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ECONOMICS LEGISLATION COMMITTEE
20/10/2010
INNOVATION, INDUSTRY, SCIENCE AND RESEARCH PORTFOLIO
Department of Innovation, Industry, Science and Research

CHAIR —We are now discussing outcome 2, Science and research, and I welcome officers from the research division of the Department of Innovation, Industry, Science and Research.

Mr Paterson —While those officers are coming to the table, I would like to draw to the committee’s attention a correction to information on a return to order on appointments. The return was tabled by the minister on 11 October based on information provided by the department. We have identified an inaccuracy in that information tabled. The tabled return indicated that Mr Greg L’Estrange, a member appointed to the Pulp and Paper Industry Innovation Council, resided in the ACT. His state of residence is in fact Tasmania. On 19 October the minister provided the President of the Senate an amended single page for that return, identifying the correction. It was a minor inaccuracy in the report. We became aware of it and acted as soon as we were able to. I thought I would draw it specifically to the attention of the committee this morning.

CHAIR —Thank you.

Mr Paterson —The minister had tabled information based on the advice we provided to him. That advice contained an error and we have corrected that error.

CHAIR —Thank you.

Senator MASON —I understand that the 13th Cooperative Research Centres Program selection round closed on Friday, 2 July this year. Is that right?

Ms Morahan —That is correct.

Senator MASON —I understand that stage 1 of the 13th round is complete and 13 applications were invited to the next stage. Is that right?

Ms Morahan —That is correct.

Senator MASON —How does it work from there? What is the process until December?

Ms Morahan —We are currently finalising peer review assessments on the research project proposals. Each of those applicants progressing to stage 2 have been required to provide their example research project proposals. We are in the process of receiving peer review assessments of those proposals. The CRC Committee is meeting on Friday this week.

Senator MASON —That is fine. So it is underway.

Ms Morahan —There is that process and then there are interviews in early November. The CRC Committee will meet immediately after those interviews and will then make their recommendations for funding to the minister.

Senator MASON —In December. Has interest been on a par with previous rounds?

Ms Morahan —It has been much stronger.

Senator MASON —It has been stronger?

Ms Morahan —Much stronger.

Senator MASON —What do you put that down to?

Ms Morahan —I would say that the identification of priority areas has certainly stimulated significant interest from the research sector and also from various end users in Australia.

Senator MASON —Are any patterns emerging in areas of applied research?

Ms Morahan —There was a very strong response from the social innovation and social inclusion area, with people looking particularly to use new technology to find innovative solutions to some of the very difficult challenges that Australia faces around social inclusion.

Senator MASON —Can you give the committee an example of that?

Ms Morahan —For example, looking at health and ageing and some of the innovative responses that might be generated.

Senator MASON —In disabilities as well? Would that be an example?

Ms Morahan —In disabilities—that is true—and also in education and training: groups looking at innovative ways of using that technology to tackle a range of issues in that space.

Senator MASON —How do you measure the success of a CRC? Sure, you talk about commercialisation, but how do you measure the success of it?

Ms Morahan —As part of the application and also as part of their contract and the ongoing monitoring, we ask each applicant to identify the benefits that they would deliver. So we ask them to tell us about what outputs they expect from their research, how those outputs would be used and what both the monetary and the non-monetary benefits would be. That is in the application. That is built into the contract.

Senator MASON —There is the application and then there is a contract.

Ms Morahan —Then we ask them to report against that.

Senator MASON —When?

Ms Morahan —Through the annual report process.

Senator MASON —For how long?

Ms Morahan —For the duration of their contract. It is an annual report. So they will report progress against their milestones and the delivery of benefits each year. They then undergo independent performance reviews. The timing of those reviews will depend on the length of their contract. For example, for a 10-year contract there would be a performance review in the fourth and the eighth year. We then ask them to provide an exit report at the end of their contract. The purpose of those reports is to identify where they have got to in terms of delivering benefits. We will then undertake, approximately on a five-year basis, an impact study. The research we have done to date would indicate that the full benefits do not start to be realised until at least nine years after the commencement of a CRC. We then do independent—

Senator MASON —There has been 13 years of it, so you are seeing the benefits flow through now.

Ms Morahan —Absolutely. The last study we did into this was in 2006. That study indicated that for every dollar invested in the CRC program there was a $1.16 returned in monetary terms. So it is a positive return.

Senator MASON —Is that in terms of commercialisation or a multiplier effect?

Ms Morahan —That is in terms of monetary benefit to Australia. It is not just commercialisation.

Senator MASON —There is a public benefit aspect.

Ms Morahan —There is a public benefit aspect there. It is the monetary benefit of that public benefit.

Senator MASON —It is hard to assess, though. It is nearly as hard to assess as research output, Minister. It has to be done.

Ms Morahan —Yes, it has to be done. These are not easy things to do. It is also quite difficult in some cases to draw a direct line between the work of the CRC to the actual benefits. Again, there are people more expert in doing that sort of assessment than me that we use and rely on.

Senator MASON —Thank you. Chair, I have no further questions on CRCs specifically. I have other questions for this area but not CRCs.

CHAIR —Are there any CRC questions?

Senator BUSHBY —Not CRC, no.

Senator PRATT —I have a very quick one, which is to follow up on your question about social innovation CRCs. I was wondering where that fits within the priority areas. Also, how do you manage your level of resources when a new area balloons like that and it has a lot of good stuff in it? How do you weigh up what is going to be prioritised?

Ms Morahan —The social innovation was a priority identified by the government for the 13th selection round. There were 22 applications out of the 30 applications received in the 13th round that identified themselves as addressing the social innovation priority. In terms of managing the resources, the CRC committee undertakes a first stage assessment. Then we will make a judgment as to which one should go through to the second stage for a fuller assessment, a peer review and the interview process.

Senator PRATT —Just to be clear: that was 22 out of 32 for the 13th round of all priority areas?

Ms Morahan —Twenty-two out of 30 were in social innovation. The other priority for the 13th round was manufacturing innovation, and there were seven applications in that priority, from memory. I want to double-check that I have my number correct. Yes, seven in manufacturing innovation.

Senator PRATT —Which priority areas did not receive many applications?

Ms Morahan —Those were the two. There were only two priorities.

Senator PRATT —Okay. Thank you very much.

CHAIR —I understand that Senator Bushby does have a couple of questions on CRCs.

Senator BUSHBY —Just one question, which may lead to other questions—but one primary question. During the election campaign, the government announced that it was intending to cut $32 million from the Cooperative Research Centres and Collaborative Research Networks programs over the forward estimates. Can you outline for us in a bit more detail where these cuts will be made?

Ms Morahan —For the CRC?

Senator BUSHBY —For the CRC particularly.

Ms Morahan —The CRC program reductions are $26.3 million over the forward estimates.

Senator BUSHBY —Can you break that down over the three years or over the years of the forward estimates. Also, I am particularly interested in where those funding cuts will manifest in terms of the CRCs themselves.

Mr Paterson —I think the number for the CRC program was $2½ million in 2011-12; $9.6 million in 2012-13; and $14.2 million in 2013-14.

Senator BUSHBY —Which suggests a progressive winding down of some of the CRCs or—

Mr Paterson —I think the way the profile works is that the early out years are likely to be more committed because you have previous years of CRC rounds that are multiyear rounds. The further out from the start point you are, the less committed dollars—

Senator BUSHBY —Which makes sense.

Mr Paterson —The profile reflects the profile of the existing commitments under the program and resources available over those out years. It is planned to commence in 2011-12, then slightly more in 2012-13 and then more in 2013-14.

Senator BUSHBY —How will you deliver those cuts? Would they be part of the normal CRC application round, where there will not be as much?

Mr Paterson —There will be less resources available to the program for the CRC committee to consider applications and therefore make recommendations to the minister. So it will be a reduction in the overall available money within the program over those three financial years.

Senator BUSHBY —So the minister will not sit there each year and decide where it is going to cut and slash?

Senator Carr —The way it works—

Senator BUSHBY —I understand that. I am getting it straight for the record.

Senator Carr —It means less resources available for distribution for this purpose. But it does mean—

Senator BUSHBY —Which may undermine the viability of some CRCs.

Senator Carr —No, because this is for new applicants. What we are doing here is that, given the budget’s overall budgetary strategy, I am required for any new initiative to have an offset. That is why in the election campaign we did not have one extra dollar to add to the overall budgetary obligations for the Commonwealth as a result of election commitments. So every single commitment made had to be offset. In this case, we provided that other scientific innovation activities would be offset against this expenditure. So it is not being lost to the science, innovation and research—

Senator BUSHBY —You just think other vehicles are better vehicles than the CRCs. Quite clearly, you have made a priority decision to strip some money from here—

Senator Carr —There is a clear implication of a budgetary commitment. We do not have the situation you had with an $11 billion black hole—

Senator BUSHBY —We will get into that later with Treasury.

Senator Carr —We actually funded every promise we made, and the difficulty for that is that we will have to make choices—

Senator BUSHBY —Exactly.

Senator Carr —in the coming years about where each of the dollars goes.

Senator BUSHBY —So, ultimately, you decided to put your dollar elsewhere rather than here.

Senator Carr —We are now entering a very tough line of country. Because of the nature of the challenges facing our budgetary situation we have to make some tough calls. I have been a strong supporter of this program for a very, very long time. Activity is not being lost to the science, innovation and research community; it means we are doing it in different places.

Senator BUSHBY —Exactly. You have made a priority call that you would rather spend that portion of the—

Senator Carr —Against future bids for money. That is effectively what has happened—uncommitted moneys.

Senator BUSHBY —You are creating new vehicles or putting money into different vehicles to conduct that research, and the CRCs have proven a successful operation.

Senator Carr —We have put money into the Science for Australia’s Future program. I had to fund those commitments. That is the consequence of it. That is the budgetary discipline.

Senator BUSHBY —You have made a judgment call and decided that you would prefer to put money into that vehicle rather than into the CRCs and that the CRCs were not going to deliver the outcomes sufficiently. In a comparative sense, you would rather deliver the other outcomes than the potential outcomes out of future CRCs.

Senator Carr —I have said what I have got to say about it. That is the reason for it.

Senator BUSHBY —That was my question on CRCs.

Senator MASON —Mr Paterson, according to your figures, then, it was $26.3 million over forward estimates for the CRCs. Does that mean that for the collaborative research networks you had $4 million over that forward estimates that has been cut? Is that right? Is that a fair assumption?

Mr Paterson —On those numbers, yes, but the real answer is no because there were a number of offsets against both the CRC program and the collaborative research networks. What I have given you is the total sum of the offsets from the CRC program—

Senator MASON —Yes, the offsets from the—

Mr Paterson —From the CRC—so from the collaborative research centres program. The numbers that I have in response to Senator Bushby’s question were those numbers—

Senator MASON —Yes, I understand that.

Mr Paterson —and the total savings that were taken out of the collaborative research networks program were $20.7 million, and they were used for different offsets in the program. There was the total of the savings that I identified for the CRC and the total for the collaborative research networks, and the $20.7 million for collaborative research networks came out of the 2013-14 year.

Senator MASON —I understand. Minister, your answer would be the same as it was to Senator Bushby’s question about a readjustment of priorities?

Senator Carr —It is the inevitable choices that you—

Senator MASON —I know—I understand that—but that is your answer. All right. In relation to the collaborative research networks, then, this was a new initiative in the 2009-10 budget—that is right, Minister, isn’t it?

Senator Carr —Yes.

Senator MASON —And it was to develop research capacity for assisting small and regional higher education institutions by teaming up with other institutions in areas of common interest. It is designed to foster collaboration. At the May estimates, officials said that as a result of the consultation process program guidelines had been prepared and would be released shortly. Is that right?

Ms Baly —That is correct. In fact, not only have guidelines been released but applications have been called for and we have expressions of interest for the first stage of the program from eligible institutions.

Senator MASON —All right. Very briefly, what is the content of the program guidelines? What do they address? What makes it distinctive?

Ms Baly —The guidelines spell out the institutions that are eligible to apply for funding, the conditions under which that funding will be made and the expectations of institutions that would be in receipt of that funding.

Senator MASON —But how do the guidelines seek to foster collaboration, which is the policy link here? How do they do that?

Ms Baly —As I said, they explain what the expectations of institutions and the receipt of funding would be, in that there is a requirement that they develop research collaborations with institutions in areas where they have research strength and an indication of the sorts of measures by which we would look at assessing those applications.

Senator MASON —How will you assess the effectiveness of the program?

Ms Baly —The effectiveness of the program or the effectiveness of the applications under—

Senator MASON —Both. The applications first.

Ms Baly —In terms of the applications, we would look at a number of things, one of which would be the strategic alignment of the application to the university’s mission. So we are not being prescriptive. There is no intention to be prescriptive about particular areas that universities might collaborate in. It needs to be aligned with their strategic mission and that needs to be quite clear. The applications need to spell out—

Senator MASON —Sorry to interrupt. You say ‘strategic mission’—the minister knows all about this—but is that where a university would elucidate that in a compact, for example?

Ms Baly —Yes.

Senator MASON —So it would tie in in that way?

Ms Baly —It would indeed.

