: But as we consolidate under OneSKY, if the world goes pear-shaped, there is an ability to deploy this system?

Air Marshal Davies : That is correct.

Senator GALLACHER: In a location?

Vice Adm. Griggs : In a location.

Senator KITCHING: Could I just ask about intellectual property. Who is going to own the intellectual property at the end?

Mr Zlabur : I'm going to take that on notice. But I believe if we talk in terms of foreground intellectual property and background, we would either own or fully license the use of the foreground as well as the background. We would license the background. The company would own the background.

Senator KITCHING: Because this is the first time this has been done where a civilian and a military air traffic control system

Mr Gillis : Are you talking about CMATS or are you talking about the mobile air traffic management system?

Senator Payne: It's two projects.

Senator KITCHING: Yes, but on both of those, tell me: who owns the intellectual property on CMATS and then on the deployable? Is it both the same? Is it the same answer?

Mr Gillis : It is probably easier if we take that on notice because it is a very specific question, and I want to make sure I give you an accurate answer in respect of the legal position in respect to that. But I know that we do have licences. With CMATS the prime contractor, the organisation is Airservices. So I want to make sure that I am not answering on behalf of Airservices.

Senator KITCHING: No, that's fine.

Senator GALLACHER: That has been traversed, the length of the intellectual property argument. Perhaps in addition to who owns it, is there any prospective income arising out of that ownership?

Senator KITCHING: Yes, that's where I am going.

Mr Gillis : I will have to take that on notice and I will get you a specific answer, because I have to draw back onto the contract.

Senator KITCHING: Thank you.

Senator GALLACHER: Thank you.

CHAIR: Senator Patrick.

Senator PATRICK: I have a couple of questions. Can I go to the F-35. I would like to table a document . The witnesses and I can refer to part of the document.

Senator Payne: What's the document?

Senator PATRICK: It's an extract from a congressional report.

Senator Payne: What's its date?

Senator PATRICK: 2018.

Senator Payne: That's a significant advance on 1963!

Senator PATRICK: You know how engineering doesn't change a lot. We still rely on a lot of things that Einstein did, and a lot of things in physics don't change.

Senator Payne: This is true. I can't believe technology has advanced

CHAIR: Senator Patrick, the committee is happy for that to be tabled.

Senator PATRICK: Thank you.

CHAIR: It has been circulated now to the witnesses.

Senator PATRICK: This is a bit buried in a congressional report dealing with appropriations. There's a comment in here, and it's at the top of the page that I've given you. It says:

The committee notes that the aircraft carrier air wing has been optimised for striking power and sortie generation and believes it may not be configured to support the long-range strike required by current and future threat systems. While the introduction of the F35C will significantly expand stealth capability, the F35 could require increased range to address necessary targets.

And then it goes on to talk about perhaps the need to get a stealth tanker to enable the aircraft to have the reach that is required. Of course range is always something we talk about here in Australia. I just wonder if you could make a comment in respect of the rangeI think the advertised range of the F-35 is about 1,200 nautical milesand whether or not we're satisfied with the performance in respect of range and whether or not that has an impact on Australia's operations.

Air Marshal Davies : Yes, we are very comfortable with the range of the F-35A that we are buying. The Navy here are talking about F-35C, and that is the carrier variant, of course. The point here, I think, is that the US Navy are using their aircraft as a maritime component of an overall effect. The aircraft carriers themselves move. That is part of their dimension. So they have an opportunity to be in the place of their choosing. We have an F-35A model, as the Australian acquisition, and the evolving nature of air combat, both offensive and defensive, means that with the KC-30 tanker and use of coalition tankers, our ability to have an effect with the F-35 remains viable.

Senator PATRICK: The V-style version has a much shorter range, is that essentially what you're saying?

Air Marshal Davies : There are three variants: the A model, which is conventional, and that's the variant we're getting; the B model is the short take-off-vertical-land version; and the C model is the heavier undercarriage, slightly different wing, to allow a lower take-off and approach speed for carrier operations.

Senator PATRICK: Is there a big range difference between those three variants?

Air Marshal Davies : Yes there is, in that the C model has a slightly longer range because it has a slightly bigger wing; therefore it can carry more fuel. The B STOVL uses more fuel to do its take-off and land, therefore has a shorter range, and it has the vertical lift engine which changes the internals. The A model is our variantI'll get the numbers if you need thembut we have a range that's in excess of the current F18 range.

Senator PATRICK: I think that point might have been made here. Just to be clear, you're not concerned about the range, it meets the requirements and there's no need for a stealth tanker in the context of Australian operations?

Air Marshal Davies : There is no need for a stealth tanker at this point. I'm not saying 'never need one'. As an aviator I would be pushing for every opportunity I could get.

Senator PATRICK: Moving to spare parts, there have been some reports in the media about shortages of spares for our F-35s. I think we've got four of them now, haven't we?

Air Marshal Davies : Five.

Senator PATRICK: Five?

Air Marshal Davies : The sixth just arrived.

Senator PATRICK: Sorry?

Air Marshal Davies : We've got six now.

Senator PATRICK: There are reports about concerns in relation to spares shortages. Can you perhaps either put that issue to bed or spell out whether there are concerns and what we might be doing about it?

Air Vice-Marshal Gordon : There have been a number of reviews into the spare parts situation on the F-35s undertaken by the US government audit office, the GAO, and those reports have been publicised. We have talked about them at a number of previous hearings of this committee. The F-35 enterprise has come up with a number of strategies to address the spare parts availability for the F-35, including things such as standing up the depot capabilities for the spares, where unserviceable spares get repaired, looking at the rate at which they buy the spares, rather than buying the spares later with aircraft buys, actually making it independent and buying the spares earlier, and a number of reform activities like that. They're progressing through the implementation of those reforms, and the forecast from the F-35 enterprise at this stage is that those remediations should be in place and delivering effects by 2019.

If we look at the actual performance of aircraft, though, within the fleet, we're seeing that the two LO6 aircraft that we have been operating since 2014, I think it is, have been performing quite well. Their availability has been good. Indeed the LO10 aircraft, which is the last four that we've received most recently, have been performing particularly well and achieving availabilities up around the 75 per cent figure, which I think US Admiral Winter, the program executive officer, briefed Congress on recently in his testimony.

So we're certainly keeping our eye on spare parts availability. We're particularly keen to ensure that there are no key items that could impact our operations in Australia when we return the aircraft to Australia and do our work-up over the next couple of years.

Senator PATRICK: Vice Admiral Griggs is wading into Air Force territory. The Coles review would be instructive in that context. The Navy initially had that problem with Collins class submarines, and they learnt a lot during that Coles review, and I believe they've solved that problem now, haven't they?

Vice Adm. Griggs : Yes.

Senator PATRICK: On IP concerns, I seem to recall it might have been the government audit office in the US was concerned about ownership. In fact, it might have been Lieutenant General Bogdan. He at one stage went public and said that had he had his time over again he would have negotiated the contract differently in respect of intellectual property. Are we still captured by the IP rights of Lockheed Martin in relation to sustainment?

Air Vice-Marshal Gordon : I think 'captured' is a strong word. We are certainly reliant on the IP provisions that the US has established through their contracts with the OEMs. But that isn't an area where the US is sitting idle. If you think about the fact that there have been a little over 300 F-35s delivered to date of a fleet of potentially over 3,000, there still is a fair degree of negotiation to occur on those follow-on purchases and certainly the program as a whole, and that's an area that the US program office is working actively on to ensure that we have the appropriate IP provisions to allow us to operate as we want to operate across the life of the platform.

Senator PATRICK: So we're leveraging off the US's buying power and them addressing the problem themselves, which would seem to make sense?

Air Vice-Marshal Gordon : Yes, for the procurements that we do through the US joint program office, that's correct.

Senator PATRICK: Is there an additional bit that then translates to Australia such that Australian companies could potentially have access to the IP to conduct repairs and sustainment operations locally?

Air Vice - Marshal Gordon : Yes, that's the piece for the global support system that the US are establishing for the F-35. The F-35 enterprise will see these components around the regions: there is an Asia-Pacific region, there's a European region and there's a continental-US region. In each of those instances it is important that the intellectual property flows to the repair venues. I don't see any difficulty with that occurring for the stand-up of the GSS.

Senator PATRICK: Except maybe ITAR's restrictions. They are quite cumbersome.

Air Vice- Marshal Gordon : We have currently got a response in to the next round of the component Maintenance, Repair, Overhaul and UpgradeMRO&Usolicitation out of the JPO. I do not expect there will be any difficulties with the intellectual property flowing from the equipment OEMs to those repair venues to undertake that work for the companies where Australia is successful in assignment.

Mr Gillis : So far Australia industry has won over 90 per cent of the competitions in the region that it's competed for. We're achieving amazing numbers in Australian industry capability there. So far we haven't struck any problems with ITAR or with IP exchange.

Senator PATRICK: Thank you.

Senator Payne: Vice Admiral Winterwho is now the head of the program, having succeeded General Bogdan, whom I met 10 days ago, from memoryis also very keen to facilitate engagement on these key issues, as is Secretary Mattis.

Senator PATRICK: Thank you, Minister. Can you give me some details on the F-35 sale to Canada?

Air Vice- Marshal Gordon : As far as I'm aware, the Canadian government are conducting a competition for a replacement for their fleet of classic Hornets. The F-35 is one of the contenders. I can't recall exactly when they're expected to make their decision, but as we sit here today Canada is still a member of the cooperative program. They participate in meetings such as the Joint Strike Fighter Executive Steering Board. They have Canadian personnel within Washington DC as part of the program. I guess their position is to continue in the program and procure aircraft if government makes that decision.

Senator PATRICK: Sorry; I should have said F-18.

Senator Payne: You didn't mean their purchase of F-35syou meant their purchase of our F-18s?

Senator PATRICK: Yes, I made a mistake.

Senator Payne: Because both are a possible question.

Senator PATRICK: Yes. My apologies. The answer is revealed. I mucked that up. I meant the F-18.

Air Marshal Davies : The Canadian government submitted an expression of interest in September of last year for us to consider. In February this year they extended that to include some spares and software testing articles. We are going through a normal process through CASG disposals to be able to provide the Canadian government with aircraft to meet their request as we begin to divest our classic F-18s as we transition to F-35.

Senator PATRICK: We propose a price to them and they may or may not accept thatis that how it works?

Air Marshal Davies : I am not part of the CASG disposal system, but that is effectively the case. We've said that as our aircraft become available we would go through a negotiation process through CASG to then make aircraft and spares available.

Air Vice- Marshal Roberts : We provided a letter of cost proposal in December last year for 18 aircraft and spares to Canada. So we put a proposal through our disposals area to them and agree on a sale price and scope with them.

Senator PATRICK: When is it likely for them to pick up that offer?

Air Vice- Marshal Roberts : They accepted our offer in December last year, but they have also put in a further request for some seven aircraft for system testing, training and spares.

Senator PATRICK: So how much do we get per aircraft?

Air Vice- Marshal Roberts : I'd have to take that on notice in terms of the actual price per aircraft. It is a general offer. It's not done per aircraft. But I can take that on notice and get back you to on the actual cost that we agreed with Canada.

Senator PATRICK: That would be appreciated. Can I move to some Army stuff now? Ration packs is one topic. Major General Coghlan, you're the person to ask this, I presume. How are we going with the ration packs, following the conversation with Senator Carr and Senator Xenophon in the previous estimates? Has that tender been finalised?

Major Gen. Coghlan : It has.

Senator PATRICK: And the outcome was?

Major Gen. Coghlan : The requesting tender was released in September 2016 for a prime contractor. On 29 January this year we signed a contract with a New Zealand company, Prepack, for the supply of combat ration packs and ancillaries for the Australian Defence Force. Prepack's tender was the most technically compliant, the best value for money and the lowest risk to continuity of supply. The tender activity complied with the Commonwealth Procurement Rules and specifically Australia-New Zealand trade agreements that require the Commonwealth to consider Australian and New Zealand suppliers equally.

Senator PATRICK: Last year you provided on notice a listing of the content of the old ration packs and the country of origin for the supplies within it. Can you do the same thing for the new ration packs?

Major Gen. Coghlan : I can. The component had not really changed because they are the same contractor, and they will vary. But I can table that todayas an example, our ration One Man C.

Senator PATRICK: Thank you. From ration packs to vehicles, and Land 400 Phase 2. It has been announced that Rheinmetall has won that tender: 211 vehicles; is that right?

Major Gen. Coghlan : That's correct.

Senator PATRICK: I'm wondering about the antitank missile that will be fitted to that vehicle. I believe there was a competition between Rafael andI have to say this carefullyMBDA. Has a decision been made in respect of the antitank missile?

Major Gen. Coghlan : The acquisition strategy for Phase 2 was that subsystems could be presented to the two primes, being BAE and Rheinmetall, and in their tender they would then advance their selection. Both Rheinmetall and BAE selected the Spike.

Senator PATRICK: Spike is the Rafael.

Major Gen. Coghlan : It is. We were happy with that decision. Our DSTG did an independent study. Land Systems Division looked at it. We made a recommendation to the capability manager that accepted the Spike.

Senator PATRICK: So Spike has won the contract?

Major Gen. Coghlan : They are a subsystem provider to Rheinmetall. So they tender to Rheinmetall. We are currently in negotiation with Rheinmetall in Phase 2, so I prefer not to go into too much more detail.

Senator PATRICK: Sure. In effect, you have a final say over the selection of the weaponry and other components on the vehicle? Obviously, there's a tender.

Major Gen. Coghlan : I do not. The capability manager and then government have the final say. The ATGM was one of multiple subsystems. We put out a specification requirement for key subsystems. We then undertook an independent review to make sure that we were a well-informed purchaser. In this case we were happy.

Senator PATRICK: Fantastic. I would like to move now to one question on Navy relating to an article that appeared in the papers at the start of May about nepotism in the submarine project. Can someone help me with that?

Mr Gillis : We have Mr Johnston.

Senator PATRICK: Perfect.

Senator Payne: And Chief of Navy.

Vice Adm. Barrett : I am not actually aware of that article. Is there a copy we may be able to see?

Senator PATRICK: Yes, I can table that.

CHAIR: We will get copies of this; it was from the Sydney Morning Herald on Friday, 4 May this year.

Senator Payne: We did discuss this in part yesterday, Madam Chair.

CHAIR: I thought you did, but I think it was Senator Carr who raised that yesterday.

Senator PATRICK: If it has been traversed, then please let me know.

CHAIR: Just ask your questions and if they have already been asked and answered perhaps the people on the floor will refer you through to the answer.

Senator PATRICK: In the article, a Defence spokesman said that the department was taking 'quick initial action'. I'm wondering what that might have entailed.

Mr Gillis : We did discuss all of that with the DSTG issues. Ms Skinner provided a range of responses, so they'll all be in Hansard.

Senator PATRICK: Thank you. That's fine. I am sorry I missed that. I have a question for you, Mr Gillis, about sustainment and sustainment costs.

CHAIR: Can I just clarify for the officials that you won't traverse that article again, that you'll go back to Hansard?

Senator PATRICK: Yes; I am happy to do that. Mr Gillis, in relation to sustainment costs, I was reading through ASPI's 'Cost of Defence' publicationI am sure you are familiar with that. Page 33 of that report raises a concern about the cost pressures on sustainment for Defence and indicates that Defence is underestimating some of the sustainment costs in its procurement processes. This matter has been raised by Rizzo in the past and by Coles. Indeed, the ANAO has done some reviews on material sustainment for CASG. I would like to give you an opportunity to perhaps put on record where you feel you are sitting in terms of estimating sustainment costs for new acquisitions. I note what you told Senator Carr yesterday in respect of the OPV.

Mr Gillis : The senator and I disagreed with the Audit Office assessment of the OPV sustainment assessment. There has been some history of some poor estimation in sustainment. That's going back historically. One of the things we've done much better is that at the investment committee we have the Department of Finance as a permanent member there. The Department of Finance is reviewing both our acquisition decisions as a partner in that acquisition decision and in the cost of sustainment. Recently the Vice Chief of the Defence Force, who is the chair of the investment committee, undertook a fairly comprehensive review of sustainment costs across all three services, which my senior leaders, the capability managers, supported. If you can give me some specifics I can answer those.

Senator PATRICK: You mentioned yesterday that parametric models were used.

Mr Gillis : Yes.

Senator PATRICK: As you know, I come from defence industries and we used to use a simple multiplier. Is there some sort of guideline you'd use to do a sanity check on any estimations that you would come up with?

Mr Gillis : We are moving to looking at historical parametric estimates to make sure that the estimates that we use are consistent with historical trends. As you would know, as we develop new capabilities cost structures can change due to the nature of the new technologies. I think we're suffering some of that on our helicopter fleets. As we move from old helicopters into very modern helicopters there is a differential in cost. We have now remediated that through additional funding for those.

Senator PATRICK: So, as a general principle, you would argue that the cost of sustainment is rising because of the technological advances?

Mr Gillis : In some areas. In some areas it's reducing because of the nature of the sustainment cost. For example, with ACA radar, we would find that the sustainment cost on that was some 20 or 30 per cent of what traditional radar was costing, because we're moving from a moving rotating radar to fixed phased arrays, and we're very pleased with the cost of the sustainment in that platform. On some platforms there are some aspects where sustainment costs are going down and some aspects where sustainment costs are going higher.

Senator PATRICK: I note on the OPV we've got something like a $3.5 billion spend. The answer you provided Senator Carr was seven to 11. That indicates the sort of band that I'm familiar with. Typically, as a sanity check you'd have something like times two at least for the through-life sustainment of a project. Would that be fair?

Mr Gillis : It varies across a whole range of aspects. With some the sustainment cost is less than the acquisition; sometimes it's higher than the acquisition. It just depends on the platform.

Senator PATRICK: Yesterday Admiral Sammut mentioned a figure of $50 billion for sustainment for the future submarine project. Just on my own experienceand I have read some stuff on these ratios of acquisition to sustainment coststhat seems to be very optimistic in that you've got a $50 billion acquisition. It's a very, very complicated project. Future submarines are very, very complex. Noting what we did with Coles, we underestimated at the start. Do you have any knowledge of how that estimate of $50 billion came about?

Mr Gillis : You'd have to ask Admiral Sammut. Regarding sustainment, we were discussing yesterday that the effect of outturning over a 20- or 30-year period is significant. The effect of outturning on a project on a vessel, the last of which may be in operation in 50-plus years time, is even more significant. That's one of the reasons why you've got to be careful of constant dollars or outturn dollars; it's the life of that. So for something that's occurring in, for example, 50 years time, the $1 value might be worth $2 to $3, but in real terms it's the same dollar. Because the GDP of the country has increased and the cost of living has increased, it is a duration issue. That's one of the biggest drivers to that multiplier effect.

Senator PATRICK: Sure. As long as you quote outturn dollars, which is what you do in your investment plan, which is why I was referencing that yesterday, I think everyone is safe. Can I ask you, on noticenoting it's a very significant amountto provide the background to that estimate? I'm presuming there's some report

Mr Gillis : I'll take that on notice.

Senator PATRICK: and some detailed calculations; so not an answer but whatever report that Admiral Sammut has that grounds that number.

Mr Gillis : I will take that on notice.

Senator PATRICK: I imagine it wouldn't be classified. It would simply be observing past

Mr Gillis : I'd have to take that on notice. One of the things I don't do is get into the detail of every project at that level. I rely on my senior officers to provide those types of answers.

Senator PATRICK: That's appreciated. Thank you very much, Mr Gillis. Thank you, Chair.

Vice Adm. Griggs : Chair, could I just add?

CHAIR: Yes.

Vice Adm. Griggs : I think the other point that needs to be madeand I know it's an issue that both Admiral Johnson and Admiral Sammut are very much focused on at the momentis about designing for sustainment. There are the issues that Mr Gillis talked about. I think one of the key lessons out of Collinsand you would know this wellis that the back end of the boat was not designed to be easily sustained, and built in were a whole bunch of costs in terms of how full-cycle dockings, for example, were conducted. I know that it's a really big focus from the SEA1000 team to make sure that as this boat is designed it's designed to be sustained in a much more efficient manner.

Senator PATRICK: That's a very good point.

Mr Gillis : An example, post Coles, was the provision of a removable hatch in Collins so that you could access the Hedemora engines, remove the main motors and do land based testing. Those things have significantly reduced the full-cycle docking period now to world's best practice and a significant reduction in cost. Those things are being designed into the next generation submarine.

Senator PATRICK: I thank either the finance minister or the defence minister, or both, who allowed me to go down to ASC and have a look at that, and they did talk a lot about that. Thank you very much.

CHAIR: Thank you. Just before we move on from this program I've got a couple of questions on projects of concern. Listening to the discussion on some of the projects makes me reflect that quite often it's easy for us to focus on what's not going right. I'm just wondering if you could tell me a bit more about the success of the projects of concern regime, because it's very clear that it has been a very successful program. Can you give us your reflections on the program; what can we learn from it?

Mr Gillis : I was in the then DMO in 2008 when projects of concern was implemented by the then minister. I was apprehensive about it, as an acquisition officiala new ministerial engagement in every issue at that stage. In the last 10 yearswe are now at the 10-year period25 projects have been listed on the projects of concern list at a value totalling $32.3 billion; 19 projects were remediated, valued at $26.4 billion; and four projects are currently on the list. So that's actually the smallest since the inception of the project, which is a credit to both my team, Army, Navy, Air Force capability management, and industry, who have worked collaboratively with us. Two projects of concern at a total value of $1 billion were actually cancelled. One of the things with this process is that where projects are going to fail we undertake the process of cancelling and terminating them as early as we practically can.

CHAIR: So you don't throw good taxpayers' money after bad projects?

Mr Gillis : Absolutely. Having been an industry CEOand when I took over an industry CEO role with five of themI actually valued it. It's an unusual thing to say but, as an industry CEO, having an item on a project of concern and having direct ministerial engagement is actually helpful. I think it improves

CHAIR: It sharpens one's attention.

Mr Gillis : It sharpens one's focus, and a regular meeting with a minister can't hurt.

CHAIR: What are the key outtakes of this? You said you've dealt with 25 of them and there are only four on the list now. Are you finding that it's also helping projects that could be in peril of going on the list by taking early remedial action, proactively?

Mr Gillis : We also have projects of interest. In other words, those are the candidates that we're looking at that could potentially go on the list, and that's provided in my regular projects of concern updates. Industry is very, very focused and does not want to get onto this list. Even an indication that we would consider them going on is enough for them to take very immediate action. So it's a very positive thing. We also regularly take lessons learnt out of these activities. Working with ASPI, we're undertaking a series of lessons learnt publications. The first one is on the Anti-Ship Missile Defence program, which for a period of time was on projects of concern. That's probably the process that saved that, which has now given us one of the most advanced anti-ship missile capabilities in the world.

CHAIR: Yesterday we talked a lot about the shipbuilding program and the ANAO report. In terms of both of these programs, the fact of their existence and some of the lessons learnt, will they also be of assistance in the longer term to assist in keeping the naval projects on track?

Mr Gillis : I think very much so. I think the fact that so much oversightministerial oversight, Defence oversightis taken means that we do learn those lessons, we document those lessons and we make sure that the next generation of project managers reads those lessons and actually implements the changes, and changes processes.

In the last three years we've undertaken one of the most significant increases in Defence acquisitions. To say that in future we will always stay at four or three projects of concern, I think, would be naive. My role manages a range of over 150 major projects. From a government perspective, you can't assume that all of those are going to run well. I think this process needs to be an ongoing, enduring activity of government, because it's one of those things which I think will save government money and mitigate risk significantly.

CHAIR: Having projects of interest will, hopefully, allow them to be caught much earlier before they go into projects of concern, and actually remediate them at that stage before they get to that crisis point?

Mr Gillis : That's exactly the issue where, once you get on projects of interest, they are usually indicated by my independent assurance reviews. I have external, very experienced, predominantly retired, people, who have lived this joy for 20 and 30 years, looking at all of our projects and indicating to me, the secretary and the CDF that these are the items which are problematic. They may not have occurred. We might not have had a slippage in either schedule or budget, but they are items which we should be paying close attention to. We advise those industry partners that they are now on a project of interest, which then could potentially lead to a project of concern, which then focuses their hearts and minds.

CHAIR: My last question on this: have you found internally within DMO, now CASG, that it's also creating a different culture? Instead of actually kicking the can along to somebody else or trying to hide it, it's actually a way of bringing it into the light and saying, 'We've got a problem here; let's fix it'? Has there been a cultural change? What is the process?

Mr Gillis : The cultural change and the most significant advantage of the projects of concern was that, historically, we sometimes got ourselves into an adversarial position with the company. We would hold a position and the company would hold a position and, surprisingly, we weren't able to come to a resolution. With the projects of concern and with ministerial oversight, on a regular basis both Defence and industry have to put their case to the ministers and explain it. I know that this particular minister questions equally the Defence position as well as the industry position: 'Why can't we get to a resolution?'

The significant outcome of the projects of concern process is that it forces industry and Defence to identify what the issues are, to develop a remediation plan and then measure themselves against that remediation plan, as well as the public oversight that we give in the projects of concern. We've just spoken about four projects here across the 140 in this place. That's what happens. The whole microscope comes on your activity, both from a Defence project and from an industry project. You want to get off as fast as you possibly can. There is the ultimate sanction that, if you are not actively remediating your projects, we will not give you future contracts. That is a big stick.

CHAIR: It's also not just domestically, I'd imagine, because companies cannot hide that from global customers either.

Mr Gillis : As I said, having been an industry CEO and having five of them, I think it was the one topic that I had with my American leaders. I know that with all the industry CEOs that are on the projects of concern, their international partners or their boardswhether they're Australian companies or internationalare very focused on being on the projects of concern.

