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Senators in attendance:

Senator Jan McLucas, Parliamentary Secretary to the Minister for Health and Ageing

Senator Nick Sherry, Minister for Superannuation and Corporate Law

Mr John Pierce Secretary

Mr Drew Clarke, Deputy Secretary

Mr Demus King, Manager, Energy Strategy Team, on behalf of Ms Tania Constable

Mr Robert Towner, General Manager, Enabling Services

Ms Nicola Morris, Chief Legal Officer, Enabling Services

Ms Sue Kruse, General Manager, International, Resources Development and Taxation Branch

Mr Chris Stamford, General Manager, Minerals Branch

Ms Carolyn Barton, Acting General Manager, Fuels and Uranium Branch

Mr Michael Sheldrick, General Manager, Global CCS Initiative

Ms Margaret Sewell, General Manager, Low Emissions Coal and CO2 Storage Branch

Mr Bob Pegler, General Manager, Global CCS Initiative

Mr Patrick Davoren, Manager, Fuels and Uranium Branch

Ms Kimberley Pattinson, Manager, Fuels and Uranium Branch

Mr Richard Niven, Manager, Fuels and Uranium Branch

Mr Martin Squire, Manager, LNG and Petroleum Development, Offshore Resources Branch

Mr Steve Tantala, Manager, Carbon Capture and Storage Legislation, Low Emissions Coal and CO2 Storage

Mr Peter Livingston, Acting General Manager, Offshore Resources Branch

Mr Brendan Morling, Head of Division

Mr John Griffiths, General Manager, Energy Security Branch

Mr Chris Locke, General Manager, National Energy Market Branch

Mr Geoff Stone, General Manager, Energy Futures Branch

Mr Paul Johnson, General Manager, Industrial Energy Efficiency Branch

Mr Bruce Wilson, General Manager, Environment Branch

Mr Gino Grassia, Manager Greenhouse Section, Environment Branch

Mr Rick Belt, Manager Renewable Energy Section, Environment Branch

Ms Jane Madden, Head of Division

Mr Wayne Calder, General Manager, Business Development Group

Mr Peter Tucker, General Manager, Industry Sustainability Group

Ms Karen Jacobson, Acting General Manager, Market Access Group

Dr Chris Pigram, Acting Chief Executive Officer and Chief, Geospatial and Earth Monitoring Division

Dr James Johnson, Chief, Onshore Energy and Minerals Division

Ms Dianne Clarke, General Manager, Corporate Branch

Mr Glenn Ashe, Chief Information Officer

Mr Geoff McMurray, Chief Finance Officer

Mr Geoff Buckley, Managing Director

Ms Rachel Crowley, General Manager, Corporate Communications

CHAIR (Senator Hurley) —I declare open this public hearing of the Senate Economics Legislation Committee. The Senate has referred to the committee the particulars of proposed expenditure for 2009-10 and related documents for the Innovation, Industry, Science and Research, Resources, Energy and Tourism and Treasury portfolios. The committee must report to the Senate on 25 June 2009 and has set 31 July 2009 as the date by which answers to questions on notice are to be returned.

Under standing order 26 the committee must take all evidence in public session. This includes answers to questions on notice. Officers and senators are familiar with the rules of the Senate governing estimates hearings. If you need assistance, the secretariat has copies of the rules. I particularly draw the attention of witnesses to an order of the Senate of 13 May 2009, specifying the process by which a claim of public interest immunity should be raised and which I now incorporate in Hansard.

The document read as follows—

Order of the Senate—Public interest immunity claims

That the Senate—

(a)   notes that ministers and officers have continued to refuse to provide information to Senate committees without properly raising claims of public interest immunity as required by past resolutions of the Senate;

(b)   reaffirms the principles of past resolutions of the Senate by this order, to provide ministers and officers with guidance as to the proper process for raising public interest immunity claims and to consolidate those past resolutions of the Senate;

(c)   orders that the following operate as an order of continuing effect:

(1)   If:

(a)     a Senate committee, or a senator in the course of proceedings of a committee, requests information or a document from a Commonwealth department or agency; and

(b)    an officer of the department or agency to whom the request is directed believes that it may not be in the public interest to disclose the information or document to the committee, the officer shall state to the committee the ground on which the officer believes that it may not be in the public interest to disclose the information or document to the committee, and specify the harm to the public interest that could result from the disclosure of the information or document.

(2)   If, after receiving the officer’s statement under paragraph (1), the committee or the senator requests the officer to refer the question of the disclosure of the information or document to a responsible minister, the officer shall refer that question to the minister.

(3)   If a minister, on a reference by an officer under paragraph (2), concludes that it would not be in the public interest to disclose the information or document to the committee, the minister shall provide to the committee a statement of the ground for that conclusion, specifying the harm to the public interest that could result from the disclosure of the information or document.

(4)   A minister, in a statement under paragraph (3), shall indicate whether the harm to the public interest that could result from the disclosure of the information or document to the committee could result only from the publication of the information or document by the committee, or could result, equally or in part, from the disclosure of the information or document to the committee as in camera evidence.

(5)   If, after considering a statement by a minister provided under paragraph (3), the committee concludes that the statement does not sufficiently justify the withholding of the information or document from the committee, the committee shall report the matter to the Senate.

(6)   A decision by a committee not to report a matter to the Senate under paragraph (5) does not prevent a senator from raising the matter in the Senate in accordance with other procedures of the Senate.

(7)   A statement that information or a document is not published, or is confidential, or consists of advice to, or internal deliberations of, government, in the absence of specification of the harm to the public interest that could result from the disclosure of the information or document, is not a statement that meets the requirements of paragraph (1) or (4).

(8)   If a minister concludes that a statement under paragraph (3) should more appropriately be made by the head of an agency, by reason of the independence of that agency from ministerial direction or control, the minister shall inform the committee of that conclusion and the reason for that conclusion, and shall refer the matter to the head of the agency, who shall then be required to provide a statement in accordance with paragraph (3).

(d)   requires the Procedure Committee to review the operation of this order and report to the Senate by 20 August 2009.

(Agreed to 13 May 2009.)

(Extract, Journals of the Senate, 13 May 2009, p.1941-42)

CHAIR —Officers called upon for the first time to answer a question to state their name and position for the Hansard record and witnesses should speak clearly into the microphone. Please make sure all mobile phones are turned off.

The committee will begin today’s proceedings with the resources and energy divisions of the department and will then follow the order as set on the circulated program. I welcome Senator Jan McLucas representing the Minister for Resources and Energy and officers of the department. I would particularly like to welcome Mr Pierce for his first estimates as secretary of the department. Minister or officers, would you like to make an opening statement?

Senator McLucas —I do not, thank you, Chair.

Mr Pierce —No.

CHAIR —We will start with questions.

Senator JOYCE —I note today that Richard Marles has bought up, as noted in the Australian, that he has concerns about the aluminium industry with the implementation of the ETS. In regard to outcome 1 where you talk about improved strength and competitiveness of the industry, have you done any research as to determine whether his concerns about an ETS in the aluminium industry are warranted?

Mr Clarke —The department is engaged with the Department of Climate Change in development of the CPRS. We are aware of issues that various energy-intensive sectors raise, including the aluminium sector. But no, we are not conducting separate modelling or analysis of that.

Senator JOYCE —You have done nothing to determine the improved strength, competitiveness or sustainability of the aluminium industry in Australia if the current emissions trading scheme, as proposed by the government, is brought forward?

Mr Clarke —We are working with the Department of Climate Change in the setting of the CPRS parameters in regard to energy-intensive industries.

Senator JOYCE —Have you done anything to determine or verify, in any way, shape or form, a position of what that industry will be? Because the ETS is not policy; it is a document, it is legislation, it is currently before the House. Where are with that?

Mr Clarke —The sectoral modelling to support the development of the emissions trading scheme is conducted through Treasury.

Senator JOYCE —Have you done anything further in regard to the agricultural resources questions that have been brought up by ABARE showing a 22 per cent reduction in the agricultural industry?

Mr Clarke —Again, that modelling is in regard to the resources and, indeed, the agricultural sector is done through Treasury and ABARE. We do not conduct independent or separate modelling from that done by those agencies.

Senator JOYCE —So, there is no modelling in any way, shape or form that you have been involved with, with the ETS?

Mr Clarke —Other than the modelling done by Treasury and ABARE and through Department of Climate Change, no.

Senator JOYCE —So you have been involved?

Mr Clarke —We are engaged in that work, but we are not conducting separate modelling from that work.

Senator JOYCE —You are engaged in that modelling?

Mr Clarke —Yes, we participate in the work developing the parameters for that modelling and the interpretation of it.

Senator JOYCE —Is that model an equilibrium based model?

Mr Clarke —Yes, it is GE modelling.

Senator JOYCE —Is one of the presumptions that it is a full employment equilibrium based model?

Mr Clarke —I do not feel competent to give you any more detail on the internal workings of that modelling. I would refer you to Treasury.

Senator JOYCE —In determining the improved strength and competitiveness of the Australian industry, have you done any studies on other industries in the mining sector throughout the globe?

Mr Clarke —The department monitors and keeps track of developments across the resources, energy and tourism sectors. I am not sure what more specifically I can—

Senator JOYCE —Let us go specifically to coal. In coal in the last year, have we been holding our markets or losing our markets?

Mr Clarke —I will bring the relevant officer to the table, thank you.

Senator JOYCE —Mr Stamford, in regard to our current position with the consumption of coal, what portion of the global market is Australian coal?

Mr Stamford —Australian coal contributes about 30 per cent of the global market.

Senator JOYCE —Thirty per cent of consumed coal?

Mr Stamford —Yes. That is 30 per cent of seaborne coal, so that is the export market.

Senator JOYCE —Of the total coal contained in the world?

Mr Stamford —I do not have that, but we can find it for you.

Senator JOYCE —Four per cent. Of seaborne coal, have other players in the market started eating into Australia’s market share?

Mr Stamford —Yes, Senator, there have.

Senator JOYCE —Where are they from?

Mr Stamford —Principally from Indonesia.

Senator JOYCE —From obviously around the island of Borneo. Their coal mines are basically proximate to the coast are they not?

Mr Stamford —Yes, they are mostly within 50 to 120 kilometres of the coast.

Senator JOYCE —Do they have any strategic cost advantages over Australian coal?

Mr Stamford —Yes, they do in regards to shipping.

Senator JOYCE —Is that because of their proximity to the market?

Mr Stamford —Yes, Senator.

Senator JOYCE —What is the volume of coal that they could bring online if they need to?

Mr Stamford —I could not answer that.

Senator JOYCE —But they have been taking market share off Australia?

Mr Stamford —Yes, they have.

Senator JOYCE —How much market share have they taken off Australia?

Mr Stamford —I do not have the figures for the growth of the Indonesian coal industry with me, but they are certainly now the world’s largest exporter of thermal coal.

Senator JOYCE —They took about a 15 per cent share I think off the Australian market. Could we exacerbate that position by internal government policies that make our coal less competitive and therefore give more of an entree to Indonesia in taking further advances into our coal market?

Mr Clarke —The general proposition that government policy settings affect the competitiveness of the industry is self-evidently true, but you would have to be more specific I think before we could answer.

Senator JOYCE —With the current position of a tax or a charge on fugitive emissions, will this have the capacity to increase the price of coal, taking away our competitiveness; therefore losing our position in the market to Indonesia vis-a-vis Australian jobs going and Indonesian jobs growing?

Mr Clarke —Senator, we can only answer the question in the hypothetical. Does any change to the cost structure of any sector affect its competitiveness? Clearly, yes.

Senator JOYCE —I will be very specific then. Does the ETS affect the cost structure and our competitiveness?

Mr Clarke —The impact of the ETS on that sector, is of course a function of the detailed design, and as you have already mentioned, it is still a policy, it is not yet legislated. It remains to be seen exactly the way in which the package for the emissions-intensive trade-exposed sectors plays through.

Senator JOYCE —Do you think that the effect on the Australian coal industry is beyond the hypothetical with the legislation as you currently see it? Because it is no longer policy; it is legislation that is currently before this parliament.

Mr Clarke —Sorry, do I think?

Senator JOYCE —It is beyond the hypothetical—that is, it will definitely affect the cost structure, it will definitely put up costs, it will definitely reduce our competitiveness; we will definitely lose market share to somewhere else.

Mr Clarke —That sounds like a statement, Senator, rather than a question.

Senator JOYCE —Do you agree with the statement?

Mr Clarke —I do not have the analysis in front of me. I make the observation that any change to the cost structure of an industry will have an impact on its competitiveness. The details of all the impacts of the CPRS are still being worked through.

Senator JOYCE —They are still being worked through?

Mr Clarke —Yes.

Senator JOYCE —What is still to be worked through?

CHAIR —The Senate, Senator Joyce. It has to pass.

Senator JOYCE —Do you have knowledge of other schemes and policies around the globe that might affect competitiveness of coal or resources elsewhere?

Mr Stamford —Not specifically, no, Senator. However, the coal market is driven also by the internal dynamics of the country that mines it. What you see in most coal market exports is a product which is consumed domestically first and then the remnant is sent overseas. I cannot tell you what the likelihood is of Indonesia continuing to grow as a coal exporter; that would depend entirely on their internal capacity, their growth and how that drives the coal market internally.

Senator JOYCE —We have currently obviously got a recession on, and obviously it is global. Do you see the capacity for coal stockpiles to increase or decrease?

Mr Stamford —Sorry, as a result of the global economic crisis?

Senator JOYCE —Yes.

Mr Stamford —It depends on where you are holding your stockpile, Senator. If you are saying, ‘Are they going to continue to mine at the current rate and stockpile, on a global sense?’ I could not say. That would be a matter for individual companies and individual countries.

Senator JOYCE —Do you think they will mine at the current rate in Australia, our nation?

Mr Stamford —We have already seen a number of mines go on care and maintenance in Australia. We have also seen a drop in the level of production in Australia over the last six months and we have also seen recent price declines in the benchmark price of coal. So under those circumstances you would say overall production would not continue to grow at the current rate.

Senator JOYCE —So they are reacting to market factors—that is, price?

Mr Stamford —Yes.

Senator JOYCE —And they are reacting to profitability factors also?

Mr Stamford —That would be a matter for the individual companies, but I would imagine so, yes.

Senator JOYCE —So anything that reduces the profitability will put more and more mines into a position of basically going into mothballs?

Mr Clarke —Market impact, Senator. I do not see how we can answer you other than from first principles.

Senator JOYCE —Are you aware of any government policies at the moment that will decrease the competitiveness of the mining sector in Australia?

Mr Clarke —Senator, that is a very open-ended question; I really do not know how to respond to that.

Senator JOYCE —Are you aware of any government policies that are before this parliament at the moment that will decrease the competitiveness of the coal industry and the agricultural industry, in fact everything that is noted in outcome 1, the improved strength and competitiveness of the resources, energy and tourism industries?

CHAIR —Senator, that is a very broad question and covers a range of government policies.

