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Economics Legislation Committee
Commonwealth Scientific and Industrial Research Organisation

Commonwealth Scientific and Industrial Research Organisation


CHAIR: Mr Marshall—sorry, I should say Dr Marshall—we welcome you here again.

Dr Marshall : Chair, only my mother calls me doctor.

CHAIR: I will call you doctor today because that is what it says. Dr Marshall, you must be settled in quite nicely now. It has been 12 months, hasn't it?

Dr Marshall : It has been 12 months.

CHAIR: It is 12 months almost to the day, I would have thought. Was it January last year?

Dr Marshall : Yes.

CHAIR: Do you have an opening statement for the committee?

Dr Marshall : I would like to table an opening statement. The committee will no doubt be aware of the strategic shift for the CSIRO announced in our strategy last year and, with more details, in the media just over a week ago. As there has been some misreporting in relation to this matter, I would like to put on record the facts as they currently stand. In our CSIRO Strategy 2020: Australia's Innovation Catalyst, we recognise that the Australian economy is in transition. We must respond. What carried us in the past cannot carry us into the future. The future will be defined by science-led innovation, which will reinvent existing industries and create new ones to maintain Australia's prosperity. CSIRO does research for a purpose. We are a big, mission-directed organisation created to deliver science and solutions to solve the biggest challenges facing Australia. On Thursday last week, I announced the outcomes of the latest review of our science investments in order to respond to our new innovation catalyst strategy. But it is more than just CSIRO's own strategy. It is responding to the nine national science and research priorities, which include a priority to build Australia's capacity to respond to environmental change and integrate research outcomes from biological, physical, social and economic systems.

This change is a refresh and a redirection of capability in CSIRO, not a cut to staffing levels. After this process over two financial years, the number of team members should be the same or slightly higher. The worst case is that up to 350 team members could be affected, and, if they cannot be redeployed or reskilled, they will leave. We are trying to be a more open organisation; that is why we crowdsourced our strategy. We communicated to our team as soon as we confirmed people's jobs could be affected. Because this affects people's lives, I respectfully ask you to be patient with us while we work through the detail to be fair to those affected. I must stress that this announcement marked the start of this journey. Moving from setting the high-level strategic science priorities as a first phase, to working out the detail of how to execute this with our staff and stakeholders in its second phase, and then executing the changes. We are currently in the second phase of this process, consulting with our staff and our stakeholders in order to resolve the details, a process which we are committed to undertaking. Until this is complete and the precise information is known, speculating on potential outcomes is not fair to our staff. Thank you.

CHAIR: Thank you very much. Just as a matter of procedure, I have listed Senator Carr, Senator Rice, Senator Waters and Senator Di Natale with CSIRO. If any other senators want some time with CSIRO, we had better get that organised. We will do it later; we will not hold up proceedings.

Senator RICE: Before I begin, I need declare my partner is an honorary research fellow with the climate science program at CSIRO.

CHAIR: I noticed that last Sunday afternoon. Noted; thank you, Senator Rice.

Senator KIM CARR: Thank you very much, Dr Marshall, for your appearance today. I listened to the ABC this morning with some interest. You made some statements about climate change and religion. Could you elaborate?

Dr Marshall : Yes, if I may, I would like to apologise for any offence I may have caused to anyone with respect to my reference to religion. I was merely referring to the passionate zeal around this issue, not any other reference and, again, I deeply apologise.

Senator KIM CARR: It is not about the reference to religion that concerns me, it was the fact that many people who seriously challenged the idea of climate change have used exactly that same formulation. I am wondering: did you consider that before you said those words?

Dr Marshall : As I said, I was merely—it was a poor way of expressing the passion with which people feel about this area.

Senator KIM CARR: I mean it is reminiscent of John Howard. They are exactly the words he used to describe people's attitude to climate change. Were you familiar with that?

Dr Marshall : I was not; I was not living in this country at that time.

Senator KIM CARR: I assume you are aware then that there have been—

Senator Sinodinos: He was channelling great people.

CHAIR: I am trying to control this side, Minister.

Senator KIM CARR: Tony Abbott also used similar terms; perhaps you do not share the greatness there, Senator Sinodinos. You would be aware of the multiple statements now that have been issued from international agencies and climate scientists expressing concern about CSIRO management's proposals to withdraw from the climate measurement and monitoring activities. Were you surprised to hear that the head of the UN World Meteorological Organization's World Climate Research Program speak out so strongly with regard to the proposals that you have advanced?