CHAIR: In another committee the feedback we've had from industry, now being considered as a FIC, has been very warmly welcomed. Is another factor in this that they are now formally engaged as a fundamental input to capability? Has that been another factor in this?

Mr Gillis : I always actually say that industry has always been a fundamental input to capability. Now we have just formally recognised it. I think culturally, within my group within Defence, that's actually a really important cultural change, that we accept that the relationship between the Defence procurement staff and industry has to be that of a partnership because without that industry partnership we do not deliver capability to the war fighters. So the whole dialogue that we have between the procurement community and the industry community in the last two or three years has changed significantly. That's one of the most positive parts of the feedback that I've received.

Senator FAWCETT: If I can follow up on that, Mr Gillis, I've asked the CDF previously whether that change has flowed down to the level of the syllabus in staff courses so that we see not only your influence and the leadership pushing down but the enabling courses and doctrine of Defence pushing up so that industry now is a partner as opposed to somebody to be kept at arms length. Are you able to advise us as to whether you're aware that those changes have been made? Perhaps, Vice Admiral Griggs, are you able to advise us: have those changes been made?

Mr Gillis : I know on the technical trainingwhich I lecture at and my senior staff lecture atit is one of the opening comments that I make about how we need to operate with industry. I'll probably defer to the acting CDF in respect of the other broader syllabus.

Air Vice-Marshal McDonald : There are two modules both in the Australian Command and Staff Course and in CDSS, the senior course. In the senior course there's a module that lasts for four weeks, and, in the Command and Staff Course, the module lasts for three weeks, which takes it through the importance of industry as FIC. For the senior course, it takes them out to visit industry. We also have secondees from industry to the senior course that goes for a year long. In 2016 we had a member from KPMG. We haven't had anyone in the '17 or '18 course, although the offer has been there.

Senator FAWCETT: Given that a number of the posting cycles take people as either captains or majors or their equivalents in other services into what used to be KPP development and is now CASG, at that SO3-level staff training are those modules there so that right from a young age we're actually inculcating in the people the attitude that industry is a capability partner, not somebody to be kept at arms length?

Air Vice-Marshal McDonald : That is correct. We are pushing it down further to where it makes relevance. When you go to ADFA they talk about it, but it's not a module for delivery because it's too junior. But as you get further through the organisation it certainly comes to the fore, particularly when you come inside headquarters. On anything to do with capability development, it is imparted to the member the importance of embracing industry, understanding their drivers, both cost and risk, and working with them. And we do encourage personnel to go out and engage with industry.

I have had some industry partners that say we sometimes drive them a little insane with our engagement at a junior level. But I think that's important. They're very good. They do embrace it so that when they get to the more senior levels they've got a far better understanding.

Senator FAWCETT: Could I perhaps ask you then to take on notice: the first time in any training course, whether it's at ADFA or junior staff officer training, ADF members are introduced to the concept of fundamental inputs to capability? Could you come back and confirm to the committee that industry is now included in the syllabus, at whatever level it is first introduced?

Air Vice-Marshal McDonald : Formally at ACSC, Australian Command—

Senator FAWCETT: At ADFA?

Air Vice-Marshal McDonald : No.

Senator FAWCETT: At your junior levels?

Air Vice-Marshal McDonald : No, because it's not necessarily appropriate. Like I said, if we

Senator FAWCETT: I mean the concept of FICin industry, the concept of fundamental inputs to capability. So you're saying Command and Staff Course is the first time that's introduced?

Air Vice-Marshal McDonald : Formally, yes. I don't see it as a deficit. I understand your point, most definitely, but I don't see it as a deficit.

Senator FAWCETT: I've seen a lot of briefs written by majors and squadron leaders in the past that have flowed into the system that have very much pushed away industry. I perhaps encourage you to consider the level at which you want to start shaping that thinking, because it just doesn't happen with people who have graduated from Command and Staff College.

Air Vice-Marshal McDonald : I'd say, in the context of your comment there, the word 'past' would be relevant. I'd say now you won't see that to that level. It was definitely a culture in the past, because it was held at arms length. That's why in the past you saw that behaviour.

Senator GALLACHER: Now that you've opened this discussion, can I just ask, Mr Gillis, in regard to the four projects of concern, can we have the specific criteria for them being elevated to projects of concern? For example you said 'overpromised, underdelivered' and in another case it was a 'cost overrun and underdelivery'.

Mr Gillis : I can give you those specific criteria that were established.

Senator Payne: Take that on notice.

Mr Gillis : We will take that on notice.

CHAIR: I've got one final question in this program, and that's on the Smart Buyer program. I'm happy for you to take this on notice. But if you could give us maybe a quick snapshot now of how its implementation is going and on notice I'd like some information on how, going forward, you're going to assess the success of the Smart Buyer program in terms of metrics, because while it certainly makes senseand I think it's a very sensible approachwhat does success look like and how do we know that it's actually making a difference in terms of better capability and better efficiencies?

Mr Gillis : At every project that is presented to the investment committeeI mean every projectwhether it comes from an estate or an ICT or a material acquisition component, we undertake a Smart Buyer assessment. And all IC members look at that Smart Buyer assessment. My role, as the procurement adviser to the investment committee, is to look at the acquisition strategy and compare it to the risk profile that has been identified in the Smart Buyer, and are we applying best practice to the way in which we're actually undertaking the procurement?

An example is: I was sitting with the Chief of Army and there was a Smart Buyer assessment that said that this was a relatively low-risk procurement. The procurement strategy that was put forwardI also look at the number of staff and the cost of that staff over the period of the lifecycle of procurement and the strategydidn't make sense. So in one of the discussions I had with the Chief of Army at the time I said, 'Angus, look at the strategy here. Look at the assessment. Look at the cost here.' And we went back and, both from capability manager and acquisition, we went back and redesigned the entirety of the acquisition strategy to make sure that we got the best possible way of buying equipment. That was early on.

What we've got to do is inculcate that before they're actually providing that information to the investment committee. We're doing it top-down now. We've now got to get it bottom-up and inculcated into the whole of the system. We're at early days, but I'm seeing positive changes in the way people are actually thinking about the way in which they devise the acquisition strategy, because that actually has a direct effect on the cost of the acquisition and on the timeliness of an acquisition.

CHAIR: Mr Gillis, as I said, I and, I know, the committee are very supportive of this project because it clearly is a very good way of changing the way that we do expend public money on these projects from, as you said, now not from top-down but bottom-up. But, in terms of a committee that has oversight of the expenditure of Defence funds on these projects, how do we know what success looks like for the Smart Buyer program? That's why I come back to metrics. I know even from what you have said it can be a little challenging, because, if you're implementing measures up-front to save money, how do we know and how can we demonstrate that the project is actually realising savings and better capability?

Mr Gillis : Because, by doing a Smart Buyer assessment, an acquisition strategy, from its outset, which is the low-cost, smarter way of doing it, it's really hard then to just assume what would have been the dumb way of doing it. So it is a hard metric to undertake. But one of the things that we

CHAIR: Hard but not impossible?

Mr Gillis : No, not impossible, but it might have to be at the level of an order of magnitude rather than trying to get down to a specific definitive number metric.

CHAIR: Mr Gillis, would you mind taking that on notice? And, again, not in any way to be critical, but in terms of where you are going

Mr Gillis : I agree with you entirely.

CHAIR: If you could take that on notice. It is something we might explore with youperhaps not in the estimates forumbut if you can provide us some more information on that we might seek further briefings on that particular aspect.

Mr Gillis : As this is my last estimates, it will have to be my successor.

CHAIR: With your successor, Mr Gillis. Thank you very much. Are there any other questions for program 2.9? There being none, this might be an opportune time to take a slightly early morning tea break. We will resume at a quarter to 11 with program 2.10: estate and infrastructure. We are now suspended. Thank you.

Proceedings suspended from 10:25 to 10 : 45

CHAIR: Senator Gallacher.

Senator GALLACHER: Thank you, Chair. Mr Grzeskowiak, I have a number of questions, but I wanted to start with the 2012 Defence listing of 17 properties for disposal. According to paragraph 5.7 of the Australian National Audit report No. 34Defence’s implementation of the first principles reviewthis list has expanded to 32 properties. The Audit report notes that independent preliminary assessments have been made or are in the process of being made regarding disposal of these 32 properties. Is this implementation plan available publicly?

Mr Grzeskowiak : We've consistently said here that the 2012 report would not be released publicly. It contained information that was relevant at that time. It's a fairly aged report now. It contains information that, if it was released, could affect market conditions in certain areas and give intent of what was then Defence thinking.

It's fair to say that things have moved on since 2012. As part of the First Principles Review into Defence, as you've referenced, we've been looking at and continue to look at the future Defence estate profile. That work is ongoing. You'd be aware that there have been some announcements over the past few years about property disposals that the government have agreed tofor example, Leeuwin Barracks in Western Australia, Bulimba Barracks in Brisbane, Pontville in Tasmania and others. We keep under review the estate profile. We try and plan for the future and look to adjustments that we need to make over time. That's just an ongoing work in progress.

Senator GALLACHER: If we just examine that answer: the 2012 list was not made publicly available because of some commercial-in-confidence considerations or impact on property valuations? Is that what you are saying?

Mr Grzeskowiak : Yes, those sorts of things. Defence wouldn't normally give indications of what it was thinking ahead of any government agreement for property disposals. In regard to the First Principles Review, there was a recommendation that the 17 properties that were listed in that report, which the First Principles Review implementation team did have access to, should be disposed of. But the government, in considering the First Principles Review, noted that recommendation and agreed that disposals would be considered on a case-by-case basis. That is what has been happening since that time.

Senator GALLACHER: It's now 2018. How many of the 17 properties have been disposed of?

Mr Grzeskowiak : I'd have to take that on notice and have a close look. We've had decisions, for example on Leeuwin Barracks, that are publicly known. That's not yet disposed of, but it's going through the process at the moment. Bulimba Barracks I mentioned and Pontville in Tasmania.

Senator GALLACHER: So is the answer zero? What are you taking on notice? You only had 17 in 2012. You're the director of estate. I'm sure that it would be within your remit to tell us three, four, five or zero?

Mr Grzeskowiak : I wouldn't want to mislead. I think the answer is two of those 17, but I'd want to take that on notice.

Senator GALLACHER: Two, and the rest on notice. Do we know which ones they were, the two?

Mr Grzeskowiak : Again, I wouldn't want to mislead. I think Pontville would be one of those, but I'd want to

Senator Payne: Pontville in Tasmania.

Mr Grzeskowiak : Yes.

Senator GALLACHER: Pontville was the training base, wasn't it, that was turned into a refugee centre?

Mr Grzeskowiak : It was a former Army Reserve range and associated facilities, yes.

Senator GALLACHER: So we had 17 in 2012. We've got at least two that are in that list that have been disposed of, but 15 that are still under work. Does that mean that we've put 17 on top of the 15, or is it 15 on top of the 17?

Mr Grzeskowiak : The way I'd characterise it is that the 2012 list was of its day. Since then we've been looking at the future Defence estate profile again, following white paper 2016. We are evaluating across the estate where we think we need to be positioned for the future. While the 2012 list is an interesting reference and is of its timein fact, most of the work that led to that report was done in around 2010it's now a fairly dated list. It pre-dates the white paper. It's still available as a reference to us, but it's not our primary reference in terms of estate management looking forwards.

Senator GALLACHER: I think we're in furious agreement that there was a list in 2012 and there's still a list in 2018. What we're trying to get to the bottom of is what is on the list. If you've made a decision that they're for disposal, why can't you do it?

Mr Grzeskowiak : As I've said, following white paper considerations and the announcement of the 2016 white paper, that list is essentially now parked. Defence continues to look at its future estate profile, given the current strategic posture of the department. We use that list as a reference, but it's not, if you like, a bible that we're trying to implement. It's a reference from its time, and we will consider estate disposals or, indeed, acquisitions through government approvals, from time to time.

Senator GALLACHER: Can Defence provide a list of the 32 properties that you've earmarked for disposal?

Mr Grzeskowiak : Which 32 properties? Where does the 32 number come from, Senator?

Senator GALLACHER: The Audit report notes: 'Preliminary assessments have been made or are in the progress of being made regarding disposal options on these 32 properties.' So there was a 2012 list of 17, and now in the Audit report of Defence's Implementation of the First Principles Review this list has now expanded to 32 properties. Is that not correct? Has the Audit Office got that wrong?

Mr Grzeskowiak : I can take that on notice and provide a list of the various ongoing disposal activities that exist within the Defence estate at the moment. I think it might be worth me just characterising the 2012 report. That was really looking at what we might call more significant Defence bases. The list that you're referring to from the Audit report looks at all of the property disposal activities that are ongoing at the moment, or at that time, within the department. There are usually a number in progress.

Many of them refer to very small property adjustments, for a whole range of reasons. For example, in New South Wales at Orchard Hills we're talking to the New South Wales government about a slither of land being sold to the New South Wales government to facilitate the new Western Motorway that's being built out there. In other parts of the country we have similar issues going on at the moment with either small parcels of Defence land, as part of a base, or small parcels of land that we might own that are being disposed of.

For example, in this current financial year we've currently sold around $7.7 million worth of property. Most of those disposals were small parcels of land associated generally with sales to local authorities, occasionally private sales and occasionally moving land to the Defence Housing Authority. I can take it on notice to get a list of all of the property disposal actions that are underway in the department. The majority of those are very minor adjustments.

Senator GALLACHER: So you don't take on notice the wrong question. I'm very clearly asking: in the ANAO audit report No. 34Defence's Implementation of the First Principles Reviewthis list has expanded to 32 properties.

Mr Grzeskowiak : I'll take that on notice, Senator.

Senator GALLACHER: You are aware of that32 properties referred to by that Audit report?

Mr Grzeskowiak : I'm aware of the property disposal actions that we have ongoing, and I'll make sure we reference back to that Audit report for the response on notice.

Senator GALLACHER: The Audit report notes: 'Independent preliminary assessments have been made or are in the process of being made regarding disposal options on these 32 properties.'

Mr Grzeskowiak : There's an ongoing range of disposals, most of them minor in nature.

Senator GALLACHER: I just asked a very specific question in relation to those that are referred to in the Audit report. The next question is: can you provide a list of those 32 properties?

Mr Grzeskowiak : I'll take that on notice.

Senator GALLACHER: Can Defence table the implementation plan that supports its Defence Estate Strategy 2016-2026?

Mr Grzeskowiak : I'll take that on notice.

Senator GALLACHER: Have you got the plan?

Mr Grzeskowiak : There is a plan, yes.

Senator GALLACHER: Is there a reason why the committee wouldn't able to see it?

Mr Grzeskowiak : No. I can't present it to you now, so I'll take it on notice.

Senator GALLACHER: It will be just a procedural thing? You'll go and find it and give it to us?

Mr Grzeskowiak : Yes. It's a detailed plan of the activities we're undertaking across the estate to implement the Defence Estate Strategy, which was an outcome of the First Principles Review.

Senator GALLACHER: I just want to put it to you, Mr Grzeskowiak, that Defence has an extremely large estate. It is probably one of the largest land holdings in Australia. It seems a bit counter-intuitive that there is no clarity about what you don't need and what you made a decision to dispose of, and why the committee can't actuallyor the public or the taxpayersee that easily and transparently.

Mr Grzeskowiak : As decisions are made by government for the sale of a property, those decisions are made available and are transparent, and we do have a website with a list of ongoing property disposals. But we do not make available to the public lists of properties that might be going through government consideration before decisions are made.

Senator GALLACHER: If we were to go to something that wasn't made available to the public, the Maribyrnong site, how far away is that from being remediated and releasedyears?

Mr Grzeskowiak : At the Maribyrnong site the remediation has commenced. It commenced in February this year. What Defence is doing there is undertaking remediation on a relatively small proportion of that site, which was used by the then Defence Science and Technology Organisation for a range of research purposes. In February this year that investigation and remediation work commenced. We anticipate that that work will take in the order of 18 months. It has a contract value of around $54 million.

In parallel with that, Defence is progressing the necessary actions for the disposal of the site. It's a three-stage process. The first stage was a market sounding process. That stage was conducted at the beginning of this year. It closed in April this year. We put out invitations to industryeither the property development industry or the remediation industry and othersand we hosted roundtables with them. Around 23 companies attended those sessions. We're now looking at that information. We wanted to engage industry and get their ideas about the disposal process and the opportunities.

Later this year, probably in around August, we will be going out to market for expressions of interest in a formal sense. At that point we'll narrow down the list of companies that are seriously interested in acquisition of that site. And then following that process, probably next year, we'll go out for a formal request for tender.

Senator GALLACHER: Next year you may be in a position, after evaluating the contamination, to go to a formal expression of interest? Is that what you just said?

Mr Grzeskowiak : Yes. We'll be going out for expressions of interest later this year. Following that process, I anticipate it will be 2019 when we go out for requests for tender. Later this year we'll be narrowing down the field of industry players that we would seek to formally request bids for that site. In parallel, we've commenced the remediation of that site.

Senator GALLACHER: Is that the remediation of the site, or is that the examination of what needs to be remediated?

Mr Grzeskowiak : It's both. It's the remediation of a relatively small part of the site which is focused on the then Defence Science and Technology Organisation's research area. We characterise it as an investigation and remediation. We've done a fair amount of investigation already across the breadth of the site at Maribyrnong. You may recall that two years ago we remediated a different area of the site. It was known as Audit Area 1. The remediation on that site two years ago was what we would call remediating more common contaminants, like asbestos and hydrocarbons. That was completed, and, in part, that was to be able to demonstrate that for the bulk of the site at Maribyrnong the contaminants are fairly straightforward—the sorts of contaminants that would be well understood by industry, and industry would know how to decontaminate those.

But, as part of the sort of risk based approach to this phased disposal of the site, we took the decision that the area that was used for research purposes, where there might be contaminants that are unique to Defence activities, would be decontaminated by Defence using specialist expertise—in fact, expertise that is not available in Australia. We are contracting with an American company to do that work. We've used them before for similar work. So that's now ongoing.

Senator GALLACHER: Of the 32 sites that you've earmarked for disposal, I presume Maribyrnong would be one?

Mr Grzeskowiak : Yes, it would.

Senator GALLACHER: Is that at the higher end or the lower end of your remediation spectrum?

Mr Grzeskowiak : In terms of remediation of land, Maribyrnong would be at the higher end in terms of complexity. You'd be aware it was a former defence explosives munitions plant for quite a long timea quite heavily contaminated site. The investigations that we've done there over a number of years give us a good database of the bulk of the contamination across that site. All that information will be made available to any potential bidders before taking ownership of that site.

Senator GALLACHER: If we go to some specific areas of Defence estate and if we go to the proposed expansion of the training area in Shoalwater Bay, can you update the committee on how many properties have been purchased?

Mr Grzeskowiak : In the region of the Shoalwater Bay area, there are two properties that have been acquired. They were acquired in the order of a year, a year and a half ago.

Senator GALLACHER: How many do you need to acquire to get to your preferred expansion plans?

Mr Grzeskowiak : That's a difficult question to answer. We're still in a sort of due diligence phase, looking at exactly how the expanded training area of Shoalwater Bay might look. The government have made it quite clear that we will only acquire properties from willing sellers as we seek to expand this training area. We're not yet at the phase where we've concluded negotiations with landholders. So it's not possible to say how many properties would need to be acquired.

Senator GALLACHER: What were the lessons learned out of that exercise? I think you moved from a compulsory acquisition to only willing seller acquisition.

Mr Grzeskowiak : If we look back, our initial engagement with the public could have been handled better. We constantly seek to learn how we do these processes. We've had extensive community engagement activities taking place over the last year or so at both areas where we are looking to either expand or create training areas. We have a good relationship now, on balance, with the landholders. We have people on the ground. We have regular information sessions in the areas of concern.

Senator GALLACHER: So what does the status of the arrangement with the Singaporeans mean in terms of the expansion? Is part of the reason for the expansion that we have this good relationship and agreement with the Singaporeans about training?

Senator Payne: This is part of the training initiative that was agreed with Singapore in the formal process between the Prime Minister of Singapore and Prime Minister Turnbull covering a number of areas of engagement between Australia and Singaporeeducation, the law, trade and defence training being one of those. It is certainly the case that the Australia-Singapore military training initiative is underpinned by Singapore's desire to support the development of training areas in central and northern Queensland that will enable them to significantly enhance the volume and the tempo of their training activities, given that we have space and they don't. I am very happy to ask Mr Dewar to add to that if you have any further questions.

Senator GALLACHER: It is a great, well-supported initiative in the community, as we found out through our examination of the impact on regional economies of the training activities. They're well received. They spend lots of money. I'm just trying to work out whether there's any impact on that arrangement with the expansion or whether they're not mutually exclusive. You can continue to have that arrangement successfully operating without acquiring properties, is that the case?

Mr Grzeskowiak : The increase in training activity that Singapore will conduct requires training areas to be expanded.

Senator Payne: It's predicated on that.

Senator GALLACHER: How many Singaporean troops have trained in the calendar year or the financial year, whatever's the best measure?

Senator Payne: We might take those exact numbers on notice. There have been a number of training activities occur, as have been occurring for almost 20 years now, if I am not mistaken, in the Shoalwater Bay area. But is it the exact figures for this calendar year you are interested in?

Senator GALLACHER: Yes.

Senator Payne: For this calendar yearwe'll take that on notice.

Senator GALLACHER: I suppose it shouldn't go unremarked that the success of the measurements of the impact on the regional economies of the training activities has now been published. Have you published some documentation in respect of that?

Mr Grzeskowiak : There was a socioeconomic report that we had done by KPMG which looked at the likely impact on the economy. That report has been made available, to my knowledge. It is obviously a significant investment over time in terms of infrastructure as we develop training areas. That socioeconomic report clearly articulates that there will be a net benefit, in the areas concerned, to the economy as a result of that investment.

Mr Moriarty : Our estimate is that over the life of the initiative the Singapore government will inject approximately $2 billion into regional economies.

Senator GALLACHER: I know, from speaking to members of the Singaporean parliament, that they really are deeply appreciative of the arrangement and think it is an extremely successful venture. If I could go to the other end of the spectrum from, say Maribyrnong, to the Greenbank training area in Queensland, it is broken up by a highway. The overall training area is used for exercises, except for a small pocket of land that is derelict and on the opposite side of the highway. How do you intend to use that land into the future? Are you aware of that parcel, Mr Grzeskowiak?

Mr Grzeskowiak : Yes, I am aware of that parcel of land. I am also aware that the local council are interested in that piece of land as well. That piece of land would be rarely used for defence training, although it is occasionally used for training. Its primary purpose is as a buffer zone, to ensure that we have appropriate safety templates. People often ask me why you would have that on the other side of the highway. Part of the buffering is for noise attenuation and, therefore, the fact that it's on the other side of the highway makes some form of sense. But we are in discussion with local authorities about that.

Our current position is that we would seek to retain that piece of land for its primary purpose, which is just ensuring separation from the training that goes on and other activities of the general public by engaging.

Senator GALLACHER: You haven't actively considered disposal?

Mr Grzeskowiak : Not at this point in time.

Senator GALLACHER: Have you received any interest in this small pocket of land from any party?

Mr Grzeskowiak : Yes. As I just said, I think the local authorities are interested in alternative uses for that piece of land.

Senator GALLACHER: What purpose would they be proposing for that land?

Mr Grzeskowiak : I'm not aware of what purpose they'd be proposing.

Senator GALLACHER: Are you aware the member for Oxley has written to the Minister for Defence Personnel in relation to the land and its possible release for park land or green space?

Mr Grzeskowiak : As I said, I was certainly aware that the local authorities were interested in alternative use. We are having discussions, or my team are having discussions, around that.

Senator GALLACHER: So you are not aware of the member for Oxley's letter to the Minister for Defence Personnel?

Mr Grzeskowiak : I don't recall it, but that's not to say it's not in the system.

Senator Payne: I think there's already been a brief provided to Mr Dick and Ms Brodtmann on this.

Senator GALLACHER: If you are using it as a buffer zone and someone was proposing it for a park zone into future, they're both complementary uses, aren't they?

Mr Grzeskowiak : It may well be, and we would have a look at that and work it through.

Senator GALLACHER: But it would be obviously a decision of the government?

Mr Grzeskowiak : All disposals are decisions of the government.

Senator GALLACHER: You've proposed some changes. Chair, I might seek your guidance on this. I am a member of the Public Works Committee and I've got some questions about the thresholds of referral to the Public Works Committee. Do I have to declare that I sit on both committees and have a view on both committees?

CHAIR: We know you do; you tell us often! That's the first principles review recommendation that you're referring to?

Senator GALLACHER: Yes. I can probably answer the questions actually, because we have a meeting

CHAIR: Is that a rhetorical question?

Senator GALLACHER: It's not a rhetorical question. What progress has been made on changes to the Public Works Act 1969 in relation to the threshold?

Vice Adm. Griggs : As you know, Associate Secretary Skinner and I came and spoke to the committee two weeks ago, I think it was, to talk through that issue. Just for context for others, the First principles review recommended an increase in the threshold from its current $15 million value to $75 million. There has been correspondence and discussion between the committee and Defence and the Department of Finance around that. The committee has made it clear that it would be happy to lift the threshold in line with inflation, if you like, since it was last adjusted, which I think was around 2006 or somewhere around that period of time. So that would take it up to around about the $23 million to the $24 million dollar mark.