Senator JOYCE —It is a very obvious question with a very obvious answer that people do not want to give.

CHAIR —I would ask, Senator Joyce, that you make it a bit more specific to the responsibilities of the department.

Senator JOYCE —The major issue that is before our parliament at the moment is the emissions trading scheme, which is a subset of a whole range of possible carbon pollution reduction schemes. Would you agree that an ETS is not the only carbon pollution reduction scheme; it is a subset of a whole range of possible carbon pollution reduction schemes?

Mr Clarke —Yes, there are a broad range of measures designed to transform the emissions intensity of the Australian economy.

Senator JOYCE —But for a tradeable entity, as proposed by the emissions trading scheme that is before our parliament at the moment, this will definitely, definitively, without a shadow of a doubt, increase the cost in our major exports, such as coal. In fact, coal is our major export, isn’t it?

Mr Clarke —Yes.

Senator JOYCE —By what factor?

Mr Stamford —Coal, coke and briquette exports in 2008-09 were $54 billion. Iron ore was considerably less than that. So, as individual commodities, it was considerably in advance.

Senator JOYCE —Mr Stamford, I know you do not want to say the word ETS, but it is the major thing and it is going to reduce competitiveness. Do you have any knowledge of any industry in Australia that could possibly take the position of coal?

CHAIR —Senator, that is very broad and hypothetical.

Senator JOYCE —No, I do not think it is hypothetical.

CHAIR —None of these departmental officers have responsibility for other—

Senator JOYCE —It is. It says ‘improved strength, competitiveness and sustainability’ of resources and I am talking about a major resource. I am asking a specific question: do you know of any export that could possibly take the position—

CHAIR —Are you talking about resource exports, Senator Joyce, or any?

Senator JOYCE —They are resources. Coal is a resource. It is certainly an energy.

CHAIR —Yes, but you have asked an open-ended question about any other export and I do not think the officer—

Senator JOYCE —I do not think it has got much to do with tourism, but it has got a lot to do with resources and a lot to do with energy. The question I ask is: is there any industry that you know that could possibly take the position of coal as our major export in the short term, because that is when the ETS is coming in?

Senator McLucas —Senator, I think you are asking the officer for an opinion. If you asked some direct questions about the work that the department has undertaken, I think we can be of assistance.

Senator JOYCE —Is there the capacity for iron ore to be increased to the extent that it will take the position of coal? Is there the capacity in the globe and the capacity in the Australian domestic economy for us to translate from iron ore to coal in the short term?

Senator McLucas —Senator, I do not know that we would have undertaken that work.

Senator JOYCE —You would not have undertaken that work?

Senator McLucas —To try and speculate about one resource commodity being able to overtake another resource commodity. I mean, why didn’t we pick gold? Why would the department spend work trying to ascertain what other commodity might take over the benefit of coal to our country?

Senator JOYCE —The verb ‘to be’, to speculate, because speculating is exactly what the emissions trading scheme is based on—speculation.

Senator PRATT —It is environmental; it is the wrong portfolio.

Senator JOYCE —We are talking about resources here. Is there any industry that you know that lately has been growing at an exponential rate that would put it proximate to the coal industry in the near future?

Mr Clarke —Perhaps the best way of answering your specific question, and I will ask Mr Stamford to respond, is on which are the high-growth areas in the resources sector. We will come back to that, but if I could respond to the broader theme in your questioning first before going to that specific. First of all, the emissions trading and the climate policy response is, of course, the responsibility of the Department of Climate Change, not this department, so specific questions about the design of that we would refer to the Department of Climate Change. Second, the sectoral impact of the policy that is currently before the parliament has been modelled by Treasury. Again, that is on the public record, and this department has not undertaken separate modelling. We are quite happy to rely on the Treasury modelling of the forecast impact on those sectors.

Senator JOYCE —You have been across that modelling, haven’t you?

Mr Clarke —We have been engaged in the process of developing that modelling.

Senator JOYCE —You have been engaged in that modelling, therefore the questions I ask are quite relevant and you do have the expertise to answer them.

Mr Clarke —The answer is in the published modelling. There is no additional data or forecast that I can bring to the table.

Senator JOYCE —Mr Clarke, let us go back to the question you suggested. Tell me about any industry that has an exponential growth factor in it at the moment, that is roaring ahead?

Mr Clarke —Without going into the mathematics of exponential, what are the high-growth sectors currently—would that be an appropriate framing?

Senator JOYCE —And what is their portion of the actual resources growth, giving a factor?

Mr Stamford —Iron ore and coal are by far the two largest sectors in the mineral sector. The export value for coal, as we mentioned before, is forecast in 2008-09 to be at least $54,679,000,000 In the case of iron ore, in 2008-09 you are looking at exports of iron ore and pellets of about $34 billion. Beneath that, while there are sectors that grow very rapidly from time to time, particularly gold at the current time—

Senator JOYCE —What is gold?

Mr Stamford —In the case of gold, normal exports for 2008-09, as a forecast, is about $17.337 billion.

Senator JOYCE —I am referring this to energy then I will hand over to my colleague Senator Abetz. Can you tell me the growth in the photovoltaic cell industry?

Mr Clarke —I will need to bring a different officer to the table, if you will bear with us, Senator. By growth in PV, you are talking about installation of photovoltaic cells rather than manufacturing?

Senator JOYCE —What is the size of the domestic manufacturing industry in Australia of photovoltaic cells?

Mr Morling —I do not have any figures on the size of the manufacturing sector in Australia.

Senator JOYCE —Is there a manufacturing industry in Australia for photovoltaic cells?

Mr Morling —Apart from the BP facility that recently—

Senator JOYCE —They are closing down, aren’t they?

Mr Morling —That is my understanding.

Senator JOYCE —So there was one, but it closed down. The size of the photovoltaic cell manufacturing industry in Australia is zero?

Mr Morling —I am not aware of another manufacturing facility in Australia.

Senator JOYCE —Because you are not aware of any other manufacturing industry in photovoltaic cells, we would have to say the size of the photovoltaic cell industry in Australia is zero.

Mr Clarke —No, Senator, we cannot give you that definitive statement as we do not have the data.

Senator JOYCE —Mr Clarke, do you want to tell me where there is a photovoltaic cell industry in Australia?

Mr Clarke —I am not suggesting there is; I am just not willing for the inference to be made that we have given you a definitive statement, because we do not have the data.

Senator JOYCE —Let us go to the wind industry. Can you tell me where the technology to develop wind power is manufactured in Australia?

Mr Belt —Certainly, most of the turbine components to make up the wind turbine are imported.

Senator JOYCE —From? Denmark?

Mr Belt —A range of places, I would say; certainly India and Europe are the main sources.

Senator JOYCE —Do we make any in Australia?

Mr Belt —I think there is a manufacturer, very small, of turbines in the west of Australia and certainly there are companies in Australia which participate in the manufacture of the steel for the towers and the footings for the wind turbine projects.

Senator JOYCE —Away from the footings, for all intents and purposes, apart from very minor participation in Western Australia, Australia is not of any real consequence; it is really an indiscernible participant in the manufacturing of wind power.

Mr Belt —I do not think we would be considered to be contributing a lot to the manufacturing side of the turbines, no.

Senator JOYCE —Can you suggest to me, and this is my last question, anywhere in the renewable resources industry which has shown exponential growth for Australia as a major competitor in global markets in the manufacture of alternative energy sources?

Mr Clarke —Technology manufacturing is your specific question, Senator?

Senator JOYCE —Whatever suits you.

CHAIR —I think the point was—

Senator JOYCE —No, let them get to an answer, Madam Chair.

CHAIR —I am saying the relevance of a manufacturing question to this department is debatable.

Senator JOYCE —No, it is energy. It is energy. It is about how we deal with energy.

CHAIR —That is a different question.

Senator JOYCE —Is there any capacity domestically in Australia currently exhibited that is in the manufacture of alternative energy sources?

Mr Clarke —Senator, would you allow me to answer the question in the broad? Is the question of the nature of: where are the growth prospects in resources, energy and technology sectors in Australia?

Senator JOYCE —I want to know where they are right now.

Mr Clarke —I would suggest to you that there is enormous potential in our—

Senator JOYCE —No, not potential—where it actually is, just like it actually is on the ground in Denmark and it is on the ground in India and it is on the ground in a range of European countries and it is on the ground in Germany. I want to know where it is on the ground in Australia.

Senator CAMERON —For 11½ years you did nothing about it.

Senator JOYCE —Hang on—

CHAIR —Thank you. We are trying to work through this questioning.

Senator JOYCE —Ignore the interjection and answer the question, Mr Clarke.

Mr Clarke —Two sectors I would point to, Senator, are LNG and geothermal energy.

Senator JOYCE —LNG and geothermal? LNG will have an emissions trading scheme. That will be covered by the ETS will it not; it will have a tax on it?

Mr Clarke —To the extent that it emits greenhouse gases, yes.

Senator JOYCE —So the only renewable sector that we have or new sector we have is actually going to be taxed by the ETS? Thank you very much!

CHAIR —Senator Cameron.

Senator CAMERON —Thank you. I am not sure if this question is for Mr Pierce or Mr Clarke. You indicated that Indonesia’s capacity to export depends on its domestic economy. There is also another factor, isn’t there, that the quality of Indonesian coal is not as good as Australia’s? Is that correct?

Senator JOYCE —That is not right, actually.

Senator CAMERON —I am not asking you. Why would I ask you for any expert opinion? Give us a break!

CHAIR —Thank you. We do not need to have an exchange among senators.

Senator CAMERON —Why would I ask Barnaby for an expert opinion on anything?

Senator JOYCE —Different to you, we have actually done our research.

CHAIR —Senator Joyce, Senator Cameron.

Mr Stamford —Sorry, Senator, your question?

Senator CAMERON —I understand that Indonesian coal has got some disadvantages in terms of moisture content and quality compared to Australian coal.

Mr Stamford —That is my understanding, Senator, but I am not a technical expert on Indonesian coal.

Senator CAMERON —Okay. Regarding the global economic recession, the worst recession since the Great Depression, what implications has it had for the minerals industry worldwide?

Mr Stamford —Senator, the principal implication is that minerals underpin manufacturing and industrialisation across the world. To the extent that the global economic crisis has slowed both manufacturing and industrialisation, the minerals sector has been hit directly.

Senator CAMERON —Both in Australia and in our export competing countries?

Mr Stamford —Particularly in our exporting countries, yes, Senator.

Senator CAMERON —In relation to the global economic crisis, Mr Hillman from the Australian Coal Association gave a Lateline interview indicating that growth in the use of coal would continue by about two per cent per annum for the foreseeable future; is that the analysis of your department?

Mr Stamford —We have not done any specific analysis on the long-term use of coal, but there is a general expectation that fossil fuels will continue to underpin both manufacturing and power for some considerable time to come. It is one of the reasons why low-emissions coal technology is important, Senator.

Senator CAMERON —Do you agree with the Treasury estimates that there will continue to be robust growth in the Australian economy?

Mr Clarke —We have no reason to diverge from Treasury forecasts in that area, Senator.

Senator CAMERON —Do you agree then that there will continue to be growth in the Australian coal industry?

Mr Clarke —Yes, we are comfortable to rely on Treasury’s forecast in that area.

Senator CAMERON —Are you aware of a report by the Minerals Council of Australia and Dr Brian Fisher?

Mr Clarke —Yes, Senator.

Senator CAMERON —That report is saying that 23,510 fewer people will be employed in the industry by 2020. But what has not been reported in the media is that this is the number of jobs lost compared with what would otherwise have occurred. Is that your understanding of that report?

Mr Clarke —It is, Senator.

Senator CAMERON —Have you got any comment about how this report has been reported by the media around the country?

Mr Clarke —No. My understanding, though, is that your characterisation is a more complete description of the report, but I have no other comment to make on it.

Senator CAMERON —So the coal industry will continue to grow and jobs will continue to be created in the coal industry for the foreseeable future?

Mr Clarke —That was the forecast presented there and that is consistent with other forecasts, yes.

Senator CAMERON —Are you aware of the Clive Palmer coal development with China, in Rockhampton?

Mr Stamford —No, Senator, I am not.

Senator CAMERON —You are not? You are not aware of a report about tens of thousands of jobs being created in Queensland in the coal industry?

Mr Stamford —Not in relation to—

Senator JOYCE —I will help him out. He is getting the pronunciation wrong. It is actually the Clive Palmer Galilee Basin and the 498 kilometres that goes from the Galilee Basin up—a wonderful idea; let us not hold our breath waiting for it.

CHAIR —Thank you, Senator Joyce! Mr Stamford.

Mr Stamford —The Galilee Basin development, Senator, I am aware of.

Senator CAMERON —Clive Palmer indicates that tens of thousands of jobs will be created nationally from that. Have you had a look at the projections on this project?

Mr Stamford —Senator, I have been present at discussions with both Waratah and Alpha Coal in relation to those discussions and I have seen those companies’ projections, but the department itself has done no further work on it.

Senator JOYCE —Are you aware that the Labor government never built the railway line for it to be moved up?

Senator CAMERON —Clive Palmer has indicated that the ETS would not have a significant effect on his decision to invest in that project; are you aware of that?

Mr Stamford —No, Senator, I am not aware of that view.

Senator JOYCE —How long would it take to get the Galilee Basin online—500 kilometres of railway line?

CHAIR —Thank you. Senator Cameron is asking the questions. Go ahead, Senator Cameron.

Senator CAMERON —I am sure they were well aware what I was going to ask! It is quite clear, I think. In terms of the Fisher analysis, are you aware of what reference case was used in that modelling? Have you had a look at the modelling at all?

Mr Clarke —No, Senator. I am not sure if we have an officer present who has gone through it to that depth.

Senator CAMERON —Does your department engage in modelling at all?

Mr Clarke —No, we do not undertake independent modelling. We do not have modelling capacity inside this department.

Senator CAMERON —Do you commission modelling?

Mr Clarke —We commission modelling from ABARE and we rely on Treasury for the broader modelling context.

Senator CAMERON —You would understand about reference cases?

Mr Clarke —Absolutely. I understand the nature of your question. I do not have a specific answer as to what was the reference case or the business as usual that Mr Fisher assumed in that report.

Senator CAMERON —Would your department be looking at that, do you think?

Mr Clarke —I am sure there is an officer in the department that has studied the Fisher report and briefed on it; I am just not sure if I can bring them to the table immediately.

Senator CAMERON —That is fine. Could you take on notice the reference case in the Fisher report?

Mr Clarke —I am happy to do that.

Senator CAMERON —Could you also comment in relation to the Fisher report on the department’s view about the capacity to accurately engage in regional analysis? I am advised that in most modelling you do not go into regional or subregional levels. It is highly unusual and inaccurate.

Mr Clarke —It is certainly the case that very few of these models have the capacity to forecast impacts at a regional level; they tend to operate on a whole of economy basis.

Senator CAMERON —Your experience in this model is it is unusual to go into this sort of depth of analysis?