Senator MASON —So the university sets its own mission in a university compact?

Ms Baly —In a compact, and the projects that would be funded under CRN would be discussed as part of that compact process as well. So we would look for a strategic alignment, we would look at the strength of the partnership in relation to the partners that the university is proposing to collaborate with, and we would look at the strength of those partners in the particular areas of research that are proposed. We would be looking also for a university to describe to us how that project would lead to sustainability in building research capability.

Senator MASON —In an ongoing capacity—I understand that. How about the program’s effectiveness?

Ms Baly —We would be looking at the eligible universities’ research performance over time and we would be looking at a range of measures to assess that capability, including through the outcomes of the ERA process that the ARC is running.

Senator MASON —Will you be doing an assessment that was mentioned where you will be able to say that for every dollar invested in a CRC the return will be $1.12, which includes a benefit back to the public?

Ms Baly —I am not sure that we have thought that far ahead in relation to this program. It might be a little harder to do that in this program than it is for the CRC program which is specifically about addressing an end user problem—

Senator MASON —And commercialisation—

Ms Baly —This is about building research capacity, so the way of measuring research capacity is to look at improvements in research activity and research quality over a period of time.

Senator MASON —So the ERA process would feed into that, so you would be able to measure whether research output had increased and so forth?

Ms Baly —We would be able to do that, certainly.

Senator MASON —You could at least do that.

Ms Baly —Yes, we could at least do that. And we can look at publications, citations and a number of things.

Senator MASON —Has it been well received?

Ms Baly —Yes.

Senator MASON —How many applications?

Ms Baly —We had applications from all of the 16 eligible institutions.

Senator Carr —There is never a shortage of applications to spend money in this portfolio.

Senator MASON —No, I understand that. It is a new program.

Senator Carr —This is valuable. We said we wanted to secure very significant structural reform within the system. We have said we are pursuing a policy of research excellence. We are trying to drive up the value chain. The question is what you do with universities that do not have the same level of capacity within the system? How do you build that? That is what this program is designed to do. It is aimed at giving people a real incentive in partnering with others to build those networks, the capacity, and accordingly it has been extremely well received by eligible institutions.

Senator MASON —And build some difference some times.

Senator Carr —Some real partnerships.

Senator MASON —Yes. A regional university, for example, cannot be an Oxford in Northern Australia necessarily but it can be a university in Northern Australia which has certain specialities that make it different.

Senator Carr —What we are trying to do is provide the best kit we can for every academic in the area and for the research students. That means that people at a regional university will get access to the best the country can provide.

Senator MASON —Chair, I now have questions on the development of Australia’s future research workforce.

CHAIR —I think we are done on CRCs, so we could move on.

Senator MASON —We are finished on CRNs too?

CHAIR —Yes.

Senator MASON —The development of Australia’s future research workforce is clearly one of the areas of significant importance for the department and the research sector. I understand the department has established a reference group to continue to undertake the development of the government’s research workforce strategy. How is that progressing?

Ms Baly —It is progressing very well. The reference group has met on a number occasions—three or four times. It has a very representative group of people on it, including the university sector, industry and students—the sorts of people you expect would be included. There has been a very extensive process of analytical work done within the department and through some commissioned work that we have had done, and there has been an extensive consultation process as well.

Senator MASON —What are the aims of this?

Ms Baly —The aim of the exercise is to look forward to make sure that we have the capacity within the research workforce for Australia’s future needs.

Senator MASON —The number of people finishing master’s and PhD research degrees has increased exponentially in the last 10 to 15 years. Is it right that over the last little while the figure is starting to deflate?

Dr Byrne —The trends in recent time have been to see a slight decrease in the commencements of domestic PhD and Master’s by research students and a slight increase in the PhD international flow. In completions as well we have seen an increase in the proportion of international students completing in a timely way compared to domestic students. That said, overall I think there are two issues here. You are correct to say that quantum-wise there has been an increase over time, but the policy challenges are quite different than, say, several years ago. For example, government has introduced participation targets in relation to undergraduate involvement in university education which in turn have an impact on the flow of skills that are needed in the university sector to provide that training.

In addition, the government has announced critical policy measures, including through Powering Ideas, around the sort of innovative economy that we want and the sort of skills base that we need in order to sustain that. The challenge, if you like, has changed. The quantum is part of the issue and, as I mentioned, needs to be looked at in terms of absolute numbers and then in terms of the composition of the commencements and completions by domestic and international students. In addition, the policy drivers are quite different. So the landscape is different—and the minister or secretary or Anne Baly may want to add to this—and I think we need to contextualise the conversation a bit differently.

Senator MASON —I understand that and it is a fair point. Dr Byrne, do you make the assumption that, from the government adopting the Bradley review and the target of 40 per cent of Australians having an undergraduate degree by 2025, many more Australians will undertake research higher degrees? Is that the government’s assumption?

Senator Carr —It is more complicated than that. What you have got is an undergraduate program in which we are quite likely to see quite significant expansions as a result of growing demand—that is, we are trying to get higher levels of participation through a change in funding. Somebody has got to teach those students. We have an expectation these days that being an academic requires appropriate qualifications.

Senator MASON —I understand that.

Senator Carr —We are moving to improve the level of qualifications for academics. There are too many universities that are having programs taught by people who do not have PhDs.

Senator MASON —It is an ageing workforce too.

Senator Carr —And on top of that you have got an ageing workforce. So there are two conflicting trends meeting here. Further, we have got very extensive investments being made by China, India and other countries, which are directly competing against Australia as pre-eminent sources of research infrastructure and experts capacity. We used to be regarded as amongst the best—probably still are—in the region.

Senator MASON —I think we still are, Minister, but there are future pressures.

Senator Carr —There are a number of issues here. Our competitive position internationally is under some challenge and I do think we need to address that question. Further, we have got a need for Australian industry and the Australian economy more generally to pick up the level of its engagement with the university system because, by international standards, deployment of highly qualified researchers is well below par. We have to lift the level of industry engagement with the research sector. All our programs, I would like to think, do dovetail. There is coherence to the package that we put through the white paper. The emerging area is around the question of personnel. We have put significant investments into the capital side of it—to build the kit, as I say. The question is making sure we have got the people. In an internationally more difficult environment we do have to measure up to different levels of challenge. This is at a time when the budgetary pressures are such that we simply need to think in much more creative terms than we have.

Senator MASON —Let me touch on that because you raise an interesting point. I am not quite sure of the answer to this myself as this is very difficult. The Howard government said Australia had to be upskilled, that we had to train people to increase productivity. I think we would all agree on that. Minister, there is some talk, and you often hear it coming from industry and also from parts of the higher education sector, that it is more important, as some people say, for skills and apprenticeships through vocational and educational training than it is for people to get undergraduate tertiary degrees. I am not saying that I agree with that, but I am saying that it is an argument that I have heard in various places, that if we are talking about upskilling our country it is more important to look at VET than it is to look at undergraduate university education. What is your view on that, Minister?

Senator Carr —As you know, I have had a keen interest in vocational education for many years. I have not resiled from that. The truth is that if you are to build a highly productive population you need to make sure that you keep a balance in the various range of programs that are being run and as to the skills that are available for this society, so not just for industry but for society.

Senator MASON —You see my point, do not you?

Senator Carr —I do, and I just want to make these two other points for you. First of all, if you look at gaps in terms of the training regime for this country then there is the question of management training, which is often neglected in the public discourse, and we are seeking through this portfolio to do something about that. We are making a big effort to try to lift the level of skills for management of companies while not neglecting the importance of vocational education for workers. The other area is a very high level of the PhD program that needs significant attention, given the changing nature of the needs of this economy. We have just announced an industrial PhD program, as an example. We were trying to bring a couple of things together there. We are saying that by international standards we are below par when it comes to the deployment of PhD students. Industry’s investment is far too low so we want to encourage greater collaboration, through the universities, by industry investment in higher degree training as well as supporting higher levels of management training for small and medium sized enterprises, which we are trying to help with through Enterprise Connect and various other measures.

Senator MASON —Fair enough, Minister, but I am noticing, and I am sure you are too, a certain friction developing between universities, on the one hand, and the VET sector in terms of: who is most important for upskilling more Australians for a more productive future? That came out a while ago on the front page of the Australian, and there have been articles in the Melbourne Age about this. I suppose my point is this. Where does the government see the emphasis or do you see them as not being mutually exclusive and that we can do everything? Can we increase undergraduate participation along the lines of the Bradley review and also do PhDs? What is the most important or are they all equally important?

Senator Carr —You cannot neglect any of them.

Senator MASON —I am not saying we should neglect. What is the order of priority? That is a fair question.

Senator Carr —It is about being able to walk and chew gum at the same time. A country that seeks to be an innovative economy and that seeks to have an advanced technological base to the maintenance of living standards is going to need all of these things catered for simultaneously at a time when there is increasing pressure on public sector budgets. So there are some quite serious public policy questions there.

Senator MASON —I am not saying I disagree with you, Minister.

Senator Carr —I know you are not, but I will just make this observation. We take the view that industry has some obligations here as well. This is not some sort of cheap privatisation—I am not interested in that. What I am saying though is that the collaborations between the public and private sectors have to improve and we have to look to industry to invest more heavily in its own future.

Senator MASON —Yes, I understand that. The difficulty is that all of us have to—and how do I put this—sell the importance of higher education to our constituencies, and you understand that.

Senator Carr —We are doing that, and we are saying that the universities can be more responsive without losing their core values, their enduring values. But it also means that things like the Industrial PhD provide an opportunity for industry to see the value of having highly qualified people that can actually train their own workforce. It also provides broader career opportunities for people in this country.

Dr Byrne —Perhaps it is just worth adding that government’s commitment to the strategy is out to 2020 so it is taking the perspective that this is a long haul, if you like, and that, as the minister mentioned, there is a range of actors that have responsibility in the space of the research workforce. It is not just universities vis-a-vis other sectors of education. It is obviously other trading providers, institutions and industry in collaboration, but for a longer term perspective rather than a short term.

Senator MASON —That is right. But the big policy question for governments of any persuasion is: what is the most cost-effective way to upskill a nation?

Dr Byrne —I think the question is a bit different though. The question is: how to build an innovation nation or an innovation economy and what is the analytic work underpinning it?

Senator MASON —I understand that, but politicians and governments talk in terms of productivity and that comes from upskilling. How do you do that—not on the cheap—but how do you do that cost-effectively? It is a fair question.

Senator Carr —Yes, it is.

Senator MASON —Many people are saying—and I am not saying that I adopt this view—that there should be greater concentration on the VET sector rather than the university sector. I am not saying that I agree with it, but the argument is certainly around.

Senator Carr —And what we say in response is—and I probably do not do this as effectively as I should—try to get an understanding of the interrelationship between these different responsibilities.

Senator BUSHBY —I have just some general questions first. You would be aware of the Prime Minister’s comments in mid-September that government promises made before the election no longer necessarily apply because of the new environment created by the hung parliament, and you will have also highlighted some of the policy challenges, particularly funding challenges, that you have in terms of making priority decisions. Following on from that statement, can you please advise us whether all of the promises for the Innovation, Industry, Science and Research portfolio will be kept and, if not, which ones will not be kept?

Senator Carr —I think that we have a very good track record of delivering on election promises, and I can give you chapter and verse, if you like.

Senator BUSHBY —I am asking the question in the context of the new environment as quoted by your Prime Minister.

Senator Carr —It is our intention to fulfil any promises I have made.

Senator BUSHBY —I look forward to you fighting hard within cabinet if anything changes as a result of the new environment that currently exists. When you appeared at your first estimates—

Senator Carr —Some things I might welcome, but that is another question. I made commitments during our election campaign in statements—and I do not recall seeing one from you on election commitments—and I like to compare our respective slates.

Senator WILLIAMS —Carbon and everything else—

Senator Carr —No, in terms of innovation.

Senator BUSHBY —Are you saying that we did not have a policy on innovation?

Senator Carr —I do not recall you having a policy on innovation.

Senator BUSHBY —There was a policy on innovation. You need to get your staff to look a little bit harder, I think.

Senator Carr —Sorry I missed it.

Senator BUSHBY —It was a very good one too. When you first appeared at an estimates hearing as the minister for the portfolio in 2008 you said:

We are not about wasting public money. We are about improving the financial position of the government consistent with our responsibilities as part of the government.

Can you confirm the veracity of the Productivity Commission’s calculations in their recent Trade and assistance review 2008-09 publication that the government industry assistance for that financial year alone blew out to $17.2 billion?

Senator Carr —No, I cannot confirm that, and I have found that, over the time, many of the assumptions the Productivity Commission makes are open to considerable debate.

Senator BUSHBY —Are you aware of that publication, Secretary?

Mr Paterson —Yes, I am aware of the publication.

Senator BUSHBY —Are you aware of the figure that they quote in that publication?

Mr Paterson —I would not suggest to you that I could pull it straight off the top of my head.

Senator BUSHBY —It is not something that has been brought to your attention?

Mr Paterson —I have looked at the publications, so I am aware of it, but I do not pretend that every number that passes my desk actually sticks.