In light of that, what Ms Skinner and I outlined to the committee was what we had done with the cabinet thresholds or the NSC thresholds. We had moved from a strict financial dollar value to a risk-based approach, and we proposed a similar approach with the committee. I think we owe you a bit of work, and the committee's actually considering how that might actually go forward. So that's roughly where we're at on that one.

Senator GALLACHER: Is anybody able to itemise how many estate-related projects would fall under your proposal75? Or a percentage?

Mr Grzeskowiak : I think we've done that, but I think we've moved away from that now, and what we do owe the Public Works Committee is a proposed risk-based list of projects and how they might be dealt with going forward.

Senator GALLACHER: Thank you. Can I ask, Mr Grzeskowiak, if you can bring us up to date on St Kilda Road? What's the situation with

Mr Grzeskowiak : The situation at 310 St Kilda Road is unchanged since we last met. The situation is that the Victorian government in February last year expressed renewed interest in acquiring 310 St Kilda Road. We are assisting the Victorian government with their due diligence. They have not yet got to the point where they have made an offer to the department. So we are still awaiting that offer.

Senator GALLACHER: It seems that nothing moves easily or quickly in this space. What's the exact problem here? You're in the hands of the Victorian government.

Mr Grzeskowiak : I can't answer on behalf of the Victorian government. If they ask us questions we provide information. We help them. They've accessed the site. I know that they have engaged expertise to do due diligence. Until they make us an offer we can't consider it.

Senator GALLACHER: We were all made aware of a Channel 7 report that it was going to happen within a matter of weeks, Minister. Was that all a bit ambitious, was it?

Mr Grzeskowiak : As I said

Senator Payne: I'd say 'enthusiastic'.

Senator GALLACHER: So you can add nothingyou are in the hands of the Victorian parliament?

Mr Grzeskowiak : Correct.

Senator GALLACHER: So they would assess their risk in taking it over and making an offer commensurate with that?

Mr Grzeskowiak : That's a matter for them.

Senator GALLACHER: So you have a property, an iconic location. They would need to come to you with a remediation end or an offer of value.

Mr Grzeskowiak : The process for an off-market sale, which is what we would call a sale that was direct to a local government, is that they may make us an offer. We then have to consider that offer and, through the Department of Finance, government would have to agree one way or the other as to whether that offer was acceptable. We need the offer before we can consider it.

Senator GALLACHER: Fair enough. I will go on to Defence contamination.

CHAIR: Before we go to contamination, and I know that several senators have questions on contamination, I might go to Senator Rice, who still has some other estate questions.

Senator RICE: Thanks, Chair. I want to continue questioning on the Maribyrnong Defence site. Thanks for the information so far, Mr Grzeskowiak. So far on the Maribyrnong site two areas have been remediated. The first is the 13-hectare that you did two years ago; correct?

Mr Grzeskowiak : That's right.

Senator RICE: At a cost of $4 to $5 million, I think you told us at estimates some time ago.

Mr Grzeskowiak : Around $4 million.

Senator RICE: Yes; the second site is 11 hectares, and that's currently under way?

Mr Grzeskowiak : That's correct.

Senator RICE: What's the estimated cost of that site?

Mr Grzeskowiak : Around $54 million.

Senator RICE: That's going to be completed within

Mr Grzeskowiak : We estimate in around 18 months, from February this year, when the remediation and investigation are completed.

Senator RICE: What's the size of the remaining area for the site yet to be remediated?

Mr Grzeskowiak : The total area of the site is 127 hectares, so of the order of 100 hectares. The remediation of the bulk of the site will be done by whoever ultimately purchases the site from government.

Senator RICE: I gathered that from your previous evidence to estimates. Do you have a current estimate as to what the cost of that remediation will beto be done by whoever?

Mr Grzeskowiak : No. We have done estimates of remediation for the site over time, and the information we have in terms of analysis and investigation on the site will be made fully available to potential purchasers. That will be factored into their offers for the site, in terms of the development potential of the place.

Senator RICE: You advised the Australian National Audit Office, I understand, in November 2015a couple of years agothat the current estimate of further required expenditure was $309 million. So this estimate is dependent upon the final remediation option, but is the expected maximum. Is that the ballpark you're still expecting?

Mr Grzeskowiak : I'm reluctant to talk about what I think the remediation costs might be at this stage. We know more about the site now than we did in 2016. We have already remediated a relatively small site of relatively straightforward contamination. We're now remediating the site that is the most complex in terms of the contamination. So I would expect any estimate of the remediation of the remaining roughly 100 acres probably to be lower than the figure you've quoted. But I would be hesitant to quote the figure because I don't have a detailed analysis. In industry, this is why we've been to market already and it's why we're going to do expressions of interest through this three-phase processso we can make sure that those organisations that might bid for the site ultimately are fully informed, to the best that we can inform them, of the nature of the contamination on the bulk of the site. Therefore, they can factor that into their estimates of what they might choose to offer for the site.

Senator RICE: Does the $309 million estimate include the cost of the site that is currently being remediated?

Mr Grzeskowiak : When that estimate was made, it included the whole property. Obviously, now Defence is funding the most complex part of the remediation.

Senator RICE: So for the most complex part, $55 million is the estimate

Mr Grzeskowiak : Around $54 million.

Senator RICE: Then you've spent $4 million to $5 million on the less complex.

Mr Grzeskowiak : Yes.

Senator RICE: So on that estimate of $309 million, that would mean for the remaining portions of the site you're looking at around $250 millionbut as you say, subject to change depending upon further information as it comes to hand.

Mr Grzeskowiak : Yes, I am not in a position to give an estimated figure. Things have moved on considerably since that figure was presented to the ANAO in 2016. I think the figure would be significantly lower than the number you've just quoted.

Senator RICE: When do you think you will have an estimate of the full extent of the contamination and what the likely costs will be to give to potential purchasers of the site?

Mr Grzeskowiak : I won't have one. I'll provide all the information that we know about the site, details of the remediations we have done, all the reports we've had done by specialists on the remaining contamination, and industry will form its view and factor that into the price it might offer to purchase the site.

Senator RICE: Will all that information be available to the public as well?

Mr Grzeskowiak : Certainly available to those companies that might bid for the site. I'm not sure we would necessarily make it available to the public, but certainly available to all those companies that are involved in the tendering process.

Senator RICE: Why wouldn't you make the information available to the public?

Mr Grzeskowiak : I'm not sure what the value would be. I can take it on notice to ask whether we would do that. We wouldn't normally do that. We would normally make it fully available to companies that might be seeking to acquire the site. The important point here is that when remediation is undertaken at a place like Maribyrnong, in this case the Victorian government's Environment Protection Authority are fully involved in that process, in terms of oversight. At the conclusion of remediation we will get a certificate from the Victorian EPA that acknowledges that remediation has been done to their required standards. I'm talking now about the remediation Defence is doing. As and when a private entity acquires that site for redevelopment, they will have to go through a similar process. The remediation they do will have to meet Victorian EPA standards. It will be oversighted by the Victorian EPA, which will issue a certificate that remediation has been done correctly, if that is the view of the Victorian EPA. If your concern is that the remediation might not be effectively conducted, then I can assure you that the relevant Victorian state government agencies are well connected into what we are doing. They will be well connected into what a private developer would do, and they will insist on appropriate standards being reached.

Senator RICE: People are very concerned about the contamination of the site, particularly given that it's going to be used for housing development. Would you have any reason why that information, given it's going to be made available, obviously through the EPA, to all potential purchasers, should not be made available to the public?

Mr Grzeskowiak : I'll take that on notice.

Senator RICE: Thank you. Once you sell the site with all that information about remediation, the final responsibility for remediation will rest with the purchaser of the site. Defence is able to then wash its hands of the site, so to speak?

Mr Grzeskowiak : We will have remediated the area of the site with contaminants unique to Defence. The contaminants on the broader site are the sorts of contaminants that industry is well able to deal with. It will be the responsibility of the purchaser to undertake that remediation.

Senator RICE: As part of the sale process you will be handing over that responsibility. So any risk that there is unknown contamination, that things aren't as you understand them to be, will be borne by the purchaser?

Mr Grzeskowiak : That's right. But we will be providing extensive information on the research that has already been done over a period of some years about the contaminants on that site. We think we have a pretty good understanding of the broad area of the level of contamination.

Senator RICE: As you've indicated, the cost of the decontamination will be borne by the purchaser. Are you aware of any suggestions that, in terms of the purchase of that land and potential interest in having housing developed thereit was spruiked by the government as being a 'significant housing development'the cost could be borne by the government's proposed National Housing Finance and Investment Corporation or the National Housing Infrastructure Facility?

Mr Grzeskowiak : I'm certainly aware of that, and I imagine that is a facility that could be accessed by whoever eventually takes control of the site through the process that exists.

Senator RICE: How would that process work?

Mr Grzeskowiak : I'm not across the detail of the process, but as I understand it, a developer or a local authority has the opportunity to apply for money through that process to help build infrastructure around housing developments.

Senator RICE: So at end of the day it could be the government that ends up paying for that decontamination?

Mr Grzeskowiak : I doubt if that fund would be accessible for decontamination. It's about infrastructure and investment; so roads and transport links would be the sort of thing the fund would potentially pay for.

Senator RICE: But if decontamination is an essential part of bringing that land to market, you don't think there would be a possibility of those funds paying for that as is required?

Senator Payne: That's not the intention, as was indicated at the time of the announcement last year.

Senator RICE: 'Not the intention', Minister, but is it ruled out that those funds would not be able to pay for decontamination?

Senator Payne: That's not the purpose for which the funds have

Senator RICE: But is it ruled out, Minister?

Senator Payne: The funds are specifically directed to a particular set of tasks, as Mr Grzeskowiak has outlined. It's not the intention that they're used for the purpose you're canvassing.

Senator RICE: But would it be ruled out; that they cannot be used for that purpose?

Senator Payne: It's a matter for the Department of Treasury, obviously. But the clear purpose of those funds is set out in the material relating to housing support.

Senator RICE: But you are not ruling it out, Minister?

Senator Payne: I'm not the Treasurer; I'm the Minister for Defence.

Senator RICE: It's still a possibility, is what I gather from your answer?

Senator Payne: No, you should not assume that at all, Senator. In fact, you would be wilfully misrepresenting what I saidwhich is not entirely surprising, I suppose. These funds are managed through the Treasury process in relation to housing. Mr Grzeskowiak has very helpfully outlined the purpose for which they are intended. I am not playing a game with you over ruling things in or out. I am saying that I am not the Treasurer and they're not my funds to manage.

Senator RICE: Thank you, Minister. I'll take it up with the Treasurer. Moving on to the sale of the site, you said in answer to Senator Gallacher that you are looking at going out to market in August for expressions of interest, then a formal request for tender next year. At this stage, prior to the August expressions of interest, have there been any other informal discussions with potential purchasers?

Mr Grzeskowiak : We conducted a market sounding process in the first quarter of this year. That process concluded in April this year. We had 23 different companies come and talk to us about that. It was a very useful exchange of information in terms of possible developments, the issues around remediation and the like. That process has concluded. We will be going to market for expressions of interest later in the year. I have suggested it might be August, but it could be July or September. Following that process next year we will be in a position to formally seek requests for proposal for purchase of the site.

Senator RICE: Were the 23 companies that responded to your market sounding all accepting of the risk they were taking on with decontamination?

Mr Grzeskowiak : I wasn't involved in the conversations in detail, but my understanding is that the suggestion that industry should manage the decontamination of the site is not seen as a show stopper in this case.

Senator RICE: Was there an expression of interest through that process from the enrichment holdings group that had made an unsolicited expression of interest in 2017?

Mr Grzeskowiak : I don't know if they were at those meetings. I'd have to take that on notice. We did have an unsolicited proposal around a year ago. I can't recall the name of the consortium.

Senator RICE: I think that was the enrichment holdings group.

Mr Grzeskowiak : We advised that consortium that we were following a process and they were more than welcome to engage in the process.

Senator RICE: So you can't tell me whether they indeed did engage with the process?

Mr Grzeskowiak : No. I would have to take it on notice. I don't have a list of the companies that were there.

Senator RICE: Were there any other unsolicited approaches, or have all of the other approaches been through your market sounding process?

Mr Grzeskowiak : I'm only aware of one unsolicited bid that was received by the department.

Senator RICE: In terms of those 23 companies that put in bids, what countries were those potential buyers from?

Mr Grzeskowiak : Just to clarify, the 23 companies have not put in bids.

Senator RICE: No.

Mr Grzeskowiak : They attended an information session with the Department of Defence. I don't have the list of which companies they were, so I'd need to take that on notice.

Senator RICE: Thank you. Can you give me then an update, as part of this process, as to any discussions regarding the planning of the site and potential zoning of the siteso the intensity of development which will be permitted on the site?

Mr Grzeskowiak : The planning schema for the site ultimately is the responsibility of the Victorian government and the local council. The Victorian government are taking the lead through their planning authority. Obviously the council and the government are working closely on that. It helps Defence to have a well-developed and mature planning schema as we go to market to sell the site next year, because that obviously informs industry on how they might value the site in terms of its potential development. The lead for that is the Victorian government Planning Authority. Defence plays no role in deciding for the future what types of developments can be undertaken.

Senator RICE: But your desire is to have some fairly clear guidelines in terms of what would be permitted on the site before you go out to market in August?

Mr Grzeskowiak : As would be normal for the disposal of what is a significant urban infill development site.

Senator RICE: In terms of the processes that the Victorian government is undertaking then, August is not very far away, is it?

Mr Grzeskowiak : In August we're not going out for bids to buy the site. We're going out for expressions of interest.

Senator RICE: But expressions of interest would depend upon the scale of development that is allowed on that site. You would expect to know, for example, the density of development and which parts of the site would be up for development in order for companies to put in meaningful expressions of interest.

Mr Grzeskowiak : I'd expect to know those details before I go to market looking for formal requests in response to a tender. I don't need to know the final development schema rules for the expressions of interest process. Obviously, the more developed it is, the better that is for us. I really need that in 2019 when we go to market finally saying, 'Who'd like to buy the site and what are you going to offer?'

Senator Payne: To reiterate, that is a matter for the Victorian government and, of course, the local council, as Mr Grzeskowiak has said.

Senator RICE: The issue of the value of this landwould you agree that there would be a significant increase in the value of this land if it was serviced by a train line such as the Melbourne airport rail line?

Senator Payne: They're not matters on which Mr Grzeskowiak should be expected to express an opinion, Senator. Quite clearly, members

Senator RICE: Well, what would be the impact on the sale price of this defence land if it was serviced by a train line?

Senator Payne: Again, we don't speculate on matters like that. Your questions really are not appropriately directed to this department.

Senator RICE: Have there been discussions with the Victorian government or with the department of infrastructure about the potential of a train line servicing this defence site?

Mr Grzeskowiak : Yes, there are ongoing discussions. My understanding is that there are at least three possible routes for that train line. One of them brings it certainly close to or into the Maribyrnong site. We're engaged in those discussions. They are ongoing discussions.

Senator RICE: In your discussions, would you agree that if there was a train line servicing this site this would substantially increase the value of the land?

Senator Payne: Senator, we're not going to speculate on those sorts of matters. I thought I'd made that quite clear.

Senator RICE: Do you expect to have a decision made on whether the train line will service the site before you go out with your market sounding

Senator Payne: It's not a matter for this department.

Senator RICE: later in August?

Senator Payne: It's not a matter for this department, Senator.

Senator RICE: Will the results of your discussions about the train line be fed into your analysis about the value of the site?

Mr Grzeskowiak : That would depend on if a decision has been made about that rail line. It's not a decision for Defence. It's a decision for the department of infrastructure and the Victorian government.

Senator RICE: Moving away from Maribyrnong, I just wondered whether there was any update on the potential sale of land regarding the land acquisition related to the North East Link, so the Watsonia Barracks land?

Mr Grzeskowiak : I'm aware that discussions are ongoing. I don't have an update in terms of finalisation of that discussion at the moment. Defence seeks to work cooperatively with local governments in terms of enabling the sort of infrastructure that that link would provide. I don't have an update.

Senator RICE: You aren't able to tell me the timing of negotiations or discussions?

Mr Grzeskowiak : No.

Senator RICE: Could you take on notice whether there is any further detail that you would be able to share with us about those negotiations, particularly the timing of any potential acquisition of the land?

Mr Grzeskowiak : I'll take that on notice.

Senator RICE: Thank you. Thanks, Chair.

CHAIR: Mr Grzeskowiak, I've got some questions in relation to estates in Western Australia. The first oneand it is probably no surprise to youis on Leeuwin Barracks. You mentioned it earlier, but I'm wondering if you can give the committee an update on the state of the master planning process, community engagement and also where it is up to in terms of disposal?

Mr Grzeskowiak : With Leeuwin Barracks, the East Fremantle council have completed what they call a 'site vision plan'. As I've said earlier, that plan is not just for the footprint of Leeuwin Barracks; it is also for some council land that is adjacent. I think they are sports fields at the moment.

CHAIR: The sporting fields, yes.

Mr Grzeskowiak : Their vision is that the two sites will be developed with one planning schema as a holistic development rather than being independently looked at. That plan is complete and has been endorsed by the council. We use strategic property advisers to help us work through the sale process. As you'd understand, we're connecting this sale now with Irwin Barracks in terms of a site for people who are currently working at Leeuwin to relocate to. Obviously, we need to do some work there. We don't have a date yet when we'll be approaching the market for the sale of Leeuwin.

The most important thing for us, though, from a Defence perspective, is that we have that positive decision from government that we will vacate this site and we're now actively developing plans for the relocations and the like. There is always a range of options about how you can do this and we're just still working through those options. I don't think in this case we'll be moving that quickly. I think it may be a few years before the site is actually sold.

CHAIR: So a few years to five years

Mr Grzeskowiak : I wouldn't want to give a timeline at this stage.

CHAIR: It is indefinite at this stage.

Mr Grzeskowiak : It's not indefinite. The option that we're settling on in terms of relocating people would, at the moment, look like an option where we need to move the people before we sell the site. There are other options. You can dispose of the site and lease it back for few years, but at the moment that's

CHAIR: You're still working through that.

Mr Grzeskowiak : Yes.

CHAIR: Obviously, there's been quite a lot of discussion locally and within the military community in Western Australia about the heritage value of some of the buildings on Leeuwin. Are able to give us an updateI am happy for you to do it on noticefrom a Defence perspective, on what are the heritage and historical values and locations and sites at Leeuwin Barracks that you would seek to preserve?

Mr Grzeskowiak : We always undertake heritage assessments of any site we dispose of. The recruit memorial is probably the most important piece of Leeuwin. I can absolutely assure you that through any disposal process the preservation of that memorial site would be put in as a constraint on any future development.

CHAIR: Is that the only site of heritage value?

Mr Grzeskowiak : No. I think there are other sites on the base there that have heritage value. I can take it on notice and provide you with all the detail.

CHAIR: If you wouldn't mind. In terms of the defence community there, one of the major issues they still have is to be reassured that the heritage value and the commemorative properties of some of the locations there are retained. That might help ease their concerns a little bit.

I would like to turn further north, to the north-west of WA, and pursue a couple of issues that we've had previous discussions on. I've been working on a number of development projects, particularly infrastructure projects, in the north-west. There are some opportunities to develop new infrastructure in the north-west with the NAIF. Obviously, the facilities at Curtin and Learmonth, the air bases there, could provide some significant commercial opportunities in the north-west.

I just want to go through a couple of questions. Again, if you want to take these on notice and provide more detailed answers? The first one is in relation to RAAF Curtin. If you could provide some information on the size of the property and also on the zones at Curtin air base? I know that there was a commercial airfield there on the base. It was an Ansett facility.

Senator Payne: Ansett! That's a name I haven't heard for a while.

CHAIR: Yes. The signs are still up there! I am interested in just where some of the opportunities or limitations might lie in commercial access to the air base for flights. You've probably seen some of the media in WA. In particular, the Ukrainian Space Agency have put in a reasonably serious approach and are doing a feasibility study on having a closed equatorial large payload launch facility in the north-west. Obviously, there's a range of other issues that would need to be overcome for that to develop further. Could you have a look at that and provide some more advice on what issues, in relation to the Defence estate, we might have to consider and whether it would be possible to access either Curtin facilities or Learmonth facilities? That would be appreciated. Have you seen some of the reporting of this?

Mr Grzeskowiak : I haven't seen it in detail. I can take an action to give you some information about Curtinwhat's there and what we use it for. It would be previous of me probably to comment on any issues about the Ukrainians' launch.

CHAIR: No, and I'm certainly not seeking it because there are other committees and other things to deal with that. Just in terms of Curtin and Learmonth and also the broader issue of what opportunities there are for peoplewe are looking at new port facilities and new industries, and obviously they are very significant airfieldsis there any possibility of looking at some additional commercial utilisation that wouldn't compromise the Defence usage of those two facilities? Are you happy to take those on notice? Again, I'm not trying to pin you down for any particular proposal, but just to give us a bit more of an idea about left and right of arc for consideration.

Mr Grzeskowiak : We will have a look at that on notice and see what we can provide.

CHAIR: Thank you. In terms of Curtin air base, there has been a representation, which you may or may not have seen. The Mowanjum Aboriginal Corporation have approached you about leasing 11,000 hectares on the northern side of the Curtin air base. I have also made some representations, but haven't heard back on that. Perhaps you could take that on notice? It's for pastoral considerations.

Mr Grzeskowiak : We'll take that on notice.

CHAIR: The final one is on the Yampi Sound Training Area; again, something that we've had a discussion on in the past. But I am wondering if you could provide me with some more information on the mining tenement access to Yampi Sound. When I've raised these issues with you and the department previously, it appears that there's a quite inconsistent application of commercial use and contracts for training areas, which the department is looking at. For example, people who want to access the land at Woomera have quite different contractual arrangements than those at Yampi Sound. Again, I am happy for you to take it on notice. But in terms of junior explorers in Western Australia accessing Yampi Sound, the worst possible outcome for them would be to continue to be granted exploration licencesthese are small family companies generally, this is the family livelihoodand have access to training areas under quite restrictive conditions. But then when they find something they can't actually develop it.

In terms of policy, could you provide some advice about the measures you're taking to get consistent approaches across all training areasand not on Defence land? Whether for Yampi Sound

Senator Payne: I would just make the point that the training areas are not consistent. They are not all the same.

CHAIR: I understand that.

Senator Payne: It doesn't necessarily lend itself to

CHAIR: No, it doesn't. For example, in some training areas there are red zones and they are subject to different requirements. And there are others, like at Yampi Sound, where there are issues with unexploded ordnance.

Senator Payne: Perhaps I misunderstood you. I thought you said a consistent approach across all training areas.

CHAIR: Yes, a consistent approach. But it doesn't mean that there is one size fits all. So if you're looking at minerals explorations in areas that are not red zones, could there be consistent contractual arrangements?

Senator Payne: I've seen some of the material that has passed back and forth on this. I understand your premise. But I do think, and obviously will stand to be corrected by the experts, because of the location and the range of our training zones and the great differences between them inherently, sometimes that is difficult to do. So I was just interested in what you were saying and wanted to flag that. But we will come back to you on notice with greater detail.

CHAIR: Thank you. For example, just for clarity, is Yampi Sound training

Senator Gallacher: Is this constructive?

Senator Payne: I think it is a constructive discussion.

CHAIR: We are being very constructive.

Senator Payne: We are actually interested in constructive discussion and contestability of ideas and engagement and all those things, because we're not sheep; Senator, if you are more comfortable being a sheep, you go right ahead.

CHAIR: The department has been extremely helpful on this issue.

Senator Payne: Thank you.

CHAIR: But my point is that I think there is more work to be done so that if you do give access to land it is very clear. Again, with miners there is no point having people being able to explore if they can't actually develop the ore deposits.

Mr Grzeskowiak : If I could just say, there was a companyit may be the company you're referring to, I'm just not surethat was conducting exploration on the Yampi Sound Training Area. They recently concluded their exploration and have terminated their deed. They are no longer there. I am not aware of any application from that company to commence mining.

CHAIR: You are talking about one of the larger explorers. I'm happy to take that on notice and perhaps talk about it separately, offline. But there are a number of minor explorers that do actually have tenements on there and have access and are still having contractual discussions. I don't want to hold up estimates with this. If you could perhaps take that on notice I would be

Mr Grzeskowiak : I can tell you we reached agreement on 7 May with a company called Cominco around some of the clauses that they had a problem with in our agreement. And having agreed them, they've now raised a new range of questions about other clauses. So we're in negotiations with them.

The training area's primary purpose is being available for defence training, which is important. We do accommodate commercial activities on our properties as that makes sense, and mining is one of them. We have five licences at the moment on various training areasthat's not counting Woomerafor various explorations that are ongoing. So the process we have in place works. Different companies have different views about some of the clauses and there's a negotiation.

CHAIR: I understand that, and I am very grateful; I raised that company's considerations because, again, there were different contractual requirements to those in Woomera. The department has been incredibly helpful in actually getting some more consistency in those contractual arrangements between the two sites, where appropriate. But the threshold question is: if Defence is going to allow junior explorers, or any explorers, to explore in those Defence sites there is no point allowing them to do it in the first place if they are not going to be able to mine the ore. Anyway, if you could take that on notice I would be grateful. Senator Kitching.

Senator KITCHING: Can I just go back to 310 St Kilda Road. I understand it was left with the Victorian government to make an offer about 12 months ago, is that correct?

Mr Grzeskowiak : I think it was around February last year that the Victorian government re-expressed interest in the site.

Senator KITCHING: And no offer has been received?

Mr Grzeskowiak : That's correct.

Senator KITCHING: What will the department do with the site in the absence of an offer from anyone?