Mr Clarke —There are some models available to government and industry that do work at a regional level, but I acknowledge the point that you are making that regional level forecasting is much more complex and perhaps inherently less reliable than macro level.

Senator CAMERON —Could you also take on notice as to whether the department is of the view that this Fisher analysis has effectively dealt with the issue of carbon capture and storage and other abatement measures when it has come to its projections?

Mr Clarke —Yes, I am happy to incorporate that in our response.

Senator CAMERON —Could you also give us some idea as to the input and output tables in that modelling and how they have rebalanced the input and output tables?

Mr Clarke —You are talking about the IO tables that Mr Fisher’s report relied on?

Senator CAMERON —Yes.

Mr Clarke —And how they changed through the course of the analysis? I am happy to provide that, Senator.

Senator CAMERON —Thanks. I think that will do me on that.

Senator EGGLESTON —One thing we heard was that there would be an equivalent number of green jobs created to offset jobs in industries like the coalmining industry. Is that your opinion as well?

Senator McLucas —Sorry, Senator, where did you hear that?

Senator EGGLESTON —This was evidence given last week at an inquiry into the amendments to the CPRS when the Minerals Council of Australia appeared before the committee. That, in fact, is some of the evidence to which Senator Cameron was referring.

Senator McLucas —That was from the Minerals Council, was it?

Senator EGGLESTON —It was given during the inquiry.

Senator PRATT —It was from the Climate Institute and I do not think you need to worry about—

Senator EGGLESTON —It was from the Climate Institute, but they were referring to the Minerals Council of Australia’s evidence in which that report, which has just been referred to, was a component.

Senator PRATT —I do not think you need to worry about it. It is not appropriate to ask the witnesses about evidence given in an inquiry that they have not—

Senator McLucas —I do not know if the officers have a comment.

Senator EGGLESTON —My question was whether the departmental officials believe that losses in the minerals industries will be offset by the creation of new green jobs.

Mr Clarke —We do not have separate modelling on that question, Senator. I have no data on which I can respond.

Senator EGGLESTON —Perhaps you could take that on notice.

CHAIR —I think it is a question for the climate change department actually, Senator Eggleston.

Mr Pierce —The effect of the introduction of the CPRS on the economic aggregate such as employment was really the work done by Treasury with their modelling. Whether that modelling identifies specifically what people understand to be green jobs or not, I am not aware, but they would certainly have the effect on employment growth in total. I refer the senator to that piece of Treasury work.

Senator EGGLESTON —The other question of interest in relation to that is whether or not alterative jobs replace the economic benefit of the jobs lost in the mining industry. Are you able to make any comment on that?

Senator McLucas —Once again, I think you should address that to Treasury.

Senator EGGLESTON —There is a view that the only way you can match the jobs lost in the minerals industry is by paying lower wages in other jobs. Do you have a comment on that?

Senator McLucas —My answer stands the same.

Senator EGGLESTON —Thank you.

Senator ABETZ —First of all, Mr Pierce, welcome and all the best in your new role.

Mr Pierce —Thank you, Senator.

Senator ABETZ —I trust it goes well both for you and of course for the people of Australia. My first question is in relation to the coal industry. Currently would you agree that the coal industry is experiencing a loss of jobs?

Mr Stamford —Yes, Senator.

Senator ABETZ —And a loss of production?

Mr Stamford —Yes, Senator.

Senator ABETZ —When somebody asks you questions about the ongoing rate of growth in the coal sector, one might presume that they are talking about the negative growth that is being experienced. That is just an observation I make, and I do not expect you to comment on that. That was a response to Senator Cameron’s questioning about the future growth and projections. How many of the department’s stakeholders have indicated concern directly with the department about the government’s proposed Carbon Pollution Reduction Scheme?

Mr Clarke —Senator, I cannot give you a quantitative answer of X stakeholders, but perhaps the more—

Senator ABETZ —Some? Many? A significant number?

Mr Clarke —We have been engaged with emissions and energy-intensive industries over the life of the development of these policies for many years. All of these sectors—

Senator ABETZ —For how many years?

Mr Clarke —Five or 10 years.

Senator ABETZ —During the Howard era as well! That is interesting for the record, thank you.

Mr Clarke —As long as climate change has been an issue and as long as the response to climate change has been a first order issue, emissions-intensive and energy-intensive industries have continued to engage with the resources department of the day.

Senator ABETZ —Since it has been a primary issue and that has been for the last five to 10 years. Thank you, that neatly puts it into the Howard government era and, of course, once again contradicts Senator Cameron’s assertions. Thank you for that. The question was how many. Whilst I accept you cannot put a number on it, would you describe it as being significant concern? If only one person who ran a very small mine were to ring up and say, ‘Look, we’ve got problems about the CPRS,’ I imagine you would tell me that there has not been much concern expressed.

Mr Clarke —Senator, I am sorry, I am not clear whether you are asking me about the volume of concern or the depth of concern. I will assume that your question is both.

Senator ABETZ —Both, yes.

Mr Clarke —I think the primary evidence about that is in the public submissions that the energy-intensive and emissions-intensive industries have made over the course of these policies.

Senator ABETZ —And there is genuine and deep concern?

Mr Clarke —They are on the record. Their submissions are published. All energy- and emission-intensive industries are naturally first order stakeholders in these policies.

Senator ABETZ —Those concerns have not only been expressed publicly but also directly to the department?

Mr Clarke —Yes.

Senator ABETZ —Are you aware of the modelling released by the Minerals Council about the cost of future jobs?

Senator CAMERON —You must have been sleeping five minutes ago.

Senator ABETZ —I did even understand your questions, Senator Cameron, on this. But, just because you asked questions on it, does not mean that other people might not want to ask questions on it. Are you aware of that modelling?

Senator CAMERON —Stupid questions like that.

CHAIR —Senator Cameron!

Mr Clarke —Senator, we observe that many stakeholder groups, including the Minerals Council, from time to time publish analyses and forecasts in this area, yes.

Senator ABETZ —Thank you. That is all I was asking, whether you are aware of that. Has the coal industry raised directly with you its concern about the potential of coalmine closures as a result of the ETS?

Mr Clarke —All of the potential impacts and worked through details of the climate change response are routinely discussed between this department and its stakeholder industries, including the coal industry.

Senator ABETZ —If that is routinely discussed, you can tell us then whether the coal industry has raised directly with you or the department its concerns about the potential closure of mines as a result of the ETS.

Mr Clarke —Yes.

Senator ABETZ —What is the number of mines they have nominated for closure?

Mr Clarke —I have no number for that, Senator.

Senator ABETZ —If I suggest to you it would be 16, would that ring a bell?

Mr Clarke —No. I cannot recall any specific numbers in there. It has been part of the general consultation and advocacy by that sector in this area and I think it simply reflects the reports that they have already put on the public record.

Senator ABETZ —Yes, but whilst I accept your reliance on what is on the public record, this is in fact questions of your department about representations made to your department, and that is what I am seeking to explore. Albeit your media monitoring service is appreciated, I am more interested in the representations to the department. Has the department examined the impact on jobs and production capacity in the sector in the wake of the latest figures on the state of the economy?

Mr Clarke —We are now going to the general state of the resources sector?

Senator ABETZ —Yes, the resources sector, not only coal.

Mr Clarke —I will ask Mr Stamford to return, thank you.

Mr Stamford —Your specific question, Senator?

Senator ABETZ —Have you examined the impact on jobs and production capacity in the resources sector in the wake of the latest figures on the state of the economy?

Mr Stamford —Yes, Senator, we have but in a very rudimentary form.

Senator ABETZ —Do you have a state-by-state breakdown on the impact on the mining sector—

Mr Stamford —Yes, we do.

Senator ABETZ —or does your rudimentary analysis not drill down that far?

Mr Stamford —No, Senator, the rudimentary analysis does drill down that far. In fact, we obtain that information directly from the ABS.

Senator ABETZ —You get that information from the Australian Bureau of Statistics?

Mr Stamford —Yes, Senator.

Senator ABETZ —Are you aware whether they have maintained their robustness of these surveys given the substantial budget cuts they have suffered in recent times?

Mr Stamford —Senator, you will have to take that up with the Australian Bureau of Statistics.

Senator ABETZ —Wait a minute, you are telling us that you rely on ABS data. Do you check to analyse the robustness of the ABS data or whether the methodology employed by ABS may have changed, or do you just take it as face value and do not bother to look behind it?

Mr Clarke —Senator, we are aware of the debate and the issue regarding robustness and the methodology that the bureau applies to its statistics and the economy generally. We do not have an independent capacity to assess that. We are as aware of that debate as you are and any other interested party. We cannot give you any more information about that though.

Senator ABETZ —Has the department expressed its concern to the Department of Climate Change about the potential impact of the emissions trading scheme on production and jobs?

Mr Clarke —We are in constant engagement with our colleagues in the Department of Climate Change. I cannot answer your question in a simple yes/no manner because it implies a simple ‘we are concerned’. The relationship and the engagement are much deeper than that. We talk about the impacts and issues across all energy- and emissions-intensive sectors.

Senator ABETZ —Given the deep relationship and the deep discussions you have with the Department of Climate Change, has the topic of production ever come up and has the topic of jobs numbers ever come up?

Mr Clarke —Again, I refer to an earlier answer I gave that in terms of those large-scale sectoral impacts we, as with the Department of Climate Change, have relied on the Treasury modelling that has been published in that area.

Senator ABETZ —Have you taken the views of your stakeholders to the meetings, these deep and meaningfuls that you have with the Department of Climate Change, to the table?

Mr Clarke —Of course. The discussions we have with all parties are informed by our relationships with our stakeholders.

Senator ABETZ —Have your stakeholders told you about their concern about production and jobs as a result of the proposed ETS?

Mr Clarke —Again, Senator, I refer to my previous answer. We are in constant dialogue with our stakeholders. They tell us, they brief us, on the submissions they make publicly and we are aware of their views.

Senator ABETZ —Have they told you about production and jobs concerns in relation to the proposed ETS?

Mr Clarke —Undoubtedly.

Senator ABETZ —Right, thank you. Given that you know that, you have been told that, have you taken those concerns of your stakeholders to the table when you have these deep and meaningful discussions with the Department of Climate Change?

Mr Clarke —Senator, your question is suggesting that we have called a meeting with Climate Change in order to discuss—

Senator ABETZ —No, not at all, do not be so defensive. All I am asking is whether in these deep and meaningful, ongoing, regular discussions that you have all the time, you bring the concerns of your stakeholders to those meetings?

Mr Clarke —Of course.

Senator ABETZ —Thank you very much.

Senator McLucas —Senator, I think that the officers will bring the concerns of stakeholders but also the potential opportunities for stakeholders. I think you are couching your questions in the negative. We are in a very volatile economic situation. On top of that we have to deal globally with climate change. There are a lot of issues on the table and I think simply to focus on one element and try and make a political point by speaking with an officer of the department is not beneficial to the discussion.

Senator ABETZ —Asking questions whether key stakeholders have expressed concerns—

Senator McLucas —It is self-evident. It is in the newspaper.

Senator ABETZ —Do you know what? The minister in this portfolio area actually called a roundtable, Minister, to deal with these concerns.

Senator McLucas —Yes, but if you know that, it is probably not useful here.

Senator ABETZ —You should have a chat with Mr Ferguson and tell him that—

CHAIR —Order! Order!

Senator ABETZ —that was unhelpful, was very unhelpful.

Senator JOYCE —The member for Corio has got a concern about it.

Senator ABETZ —I think you might start falling into this category of denier, Senator McLucas, if we do not watch it. I think we have got to be very careful.

CHAIR —Order!

Senator ABETZ —Was any official from the department present at the minerals industry conference where Mr Combet made certain statements suggesting that industry assistance was at risk if the CPRS package was not supported?

Mr Clarke —Senator, the senior officers at the table before you were not there. It is possible that an officer from the department was present but no-one that we can bring to the table today was there.

Senator ABETZ —Are you saying that we did not have a representative? Can you take on notice to see whether the department had a representative at the annual Minerals Week conference at what I understand was either a keynote or opening address by Parliamentary Secretary for Climate Change, Greg Combet?

Senator McLucas —We will take that on notice.

Mr Clarke —Yes, Senator, we will. It is certainly the case, as it is every year, that the department participates in industry conferences such as that. To your specific question as to who might have been present during Mr Combet’s remarks, we would need to take that on notice.

Senator ABETZ —Quite frankly, I cannot blame the officer if they took a coffee break during the speech.

Senator McLucas —Not necessary, just not necessary.

Senator ABETZ —But let us see if the officer was in fact present—that would be helpful. Has the department got any views as to the impact on the resources sector in the event that the industry assistance that is currently proposed in the emissions trading scheme were rolled back or diluted in any way?

Mr Clarke —We have not undertaken separate modelling on such alternative scenarios. We have the scenario in terms of the assistance package currently defined and the forecast of its impact. We do not have any separate modelling on alternative positions.

Senator ABETZ —But you have had these deep and meaningfuls with the Department of Climate Change and hopefully part of your input led to the regime that was put in place for the energy-intensive trade-exposed sector, which includes the resources sector. Do you believe that, if there were a reduced level of assistance than currently proposed, that that would have an impact on production and jobs and, of course, our capacity to sell product overseas?

Mr Clarke —Your question is whether, if the policy were different, the outcome would be different. Self-evidently: yes.

Senator ABETZ —Yes, thank you.

Mr Clarke —But that is a truism, with respect. If things were different, they would be different.

Senator ABETZ —Yes, but the important point is that Mr Combet in effect threatened, blackmailed the sector in his speech and I do not expect you to comment on that.

Senator PRATT —That is very unparliamentary.

Senator ABETZ —Page 4 of his speech says:

If we have to go back to the drawing board, everyone involved will have to run the gauntlet of the political process, something we know cannot guarantee certainty.

This is something that all industries receiving assistance should think very carefully about when they consider their approach to proposals to delay the scheme. Billions of dollars worth of assistance are involved.

They are quite menacing words, and the menacing nature and tone of that has been picked up by many media commentators.

CHAIR —I do not think there is a question here.

Senator ABETZ —Given your knowledge of what is in the media, Mr Clarke, you would undoubtedly be aware of that. Has the department provided advice on further assistance to coalmines and is it being considered?

Mr Clarke —Further assistance? You question implies alternative policy.

Senator ABETZ —Yes, or further assistance.

Mr Clarke —No. We are working with Climate Change on the detail of the current assistance package but I am not aware of any alternative policy work that we have been doing.

Senator ABETZ —It was set in concrete once; it has since been changed. We had the Wong version of the legislation; now we have got the Combet version of the legislation. We are still in a moving feast.

Senator CAMERON —When is Barnaby going to let Malcolm get some policy?

Senator JOYCE —What sort of question is that, Madam Chair?

CHAIR —That is not a question; it is an interjection and it is out of order, Senator Joyce. Senator Abetz?

Senator ABETZ —What would any roll-back of the current assistance package mean for the mining sector? I think you have answered that it would have a negative impact.