Senator BUSHBY —Would you mind taking on notice having a look at that and seeing whether you agree with their conclusion, particularly in light of the minister’s comments.

Mr Paterson —I am not sure about questions to us about competing judgments—whether we think something is appropriate. We are not expected to respond to questions of opinion.

Senator BUSHBY —This is a calculation that the Productivity Commission has done.

Mr Paterson —Yes, but you are asking me for an opinion about a calculation done by the Productivity Commission. I am happy for the Productivity Commission to respond to your questions as to how they reached the conclusion. I am not sure that it is for us, or for me particularly, to give an opinion.

Senator BUSHBY —No, I am not asking for your opinion. Let me ask the question slightly differently. Would you be able to indicate to me, in the 2008-09 financial year, a figure that you consider is appropriate as representing government industry assistance through your department?

Mr Paterson —The government publishes on an annual basis innovation tables which provide a very broad whole-of-government position in relation to innovation support mechanisms that are available. The Productivity Commission’s report does not just look at our portfolio, it looks across the whole of government. What you are asking me to do is to pass judgment on their assessment of the value of whole-of-government assistance across many portfolios. I do not think that is appropriate.

Senator BUSHBY —The question I just asked you was just in respect of your department.

Mr Paterson —Yes, which will not be the number that you quoted.

Senator BUSHBY —No, but it will form a part of an investigation that we can look at and see how it all compares?

Mr Paterson —I am happy to take a question on notice that limits the question to this portfolio and that is not framed in the context of asking me to pass an opinion in relation to it. If you are asking us to make a calculation as to what we think that number is in relation to our portfolio, I am happy to take that on notice.

Senator BUSHBY —Okay. As part of Labor’s signed agreement with the Greens, are you and your staff, Minister, required to meet with them and/or give them briefings whenever requested?

Senator Carr —Can I just say this to you, Senator Bushby: if you rang me up and asked me for a briefing, you would get one.

Senator BUSHBY —I will remember that.

Senator Carr —I have never refused a briefing from any member of parliament while I have been a minister.

Senator BUSHBY —I accept, on face value, your statement that you are open in that respect for requests. Is there any formal arrangement in place under which the Greens—

Senator Carr —Get any special arrangement? No.

Senator BUSHBY —Nothing beyond that general open—

Senator Carr —No special arrangement. Every member of parliament, as far as I am concerned, is entitled to receive briefings if they go through the due process. There is a due process.

Senator BUSHBY —I understand your general openness, but is there any arrangement in place under—

Senator Carr —I do not have any special arrangements. There are no special arrangements for particular groups outside the Labor Party, of course. I will concede I do have special arrangements with members of my own party.

Senator MASON —You’ve got your own faction.

Senator Carr —I wish I saw more of them.

Senator BUSHBY —You would also be aware that the agreement with the Greens, signed by the government, and with the Independents includes provision for those other members of parliament to seek not just briefings on government policies and programs—which is, I think, what you were referring to—but to participate in the budget process, to have access to key public servants, to propose new policies and to have those policies analysed.

Senator Carr —These are not matters—

Senator BUSHBY —This is actually a question for the department. Has the department had a look at that agreement with a view to any impact to its resources in staff requirements and workloads in order to meet any such demands?

Mr Paterson —We have certainly had a look at the agreement. I think all senior public servants in this town and elsewhere would have had a look at the agreement. It is difficult to predict what the nature of the briefing demand may be. Certainly, it has had no impact on our resources at this time. Do I anticipate it being a resource-intensive exercise for us? No, I do not. But obviously it is a matter that I would have to take under review. It is an agreement that the government has entered into; therefore, the government has made commitments for briefing and participation to apply. We, along with all other agencies, would be expected to meet that commitment.

Senator BUSHBY —But at this stage, because it has not impacted on you, you cannot gauge or assess whether it is likely to have an impact?

Mr Paterson —It is not that we have not participated. We have already participated in briefings, but it has not had an impact on resources in a way that I would need to be concerned about at this stage.

Senator BUSHBY —Minister, what is your view of Dr Emerson’s recent comment:

We won’t cop governments cloaking protectionism in this sort of green cloak of respectability, where it’s just old protectionism. It’s just designed in fact to protect their own domestic industries and they say now, oh but this is all so that we can have a cleaner environment. Let’s understand what this is and what motivates it.

What it actually is all those old protectionist instincts coming out …

… let’s not believe that this is all about climate change. There is a very clear … protectionist instinct … under this green cloak of respectability and we won’t cop it.

Shouldn’t that be seen by every Australian as an utter repudiation of many of the programs in your portfolio that are cloaked in green labels—most notably, the Green Car Innovation Fund that is largely used to continue to promote traditional technologies and shore up the domestic car industry?

Senator Carr —Sorry, what did you call them? I have to get these quotes straight. I hope you can repeat them as often as possible.

Senator BUSHBY —I said ‘traditional technologies and shore up the domestic car industry’, and if not, why not?

Senator Carr —I see. You do not support the domestic car industry?

Senator BUSHBY —I am not talking about whether we support it or not. I am talking about the cloaking of it as a green measure.

Senator Carr —That is what you just said. I just wondered whether or not the Liberal Party was now walking away from the Australian car industry.

Senator BUSHBY —Minister, I am asking you the questions; you are not asking me the questions.

Senator Carr —I am trying to help you clarify your question.

Senator WILLIAMS —You would help by answering.

Senator BUSHBY —Exactly. Do you have any comment? Feel free to defend your programs—that is what I am looking for you to do.

Senator Carr —I am more than happy to defend the program.

Senator BUSHBY —Defend the green credentials of these programs, which could be viewed by others—unlike what you suggested, I am not suggesting at all that they are—as basically protectionism in a green cloak. There has certainly been commentary about it. Dr Emerson was certainly very keen to make sure that that does not occur.

Senator Carr —I think you will find that Dr Emerson was actually talking about some matters that are occurring in Europe in relation to some border protection questions—tariff issues in particular.

Senator BUSHBY —So you are not going to comment on—

Senator Carr —I strongly defend the Australian automotive industry and the Australian workers it employs. It is a highly skilled and very effective group of people.

Senator BUSHBY —But isn’t your defence of the industry itself, rather than the green credentials of the programs?

Senator Carr —No, you asked the question. I just wanted to contrast our approach.

Senator BUSHBY —No, I was asking about the green credentials of the programs.

Senator Carr —No, I am defending the Australian automotive industry. I have no trouble at all doing that; it is a pity the Liberal Party did not, since you are walking away from it.

Senator BUSHBY —I think that you will probably find that we did actually assist on quite a number of occasions.

Senator Carr —I am just wondering. In your state, what is the percentage of state GDP that goes to the automotive industry?

Senator BUSHBY —There is some.

Senator Carr —I am glad you are looking after it.

Senator BUSHBY —I find it interesting that your answer to that question, which is about industry protection—

Senator Carr —You asked me a question about Dr Emerson’s remarks. I have indicated to you my understanding of what Dr Emerson was talking about.

Senator BUSHBY —Your defence of the programs is based on industry protection, rather than on their green credentials.

Senator Carr —If you have other matters that you want to take up about the trade portfolio, I suggest you go to that portfolio.

Senator BUSHBY —I am happy with that. I have some research questions. In the last round of estimates questions on notice the coalition asked a number of questions about an email dated 31 May 2010 that was sent to a range of stakeholders about a new so-called collaborative development program. In relation to that email, did the research division—

Senator Carr —Sorry, Senator Bushby. I understand there was some inference that you made before that perhaps I did not appreciate fully about an attack on the Green Car Innovation Fund. I am wondering if I could ask the secretary to actually inform you of what we have actually spent the money on, so that you are aware. I think you have got a misunderstanding.

Senator BUSHBY —I did not attack it; I was asking about your general approach. I used that as an example. It is a green fund.

Senator Carr —I do think it is important to get the record complete here.

Senator BUSHBY —I said I found his answer interesting in that he chose to defend the program by talking about industry protection and—

CHAIR —Senator Bushby, we are nearly at lunchtime. I am prepared to run a little bit over. Unless we want this group to come back after lunch—

Senator Carr —I think we could do it very quickly.

Mr Paterson —The Green Car Innovation Fund is, in fact, in outcome 1, which is coming up after lunch. So we can deal with that issue after lunch so as not to consume the time on research. I think it is important to be able to identify what is being done under that program.

CHAIR —Certainly. I will give you that opportunity straight after lunch.

Senator BUSHBY —Do you agree with Dr Emerson? That is the first question. Is he correct? Is that a statement that you agree with?

Senator Carr —We have dealt with that matter. You have attacked the Green Car Innovation Fund.

Senator BUSHBY —I did not attack the Green Car Innovation Fund. I was asking about the government’s motivation for—

CHAIR —Minister and Senator Bushby, I think we are having a toing and froing argument rather than asking the questions here.

Senator BUSHBY —Do you agree with Dr Emerson’s statement that I quoted?

Senator Carr —I think we have already dealt with the matter.

Senator BUSHBY —So, you are not saying. You mentioned that it was in the context of Europe. Nonetheless, does the principle apply to Australia?

Senator Carr —No. It is our program. The assumption for your question is wrong.

Senator BUSHBY —No; I am not talking about particular programs. The principle about protectionism—

CHAIR —Senator Bushby, Mr Paterson has said that he would, after lunch, go through the details of the program which would inform your questioning.

Senator BUSHBY —I was not going to examples—

CHAIR —Nevertheless, I think we are arguing here without agreeing on the statement. So either we ask Mr Paterson to do that statement now or we resume this discussion after lunch. I am happy to do it either way.

Senator BUSHBY —I am happy to leave it at that. Minister Carr indicated no in answer to the question. That answers my questions.

Proceedings suspended from 12.32 pm to 1.31 pm

CHAIR —We will continue the estimates hearing again with the Department of Innovation, Industry, Science and Research and outcome 1—innovation and industry.

Senator Carr —Can I just ask if the secretary might be able to draw your attention to the Green Car Innovation Fund, since that was raised in the previous session, and what the money has been spent on, which I think will help reassure Senator Bushby that his conclusions are perhaps misplaced?

CHAIR —Mr Paterson?

Mr Paterson —I will just get the two officers who are responsible for directly managing the program to provide that statement.

Senator BUSHBY —Keep it as brief as possible because I do have a lot of questions for innovation and industry.

Mr Sexton —The commitments under the fund now total almost $300 million. There have been seven announcements to date, and there are a couple that are in the pipeline which we are expecting will be announced shortly. Four of those announcements to date relate to funding that is going to the three car companies. Two of those projects concern Toyota. The first one, which was announced some time ago, related to $35 million for the hybrid Camry to be built in Victoria. There are employment benefits arising out of that project as well as environmental benefits. Secondly for Toyota, we had an announcement only a week or so ago of $63 million, which relates to a new global engine line. It is a facility that will be built in Victoria, which has been competed for around the world amongst the various Toyota facilities; a facility that has been secured for Australia with a life of at least 10 years and, once it gets into production, some 100,000 engines are to be developed out of that facility—again, with some significant environmental benefits.

There is a project supporting the Ford Motor Co., where they have been provided with some $42 million in assistance to assist in an overall development of several hundred million dollars—$230 million to be exact—which is very much focused on providing a new four-cylinder engine for the Falcon vehicle. Again, that secures employment for people in Victoria and again has some significant environmental benefits in terms of lower emissions.

We would all be aware of the Holden new car facility in South Australia, where $149 million was committed. That facility will be used to fund the development of a new line for the purposes of localising the currently imported small vehicle the Holden Cruze. Again, there are significant environmental benefits and, secondly, it secures employment and jobs for those people in South Australia. And there are a number of smaller projects which have been announced relating to the supply chain in the automotive sector, the first one being for Orbital Corporation Limited over in Western Australia which received a grant of $440,000 to develop indirect injection technology. The important thing there is that it is a joint project with the Chinese maker, Changan Automobile. So there we will see technology developed in Australia which will have application in China.

There is a grant of $2.422 million to SMR, an organisation in South Australia. That has been provided to the company in order to set up a pilot plant to adapt some of their leading-edge technology in producing side mirrors for vehicles out of lightweight materials.

Finally, Century Yuasa, a battery manufacturer located in Queensland, has received some $996,000, again to develop improved lead acid starting, lighting and ignition batteries for conventionally fuelled passenger motor vehicles. So, in most of these cases there is leading-edge technologies being supported which will have application not only in Australia, providing jobs and environmental benefits, but in some cases will have significant export potential.

Senator Carr —And so, Senator Bushby, the claim about this being a protectionist measure is demonstrably untrue.

Senator BUSHBY —I did not claim that. You want to reread Hansard.

Senator Carr —Well, whoever made the claim, it is demonstrably untrue.

Senator BUSHBY —Nobody made the claim. I was interested in the approach that you took to defend the program.

Senator Carr —I have just indicated to you my response.

Senator BUSHBY —While we are on that, I will ask some questions about that. You outlined how much had been spent on a number of programs, larger and smaller ones. How much of it remains uncommitted?

Mr Sexton —$507 million remains uncommitted in the project at this time.

Senator BUSHBY —And presumably you are working on assessing further projects to actually spend that?