Mr Grzeskowiak : If we don't receive an offer or don't reach an agreement through this proposed off-market sale to the Victorian government, then Defence would propose that the site is disposed of on the open market. But government would need to agree the position.

Senator Payne: Indeed.

Senator KITCHING: The Commonwealth government?

Senator Payne: This government.

Senator KITCHING: Has the department done any planning or are there any thoughts about how the site could be used? Sorry, looking back

Mr Grzeskowiak : The site has already been declared as surplus to Defence requirements. That's in part Y. We are going through the process with the Victorian government, who have expressed an interest. Defence hasn't used that site for close to 20 years.

Senator KITCHING: I think it's 23, but I stand to be corrected.

Mr Grzeskowiak : So there is no perceived or future Defence need for that site.

Senator KITCHING: Do you have an idea of the cost of remediation of the site?

Mr Grzeskowiak : We did do an assessment and, of course, remediation depends on what other work would be done on the site. Our assessmentand it's a very rough-order assessmentto remediate the building so that it was substantially the same building but fully remediated would be in excess of $10 million, of that order. It's a very rough-order cost.

Senator KITCHING: Yes, I understand that. Is there a view about the site being used for veterans?

Mr Grzeskowiak : We're aware of a group who want to use the site as a veteran arts museum.

Senator Payne: ANVAM.

Senator KITCHING: ANVAM, yes.

Mr Grzeskowiak : My understanding is they are talking to the Victorian government about that. They did approach Defence some years ago, asking if we could directly sell the site to them as an independent organisation. But under the Commonwealth property disposal legislation, which is administered by the Department of Finance, Commonwealth entities cannot sell what we call an off-market sale, a sole sale, to a non-government entity. So we can negotiate an off-market sale with the Victorian government, but we could not do that with just an independent entity. We'd have to go to full open market and seek bids from the open market.

Senator KITCHING: So it could be a state government. Could it be a local government authority?

Mr Grzeskowiak : Yes, a state government or local government authority.

Senator KITCHING: I understand that there was property in Point Nepean that was dealt with where a trustee was appointed so that the property could be utilised. I think it might have been property sold at the Point Nepean.

Mr Grzeskowiak : I am not aware of what that was.

Senator Payne: That was some time ago?

Senator KITCHING: Yes, it was.

Senator Payne: Some considerable time ago.

Senator KITCHING: I am wondering if that is a precedent that could be used where a trustee could be appointed to that site, to 310 St Kilda Road, and then it could be utilised by the veterans organisation.

Senator Payne: We can have a look, on notice, as to what disposal method was adopted in relation to Point Nepean and whether it has any relevance to St Kilda Road.

Senator KITCHING: That would be great. I have met with people from ANVAM and I think the case they make around arts therapy—and providing therapy for mental health issues prior to their becoming so advanced that other help needs to be sought—is something that is worth looking at. I have written to Minister Chester in relation to ANVAM. I am very interested in the site. I will write to Minister Eren, who is the Victorian Minister for Veterans. Given that we now have a new Lord Mayor in Melbourne, I might write to her as well. I think it is a shame that the building, which was designed by the same architect who designed another building that the Melbourne City Council owns and uses for community purposes, cannot be used by the veterans organisation. I think that it would be good to keep it in public use; obviously, it's in a very prominent location, and it would be good to use it in such a way. But I'll let you know how I go. If you could come back to us about the Point Nepean land as well, that would be good.

Mr Grzeskowiak : We will take it on notice. But in this current negotiation the ball is firmly with the Victorian government.

Senator KITCHING: Yes. I might speak to them and see what we can do. Could I just ask some questions about the Henderson shipyard. There was an announcement on 20 February 2017 about the $100 million investment into the Henderson shipyard. Firstly, I am wondering was this money for improvement of the wharves, the hard stands, cranes, and module-manufacturing facilities? Is that what the money was for?

Mr Gillis : The appropriate officials from my area have actually left; so can I take that on notice?

Senator KITCHING: Absolutely. Can I ask whether that money was for the improvement of wharves et cetera? And was this Department of Defence money?

Mr Gillis : I will have to take it on notice. As I said, the officials

Senator GALLACHER: A point of clarification, you're building a new wharf in Darwin and one in Western Australia. Are they part of Defence Estate?

Mr Grzeskowiak : Yes, the wharves we're building

Senator GALLACHER: So they're part of the Defence Estate?

Senator Payne: Could you let Mr Grzeskowiak finish, please.

Senator GALLACHER: He answered it.

Senator Payne: 'The wharves we're building' is how far he got.

Mr Grzeskowiak : The wharves we're building in the Northern Territory at HMAS Coonawarra and in New South Wales at Garden Island are on Defence Estate.

Senator GALLACHER: So if Defence spent $100 million on wharves and facilities they're not part of Defence Estate? How does that work?

Vice Adm. Griggs : Those projects are part of the innovation investment program. When something comes into the innovation investment program it then goes through Mr Grzeskowiak's process, within Defence Estate and Infrastructure Group. The Henderson piece is not yet at that stage.

Senator GALLACHER: We're very happy to put this on notice. We want to make sure we send it to the right people. Who owns Henderson?

Mr Grzeskowiak : Not Defence.

Vice Adm. Griggs : Not Defence.

Senator Payne: The government.

Senator GALLACHER: Does it go to

Vice Adm. Griggs : In terms of who in the department will answer it, it is in the shipbuilding and CASG area, not in the EING area, until it becomes a project that Mr Grzeskowiak will manage.

Mr Moriarty : Could I add that when the government announced the investment in Navy-related infrastructure and sustainment in WA, it said that the investment in shipbuilding production lines and facilities, including wharves, jetties and cranes, will occur on both Defence Estate, particularly HMAS Stirling, Fleet Base West, and the Henderson industrial precinct.

Senator GALLACHER: I'm trying to work out whether we actually end up with an asset. What's going on if it's invested in Henderson? That's a private facility, is it?

Senator Payne: No, it's owned by the Western Australian government.

Senator GALLACHER: Where do we send these questions on notice?

Mr Gillis : To me.

CHAIR: It's considered to be an output rather than a capital.

Mr Gillis : It depends on where and how we allocate that money. Some of it might be on the Defence estate, some of it might not be on the Defence estate, some of it might be in a partnership with the Western Australian government. We are meeting regularly with the Western Australian government about a master plan not just for the Henderson precinct, but for the naval facility in Western Australia. So it's much broader. Some of my team are meeting with the Western Australian infrastructure people regularly to establish a joint master plan. There's no point Defence doing this on our own; we need to work closely with the Western Australian government. We are not trying to be difficult hereit's not a clear allocation as yet.

Senator KITCHING: Is it being passed to the Common User Facility? Is that part of the master planning?

Mr Gillis : The Common User Facility is in there, the dredging of the wharvesthere's a whole range of different attributes in Western Australia. It's a very broad announcement. I would have to take the specifics on notice.

Senator KITCHING: The $100 million hasn't been assigned yet, but some or all of it might be going to the CUF?

Mr Gillis : No. We haven't made that decision, and we are working with the Western Australian government on that outcome.

Vice Adm. Griggs : It's a combination.

Senator KITCHING: When will the master-planning process be finished?

Mr Gillis : We will be working on that with the Western Australian government this year. We've planned three more meetings with them over the next six to nine months.

Senator KITCHING: So not calendar year, but financial year?

Mr Gillis : Again, I would have to take that on notice. I have some of my officers working on that specific task, but we were looking at that in the 2.8 program, so we sent them home.

Senator KITCHING: This might be slightly premature, but is any of that money critical to the construction of the OPVs?

Mr Gillis : No. Fortunately, Civmec has made a $90 million-plus investment in a purpose-built facility for the OPVs. That was a capital injection the company is making now. They have progressed significantly, so it won't be required for that purpose.

CHAIR: Senator Kitching might like to know that it is going to be the biggest enclosed shipbuilding facility in the southern hemisphere.

Senator KITCHING: That is very disappointing for Victoria, but I don't like to be parochial about things.

Senator GALLACHER: I want to start the brief on Defence-based contamination, but when I get to a specific area of Katherine I want to throw to Senator McCarthy. By way of preamble, $55.2 million is to be provided over five years to establish drinking water programs in communities surrounding the Army Aviation Centre Oakey, RAAF Base Williamtown, RAAF Base Tindal and RAAF Base Perth: are we reading that correctly, Mr Grzeskowiak?

Mr Grzeskowiak : That's correct. That was announced by the government on 7 May this year. We refer to it as the Sustainable Water Program. Those four sites you mentioned will enable us over the next few years to continue the work we're doing to break the primary exposure pathway, which is drinking water that might be impacted by PFAS through range of measures. Some of those measures have already commenced, as you would be aware. So it is going back in time, starting with provision of cask water to people who relied on contaminated bore water as their only source of water, and connecting people to mains water. At Williamtown and Oakey that is in progress. The provision of water tanks, which is the main mechanism for breaking the exposure pathway in Katherine up in the Northern Territory, is well advanced. Defence has committed to paying for those people we connect to mains water

Senator GALLACHER: I have a specific question. If you want to answer questions before I've asked them, that's fine, but I'm still going to ask them. How much funding is allocated to each of the four listed areas?

Mr Grzeskowiak : We haven't allocated it specifically to the four areas. The announcement was our best estimate at the time of how much money we would need over the next around four years to provide water through the various mechanisms that I've discussed, including paying people's water bills where we've connected them to town water. There's no rigid allocation.

Senator GALLACHER: You've answered the questionthere's no rigid allocation. What will the funding cover?

Mr Grzeskowiak : Connection to town water, insulation of rainwater tanks, paying people's water connection fees and their water usage fees for a number of years, and other measures that would enable people to live in accordance with the advice that might be provided by a relevant state agency, usually the Environment Protection Agency, in terms of whether they can use water for watering vegetables they might grow in their garden, or whatever.

Senator GALLACHER: What are the costs per site to date for the provision of bottled water or the provision of alternative drinking water sources, including water treatment plants and connection to town water? Is that something you need to take on notice?

Mr Grzeskowiak : To give a comprehensive response, I'd need to take that on notice.

Senator GALLACHER: What is the expected time frame for infrastructure for alternative drinking water sources to be provided in each of the respective areas?

Mr Grzeskowiak : In Williamtown that process is ongoing; we are anticipating that the majority of connections would be made before the end of this year. Similarly in Oakey, the infrastructure works are well progressed, and the connection should be made certainly before the end of this year. In Katherine we've installed 50 water tanks at properties so far, with around another 20 to go. They will be done before the end of this year.

Senator GALLACHER: Who has paid for the infrastructure for the alternative water sources?

Mr Grzeskowiak : It's come from the Defence budget. In Pearce, in Western Australia the stage of the investigation is less advanced. We're still providing bottled water to over 100 properties, but we don't know yet how many properties might need a connection to town water. That's in part why I can't give a specific cost for each place at this point.

Senator GALLACHER: Senator McCarthy has some specific questions about Katherine.

Senator McCARTHY: Mr Grzeskowiak, you mentioned 50 water tanks in Katherine and around another 20 to go. Where are those 20 going?

Mr Grzeskowiak : These are the properties we identified as part of the investigation that are a bit out of town. They are not connected to the town mains water supply; they rely on bore water. The solution to giving those families clean water is to install rainwater tanks that are big enough to fill up in the wet season and survive through the dry season for the size of the family. I can provide details later on exactly where, but they are generally not on the town water network.

Senator McCARTHY: To clarify, we heard about 50 properties in the previous estimates. Are you talking about 50 properties or 50 water tanksor both?

Mr Grzeskowiak : It's properties. The size or number of tanks at each property will depend on the family composition and the number of people who live there. We use experts to help us calculate how big the tanks should be, because obviously to collect enough water to go through the dry season you need to size the tanks appropriately.

Senator McCARTHY: So you're going have 70 tanks in total?

Mr Grzeskowiak : Around 70 properties in total. There may be more than one tank at each property. It depends on the composition of the family that live there.

Senator McCARTHY: There has been an increase in the property numbers now. There were 50 initially; is that correct?

Mr Grzeskowiak : Initially there were around 62. What I'm saying is that 50 have been done and installed and there's a few more to go.

Senator McCARTHY: What remediation work is happening in Katherine?

Mr Grzeskowiak : The most important thing, obviously, is breaking exposure pathways through putting those families on water tanks. Defence work with the Power and Water Corporation to install the water-cleaning facility on the Katherine town water bore that you would be aware of. That has been cleaning the bore water that has fed into the town water since late last year. That's giving us town water in Katherine that has PFAS below the limited detection essentially, or very, very low. So that's breaking exposure pathways there.

On the base at Tindal we are installing the first of probably two water treatment plants that will start to draw water from the higher contaminated source areathe old firefighting training area. It will draw water from the ground, clean it and put it back. That's at the beginning of the remediation strategies for Tindal. That's going to be a long-term endeavour.

We have taken the best advice we can from our experts in this field about where we should site those plants. Intuitively, it will start to make a difference because, for every litre of water we take some PFAS out of, we are removing PFAS from the environment. We're not exactly sure how that will affect the flow of PFAS in the aquifer nearby. It will affect it in a positive way, in that there will be less contaminant in the ground, but we will need to run those plants for a long time.

Senator McCARTHY: How much will all the plants cost?

Mr Grzeskowiak : To buy and install the plant that we put on the bore for the town water cost around $4 million. That plant is capable of treating around a million litres of water a day. I would have to take on notice the cost of the plants we're installing on the base. I expect that they would be slightly more expensive because they were higher capacity plants.

Senator McCARTHY: They will hold more than one million litres?

Mr Grzeskowiak : It's not a question of what they hold; it's a question of the volume they can treat in a 24-hour period.

Senator Payne: Processing water.

Senator McCARTHY: Where is contaminated soil being kept?

Mr Grzeskowiak : I've just been advised that installation cost of the plant we're putting on the base at Tindal is around $5 million.

Senator McCARTHY: But you said there are two plants at Tindal?

Mr Grzeskowiak : The first plant we put in will treat five million litres of water per day.

Senator McCARTHY: Not one million, but five million?

Mr Grzeskowiak : Five million litres per day. I'll come back to you with the costs on notice, because I don't have those with me.

Senator McCARTHY: I'm a bit confused now. What are the costs of the tanks at Tindal?

Mr Grzeskowiak : I'll take that on notice. I was talking about the processing capacity of the plant at Tindal.

Senator McCARTHY: The plant in Katherine.

Mr Grzeskowiak : It will treat five million litres a day. It's not a tank. It's a processing capacity. It sucks water out, cleans it and puts it back into the ground.

Senator McCARTHY: Where is contaminated soil kept?

Mr Grzeskowiak : The contaminants we are storing on base are a fairly small amount at the momentmainly contaminants from some of the remediations we have been doing. We haven't started large-scale soil remediation at the base of Tindal at this time.

Senator McCARTHY: Why is that?

Mr Grzeskowiak : Because we're working towards that. We've started some soil remediation at some other places where we're further advanced in the remediation process, but at Tindal we're not quite there yet. The advice is that putting the water treatment plants on the firefighting training areas and pulling the PFAS out of water that's underground is the first thing we should do. So we're starting that now. We're taking advice on the next phase of the mediation. I expect we will be looking at some form of soil removal. The problem we've got

Senator McCARTHY: Do you have an estimated time for that soil removal on Tindal?

Mr Grzeskowiak : Not at this stage. I'll come back to you with that. The problem we've got across the whole estate is that techniques for extracting PFAS from soil are much less developed than techniques for extracting PFAS from water. We're doing a range of research activities, which include working with industry, to try and find better ways of extracting PFAS from soil. In fact, we'll be running some trials at one of the defence sites, starting probably later this year, on a relatively new technique for extracting PFAS from soil. The problem with soil is that soil has many different compositions. Whether it's sandy or clay soil or different types, the PFAS attaches itself to it in different ways and therefore you might need different techniques for removing it.

Senator McCARTHY: You've spoken about the soil at Tindal. What about other contaminated soil sites? Where are you at in removing it?

Mr Grzeskowiak : At RAAF Base Williamtown near Newcastle we've started to remove some soil from the drainage network.

Senator McCARTHY: Sorry; I meant around the Katherine region other than Tindal.

Mr Grzeskowiak : We haven't looked at decontamination of soil around the Katherine region, and I'm not sure that we would ever need to do that.

Senator McCARTHY: Why is that?

Mr Grzeskowiak : The primary mechanism for the spread of the PFAS has been through the water system, and essentially the underground water system. The primary mechanism for people being exposed to it is through drawing that water up through bores and then using that for drinking or cooking or whatever. It's not the case that the PFAS is out about in the air and just lands on the soil. That's not how it works. It doesn't evaporate. There are unlikely to be many areas outside of the base where soil remediation is a sort of good value thing to do. Soil remediation on the base at those hotspot areas where the PFAS was put into the ground in the first placewhich are usually the firefighting training areas, but sometimes some other areas as wellthat is the high value site to go and look at for extracting PFAS from the environment.

Senator McCARTHY: You've spoken about the properties. How many homes and businesses in the investigation area have been directly affected by PFAS contamination?

Mr Grzeskowiak : It's a difficult question to answer and be specific. We're obviously dealing with many members of the community. We'll be up in Katherine again on 18 June running the next community engagement session. We've regularly had a lot of people talk to us about their various issues. It's fair to say that the people who are most likely to be the most affected are those people that have been using contaminated bore water for domestic purposes, and that's around 70 properties where we're installing water tanks.

Senator McCARTHY: In relation to the meeting at Wurli-Wurlinjang Aboriginal Health Service that Dr Anthony Hobbs, the Deputy Chief Medical Officer, attended in Katherine, are you able to tell me how that meeting was promoted amongst the community?

Senator Payne: We can answer on behalf of Defence, Senator McCarthy, but obviously Health would have to answer on behalf of Dr Hobbs.

Mr Grzeskowiak : I'm not aware. I just can't recall how that health meeting was promoted. Normally, from a Defence perspectivethere's a community group that have been formed up in Katherine to deal with this issue. We'd talk to them and they would spread the word. When we're having engagements we put adverts in the local paper and we try and get on the radio to promote what we're doing.

Senator McCARTHY: Do you have a copy of the information that was provided to Aboriginal people about PFAS at that meeting?

Mr Grzeskowiak : Not the Health information that was provided. I'm sure we could obtain that and provide it to you on notice, but we'd have to get that from the Department of Health.

Senator McCARTHY: In the Defence response to question on notice 68 this is what we were told: 'In December 2017 the government announced it will be funding a community support package for people impacted by PFAS emanating from RAAF Base Tindal. The community support package includes additional dedicated mental health and counselling services to assist those in the Katherine community affected by PFAS contamination.' Have the mental health and counselling support services arrived in Katherine?

Mr Grzeskowiak : That's being delivered by the Department of Health, so it's really a matter for the Department of Health to answer. My understanding is that certainly initial support services have been made available through a telephone hotline, but a detailed answer would need to come from the Department of Health.

Senator McCARTHY: Sure. I will also be putting these questions to Health. It was actually in response to a question that you answered at the last estimates. Is there a mental health professional or professionals in Katherine, as promised in the support package from the government announced in December?

Mr Grzeskowiak : The Department of Health would have to answer that question.

Senator McCARTHY: Just on the water treatment plant in Katherine: why was the water treatment plant in Katherine not built to the same scale at the water treatment plant in Lake Cochran at Williamtown?

Mr Grzeskowiak : There are different situations and a range of different types of water treatment plant. In fact, we've got at least three different types of water treatment plant operating on the base at Williamtown. The plant that we've installed on the Power and Water bore that supplies town water is the latest technology of the water plants we've been using. It's very effective. The scale of the plant, treating a million litres a day, is enabling Power and Water in Katherine to provide sufficient water to the town for the normal uses.

You'd be aware that there are some water restrictions in the town around odds and evens for watering gardens and the like, which has kept the town water consumption down to around 15 million litres a day. The water treatment plants treat one-fifteenth of the water which comes out of the bore. The rest of the water comes out of the Katherine River. To the point where Power and Water draw water from the Katherine River, the water there has no PFAS in it. The bore water has historically been mixed at a ratio of around 10 per cent. At the moment we're a bit lower than that because of the capacity of that plant. But Power and Water advises that that's being managed.

Senator McCARTHY: Will the water treatment program in Katherine be expanded?

Mr Grzeskowiak : We're currently in negotiations and discussions with Northern Territory Power and Water about their preferred approach for long-term solutions here. The plant we put in place was very much a short-term solution, what we could do quickly. A range of options have been explored by Northern Territory Power and Water. We've made available to them our environmental consultants on the ground, free of charge, to the Northern Territory to help them with their deliberations. I can't speak too much for them, but my understanding is that they've come to the view that a larger version of the plant that we have installed would be good long-term solution.

Senator McCARTHY: Would that be their decision?

Mr Grzeskowiak : It's for Northern Territory Power and Water to decide what they think the best way forward is. We'll then have a conversation about how that's managed.

Senator McCARTHY: Just going back to the water bottles being supplied: can you tell us how much is being spent on water bottles being supplied to those properties?

Mr Grzeskowiak : I'll take that on notice for Katherine. We should be able to get those figures.

Senator McCARTHY: And also how often the water is being supplied to those properties? Is it on a daily basis or a weekly basis?

Mr Grzeskowiak : That varies. We try and work individually with properties. Obviously, now we've got 50 of those properties connected to rainwater tanks, we would fill those rainwater tanks initially, so bottled water supplies would cease because the rainwater tanks are in place. The amount of bottled water that's being delivered would be significantly reduced now compared to where we were a year or so ago. The negotiation with individual households about the amount of water they need and how often it is delivered would vary, I think, from household to household.

Senator McCARTHY: If we could get that information for the committee?

Mr Grzeskowiak : I'll see what I can get for you.

Senator McCARTHY: How is the community engagement going in relation to Defence and communication with families in the Katherine region?

Mr Grzeskowiak : This year we've had one community engagement session. We've got the next one in around three weeks time on 18 June. I'll be up there for that one. We've had a range of engagements. I have a dedicated member of staff who has been living in the area for all of this year and a little bit of last year who is my point of contact for families. He spends his time talking to families, talking to the people on the base to make sure that any issues are being connected. We certainly understand the issues. We attend the community forum that meets occasionally to discuss PFAS issues as well. I think we have a pretty strong community engagement process.

Senator McCARTHY: The Department of Defence previously advised that it had received a number of claims for compensation related to PFAS contamination. What is the status of those claims?

Mr Grzeskowiak : That's correct. We call these 'non-litigated' claims.

Senator McCARTHY: How many?

Mr Grzeskowiak : As I recall, there were 33 non-litigated claims that we received originally. There have been some what I will call 'partial settlements' of those claims. I'll give you an example. Some of those claims have been about: 'Can you connect me to town water?' I'm not talking Katherine in this case. This would be either Williamtown or Oakey. Where we have put one of those connections in place then obviously that meets at least part of that claim. There were 33 claims.

Senator McCARTHY: Any litigated claims?

Mr Grzeskowiak : In terms of class actions, yes; there are two. There is one around Williamtown and there is one around Oakey. Those claims were lodged last year. They're working through the process. There is not, to my knowledge yet, a class action lodged around Katherine.

Senator McCARTHY: Are any of the non-litigated claims around Katherine?

Mr Grzeskowiak : Six of the non-litigated claims are from Katherine.

Senator McCARTHY: And my last question: have any claims been settled?

Mr Grzeskowiak : None in full, but some have been partially settled, as I said before, because of something Defence has done through its water connection program.

Senator McCARTHY: Thank you.

CHAIR: Thank you, Senator McCarthy. The hearing will now suspend for the lunch break. We will resume at 1.30. This program will be in continuance. We have two more senators on issues of contamination and then we will move on to the other programs. It is likely, as I foreshadowed, that DHA and the War Memorial are likely to come on before the tea break. Thank you.

Proceedings suspended from 12 : 29 to 13 : 31

CHAIR: The hearing is now resumed. We are still on program 2.10, estate and infrastructure.

Senator RHIANNON: I want to start off with some questions about how the Department of Defence interacts with the task force that was set up by the Department of the Prime Minister and Cabinet. I notice that there's now a dedicated website, pfas.gov.au, but I notice that the page is not branded with the Department of the Prime Minister and Cabinet and that there are no contact details. Can you explain the relationship the Department of Defence has with this task force? Then I'll get into practical measures.

Senator Payne: Mr Grzeskowiak might also want to indicate that the responsibility has now transferred to the Department of the Environment and Energy.

Mr Gr z e s kowiak : The announcement on 7 May from the government contained within it a statement to the effect that the task force will continue its operation, in terms of coordinating whole-of-government activity, but the leadership has moved into the department of the environment. Defence works closely with the task force, and has done since its inception, including seconding people into the task force process for various periods of time. We continue to work closely with the task force, now led by the department of the environment, on Defence matters in relation to the broader government issue of PFAS.

Senator RHIANNON: Since the task force was set up, how many meetings have representatives of the department attended, and how many meetings have been held?

Mr Gr z e s kowiak : Defence would have attended all of the meetings of the task force. I'll have to take on notice the actual number.

Senator RHIANNON: Has the task force visited contaminated sites, or is it a matter of having meetings about your plans?

Mr Gr z e s kowiak : Defence hosted some members of the task force at at least two of the contaminated sites, being Williamtown and Oakey. We've also had members of the task force hosted at community reference group meetings in Williamtown.

Senator RHIANNON: Now that you've said that it's under the Department of the Environment and Energy: does the task force report to the Department of the Environment and Energy—is that how it works?

Mr Gr z e s kowiak : The leadership of the task force is now embedded in the department of the environment, although government departments that have work to do in this area would communicate with the task force through the department of the environment.