Dr Marshall : Yes, I was very surprised. You mentioned in your question our proposal to withdraw from measurement and modelling. For the record: we are not planning to withdraw from measuring or modelling, but we are reducing our effort in that area in an effort to redirect our attentions to mitigation.

Senator KIM CARR: What is your response to the statements that have been made by a number of the international experts in this field, whether it be from Scripps, whether it be from the UN meteorological organisation? What do you say to their criticisms?

Dr Marshall : I was surprised. I have spent 26 years in the United States and I have spent some time at Scripps. It is a wonderful research institution. The reason I was surprised about the comments from the US was that it is a matter of fact that the United States invests 75 per cent of its dollar investment in the environmental area into mitigation, and only 25 per cent into modelling and measurement. Over the last decade, the investment in the US into modelling and measurement has changed hardly at all—roughly four per cent a year—while in contrast the investment in mitigation technologies has increased 40 per cent per year. Given the US are playing a lead in a major shift in research priorities, this was a big part of our thinking in following that leading trend, so it surprised me to be criticised by someone who led the trend.

Senator KIM CARR: I saw the letter had been signed by international scientists in extraordinary, unprecedented numbers. Are you not surprised by that?

Dr Marshall : I am surprised, yes.

Senator KIM CARR: What do you say to them? Are they wrong?

Dr Marshall : We are not saying that modelling and measurement are not important. We are saying that modelling and measurement is not more important than mitigation, and we have chosen to shift our emphasis to mitigation, which by—

Senator KIM CARR: Perhaps you should explain to me then, because you have put a great emphasis on this shift, exactly how much resourcing is being withdrawn from the measurement and how much is being put into adaption, as you see it.

Dr Marshall : For the detail, I will hand off to Dr Wonhas, who is responsible for this area. But may I say again: we are at the beginning of this process, and the climate modelling and measurement area is by no means the largest area affected in these possible changes. We have to be respectful to all 5,000 CSIRO team members who are part of this. In respect of measurement and modelling, it is very likely to be a reduction in headcount. But there are other ways that we can use technology to improve our capability to do things that do not require more headcount.

Senator KIM CARR: Perhaps you could give me some assistance here, Mr Roy. What exactly are the numbers?

Mr Roy : I will pass to Dr Wonhas for that. He has the details.

Dr Wonhas : To answer your question, we have asked the oceans and atmosphere team to identify a reduction of up to 100 FTE, and we have also asked them to identify 35 new positions in growth areas, and I think the remainder of that will be reinvested across the organisation.

Senator KIM CARR: What is the total resourcing difference? If you take 100 out and put 35 on—

Dr Wonhas : It is a reduction of 75.

Senator KIM CARR: What is it in dollar terms? What does that mean?

Dr Wonhas : Do you want labour costs?

Senator KIM CARR: You must have had some calculation as to what the costs are for this 'reprioritisation', as you put it.

Dr Wonhas : Correct. Our average labour cost is around $130,000 per staff member.

Senator WHISH-WILSON: Senator Carr, could I just ask for a point of clarification? You just said the extra 35 would be allocated across the organisation. Will they stay in oceans and atmosphere?

Dr Wonhas : The 35 stay in oceans and atmosphere. The remainder go outside of oceans and atmosphere.

Dr Marshall : If I can correct the record, I believe Dr Wonhas said it was a 75 change. But that would actually be a 65 change.

Dr Wonhas : Thank you—I cannot calculate in my head.

Senator KIM CARR: So there is 65 just in terms of oceans. Where are the other changes? How many are there in manufacturing? What is the change there?

Dr Wonhas : I might ask Mr Roy to answer that question.

Mr Roy : As Dr Marshall said, across the full business the number is up to 350. Over the two-year period, you would expect the net to level out to about the numbers we have got now. If I go through the business units that were announced by Dr Marshall, in manufacturing we expect those numbers to be in the order of about 40—

Senator KIM CARR: Is that 40 up or 40 down?

Mr Roy : That is 40 losses initially, and some of these are because the BU took a punt on coming out of our integrated reform program and held on to a number of people through that in the expectation that we might be able to gain further support from the manufacturing sector. The growth we were expecting has not fully come through, so, unfortunately, we need to move on those changes that we had previously announced. But the numbers are in the order of 40 from—

Senator KIM CARR: That is a net loss of 40.