Mr Sexton —Interest in the program has risen in recent months and there are a number of projects in the pipeline, yes.

Senator BUSHBY —At the time that the New Car Plan for a Greener Future was announced, much of the $6.2 billion in funding was justified on the basis of needing to help the industry cope with the onset of the GFC.

Senator Carr —That is not true. That assumption is not true.

Senator BUSHBY —You did not make any statements whatsoever that—

Senator Carr —You said ‘much’ of it. It is about transformation of the Australian automotive industry. There were a number of points that went to the reasons for that.

Senator BUSHBY —But the GFC was a part of that or not a part of that?

Senator Carr —Clearly, the new car plan has ensured that the Australian automotive industry has survived the global economic crisis.

Senator BUSHBY —We did not have a recession in Australia.

Senator Carr —I just said to you, clearly the program has allowed that to occur, but you will recall that the—

Senator BUSHBY —That is quite a big statement.

Senator Carr —It is a big statement. I believe it to be true.

Senator BUSHBY —There may well have been other factors at play that I would have thought fed into that as well.

Senator Carr —Let me hear about them.

Senator BUSHBY —Not that I necessarily agree, but I am sure the Treasurer made a few points about what might have assisted as well, quite apart from that.

Senator Carr —I am sure he would agree with what I said.

Mr Sexton —The objective of the program was quite clear, and that was to enhance R&D and commercialisation of technologies that significantly reduce fuel consumption or greenhouse gas emissions of passenger motor vehicles. That is the sole objective.

Senator WILLIAMS —Just in relation to the orbital engine and the research into new acid batteries et cetera, does the department get an update on progress being made through that research and development or is the funding just given out and then you wait for a result? Do you get updated on progress?

Mr Sexton —Indeed, Senator. The money is not handed out in advance. It is paid against milestone achievements. We keep monitoring those projects and they are only paid if they achieve the milestones under the grant.

Senator WILLIAMS —So you have seen those milestone achievements? I am especially interested in both of those: the battery and the orbital motor.

Mr Sexton —These are very early days in those projects, which were only announced earlier this year. It is very early days, but we will continue to monitor them as they incur their expenditure.

Senator BUSHBY —You mentioned there was $507 million uncommitted in the program or in the fund. Is the fund broken up with the intention to allocate a certain amount of it in each year?

Mr Sexton —Yes, there is an expenditure profile.

Senator BUSHBY —Was all of the 2009-10 funding put into that profile spent or allocated?

Mr Sexton —The profile for 2009-10 was $107 million, and the expenditure at the end of the year was $108 million.

Senator BUSHBY —What about for 2010-11? What is the profile for that?

Mr Sexton —I will correct that. In 2009-10 there was a total expenditure of $108.456 million. In 2010-11 the budget is $104 million, and at the moment we have expenses of $29 million and commitments of $48 million.

Senator BUSHBY —How much does that leave uncommitted so far this financial year?

Mr Sexton —This is in 2010-11?

Senator BUSHBY —How much is uncommitted?

Mr Sexton —Uncommitted? About $29 million.

Senator BUSHBY —So that $29 million remains uncommitted to any contracts that the government might not have entered into or that, in terms of—

Senator Carr —There are a couple of projects in the pipeline.

Senator BUSHBY —There are some in the pipeline.

Mr Sexton —Correct.

Senator BUSHBY —But there is nothing that is committed at this point? So, theoretically, if you cut that $29 million from the program it would not actually cause any contractual issues?

Mr Sexton —Yes, it would, because there are a number of projects in the pipeline. As I said, there are a couple which will be announced soon. They will take up some of that funding.

Senator BUSHBY —Have you entered into contracts with those projects that are in the pipeline?

Mr Sexton —We have started work on executing agreements with those companies.

Senator BUSHBY —So there might be agreements in principle or heads of agreement.

Mr Sexton —Offers have been made, and they will presumably expect us to honour those offers.

Senator BUSHBY —Have those offers been accepted?

Mr Sexton —I believe they have.

Senator BUSHBY —Will they take up all of that $29 million?

Mr Sexton —Not at this stage, no.

Senator BUSHBY —How much would be left?

Mr Sexton —There are further applications in the pipeline. We are only in October. There will be further applications considered and, to the extent to which they are supported, the uncommitted funds will fall.

Senator BUSHBY —Minister, on 14 August 2010 Ministers Bowen, Tanner and Swan made an announcement that another $200 million would be cut from the Green Car Innovation Fund by Labor if it were re-elected. I am yet to see any public comment from you about this cut. Have you made any public comment about it and, if so, could you confirm what you have said?

Senator Carr —I am sure I made some comment on it.

Senator BUSHBY —Are you happy with it—the $200 million cut?

Senator Carr —I do not think that is an emotion that immediately comes to mind.

Senator BUSHBY —Have you made public comment on it?

Senator Carr —I believe I have. If it is a government decision, I would have supported it.

Senator BUSHBY —I understand that.

Senator Carr —There were comments made at Toyota. I did some interviews on this at Altona, at the Toyota plant.

Senator BUSHBY —On what date would that have been?

Senator Carr —The day we announced the new engine plant—10 September.

Senator BUSHBY —I take it from your comment—mainly directed to the officers at the table—in response to my question of whether you were happy with it, that that was not necessarily your—

Senator Carr —It was not my first reaction, I think it would be fair to say. If it is a government decision, I will be supporting it.

Senator BUSHBY —I understand. You sit in cabinet, cabinet makes a decision and you will support the decision that cabinet makes.

Senator Carr —I do not think it was made by cabinet, but it was a government announcement. It was an election commitment and it will be implemented.

Senator BUSHBY —But it is not something that you would have put forward as a proposal to—

Senator Carr —I do not want to go to the process of deliberations on election commitments any more than I am sure you would be willing to discuss with me the political processes of the Liberal Party in terms of its election commitments.

Senator BUSHBY —The $200 million that is being cut is one of the savings that is being used to—

Senator Carr —It was announced as an offset.

Senator BUSHBY —Was the decision to make the cut only agreed to on about 13 or 14 August?

Senator Carr —I would have to take that on notice. There was an announcement. If the question is when it was announced—

Senator BUSHBY —The announcement was made on 14 August.

Senator Carr —I cannot tell you any more than that.

Senator BUSHBY —Why can’t you tell me?

Senator Carr —Because it is a matter that was determined as a result of an election commitment.

Senator BUSHBY —At whose instigation was the cut made?

Senator Carr —I am not going into all of that, I am sorry.

Senator BUSHBY —When you were first—

Senator Carr —It was a decision made during the election campaign as an offset to other announcements.

Senator BUSHBY —Can I ask, then, whether the department was involved in preparing any advice or briefings about the cut? No?

Senator Carr —It is not a matter for the department.

Senator BUSHBY —I understand that. I am not pressing you on that point because I do not disagree with what you are saying. As a separate question that related to that matter—

Senator Carr —The department was not asked about it, either.

Senator BUSHBY —That is fine. As a result of the $400 million in cuts made by Labor in the budget during the election campaign, is it correct that the Green Car Innovation Fund is now a $900 million program?

Senator Carr —If you take $400 million from $1.3 million, I think that is what you get, isn’t it?

Senator BUSHBY —I am just clarifying for the purposes of the record. What is the process for how applications under the Green Car Innovation Fund are assessed? I have heard there are a few in the pipeline. Presumably they are being assessed. How did they get to be in the pipeline?

Mr Sexton —We are out there promoting the program, and those applications are coming in through our state office network. We have people in those state offices who work with the companies in order to ensure that they put their best foot forward in terms of the detail in the applications. Those applications are then assessed as to eligibility and to see that they satisfy the various requirements of the program. Those applications then go to an automotive committee of the Innovation Australia board, which is a technical committee which examines those projects and makes a consideration and makes recommendations to the program delegate. If those applications are for grants in excess of $10 million, they go to government for consideration and a decision.

Senator BUSHBY —When you are looking at the financial circumstances of applicants, which I presume you do as part of that, to what extent are their broader financial circumstances taken into account?

Mr Sexton —The applications are judged against a series of merit criteria. They go to: the extent of the reduction in the passenger motor vehicle fuel consumption on greenhouse gas emissions that are going to be the outcomes of the particular project; the technical merit and the extent and calibre of the innovation that is to be generated; the capacity and capability of the applicant to undertake the project, including their management capability; the commercialisation potential of the outcomes of that particular project; and the contribution that the project would make to the overall sustainability and competitiveness of the Australian industry. They are the merit criteria against which we assess the projects.

Senator BUSHBY —Okay. Minister, you purportedly made a statement about the government investment in these projects to a journalist, and I want to check it with you to make sure it is an accurate statement.

Senator Carr —When did I do this?

Senator BUSHBY —I have a copy of the article here somewhere, so I will hunt it out. I will give you the quote and then you can—

Senator Carr —What is the source please?

Senator BUSHBY —I think it is actually a web based report. The quote was in respect of the formula for government investment in these projects. You are quoted as saying,

“It doesn’t have to be three-to-one. We are prepared to come lower than that ...

“There’s some flexibility on the three-to-one ...

Does that sound like something you said?

Senator Carr —That is right.

Senator BUSHBY —Can you tell us how that would work in practice?

Senator Carr —First of all, all that happens with all of these projects is that there is an assessment made by officers. It is not made at a political level; it is made independently of the government. Each project is assessed on its merits and they are in two streams. The first is applications seeking $5 million or more, the ratio of greater than three to one, and the recommendation comes to me from the innovation board. That is an independent assessment process, so officers look at it, a recommendation is made by the innovation board as to whether or not the project should be supported and then that comes to me. The recommendations that involve spending more than $10 million are considered by cabinet.

Senator BUSHBY —In relation to the three-to-one formula though, a fact sheet about the Green Car Innovation Fund on the AusIndustry website still quotes the three-to-one formula. If you are saying that there is a flexibility—

Senator Carr —There is some flexibility around that issue.

Senator BUSHBY —How do you actually introduce that flexibility, given that there is a requirement?

Senator Carr —I will get one of the officers to deal with the specifics of the guidelines.

Ms Kennedy —The flexibility around the one to three resides with me as the program delegate. An applicant can seek funding greater than the one-to-three ratio. To do that, they have to meet all of the five merit criteria to a very high level and put forward a business case identifying exceptional circumstances that would warrant that.

Senator BUSHBY —So is that apparent to a potential applicant who might be looking through the website seeking information?

Ms Kennedy —There is information in relation to that in the customer information guide.

Senator BUSHBY —The customer information guide explains that you can get more than three to one on those circumstances.

Ms Kennedy —That is correct, yes.

Senator BUSHBY —Thank you. How was the $63 million figure calculated for the recently announced grant to Toyota for its Altona plant? Is that based on the old guidelines of three-to-one funding or some other calculations?

Mr Sexton —It is based on the three to one.

Senator BUSHBY —On what date was management at Toyota advised that its Altona application was successful?

Mr Sexton —We will have to take that on notice.

Mr Paterson —It was announced on 10 September.

Senator BUSHBY —I understand you will take on notice the date Toyota was advised. What date was the agreement with Toyota signed?

Mr Sexton —In relation to that particular project?

Senator BUSHBY —In relation to the Altona application.

Mr Sexton —The agreement has not been executed at this stage.

Senator BUSHBY —Minister, there are press reports that you and the Prime Minister personally met with Toyota management in the days before the announcement; is that correct?

Senator Carr —I do not think it was the day before the announcement.

Senator BUSHBY —‘In the days before’ I said.

Senator Carr —Yes, that is correct.

Senator BUSHBY —Can you tell me the date of that meeting?

Senator Carr —I would have to take that on notice, but it was some days before. If you can bear with us, we will check that.

Senator BUSHBY —Certainly.

Senator Carr —The meeting occurred on the ninth. That was the day on which we advised Toyota. The announcement was made on the 10th.

Senator BUSHBY —When was in-principle agreement reached with Toyota to provide the funding? That would have been on the ninth as well?

Senator Carr —Yes.

Senator BUSHBY —Is it true that you were first approached by Toyota to consider the Altona grant in the first half of 2010?

Senator Carr —It may well have been earlier than that. It was in 2009.

Senator BUSHBY —So early 2009 or late 2009?

Senator Carr —The gestation of this project was over two years.

Senator BUSHBY —I was going to ask about that. What was involved?

Senator Carr —The economic crisis was a major setback. Then there were other issues with regard to Toyota’s global position. Senator, I am sure you would be aware that there are not too many of these plants that have been announced by companies anywhere in the world since the onset of the economic crisis. I think there might be one in India. There have been some refurnished plants in some parts. This is a very highly contested and highly competitive business. It was very fortunate that we were able to secure this program. We stuck at it for two years to secure it.

Senator BUSHBY —So you are saying that part of the time line was to actually get Toyota across the line?

Senator Carr —This is a project involving very large sums of money in a period when there is intense competition for capital investment and during a period when Toyota itself is under considerable strain. My recollection is that it was the first time on record that it actually lost money internationally. There were massive questions about the future direction of the company. There were some pretty serious issues that we had to deal with with the company. The Australian management of the company was very keen to pursue this project, but it is up against 30-odd other branches. I do not know precisely how many branches there are in Toyota, but there was considerable competition for this plant. My recollection is that there are only five places in the world that make this vehicle. This is the next generation.