Senator RHIANNON: In terms of discussions that go on in the task force, have the task force members considered how they handle communities in contaminated areas with regard to how they interact with those communities? Is that an issue that the task force considers?

Mr Gr z e s kowiak : The task force is looking at the coordination of activities from different government departments. Obviously, Defence is involved in terms of the work that we're doing, but so are a range of other agencies—the Department of Health, in terms of the work they are doing; the department of the environment themselves; the department of agriculture; and the Prime Minister's department. Part of the conversations that go on would be about learning how we can best offer our community engagement. I've said here before that we are a learning organisation. We constantly seek to adjust the way we offer our community engagement based on feedback from communities to make them as effective as possible.

Senator RHIANNON: You just talked about how best to offer community engagement. One of the issues that has been raised with our office from communities in contaminated areas is that they've seen a shift from public meetings to one-on-one events. Is that correct?

Senator Payne: Are you asking specifically in relation to Defence or to the task force? If you are asking in relation to the task force, it is a matter for the department of the environment.

Senator RHIANNON: No, I appreciate that. I want the questions to go to the Department of Defence, but I'm also interested in if this tactical issue has been discussed at the task force. Let's start off with how the Department of Defence is handling its interactions with the affected communities.

Mr Grzeskowiak : It depends on which community we are in and the nature of the community engagement, whether we are presenting the results of a major study or milestone in the process of the investigation or whether we are just enabling people an opportunity to talk to us between significant events, if you like, in the study. We use different types of engagement for different circumstances, and it's fair to say we use different types of engagement in different places as well. When we started this process, we tended to do what we called town hall meetings. That would be the big meeting with lots of people. Quite a lot of feedback from communities around those meetings was that some people felt they were a bit intimidating and therefore they didn't want to ask a question in the broader public forum, and they would appreciate an opportunity to be able to talk one-on-one to people, so we then moved to a process where we have now quite an emphasis on that. We call them drop-in sessions. We might be in a local community centre—we do some of them in local shopping centres—where we will set up and have experts all day, and people drop in for a chat about whatever's on their mind. At some of those sessions we will run presentations at certain times of the day; at some of them we don't. It varies, and we are learning all the time about how to do this.

Senator RHIANNON: How long since you have organised a public town hall style meeting?

Senator Payne: Where?

Senator RHIANNON: Anywhere.

Mr Grzeskowiak : My next one will be on 18 June in Katherine, where we will be briefing on the results of the human health risk assessment final study. That will be characterised by a presentation that people can come and witness, but will also provide the opportunity to talk to individual specialists one-on-one.

Senator RHIANNON: Why I'm asking those questions is one of the issues—did you have other information?

Mr Grzeskowiak : I've just been advised that we did an open forum style briefing in Richmond fairly recently as well. We are still doing those open forum type briefings, but the strongest voice we get from the quiet majority in most of our community sessions is that they prefer the one-on-one or the ability to have smaller sessions where they can drop in and talk about their specific circumstance. They don't necessarily want lots of other people listening to that conversation at the same time, so we've responded to that feedback.

Senator RHIANNON: To clarify: you are having a public meeting in Katherine, but then you'll go into one-on-ones. Does that mean there won't be an opportunity for questions from the floor and a collective discussion?

Mr Grzeskowiak : No, there will. We always make time available for questions from the floor.

Senator RHIANNON: The complaint we are receiving is that there has been a shift from public meetings where people could hear other ideas—and often be quite strengthened, knowing that other members of the community were struggling with the same issues—to one-to-one meetings. That tactic is often used because it's harder for communities to become organised. You've said that you have received this feedback, but have you done focus groups or surveys to determine how people want to interact with you, or is it an assumption you have made?

Mr Grzeskowiak : We talk to people.

Senator RHIANNON: You talk to them?

Mr Grzeskowiak : Yes.

Senator RHIANNON: That sounds like it's not really evidence-based—that you had some conversations with people, but it's not a sampling of the community on how—

Mr Grzeskowiak : My people on the ground talk to a lot of people. I can assure you that the majority view that we're hearing is that the opportunity for one-on-one sessions with the health expert, the environmental expert, the people doing the remediation, somebody from Defence, whatever the issue is, is valued by the majority of members in the community. That is not to say we don't do broader presentations to a larger audience. We do, and there are always opportunities for questions.

Senator RHIANNON: Could you take it on notice and provide the committee with a list of public town hall meetings that have been held, where there can be a Q&A at the end, and of those one-on-one meetings—

Mr Grzeskowiak : We can certainly take that on notice.

Senator RHIANNON: for the different areas where you interact?

Senator Payne: There are a number of other variations on that. I think the response should put together all of the public consultation activity.

Senator RHIANNON: Thank you for your advice on that, Minister. I also want to go to some of the work of the health department, and how you're interacting with that. The health department has released a report prepared by the Expert Health Panel for PFAS. The panel noted that even though the evidence for PFAS exposure and links to health effects is very weak and inconsistent:

… important health effects for individuals exposed to PFAS cannot be ruled out based on the current evidence.

Are you aware of that report?

Mr Grzeskowiak : I am.

Senator RHIANNON: Has the Department of Defence reassessed its decisions—and I want to go through various aspects of the decisions you've been making? In light of that advice from the health department, have you reassessed your decisions on providing compensation to people impacted by contamination resulting from activities on your bases?

Mr Grzeskowiak : We've of course had a look at that report. The report essentially supports the approach Defence has been taking thus far, which is to minimise exposure pathways for people who were previously exposed to PFAS-contaminated water or products grown with that water. The view is that the report supports previous information that has been put out by the health department and other bodies that operate in that space. That's in part why the government announced a sustainable water program on 7 May, which sees Defence carry on doing what it's doing in helping people adapt their properties—largely through the connection to town water or water tanks—so that they can live in accordance with the various precautionary measures that might have been put in place by a state or territory authority.

Senator RHIANNON: I understand that that report from the health experts—and I'll repeat the key phrase again:

… for individuals exposed to PFAS cannot be ruled out based on the current evidence—

is at variance with previous evidence that you have given, where it's been denied that there is evidence about the accumulative impacts of this contamination.

Mr Grzeskowiak : Defence is not an expert in health. We have consistently said that we look to the peak bodies in Australia for advice on health effects. The peak body is enHealth. As I understand it—and the Department of Health would know better than me—enHealth have not sought to change their guidance based on this latest report, which was released a few weeks ago. The enHealth guidance is:

There is currently no consistent evidence that exposure to PFOS and PFOA causes adverse human health effects.

But they go on to say that, as a precaution, exposure should be minimised. That's the statement from enHealth. They have not chosen to modify that statement as a result of the latest health report. Beyond that, I think your questions should be directed to the Department of Health.

Senator RHIANNON: To go back to my original question: has the Department of Defence reassessed its decisions on compensation and land buyouts? I'm taking from the answer that you've just given that you haven't. Is that a fair assumption?

Mr Grzeskowiak : No. You've misinterpreted my answer. We have looked at the report. The report backs up the approach that Defence has been taking, so we are carrying on taking the same approach, which is around enabling people to live in their properties with access to clean water and other support mechanisms. The report released a couple of weeks ago by the expert panel supports the approach that Defence has been taking. Our view is that we need to keep doing what we're doing: breaking exposure pathways, and then moving into remediation as a focus.

Senator RHIANNON: With all due respect, my question was: has the Department of Defence reassessed its decisions on compensation and land buyouts? The conclusion is: you haven't.

Senator Payne: As you know, the matter in relation to those questions is being considered through the task force previously located in the Department of the Prime Minister and Cabinet, now located in the department of the environment. In the announcements concerning this area, which were made on 7 May, that matter was also addressed. It's not been a matter handled by the Department of Defence.

Senator RHIANNON: I also want to ask: have you reassessed your decisions with regard to advice being given to people about eating produce that they're responsible for? The one I'd really like to deal with is beef. I've been given reports that, in some areas, you advise beef cattle shouldn't be eaten by people in the contaminated area, whose cattle it is, but they can sell cattle on to the market. Is that the case?

Mr Grzeskowiak : The first thing I'd clarify is that the advice around consumption of food does not come from the Department of Defence per se. It comes from either Health or the various state and territory environmental protection agencies. They look to organisations like Food Standards Australia New Zealand in making their advice. I might just take a few minutes to explain the issue you've just alluded to. The advice from the experts in Health is that those people who might be in a situation where they have a higher-than-average potential exposure to PFAS should not consume products that have been grown using PFAS-contaminated water, which could include beef, because their starting point is as a higher-exposed population. Therefore, they should seek to, as a precaution, minimise their population. However, those products can be sold into the open market, because the view from the health experts and the Food Standards Australia New Zealand people is that when food goes into the broader market, it's separated into a very diverse supply chain. The probability of anybody eating steak three times a week from an area where there might be some contamination, whether it's PFAS contamination or some other form of contamination, is very low. No food standards agency in the world has yet sought to regulate any level of allowable PFAS in any food anywhere in the world, hence why you hear statements from those bodies that are authorised to issue them—and Defence repeats them, because we do communicate. In some situations, while people would be advised against eating beef, as an example, that they have grown using PFAS-impacted water, there's no impediment to that being sold into a broader supply chain.

Senator RHIANNON: In response to a question I just asked, you made the comment that precautions should be minimised. My question arising from that is: does the department have a policy when it comes to applying the precautionary principle, which I'm sure you're aware of but I'm happy to read out a definition if you wish?

Mr Grzeskowiak : The advice given to communities in areas where we are finding PFAS, particularly to people who have been drinking water that has been impacted by PFAS, is that they should minimise any future consumption. That's why we're taking the approach we are taking, which is to provide clean water—the government recently announced the continuation of the sustainable water project—and we will continue to do that to ensure that people who have been affected by this continue to take the precaution of minimising their exposure.

Senator RHIANNON: Do you agree, then, that applying the precautionary principle is sensible public policy? Is that a foundation?

Mr Grzeskowiak : That is the policy from enHealth, who are the peak body within the health organisation. Their statement is: while there is no consistent evidence that exposure to PFAS chemicals causes any adverse health effect in humans, as a precaution, exposure should be minimised.

Senator RHIANNON: So the precautionary principle also identifies the need, because of a lack of certainty that the science is still working it through. The principal working in terms of eliminating the actual source of contamination. In terms of how you described it and in terms of the contamination we know is there, doesn't it point to a need to apply the principle in the case PFAS contamination and therefore take immediate action to buy residents out of their properties?

Mr Grzeskowiak : We are applying the precautionary principle by taking immediate action to break the exposure pathways. All the experts in the field we talk to say this is the first thing that should be done: break the exposure pathways and have no further exposure. The next thing we are doing is looking at remediation of the environment. We have started that process at some sites. I have explained to you before what we are doing in terms of cleaning water in towns like Williamtown, Oakey and Tindal and we will be doing that in other places as well. We have started to remove soil from drains. In fact, we have done that work at RAAF base Williamtown and at the Army Aviation Centre Oakey. We are looking at doing more in those places and in other places. The precautionary principle is all about minimising exposure. It is the first thing and that's what we are doing. How do we start to remediate the environment? With these compounds, we are now pretty confident we know how to remove them from water and we are starting that work but it will be an extended piece of work over a long time. Remediation from soil is so challenging. We look worldwide for companies that can help us do this.

Senator RHIANNON: You talked about the precautionary principle of minimising exposure. But the usual definition of 'cautionary principle' is that you actually remove the exposure and, if the contamination cannot be removed then remove the people and assist them with that. There are some interesting examples in various international publications. One of them about PFAS from 2016 is a journal article called the Precautionary principle and chemicals management: the example of polyfluoroalkyl acids in groundwater. It was addressed by separating people from the actual chemical exposure. That's the accepted definition of precautionary principle. It was good to hear you are talking about the precautionary principle but worrying in terms of how you are defining it. Are you saying there is another definition of precautionary principle or have you chosen to redefine it?

Mr Grzeskowiak : I'm not a redefining it. What I am saying is there is more than one mechanism for applying the precautionary principle. The mechanism we are applying is to remove exposure pathways by making clean water available and there are some other things that we are doing so that people can live in their properties in accordance with the advice provided by the local relevant state or territory health or environmental protection agencies.

Senator RHIANNON: When you say 'remove exposure pathways', people in Oakey and Williamtown are still living with the contamination. And because of the terrible agitation and uncertainty they have lived with, some of them would prefer to move but now their properties are worthless—again, the human aspects. We first met and started having question-and-answer sessions back in 2015 but three years later, that aspect of people's lives, you are still not dealing with. Is that a fair description?

Mr Grzeskowiak : We are working as diligently as we can to ensure that the people in the communities that are affected have access to clean water and can live a life in those properties in accordance with the precautions that have been laid down by the local health or environmental protection agencies. The majority of the exposure would come from the consumption of water, usually groundwater, that contains PFAS. By taking that exposure pathway away and helping people in some other ways, we can eliminate the exposure pathway. I accept that that does not eliminate the angst that many people feel because of the uncertainty of the knowledge of science around what these chemicals might do. All I can do is look to the peak bodies in this country—enHealth, the Department of Health and the expert panel that was put together. The expert panel released its report two weeks ago, and there is a body of evidence there that says that there's no consistent evidence that exposure to these chemicals is actually causing any adverse health effects in people.

Senator RHIANNON: That's the quote from the report. It said:

… important health effects for individuals exposed to PFAS cannot be ruled out based on the current evidence.

Mr Grzeskowiak : That is exactly what the report says, and that's why it goes on to talk about minimising exposure as a precaution. That is what we're doing.

Senator PATRICK: This is on the same topic but dealing with RAAF Edinburgh. My understanding is that the RAAF ceased using PFAS there back in 2004. Would that be about right?

Mr Grzeskowiak : Around 2004, a decision was made to move away from the old 3M Light Water, which contained PFOS and PFOA as active ingredients. It didn't all happen magically in the space of a few months. There was a phasing out period over a few years where the chemicals were changed to a product that's called Ansulite, which is what we still use.

Senator PATRICK: I think you've done a set of samplings around Edinburgh and you're extending those samples. When did the original sampling commence?

Mr Grzeskowiak : The investigation would have commenced last year. We always say when we undertake an investigation that we nominate an initial investigation area. That's based on some analysis by people who know about how the hydrogeology works—how the rivers or stream networks might work—and then we go and do the sampling and analysis of that investigation area. Based on what we find, sometimes we may need to expand the area. Obviously, if we're out at the edge of an area and we're still finding things, we might want to expand the area, or there may be some other reason why we want to expand the area. In this case, we have expanded the area. Over a thousand samples have been taken so far. There'll be another 500 or so samples taken in the expanded area. We're not finding large amounts of PFAS outside of the base at Edinburgh. We're finding it mostly in surface water. We're not really finding it in underground water. That's due to the nature of the types of soil and the hydrogeology of the area. It doesn't seem to be leaving the base at the sort of rates it is in some other places.

Senator PATRICK: Who was engaged to do that first set of sampling?

Mr Grzeskowiak : The environmental consultant was a company called JBS&G. I'm not sure what that stands for.

Senator PATRICK: So they had the expertise to establish what area made sense to do as a first instance.

Mr Grzeskowiak : Yes. We take advice from them on what to do. We are engaging companies that have the necessary expertise in this sort of environmental analysis. You may be aware that we're running 23 investigations around the country at the moment. We're using quite a lot of Australia's capacity in terms of companies that can do this sort of work.

Senator PATRICK: I presume there was a report generated after that first engagement. Assuming that's the case, is that report public?

Mr Grzeskowiak : Yes. We have a three-stage process. Initially, there is a preliminary site investigation, and that would have been completed at this base. We always make our information publicly available. We do community sessions to brief that to people and allow them to talk to the experts. The second phase is then the detailed site investigation. That's ongoing at Edinburgh at the moment. If required, we will do a human health risk assessment and environmental risk assessment. At Edinburgh, we are doing a human health risk assessment.

Senator PATRICK: When do you expect the second round of samplings to be completed for Edinburgh?

Mr McLeod : We expect those to be completed in the third quarter of this year and we'd be back in the community towards the latter end of the year to provide the results of those investigations.

Senator PATRICK: The report will be made public?

Mr McLeod : Yes.

Senator PATRICK: I note that you are doing consultation. In fact, my office got an invitation, so thank you for that. Can I have a summary, as was prescribed by Senator Rhiannon for the New South Wales sites? Can I get one of those that describes the consultation that's taken place for Edinburgh, please?

Mr Grzeskowiak : A list of the consultations that we've undertaken?

Senator PATRICK: Yes, in a similar form. The minister made mention of the fact that there were different types of consultation.

Senator Payne: Yes, that's right.

Mr Grzeskowiak : We can provide that on notice.

Senator RHIANNON: Can I clarify, Chair: I'd been asking for it from around the country, not just for New South Wales. Is it okay if that goes on notice?

Senator Payne: Across the sites—yes, Senator.

Senator PATRICK: That will identify each of the individual sites, I presume, and we'd be able to break it down that way.

Mr Grzeskowiak : We'll go through each site when we've undertaken a consultation and will briefly give the format of that consultation.

Senator PATRICK: Fantastic. Has there been any engagement with the South Australian government and especially the EPA?

Mr Grzeskowiak : We are well engaged with all of the EPAs around Australia and all of the relevant local government associations—usually the EPA; often the health agency as well.

Senator PATRICK: In these circumstances, I presume that the Commonwealth is subject to state law unless there's an overriding federal law. There's no overrider in this instance; you are simply subject to state laws and are responsible from a state perspective?

Mr Grzeskowiak : On Commonwealth property, the Commonwealth is not subject to state law. Usually, if we're involved in remediation works—for example, we might have soil that we need to dispose of—if we're disposing of it offsite, we make sure we get environmental protection agency clearance for that, from whichever state or territory we're in. We do have strong connections with them. If we're doing anything that's off a defence base—that is, it's not Commonwealth land—we follow state and territory rules and regulations. On a defence base, we're not obliged to, but we seek to.

Senator PATRICK: In the case of the South Australian government, I presume that you ultimately end up having to satisfy community expectations, but it's the EPA that, in some sense, sets the standard in terms of what you should have done and what you should do?

Mr Grzeskowiak : As I said, the EPA cannot formally regulate Defence on Commonwealth land, but we have a good working relationship with the EPAs and we always seek to achieve the standards.

Senator PATRICK: Sorry, I am referring to off-base.

Mr Grzeskowiak : Off-base—yes. I referred to some other things earlier. Whenever we're working off-base or we're trying to dispose of things off-base, we need clearance from the EPA.

Senator PATRICK: Consistent with your approach, I presume that when the report is completed—with a further round of sampling—I think you said you'll make that available. There were some nods for the Hansard. Finally, how much has been spent on this remediation, dealing with the PFAS issue, in total so far?

Mr Grzeskowiak : If I look at the cost of the investigations and the cost of the remediation we're starting to do, we've spent to date around $150 million. Spend into the future is something we're looking at. Really, that's going to be driven by the remediation strategies that are put in place, but this will not be a short or inexpensive exercise.

Senator PATRICK: Do you have any contingent liability set aside for litigation? I won't ask you the amount, but—

Mr Grzeskowiak : I am not an expert in that area. I don't think there's any specifically for litigation. No, I don't think so.

Senator PATRICK: Maybe if you could just take that on notice just to confirm that, that would be good. On the expert panel, was it in any way constrained as to recommendations for remedies?

Mr Grzeskowiak : The expert panel was put together through the Department of Health, led by the task force, so I don't have a clear vision of that. My understanding is there was no constraints placed on the expert panel. What the government is trying to do with the various research it is undertaking is trying to really understand this problem. It is fair to say that in Australia now we are one of the nations that understands, as well as any other nation, about this compound. We talk to the US and we talk to some European nations, and they are very eager to talk to us about what we are doing. In many respects, we are a bit ahead of some of those countries.

Senator PATRICK: In respect of the whole issue involving potentially hundreds of millions of dollars—at least $100 million or possibly $200 million—I presume you have then fed the lessons learned from this back into other areas of Defence in respect of chemical use? I am presuming that has been done?

Mr Grzeskowiak : The part of Defence that worries about environmental consciousness is in my organisation. We have recently issued a pollution prevention manual. We have started a rolling three-year program that is looking more closely at other contaminants. We have had pollution or contamination eradication programs running for a long, long time for things, like asbestos, that are widely known about. We are still spending around $25 million a year removing asbestos from the Defence estate. We have been doing that for a decade, and we will keep doing that for another couple of decades. There are a whole range of remediation activities into hydrocarbon contamination. Whenever we are looking at a redevelopment on a base or a sale of a piece of land, we always have to do a contamination investigation and work out how to take that forward. Unfortunately, there is quite a legacy there. You would call it poor practice by today's standards; but back in the 1950s and 1960s, people did things differently than we do now.

Senator PATRICK: Yes, hindsight is a wonderful thing. Thank you, that was very helpful.

Senator GALLACHER: You have mentioned the product ansulite. Whilst this product does not have PFAS as an active ingredient, trace amounts are detectable as a by-product. Is that correct?

Mr Grzeskowiak : That's right.

Senator GALLACHER: Civilian airports use an alternative product, Solberg 6, which does not contain any PFAS. Defence has a position that states that Solberg 6 does not meet the requirements set by Defence for firefighting foams in Defence bases. On the back of that excellent summary of the situation we find ourselves in, are we still using a product which contributes to PFAS in the environment?

Mr Grzeskowiak : We are still using ansulite. As you have correctly stated, it doesn't have PFAS and PFOA put into it when it's made, but we have detected trace elements—a really, really low level. Ansulite would still be characterised as a product that might contain fluorinated products, which is a generic name for the PFAS chemicals. We are actually looking now at alternative solutions to see whether there is a fluorine-free product that can meet the military-standard requirements for firefighting. They are a bit different from a civilian firefighting requirement. I am confident that, before the end of the year, we may have enough information to propose a shift; but right now that investigation is still ongoing.

Senator GALLACHER: For the layperson out there, if a civilian aircraft is in need of a firefighting foam—and generally speaking they would be larger than a military aircraft, except for your C-17s and the like—why can't you put out a fire with Solberg 6 right now and get away from PFAS altogether?

Mr Grzeskowiak : You can put a fire out with Solberg RF6. For the reasons, and we're going back now to the early to mid-2000s—

Senator GALLACHER: I'm just going back to the fact that PFAS is a problem and we want to get rid of it.

Mr Grzeskowiak : The reason why ansulite was selected over Solberg RF6—and it was looked at in the early to mid-2000s—is for the higher energetic fires that you could get on military aircraft because of the nature of the fuel and munitions that are carried. At that time, ansulite was deemed to be a foam that would more quickly extinguish a fire than Solberg RF6. We are having those assumptions tested.

Senator GALLACHER: Is there a study or a review of standards?

Mr Grzeskowiak : We have started a review. That's ongoing at the moment. That will run through certainly the next few months. We have seen product demonstrated recently in Europe that are showing us that there may be alternatives available that can meet the military standards and are fluorine-free products. The point I should make about ansulite is that we really hardly use it any more at all. Back in the 1960s, 1970s and 1980s, the firefighters would train using foam all the time. These days, and for quite sometime now, we train using water. Firefighting foam is rarely used. It is used occasionally for testing equipment, because it needs to be. When it is used, it is used in a controlled environment, collected and taken away for proper disposal. We are not putting it into the environment. Clearly, if there was an actual fire, we would then use it and we would do our best to clean it up afterwards.

Senator GALLACHER: If I can just run through these very specific questions: has any work being undertaken to review the standards preventing Solberg 6 from being used on Defence bases?

Mr Grzeskowiak : Yes, we're doing that work at the moment.

Senator GALLACHER: And there will be recommendations coming out of that review?

Mr Grzeskowiak : I hope so.

Senator GALLACHER: Do you have a time line for the review?

Mr Grzeskowiak : I would like to be in a position to see recommendations before the end of this year.

Senator GALLACHER: Products are being used by defence forces in countries where PFAS is banned; is that your understanding of your international contacts? Mr Grzeskowiak said they was in touch with international partners about this subject.

Mr Grzeskowiak : There are rather other countries that use ansulite for firefighting.

Senator GALLACHER: Are you in touch with any other countries where the defence forces have banned PFAS?

Mr Grzeskowiak : I'm not aware that anyone has banned PFAS. There maybe some defence that use fluorine-free foams, but I would have to take that on notice to give you a reliable answer.

Senator GALLACHER: Is Solberg 6 the solution or is there a number of products that you might be considering?

Mr Grzeskowiak : My understanding is there is potentially a range of products, and Solberg RF6 may well be one of the candidates.

Senator GALLACHER: And they will be part of the review, which is to be concluded by the end of this year?

Mr Grzeskowiak : The review is looking at what the options are that Defence could move to.

Senator GALLACHER: This is a dumb question, but why don't you just move to Solberg 6 now and get rid of PFAS altogether? It does the job, doesn't it?

Mr Grzeskowiak : It is certainty what is used by the civil aviation authority in this country.

Senator GALLACHER: It is quite possible that military aircraft could be dealt with that way anyway. If it landed at a civilian airport, a firefighting unit with Solberg 6 would turn up and it would probably be used.

Mr Grzeskowiak : That is entirely possible. There are a range of issues when we look across the Defence spectrum. We use these foams on ships at sea as well. We need compatibility with seawater, and not all foams have that compatibility. When we're on operations, we need compatibility with our potential coalition partners, and not all foams have that compatibility.

Senator GALLACHER: To summarise, I think your evidence is that ansulite contains a very small measure of PFAS.

Mr Grzeskowiak : PFAS and PFOA is what I talk about, because that's what I know about. It's not put in it when it's made, but we are discovering very, very small amounts of it in it. We don't know why that is.