Senator McLucas —I am sorry, Senator; I think your question was speculative and I do not think it is right to be asking an officer a speculative question like that. I do take exception when you try to answer a question that you have asked.

Senator ABETZ —I am not sure what all that was about.

Senator McLucas —Have a look at the Hansard.

Senator ABETZ —I am quite free to ask the question as to what it would mean for the industry. We have the government and departmental officials telling us all the wonderful impacts certain government policies might have in the future; for example, in relation to jobs that will be created in the green sector.

Senator JOYCE —Even though there is absolutely—

Senator ABETZ —That is purely speculative, and the government and departmental officials are willing to bang the drum on that one—and quite rightly; they should and can and that is all good.

Senator McLucas —We have already covered those issues.

Senator ABETZ —But if you are willing to beat the drum on that you ought be allowing departmental officials also not to beat the drum but possibly to toll the bell in relation to what it would mean if the assistance package were rolled back, which was hinted at by the Parliamentary Secretary for Climate Change in his speech. That was the broad hint by the parliamentary secretary; not so subtle, might I add.

Mr Clarke —The department has not modelled alternative policy in this area.

Senator ABETZ —Has the minister—and possibly you will need to take this on notice, Senator McLucas—expressed his concerns to Mr Combet about the tone and nature of his speech at the Minerals Week conference on 27 May 2009?

Senator McLucas —I am happy to ask Minister Ferguson if he has anything that would assist the committee.

Senator ABETZ —In relation to the specific question I asked, that is all.

Senator McLucas —Certainly.

Senator ABETZ —Not anything that he might want to tell us about; I want to know whether or not he has expressed his concern to Mr Combet about the nature of those quite menacing remarks. Can I move on, Chair, to an area that I flagged, with my industry hat on, at estimates yesterday, which is in relation to the ‘nuclear waste repository’. What do we call it?

Mr Clarke —We understand the questions you are asking of industry yesterday that were referred to us. I will bring the officer to the table. Thank you, Senator.

Senator ABETZ —Aha! You were watching. Somebody does not have a life. It is very kind of you that you were watching and so will be able to assist. I hope you are highly paid to watch Senate estimates.

Mr Davoren, can you give us an update in relation to where we are at with nuclear waste disposal in the country? At the moment it is still housed in drums under hospitals, under city buildings and scattered all around the country. Might I add, before people get too excited, that these are the wastes as a result of nuclear medicine, which is of great benefit to possibly hundreds of thousands of Australian people. Alarm bells should not be going off about the fact that we have these wastes, because these wastes are the result of some very good medical treatment that is improving the quality of life for many people. I think it is important to get that on the record. But how far have we progressed with the dump, the repository—whatever we want to call it—especially given that ANSTO has contractual arrangements whereby 2011 is a deadline for them to take this material back from Scotland, as I understand it? Also, there is some discussion about extending that period of time beyond 2011. I think we also have contractual arrangements with France, with a cut-off date of 2015. If any of those basic matters that I have raised as facts are wrong, feel free to correct me, but could you give us a general outline, please.

Mr Clarke —Before Mr Davoren responds, I should clarify for the record, of course, that the details of ANSTO’s arrangements are a question that only that portfolio could confirm, with regard to the detail you provided. I am sure Mr Davoren can talk to you about the status of the repository.

Senator ABETZ —Yesterday ANSTO was telling us that responsibility for where it will be housed lies with this department.

Mr Clarke —That is correct.

Senator ABETZ —All right.

Mr Clarke —We will talk about the ultimate housing and location of it, but you are asking for confirmation about the dates in ANSTO’s contracts. I am saying that that is not our portfolio.

Senator ABETZ —That is a fair point, Mr Clarke, and I accept that other than to say that—

Mr Clarke —There is a consequence.

Senator ABETZ —Yes. There is a consequence of that time line, which now makes it somewhat urgent.

Mr Clarke —Of course.

Senator ABETZ —Yes.

Mr Davoren —I am able to comment on that schedule because of material that is on the public record; in fact, material that was provided in response to a question from Senator Ludlam that was answered in February of this year. We are not looking at 2011 for the radioactive waste returning from Dounreay. Initially there was a window—

Senator ABETZ —Dounreay is in Scotland?

Mr Davoren —That is right.

Senator ABETZ —Yes.

Mr Davoren —Initially there was a window in which that material could return. The earliest date was 2011 and the end of that window was 2015. ANSTO has been able to negotiate arrangements which will see that material coming back around 2015.

Senator ABETZ —This is not a trick question. I was of the view that ANSTO was still in the process of negotiating, but I may have misheard.

Mr Davoren —They are negotiating the specific modalities of that return.

Senator ABETZ —But it has been agreed to defer it till 2015?

Mr Davoren —That is right. In fact, if you looked at question 1175, which was answered on, I think, 3 February 2009, that would provide the detail on the Dounreay shipment. As far as the broader policy is concerned, the minister stated that the government is developing a strategy for management of the Commonwealth’s radioactive waste. That strategy is still under development and it will not be announced until it has been settled and decided within government. The minister has repeated that position as recently as this morning on radio in Darwin. The government has committed itself to repeal of the Commonwealth Radioactive Management Act 2005, but not until it has made arrangements for suitable replacement legislation in accordance with the policy that it eventually adopts.

Senator ABETZ —If I were to hazard a guess that this strategy will not be in place before the next election, would you agree with me?

Mr Davoren —I would not go anywhere near that, Senator.

Senator ABETZ —That is very wise, well done on that. Can you tell us, without putting an election into it, the timeline for this proposed strategy?

Mr Davoren —We do not know the timeline for the strategy. I can inform you on the stages—

Senator ABETZ —We are developing a strategy; is that right?

Mr Davoren —The government is developing a strategy.

Senator ABETZ —Minister, when do we anticipate that this strategy will be completed? You had a very strong policy at the last election to repeal certain legislation, but in the rush of legislation I have not seen replacement legislation. Chances are you might even get cooperation from at least one or two other parties in the Senate if you were to introduce legislation. Can you advise us of the timeline for the strategy?

Senator McLucas —Minister Ferguson is on the public record regularly and often around the question of progressing this work. I will ask him if there is any information that he can provide to this committee with respect to your question of the timeline.

Senator ABETZ —Thank you very much, because you are quite right. He is on the radio and airways regularly and often talking about all these things and studiously avoids the issue of the timeline. That is why I am not surprised you are not able to answer the question—and indeed I do not think anybody is—in relation to the strategy. We are talking about dealing with the Commonwealth’s waste, given this new era of cooperative federalism that has broken out. Are we cooperating with all the states in the strategy so we get one central repository for all of the nation’s nuclear waste and so that in my capital city of Hobart, for example, we do not have this radioactive material stored in drums under buildings in the city?

Mr Davoren —That is a matter for the government to decide in the context of its strategy. I might add that one state, Western Australia, went its own way on this matter a long time ago and has an operating near-surface low-level-waste disposal facility at Mt Walton East in the Goldfields district.

Senator ABETZ —It is a policy issue, so I will direct it to the parliamentary secretary at the table. Is it the government’s view and policy position that it would be ideal if all the waste of the nation, from both the Commonwealth and the states and territories, were placed in a central repository?

Senator McLucas —Once again, I will seek some advice from Minister Ferguson.

Senator ABETZ —If that is the government’s policy position—which I would have thought, on the face of it, at least, makes sense—have any discussions have been had at COAG, a relevant ministerial meeting or a leaders’ meeting to progress this so that we can have a national strategy as opposed to potentially eight or nine different strategies around Australia?

Senator McLucas —I will take that on notice.

Senator ABETZ —How many people are working on this strategy in the department?

Mr Davoren —I have a staff of three officers.

Senator ABETZ —How long have they been working on this strategy?

Mr Davoren —We provide advice to government on this issue quite regularly. We provided advice to the government on the work done by the previous government and on the site assessment studies that were commissioned by the previous government, and we are awaiting advice from the government on how it wishes to proceed.

Senator ABETZ —This might be a bit of a cheeky question and discipline me if it is. You have provided the advice, so what are you and the three staff doing whilst you are waiting on a government response? Are you freewheeling?

Mr Davoren —This is not the only issue we have responsibility for, Senator. We have responsibility for managing the former atomic nuclear test sites at Maralinga in South Australia, where the Commonwealth is still responsible for about 3,000 kilometres of land and the infrastructure out there. We also have responsibility for a program of monitoring and maintenance works at Rum Jungle, which was recently funded in the budget.

Senator ABETZ —But at this stage there is no further development on the repository; the ball is fair and square in the minister’s court?

Mr Davoren —That is correct.

Senator ABETZ —In that case, Parliamentary Secretary, given that the department has finished its work on this matter, could the minister then provide us with a timeline as to when a decision is made? If the department has finished with its considerations, it would be very interesting to know when the minister will make his determination on it. More likely, is it stuck in the Prime Minister’s office for consideration and the tick-off? When it is likely to re-emerge from the government, either via the minister’s office or the Prime Minister’s office, because it now seems that all the preliminary work has been done and the only stalling is on the part of the government?

Senator McLucas —In good faith I have taken those questions on notice, and I note that you have made your political point. We probably could move on to other questions.

Senator ABETZ —Not a political point—an observation. But if you are saying to us that this matter will not go to the Prime Minister’s office prior to the ministerial tick-off by Mr Ferguson, I will ask that question. Can the minister advise whether the proposal will go to the Prime Minister’s office for consideration prior to final approval and decision and also whether this matter will go to cabinet—

Senator McLucas —I expect so. I will find out for you.

Senator ABETZ —before a final decision is made?

Senator McLucas —I imagine it will go to cabinet.

Senator ABETZ —In that case, it will go to the Prime Minister’s office and my suggestion that it would go to the Prime Minister’s office, therefore, was not a political comment and your intervention was ill-considered, was it not?

CHAIR —Senator Abetz, Senator McLucas has said she will take all that on notice. Are you finished?

Senator ABETZ —I don’t know why, but chances are Senator Ludlam will have a question or two on this area.

CHAIR —Exactly.

Senator ABETZ —Senator Joyce as well. I have got further questions but on this area I think it is—

CHAIR —We will go on to this area. Senator Ludlam.

Senator LUDLAM —Thank you, Chair. You have just described you have three staff working for you and you have other responsibilities. How much time is the waste dump issue taking up now—or is it actually off your desk?

Mr Davoren —It takes very little of our time. We have correspondence on it, as you would expect, and occasionally we brief ministers on issues that arise.

Senator LUDLAM —But the main work of—do I call it a department, a unit or a—

Mr Davoren —It is a section.

Senator LUDLAM —The main work of your section on the radioactive waste dump issue is concluded for the time being?

Mr Davoren —Certainly as far as the national facility is concerned.

Senator LUDLAM —Have you, therefore, provided drafting instructions for a repeal bill?

Mr Davoren —We have not. We are not in a position to do that. I think the government said that it is not going to repeal unless it is in a position to put in appropriate replacement legislation. That legislation would reflect its policy, which has not yet been developed.

Senator ABETZ —Can I just ask a question? Was that the actual policy announcement during the election campaign?

Senator LUDLAM —There were quite a number of announcements.

Senator ABETZ —They would not repeal the legislation until they had alternate legislation? Do you know the answer, Parliamentary Secretary? If not, take it on notice.

Senator McLucas —Senator, I think it is fair to say that our government is a consultative government. It is very important—

Senator ABETZ —That is not the question.

Senator McLucas —I can actually answer your question around states and territories as part of this question. It is important that we do consult with various stakeholders who are part of this piece of work that has to be done, including Indigenous people—

Senator ABETZ —But my intervention was—

Senator McLucas —and including the states and territories.

Senator ABETZ —in relation to what your election promise regarding the legislation was. If I recall it—and I may be mistaken on this and corrected—it was a statement that you would simply repeal—

Senator LUDLAM —That is correct.

Senator ABETZ —and that you would not make the repeal subject to alternate legislation. This is a new development. You have been mugged by reality and I welcome that to a certain extent.

CHAIR —Senator Abetz, you continue to make these comments that invite interjection.

Senator ABETZ —Only from the chair on this occasion.

CHAIR —I allowed you to come in on that interjection. If you could just ask a straight question and then we will go back to Senator Ludlam.

Senator ABETZ —Chair, I fully agree with you. I asked a very straight question, which was: was it part of the policy of the opposition, now government, at the last election, to simply repeal the legislation or only to repeal the legislation subject to? We then got a political diatribe from the minister, and that is what unfortunately tempted me to make further political commentary—

CHAIR —I do not think her diatribe was anything like as lengthy as yours, Senator Abetz. Senator McLucas, do you have any further response?

Senator McLucas —The timing was not included in the election commitment. I think everyone would know that. The commitment was to repeal. It is now very clear from Minister Ferguson’s office and Minister Ferguson himself that there is a commitment to consult with the community. We are committed to the repeal of the Commonwealth Radioactive Waste Management Act, but we will not take piecemeal steps or decisions on radioactive waste management in the absence of a total package that will solve this problem for the long term. I think that is well known to this committee, and I think, Senator Ludlam, you understand that as well.

Senator LUDLAM —I have just about memorised that statement! Thanks for the reminder, though. I think you will find, Senator Abetz, that the commitment prior to the election was not conditional—

Senator ABETZ —That is right.

Senator LUDLAM —on substitute legislation.

Senator ABETZ —Exactly.

Senator LUDLAM —If you would like to correct the record down the track, that would be appreciated. Let us just stay with where we were. So you have not provided drafting instructions of any sort yet?

Mr Davoren —That is right.

Senator LUDLAM —Will those originate with the minister or are you expecting some time down the track that that responsibility will—

Mr Davoren —We do not really have any access to parliamentary drafting services until the government has made a decision.

Senator LUDLAM —The government will make a decision and then it will be down to you to provide some drafting instructions for—

Mr Davoren —I assume so.

Senator LUDLAM —We are now in early June and that process has not even commenced yet?

Mr Davoren —Correct.

Senator LUDLAM —Thank you, that is helpful. The minister was on the radio a couple of weeks ago, again from Darwin, saying that they were not going to waste a whole heap of time consulting until a site had actually been selected, which is a substantial shift. Actually, it is a 180-degree shift in the policy that the government took to the election. Could you just describe for us the work that your section has conducted; has it been designing a process or are you still conducting site selection activities?

Mr Davoren —Work on the site selection has concluded, with the work initiated by the former government—that is, a consultant’s report was provided on the three defence sites and the volunteer site at Muckaty Station. That report was subject to a peer review process. That peer review report and the consultant’s response to that have been provided to the minister.

Senator LUDLAM —So let us just step this out. The original Parsons Brinckerhoff consultants report was provided to you; on what date was that provided?

Mr Davoren —I think it was provided in final form towards the end of last year.

Senator LUDLAM —Would you be able to provide us with the date for that?

Mr Davoren —I could.

Senator LUDLAM —On notice, if you would. Are you able to table that PB report for the committee?