Senator BUSHBY —When you say that five places make this vehicle, are you talking about the hybrid Camry?

Senator Carr —Five Camry engine plants.

Senator BUSHBY —For any Camry?

Senator Carr —Ones that will make this particular series of engines. There are a number of variations of the engine. This is a highly competitive business. It puts Australia at the leading edge of the deployment of a technology which will be a critical part of the next two models of Camry. It has huge implications in terms of future export arrangements for Toyota and as a consequence it is a major achievement of the Green Car Innovation Fund to secure this investment at this particular time in particular.

Senator BUSHBY —Thank you for explaining all of that, but I was particularly interested in the context of the time that it took from when you were first approached. I understand from your answer where you were coming from with that. Is $63 million categorically the full amount that the government will be providing to this project? Can you confirm that no extra money has been set aside for it, or promised to Toyota for it, or in the pipeline?

Senator Carr —No, there is no other.

Mr Sexton —The $63 million will be the value of the deed contract we enter into.

Senator BUSHBY —Okay. Thank you.

Senator Carr —We put all the grants upfront on the public record on the website. It is a requirement of the act.

Senator BUSHBY —I also did say ‘in the pipeline’. I mean, there are some in the pipeline.

Senator Carr —Can I just give you the process that we have adopted here, which is different from some other governments’? We have no trouble with that. We argue the case out on the merits of the project and all of that is publicly declared.

Senator BUSHBY —How much is the Victorian government contributing to the Altona engine plant?

Senator Carr —That is a matter for them to determine. That is a matter for their declaration.

Senator BUSHBY —Is it part of the agreement that you have with Toyota? Is it dependent on Victoria putting in that amount of money?

Mr Sexton —No, the agreement that we will have with Toyota when it is executed will simply focus on the $63 million that we are providing.

Senator BUSHBY —So there are no terms in there that reflect and make anything conditional in that agreement on the Victorian money?

Mr Paterson —No doubt Toyota has an agreement of that nature, Senator.

Senator BUSHBY —I beg your pardon?

Mr Paterson —I said no doubt Toyota—

Senator BUSHBY —I am sure they are pretty keen on tying them down. That is right.

Senator Carr —I might just make clear, from the terms of the correspondence on this issue, that we do require coinvestment but the extent of the coinvestment is a confidential matter. Contracts that we enter into—

Senator BUSHBY —When you say ‘coinvestment’, coinvestment by Toyota?

Senator Carr —Of course by Toyota but also by the Victorian government in this case. We have a series of these types of arrangements with state governments, because we are trying to encourage a higher level of leverage in terms of the investment and also, though, there is the point the officers have made, that the contracts go to the Commonwealth expenditure, which is the nature of those contracts. But in terms of our negotiations with Toyota, we did make it a condition that they were able to attract money from other sources.

Senator BUSHBY —So there is a condition.

Senator Carr —On the offer.

Senator BUSHBY —On the offer.

Senator Carr —But that is a different question from the deed that the officers are speaking of.

Senator BUSHBY —But it will be read into that contract if there was ever a dispute from the Commonwealth’s perspective to say that Victoria did not put money in.

Senator Carr —The relationship that Toyota—that TMC—has with the Victorian government—

Senator BUSHBY —I am sure the outcome is very unlikely.

Senator Carr —No, but it was conditional on—

Senator BUSHBY —You mentioned that you were trying to tie other state governments in.

Senator Carr —The same principles.

Senator BUSHBY —Are state governments contributing to any of the other programs?

Senator Carr —Yes.

Senator BUSHBY —Which projects?

Senator Carr —Holden—General Motors-Holden’s, for instance.

Senator BUSHBY —I am happy if you take that on notice, if you like.

Senator Carr —I can just say to you that there has been a series of them. As I say, as a general principle I try to encourage partnerships across the industry and across government. That is the policy intent and my recollection is that most of the major projects do involve coinvestments from state governments.

Senator BUSHBY —Okay. Do any not?

Senator Carr —I cannot recall any of the major ones. We just have to check, but there were others.

Mr Paterson —We will respond in writing, Senator—

Senator BUSHBY —Thank you.

Mr Paterson —on which do and which do not, but I think from a layman’s point of view, if we use the Toyota hybrid engine plant as an example, we have an agreement with Toyota. Toyota has an agreement with the Victorians. Toyota is obligated to meet its milestones of investment and the like with us to get access to the Commonwealth resources.

For some reason, were the unlikely event—in your words—to occur and were the Victorians not to put their money in, that is a matter for Toyota and the Victorians because that is a separate agreement to this one. For the Commonwealth to make the offer in the first instance it needed to be satisfied that there was co-investment, but the deed only applies in relation to the Commonwealth resources and is a deed between the Commonwealth and Toyota.

Senator BUSHBY —Just to get that straight, if the deed between Toyota and Victoria fell over for any reason, that initial offer requiring co-investment has been superseded by this agreement?

Mr Paterson —No. That would then be a separate legal matter that Toyota would need to deal with because no doubt it will have a deed with the Victorian government about them providing money to Toyota on certain conditions. So there will be two separate legal instruments—that is, the Victorian and the Commonwealth. We are not a party to theirs; they are not a party to ours.

Senator BUSHBY —I understand they are separate legal agreements, but the initial offer forms an agreement as well.

Mr Paterson —But before the offers have been made in the first instance the government required co-investment, and no doubt that was the position taken by the Victorian government.

Senator BUSHBY —I could go into that a little bit more, but I am conscious of the time and other things that need to be asked about. So I am going to move on to ‘cash for clunkers’.

Mr Paterson —We have no such program.

Senator BUSHBY —I know, but I am going to ask some questions at least of the minister and the department about where you may be in assessing the election promise in that regard. First of all, is it correct that the department provided the minister with a brief on the idea of implementing a ‘cash for clunkers’-type scheme in Australia during his first term?

Senator Carr —No, not on the implementation of such a scheme.

Senator BUSHBY —The idea of developing such a scheme?

Senator Carr —No. I am going on memory now, but I receive from time to time advice on international developments in the automotive industry.

Senator BUSHBY —Obviously there were similar schemes internationally but in terms of—

Mr Paterson —Can I answer that. I think the question is: did the department provide advice to the minister for consideration on the implementation of a ‘cash for clunkers’, in your words, program in Australia? The answer to that question is no.

Senator BUSHBY —Okay.

Mr Paterson —Have we advised the minister in relation to programs of that nature that operate in other places? Yes.

Senator BUSHBY —But not with a view to the feasibility of doing something like that in Australia?

Mr Paterson —We have not put forward a proposition for the adoption of a scheme of that nature.

Senator BUSHBY —You have not put a proposition forward. Have you responded to a request from the minister?

Senator Carr —No.

Mr Paterson —For a scheme of that nature?

Senator BUSHBY —To examine the feasibility of such a scheme in Australia?

Mr Paterson —No, we have not.

Senator Carr —No.

Senator BUSHBY —Since the election, have you undertaken any briefing work on the feasibility of such a scheme in Australia?

Mr Paterson —Since the election? The government during the election campaign made an election commitment to introduce a clean car rebate scheme and we have been given the responsibility for the administration of that scheme. So have we provided advice on the potential implementation of that announced scheme?

Senator BUSHBY —Yes.

Mr Paterson —The answer to that question is yes.

Senator BUSHBY —When was that brief provided to the minister?

Mr Paterson —On 18 October.

Senator BUSHBY —Presumably that brief would have had advice in it about the total cost to government of developing and running such a scheme?

Mr Paterson —I think there was an earlier brief on 8 October as well. So we have done at least two briefs—one on 8 October and one on 18 October. These are briefs associated with the announced design of the scheme and the issues that we need to consider in terms of how the scheme might be implemented.

Senator BUSHBY —Okay. So those two briefs were the first time you provided advice to the minister about a scheme of this type?

Senator Carr —Was that 8 October?

Senator BUSHBY —It is 8 October and 18 October?

Senator Carr —I have not seen 18 October.

Senator BUSHBY —It is 8.

Senator Carr —I do not think I have read 18 October yet.

Mr Paterson —That was, in fairness, two days ago.

Senator Carr —Yes. I have been at estimates for the last two days, so there is a good chance I would not have read that particular—

CHAIR —You should be doing your work back in your office.

Senator BUSHBY —What are you doing between 11 o’clock and six o’clock in the morning?

Senator Carr —But there is a document from 8 October.

Senator BUSHBY —Okay. That is right.

Senator Carr —I am not at liberty to discuss that with you yet, Senator.

Senator BUSHBY —I am going to quote your favourite source of information for the Liberal Party and that is the media.

Senator Carr —Which paper is this?

Senator BUSHBY —This is actually a website news report, goauto.com.au, of 25 March 2009. It has a nice picture of you.

Senator Carr —Yes.

Senator BUSHBY —It states:

Industry minister says tax break will work better than expensive scrappage scheme.

Senator Carr —Yes.

Senator BUSHBY —If you read through that, it actually talks about how your department has estimated the cost of the scrappage scheme at about $1 million, depending on the age cut-off and the amount offered, which suggests that some advice has been given to you about a pilot scheme.

Senator Carr —There would have been discussions about the equivalent types. It was based on international experience, if I remember that quote. What I was doing there was contrasting the proposition that was being put to me, if my memory serves me correctly, by some motoring organisation that wanted to follow a similar course. I think that was the context. We said that the investment allowances that we had introduced at the time—and I think that was the context of those remarks—were more effective.

—Yes. ‘Industry minister says tax break will work better than expensive scrappage scheme’ is the headline. It states further:

“The difficulty is that it’s extremely expensive and there are finite resources for the government,” Mr Carr told GoAuto this week.

Senator Carr —What? Do you think that is wrong?

Senator BUSHBY —It states further:

It provides a benefit for a tradesman.

No, what I am saying is that you rejected outright a scheme which, basically, has the government—

Senator Carr —No, what I said was that, in the context of the investment allowances, it was a more effective way to pursue at that time.

Senator BUSHBY —So what has changed since then? Nothing?

Senator Carr —It is an entirely different matter now. There are differences between—

Senator BUSHBY —Between what? You mentioned an organisation—I think it was the Motor Traders’ Association of New South Wales. You are saying that there are differences between what the motor traders were calling for.

Senator Carr —There are different circumstances.

Senator BUSHBY —Different circumstances—or you did not consider or your department did not consider at that time a program that has characteristics of the one that you are looking at developing now?

Senator Carr —I do not think there is more that I can add that is not already on the public record.

Senator BUSHBY —The public record suggests that at that time you rejected the concept of a government paying for, basically, the scrappage of cars in order to promote a desirable outcome.

Senator Carr —In the context of whether it was better to invest through the investment allowance—

Senator BUSHBY —I do not think that the motor traders association was saying when they called for it, ‘Scrap the investment allowance and give us this.’ They were just saying, ‘Give us this.’

Senator Carr —No, I think they made the call before the investment allowance. That is what I was saying—that the investment allowance was more effective at the time.

Senator BUSHBY —And does that investment allowance still continue?

Senator Carr —No.

Mr Paterson —No, it was a time limited one. It was not within our portfolio, as I recall.

Senator Carr —I think it ended on 30 June—

Mr Paterson —This year.

Senator Carr —This year or last year? 2009? I think it was 30 June 2009. I will stand corrected on that; it was not a program administered by this portfolio, but it was an announcement of the government at the time to support the industry by providing a tax break at the time to encourage the purchase of vehicles.

Senator BUSHBY —Given the similarity between the Cleaner Car Rebate program, as announced during the election campaign, and calls for similar types of programs that had occurred earlier, which the minister had made comments about that were not that endearing, were you consulted about the announcement?

Senator Carr —I am sorry; I cannot go into the processes of election commitments, preparations or announcements.

Senator BUSHBY —So you are not prepared to say whether you were—

Senator Carr —No, I am afraid that is not a proper matter for the estimates committee as to what the Labor Party did during the election campaign in regard to its election announcements.

Senator BUSHBY —The reports suggest that you were absolutely livid when you found out that the Prime Minister was going to announce it.

Senator Carr —Lots of reports in lots of newspapers that we have discussed on many occasions. Senator, I would be surprised if you suddenly become a convert to the view that because it is in a newspaper it is right.

Senator BUSHBY —No, but they often indicate and point you in very interesting directions. So were you happy with the announcement when it was made?

Senator Carr —I do not think there is anything further to be added to this line of inquiry.

Senator BUSHBY —For Labor to introduce this kind of program after it was what I would term comprehensively rejected by the minister responsible only last year—

Senator Carr —Well, no, I was not responsible. At the time the commitments were made it was a matter for the department of the environment—or is it Climate Change?

Senator BUSHBY —When the Motor Trades Association was calling for it, I would have thought it was thinking more about it from an industry support level.

Senator Carr —The undertakings were made as part of the climate change program.

Senator BUSHBY —In the election campaign?

Senator Carr —Yes.

Senator BUSHBY —So why are we talking about it here today?