Senator GALLACHER: If someone was measuring it, they would identify something, even though it might be small?

Mr Grzeskowiak : It is identifiable.

Senator GALLACHER: So it would still upset your neighbours?

Mr Grzeskowiak : It's orders of magnitude less than the amount that was put into the previous products when they were made.

Senator GALLACHER: Are you gaining any acceptance of the normal or acceptable level of PFOA or PFAS in your surrounding communities or do people just not want a bar of any of it?

Mr Grzeskowiak : I can't talk for what communities feel, but the communities we're involved with now would rather there was no PFAS in the environment.

Senator Payne: But the reality is—and we've discussed this before—that, in terms of production of materials like Scotchgard- or Teflon-type materials or sandwich wrappers and a number of other things, it has been pervasive—

Senator GALLACHER: Ubiquitous.

Senator Payne: ubiquitous indeed—across a range of aspects of modern life, and that is part of the challenge for an organisation like ours. I just want to clarify—from an abundance of caution—with the deputy secretary my recollection that there had been an earlier report or a previous report into Solberg RF6 that covered its persistence in the environment and its higher levels of toxicity.

Mr Grzeskowiak : That was a report done in around 2006 by an organisation called CRC Care.

Senator Payne: This is part of the challenge we're dealing with.

Senator GALLACHER: I accept that it's a very complex and difficult area.

Mr Grzeskowiak : The CRC Care report was part of the information that fed into the decision to use Ansulite at the time. The CRC Care report suggested that Solberg RF6 was more toxic than Ansulite. I think that, when we now look back at that study, they were talking about short-term acute toxicity, if that's the right phrase, rather than any long-term sorts of issues. But certainly, back in 2006 when those decisions were made, there was some evidence that Ansulite was a lower toxicity product than Solberg.

Senator GALLACHER: I suppose what brings this line of questioning to the fore really is the Airservices example where they say, 'We haven't used this for X number of years; we moved away from it years ago.' They don't actually point the finger at Defence, but there's a clear implication that they feel that they've moved much more quickly than Defence. In Tindal, I think that the treatment you need to put out on an F18 or something like that is quite different to what you might need to deal with a fire on a civilian base. That's what one of the commanding officers told us, anyway. Thanks very much for that.

CHAIR: Are there any more questions for program 2.10, Estate and infrastructure? There being none, I thank Mr Grzeskowiak very much for coming here today with the officials.

[14:17]

CHAIR: We now move on to program 2.11, Chief Information Officer.

Senator GALLACHER: Do we have a CIO?

CHAIR: We do.

Senator GALLACHER: You have ServiceNow. Is that a cloud computing company that's been running a 500-person trial? Does anyone know anything about that?

Mr Pearson : ServiceNow is a product we are using. It offers a range of IT services, but it's used outside of IT as well to facilitate and workflow demand and supply services.

Senator GALLACHER: Is it characterised as a 'new automated post-in, post-out system'?

Mr Pearson : It can be used for that amongst many other things, Senator.

Senator GALLACHER: What does that mean? You apply to go to Adelaide, and Defence send you to Brisbane or something?

Ms Skinner : Senator, I think you might be talking about one of the reform pieces of work that we are working through to integrate all of the enabling services that are required to facilitate members, particularly the ADF, posting in and out of different locations and that product probably underpinning the workflow that integrates all of the different service elements of the Defence enterprise to help people.

Senator GALLACHER: So there was a cloud computing company, ServiceNow, which ran a 500-person trial within Defence of a new automated post-in, post-out system for Defence called PostingConnect? That trial has concluded?

Ms Skinner : Yes, that trial has concluded. It was quite successful, and we're doing some further work on continuing that integration.

Senator GALLACHER: There's a statement that the initial trial went well, but Defence said they didn't have a procurement vehicle to turn the trial into a full rollout. What does that mean?

Ms Skinner : What that means is that it was a trial. It was a pilot. Now that we've got some information that it worked, we can have a look at creating a program or a project and looking at how that might be funded.

Senator GALLACHER: Does this mean that there'll be another 500-person trial of a new and improved ServiceNow offering?

Ms Skinner : No, Senator. I think what we would say is that we will take the lessons we have learned from the work that's been done in understanding how to provide a better-integrated posting-cycle outcome for ADF members and build that into a proposal for a broader rollout of the program.

Senator GALLACHER: This is our description, not yours, obviously: does this trial look at improving an antiquated and laborious system?

Ms Skinner : Certainly, Senator. Just to provide some context: one of the continuing pieces of work and themes of the first principles review is integrating the enabling services. Mr Sergeant in previous testimony has commented on the challenge if you're an ADF member posted, let's just say, from Adelaide to Brisbane. They are often the person who has to integrate all of the pieces of their posting—their removal, their ICT arrangements when they move from one location to another and a whole range of different elements that the various parts of Defence would provide them. Rather than the enabling service, the customer, if you like, ends up integrating all of that and then has to go to a range of places and do paperwork for a range of things. The pilot integrated all of those elements so that the person minimises the amount of time that they're integrating their posting, providing and re-providing information. The whole intent is to de-thatch the organisation, remove those layers of duplication and provide a better service to the customer.

Senator GALLACHER: The customer is Defence personnel?

Ms Skinner : The customer would be an ADF member in this case, in terms of post-in, post-out.

Senator GALLACHER: De-stressing this would be a key enabler to secure longer or greater retention?

Ms Skinner : Absolutely, Senator. It is very exhausting to relocate.

CHAIR: There would be a lot less frustration, no doubt.

Ms Skinner : There is lots of frustration. Having been a child of serving parents, I know about moving around as a small child.

Senator GALLACHER: This is not a new issue. Are we leveraging all the opportunities that are available to us? Are we getting this right? If you did a 500-person trial and it was successful, what are the impediments to actually rolling it out?

Ms Skinner : I wouldn't say that there are any impediments. The trial was conducted over the January 2018 and December 2017 posting cycle, so we've concluded that and we've got feedback. Now, as I said, it's really about how we then take those learnings and build an industrial-sized program for the number of people that actually do post in and post out over that period. It's just that we can now use those learnings to create a program and then fund it.

Senator GALLACHER: What is your average posting cycle? Is it 18 months and 2,000 people or 18 months and 1,000 people?

Ms Skinner : I don't have the detail on how many people move at the end of each year. I can get that for you.

Senator GALLACHER: But 500 is a representative sample to be able to make a judgement? Is that what you're saying?

Ms Skinner : Five hundred is a decent enough sample to make a judgement. You need a sample size that you can manage and get feedback from, and you need one that's large enough to test your system, so 500 was settled on for that. I don't have off the top of my head, though, how many people move around at the end of each year.

Senator GALLACHER: What is the outlook in this area? Is there a timetable or a program for enabling this system to roll out?

Ms Skinner : I chair the integrated service delivery committee within Defence. I'm waiting for advice from the lead area there to come forward with how we take those learnings and make it into a program. We are working on that right at the moment. It is a key focus.

Senator GALLACHER: Is it a funding issue or a 'get it right the first time' issue?

Ms Skinner : It is a combination of 'let's get it right' and then 'let's understand how much it will cost'. Then we can have a look at how we prioritise the resources to what is a very worthy endeavour.

Senator GALLACHER: Do we know how much the trial costs?

Ms Skinner : I don't have that. I can take that on notice.

Senator GALLACHER: If you could take on notice what the trial cost. To clarify, has the trial been and gone?

Ms Skinner : Yes. The peak posting cycle is the December-January period. The trial occurred over that period. We may well still be collecting some feedback, but the broad activity occurred at that point. We got feedback and other information through that period.

Senator GALLACHER: For those who experienced a better service in the trial, are specific programs going to be in place that would maintain that experience in the next posting cycle?

Ms Skinner : That is certainly something I need to look at between now and the next posting cycle.

Senator GALLACHER: But there are no specific programs, as we speak, that would solve the issue—

Ms Skinner : Not at this point. As is said, it was a trial—it was a pilot. It's one of the new ways of doing business—let's try something, let's experiment, and then let's create a program, if it works.

Senator GALLACHER: What is Posting Connect?

Ms Skinner : That is the label given to the virtual front door that a member can go to. It gives them access to all the services. As you said in your earlier point, it provides a workflow. Instead of the member needing to go to the removals people or the security people or the ICT people, that is all work-flowed through for them.

Senator GALLACHER: Is that run in the cloud or is it on Defence infrastructure?

Mr Pearson : It can be both. This version is running in the cloud. Its ability to be accessed in a wide variety of places allows the spouse of the serving ADF member to use it while her or his spouse is on active duty. That is one of the real pushes for this. It's not reliant totally on the ADF member to do all the work.

Senator GALLACHER: The pilot has been completed. Is it able to be extended, can it be used, or can it be made available again, in the cloud or on the infrastructure?

Mr Pearson : Absolutely. The product itself has been well-tested in the market. It's been around for some years. It is very suited to this type of application.

[14:28]

CHAIR: Are there any other questions for program 2.11? No. Then that concludes program 2.11. Thank you very much, Mr Pearson. We now move to program 2.12: Defence People.

Senator MOORE: I have a couple of different areas. The first one is about the release of media we have seen about the FOI about the number of sexual assaults across the whole of the defence forces. I know there are particular ways that sexual assaults are handled in the defence forces, but can we get any information at this hearing?

Senator Payne: I think the officials can also assist with some clarification of, perhaps, not entirely accurate reporting—

Senator MOORE: That would be very useful, Minister, because what we have out in the public sphere is what's there, so that would be great.

Vice Adm. Griggs : I will lead off and if we need clarification from particular areas I will pass to colleagues. I think you know from numerous discussions we have had over the years what our position on sexual misconduct is and our lack of tolerance for it. We do not tolerate it. We don't accept it. We have, as you know, embarked on a fairly serious cultural change program over the last number of years, and it's probably worth, for the record, reminding not you but others who listen and watch this—

Senator MOORE: Is this about the program?

Vice Adm. Griggs : Yes.

Senator MOORE: I'm very happy it's going to lead to that, because in the past we have had quite extensive discussion at this forum, so it's a very good place to do it again.

Vice Adm. Griggs : I think one of the big issues we've had—and it's not just in terms of sexual misconduct and sexual assault but abuse generally—is that there was a culture that excluded rather than included. I think, particularly in relation to sexual assault, there was a fear—a not unjustified fear—by victims of sexual assault that the organisational response would be either inadequate or automatically launch into an intrusive and distressing investigative process.

Senator MOORE: Yes. And, added to that, we've talked about that power dynamic—

Vice Adm. Griggs : Yes.

Senator MOORE: And we talked a lot about how Defence has taken that on board as an issue to be considered.

Vice Adm. Griggs : The biggest shift we've made in the last few years is to move away from the focus on the investigation, which was everyone's automatic default position, to adopt a victim-centric approach. So the aim is to support the victim and make sure that the victim's needs are taken care of first and foremost, and things like the investigative process, frankly, take a back seat to the victim's needs. If the victim does not want to pursue that process in the immediate aftermath, they're not compelled to. Part of the reform process was to introduce this notion of restricted reporting, where a report could be made which would allow the initiation of support through the Sexual Misconduct Prevention and Response Office, SeMPRO, but it did not automatically mean that there was an intrusive and distressing investigative process. The aim of that was so that it would generate confidence in our people that they could come forward and get the support they needed but not be put in a situation where they felt that they didn't have control of the process. And that feeling of lack of control was a major issue. What the SeMPRO does is provide trauma-informed support and advice to victims of sexual assault, but also, and importantly, to the command structure on how to help the command structure deal with these issues in the workplace. Very importantly—and I think one of the factors for seeing an increase in this year's figures—we have significantly ramped up what we call bystander training. That is making people aware that, if they see these sorts of things occurring or if they hear of these things occurring, they need to come forward. I think the SeMPRO has trained something like 29,000 people in the last 12 months in terms of bystander training.

Senator MOORE: In terms of training processes across different levels of the service?

Vice Adm. Griggs : All across the ADF. I think what you're starting to see is victims having more confidence to come forward and being more ready to report and get the support they need, rather than what used to happen a lot, as we know, which was that people suffered in silence. More importantly, the people around them are now much more aware of what they can do, how they can support, how they can help and what their reporting responsibilities are. I think that's one of the reasons we've seen the spike in this year—

Senator MOORE: As awareness grows.

Vice Adm. Griggs : As awareness grows. The other part to the numbers that were reported was that there are a number of historical cases in that. They weren't this year. They were reported this year but they were from some time ago. We also had cases in those number where the alleged perpetrator was not a Defence member. They were all mixed in together. That is where we're at in broad terms. I don't know if Justine or Admiral Wolski want to add anything to that.

Ms Greig : The aggregated numbers were reported as a lump—I absolutely agree with everything the acting CDF has said in relation to the complete unacceptability of behaviour of this nature, but in terms of the breakdown of numbers, I do think it is relevant for the purposes of accurate reporting for that to be reflected.

Senator MOORE: Minister, do you believe that the way it was reported did not reflect that kind of sensitivity?

Senator Payne: That's correct.

Senator MOORE: I just wanted to get that on record. It was lump numbers that went out and became headlines across a lot of the media about increases and those kinds of things. Can we get the statistics on how many reports of sexual misconduct have been received in the last six months?

Vice Adm. Griggs : I could actually read you some numbers. I will go for the last four years?

Senator MOORE: Which is what the report did, it went for a number of years.

Vice Adm. Griggs : In 2014-15 there were 127 allegations of sexual misconduct—that's across the spectrum: it's not just sexual assault; it's sexual misconduct—reported to the ADF Investigative Service.

Senator MOORE: That was before the change. Was that before we had the

Vice Adm. Griggs : That was early in the—

Senator MOORE: What year did the SeMPRO process come in?

Vice Adm. Griggs : In 2013.

Senator MOORE: I knew it was around that time. I'll go back: 2013-14 was 157; 2014-15 was 147; 2015-16 was 134; 2016-17 was 147; and 2017-1818 to date is 187. That's the spike I am talking about.

Senator MOORE: And through that period there's been the extensive awareness campaign, which has kind of permeated out through the service.

Vice Adm. Griggs : It's growing, and that number, particularly the bystander training piece, has really ramped up in the last little while.

Senator MOORE: So the definition of those responses is 'sexual misconduct', so it could cover anything that someone would perceive to be sexual misconduct, from a perception of poor behaviour up to sexual assault.

Rear Adm. Wolski : That's right. The definition of sexual misconduct includes the areas of sexual harassment, acts of indecency, sexual assault aggravated sexual assault and pornography.

Senator MOORE: So it's a very, very wide definition.

Rear Adm. Wolski : Very broad, and sexual harassment actions include leering, unwelcome touching, suggestive comments et cetera.

Senator MOORE: It is very similar to the Australian Public Service definition.

Rear Adm. Wolski : Very broad, yes.

Senator MOORE: The APS does not have such a wide definition. There's sexual harassment and then it goes into other definitions, but Defence has got that very wide one, which, again, could impact on the figures that we're talking about.

Rear Adm. Wolski : That's right.

Senator MOORE: Vice Admiral, you've described the process, which is SeMPRO. Can you tell me what the current numbers on the staffing level of SeMPRO are at the moment?

Rear Adm. Wolski : It is about 19.

Senator MOORE: Is that ASL?

Rear Adm. Wolski : That's about 14 ASL, and the rest are reserves or full-time military members.

Vice Adm. Griggs : The other change we have made in the not-so-distant past is that, following the Royal Commission into Institutional Responses to Child Sexual Abuse, we expanded the SeMPRO services to cadets—the youth development scheme; not cadets at ADFA, who are already covered.

Senator MOORE: These ones who join up at the local naval—

Vice Adm. Griggs : Yes.

Senator MOORE: That was done as a trial for the first 12 months and has been taken on as a permanent feature.

Senator MOORE: It's now permanent from 2017-18?

Rear Adm. Wolski : Correct—from the end of last year. We received about 26 expressions of interest in getting assistance through SeMPRO from the cadet organisation. The vast majority of that 26 were from instructors, parents and other adult supervisors. I just have to correct something I said before. There are about 12 ASLs rather than 14.

Senator MOORE: Are they mainly based in Canberra?

Rear Adm. Wolski : That is correct, yes. They do a lot of travel around Australia because, as Admiral Griggs said, we are taking the training which is going on to bases—including the healthy relationships and sexual ethics courses, general awareness courses and the command-and-management team awareness training as well. Also, we are building a library of scenario based sexual ethics training packages so that commanders on the ground can take their workforce through those online modules.

Senator MOORE: Is it a case study model?

Rear Adm. Wolski : Yes, exactly like with case studies.

Senator MOORE: On notice, can we get the experience level staff profile of those people?

Rear Adm. Wolski : Yes.

Senator MOORE: Have there been reports made from the investigations that you've identified to me that have gone to the police? Have any gone from an internal investigation to a police investigation? Do you have stats on that?

Rear Adm. Wolski : On the numbers that you quoted before regarding the freedom-of-information request, I am unable to say whether any of those cases have gone to the police. However, obviously, we do have cases that get taken to the civilian police. As well as that—

Senator MOORE: What is the focus there? How does that work? You have a discussion with someone inside about what they want to do. They can choose to take that further, if they wish. You went into detail about that. But, at the stage where they wish to take it further, is that an internal military investigation or is that a civilian police investigation?

Rear Adm. Wolski : It depends on the alleged offence. I have the numbers for currently serving members who have been accused of sexual assault as at 1 May.

Senator MOORE: This year?

Rear Adm. Wolski : Yes. As at 1 May this year, there have been 27 substantiated allegations, one civil conviction, 24 disciplinary or administrative actions and one service terminated. That is not to say some of the others haven't had terminations, but this is what's in the data. One was resolved through mediation. That would be with the consent of the victim. There are 36 under consideration. Of those, 23 have been referred to civil authorities. Two inquiries are in progress. Another 10 are under consideration by the military discipline system, and one is subject to legal review. So that gives you a sense of the split between what is dealt with internally and what is dealt with by civil police. Our default for the serious offences is the civil police.

Senator MOORE: Sure. If it's a case of military personnel who are accused of sexual assault against someone who is not military, is that automatically with the civilian police? If the alleged victim is not in the military and a claim is made, would that automatically go to the civilian police?

Rear Adm. Wolski : Absolutely, yes. In fact, the victim would generally go to the civilian police, not the employer or person who is the perpetrator. Just one other point is on the trauma informed care principles that were discussed before. We work on safety, choice, trust, empowerment and collaboration with the people who come to SeMPRO for support. We are able to emphasise that the victim is able to do whatever they choose, whether that be, at the time, feeling like not making a formal report, or going straight to the civilian police, regardless of whether they are in the ADF or not, or using the ADF investigative service.

Senator MOORE: So that's the reverse of the last case I mentioned. If the alleged victim is a member of the military and the alleged perpetrator is not in the military, you would refer that automatically to the civilian police?

Vice Adm. Griggs : Yes. That could be reported through the military system, and then that would be referred to the civilian police.

Senator MOORE: That's what I was thinking. A member of the military may know, through the amount of training and awareness that you've been doing across the service, that SeMPRO exists and may well turn to SeMPRO in that situation—

Rear Adm. Wolski : For assistance.

Vice Adm. Griggs : We would hope they would.

Senator MOORE: Okay.

Rear Adm. Wolski : We do see that quite regularly. People are able to call up and ask for advice for friends who are outside the service. We do not hang up on anybody on the SeMPRO helpline. There are definite actions and information which can be given on any circumstance, and sometimes this also involves cases which are not in the Australian Defence Force but, rather, in their civilian lives totally.

Senator MOORE: The FOI request—and various media covered various different parts of that particular situation. There were a number of quite explicit examples of the types of behaviour that was alleged to have happened in the six months to March. Are those the kinds of things that you're looking at doing in that case model—working with people in the service, both as supervisors and potential victims? They're quite direct about spiking drinks and filming, and there is this constant thing about filming other members; it just seems to be a recurring issue. They're the kinds of things that could be the basis of the model for how you survive those situations and what you do. That's what I would expect. I'm just putting that on record.

Rear Adm. Wolski : Yes, that's correct.

Vice Adm. Griggs : We're analysing the trends.

Senator MOORE: Thank you very much for the detail you've provided. As indicated, those numbers are large, in terms of what's come out, but the numbers that have actually gone through to sexual assault are a much lower figure. It's 187 as opposed to the 27 that have gone to action.

Vice Adm. Griggs : They are still too high.

Senator MOORE: It is way too high. Can you give me some indication, on notice, about the kinds of things that happen with that range? You've given me what happens with the most serious, which is absolutely when somebody has been sexually assaulted, but around the issues of—

Unidentified speaker: Sexual harassment?

Senator MOORE: Vice-Admiral, you gave me the list of things, from sexual harassment through to indecent behaviour. Can you just give us some idea about the kinds of responses for military—can it be demotion, counselling? What kinds of things?

Vice Adm. Griggs : We can do that.

Senator MOORE: That would be helpful.

Vice Adm. Griggs : Just to finish that off, the 27 substantiated and the 36 under consideration. There were 73 not substantiated. The three categories of that were either no statement made by the complainant or it was withdrawn. So there were—

Senator MOORE: So the person may have decided, for whatever reason, not to go forward? Okay.

Vice Adm. Griggs : There were 32 examples of that. Insufficient evidence—there were 30 examples of that. And tried and found not guilty—there were 11. That gives you the full picture.

Senator MOORE: A bit of a spread. The particular program now that's looking at issues in cadets—can I get some indication of the issues that have been raised? I'll put that on notice as well.

Vice Adm. Griggs : We can do that.

Senator MOORE: Particularly as that came out specifically from the royal commission to see the information put forward—

Vice Adm. Griggs : We're very acutely aware of that because, as we continue to develop the youth safety framework, we want to make sure that it's adapting to the issues as they exist. It is a small number of issues, but we'll provide you that.

Senator MOORE: What are the ages of cadets?

Vice Adm. Griggs : Fourteen to—I think we're standardising to 18.

Unidentified speaker: One service was 19.

Vice Adm. Griggs : We're getting to 18 across the board.

Senator MOORE: That's adolescent. There is no-one linked to the service in any way that is younger than 14?

Vice Adm. Griggs : No, I don't think so.

Senator MOORE: The only thing would be if it was behaviour. One of the issues mentioned in the FOI request was a member sexually abusing a child within their care, which is another category altogether. But, for people who are members of the Defence Forces, 14 is the youngest at this stage?

Vice Adm. Griggs : Members of the Defence Force?

Senator MOORE: Within your families. You've got the formal members of the Defence Force and cadets who are linked to the military service.

Vice Adm. Griggs : I'll check to make sure it is 14. I think it's 14.

Senator MOORE: And to sign on to the Defence Forces—is that 18? No. We actually have 16-year-olds—

Senator MOORE: Sixteen -year-olds can sign up?

Vice Adm. Griggs : at the academy. Largely Queenslanders, because of the wonderful common national education curriculum.

Senator MOORE: I'm wondering what that means?

Senator Payne: The national education curriculum is not consistent.

Senator MOORE: I did not know that.

Vice Adm. Griggs : Our youngest members are generally ADFA cadets from Queensland.

Senator MOORE: Of course. And they'd be in whatever our year 12 is, which would have some 16-year-olds.

Vice Adm. Griggs : Yes.

Senator MOORE: Thank you. I think Senator Rice has some questions on the same issue.

CHAIR: Senator Rice, over to you.

Senator RICE: Thank you. I've just got a couple of quick questions about Defence's implementation on the government guidelines on the recognition of sex and gender. I want to know what actions you have taken to implement the guidelines.

Ms Greig : To position this—because there has been quite a bit of work done, I'll go back to 2012. At the same time as our Pathway to Change reform, to complement that, we put in place the whole-of-Defence gender inclusion strategy. We actually didn't release that until 2013, even though it is 2012-17. As part of that release in 2013, we made sure that we reflected the guidelines in the overarching strategy. So, in that sense, I think we were one of the first—at least of the large agencies—to do that. From the strategy itself, we identified particular diversity groups. I think today the language is more contemporary, but, as phrased in that strategy, priority groups included women, Indigenous Australians, people with disability and the LGBTI community. In terms of then positioning where we could then put the guidelines into place, that provided a loose but broad framework.

In terms of the practical things, we did adapt our systems—our HR system—and our surveys to ensure that we had that in place. I think it was July 2016, that requirement. So that has occurred. The other things, though, that I think in some ways are the more meaningful things, are around how you communicate around different forms of gender identity? In that respect, we have got quite a bit of information in print. In my area, that relates to what we make available in our diversity inclusion pages. We also started some work early on on guides for managers. Today, one good example of that is we currently have, at the Australian Defence Force Academy, a guide for managers in terms of how to lead and be inclusive for people that have various gender orientations.

In addition to that, my area in the medical—joint health command—have worked hard from the medical point of view—in particular, really encouraging conversations with commanders, as well as the medical establishment, in terms of how we best include, as I said, but also work with individuals on a case-by-case basis in an organisation where, obviously, different gender orientations aren't the norm in a very large organisation. That's sort of where we are now. I don't think we've finished in terms of implementing the guidelines. But it's certainly been one of a number of priorities that came out of that original work.

Senator RICE: That's very good to hear. Can you give me a bit more detail? You talked about working with commanders: what are the training opportunities and where is the training mandatory across the organisation?

Ms Greig : In terms of the inclusive culture that we are really trying to bring around, it comes back to the Pathway to Change comments that I think the VCDF provided earlier. We have really pushed now towards a place where commanders—leaders—are being held to account, not only for a positive workplace climate but an inclusive one. It comes into all command and leadership training in terms of what the expectations are and what the behaviours are that are central to our cultural reform. In that way, I guess, it's a strong theme in all leadership and command training.