Mr Davoren —I am not in a position to, seeing it is with the minister. It is being considered by the minister.

Senator LUDLAM —Then you subjected that report to a peer review by CH2M Hill?

Mr Davoren —That is correct.

Senator LUDLAM —When did you receive that peer review?

Mr Davoren —In January 2009.

Senator LUDLAM —Then you referred that document back to PB for their comments on the peer review; is that the way the process worked?

Mr Davoren —Yes.

Senator LUDLAM —When was that final feedback from PB?

Mr Davoren —February 2009.

Senator LUDLAM —Was that before or after the last session of estimates—the last time we spoke?

Mr Davoren —It might have been just after.

Senator LUDLAM —So those three documents are finalised and are now with the minister; is that correct?

Mr Davoren —That is correct.

Senator LUDLAM —Are there any other sites apart from those four under consideration?

Mr Davoren —Not by us, Senator.

Senator LUDLAM —Okay. So whatever process the minister might have running, that is separate to yours. But you have basically concluded the work that the Howard government had undertaken to select those four sites?

Mr Davoren —Yes.

Senator LUDLAM —Have you played any part at all in advising the government on a consultation process or is it strictly site selection work that you have been undertaking?

Mr Davoren —Obviously, we have not provided this government with a consultation process.

Senator LUDLAM —Sorry; you have not?

Mr Davoren —No, because I think we would need to know what they intended, how they intended to proceed. There are a whole range of options that are open to them.

Senator LUDLAM —That is certainly true.

Mr Davoren —They could proceed with an already identified site; they could go to a complete national selection process. I do not see that we are in a position to provide any advice on a consultative process when we do not know the broader context.

Senator LUDLAM —When did you provide those three documents to the minister?

Mr Davoren —Earlier this year, Senator, pretty soon after we got them.

Senator LUDLAM —So some time maybe in mid-February. Would you again be able to provide dates for each of these processes?

Mr Davoren —I will take that on notice, Senator.

Senator LUDLAM —Thank you, I would appreciate that. Has your section conducted any consultation with a land council or any other parties on this matter or has your interaction strictly been with government?

Mr Davoren —It has strictly been with government. We obviously see the land councils because we deal with them on other matters, like the Rum Jungle project, and naturally they ask us what we are doing and I think we give them the same answer that we give you.

Senator LUDLAM —But there is no formal correspondence between you and the land council? It is not your role to be consulting or putting options to anyone?

Mr Davoren —No, certainly not.

Senator LUDLAM —Strictly with the government. What about the Northern Territory government or any agencies of the Northern Territory government—do you liaise with them at all on this matter?

Mr Davoren —I think the situation with the previous process was that the Northern Territory government opposed that process, so we had no arrangements for consultation with them, and that remains the current situation.

Senator LUDLAM —So there is no dialogue with the Northern Territory government either. Do you have any indication at all in terms of your forward planning—and we will get to the budget in a moment—of the expected workload for your section in the next few months on this issue or are you really in a holding pattern?

Mr Davoren —Obviously, if there was an early decision on this, we would have a substantial workload. We would be involved in—

Senator LUDLAM —An early decision, with respect, would have happened 18 months ago.

Mr Davoren —I am talking from now. There would be a considerable workload in terms of legislation. If we proceeded to an environmental impact assessment of a particular site, there would obviously be quite a deal of work, contractual work and work on a referral.

Senator LUDLAM —Can I just bring you to the budget statement. At page 33, under radioactive waste management, there is roughly $2 million between this point and out to the 2011-12 financial year, with nearly half of the total funds in the next financial year’s budget. Can you tell us what you plan to do with $4½ million dollars between now and this time next year?

Mr Davoren —Investigation and early licensing stages of a facility are a major expense. We will be conducting an environmental impact assessment and also applying for a siting licence from the Australian Radiation Protection and Nuclear Safety Agency. We are working on the basis that we are going to do this work, say, in the current financial year. There has been no decision, so this represents a rephasing of those funds so that those moneys are moved into 2009-10 so that we can respond to a decision by the government.

Senator LUDLAM —That is not construction work, though?

Mr Davoren —No, not at all.

Senator LUDLAM —That is feasibility work and studies and so on?

Mr Davoren —Yes. I think it is important to understand that with this project most of the time is taken in licensing processes. We need three licences from ARPANSA, we need EPBC approval and we probably need to take it to the Parliamentary Standing Committee on Public Works.

Senator LUDLAM —The $4.4 million that is in this financial year, the one coming, will that include consultation?

Mr Davoren —Yes, it would.

Senator LUDLAM —Once you have a policy decision from the government, it will actually be down to your section to conduct whatever consultation process is being envisaged?

Mr Davoren —That is my understanding, Senator.

Senator LUDLAM —What expertise do you have in your section around running consultative or deliberative processes around these sorts of issues?

Mr Davoren —We have significant experience, particularly in relation to consulting Indigenous communities. We handled the consultation on a number of radioactive waste projects, including the Maralinga project, which was a particularly challenging one. It involved commissioning independent scientific advice for the benefit of the traditional owners. Where we do not find that we have relevant experience, I think there are a number of potential contractors that operate in that field that we could use.

Senator LUDLAM —For that kind of budget, you would be in a position to bring in other sources of expertise?

Mr Davoren —Once again, Senator, that depends on the task. If we had the consultation process involved in a nationwide site selection process, we might have to go back to the government for some more money. Once we know the nature of the task, we can then work out what we have got to do.

Senator LUDLAM —But, certainly, if the minister just decides on a site and tells you to go out and sell that, that would be presumably a much cheaper exercise than actually running a properly deliberative process?

Mr Davoren —I am not going to respond to the words that you have used, Senator.

Senator LUDLAM —Fair enough. Are you aware that the long-running nature of this debate and the fact that some of the communities in the Northern Territory are feeling frankly betrayed by the way the minister has handled this issue—

Senator McLucas —I do not think the officer can answer that question, Senator.

Senator ABETZ —I am sure you can.

Senator LUDLAM —I just put it then as a preamble to the question. Are you aware that all three of the sites that are under study—certainly, if your section has not investigated any other of those four sites—are very strongly contested by the people living in the vicinity of those sites?

Mr Davoren —I am aware that there are a range of views on those sites.

Senator LUDLAM —A range of views meaning very strong opposition. I do not know if you have taken the time yourself to visit those places.

Mr Davoren —I have visited all of those sites.

Senator LUDLAM —You would be then directly aware firsthand of the strength of opposition in those communities?

Mr Davoren —I just do not think that is an accurate statement in regard to some sites.

Senator LUDLAM —Which sites do you feel are welcomed?

Mr Davoren —One of them is a volunteer Aboriginal site, so the people that volunteered it obviously were not strenuously opposed to it.

Senator LUDLAM —You would be referring to the Muckaty site?

Mr Davoren —Yes.

Senator LUDLAM —The other three obviously were not volunteer sites. They were proposed and the people first heard of those in media statements apparently. It is not a concern to you that those three were not volunteer sites?

Mr Davoren —My concerns are neither here nor there.

Senator LUDLAM —Are you aware of the very strong opposition amongst traditional owners of the Muckaty site, which, as you say, was volunteered? Large numbers of traditional owners and people with responsibilities for that country are very strongly opposed to that

Mr Davoren —That is a very loose statement, Senator. The people who actually volunteered their land are not opposed. A lot of other people are opposed, but they are not the traditional owners of the land concerned.

Senator LUDLAM —I think they would be very upset to hear that statement. Finally, to confirm, you were not instructed or requested by the minister to investigate any other sites?

Mr Davoren —No, we were not.

Senator LUDLAM —You are absolutely clear about that?

Mr Davoren —Absolutely not.

Senator LUDLAM —Just the four. Thank you. Are you involved in the ongoing administration of the funds that were paid to the Muckaty Land Trust as a result of their nomination being accepted by the previous government?

Mr Davoren —That is the responsibility of the Northern Land Council.

Senator LUDLAM —Your section has no responsibility whatsoever for administration of those funds from the Commonwealth?

Mr Davoren —Not at all. Once the payment is made, and one payment has been made, the disbursement of those funds is the responsibility of the Northern Land Council under well-established processes that apply to any range of projects, from mining projects right through to infrastructure.

Senator LUDLAM —Does the NLC report back to the government on the disbursement of those funds?

Mr Davoren —Not to our portfolio. It may report to the minister for Indigenous affairs.

Senator LUDLAM —Are you aware of what milestones will trigger the next payment to be made to that group?

Mr Davoren —Yes, I think it would be a referral, the selection of a site for environmental assessment.

Senator LUDLAM —I will leave it there. If you are able to provide us with the materials that you undertook to provide on notice, or the dates in particular of the documents, that would be greatly appreciated.

Senator JOYCE —In regard to the competitiveness and sustainability, are you also across the infrastructure program that is currently before us in moving resources such as coal to ports?

Mr Clarke —We have an interest in the infrastructure that supports the resources industry, yes, Senator.

Senator JOYCE —You are aware of problems that are currently occurring in regard to the Goonyella link, the missing link between Abbot Point and the coal fields of central Queensland?

Mr Clarke —The famous missing link, yes.

Senator JOYCE —The famous 69 kilometres. I will put this as a package. You are also aware of the prospect of an inland rail that would have gone through the southern coal basin and into northern New South Wales to increase internodal port activity, remove port bottlenecks and give us greater capacity for utilisation of port resources in a more efficient manner to move coal out?

Mr Stamford —Yes, we are aware, Senator.

Senator JOYCE —Given these things are essential in increasing our competitiveness, do you believe that it was better to invest in dealing with the missing link, the creation of inland rail or is there more to be gained in our economy by investment in ceiling insulation and boom gates?

Senator McLucas —For goodness sake.

Mr Clarke —We have not undertaken that comparative analysis, Senator.

Senator JOYCE —How much would it cost to fix the Goonyella missing link?

Mr Stamford —I do not have a direct figure on the capital cost of fixing the Goonyella system but there will be a number of elements to it. The first is to build the Goonyella link itself; second, to make sure there is rolling stock on that link to carry the coal; and, third, to make sure there is full capacity at the end of that link to ensure that the additional capacity can be dealt with in the export market.

Senator JOYCE —There is increased capacity at the point at the moment, isn’t there?

Mr Stamford —There will be additional capacity built at Abbot Point at the moment, yes.

Senator JOYCE —And that will require the Goonyella link really too. They are not going to get all that from Collinsville. They are going to have to go on land to get that coal, aren’t they?

Mr Stamford —I think that, in the case of Abbot Point, the capacity at 31 December last year was about 21 million tonnes. By mid-2011 they are looking to go to 50 million tonnes. I would have to go back to check here, but my understanding is that they will need additional rail capacity to go beyond that.

Senator JOYCE —What about inland rail, the capacity for us to access the Surat Basin, especially access to the port facilities at Brisbane, which is missing because of the Toowoomba Range link, there is also a bottleneck there at the moment, is there not?

Mr Stamford —Senator, the Surat Basin railway, firstly, is a private consortium which is being built there, and that will be tied to the Wiggins Island coal terminal first and foremost and will be driven by the Wandoan coal project.

Senator JOYCE —Is the Toowoomba Range a current bottleneck in that it completely limits the capacity of transport of coal from the Dalby area and around those areas down to the port of Brisbane?

Mr Stamford —The industry regards the Surat Basin railway as something which will add considerable value to the export capacity of the coal producers.

CHAIR —If I could ask the secretary of the department whether we could have the Australian Office of Financial Management available a bit earlier than scheduled, perhaps after dinner. We will see how we go with the schedule, but we may get to the Australian Office of Financial Management earlier than the 9.30 proposed time.

Senator McLucas —We will come back to you with an answer on that, Chair.

CHAIR —If I could have a discussion with the members of the committee about that.

Proceedings suspended from 10.32 am to 10.48 am

CHAIR —The committee will now resume, and Senator Joyce will continue with his questions.

Senator JOYCE —Thank you. I just want to go back to improved strength and competitiveness in regard to the capacity of projects to come on line. Have you done any studies as to the availability of credit in the marketplace and the capacity of new resource projects to get up and running by reason of their capacity to get access to finance?

Mr Clarke —We are certainly conscious of the issue as one of the many impacts of the global financial crisis. But to answer your specific question: no, we do not have separate analysis on how that issue is affecting the resources sector.

Senator JOYCE —I will not pursue the issue, but to your knowledge is there a sense of crowding out in the marketplace, that is, with the advent of the global desire for bills and notes, that this affecting the capacity of miners and resource developers to get access to finance?

Mr Stamford —One of the characteristics of the global financial crisis has been a credit squeeze on resources capacity and a cash squeeze as well and so, yes, the bond and equity markets for resources projects have been very, very tight over the last while and the availability for cash has also had an effect on the resources sector.

Senator JOYCE —Like any other resource, being tight will mean they will be forcing the price of finance up?

Mr Stamford —If indeed finance is available at all and if those providing the finance are in a position to make that risk, yes, Senator.

Senator JOYCE —If available at all. If they are available at all, then it is tight and it will force rates up. Who would be, in the foreseeable future, the biggest domestic buyer of bonds and notes in the Australian market?

Mr Stamford —That I could not answer you, Senator, from this portfolio’s perspective.

Senator JOYCE —Would anything come close to the federal government?

Mr Clarke —That is an analysis which we would defer to Treasury on.

Senator JOYCE —I just want to go quickly to the Clean Energy Initiative.

Mr Clarke —Certainly.

Senator JOYCE —I noted the Rudd government claims to have spent $3.5 billion over the next nine years, but only $1.3 billion is accounted in the forward years. What instruction has the department received about where the other $2.2 billon will come from?

Mr Clarke —Senator, I am not sure that I can literally answer your question. You are right that the $3.5 billion of funding for the two flagship programs, carbon capture and storage and solar, extend well beyond the forward estimates, and that there is only so much within the period of the forward estimates. But it simply has that nature. Its profile extends beyond the forward estimates.

Senator JOYCE —Is there anything definitive or decisive—decisive being the optimum word these days—about where this $2.2 billion will come from?

Mr Clarke —It will come through the budget process as the forward estimates roll out.

Senator JOYCE —Has the government flagged priority areas within the Clean Energy Initiative?

Mr Clarke —The Clean Energy Initiative has three components. There is carbon capture and storage flagship projects, solar energy flagship projects, and the creation of a new entity, nominally Renewables Australia, and the funding allocation has been specified across those three elements.

Senator JOYCE —What is that funding?

Mr Clarke —In total, CCS has $2.425 billion over nine years of which $2 billion is new and $0.425 billion was previously announced money. Solar Flagships has $1.6 billion over six years of which $1.365 billion was new, $0.235 billion existing. Renewables Australia, $465 million of which $100 million was new, $365 million existing.

Senator JOYCE —How are these rolling out in regard to the financial encouragement given by the government? Have we had any sort of relationship as to whether these projects are up and running, going forward, the money is turning up as expected, there are people on board, ready to do it?