Senator Carr —Well, you are the one who raised it.

Senator BUSHBY —But isn’t it going to be run through your department?

Mr Paterson —Can I help on this? We clearly were not involved in any of the issues associated with the announcements during the election campaign. At the time the announcement was made, this was a program where the policy responsibility was to be with the department of climate change, and AusIndustry was going to deliver the program.

Senator BUSHBY —Right.

Mr Paterson —Since that time the policy responsibility for this program has come to us, so we will have policy responsibility for it as well as the administration of the program.

Senator BUSHBY —Is that something that you sought, Minister? You wanted the policy responsibility to go with the administration for neatness reasons or other reasons?

Mr Paterson —I know that was a question to the minister but—

Senator BUSHBY —No, it was for the minister. I was wondering whether he asked for it all to be brought to him.

Senator Carr —I do not recall an invitation being sought on this matter.

Mr Paterson —To clarify a point you made earlier, Senator, you drew similarities between this program and programs that had been discussed at earlier times—

Senator BUSHBY —Yes.

Mr Paterson —that you described with a different label to the program that we have responsibility for administering. But there are differences between those programs. The program announced was essentially directed towards the cleaner and safer outcomes associated with these. This program has a defined green star rating for eligibility. We still haven’t worked through all the operational details of the program, but it is clearly focused not as an industry measure but as a measure associated with trying to change the construction of the fleet, if I can call it that.

Senator BUSHBY —And yet it is being run now through AusIndustry.

Mr Paterson —We run a variety of programs both for our own department and for other departments. You cannot draw things from the fact that AusIndustry is delivering the program. It is a delivery capacity that is available to the government and we deliver programs for other departments. That was the original intention. It is just that with the machinery-of-government activities that have taken place since the outcome of the election, we now have responsibility for it. But it is not an industry program or to be described in that way. It is about changing the nature of the car fleet.

Senator WILLIAMS —Just on this cash for clunkers, how much is the budget for this program to proceed?

Mr Paterson —I am happy to respond to your question, Senator, but—

Senator WILLIAMS —You are not too sure as yet?

Mr Paterson —No, we know what the budget profile is for the program, but I made the point with Senator Bushby earlier that we do not run a cash-for-clunkers program. What we do run is a Cleaner Car Rebate program. If the question is associated with the Cleaner Car Rebate program—

Senator BUSHBY —Mr Paterson, you have got to keep up.

Mr Paterson —No, I am not being obtuse, but they are different programs and a lot of things are attributed to this program by association with a program that was adopted in the United States, and they are different.

Senator WILLIAMS —Mr Paterson, I was just thinking the other night about what part of a motor vehicle is made from renewable resources. I thought if the carpet were made out of wool that would be renewable. If the seats were made out of leather with the constant slaughter of cattle et cetera that is renewable. But I could not think of anything else in a motor vehicle made from—

Mr Paterson —By way of example, an Australian company has developed technology which uses former PET bottles to make carpet which goes into motor vehicles—

Senator WILLIAMS —What sorts of bottles?

Mr Paterson —PET—these sorts of bottles. They are recycled into fibres which are then made into automotive carpets.

Senator WILLIAMS —Do those bottles come from a finite resource?

Mr Paterson —The fact that they are a renewable—

Senator WILLIAMS —You are turning over another resource, but it still comes from a finite resource.

Mr Paterson —If you adopt that definition, then everything is a finite resource, even renewable resources. Trees are a finite resource.

Senator WILLIAMS —I disagree with you totally there. We have renewable resources and we have resources that can turn over all the time. Growing food, growing vegetables, livestock et cetera—they are not finite resources. If something is dug out of the ground or pumped out of the ground, such as minerals or rock or whatever, they are finite resources. They will run out in time. The point I make is this: this policy is about getting vehicles off the road and wrecking them and using up more finite resources. I know that Lotus has made a car out of Indian hemp. It does not smoke. But hemp is a very good product as far as renewable resources is concerned. You can use it for building products and everything. We are doing some work in the Ashford community at the moment. They were growing hemp last year and it has been very successful. When you look at a car, except for the woollen carpet or the leather seats, I cannot think of anything else that comes from a continuing resource; the rest of the vehicle comes from a finite resource. The more you crush up and throw in the bin, the more you are using up finite resources that will one day run out. You cannot keep digging the hole in the ground and expect it to go on forever.

Mr Paterson —Some of the issues that we are dealing with in the design of the program go to the nature of the recycling activity that is undertaken in relation to the vehicles that are scrapped and how you can develop a program that makes sure that when the vehicle is taken off the road there is a recycling plan available and where those recycling facilities might be available. So we have to work through that operational detail.

Senator WILLIAMS —No doubt this policy will put a floor on the value of a second-hand car, will it not?

Mr Paterson —There is no doubt that any intervention in the marketplace can have an impact on relative prices.

Senator WILLIAMS —So school leavers heading off to university, particularly those from regional areas, who perhaps have to have a motor vehicle may well pay more for their motor vehicles as a result of this.

Mr Paterson —Not really. There will be some impact on relative prices. But, depending on how the scheme finally operates, this does not have to become just a trade-in value. There will be an opportunity to identify the scrappage of a vehicle for a price with an appropriate recycling facility and then get the government rebate off the purchase price of a vehicle. So those transactions can take place separately in the marketplace.

Senator WILLIAMS —I will watch this one with interest, Mr Paterson. I think this might even overrun the ceiling batts program.

Mr Paterson —I can assure you that, if we have responsibility for running this program, you will not need to hold that fear.

Senator WILLIAMS —Time will tell.

Mr Paterson —Time will.

Senator PRATT —The Supplier Access to Major Projects program is delivered through the Industry Capability Network. I understand that there has been a funding boost to that program. I am particularly interested to know about how that program is intended to assist Australian companies find opportunities within liquefied natural gas projects in Western Australia.

Mr Lawson —The Industry Capability Network is a network run by each of the states, with Commonwealth support to provide the national framework, national board and the IT system. There has been a SAMP program for some time, a competitive grants program that the ICNs have applied to for assistance. The Western Australian ICN has been supported in getting money for working on the LNG, oil and gas projects.

More recently, there was, as you say, the increase in resourcing for the SAMP program provided for the state based ICNs to employ sector managers in various sectors. One of those sector managers is in the oil and gas sector and is appointed in Western Australia. Part of the exercise is that they should operate nationally, and in this area collaborate with Queensland and New South Wales in particular. So a specialist has been appointed with Commonwealth funding to the state based ICNs to focus on this area to ensure that the activities of the ICNs around the states work collaboratively to do that.

The sort of activity that they do is collect information on Australian industry capabilities. That is put up on a website so it is available to all of the experts around the country. They engage with the major project proponents to find out about their needs, and they also explain to the major project proponents issues about the structure of Australian industry so that their tender packages can be structured in a way so that Australian industry can compete effectively for those tender packages. If they structure them too big or too small, so they do not suit the capabilities in Australia, it can mean that people who should have opportunities do not have opportunities.

Senator PRATT —Can you give some examples of what kind of work companies might be bidding for as part of the liquefied natural gas projects in Western Australia? I can certainly think of examples myself, but I am interested in some of what has taken place. A large amount of what the Australian companies are doing is stuff that can only be done in Australia because of the logistics, and then there is a cohort of work that is being competed for internationally. It seems to me that it has been quite difficult for Australian companies to compete effectively for that work, so I am interested in what framework will actually assist Australian companies to enhance their competitiveness for that kind of work.

Mr Lawson —The focus has been on trying to target that contestable work because, as you say, there will be some material that of its nature will happen in Australia and there will be some that probably through intellectual property ownership is only going to happen offshore. There are always aspects where there is contestable work. Sometimes they are the subsets of broader functional units. Often the home team has an advantage in the whole-of-life maintenance of projects in getting them partnered with original equipment suppliers from offshore, so they get involved increasingly in that sort of work.

The ICN activity is about trying to match the opportunity and capability. It works in collaboration with Enterprise Connect, which is the program that assists Australian industry to boost their capabilities. That provides a series of business reviews and ongoing support for companies to improve their competitiveness and their capabilities.

Senator PRATT —What are the major challenges for companies who are seeking to bid competitively for work in this industry?

Mr Lawson —Some of them need to innovate more. There are some sectors that need to increase their capabilities. A number of them in the metal fabrication area have quite a bit of work to do on lean manufacturing.

Senator PRATT —On what?

Mr Lawson —Lean manufacturing—that is, being really efficient in their manufacturing processes so they can achieve the price points that are necessary.

Senator PRATT —So what kind of strategy needs to be put into place to help such companies that are bidding for specifically that kind of work to reach those benchmarks?

Mr Lawson —That is where the Enterprise Connect link provides that capability. We have the supplier advocates visiting companies and indicating to them as a business leader—you really need to lift your game—

Senator PRATT —So Enterprise Connect will work through with those companies exactly what they are going to need to do to look as competitive as the kinds of company they are likely to be competing against?

Mr Lawson —Precisely. I am not the Enterprise Connect person—and I will get in trouble—but we work with them. These various aspects need to be interlinked so that you get a whole-of-government response to the needs of the companies. A review is done by a business adviser on the issue that company is facing. It identifies the particular issues of that particular company. On some occasions they also do some international benchmarking on how they compete within their sector.

Senator PRATT —How does the international benchmarking process work? I have certainly seen that as an issue in the past.

Ms Zielke —The work that Enterprise Connect does with individual businesses is actually to go into the business, work with them over a period of time to identify what their strengths and weaknesses are and actually come up with a plan on how to improve their capabilities. Largely there is a focus on their management capability but, as my colleague said, also a focus on things such as lean manufacturing. It might be how they are managing their cash flow. Do they have an understanding of what their market opportunities et cetera are in that regard?

In relation to market opportunities, the program does assist in providing some advice, possibly from Austrade, for example, in relation to what opportunities there might be overseas, or by using ICN in relation to what their opportunities are here in Australia that then lead to overseas opportunities as well. Of course, the program is targeted at increasing their competitiveness generally across the firm.

Senator PRATT —How competitive is Australian industry in bidding for these projects currently?

Mr Lawson —It is highly variable. I think companies exist rather than industries. Some of them are very competitive and some are very uncompetitive. That is reflected in their success and otherwise in those exercises. That is a thing about companies.

Senator PRATT —I know that my next question is a little bit outside this portfolio, but it is certainly linked. One of the issues we consistently come across in Western Australia is skills shortages. Indeed, the large natural gas projects poach skills out of other parts of industry. It could be pipeline industries or any number of different trades. In part some of that is being perpetuated by the failure of Western Australian companies, for example, to successfully bid for this work so there are more people getting trade skills and apprenticeships going through the system.

Ms Zielke —Another facet of what Enterprise Connect does is also encourage collaboration between firms, hence our connection with ICN as well in that regard. An example I can give you is a group of Tasmanian engineering firms. They have been involved in producing underground mining equipment—trucks—for various players. There have been some changes in the market in that area and as a result we are now working with those firms to look at what they can do in the defence industry and actually get them working with companies from the defence sector to understand what their capability requirements are and to see what new opportunities there are in that regard.

We are doing the same with some companies in the mining sector going into defence and vice versa as well. What we are trying to do is look at where capabilities and skill sets are similar across sectors and get companies to work as networks in relation to improving their capability. We are finding that that is opening up new opportunities for them as well.

Senator PRATT —Just one last question. Have you been doing similar work to that at the Australian Marine Complex in Western Australia? I am happy for you to take that on notice, but what can you tell me about whether there is any support through Enterprise Connect or SAMP for projects that might come forward through AMC?

Mr Lawson —I think we will have to take it on notice. I am pretty sure somebody at least has visited them a couple of times, including myself in the past. But what we have been doing recently I need to take on notice.

Senator BUSHBY —I had not finished questions about the cash for clunkers. I just have a couple of questions more.

Senator PRATT —I did not mean to delve into Enterprise Connect specifically.

Senator BUSHBY —No, that is all right. I mention the Clean Car Rebate scheme. Earlier you were talking about the environmental benefits of the scheme, and that is how it was originally set up. Given that the price of carbon abatement under the Rudd government’s shelved ETS was less than $30 per tonne, I would like to do a comparison of how cost effective this scheme would be environmentally. Can you tell me what the price per tonne would be under the clean car initiative?

Mr Paterson —I think the final design of the scheme will influence that. We have not settled the final design of the scheme with government at this stage, Senator.

Senator BUSHBY —Are you aware of any publicly released assessments of what the cost might be per tonne?

Mr Paterson —I think there has been some public commentary in relation to it. I do not believe there have been any publicly released assessments.

Senator BUSHBY —In terms of that public commentary, have you had a look at any of the analyses that have been included in that?

Mr Paterson —I am conscious that there has been some work done in this area. There was a question raised in the climate change estimates in relation to modelling on this issue which I am aware is a question that was taken on notice in those estimates. To the extent that there has been modelling undertaken on the cost per tonne of emissions that might be abated in that context, I think it would be appropriate for us to wait for that response to the question on notice.

Senator BUSHBY —Obviously some of the public comment and analysis that has been conducted by other than you, or probably from the climate change department, suggests it is somewhere around the $400 per tonne mark.