How do we then support commanders with particular cases, which I think is where you are heading? We have, certainly, material available as guides to managers and leaders in the organisation. We are yet to finalise a definite policy—that policy piece is still a work in progress—but we are consulting on that piece with various communities, in fact, as I speak.

Senator RICE: So with the training and whether it's mandatory: across the range of departments I've talked about there can be policies, but it's the implementation of them and then whether you've got comprehensive, respectful relationships, essentially, or whether there are some people where it's much more ad hoc across—

Ms Greig : The other thing that has been implemented most recently is that we totally refreshed our mandatory workplace behaviour training. That is mandatory across the ADF and APS workforce. That has been refreshed along the lines and themes that I've just spoken about.

Senator RICE: That's good to hear. So that's your internal, but can you give me a bit more detail about the external-facing operations of Defence in terms of being gender-sensitive and respectful?

Ms Greig : Yes. It was probably about 2011 that we engaged Pride in Diversity to really help us in this area and to give us greater capability. I don't think we were very capable at that time. So the Pride in Diversity organisation has helped build up some skills for us.

We've continued to have a membership with that organisation and we call on it at various times. We also have an internal network and, in addition to that—indeed, most recently—we had a group of those who are part of our LGBTIQ workforce who actually talked to the previous acting secretary for some time to really share what the challenges were for them. More recently they talked to Secretary Moriarty about some of those issues as well. So we are really trying to learn at the same time. I don't think we've stopped learning since 2011.

Of the other external things we do, clearly, the most obvious to the nation is the march in the Mardi Gras as an external recognition of us embracing an inclusive workforce.

Senator RICE: Finally, with the work that you do with other agencies—or, say, with the interactions between Defence in states and territories—have you done any work in ensuring that for any joint projects or combined things you do that the guidelines are being fully implemented and that there is respect and recognition?

Ms Greig : We benchmark ourselves every year on the Australian Workplace Equality Index. That is one way. We are compared to other organisations across Australia that also partake in that index. That's growing year by year. So that is a benchmark for us.

In terms of states, the other thing we do is really to try to look at the data and the research. That's probably where we are at the moment.

Senator RICE: Does what you've been talking about apply throughout the various agencies that fall within the Defence portfolio?

Ms Skinner : I'm not sure what you mean by agencies. Do you mean by the Defence department as a whole? It applies across the Department of Defence.

Senator RICE: In particular parts—whether across the department is completely compliant.

Ms Skinner : Yes.

CHAIR: I have a number of questions. I am certain I saw, today, an announcement by the Minister for Veterans' Affairs of a trial for assistance dogs for veterans. Is anyone able to provide information on that?

Senator Payne: Not here, but tonight perhaps.

CHAIR: I'll move that on; thank you. My second question is in relation to antimalarials. We've seen a lot of commentary recently about the use of antimalarials and I'm wondering if you can tell me about Defence's approach to the use of mefloquine?

Vice Adm. Griggs : I might start with the broader context on malaria. The World malaria report is a WHO report which is released periodically. The last one was released in November 2017. In 2016 there were 216 million cases of malaria across the globe. That's an increase from 2015—

CHAIR: Did you say 200 million?

Vice Adm. Griggs : I said 216 million, up from 211 million. That's 445,000 deaths from malaria. So that's 1,200 people a day dying from malaria. On three occasions, certainly in the Army's history, our operations have been either stopped or severely impacted by malaria. So we take our duty of care there extremely seriously. One of the challenges of malaria and malaria treatment is that it is not a static disease like many diseases, and resistance to particular drugs is common, and we have to stay ahead of that. We have, what I believe to be, a world-class facility in Brisbane. The ADF Malaria and Infectious Diseases Institute, as it is now called, are at the frontline of antimalarial research.

The concerns that have been expressed around mefloquine and tafenoquine, which is another drug I'll talk about in a minute, have come from a relatively small group of veterans but they are quite an active group. The side-effects of mefloquine are well-known and documented, and they do have a neuropsychiatric dimension to them. I'll get Commodore Sharkey to talk about those. You don't prescribe mefloquine to people who have had mental-health issues, because it can exacerbate those. We have had one of the most conservative approaches to the prescribing of mefloquine. It is our third-line antimalarial. Doxycycline is our primary antimalarial. Malarone is our second line. A total of 1,984 members of the ADF have been prescribed mefloquine over the last 20 years or so. One thousand, three hundred and nineteen of those were prescribed the drug in two trials, and the reason we conducted the trials back in 2000-02 in Timor was that we had a significant number of malaria cases in our Timor deployment. I think that, in the initial deployment, we had 63 cases, but overall, out of the Timor deployment, we had over 400 cases—

CHAIR: And that was with people who had had doxy or some other—

Vice Adm. Griggs : That's right. The challenge you've got with doxy, of course, is that it's a daily dose and has to be taken with food, and, obviously, if you're in the field, that can be problematic. The attraction of both mefloquine and tafenoquine is that they are a weekly dose, and so, from a combat or operational scenario, easier to manage. Current prescription rates for mefloquine: in 2016, five; in 2017, three; and this year, one person has been prescribed mefloquine. It is very much the antimalarial that is our last choice. Tafenoquine is not yet registered by the TGA. It is going through a registration process in the US, and that is, I think, coming towards a conclusion. We did do some trials with tafenoquine as an experimental drug, again in the early 2000s, and 1,540 members of the ADF participated in those trials. There was a series of allegations made that the mefloquine trial in Timor was not conducted properly. That has been investigated by the Inspector General, ADF, who found no basis to that allegation and concluded that the trials were conducted ethically and in accordance with the National Health and Medical Research Council's guidelines.

I just gave you those prescription numbers for ADF, being five, three and one. In the civil community, between 10,000 and 13,000 people are prescribed mefloquine every year. One of the things we're still trying to understand—

CHAIR: Can I just clarify that? So, today, there are still Australians outside of the Defence Force who are regularly prescribed mefloquine?

Vice Adm. Griggs : Ten thousand to 13,000 a year—of that sort of order. Around 35 million prescriptions of mefloquine have been made globally. So what troubles us, and what we've been trying to grapple with for a few years now, is: why does this issue seem to manifest in a military population? Some of the rates and numbers that have been put forward by the anti-mefloquine advocates are significant, and, if you extrapolate those rates out to the 35 million prescriptions across the globe, why are we not seeing the same sort of manifestation across the globe? No-one in the ADF has denied that mefloquine has side-effects and can have serious neuropsychiatric side-effects. But the incidence of that, we would maintain, on the evidence that is available, is that that is very, very much lower than what is claimed. So the fact that we don't see this manifesting across either the Australian community, in those sorts of numbers, or the global community, in the 35 million, is something that we still don't understand.

The linkage to suicide and particularly to veterans' suicide has been made and claimed over the last few years, and that's something that, again, worries us and concerns us. We've been working with the Department of Veterans' Affairs on a number of initiatives there to try and understand that a little bit better. One of the things that we did was look at our in-service suicide number since 2000, which I think was 135, and I asked the team to look for whether is there a pattern, any connection to mefloquine in those numbers. I think the total number of people who had taken mefloquine was two and both—

CHAIR: Two out of 130?

Vice Adm. Griggs : Two out of 135. Both of those had taken the drug at least 15 years before they tragically died. Again, this is not an easy one. It is clearly a very, very emotive topic and it generates a lot of anxiety. We have developed, I think, an exceptional educational web resource. I think it is the best web resource in understanding antimalarials on the planet. We have updated clinical guidelines for our medical health professionals. We have done a complete literature review externally on mefloquine to again try and understand what we are missing. Is there a gap in our knowledge? None of that has turned up anything of significance.

Both the Canadian and the UK parliaments have had inquiries into mefloquine. Neither of them have recommended banning the drug. What they have done is effectively recommended that the UK and Canadian militaries—again, this was generated out of the military population, not out of the civil population—adopt basically the same regime that we have, which is the third-line drug. In the UK in particular, there was no hierarchy of prescription. There was no first line, second line, third line; they would generally just prescribe.

CHAIR: So as a result of their inquiries, they've now pretty much adopted what the ADF is doing?

Vice Adm. Griggs : They've effectively adopted what the ADF has done for some time. Even one of the more significant antimefloquine advocates in the US, Dr Remington Nevin, who is critical of mefloquine use in the military, has commented that those other militaries are now adopting what we've adopted. There are no simple answers. There has been significant discussion—

CHAIR: I guess if there was, the cases of malaria would not be increasing globally; they'd be decreasing with all of the efforts that go into global antimalaria campaigns.

Vice Adm. Griggs : There have been a number of allegations that we—and I seem to feature more prominently in this than others and I'm not sure why—are advocating and helping the drug companies to register tafenoquine. We're not. We are waiting on the outcome of that registration and if that drug is registered by the TGA then we will consider—there'd be no reason we wouldn't use tafenoquine. Again, it's a weekly dosage drug. Its side-effects profile is much, much better than that of mefloquine. There is no evidence that we know of that links it to neuropsychiatric conditions. During the trial that we did, of the 1,540 members—in fact it was that trial that generated knowledge of a deposit that builds up in the cornea when you take the drug. It doesn't affect your vision and it dissipates when you stop taking it, but that was actually as a result of the trial that we conducted. Where it would sit, should it be registered and we adopt it, if it is registered, would be a decision that we'll take once it's adopted. In a nutshell, that's where we're at.

CHAIR: Thank you very much for that very comprehensive overview. The bottom line is that today we've got one service personnel who is taking it this financial year.

Vice Adm. Griggs : One prescription this year.

CHAIR: Before I hand back to Senator Moore, I would like to go to ADF transition. Could the department update the committee on what they're doing for the transition processes for members leaving the ADF. We heard a little bit from Ms Skinner earlier on, but I would like a more comprehensive overview, if we could.

Rear Adm. Wolski : The situation that we described last year was that 5,500 to 6,000 people are transitioning from the permanent ADF each year. That remains the same. With transition, we are very keen on making sure that members and their families have a plan on what they are going to be doing after their life in uniform, they are financially aware of the types of recompense and what they are going to do for employment outside of uniform, they are aware of the steps that are needed to be taken to make themselves as ready for employment as possible, and they have a plan for how to cover themselves medically and also housing needs. They should be aware of all of the support which is available to them—and that is from the Department of Defence, because they can still access some support even after they have transitioned, and also the other support mechanisms through the ex-service organisations, DVA et cetera.

The most important part here is to start the planning early, and that's what I wanted to talk about today. The ADF is very keen to make sure that people plan early when they're going to approach their transition. This is not something which is just a template that we put over all of our workforce, because there are so many different individual needs. Some people are transitioning out of the ADF very soon after joining. Others have a full career and are transitioning into retirement. So we do talk to people on all of the points, and that is, first of all, at recruit school. We talk about transitioning and the Department of Veterans' Affairs there.

CHAIR: So it actually does start at recruitment?

Rear Adm. Wolski : At recruit school rather than recruitment—

CHAIR: Post recruitment.

Rear Adm. Wolski : Correct. We also talk about it during some of the promotion courses that people attend. The Department of Veterans' Affairs features there. Of course, as a person is starting to consider their options as far as transition goes, we ramp up that support and take them through the new coaching model, which is where there is a tailored program of a member and their family sitting down with a transition coach and talking through what their plan is, what training they may need to be able to enact that plan and also what a plan B and a plan C is, because we are finding that it's beneficial for people to understand what it is that's going to happen if plan A doesn't work for them. We also talk about not transitioning out and remaining a part of the Australian Defence Force, whether that's as a permanent or as a reserve member.

The families are really important in the transition work that we are doing. We are fully supportive of families coming in and sitting through those coaching contacts. We are also very supportive of family members attending the transition seminars, which are a feature in the transition process as well. We make sure that the members are separating with the appropriate documentation, and that is, of course, key to them having their medical documents, understanding what their financial payments are going to be, and also having all of their claims put in to DVA, preferably well before they transition from the ADF.

Recently, we introduced a two-day job search preparation for those who have served less than 18 years. Anybody who is transitioning is able to attend the two-day job search preparation, even those who are separating after a short time, for example in recruit school. People are able to access leave so that they can go and do job search or work experience opportunities. Again, somebody who is leaving after only a very short time in uniform is able to get up to five days leave to do those types of things. We find that more people are taking the job search opportunities now that we are talking more about it. Obviously people as they approach transition are very focused on it, but we are finding that it's beneficial to talk to people through the career stages that I mentioned before, and also talk more to folk about DVA.

The final step that I'll mention is about surveying. The department is conducting surveys just before a member transitions. We talk to them about 30 days prior to transitioning and then about a month after they have left uniform. We give them a phone call, have a chat to them about how they are experiencing life and what sort of things they need to do to continue on with their plan. It's that transition coach that makes that call, so that we keep that consistent person there with them, talking through their plan initially, building that plan, and then as they are executing it after having left uniform. After that phone call, every three months we are sending out an electronic survey to the person and assessing whether they have any further needs as far as training goes, because people are still able to access the career transition assistance scheme for up to 12 months. That is points to help them find employment and to prepare themselves: job preparation, resume writing, or accessing some individual education which is needed to round out their skills. Also interview skills as well can be accessed through the career transition assistance scheme.

We have found that since we've started the surveys, it does jog people to actually say, 'Well, Plan A isn't quite working out for me. I do need to go back to Defence and access some of that training to assist me to get employment, for example.' We have now seen around 170 people that have come back to Defence through the Defence Community Organisation and accessed further training or further help in what they need to make that transition successful.

Another piece about employment is obviously the Prime Minister's veterans' employment initiative, which has been working especially at trying to make it clear that it is a great business proposition to have veterans as part of the workforce for companies outside. That is a really key piece, as well as explaining to industry the skills that ADF people develop while they are in uniform and thus what a great business proposition they are. They're the main points that we are helping with—explaining what ADF skills are resident in folk, especially those who are at various ranks and what you would normally expect of those, for example in leadership abilities. That's a key piece to get across to industry, and a lot of industry are very accepting of that we're seeing a lot of interest through the Prime Minister's veterans' employment initiative in organisations, companies recruiting veterans.

CHAIR: That is all music to my ears. Thank you. It is very comprehensive. I have got a couple of questions in relation to that. In relation to the transition coach and the surveying that you do, what cohort is that? When did you start doing that? Is it just for people in the year that it started looking forward or are you looking back for people who have transitioned in the past and providing more support for them? How does it work?

Rear Adm. Wolski : The transition coaches are for people who are going through the transition process now—and this started in 2017. A lot of people are identifying, up to a year out, that they are going to transition and have placed their discharge at own request in, because the majority of ADF people are voluntarily discharging from the ADF. Then, over that year as they approach transition, they put in place the steps necessary to go through that process and access the coaching.

CHAIR: This is not a criticism: it's the logical thing to do, but you are now picking up people who are seeking to transition and that will be a progressive process from here on in. For people who have transitioned out—I know those are big numbers, 5,500 per year—as you know we've heard in this committee and other committees that veterans are particularly the most vulnerable when they transition out, particularly for mental health issues, and if they can't get employment or a job, some have in the past fallen through the cracks. Is that one of the things you might have an indicator for, so when people do talk to them or do surveys, if there's any indication that they're also—from a mental health prospective—struggling, there's a mechanism in that to actually either suggest they go to somebody or refer somebody else to them?

Rear Adm. Wolski : Absolutely. Of course, we also have a concurrent medical process which people are going through, because administratively, medically, people have to be prepared as they go through the transition process. Generally mental health issues will be picked up as people go through their final medical assessments. But that is not to say that—even after a person has just transitioned out and are going through a discussion about how things are going with their coach after they've left uniform—we're not able to identify that they have a need to come back in and do some more work as far as either accessing Department of Veterans' Affairs or the Joint Health in Defence.

CHAIR: But it is contact they haven't had in the past that might be able to assist in that. In relation to Suakin and changing in careers as it gets fully implemented across the services, you have members who might start off full-time then they might move up and down the Suakin employment scale. In terms of transition, if they've actually moved to casual or part-time work, if they've had full-time service at some point, will they still be subject to the same support requirements? How will that integrate with Suakin and different categories of employment?

Rear Adm. Wolski : As they move up and down the employment spectrum from full-time, most people go from full-time to reserve work. They are either service category 7 or service category 6 for full-time. They will go through the transition process as they transition to service categories 4, 4 or 5.

CHAIR: So that becomes part of their plan (a), (b) and (c)?

Rear Adm. Wolski : Correct.

CHAIR: That's great.

Rear Adm. Wolski : A lot do then return and do some continuous full-time service as you would know, and at the moment we've got about 730 reservists who are doing full-time service. They will again be able to access the transition process as they move back out of continuous full-time service and into more reserve work.

CHAIR: That is particularly pleasing because that's obviously been another gap in the past. We're about to stop for the tea break, but could I ask you perhaps on notice that you provide a bit more background information about the transition package and the measures that you've talked about. But also in terms of the survey results, if you could also take on notice and give us a report back how you're measuring success. With the numbers of people on the programs going through and some of the survey results, I think the committee would find that very instructive to have a look, so we can longitudinally look at it with you as well—what's the snapshot in time now and then when we come back and talk to you, we can have updates to see how it's progressing across the different indicators.

Rear Adm. Wolski : Of course.

CHAIR: Thank you very much.

Vice Adm. Griggs : Chair can I just clarify—you detected a bit of hesitancy about minimum age for cadets—I was actually wrong. ADF cadets can join as young as 12 if the cadet turns 13 in the calendar year that they join. The youngest army cadet is 12 years and eight months, the youngest Navy cadet is 12 and a half, and all Air Force cadets are 13.

Senator MOORE: So it's not just states that have different rules in this space?

Vice Adm. Griggs : The One Cadet reform program is not yet complete. We're getting there.

CHAIR: We will now break for afternoon tea break and will resume on Defence people with Senator Moore.

Proceedings suspended from 15 : 30 to 15 : 45

CHAIR: We are on program 2.12, Defence people.

Senator MOORE: I have a question about the sexual assault support that your central agency offers. In locations like Townsville or Brisbane, where that team is not available, are there any professional links with professionals in this area outside of the service? For instance, in the Townsville region they have quite a strong sexual assault department through the state government. If an incident happened for someone in the military, is there a way that those services are able to be accessed?

Rear Adm. Wolski : Absolutely, yes. We are reliant on our links, in fact, with other community organisations, simply because these incidents can happen anywhere and sometimes people do need immediate care. SeMPRO has developed a series of links which we are able to call upon. It also allows us to keep aware and across some of the differing laws that states have in regard to this area.

Senator MOORE: And they all are different.

Rear Adm. Wolski : It does have multiple purposes, but, obviously, care is the primary one.

Senator MOORE: That's the end of that section. This is completely non-related; it's a data question. You may well have to take this on notice. What is the total number of dependent children across the Defence Force?

Rear Adm. Wolski : I can take that on notice. In the childcare program I do have one point which was asked last time, and that was around the individual case management service for child care, which is run by the Defence Community Organisation. It has now assisted 512 families in placing their children in new child care and has helped 601 children.

Senator MOORE: With that data, is there any indication of where the need's greatest? If there are 512 families—

Rear Adm. Wolski : It's very dependent on the time of year that people are moving, so it varies a lot.

Senator MOORE: I now have a series of questions about the restructuring of Healthcare Australia at Lavarack Barracks. My understanding is that Healthcare Australia is currently undertaking changes to nursing and health practitioner rosters in all of the health units on site at Lavarack—is that true? My understanding is that that is happening.

Vice Adm. Griggs : We'll get Commodore Sharkey up.

Cdre Sharkey : Sorry, what was the question?

Senator MOORE: It's about roster changes to healthcare practitioners employed through Healthcare Australia at Lavarack Barracks.

Cdre Sharkey : I'd have to take that question on notice to get the details.

Senator MOORE: There's a whole series of particular questions about different levels—I will put this all on notice, but just so you're prepared for it—of nursing, nursing staff, criteria for determination where there are redundancies and support being offered, and on what models the department has put in place to avert or mitigate any adverse effect of the proposed changes. I won't go through the rest of them, because it's obvious that it's ridiculous to put you through that. There are quite detailed questions about the different personnel and the kinds of conditions of service for people in that space. We'll put those on notice. I don't have anymore medical ones to the best of my knowledge, Commodore. There was a question on notice on vacant positions in the Defence Community Organisation. We've asked before, but can we get on record again the support provided by the Defence Community Organisation during relocation? We've had these discussions. It's similar for relocations we've just gone through with the transition process.

Rear Adm. Wolski : We'll take that all on notice.

Senator MOORE: Are you aware of eight vacancies for social workers within the DCO?

Rear Adm. Wolski : There are not eight at the moment. We have been going through a rolling pattern of filling social worker positions around Australia. We find that some—

Senator MOORE: Are social workers only in the DCO?

Rear Adm. Wolski : No, we have social workers in other parts of Defence as well. One way that we do have of keeping an appropriate service in each location, even if there is a gapped billet for a period of time, is a contract with a national social worker provider so that we can call that assistance in—

Senator MOORE: Locums?

Rear Adm. Wolski : from a contractor point of view for a short period of time.

Senator MOORE: On notice, can we get where your vacancies are and how long they've been vacant for? You've said that you can tap into this professional support unit when there's—

Rear Adm. Wolski : That's right. We'll take that on notice.

Senator MOORE: One of the vacancies in Tindal was moved to Darwin. How many social workers remain at Tindal?

Rear Adm. Wolski : I believe it's one. I will confirm that on notice.

Senator MOORE: Was it moved because you were unable to fill the position?

Rear Adm. Wolski : We are able to cover Tindal quite a proportion of the time with somebody travelling down from Darwin as necessary. It's not ideal, I understand—

Senator MOORE: Three to four hours? I'm trying to think of the last time I drove it. How long is—

Senator GALLACHER: 3½ hours.

Senator MOORE: It's not optimal.

Rear Adm. Wolski : It's not ideal, but we can do that.

Senator MOORE: How many positions are in Darwin?

Rear Adm. Wolski : There are a couple. I'll take that on notice.

Senator MOORE: While there's a vacant position at Tindal, you're saying that you'll be able to fill it by support out of Darwin?

Rear Adm. Wolski : That's correct, Senator.

Senator MOORE: What is an FLO?

Rear Adm. Wolski : Family Liaison Officer.

Senator MOORE: Vacant Family Liaison Officer positions—do you want to take that on notice as well?

Rear Adm. Wolski : I'll take that on notice. We have very few vacancies there.

Senator MOORE: Has there been a recent selection process there? It says 'when were they finalised?' Was there a recent—

Rear Adm. Wolski : All the Defence Community Organisation positions are taken as a priority within my organisation. We run rolling recruiting processes to keep people in those positions.

Senator MOORE: According to the returned question on notice following the last session, two Family Liaison Officer positions were recently inactivated. Can the department provide an explanation as to why these positions were inactivated, where they were, how support is being offered to those sites and how much the saving is to the department by having these positions not filled?

Rear Adm. Wolski : I'll take that on notice.

Senator MOORE: We've got some questions, and we had some discussion yesterday, seeking an update in relation to women's participation in the ADF. We had some, and I think you may well have answered the question about—I'm not sure of the title, but the head of Defence did put some information about how many women are in combat roles and, across Defence, whether that was an increase or decrease. I think we had the discussion on that yesterday afternoon, but, if not, it can go on notice. Can the department advise how many women sit on boards in Defence and whether that's gone up or down in the last 12 months?

Ms Greig : We can give you the full information. The short answer is that it's gone up in the last 12 months.

Senator MOORE: On notice we'll get how many and which boards?

Ms Greig : Yes.

Senator MOORE: That would be wonderful. This question is very general, and I think I'll put it on notice as well: what's being done to encourage more women to join or stay in the ADF? What programs do you have? We will put that on notice rather than—

Senator Payne: There is a range of responses for that.

Senator MOORE: That's what I thought. We will do that. I have a few questions—

Rear Adm. Wolski : I can take us back to that question that you had about female participation rates for the services. This is as at 1 March 2018. ADF in total is 17.5 per cent, the Navy is 21.2 per cent, Army is 13.9 per cent and Air Force is 21.5 per cent. All are trending upwards.

Senator MOORE: So Navy is just shading Air Force, and all are trending upwards.

Vice Adm. Griggs : It's the other way around; Air Force is just shading Navy.

Senator MOORE: That will all be in your annual report, I would imagine.

Rear Adm. Wolski : Very much so.

Senator MOORE: I would have thought so. If we can get the information on notice about what programs you have for retention and for recruitment in those areas, that'd be great. I just have a couple of questions that have arisen out of the media reports yesterday about changes to a fleet directive which restricts alcohol consumption for sailors in overseas ports. There was quite a bit of coverage.

Vice Adm. Griggs : We'll get the Chief of the Navy to come and talk to you about that.

Senator MOORE: It was yesterday's Defence story in the media. Can you give us some information about the new fleet directive which restricts alcohol consumption for sailors in overseas ports.

Vice Adm. Barrett : Let me start by saying there have always been rules and regulations about both leave and alcohol consumption in overseas ports.

Senator MOORE: Since the First Fleet, I would imagine.

Vice Adm. Barrett : I can't speak for the First Fleet, but I imagine they would have existed.

Senator GALLACHER: They had a cup of rum every day!

Senator MOORE: So there have always been rules.

Vice Adm. Barrett : There have always been rules. The issue we have at the moment has been a spike of occurrences or incidents of alcohol related behaviour, particularly in Singapore. We have had seven incidents over the last 12 months. As a consequence of that, the rules have been tightened. Certainly the rules have been impressed upon commanding officers of ships and can be tightened. So there are a series of measures put in place.