Mr Clarke —Certainly. The three elements of the Clean Energy Initiative have quite different characteristics in terms of the questions you are asking, so I will have to answer it in three parts. In terms of carbon capture and storage flagship projects, that area has been the subject of extensive industry and state government consultation under the National Low Emissions Coal Initiative, and hence there are a number of carbon capture and storage projects on the table as project proposals. We would expect there to be a competition to select projects that are already under development in that area.

Solar Flagships is less well developed and, therefore, we will be undertaking a market study right now to identify the optimum business model, the way in which to shape that program and the appropriate way to present it to the market. The renewables initiative is research and development more than big project. Much of the funding allocated in that area is already in process through various competitive rounds and so on. But the new structure of the nominal Renewables Australia will be subject to a government decision and potentially legislation before it is implemented.

Senator JOYCE —Is this funding available—I imagine it has to be because that is where a lot of it will come from—to overseas organisations working within Australia?

Mr Clarke —I would characterise the two flagship programs as the funding will go to projects, and the backers of those projects are likely to be consortia. That could well include energy and resources industry, technology and research organisations and, inevitably, several of the parties in those consortia will be international companies.

Senator JOYCE —Obviously part of it is research and development, and they will be putting forward in their submission, ‘This is the research and development of this project and this is what is in my budgetary proposal’?

Mr Clarke —Again, I need to break down the answer. There are two components. In the flagship projects, which is building the large CCS and solar energy projects, there will be a research infrastructure component that will require the participation of a research agency.

Senator JOYCE —What is to stop a company or organisation gathering those funds and then using the debt of the Australian taxpayer—because it is all borrowed money—in a project overseas? That company can basically pick up their IT, their technology, and head overseas with it.

Mr Clarke —The two flagship elements, CCS and solar, the projects where the Commonwealth’s funds will be expended, must be Australian projects. We would expect that the learnings, the know-how, et cetera that come out of those projects, would be disseminated globally to the benefit of both the Australian and the global carbon capture and storage and solar energy communities. But the projects themselves must be domestic projects.

Senator JOYCE —It is very benevolent, but it is a form of the Australian government possibly subsidising the development of this technology for the globe?

Mr Clarke —These programs have dual benefits. They will accelerate the deployment of these technologies domestically but they also, quite explicitly, will have a knock-on effect globally. They operate in both spheres.

Senator JOYCE —When will these projects actually be up and running? When will we actually be able to drive out and see one?

Mr Clarke —I cannot give you a date on that. When would we hope that this would start—

Senator JOYCE —Have they turned a sod of earth on any of them yet?

Mr Clarke —We have not yet selected the project, Senator.

Senator JOYCE —When do you think that will happen?

Mr Clarke —The project selection process, to actually identify it to where we could tell you it will be that plot of dirt and that technology and that capacity power station or whatever, we would hope across the two, CCS and solar, that it would be completed within 12 months.

Senator JOYCE —Within 12 months.

Mr Clarke —Potentially faster, but that is a conservative estimate today.

Senator JOYCE —What is the belief of your rollout after you have selected the project; how long would you envisage before the project was actually up and running?

Mr Clarke —Again, that will obviously be the subject of contracts with each of the projects. It will vary from project to project. Those that have already done a lot of front-end engineering design work, that have got licensing, that have got sites, et cetera, could happen a lot faster. Those that need to go through that process; it could take an additional two years to complete that preliminary work. Some projects are already well advanced in that area and could start much faster. I expect there will be a spread.

Senator JOYCE —So, on roughly 12 months and two years, we are looking at, give or take a bit, around a three-year time frame?

Mr Clarke —I am reluctant to give you a general answer. I am saying that it will vary. Some projects are well advanced and could start site works much faster than that. Others that are starting cold today, so as to speak, could take up to that period. There is also the fact that some of these projects, particularly in the CCS area, potentially retrofit to existing sites where, again, the permitting process is much shorter.

Senator JOYCE —Do the projects have to be commercially viable in production phase or will they be subsidised?

Mr Clarke —The design at the moment assumes a capital subsidy for the capital cost of constructing those projects and it assumes a ratio of $2 from counterparties for each $1 from the Commonwealth. It is a capital subsidy upfront, but the assumption, the business model behind that, is that these entities will be profitable as power stations in the short, medium, long term, but need this capital subsidy to address that early mover issue in these technologies.

Senator JOYCE —Do you see it involved with the Renewable Energy Target scheme?

Mr Clarke —The solar projects would be eligible under the Renewable Energy Target, yes.

Senator JOYCE —Has government acknowledged the utilisation of methane under the Renewable Energy Target?

Mr Clarke —I do not believe so, Senator, although that is strictly a question for the Department of Climate Change, but that is not my understanding.

Senator JOYCE —Are any of the benefits from methane from landfill recognised under the Renewable Energy Target scheme?

Mr Clarke —I do not think we can advise you on that, Senator.

Senator JOYCE —Can you generate power from the burning of methane?

Mr Clarke —Absolutely.

Senator JOYCE —Is it used anywhere in the world? Is there capacity to generate power from the burning of methane in a viable and productive capacity?

Mr Clarke —Yes.

Senator JOYCE —Can you give me an example of where that would be?

Mr Clarke —No, but I am aware that it is a mature technology.

Senator JOYCE —It seems a bit strange that a mature technology that would reduce greenhouse gases because we would be burning the methane would not be utilised under the Renewable Energy Target?

Mr Clarke —Your question goes to the definition of renewable energy under that scheme, both the previous renewable energy scheme and the extended one, and that is an issue for the Department of Climate Change.

Senator JOYCE —Obviously you have no knowledge of the logic behind methane being omitted from the Renewable Energy Target?

Mr Clarke —I am not able to comment on that issue or, indeed, to advise you of its status.

Senator JOYCE —Has the department done any modelling on the disproportionate impact of the Renewable Energy Target on the aluminium industry?

Mr Clarke —Senator, sorry, it has just been brought to my attention that my colleague has some of the documentation from our colleague department that does indicate that landfill gas, which is what I understand you are talking about, is indeed scheduled as a renewable source. But, again, any specifics about that, I would have to refer you.

Senator JOYCE —Landfill gas would be methane, wouldn’t it?

Mr Clarke —That is what I am assuming also.

Senator JOYCE —Isn’t there a bit of confusion here, because methane is not under the Renewable Energy Target and landfill gas is, but landfill gas is methane?

Mr Clarke —Again, that is why I am cautioning that we are not the responsible department. I just wanted to bring to your attention that the term ‘landfill gas’ is scheduled by the Department of Climate Change and therefore I would refer you to them for an explanation of that.

Senator JOYCE —Let us go back to aluminium. Have you done any modelling on what is going to happen to the aluminium industry under the Renewable Energy Target?

Mr Clarke —We have not done any independent modelling of that, no.

Senator JOYCE —You are aware of the comments even within the Labor Party? The member for Corio, Mr Richard Marles, has concerns about it. It is in the paper today?

Mr Clarke —I am aware that the aluminium industry has raised questions about the impact of the Renewable Energy Target on them as large consumers of electricity, yes.

Senator JOYCE —Have you been asked to do further modelling on it?

Mr Clarke —Not to my knowledge.

Senator JOYCE —What sort of reduction will there be in the aluminium industry from the Renewable Energy Target?

Mr Clarke —Again, I can only refer you to the answers to previous similar questions that the Treasury modelling on the sectoral impacts of climate change policy are the only source of independent data that we have in this area, other than submissions made by industry itself.

Senator JOYCE —Are you aware of flow-through shares?

Mr Clarke —Yes. I will bring the relevant officer to the table.

CHAIR —Does the Australian Solar Institute involves these officers?

Mr Clarke —It does, Senator.

CHAIR —Senator Joyce, could we just save too much to-ing and fro-ing.

Senator CAMERON —And I have questions on CCS.

CHAIR —Senator Pratt.

Senator PRATT —Thank you very much, Chair. As I understand it, one of the programs announced has been the $100 million for the Australian Solar Institute. I wanted to understand how that $100 million is going to be divided and used, because I understand that it is for both solar thermal and photovoltaic. If you could take me through that, to begin with, that would be terrific.

Mr Clarke —Certainly. The $100 million for the Australian Solar Institute was one of those parcels of existing money that I referred to—it was actually announced in last year’s budget and we have been working through for the last 12 months on implementation of that announcement. It has now been linked into, augmented, if you like, by the Clean Energy Initiative. The three principal members of the Australian Solar Institute are the CSIRO at Newcastle, the Australian National University solar laboratories and the University of New South Wales solar laboratories. You are right that there is an explicit recognition of both solar thermal and photovoltaic interests within the institute, and I will ask my colleagues to explain how that is being rolled out.

Mr Stone —The roll-out of the Australian Solar Institute is currently underway. There is an establishment committee that has been appointed by the minister, and that committee is charged with the responsibility for developing the governance, the administrative and the legal framework under which the institute will operate. The institute is most likely to be set up as a not-for-profit company, limited by guarantee, and it will have an independent board. That board will be making decisions on the allocation of funding under competitive grants programs for the institute. For the first year there is a split of fifty-fifty between solar photovoltaic and thermal and that will be reviewed after 12 months of operation.

Senator PRATT —Why the decision of a not-for-profit company?

Mr Stone —One of the key things over the longer term for the Solar Institute is to make it self-sustaining and one of the tasks that the board will have is to identify alternative sources of funding, so that obviously works better if you have got a non-government model. But at this point in time the government will be the sole shareholder.

Senator PRATT —As I understand it, one of the objectives is the development of industry capability and intellectual property. That intellectual property would be negotiated with the partners working with this not-for-profit company?

Mr Stone —Some of those details are still to be worked out. It is going to be a matter for the board to negotiate contracts between the Solar Institute and the recipients of funding.

Senator PRATT —As I understand it, one of the objectives of the institute is to look at growth in export opportunities for Australian businesses in these two sectors. How are those opportunities currently viewed by the department?

Mr Clarke —You talk about export development industry growth in that renewables area. The Australian Solar Institute, as I said and as Mr Stone has said, has a hard R&D focus which is initially centred around the three major research bodies in this field. There are a number of other research bodies, but these three constitute the lion’s share of resources at the moment.

The broader area of renewable energy industry development is probably going to be addressed more specifically through this new body—nominally called Renewables Australia—that was announced in the Clean Energy Initiative. The government’s intent is that this new body will have a great deal more flexibility in the way in which it disposes the money that is appropriated to it. At the moment we are largely limited to a grant funding model with the inherent limited flexibility that comes with that structure. The policy framework for Renewables Australia is that it will be able to use alternative means of support potentially—this is not yet decided, but potentially—loan funding, equity funding and follow on investment in the form of venture capital. It is a much more flexible and commercial approach.

Looking forward, I would think that the development of the domestic renewable energy sector will be looking to Renewables Australia, whose name is not finalised, as the likely source of support. The solar R&D community will see its focus more in the Australian Solar Institute.

Senator PRATT —As I understand it, one of the objectives of the commitment to this research and development is to help cross the divide to help solar photovoltaics and solar thermal to become more cost competitive with other forms of energy. What are the prospects there?

Mr Clarke —Again, this is where it links into the announcement in the current budget for the Clean Energy Initiative. With the big Solar Flagship program, $1½ billion will go into very large-scale solar projects. That will, I think, be the key driver of commercialisation in those two areas.

The PV industry operates from the micro household scale right up to perhaps medium scale. Solar thermal perhaps starts at medium and goes up to large. The place these two technologies take in the energy mix of the future is subject to a lot of conjecture and modelling. But the Solar Flagship program will really test what they look like at very large scale where we were counting deployment in the hundreds of megawatts per facility rather than in kilowatts, which tends to be the scale of deployment in Australia at present.

Senator PRATT —Terrific, thank you.

Senator CAMERON —Isn’t the effect of implementation of carbon capture and storage absolutely essential to the long-term viability of our minerals industry?

Mr Clarke —Senator, I would certainly support the contention—and indeed, it is not a personal view; it is a view from international energy agencies and industry analysts worldwide I believe—that for fossil fuels to have a long-term role in the energy mix of this century, carbon capture and storage is the most likely technology that would provide that pathway. Through this Clean Energy Initiative the government is clearly saying that this technology is essential for the future of that sector.

Senator CAMERON —The steel industry in general has basically nowhere to go in terms of chemical or processes. Do they have to have carbon capture and storage in steel as well?

Mr Clarke —You are right to highlight that CCS technology is more than just for coal fired power stations. The technology applies to fossil fuel combustion generally and many heavy industries—cement, steel et cetera—are fossil fuel combusting industries. Indeed, the modelling that the International Energy Agency has put out in terms of the energy mix that would be needed to support deep emission cuts by mid century, suggests that almost half the CCS deployment is in industry, not just in the energy sector. Deployment in facilities like steel and cement is particularly important.

Senator CAMERON —The UK government has mandated the use of CCS in any future coal fired power station.

Mr Clarke —There are a range of policy measures that different significant coal-using economies have deployed. For example, Canada has regulated to the exact effect that you suggest for new coal fired projects. The way they do that is that it must be able to meet the emissions specification that would come from CCS and then it is of course a question for the proponent as to exactly what technology they would deploy to achieve that. The UK has just announced an expansion of its CCS demonstration program. They were initially running a competition to select a single project and, from memory, they have now broadened that to four projects. The Obama administration has similarly made very large announcements. I think very significantly the US package specifies that a proportion of it be taken up by those industrial applications that you talked about, not just in the energy sector.

Senator CAMERON —We are not on our own in terms of addressing carbon capture and storage and recognising the need to mitigate against CO2 emissions?

Mr Clarke —Certainly not. The country and industry membership that we have achieved for the Global Carbon Capture and Storage Institute demonstrates the point that you are making. If you start at the top and ask, ‘Where do the deep cuts to emissions come from midcentury?’ the analysis that bodies such as the International Energy Agency and others do, including the IPCC, makes a very compelling case that this is a critical technology to achieve those deep cuts. If it fails to be successfully commercialised, the global abatement task midcentury will be enormously more difficult and enormously more expensive. Every developed economy that has high fossil fuel dependency is interested in CCS and many of the developing economies have a similar interest.

Senator CAMERON —We have a particular interest because of the nature of our export industries being coal and minerals.

Mr Clarke —The way I have described it in talking about Australia’s interests in this area internationally is to respect the fact that many other economies have a similar interest but to argue that no-one has a greater interest than Australia, for the very reason you say.

Senator CAMERON —Are you following the developments at Longannet power station in Scotland?

Mr Clarke —I am not personally familiar with that project. I am sure I could bring an officer to the table—

Senator JOYCE —Is anybody following Longannet?

Senator CAMERON —Actually, Senator Joyce, they are.

Senator JOYCE —All the people following Longannet, please put up your hand.

Senator CAMERON —Let me tell you, the climate change deniers are not following it, like you, but the government that is actually trying to deal with employment and deal with CCS is. I understand at Longannet there is a one-megawatt carbon capture facility in place and they are talking about by 2014 being able to increase that to 300 megawatts. That would be a significant development, wouldn’t it?