Mr Paterson —I am aware of commentary that has asserted that.

Senator BUSHBY —Do you think, from what you understand and what you have done and the program that you are putting together, that is a likely outcome or a possible outcome?

Mr Paterson —It does depend very much on the end design of the program.

Senator BUSHBY —That is right. So how far down the path are you in terms of designing it?

Mr Paterson —We are raising a number of questions about the design and implementation. I do not want to go into the detail of those because they are matters in relation to which the minister has not yet, by his own evidence today, even read the most recent brief. He has not yet seen it. So there are matters of design that we are seeking guidance on, and until those design issues are finally settled it would be difficult for us to predict what the abatement costs might be. But there were a number of objectives identified at the announcement of the program. Emissions reduction, by its very name—the Cleaner Car Rebate—is a key objective in relation to the program but not the only one.

Senator BUSHBY —Absolutely, and the minister made that point earlier—that the main objective was environmental rather than industry support. We will look forward to the modelling coming back within the time lines from the climate change department. I have a final question on this. A number of observers have pointed out that there is very limited incentive for potential sellers to simply get $2,000 for their car to make a deal viable. This is particularly the case given that used cars in Australia tend to have a much higher value for a similar car of similar year than they do in a lot of other Western nations particularly. That is a bit of a bee in my bonnet, but it has to do with some of our car import rules and a number of other matters. But, given that cars do hold their value better—it sort of touches on what Senator Williams asked earlier—will $2,000 actually provide sufficient incentive for people to go and trade in their car when most older cars in reasonable condition are probably worth that in a trade-in anyway?

Mr Paterson —As I said in response to Senator Williams’s observations earlier, it does not automatically align the scrappage from the transaction with the purchase of the new car. So depending on the design of the scheme you can have a scrappage arrangement for which the vendor gets the payment from the scrapper and then pursues a transaction with the new vehicle, and as long as they meet the requirements of the scheme then the incentive can be there. It will be a matter for individuals to make a judgment as to whether the vehicle that they have—

Senator BUSHBY —It will be, but people have to make a commercial judgment and you need to provide them with an incentive to actually make that decision.

Mr Paterson —All elements of that chain will make a commercial judgment. If a 15-year-old vehicle is worth more than $2,000 and it is not worth their while in relation to scrappage, then this program will not be for them. But I am sure there is a suite of vehicles out there that are worth less than $2,000.

Senator BUSHBY —In other countries obviously with different schemes the administrators of those schemes found that they had to increase the amount payable to actually make it worthwhile, and in those countries the second-hand price of cars is probably not as robust as it is here.

Mr Paterson —They had different objectives in relation to their schemes. If you reflect on the scheme that you have often referred to as cash for clunkers, that was a scheme brought on in the United States in the middle of the global financial crisis when there was a collapse in sales of motor vehicles in the United States and it was about encouraging the purchase of motor vehicles and it was not a capped scheme. The scheme that we are being asked to examine is a capped scheme. So there has been a lot of speculation about the capacity for the scheme to blow out. The scheme cannot blow out because there is a capped number of grants that could be given under the scheme and a defined amount of money that has been provided for in relation to this.

Senator BUSHBY —I would like to ask questions about how you are actually going to administer that, but I will not now because I only have about another 10 minutes before we have to move into the small business side of this session. I will quickly ask some questions about Building the Education Revolution. Did the department have any direct involvement with the development of the guidelines for that program?

Mr Paterson —Building the Education Revolution is a responsibility of the Department of Education, Employment and Workplace Relations.

Senator BUSHBY —I understand it is its responsibility, but did you have any involvement with the development of the guidelines?

Mr Paterson —For which element of BER? BER is a complex series of arrangements. If you are talking about the expenditure in relation to school buildings and the like, the answer is no.

Senator BUSHBY —Okay; thank you. Were you at any stage consulted or asked for input at all into the program or into that aspect of the program?

Mr Paterson —No.

Senator BUSHBY —So neither the department nor the minister or his office had any involvement in drawing up things like the procurement guides or the lists of recommended suppliers or sourcing where they might have been made for the participating schools?

Mr Paterson —Not that I am aware of.

Senator BUSHBY —You had no involvement in deciding which companies were awarded contracts obviously?

Mr Paterson —Correct.

Senator BUSHBY —Some people could interpret that as a bit odd given that the government has claimed over and over again that the Building the Education Revolution was all about protecting and supporting jobs in a range of Australian industries like, say, the building and construction industry, the TCF industry and so on. Against that background, I want to ask you if you are aware of a company in my home state called Tascott Templeton, which is based in north-west Tasmania.

Mr Paterson —Yes, I am aware of the company.

Senator BUSHBY —Are you aware that the company is a unique Australian carpeting business but that it has gone into administration and is expected to close by Christmas?

Mr Paterson —Yes, I am aware of that.

Senator BUSHBY —Are you also aware that it sought to win a range of contracts under the Building the Education Revolution program that might have gone a long way to ensuring its survival? Notwithstanding that there were thousands of schools involved in this program, a large proportion of which would have had carpet as part of what they were purchasing, are you also aware of claims that Tascott was awarded a mere handful of those contracts and that only a fraction of the carpeting contracts under the Building the Education Revolution favoured Australian companies over foreign competition?

Mr Paterson —There are three questions I think in that last bit, Senator. The answer to those three questions is no, no and no.

Senator BUSHBY —So you obviously were not aware, but do you think that involvement by the department may well have helped to achieve some of the stated targets or stated aims of the Building the Education Revolution which were to promote economic activity in Australian businesses?

Mr Paterson —I do not think it is appropriate for officers to comment on the government’s Administrative Arrangements Orders. It determines that different departments of state are responsible for different activities. There were other parts of the stimulus program that were administered by other departments—for example, the one that has already been referred to: the Home Insulation Program. That was not administered by us. The BER was administered by the Department of Education, Employment and Workplace Relations and it is appropriate for questions to be put to them.

Senator BUSHBY —Mr Paterson, I am sure you would acknowledge that you have within your department a high degree of expertise in the area of Australian industry and what it can do. Surely it would have made some sense for that expertise to have been tapped into as part of the development of the stimulus package as a whole, but in particular in this case, the Building the Education Revolution.

Mr Paterson —That is an opinion.

Senator BUSHBY —Minister, would you care to comment on that?

Senator Carr —I think it is quite clear that the administrative arrangements for the BER are the responsibility of the department of education. All I can suggest is that if you—

Senator BUSHBY —You like to have lots of nice ivory towers and not talk to each other.

Senator Carr —No.

Senator BUSHBY —Minister, you have expertise at your disposal that could have actually gone a long way, with just a little bit of thought, to actually ensuring that the taxpayers’ money you are spending achieved the aims in a far better way.

Senator Carr —I do appreciate the fact that you are now acknowledging the BER was an important part of the economic stimulus. That is a big breakthrough and I look forward to seeing that in the Canberra Times tomorrow.

Senator BUSHBY —It is not timely, it is not targeted and it is certainly not temporary. It fails the Treasury’s test in all three.

Senator Carr —It would be a delight, wouldn’t it? It would be a delight to see a Liberal senator acknowledge that the BER was an important economic stimulus measure.

Senator BUSHBY —Maybe if your department had been involved we might have acknowledged that. We might have got a bit more value for your money.

Senator Carr —If you have any questions about the administration of that program, all I can do is suggest that you go and speak to the department of education.

Senator WILLIAMS —The New South Wales government. Look at the way they handled it.

Senator BUSHBY —In the couple of minutes I have left, I will ask some quick questions about the research and development tax credit.

Senator Carr —I am delighted.

Senator BUSHBY —Do you accept that the closure of the 175 per cent premium concession will save around 30 to 35 per cent of the current cost of the program?

Mr Pettifer —The R&D expenditure by program element proportion under the current R&D tax benefit arrangements has the premium providing—and this is for the year ended 30 June 2010—59 per cent of the benefits. My colleague has just pointed out that that is total expenditure, not the benefit that is actually provided underneath the program. The number of firms that would benefit under the premium is about 19 per cent.

Senator BUSHBY —I am happy for you to look at the question and take it on notice and maybe analyse it a bit and get back to us.

Mr Pettifer —Yes, that would be helpful.

Senator Carr —The fact is that there is not a reduction; there is not a saving—

Senator BUSHBY —I know that it is revenue neutral in terms of the overall.

Senator Carr —In terms of the costings, $1.6 billion is the figure. There is not a reduction in terms of revenue foregone.

Senator BUSHBY —No, it is a reallocation of how you use it. I understand that and they are some of the questions I would like to ask but time is very short now so I will not get into all of it.

One of the things that has been the government’s refrain on this legislation is that it wants to reduce some of the larger claims by some of the larger companies basically because—and I think you might even have used these terms—you want to reduce some of the rorted claims.

Senator Carr —We do not use that term ‘rorting’. I am saying that there have been whole of project claims which are inappropriate that are more properly described as business as usual claims. What we want to do is fund genuine R&D.

Senator BUSHBY —What kind of analysis has the department done about whether the introduction of a cap, say, of $20 million per project or $100 million per company, might not be a better way to achieve what you are trying to achieve in that sense—that is, reducing the larger claims by larger companies—than the current changes to the legislation?

Mr Pettifer —We have talked about this before. Our view on that is that putting caps or thresholds in is not a good approach to policy because you get all sorts of inequities and inefficiencies created by those circumstances. What we want to do is reward genuine R&D, whatever its level, and reward it in a more attractive way than we do at the moment. We have looked at those sorts of general options and decided that they are not the best policy approach.

Mr Paterson —Beyond that, we have also looked internationally at the experience around the globe of the best approaches in this area. The design of the R&D tax credit reflects that international experience and it reflects the experience and guidance of the OECD. It was a recommendation of the review of the national innovation system that we move away from a tax concession to a tax credit arrangement.

Senator BUSHBY —But I do not think the bulk of the criticism of this bill, which does exist—and it exists from unions and some industry—is related to the fact that you are moving to a tax credit. It is to do with other things, including definitions and the actual way you deal with it at more particular levels.

Mr Paterson —It would be fair to say that the bulk of the criticism that has come in relation to this change is from the beneficiaries of an existing arrangement who do not want to see a change in the definitions impacting on their individual business. But the government’s objectives, clearly stated in the bill and in all of the consultations to date, have been to design a scheme that rewards research and development activity.

Senator BUSHBY —The move to the tax credit scheme is basically welcomed by just about everyone. It is the details of how you are doing it and other aspects within the bill that attract criticism. In terms of criticism—and I was involved in the economics committee inquiry into this—we had joint submissions from unions, the Australian Industry Group and academics who were all working together to highlight what they saw as serious flaws with this legislation.

Senator Carr —And we responded to the report.

Senator BUSHBY —In a minor way.

Senator Carr —Not in a minor way; in a very significant way. I do acknowledge that you have a more positive attitude to this than some other members of your party. The fact is that we have responded to the Senate committee report. The bill is in the House at the moment. I trust it will be supported by the House and we will have an opportunity to discuss it again across the floor in the chamber.

Senator BUSHBY —We may well do.

CHAIR —I notice Senator Sherry is here. I understand there is a going to be a quick changeover of minister and we will go to the small business area. Welcome, Senator Sherry. I think Senator Ryan is starting off the questioning.

Senator RYAN —Welcome, Senator Sherry. I would like to turn to the issue of independent contractors. I am sure you are familiar with some of the newspapers’ coverage on this issue, particularly an article in the Financial Review in September that referred to the Labor government setting up a process for the unions to discuss a potential crackdown on sham contracting, which indicated that you were involved in three meetings with a group of unions—including the CFMEU, the AMWU, the AWU, the TWU and the CEPU—before the election.

Senator Sherry —Wrong.

Senator RYAN —There were no such meetings?

Senator Sherry —No.

Senator RYAN —Were there any meetings with you and a selection of those unions?

Senator Sherry —I meet with a considerable range of business—small, large—union officials et cetera but the import of that report is just wrong. In fact, whoever wrote it, and I cannot recall the journalist, did not even check with me or my office to verify the accuracy. It was wrong.

Senator RYAN —So there have been no meetings with you and a group of unions and other ministers where the tax treatment of independent contractors has been discussed and a potential government crackdown was outlined?

Senator Sherry —No. The report of a potential government crackdown that you refer to is just wrong. It is inaccurate.

Senator RYAN —I am trying to ascertain whether there were meetings that involved you and a number of trade unions under the ambit of whatever group—

Senator Sherry —Who I meet with and what I discuss is a matter for those people that I meet with.

Senator RYAN —I am not asking for it verbatim.

Senator Sherry —I have given you the answer.

Senator RYAN —So you are not going to tell us here today whether you have had meetings with the unions in response to this article that discussed changes to tax treatment—

Senator Sherry —I have already said to you that the details as outlined in that article are wrong—end of story. They are wrong.

Senator RYAN —I am not challenging what you have said there, but, as you know, the article contains a number of allegations. What I am trying to ascertain is whether have you been involved—whether it be under the auspices of the Labor Advisory Council or under the auspices of informal meetings—with meetings with trade unions or representatives of trade unions to discuss the tax treatment of independent contractors.