Mr Roy : That is correct—from where we sit here today.

Senator KIM CARR: Can I have the others, please?

Mr Roy : Oceans and atmosphere, as Dr Wonhas said, is 100 net with a change of 65. The other announcement was with regard to the land and water business unit, where we expected somewhere in the order of between 40 and 50 new hires behind the 100 in there as well.

Senator KIM CARR: What is the net? Is there a net gain of 40?

Mr Roy : No. Net loss would be about 60 in that part of the business—between 40 and 60.

Senator KIM CARR: What about Data61?

Mr Roy : Data61 is separate from this announcement. I can pick that up, though. At our last hearing we said that there would be up to 200 staff losses. We have been able to reduce that to less than 100.

Senator KIM CARR: Is it 115?

Mr Roy : Less than 100.

CHAIR: So it has gone from 200 expected to less than 100.

Senator KIM CARR: Job losses, though.

Mr Roy : To be more complete, if CSIRO had not come in and merged it would have been the loss of the whole of NICTA—so some 400. We have then brought it to 200, and our best estimate now is less than 100.

Senator KIM CARR: Thank you for that. Dr Marshall, in your staff email you said, 'Questions had been answered in terms of proving global climate change and we now have to find solutions for climate we will be living with.' I am just wondering how that squares with your proposition that you are—or to what extent are you reducing your capacities in regard to climate change mitigation?

Dr Marshall : We are reducing our person power in measurement and modelling and increasing our capability in mitigation.

CHAIR: So we have to stop talking about it and start doing something about it.

Senator KIM CARR: Let me just get to that. I want to know precisely how you are reducing climate change measurement. How are you reducing that capacity?

Dr Marshall : Maybe I could help a little bit by correcting some of the misstatements, so that you know what we are not changing, if that is okay. That might help. Firstly, there were misstatements in the media that we were closing Cape Grim, shutting down the ship and firing 350 climate scientists, and more than one that I was a climate denier. Just to go on record, I am not a climate sceptic or a climate denier. My statement about—

Senator KIM CARR: About religion was just misplaced?

Dr Marshall : The statement about being proved. From my perspective the question of whether CO2 emissions are affecting the world's climate has been definitively answered by science. We operate Cape Grim, which is a very important and unique facility in a unique location. It is actually operated by the Bureau of Meteorology. We will not withdraw from Cape Grim but, as with all our facilities, we will always try and find more-efficient ways to operate. So we will experiment with some digital technologies to help us gather data more efficiently—transmit data more efficiently. That may impact the labour content we need to perform that function but it will not affect that function itself.

The work that we do in Argo—the Argo floats—which is a very important sensor network in the oceans measurements program, we will not change, obviously. We will not stop measuring the human impacts on air pollution. It should go without saying that we will keep all of our contractual commitments, but in particular to the earth systems science hub under the NESP program and of course to the IMOS program, the Integrated Marine Observing System. Dr Wonhas can give more details if you would like.

Senator KIM CARR: Are you going to maintain the air library?

Dr Marshall : Let me hand over to Dr Wonhas to give you the details.

Dr Wonhas : We will certainly keep what currently has been done—

Senator KIM CARR: You will not add to it?

Dr Wonhas : What we will try to do is find a sensible pathway from here to maintain the vital measurements that this nation needs, and what we will also want to maintain—

Senator KIM CARR: You will need to explain to me what a sensible pathway is when you are not adding to the database.

Dr Wonhas : We have just started the process of talking to our partners and to our staff to identify that. As we are working through that I am sure we can clarify that further.

Senator KIM CARR: Who are your partners? This is a national facility. Who has been collecting that material for—what, how long now?—it is a generation at least that I am aware of?

Dr Wonhas : Forty years.

Dr Marshall : Cape Grim would be 40 years.

Senator KIM CARR: Yes. Who is going to collect it if you don't?

Dr Wonhas : As I just said, we will ensure that the vital measurements will continue.

Senator KIM CARR: What about the ice library?

Dr Wonhas : I have no intention of closing the ice library at this point in time.

Senator KIM CARR: Or adding to it?

Dr Marshall : I think, as I said, we are at the beginning of a process. Perhaps if I can point out that our intention is—

Senator KIM CARR: What about the bugs collection—is that affected by these changes?

Dr Wonhas : National Facilities are quite separate from this.

Senator KIM CARR: Are they not affected by these changes at all?

Dr Marshall : National Facilities?