Senator JOYCE —Isn’t that amazing everybody? Longannet, there you go.

Senator STERLE —Point of order, Madam Chair.

Senator JOYCE —What is the point or order, Senator Sterle?

CHAIR —We do not call points of order—

Senator STERLE —Butting in. The question was asked—

CHAIR —for Senator Joyce’s relatively innocuous interjection.

Senator CAMERON —Barnaby being a boofhead: that is the point of order.

CHAIR —Senator Cameron, please!

Senator STERLE —And he has a PhD in being a boofhead.

Senator CAMERON —He is being a boofhead, as he always is.

Senator STERLE —Senator Cameron asked the question. I am waiting for an answer from the department. We do not need a National over the other side butting in.

Senator JOYCE —Senator Sterle, is very interested in Longannet. You might be interested in the miners that are going to lose their jobs, Senator Sterle.

CHAIR —Senator Joyce!

Senator CAMERON —Mate, you have never been interested in jobs. You have never been interested in—

Senator STERLE —You supported Work Choices. You absolute hypocrite!

Senator JOYCE —You are going to put your miners out on the street.

Senator CAMERON —What a fraud you are.

Senator STERLE —‘Mr Work Choices’. You did not have the guts to cross the floor.

Senator CAMERON —What a shallow fraud you are.

CHAIR —Are we ready for the answer now? Senator Joyce, Senator Sterle, Senator Cameron!

Senator CAMERON —If the shallow fraud just shuts up for a minute we can get on with it.

CHAIR —You can keep arguing among yourselves while we are waiting for Mr Clarke, if you like, otherwise we will wait to hear the answer.

Senator JOYCE —Longannet—off you go.

Senator CAMERON —Now you know about it, go and have a look at it.

CHAIR —Senator Cameron!

Senator CAMERON —I was asking about the proposal to have a 300-megawatt CCS facility at Longannet by 2014.

Mr Clarke —When we were doing the research to establish the Global CCS Institute we conducted a global survey of CCS projects and that showed that there are of the order of 30 or 40 small-scale projects, such as the one you refer to, and only three that at that stage were storing a million tonnes a year or more. This analysis took us through what commercialisation of this technology would look like and how it would be defined. We struck the nominal analysis that 250 megawatts, or 300megwatts, if you like, is the sort of commercial scale that is necessary to demonstrate the successful deployment of this technology and, in parallel with that, the successful storage of at least one million tonnes per year per project. We have nominated that 250 megawatts million tonnes per year per project as a nominal indicator of commercialisation. Hence the scale-up that you are talking about is precisely the sort of scale-up that is needed to inform the commercialisation of this technology.

Senator CAMERON —As I understand it, the leaders in this technology at the moment are in the regions and companies like Aker, I think it is. Have we had a look at their technology?

Mr Clarke —Absolutely.

Senator CAMERON —Are there any implications of that? Could we actually create some employment in Australia because of the potential of CCS?

Mr Clarke —It is interesting to think through: where are the jobs, where is the technology, where is the manufacturing, where is the expertise in CCS. You need to separate the capture—

Senator JOYCE —Longannet.

Mr Clarke —and the storage component. Capture is essentially a power station—engineering technology, chemical manufacturing engineering and so forth. Transport is what it is—pipelines. Storage is geology, geophysics, oil and gas industry expertise. Who will be the dominant manufacturers of capture technology? I think it is far more likely to be those companies that are already major players in the power sector, which are not Australian manufacturers. Where will the expertise be in storage? That is likely to be companies with expertise in the existing oil and gas sector of which there are some very significant Australian players. The expertise in structuring and running these projects I think does have significant export potential for Australia. It is one of the knock-on effects that we would hope will emerge from being a first mover on large-scale projects.

Senator LUDLAM —I have just got a couple of questions to follow on. In your opening statement on the two different flagship initiatives you said there was a two to one funding mix and that you were looking for a two to one contribution from the private sector. Does that apply to the CCS flagship?

Mr Clarke —The starting point in both of the flagships is that two to one ratio.

Senator LUDLAM —How do you mean the ‘starting point’?

Mr Clarke —That is what the government has announced. But we have yet to publish the formal guidelines and then conduct the market testing.

Senator LUDLAM —There would be some kind of request for proposals process, and you will be looking for industry to put up not just good ideas but money as well?

Mr Clarke —Absolutely.

Senator LUDLAM —Do you anticipate there is going to be a rush of proposals given that will assume quite a large commitment of funding from private industry?

Mr Clarke —I will have to answer that in two parts. In the CCS area, as I have said, where a lot of industry and state government work has already been underway, we know there are a number of well-developed and developing projects in that space. The feedstock, if you like, for CCS projects is reasonably well advanced. In the case of the large-scale solar, we think it is less well advanced and we will need to do the market testing in that area. That is why, before going straight to the market, we are going to undertake quite extensive market consultation in talking to the solar energy industry and the existing energy players just to understand how best to frame the actual formal approach to market for that area.

Mr Pierce —Senator, I think one of the design principles around both of these that we are trying to achieve is that when this technology is deployed, when these projects get up, they just do not exist in isolation from the rest of the electricity network, if they are obviously in that sector. We would hope that these projects would be participants in the national electricity market just like any other project rather than just, if you like, sitting off to the side, isolated, for people to look at. We want them to actually play a part in the national electricity market.

Senator JOYCE —I have got a question on this carbon capture and storage for you.

Senator LUDLAM —May I just finish?

Senator JOYCE —Yes, sure.

Senator LUDLAM —Just moving to gas for a second before we go to coal, does the government have a threshold for well-field CO2 that must be captured and stored? I know it is easier to strip CO2 off a gas resource than it is from a coal-fired power station. Is there a benchmark that has been set by the Australian government for mandatory stripping of CO2 at the well-field?

Mr Clarke —No.

Senator LUDLAM —There is not?

Mr Clarke —The policy framework is that of course those emissions are measured and will have a cost and an obligation under the CPRS. But the decision whether or not to buy the permits and pay the carbon price, if you like, or to capture, store or otherwise deal with it, is a commercial or economic decision for the project.

Senator LUDLAM —In the case of Gorgon off Western Australia, for example, they could decide to bite the bullet and bury the stuff or they could take whatever cost of permits that might be—

Mr Clarke —From the Commonwealth’s perspective, yes. What obligations the WA government might put on that would be a separate issue.

Senator LUDLAM —I am interested to hear about your example in Canada where they are not going to be licensing coal-fired power stations until they are storing and capturing?

Mr Clarke —In Australia?

Senator LUDLAM —No, in Canada. You mentioned it before.

Mr Clarke —My understanding of the Canadian policy is that it is through a licensing regulatory process on those projects. I understand they are imposing, simplistically you would call it, a technology obligation, but that in fact it is framed one level higher than that, in that it is an emissions obligation. The effect of it and the way it is discussed is that, in effect, it is saying, ‘If you build for this fuel the only way you can get a permit is to apply this technology.’

Senator LUDLAM —They are just setting quite a low benchmark. How the company decides to comply is up to them, but—

Mr Clarke —Yes.

Senator LUDLAM —it leads them to CCS. Whereas in Australia we have this terminology being thrown around: you can build whatever you like as long as it is ‘carbon capture ready’. Have you come across that phrase and can you tell us what that means?

Mr Clarke —Certainly, but I need to respond to the preamble to your question. The Australian government does not mandate particular technologies or fuels in the power sector. The CPRS will of course change the economics of developments in the power sector by pricing carbon, but in the current policy framework it is a matter for industry. The parallel mechanism is of course the Renewable Energy Target that creates a particular incentive in that area. If you like, there is no Commonwealth legislation or regulation that goes directly to deployment of CCS. There is enabling legislation for the storage, but it is still a matter for industry as to what form of technology they actually build should they choose to go down the coal- or indeed gas-fired area.

The term ‘CCS ready’ is an important part of the global discussion about deployment pathways to CCS. The concept is that a government body, a regulator if you like, might only license a coal- or gas-fired power station if it has satisfied this concept of CCS ready. It is a very ambiguous term and, for it to be applied by a regulator there would need to be a specification of it. In broad terms, it simply means that the power station is capable of being retrofitted to capture and, presumably, store CO2.

Senator LUDLAM —But technically that does not yet exist?

Mr Clarke —There is plenty of demonstration of post-combustion capture. The technology exists; it is just not mature and commercialised worldwide. There are numerous examples of the deployment of this technology on a demonstration scale. The concept of CCS ready is that your power station would be designed from the start to accommodate such kit that would be built in.

Senator LUDLAM —You mentioned before that there are up to 30 different kinds of technology floating around—just in the examples that you cited before—

Mr Clarke —There are 30 different small-scale projects, in order of magnitude. There will be only about three or four broad classes of technology—

Senator LUDLAM —There is no definition in any law or statute in Australia that you could point us to of what CCS ready means?

Mr Clarke —But this term or this concept is under active development in the international energy community. Between the International Energy Agency, the Carbon Sequestration Leadership Forum and the Global CCS Institute, those three bodies have all jointly recognised that a robust definition of CCS ready, such that it could be applied by a regulator or indeed a board of a company that wanted to make that a condition of their own investment, needs to be developed. There is work commencing now to develop such a specification.

Senator LUDLAM —I have just one last question and then I will pass you back to Senator Joyce. When is this technology going to be playing a measurable part in emissions reduction in Australia? You have benchmarked a 250 megawatt, million tonnes per year power station; how many of them by 2020? When will we actually see a significant proportion of this technology on the ground?

Mr Clarke —I will come to Australia, but it has a global context. The global goal, which is perhaps the best term, is for there to be of the order of 20 such projects operating worldwide by 2020.

CHAIR —Excuse me, Mr Clark. Could the photographer check with the secretariat before you start taking photographs, please? Sorry, Mr Clark, please go on.

Mr Clarke —That was a goal established by the G8 in Hokkaido last year and I think it is a good benchmark in terms of global expectations for the rate of development of commercial-scale projects in this field. We could point today to announcements, statements of intent, that exceed that 20 number by 2020, but the issue always is the conversion rate of announcements, statements of intent, to projects on the ground. In Australia’s case we think that the $2 billion in the Clean Energy Initiative will support of the order of three—it is such a small number that plus or minus one makes a big difference, but in order of magnitude three such projects domestically would contribute to this nominal portfolio of 20. Your point of course is: when do you start getting serious abatement that actually affects the top curve globally?

Senator LUDLAM —No, no, just nationally; we have got a notional 20 per cent renewable energy target in Australia now, which is very welcome. What is our carbon capture and storage target by 2020?

Mr Clarke —There is no CCS target that is legislated in that manner. There are goals about the deployment of the technology but the current policy framework does not presume a regulated target for CCS.

Senator LUDLAM —What are your goals then by 2020, as a proportion of expected emissions in 2020?

Ms Sewell —You were asking what the goal is from CCS deployment by 2020?

Senator LUDLAM —There is no policy and there is no formal target in law; what are the goals? I am trying to get a sense of what the Australian public, for the expenditure of $2 billion, could expect to have built by 2020. Could you express that as a proportion of expected emissions in the electricity sector by then?

Ms Sewell —I might just ask my colleague to take total emissions from the coal-fired power sector. Although that sector is by far and away the largest component of Australia’s CO2 emissions—coal-fired power produces approximately 32 per cent of our CO2 emissions—we are hopeful that CCS will be taken up by other heavy industrial sectors, as Mr Clarke was outlining earlier. Basically. the Clean Energy Initiative has been announced for CCS with a target of 1,000 megawatts of CCS power. That is open ended and it is not mandated.

Senator LUDLAM —So, 1,000 megawatts by 2020?

Ms Sewell —The general thrust of the whole Clean Energy Initiative in the CCS area is around commercial operation from 2015. As Mr Clarke highlighted, we expect $2 billion to produce two, three or four commercial-scale projects. The government’s framework in this area has been very much directed by the work of the national Low Emissions Coal Council, which has provided the framework for the proposed process to select these projects going forward. Depending on the scale of the projects coming out of the Clean Energy Initiative, the quantity of emissions saved could vary quite considerably. By that I mean we have actually identified a number of priorities in the area. If we look at commercial scale, we could be talking about a new build plant in which case potentially you are talking about a 400 or 500 megawatt new power station, we could be talking about smaller amounts of money spread across smaller retrofit projects or we could be talking about a multi-user infrastructure project, which is actually providing financing for say, the pipeline component of CCS as well as the geological storage or injection component.

CHAIR —Unless anyone has any objection, we will let the photographer take some photos of the committee. If you could make sure not to photograph any papers or laptop screens or go behind the committee members.

Senator JOYCE —To the best of your knowledge is whisky, electronics and financial services covered by the emissions trading scheme or do they require carbon sequestration? They are the main exports of Scotland from where Longannet is.

Senator CAMERON —I told you it was shallow. This is really shallow.

Senator JOYCE —What has Scotland really got to lose? Have we got far more exposure to carbon capture and storage, if it does not come on line, than a place such as Scotland, which is a thousand miles away from the sort of economy that Australia is based on?

CHAIR —Senator Joyce, I think we are going back to general questions that have been answered by the department.

Senator JOYCE —Is carbon capture and storage commercially available anywhere in the world at this present time?

Mr Clarke —Yes it is. It is a commercial deployment in the oil and gas sector today and it is operating at commercial scale in three locations around the world and has been successfully for quite some years.

Senator JOYCE —Where are they and do they have the capacity to deal with our coal industry?

Mr Clarke —There are probably four commercial-scale projects operating worldwide, two in Norway, one in North Africa and one that straddles the Canadian-US border.

Senator JOYCE —What is the cost overlay on the price of the product?

Mr Clarke —It varies. This is one of these technologies that you cannot specify. You cannot go out and buy it and know the exact cost per project. You will be able to on the capture side; the capture side will be an engineering product that, with successful commercialisation, you can get competitive quotes from alternative suppliers to install, build and operate. It is the storage side that is the big variable. It is obviously site specific and the transport and storage costs will depend on each site. There are estimates about the extent to which CCS will increase costs in the coal-fired power sector, which is arguably the most critical of the sectors for its deployment. It is by no means the sole one, but probably a key one. It could increase costs in the order of 30 per cent, perhaps but again—

Senator JOYCE —Increase costs by 30 per cent?

Mr Clarke —I am very loathe to say. That is not a robust number; it is a forecast number that makes assumptions about the rate at which the economics of the technology improves with scale and deployment, and assumptions about the actual proximity and quality of storage size.

Senator JOYCE —Up to a 30 per cent—

Mr Clarke —The point I am acknowledging is that it is material.

Senator JOYCE —It is material costs. What about the environmental impacts of carbon capture and storage and especially the sequestration of carbon into fields? Has there been any feedback as to whether this might have other environmental impacts like infection of water tables—I do not know, a whole range of things—the seepage through water tables? What sorts of studies have we had about the possible negative outcomes of carbon capture and storage?