Senator Sherry —Who I meet with and what is discussed—and I meet with a vast range of individuals and organisations—is a matter for those organisations and me—that’s it.

Senator RYAN —I would have thought it was a matter for—

CHAIR —Senator Ryan.

Senator Sherry —You will not find any minister who is going to give you a report on meetings between individuals and organisations unless they issue some sort of public pronouncement by agreement with the parties that you meet with.

Senator RYAN —I have not asked for a report; I have asked whether a meeting took place and whether this issue has been discussed.

Senator Sherry —I have answered your questions.

Senator RYAN —I will take that as a refusal to answer my question on whether or not a meeting took place.

Senator Sherry —You can take it any way you like.

CHAIR —Senator Ryan, you are just going to invite responses if you make that kind of comment. We will get further delayed.

Senator RYAN —I think Senator Sherry is trying to characterise my question in a way that is not accurate. I am not asking for details of everything that happened at all of the meetings. I am asking whether he has had discussions with trade unions about the tax treatment of independent contractors, because there has been a significant amount of media commentary about this.

CHAIR —The minister has answered.

Senator Sherry —As I have indicated to you, that report is highly inaccurate, as indeed have been a number of other reports by media commentators about this issue—and I might say that not one of them had the journalistic ethics to contact me and ask me to verify the accuracy of what they were reporting. In fact, I would put it in the category of ‘inventive journalism’.

Senator RYAN —I think you would be familiar with this article where there are significant quotes from a representative of a trade union that says they were involved in such discussions.

Senator Sherry —I have answered your question.

Senator RYAN —You have previously stated—sorry, the government has previously stated—that the existing personal services income tax laws are a threat to the integrity of the taxation system and to the working conditions of employees. Did you make that statement?

Senator Sherry —Sorry, are you referring to a statement I made or one the government made? Could you reference the date?

Senator RYAN —I just realised I do not have the reference handy.

Senator Sherry —That would be useful.

Senator RYAN —I am sure it would be.

Senator Sherry —I do recall issuing a press release, which I do not have with me because it was not issued as Minister for Small Business; it was issued as Assistant Treasurer. I do recall issuing a press release—which, as I say, I do not have here—which was issued when I released a report by the Board of Taxation into these issues.

Senator RYAN —That press release, as I understand it, was a press release made upon receiving the Board of Taxation report.

Senator Sherry —Correct—and releasing it publicly for comment.

Senator RYAN —Do you stand by that statement? Do you believe that the existing personal services income tax laws are a threat to the integrity of the taxation system?

Senator Sherry —Let me firstly make this point: this policy area falls within the Assistant Treasurer’s portfolio. I am respectfully not going to respond to those issues here today because they are not my ministerial responsibility. They fall within the Assistant Treasurer’s portfolio. If you want to go to these issues, the appropriate place to raise them is in another section of the economics committee. It is not in the area of small business.

Senator RYAN —They will be asked in another section of the economics committee estimates, but the small business portfolio ranges across a number of areas of government and, I would expect, your constituent groups.

Senator Sherry —However, I make the point that the issues to which you are referring—the Board of Taxation does not fall within my current ministerial responsibilities; it is AT.

Senator RYAN —Since you have taken on this new role, have you made any representations to the Assistant Treasurer or to others within government regarding the tax treatment of personal—

Senator Sherry —You well know that discussions about any matter of policy between ministers and, for that matter, I referred earlier to individuals and other organisations—I am not going to go there.

Senator RYAN —It is a choice; it is not a rule.

Senator Sherry —I am not going to go there. I have already given you a response.

Senator RYAN —So you are not willing to outline whether you have made representations on the issue as the Minister for Small Business?

Senator Sherry —What I can say is that, beyond the press release publicly releasing the Board of Taxation’s examination of this issue, I have taken no further action.

Senator RYAN —That partly answers the question. Thank you very much. In the interests of time, I would now like to move to the issue of paid parental leave. You may have some similar answers. This question I will be asking to an agency at another committee, but I was interested in your particular views, given the impact upon small business. The Centrelink employer engagement plan recognises that ‘a major potential constraint for many employers will be the readiness of their payroll and accounting software to implement the scheme.’ By this I mean the government’s PPL scheme. It continues:

This may impede our—

the government’s—

advocacy of early adoption and, in the worst-case scenario, could cause severe disruption in the lead-up to the mandatory employer role from 1 July 2011.

I would like to know whether or not, on behalf of the small business community that is going to face this new burden as a result of the government’s plan, you have undertaken any advocacy within government to reduce this burden upon small business.

Senator Sherry —Not to date.

Senator RYAN —Do you intend to?

Senator Sherry —The issue does not fall within my portfolio responsibilities.

Senator RYAN —No, but I—

Senator Sherry —I have personally had some representations on the issue, but beyond that I cannot add anything further here today.

Senator RYAN —So when groups like the independent contractors or the Council of Small Business come to see you—presumably they would make representations on matters like this to you as the Minister for Small Business—do you simply say to them, ‘This is not a matter in my portfolio area’?

Senator Sherry —What I discuss with those organisations, as I have already said to you on a number of occasions, is a matter between me and those organisations and individuals. But, as I have indicated, I have had commentary from a range of individuals in small businesses about the Paid Parental Leave scheme.

Senator RYAN —Have they received the same answer I have—that it is not in your portfolio area?

Senator Sherry —Beyond what I have indicated, as I have said to you—and I think this will be the fourth occasion—I do not go into an explanation and detail of discussions I have with individuals and organisations; I never have and I never will.

Senator RYAN —I am asking about discussions you may have had within government. Have you made representations on behalf of those groups within government?

Senator Sherry —Let me make a couple of points on the matter you raise. Firstly, paid parental leave does not fall within my ministerial responsibilities. If you want to raise it, the design of the scheme, its impact et cetera, there is another estimates area that is responsible—

Senator BUSHBY —Have you had any input into the design?

Senator Sherry —Can I finish? I had not finished, Senator. As far as the government’s Paid Parental Leave scheme is concerned, firstly, I would make the point that it is the first comprehensive parental leave initiative designed to support working families. It encourages workforce participation, which will benefit small business by helping them to retain skilled staff. It will fund paid parental leave for working parents whether they work in the private or the public sector, are contractors or are self-employed. The government will support small business by making sure that all paid parental leave money is supplied ahead of their employees’ pay cycle. That is an important design feature which I know is a benefit to small business. There is a phase-in period of six months to allow small business employers time to transition to the new arrangements. They are aspects of the Paid Parental Leave scheme that I believe are very positive and, in the context of small business, broadly important.

Senator RYAN —So you are aware of the significant opposition from small business and other employer groups to this particular burden that is being placed upon business?

Senator Sherry —The policy and indeed the legislation have been determined.

Senator RYAN —I am asking a question.

Senator Sherry —You are asking a question and I am giving you my answer.

Senator RYAN —Senator Sherry, it is like I am asking you what the weather is and you are telling me what football team you barrack for.

Senator Sherry —Geelong, actually. We had a pretty tough year, but I have answered your question.

Senator WILLIAMS —Point of order, Chair.

CHAIR —I have a point of order.

Senator WILLIAMS —Chair, the minister specifically asked to be allowed to finish his answer when Senator Bushby interjected. Now we have Senator Ryan trying to ask and complete his question with the minister speaking all over Senator Ryan, which I think is double standards. Will you see that one speaks at a time, please, and Senator Ryan is allowed to complete his question?

CHAIR —I was not taking a great deal of notice of the interaction so I think we will just continue with questioning.

Senator WILLIAMS —Senator Sherry is being a bully—that is what I am saying.

Senator RYAN —Senator Williams, they need to be bigger than Senator Sherry.

Senator WILLIAMS —What I am saying is that it is double standards.

Senator Sherry —That is the first time I have ever been accused of being a bully on either side of the table at Senate estimates, I have to say.

Senator RYAN —The point I am making is that you have received representations from employer groups and small business representative organisations. Are you aware of their opposition to this element of the government’s plan?

Senator Sherry —This would be I think the sixth occasion on which I have told you that the conversations I have with individuals, organisations, businesses or, for that matter, any—

Senator RYAN —It does not have to have been a conversation; it could have been a written submission.

Senator Sherry —I will add ‘written’ to it. The conversations or those things written are a matter for me and those organisations and individuals.

Senator RYAN —You are creating a new historic definition of the narrowness of Senate estimates committees, as I understand it, Senator Sherry. I will take that as yet another refusal to answer a pretty basic question. But I appreciate your keenness not to have this on the public record coming out of your mouth because I do not think anyone else in this room is in doubt of small business’s view with respect to the burdens being placed upon them by Labor’s scheme. If I could turn now to an issue which I think is within your portfolio, Senator Sherry, which is business enterprise centres—

Senator Sherry —Yes, that does fall within my direct responsibility.

Senator RYAN —I think many small businesses would think that a number of other issues did, too, but we will leave that for the chamber. What were the criteria for determining business enterprise centres that were funding recipients in the 2008-09 budget? What criteria were used? I am happy for you to take elements on notice and provide them later if that is an easier thing.

Senator Sherry —Do you want it now?

Senator RYAN —I would be happy to have it now.

Senator Sherry —Okay.

Mr Sexton —Senator, the funding for these business enterprise centres—

Senator RYAN —All the locations.

Mr Sexton —The locations were election commitments.

Senator RYAN —So all the locations were actually election commitments?

Mr Sexton —Correct.

Senator RYAN —Okay. That answers the rest of my information on that. Chair, I can put the rest of my questions on notice.

CHAIR —Thank you. We have until 3.15. Are there any more questions in that area of outcome 1 that we could usefully go to?

Senator RYAN —Can I just check the Superannuation Clearing House? I assume that is also another matter that is not in your portfolio?

Senator Sherry —You know it is, Senator, and you can tackle me on that I think tomorrow when I am representing the minister for financial services and superannuation. I will be more than happy to talk loquaciously and in great detail on that matter with the officers at the table.

Senator RYAN —I just thought I would check.

Senator Sherry —It is not for this Senate estimates. It is not a small business responsibility, Senator.

Senator BUSHBY —Minister, I find it curious the attitude you have taken to questions that impact on small business today. I understand that, as small business minister, you would have certain programs the delivery of which you are specifically responsible for.

Senator Sherry —Yes.

Senator BUSHBY —But I would also have thought—and correct me if I am wrong—that as minister for small business you would also have an interest in influencing decisions of government made in other departments that impact on small business. Is that not the case?

Senator Sherry —I think that is generally right, Senator Bushby. Certainly in the consultations I have had with small business over the last couple of weeks—very extensive, I might say, in terms of individuals and organisations—they do raise a considerable range of issues that are not specifically my ministerial responsibility.

Senator BUSHBY —No, but as a member of government you have an—

Senator Sherry —Yes, they do—

Senator BUSHBY —And I would presume—

Senator Sherry —And they raise a vast range of issues—the complexity of superannuation choice, which has been touched on here, vis-a-vis the clearing house, finance for small business, regulatory issues, regulatory burdens, industrial relations issues. There is a wide range of issues that are raised with me.

Senator BUSHBY —Absolutely. In the context of where government is making a decision or looking at implementing a program that may have some impact on small business, even though it is being administered or the policy oversight of that program may be other than with you, presumably at times you would be asked for your input into that?

Senator Sherry —Yes.

Senator BUSHBY —And at other times you would seek to impose your input into some of those things.

Senator Sherry —Yes. Certainly this department—and the small business area—would be consulted on a wide range of policy initiatives by government and, indeed, legislation by government. It has certainly been the case in the past. That is certainly true.

Senator BUSHBY —And in the case of programs Senator Ryan mentioned such as the Superannuation Clearing House or the Paid Parental Leave—presumably those things that would impact on small business—you—

Senator Sherry —Not me specifically but my predecessors.

Senator BUSHBY —And the departmental people assisting you.

Senator Sherry —Yes.

Senator BUSHBY —Would have had some input?

Senator Sherry —Yes, but the policy responsibility sits with whichever department, minister and obviously estimates committee has the policy responsibility for that area.

Senator BUSHBY —That is right, but when you are sitting before us, if we ask questions about whether you have had input into that, then those are legitimate questions.

Senator Sherry —I have already indicated what the past practice has been, and that will continue. But in terms of answering and responding, as you would well know, Senator Bushby, there is a recognised process for dealing with that policy and legislation at the appropriate estimates committee. I think it is useful you have raised this because that is the approach that my predecessor, Senator Carr, took.

Senator RYAN —Can I tell you that I have asked in this department today questions about programs being administered by other departments, and the input that this department has had into that, and I have got some degree of satisfaction—not as much as I would like but some degree of satisfaction and far more than we were getting in respect of small business today.

Senator Sherry —I have indicated to you what my approach as minister will be in this regard.

Senator RYAN —Thank you, Chair.

CHAIR —If that is all, we will take a short break and return at 3.30 pm with the Resources, Energy and Tourism portfolio. I would like to thank officers from the Department of Innovation, Industry, Science and Research for attending this today.

Proceedings suspended from 3.12 pm to 3.31 pm