Senator KIM CARR: Yes, National Facilities.

Dr Marshall : No, they are not.

Senator KIM CARR: Not at all?

Dr Marshall : If I can point out, CSIRO represents about 16 per cent of the environmental research capacity, 16 per cent of the output—

Senator KIM CARR: I know this story, and you well know that I know this story, but the difference is that you get a block grant. Most of the other people that are in this space are relying on terminating grants. You are the only ones that can be relied upon to have the continuity of capacity, and in some cases over a 40-year period. Who are you going to turn to that can replicate your capacities in these areas?

CHAIR: Senator Carr, your knowledge is profound in this area. But I think the officers—

Senator KIM CARR: No, it is not. It is nowhere near profound. The point is I know drivel when I hear it and this is what we are being fed.

CHAIR: Senator Carr, you are now verballing the officers. You have a great deal of knowledge and I am very interested in—

Senator KIM CARR: I am asking for the answer to the question: who has the capacity that matches anything like the CSIRO does in these areas and who has the security of funding?

CHAIR: And the officers have said they are in their preliminary stages of the evaluation.

Senator KIM CARR: No, they have not given me an answer. You can try to protect them but I would like to know the answer.

CHAIR: I am not protecting them. I know what I have heard. I am a reasonable person.

Senator KIM CARR: What is the answer?

Mr Roy : Senator, we have given a commitment that we would maintain those important facilities. We have not yet identified where their final destination will be, inside or outside of CSIRO, but that is part of the stage 2 work that we said we would do. So our commitment to you in this setting is that we would find a way either as owners or not as owners to maintain the facilities that you have mentioned and Dr Wonhas has responded to.

Senator KIM CARR: Thank you.

Senator WHISH-WILSON: Will people lose their jobs before you find that way?

Dr Wonhas : No, Senator. It is our aspiration to resolve that relatively quickly. I think it is probably worthwhile pointing out that since last Thursday, when Dr Marshall made the first public statement, it was the following day that we started to talk to our staff, which I think you have rightly pointed out are really the most affected in this. The next working day I started to reach out to some of our partners to start this process of a dialogue. As you would appreciate, and I guess it is the nature of this discussion, this is a difficult process. There are a large number of stakeholders. Having said that, it would certainly be my aspiration to complete this process by the end of March because then we can also create some clarity for our staff members that will be affected.

Senator KIM CARR: Can I come back to the syntax here—correct me if I am wrong, but did CSIRO not close down the Climate Adaption Flagship two years ago?

Mr Roy : We did.

Senator KIM CARR: Why did you do that?

Mr Roy : It is important to go to the history as to why we stood up that flagship in the first instance—it was because we thought we needed to develop some fundamental capability in climate adaptation, which happened. It was always our plan to transition that into some of the other flagships, so that work was picked up and transitioned down sectorial lines, where it actually had the impact of feeding that into agriculture or other parts of business.

Senator KIM CARR: Dr Marshall, did you give that consideration before you took your decision? That you already had announced this so-called change project and abolished the mob that actually undertook the work that you are now saying is your priority?

Dr Marshall : I am aware of those changes prior to becoming chief executive, but as happens in all fields of endeavour global markets change, global trends change and we must be willing to evolve with them.

Senator KIM CARR: In two years they changed, did they?

Dr Marshall : Again, I cannot speak to decisions made prior to me becoming chief executive but I believe that CSIRO is about 16 per cent of the environmental research capacity, which means that we need the help—

Senator KIM CARR: Yes, you have already drawn my ire on that matter.

Dr Marshall : Over time more and more funding has diverted to universities, which is why we are 16 per cent of the capacity. That is a very natural process to happen as a field of science matures. But what we need to do now is drawn on support of the greater part of the environmental community to help us in this transition. Within a finite envelope we have to prioritise.

Senator KIM CARR: I can accept the argument about the finite envelope. The government has reduced your budget, I accept that: that is a statement of fact. You have to operate within an envelope developed by government. In your email you say that our client models are among the very best in the world, and very large numbers of people are agreeing with you now. I wonder what you would say to this proposition the President of the Australian Academy of Science put forward:

We wouldn’t stop supporting our elite Olympic athletes just as they're winning gold medals. Nor should we pull the rug out from under our elite scientists.

What do you say to that proposition?