Mr Clarke —The four projects I referred to are all storing a million tonnes or more per year and of course are the subject of intensive study in terms of the behaviour of the stored CO2. There is also a project in Australia, in the Otway Basin through the CO2 CRC that at a smaller scale is focusing on exactly this question of understanding how the CO2 behaves in the particular geologies that are in there. There is intensive study worldwide to understand the issues that you are raising.

Senator JOYCE —Have there been any issues with regard to volatility and possible explosions via carbon capture and storage?

Ms Sewell —That is an issue, obviously, that we have always got in mind. In relation to the four projects we can point to that are operating around the world, governments have worked to ensure that the chances of that occurring are minimal. There is often discussion about an incident some years ago now where CO2 had accumulated at the bottom of a lake and came out of that lake. The process of geological sequestration is not comparable to that at all. In terms of a catastrophic explosion, this product is being stored at least a kilometre underground. In the case of the Gorgon project we discussed briefly before, it is more than two kilometres underground. Work has been undertaken in Japan, which obviously is very subject to seismic events and in fact did have a seismic event go through a trial storage site, which demonstrated that the risks of anything coming out of the ground at a greater rate than had been anticipated were pretty close to zero.

Senator JOYCE —My final question: is there any sort of emissions trading scheme tax or like tax in the European Union that currently is placed on oil extraction?

Mr Clarke —I cannot answer that question with confidence. I would rather take that on notice. Is your question how the European ETS applies to their oil sector?

Senator JOYCE —Norway’s largest export would be oil, would it not?

Mr Clarke —Yes, but it is interesting that the Norwegian CCS experience was driven by the regulatory imposition of a carbon tax. That was exactly the policy driver that has made Norway a world leader in that area.

Senator JOYCE —Fair enough.

Senator EGGLESTON —Are you the appropriate people to ask about flow-through shares?

Mr Clarke —We will bring the officers to the table, Senator.

Senator EGGLESTON —Good; thank you very much.

Senator EGGLESTON —I notice that in June 2008 Martin Ferguson said the government would introduce a flow-through share scheme. He said this year on 9 April that, ‘I will work hard to deliver that commitment in this Parliament’. He meant a flow-through share scheme, but we have not seen any proposal in the budget for a flow-through share scheme. Are you people working on a flow-through share scheme?

Ms Kruse —We have been working with Treasury on a flow-through share scheme. The flow-through share scheme is part of the tax review which is currently being undertaken by Treasury.

Senator EGGLESTON —It is part of the Henry review, you mean?

Ms Kruse —It certainly is.

Senator EGGLESTON —Beyond the fact that you have just said it is being considered by the Henry review, do you have any further information that you could provide this committee since the last estimates, when it was stated that the department was working with a number of stakeholders on the appropriate design of such a scheme in relation to its implementation?

Ms Kruse —As it is being considered by the Henry review at the moment, the industry has put a submission in to the Henry review on a model and we have consulted with industry on that.

Senator EGGLESTON —Has consideration been given to including exploration for geosequestration sites, which you have just been talking about, in a flow-through share scheme? Would that come within the ambit of it? Is that one of the considerations?

Ms Kruse —As it is now part of the Henry tax review, the flow-through share scheme will look at a range of issues. You would probably have to talk to the Treasury on the area of whether they are specifically looking at that.

Mr Clarke —Your general point that exploration for carbon storage sites is of a similar nature, quite analogous to exploration for mineral resources, is well taken and we will follow through on that question.

Senator EGGLESTON —Very good. Are you able to give us any suggestion of when a flow-through share scheme might be implemented? Do you have a projected starting date?

Ms Kruse —The tax review is reporting in December at the end of this year and it will come out in those recommendations. I can assume that you might have to look to talk to Treasury about how they feel that that is tracking.

Senator EGGLESTON —Are you able to tell us about who has been consulted in relation to the development of a flow-through share scheme? Have you, for example, consulted the Canadian government? They have a flow-through share scheme there.

Ms Kruse —We have not consulted the Canadian government ourselves, but we have looked at the Canadian system.

Senator EGGLESTON —Do you find it is a system that has merit in terms of its possible application in Australia?

Ms Kruse —The Canadian system is subject to the Canadian policy and environment. It was one of the things that we looked at but any system that is brought into Australia, if it is brought in through the Henry tax review, would have to take into account Australia’s current policy and environment.

Senator EGGLESTON —So really we have to wait for the Henry tax review. That is the end answer. Okay; thank you very much. We will look forward to that. The other question I would like to ask is about uranium mining. The new Western Australia government has authorised uranium mining in Western Australia. Do you know anything about mines that might be under consideration for establishment under this new regime in Western Australia?

Ms Barton —There are currently four uranium mines in Western Australia that are actively pursuing development, one of which is the Yeelirrie mine by BHP Billiton. They submitted a referral under the EPBC Act recently. The other ones are the Kintyre deposit, which is owned by Rio Tinto. The third is the Mulga Rock uranium deposit and the fourth is the Lake Way project.

Senator EGGLESTON —Are they proceeding fairly actively towards beginning to mine uranium? What starting dates, if any, do you know of and would you put on these projects?

Ms Barton —The Yeelirrie mine is the most advanced project. Their forecast as I understand it is for production, pending all the relevant approvals, to be in place by 2011-2012.

Senator EGGLESTON —What role does the federal government play in authorising a uranium mining project to go ahead in Western Australia and authorising export?

Ms Barton —Our role on the approvals side is under the environment portfolio under the EPBC Act. Another role is in relation to exports; Minister Ferguson has the approval for uranium exports. Our third Commonwealth role is in relation to safeguards under the foreign affairs portfolio in relation to tracking the uranium once it leaves Australia.

Senator EGGLESTON —Would you anticipate any problems with the export of uranium from these proposed mines in Western Australia?

Ms Barton —As I understand it, the proponents are looking to export through the current uranium export ports of Darwin and Adelaide.

Senator EGGLESTON —Not through Fremantle, Albany or Port Hedland?

Ms Barton —The shipping lines as they are set up at the moment are through Darwin and Adelaide, so there are no established shipping routes out of Western Australia at the moment.

Senator EGGLESTON —I have another question in relation to the mining industry. I attended the Minerals Council of Australia seminar on Wednesday of last week, where it was said that the Carbon Pollution Reduction Scheme might result in the loss of some 23,500 jobs directly and another 100,000 indirectly around Australia. Is the department making any planning to compensate for that loss of jobs within the minerals industry?

Mr Clarke —Senator, we—

Senator CAMERON —That would explain why they thought they were pointing it out to him.

Mr Clarke —As I have answered previously, we have not undertaken any modelling regarding the veracity of such numbers and, no, we are not making explicit plans in anticipation of any such outcome.

Senator CAMERON —These are not job losses either. This just perpetuates the nonsense—

CHAIR —Senator Cameron.

Senator EGGLESTON —Does this mean that you are not concerned about the possibility of job losses? I would have thought that your role would certainly be to consider the implications of such job losses as a matter of some significance to this country as a result of this scheme if it were introduced.

Senator McLucas —We have canvassed this a couple of times today. The Minerals Council’s report misleadingly describes potential future jobs that are not created in the mining sector as job losses. I think it is inaccurate to say ‘job losses’ in that context.

Senator EGGLESTON —With respect, they believe that there will be an 11 per cent fall in jobs, so I am not sure that what you are saying is quite accurate.

Senator CAMERON —For what would otherwise have been produced.

Senator EGGLESTON —It is a matter of great concern to most Australians that there will be job losses of this size.

Senator McLucas —Absolutely. We are all very concerned about the impact of the global financial crisis on all of our industries, but it is inaccurate to describe 23,510 jobs as job losses in the way that it has been reported.

Senator EGGLESTON —That is an opinion. Concept Economics did the report, and it is a much respected economic consultancy. I am a little bit surprised that the department is not giving consideration to the implications of possible job losses as a result of the CPRS. I am surprised at the parliamentary secretary, given the fact that Concept Economics is a highly respected economic consultancy, even though there may be some people who find that hard to believe. It seems to me to be a very serious consideration that there may be a total job loss of 125,000 people in the mining sector as a result of the introduction of the CPRS. I am surprised the department is not modelling this and considering the implications of it.

Mr Clarke —The modelling that the department relies on in terms of changes across sectors and industries comes from Treasury, as I have previously answered. The point has been made that in any modelling of the impacts on this you must be careful about whether the delta, the difference, is against current levels or forecast levels. In most of these sectors there is a forecast growth, and these differentials are off an already increasing base.

Senator EGGLESTON —That is an interesting comment, but it is so widely different from the report of Concept Economics. I suppose we will have to wait and see who is right.

Mr Clarke —I am not challenging Concept Economics modelling. I am simply making the observation that with these headline numbers about increases or decreases you have to look deeper into the modelling to see what the reference case was against which they were making those changes.

Senator ABETZ —I would like to go back to the coalmining sector. Has the department done any analysis of the methane emissions of each individual coalmine in Australia? If so, which one vents the most, and do we have a league table of the total amount leaked by fugitive or other means?

Mr Clarke —I have seen such a league table, but my advice is that it was submitted to us by industry. Your literal question was: does the department have such an analysis that is independent of one provided by industry or that comes from an independent statistical source? The answer is: not to my knowledge. But such analyses are being done. It is possible that, because of the obvious impact through to the CPRS, such data would be held in the Department of Climate Change, but I cannot offer you more than that.

Senator ABETZ —To your knowledge, has the Department of Climate Change consulted with your department to determine methane venting by coalmines?

Mr Clarke —Yes. We are in consultation with DCC on that matter because it goes to the CCAF element of the package. Of course, it has to be observed that an analysis of all Australian emissions has been something that successive governments have been undertaking for many years in terms of the carbon-accounting obligations under the UNFCCC. There has been analysis; how much of it is data and how much of it is modelling I cannot confirm. But there has certainly been analysis of coalmine methane for many years. I am sure that analysis exists somewhere in government.

Senator ABETZ —Could you please take it on notice. If you have it, provide it; otherwise, do me a favour and find out which department has it and then flick-pass the question to that department. That would be most helpful. Also, has the industry chart or league table been publicly disclosed to your knowledge?

Mr Clarke —I do not know but I am happy to take on notice whatever is on the public record or in the government data on that.

Senator ABETZ —If you are at liberty to disclose that league table to us, please do so. If you are allowed to disclose it and do so, could you advise us whether you have any opinion to share in relation to the robustness of the league tables.

Senator LUDLAM —I believe when I was out of the room we heard from one of the officers on uranium mining and what the federal government is doing to establish a regulatory regime. Could I grab another couple of minutes in the time that is available?

Mr Clarke —The information we provided the committee in your absence was our understanding of the sites under development in WA and the extent to which the Commonwealth has a regulatory role in that area.

Senator LUDLAM —I want to follow on on those. What is the Commonwealth government doing to establish that regulatory regime? Is it an office, a section or a department that you represent? Who are you meeting with and how is that rolling out?

Ms Barton —Is this just in relation to Western Australia?

Senator LUDLAM —For the moment.

Ms Barton —The Commonwealth’s role in relation to uranium mining, including in Western Australia, is in three areas. One is in the Environment portfolio under the nuclear trigger of the Environment Protection and Biodiversity Conservation Act. The second area is in our portfolio, to issue uranium export permits. The third area is in the Foreign Affairs portfolio, to issue permits within Australia and then tracking the uranium once it goes overseas.

Senator LUDLAM —Are those three portfolios being coordinated through the Uranium Industry Framework? Through what mechanism are they coordinated?

Ms Barton —We have very close relationships with those other portfolios and we have been working together to assist Western Australia on the projects that I described earlier in relation to what the Commonwealth approvals would be.

Senator LUDLAM —Which is the lead agency, if there is such a thing?

Ms Barton —We work very closely together. We have an industry development role, so we have been leading in the consultations with Western Australia.

Senator LUDLAM —Who are you consulting with in Western Australia? If this is a complex, long list, I am happy to have that information tabled, but is there a consultation schedule?

Ms Barton —There are two key agencies in Western Australia that we are working with. One is the Western Australian Department of Mines and Petroleum, which issues the mining titles; the other one is the Western Australian Department of Environment and Conservation, which does all the environmental approvals.

Senator LUDLAM —That is not consultation; that is intergovernmental meetings. What about Indigenous communities, local government authorities, general communities? That is consultation. Who have you met with in that regard?

Ms Barton —The consultation process would occur under the EPBC Act for the projects.

Senator LUDLAM —That is for individual mines.

Ms Barton —Yes. Consultation with the Western Australian government, as I said, was with those two lead agencies in Western Australia, and then they would be responsible for coordinating within the Western Australian government.

Senator LUDLAM —I do not know that it is really true to say that the Commonwealth is consulting as such; you have agency meetings going on with departments in Western Australia. But am I reading you right when I say there is no consultation occurring at a community level at all? You have named two government departments; that is all.

Mr Clarke —That is correct, Senator. This department is not undertaking community consultation in regard to these projects. The Commonwealth may well do so through its EPBC interests.

Senator LUDLAM —That will be case by case. That process is not triggered until there is an individual project on the table, as there is now with the BHP mine, but there is no consultation. You are effectively the lead agency in an industry development role but you are leaving consultation either to the state side or to an individual project-by-project basis. Is that fair to say?

Mr Clarke —Yes, that is a fair summary.

Senator LUDLAM —Can you tell us exactly what role the Uranium Industry Framework is playing in that process.

Ms Barton —Regarding the Uranium Industry Framework, I guess we have been working with Western Australia on helping them to establish a regulatory regime, but that would be a state regulatory regime that would be complementary to the Commonwealth one.

Senator LUDLAM —Are you playing a role in taking best practice, as is the common phrase, from other states and territories and applying it to WA?

Ms Barton —Yes, because South Australia and the Northern Territory government are both members of the Uranium Industry Framework, and Western Australia has recently joined them, to work together on best practice regulation.

CHAIR —Last question.

Senator LUDLAM —The last one. The benchmark for best practice in the case of tailings management, obviously, is set at the Ranger uranium mine, which has a 10,000-year licence condition on containment and storage of tailings in the mine void. Will that best practice be applied in Western Australia?

Ms Barton —Best practice is really on a case-by-case basis for the conditions that are around that mine. In the case of Ranger, that is correct; 10,000 years is the benchmark. In the case of a mine in South Australia, the benchmark may well be quite different.

Senator LUDLAM —Well, there is no benchmark, so there is not best practice in South Australia. Best practice is in the Northern Territory. Are you applying that standard across other mines in Western Australia?

Ms Barton —As I said, it is on a case-by-case basis depending on the mine, the environment surrounding it and the issues around that mine.

Senator LUDLAM —I do not understand how you can use the term ‘best practice’ if it is different everywhere.

CHAIR —Thank you, Senator Ludlam. We need to go to Geoscience Australia now. Thank you to the officers of the department in outcome 1. I will now call to the table Geoscience Australia.

[12.02 pm]