Senator MOORE: So the responsibility is with the commander of whichever ship it is?

Vice Adm. Barrett : It's the responsibility of individuals, but it's the responsibility of commanders to enact that. The issue I wish to stress is the fact that it's not that we are picking up poor behaviour; it's that, particularly in Singapore, the tolerance for alcohol related poor behaviour is such now that the police will arrest people immediately and will hold them for questioning and remove passports. As a consequence, people can be delayed or remain, in some cases, incarcerated in Singapore for long periods of time. The issue we are addressing is how you manage people who are in that situation. The incidents that have occurred range from relatively benign incidents—we've had incidents of people spraying water on taxi drivers—right through to more serious offences. But the tolerance within Singapore itself is not to accept that, and the consequence has been arrest.

Senator MOORE: What is the impact? This is someone who is on duty but on leave when they go off the ship into port?

Vice Adm. Barrett : It's a ship that is on duty. People are given shore leave, as we have done and will continue to do.

Senator MOORE: Shore leave would be short term. If these people are arrested—and it could be for any period of time—they can't return to the ship?

Vice Adm. Barrett : They may be arrested and they may be returned to the ship while the ship is still in Singapore, but their passport will be held by Singaporean authorities. It is a right of the Singaporean authorities to be able to do that.

Senator MOORE: So the ship can sail and leave them?

Vice Adm. Barrett : If that occurs, the ship may sail but the sailor may not.

Senator MOORE: Exactly. There are rules about that?

Vice Adm. Barrett : It depends on the individual countries, and that's what we stress. It's why we do educate people whenever we go into any port—not just in Singapore but around the world—that you comply with local rules. None of that has changed. I would also stress that the rules that have been put in place, or the tightening of them, do not prevent people from drinking. It just moderates people's behaviour, or seeks to, by limiting the amount of alcohol that can be consumed.

Senator MOORE: Naval vessels would go to places where you would be prevented from drinking, though, in the Middle East, wouldn't they?

Vice Adm. Barrett : Yes, we do.

Senator MOORE: So you have places like Singapore, which have tightened with a no-tolerance policy—

Vice Adm. Barrett : And there are other areas where we can't. That's why I'm saying the rules have always existed because you have to manage the customs of the country you're visiting, which is a fair and proper thing to do.

Senator MOORE: We've had a number of incidents with foreign affairs of young people going to Japan, where the drinking age is higher than it is in Australia, and getting into trouble. Has that happened in the services as well?

Vice Adm. Barrett : It hasn't in recent times, particularly, but it has occurred in the past.

Vice Adm. Griggs : We have to deal with it in the US.

Senator MOORE: In many of the states?

Vice Adm. Griggs : Yes.

Senator MOORE: It fascinates me.

Vice Adm. Griggs : It is something we have to deal with.

Vice Adm. Barrett : The issue with these rules is, as I said, it's a reminder, it's a tightening. It is around what we are required to do because of less tolerance by the country in which we serve. We will review the rules, as we always do, in the near future to see whether the actions we've taken are appropriate in stemming what has been a number of incidents.

Senator MOORE: Are there additional powers which commanding officers will have?

Vice Adm. Barrett : They are not additional powers; it is just reinforcing the need as to why we do this and reminding them of the options they do have to them. The reason we have restrictions on ships is because you may only visit the country for a couple of hours to refuel up to possibly four days or a week, but during that time the ship maybe required to sail at short notice. The issue we have is managing the consumption of alcohol because people may still need to rejoin the ship for the ship to sail and you need people to be safe when they work.

Senator MOORE: Yes. So do we get a copy of the new directive?

Vice Adm. Barrett : I believe it's in the press at the moment.

Senator MOORE: I never know whether that's the actual directive.

Vice Adm. Griggs : No, it is online.

Senator Payne: An official version.

Senator MOORE: When was it instituted?

Vice Adm. Barrett : It was about a week ago. It was instituted by the fleet commander. It is one of his directives. I fully support the fleet commander in doing what he has done.

Senator MOORE: We're talking particularly about Navy. Are there similar things with the other elements of the forces for Army and Air Force when they're in other countries?

Vice Adm. Griggs : We're all members of the ADF and we have to comply with local customs and laws. There are additional restrictions placed in areas of operation as well so yes. Essentially, the whole ADF has to deal with this in some shape or form.

Senator MOORE: You say there has been a spike in Singapore over the last 12 months?

Vice Adm. Barrett : There have been seven incidents over the past 12 months. Whilst that is a concern to me, the issue is more clearly a concern to the Singaporeans and that's why we've acted.

Senator GALLACHER: It is a very busy port.

Vice Adm. Barrett : It is. In that time period, we've had about nearly 2,500 sailors that have visited in various ships over a period of time—seven incidents; it's a small number. The issue is the Singaporeans have lost a tolerance for alcohol-related behaviours.

Senator GALLACHER: Is that because of the behaviour of the general fleet that attends Singapore? There is a lot of people that go in and out of Singapore.

Vice Adm. Barrett : There are. The incident is not just restricted to Australians. The intolerance is across visiting navies from other forces as well so I would not suggest it is only us. The issue we are seeking to manage here is the consequence of behaviour, particularly alcohol related behaviour, because of what the Singaporeans, under their normal—

Senator GALLACHER: You said there were 2½ thousand sailors and how many reports?

Senator MOORE: There were seven in 12 months.

Senator PATRICK: When you say the word, 'sailor' do you mean junior sailor or are you talking officer to senior sailor?

Vice Adm. Barrett : I'm referring to members. But if I were to look at the seven incidents, there has been a preponderance of junior sailors and a number of senior sailors.

Senator MOORE: So the Singaporean government didn't come to the Navy and say, 'We're changing our position.' The Navy took a pre-emptive decision that this was of enough concern to tighten things up?

Vice Adm. Barrett : The government through their agencies did—by arresting people.

Senator Payne: To be very clear, Singapore has its own level of expectations to which they are perfectly entitled and which they must administer according to their own expectations. As visitors in their ports, our personnel are required to observe and comply with those. So I think it's slightly different from a tolerance question per se as to legal expectations.

Senator GALLACHER: We haven't had to arrest any Singaporeans visiting Shoalhaven Bay, have we?

Vice Adm. Barrett : Shoalwater Bay?

Senator Payne: Neither of the above, indeed.

Senator GALLACHER: So they impose the same standards on their people overseas as they are expecting us to comply with?

Senator Payne: As far as I'm aware.

Senator MOORE: The question is can we have identified information regarding the incidents, how many and whether that was an increase? I think you've covered that kind of range in the answers you've given me. In terms of the impact on personnel who are caught up in such an issue, they would be subject to Singaporean justice because they have been arrested in Singapore.

Vice Adm. Barrett : Yes.

Senator MOORE: Are they also subject to military justice? Is that a breach of the military code?

Vice Adm. Barrett : In certain circumstances it may well be. So we do look at that. In some cases, there is a jurisdictional issue; the Singaporeans may release those individuals to us. Under the Five Power Defence Arrangements, there are provisions where we are to look at disciplinary matters. So the jurisdiction might be passed to us, whereby we do seek to take disciplinary matters at our own level.

Senator MOORE: And the Singaporean government would expect that if they release them into your care?

Vice Adm. Barrett : Equally, those who are caught up there do get ongoing support from the Navy and from the government while they are awaiting their court case to be heard.

Senator MOORE: There was a particularly distressing case in the media yesterday about something that someone had seen.

Vice Adm. Barrett : A consequence of one of those seven was incarceration. And the consequence of that, which was highlighted in the fleet directive, is that the conditions in Singapore jails are harsh compared to here.

Senator MOORE: And those personnel would get support for any trauma that occurred as a result of that?

Vice Adm. Barrett : The individual who did that is now back in Australia. He has served the sentence and he is supported.

Senator PATRICK: From my limited understanding, an Australian warship is an Australian jurisdiction and, in law, you wouldn't necessarily have to hand over a sailor. I presume you do that for diplomatic reasons and there would be some balance if you thought that an ADF member was going to end up inside a harsh prison environment.

Vice Adm. Barrett : It is our obligation to be able to surrender someone who has committed what is considered to be a crime in someone else's country. The option available to us diplomatically is to comply with those countries' laws. As I said, in cases in the past, we have sought to have someone on a ship who may have been accused. But if there is a requirement or a significant level of evidence, and there is a case that we may land that sailor to face court should that be warranted, there is a decision that is made.

Senator PATRICK: From an international law point of view, once they are on the ship they are in Australian territory—

Vice Adm. Barrett : They are, but that would be an issue that would be resolved government to government as a diplomatic issue.

Senator PATRICK: In Singapore there are very harsh drug laws and that could result in a death sentence, for example. I guess that sort of thing would add a complication.

Vice Adm. Barrett : It is an issue that may arise. Thankfully, it hasn't to date. But part of the issue we trying to raise here is that there is an obligation of visiting ships and personnel in those ships to comply with local laws.

Senator PATRICK: I would have thought that in a minor incident, if you gave an undertaking, that wouldn't necessarily result in someone having to be landed.

Vice Adm. Barrett : The minister is right in terms of legal expectations. You may recall from your times that there may have been more tolerance in being able to manage the jurisdictional issues that would allow sailors—or officers—who had behaved poorly ashore to be managed from within their own ship. There is no longer that same tolerance to allow a change of jurisdiction in the way it has been in the past.

Senator PATRICK: In the past, when an ADF member, particularly in the junior ranks, did something inappropriate, the approach was often to deal not with that single person but with the unit. Is that sort of culture changing?

Vice Adm. Barrett : I am not sure I understand. Are you saying the treatment of a unit as a whole by the Singaporean or any government authorities—

Senator PATRICK: By the Australian Navy. Leave is stopped for the whole ship because of someone having done—

Vice Adm. Barrett : This is a ship's company issue. I make no distinction between juniors, senior sailors or officers. The rules apply to all. One of the mitigations is that the ship's company should look after their own, and that comes right down to individuals going ashore: they should go ashore in at least a pair and there is a mutual obligation to keep each other out of trouble.

Senator PATRICK: Mates.

Vice Adm. Griggs : And we haven't gone from zero to 100 here. This is a last resort action from the Fleet Commander following a ramping up of briefings. We just haven't been getting the response that we needed to get.

Vice Adm. Barrett : And this will be reviewed, depending on the nature of our discussions.

Senator PATRICK: I was going to ask some questions on SeMPRO and the status of the phases that were going to be implemented, but I believe that question may have been answered.

Vice Adm. Griggs : Yes.

Senator PATRICK: Fine. I'll review the Hansard on that. Last time, you provided me some figures on current serving members who have been accused of sexual assault outside of the DART process—Navy, Army and Air Force. Could I please get an update on those figures?

Vice Adm. Griggs : In the earlier discussion, I provided Senator Moore with the breakdown. I think there are 182 serving ADF members who have been accused of sexual assault. That is not outside DART, it is in total. And I then I broke it down.

Senator PATRICK: By service?

Vice Adm. Griggs : Yes.

CHAIR: That concludes program 2.12. I thank very much the officials for appearing here today for that. We now move to program 2.13, Defence Science and Technology. Senator Gallacher.

Senator GALLACHER: Senator Carr traversed a matter where DSTO was in charge of programs where contractors were hiring contractors. Is that within your remit, Dr Zelinsky?

Ms Skinner : That's the matter I covered with Senator Carr yesterday. They do work for those individuals.

Senator GALLACHER: This is the man in charge of DSTO, though, isn't it?

Ms Skinner : Yes.

Senator GALLACHER: Dr Zelinsky, you are aware of the evidence that was given yesterday?

Dr Zelinsky : Yes, I am.

Senator GALLACHER: And you are aware of the allegations?

Dr Zelinsky : I wouldn't say they are allegations.

Senator GALLACHER: I thought it was a family member signing off on a contractor and signing off on sums of money that looked inappropriate.

Dr Zelinsky : To be clear, there was an internal complaint. We always act on complaints. There was an investigation. Our report was written and we have acted on it. That report was leaked, which is the summary of these allegations. Subsequent to that, as Ms Skinner alluded to, we are now investigating it further because it did highlight some process issues.

Senator GALLACHER: So is the report that has been leaked available to the committee at some point in time? Is it an internal report? How do we make a judgement that you have an ethical process and that the efficacy of your process is fine if we are going to try and juggle a media report and an internal report that we can't see? When do we get to see some clarity?

Ms Skinner : The material that was provided to The Canberra Times had a security classification of 'for official use only'. That is a separate inquiry into why that material was in the public domain. As the chief scientist has said, they have made some internal arrangements based on the quick assessment that they undertook. And the remaining activities are with our fraud and audit area, who are doing an investigation into the allegations in that document. You have a copy of it if you got it from the public domain. But, from our perspective, that material has a classification of 'for official use only'.

Senator GALLACHER: I accept all of that. What I am asking for the committee to be apprised of is the efficacy of the systems in place at DSTO. For whatever reason, you have had a problem in the public domain. Where do you point us to say, 'We've investigated. Here is the result of the investigation. These are the standards that are now in place'?

Senator Payne: Do you mean in addition to what we discussed yesterday?

Senator GALLACHER: Yes.

Senator Payne: I think what we discussed yesterday is actually the answer. That would be my understanding from Ms Skinner.

Ms Skinner : We have taken some initial actions, as we discussed yesterday, to ensure that only Australian public servants can act on procurement delegations within that research science area—

Senator GALLACHER: And that is a written delegation now?

Ms Skinner : I believe that is the case. Subsequently, we are doing an inquiry. Part of that will also tell us whether additional governance would be required in the process.

Senator GALLACHER: Can the committee have in writing a snapshot of the actions you are taking, including any written delegations to correct any anomalies that might have occurred and been publicised?

Ms Skinner : We can take that on notice and see what we can provide as far as the initial actions are concerned.

Senator GALLACHER: Thank you.

Senator PATRICK: In April 2018, Fairfax Media reported that a Defence Department senior scientist had been involved as a director with a private company that had entered into a business partnership with a subsidiary of the China Aerospace Science and Industry Corporation. Are you familiar with that article?

Ms Skinner : Yes, I am familiar with that. That is a matter of security, so that is a matter that is in my area.

Senator PATRICK: Did the departmental officer properly declare his involvement in the company and the connections with the Chinese state owned enterprise prior to the report of the media?

Ms Skinner : That is a matter that is also under review and investigation, so I can't comment on that.

Senator PATRICK: I might just ask some other questions. If you are uncomfortable let me know. Have any other agencies been involved in this investigation?

Ms Skinner : I would have to take that on notice and discuss that with the head of security.

Senator PATRICK: Outside of the review that is underway, have you come to any conclusions that may affect the way you operate more generally across the board as an interim measure?

Ms Skinner : We have very clear requirements for people to declare all sorts of things—conflicts of interests, external employment—and those are clear to employees. Part of our investigation here is about whether those practices and policies within Defence were complied with—and that is part of the review process.

Senator PATRICK: When is the review into that matter likely to be completed?

Ms Skinner : The review has been underway for a period of time and I believe it should be concluded shortly.

Senator PATRICK: What rules are currently in place concerning the involvement of Defence Department scientific personnel in research or commercial activities outside of their employment with Defence?

Ms Skinner : All employees in the organisation are required to get approval for any outside employment—whether they are a scientist, an administrative officer or a person who is assisting on a board or something like that. So there is nothing special. We all have to comply with conflict of interest, secondary employment and anything that could give rise to a concern about the ability of a public servant to properly do their duties.

Senator PATRICK: Okay, thank you. I will move away from that particular matter to general questions. Across the senior executive within DSTG is there generally a requirement for a security clearance at those levels?

Ms Skinner : Within the Department of Defence people will be cleared to the level at which they need to operate and have a need to know. The security clearance profile across the senior leadership group would drift to the higher side, but there is still a diversity of security requirements across that group, and so I'm sure the Defence science organisation, similar to other parts, has people with everything from secret clearances at the lower level through to the very highest security clearances.

Senator PATRICK: Okay. In accepting that each senior executive in DST might have different clearances, is it the case that all of the executives that you have at the moment meet that required security clearance for their position? Do you have some shortfalls in that area?

Dr Zelinsky : I wouldn't say that people have got a shortfall. They have the level of clearance required to do their job. For people who have to go through clearances we have done some different things in recent times. For instance, we have hired a UK citizen. He had to get a security clearance to operate through the secretary, so it was a form of policy exception. So that is something that's done on the basis of the work that needs to be done and the teams they manage.

Senator PATRICK: Sorry; I probably didn't express that very well. Where there's a requirement to have a security clearance, do all of your senior executives at the present moment have the required security clearance for their task?

Ms Skinner : What I would say is that all people in the department that are working with whatever level of information are cleared to work with the level of information that they have access to. That doesn't mean that there aren't people in the process of getting a higher level security clearance, but, as you're probably aware, sometimes those take a bit of time, and so people may well start on a lower level clearance where they can do the majority of their work and during a period of time we'll have their clearance raised to the next level through that security clearance process. But people are not able to work on higher-classified information if they are not cleared to do so.

Senator PATRICK: So the bottom line is that if they have an interim lower clearance then they are restricted in the activities that they conduct?

Ms Skinner : That's right.

Senator PATRICK: What are the current delays for DST in respect of getting some of these higher clearances?

Ms Skinner : The baseline clearances and up to the negative vet 1 and 2 are all within the benchmark periods of time. The maximum there is around three to six months for the NV2, but the average person is getting their clearance within the benchmark time frames. The positive vetting is the area that remains elusive to get back into benchmark, despite a lot of work that we're doing there. Those time frame are coming down. For a clearance required in a priority sense, the average one will be done around the 12-month mark, but standard clearance times are still going out to around that 18-month time frame.

Vice Adm. Griggs : For a baseline clearance, it's 20 days, NV1 is 90 and NV2 is 125. A positive vet is 180 days unless it's a priority positive vet for special cases, and then it's 90 days.

Senator PATRICK: Thank you very much, Admiral. Have any members of DST leadership had any substantive dealings in the past with Chinese aerospace or aviation entities?

Ms Skinner : We have the fortune of employing people from a range of backgrounds. I don't think it's appropriate here that we would go into any specific details about employees' past work history. I only say that we have, as Dr Zelinsky said, employees from industry with a significant industry experience working in the UK and other places.

Senator PATRICK: I'm not asking for any identities here and I don't intend to go to any identities, but there is before the parliament some legislation that focuses on foreign interference and security related matters. Is it possible to, without identifying any people, establish whether or not there is anyone in the team that has that background experience?

Ms Skinner : The point I would say is that all employees of the department, including employees from the Defence science organisation, despite their work history and background, will go through a security clearance process, and, should that background be relevant to the consideration of the ability for that person to get a clearance, it will be managed through that security clearance process. I think that probably helps to clarify rather than talk to any specific person, because we have a large workforce and there will be many people who have travelled the world and done all sorts of work in Australia and overseas. I think that point's relevant for a large proportion of the workforce.

Mr Moriarty : Any employee would have to declare any previous employment and connections in terms of the information that they supply when they are requesting a clearance.

Senator PATRICK: Sure. To go from your comment Ms Skinner: if someone has had some experiences in particular countries, I presume that may cause a lengthening of a review process in terms of security. Would that be fair?

Ms Skinner : Yes. People with complex backgrounds, whether that be through vast world travel, work overseas or complex financial arrangements—all of those matters sometimes make for a lengthening of the security clearance process.

Senator PATRICK: But, in those circumstances where it's has been lengthened, from the evidence you provided before, you can assure me that those people will have had limited access to any sensitive data.

Ms Skinner : That's right.

Senator PATRICK: All right; thank you very much.

Vice Adm. Griggs : Could I just clarify? I'm not doing well on ages today. You can start the recruitment enlistment process at the ADF at the age of 16, but you cannot enlist until you're 17. But my point about the youngest generally being Queenslanders remains valid because of the school system.

CHAIR: Thank you very much for that clarification. If there are no more questions for program 2.13, thank you very much for appearing here today. Are there any questions for program 2.14, 2.15, 2.16 and 2.17? If there are no questions for those programs, those matters are all concluded and we have now officially concluded outcome two for Defence. Before I formally conclude that, I understand that you, Minister, would like to make some comments.

Senator Payne: I do have a couple of points that I want to make. After a productive couple of days—I'm being very generous, Senator Gallacher!—it was observed at the beginning of our meeting yesterday that the Chief of the Defence Force, Air Chief Marshal Mark Binskin, was attending his final Defence Senate estimates, and I'm sure he left with enormous regret when he had to depart early yesterday afternoon.

But there are a couple of other observations that I also need to make. As a matter of public record, the Deputy Secretary Capability Acquisition and Sustainment Group, having been in the organisation on more than one occasion, has finally decided, notwithstanding my efforts to implement a 20-year plan, that he will finally leave us later this year. That will precede the next iteration of Defence estimates. I have to say that Mr Gillis, whom I've known for some time, from my perspective brings a unique but very, very important brand of professionalism to his role as the deputy secretary in CASG. His experience, his good humour and his unerring eye on key capability projects have been invaluable to the organisation—certainly in the period of time in which I have been in this role. I particularly wanted to acknowledge that on the record.

And then, as mentioned yesterday, with the change in leadership announcements of the ADF, both the Vice Chief of the Defence Force, Vice Admiral Griggs, and the Chief of Navy, Vice Admiral Barrett, will leave the Australian Defence Force at the end of their roles in July. Both have had exceptional careers of more than 40 years in the Royal Australian Navy, and I want to personally thank them both for their advice, their leadership and their support over the period of time that I have served as Minister for Defence and, indeed, long before that.

As Vice Chief of the Defence Force, Vice Admiral Griggs has particularly been at the forefront of implementing many of the key recommendations of the seminal first principles review of Defence and has been a true champion for the reform that has been associated with that. He's had an instrumental role in managing—wrangling, some might say—the Integrated Investment Program, particularly as chair of the investment committee. He's led the development of the new capability life cycle which has enabled this government in particular to make significant progress on the plans we outlined in the 2016 Defence white paper. His legacy as vice chief is most significant. I believe his dedication to getting those reforms right will be an enduring legacy.

In other matters, I have seen him as an extraordinary champion for the Invictus Games, for example. I know his connection with the men and the women of the ADF, particularly some who have faced the greatest challenges in their professional lives, and that leadership is very important.

We met in the Middle East in the early 2000s when he was the CO of HMAS Arunta and a random group of senators climbed up the side of his ship from a RHIB in the gulf. It's not an activity I would recommend to all, but nevertheless it was an interesting way to meet then Commander Griggs. It has been a very valuable contribution that he has made over those years.

As Chief of Navy, Vice Admiral Barrett has indeed been one of the most influential drivers of the regeneration of the fleet of the Royal Australian Navy. He's had a guiding hand in the government's key announcements in relation to the offshore patrol vessel acquisition, the Future Submarines acquisition and, ultimately, when those decisions are made, I am sure, the Future Frigates acquisition. He's overseen the introduction into service of our LHDs, Canberra and Adelaide, which, of course, started slightly earlier than that in terms of the acquisition process, and also the first of our new destroyers, HMAS Hobart. As discussions at this estimates alone have shown, the selection of these vessels and their introduction into service is a very complex and challenging task, and it's one in which Vice Admiral Barrett has played an integral part. His legacy, this powerful new fleet, will be in service for decades to come.

Of course, he's set out his vision for this in his own published book, The Navy and the Nation: Australia's Maritime Power in the 21st Century, which I know all committee members not only possess but have read! It is a must-read for anyone interested in the Navy and the national enterprise of our shipbuilding program.

I wish both senior officers all the best in their future roles. They've undoubtedly left the Australian Defence Force in a stronger position than when they entered it and when they began their roles. They still have a great deal to offer our nation, and I hope to see them continue in public service in the years ahead.

To those who are about to complete their service, particularly the representatives of the Australian Defence Force: I have annotated that it comprises over 120 years in total service between Air Chief Marshal Binskin, Vice Admiral Griggs and Vice Admiral Barrett, which is remarkable given that they all look so young! Let me convey on my own part my very sincere thanks but also that of the government.

CHAIR: Thank you very much. I'm sure they'll all look a year younger, if not more, in a year's time! On behalf of myself in particular as chair of this committee and through my personal engagement with all three, I'd just like to extend my personal thanks to all three for their significant contributions not only to Defence capability but also to transforming the Navy and the ADF—and Defence capability in Mr Gillis's case. All three gentlemen leave an enduring legacy that all should be very proud of in their own ways. You've certainly got big shoes to be filled, and all of you have been a pleasure to deal with in my role as chair and as a member of various other committees. We greatly appreciated your perseverance and endurance at these committee hearings but also the way that you've led your teams in responding to and dealing with all of the committees. We're very conscious of the role we play on behalf of the Australian people in the parliament, so we're very grateful for that. On behalf of myself and the committee, I wish you all every success and I hope you find the transition back to your family lives very enjoyable. Again, thank you very much. We're very grateful. Senator Gallacher.

Senator GALLACHER: The opposition concurs with the sentiments expressed by the chair. I'll just add, as I did yesterday, that there's no greater service to the Australian community or the Australian taxpayer than leadership in the Australian Defence Force. You both need to be exceedingly proud of that, as no doubt you are. With respect to Mr Gillis, wearing the twin hats of capability and value for money—you're an exemplary public servant who I have enjoyed having discourse with through the life of estimates. Thank you.

CHAIR: Thank you very much. That formally concludes the committee's examination of the Department of Defence. I thank the officers and all officials for their attendance and their terrific support of the committee through this process.

Vice Adm. Griggs : Thanks, Chair.