Dr Marshall : Senator, with respect to the model, there are many models now. When CSIRO started we were quite unique, but there are many models. I think, but I am not certain, that there are in the order of 30 globally. CSIRO spent 20 years or so working, honing, perfecting and improving that model. Simply because we reduce our manpower, or our labour force, does not mean the model goes away. We can be much more innovative about how we maintain it. For example, several years ago we open sourced the model to enable researchers all around the world to have input into that model. That is an example of using innovation to draw on more support from the community—that does not require more funding. Another example is using autonomous underwater vehicles to collect data, and we are increasing our investment in that area. Again there is a reduction in labour cost through the use of more efficient technology. As Dr Wonhas said, we are reducing our labour in modelling and measurement by about half, but we are trying to be smarter about how we do things—we are trying to be more collaborative and leverage that much bigger portion of the innovation system that also works in climate.

Senator KIM CARR: What I cannot follow is that you are saying you are reducing your capacity by about half—did I understand you correctly, by about half?

Dr Marshall : Yes, Senator. In terms of labour capacity, sorry.

Senator KIM CARR: But that is the point you make. How do you actually undertake an assessment of how effective your adaption strategies are without that measurement capacity? Without actually knowing what effect you are having. How do you do that?

Dr Marshall : Senator, it is not a binary issue. As I have said, we are continuing our measurements. It is not that we are stopping measuring. We are not the only people doing measurement. You are quite right: in order to know the impact of what we do in mitigation we need measurement, but there are also some things that we can do that we know will improve outcomes. We know, for example, that if we can reduce CO2 emissions we will improve things. We also know that, in the broader environmental contexts, there is reducing chemical waste and waste from mining. There are many other impacts on the environment that CSIRO has to balance. We know we can improve these things by reducing waste products, for example.

Senator KIM CARR: You mentioned before that you started the consultation after the announcement. Is that correct? Did I get that correct, Dr Wonhas?

Dr Wonhas : That is largely correct. We gave a few select, very close partners a relatively short notice heads-up before the announcement, but I think, as you would appreciate, now is the time for us to engage much more broadly.

Senator KIM CARR: I would have thought that with an announcement as profound as this you would have actually had a process of engagement before you made the announcement, not after.

Dr Marshall : Senator, if I may. The announcement was somewhat made for us by a leak to the media, somewhat pre-empting us.

Senator KIM CARR: I did see your email last Thursday. It was from you, was it not?

Dr Marshall : Yes, Senator. I was referring to the fact that the media had reported these changes before we did.

Senator KIM CARR: But you did send out an email last Thursday?

Dr Marshall : Senator, just to clarify: I sent three all-staff emails. Are you referring to the second one, describing the changes, or the first one?

Senator KIM CARR: The one I am referring to is the one that I read on just about every scientific website in the country, where you stated:

Dear colleagues. We have seen a major change already this year with oil prices way down …

and so on and so forth. That one.

Dr Marshall : I understand, Senator.

Senator KIM CARR: I am interested to know when you consulted the board.

Dr Marshall : The initial conversations around funding, balancing of priorities and performance of the different groups were at our last board meeting, which I think was in December last year.

Senator KIM CARR: Was that a discussion about the strategic plan or a discussion about these specific measures?

Dr Marshall : We always discuss the strategy and the performance across the organisation at every board meeting. In that board meeting I flagged the fact that we were seeing some trends, and I basically told—

Senator KIM CARR: So, if I spoke to a board member and asked them, 'Did you hear a conversation that involved the net loss of 65 jobs from the oceans division?' they would be able to tell me, 'Yes, the CEO told us in December'?

Dr Marshall : Not quite, Senator. We discussed the potential of change in December.

Senator KIM CARR: When did the board hear about these changes?

Dr Marshall : Again, the numbers are not set, so, as we always do, we picked the highest possible number—350—

Senator KIM CARR: Okay. When did the board hear about the 350?

Dr Marshall : I am trying to answer you, Senator. I discussed this with the chairman early in the new year, and he had the all-staff with the board probably a week or so before we intended to send it, but we did—

Senator KIM CARR: So last week—the board heard last week, did it?

Dr Marshall : Probably the week before.

Senator RICE: When did the board specifically hear about the proposal to cut 100 FTEs from the climate science programs?

Dr Marshall : The numbers? To be sure, I would have to refer to—

Mr Roy : We are talking about broad consultation, Senator, so, if I may, can I step back to what we have done through the period. Dr Marshall spoke around the strategy launch and the build-up and the crowdsource of the strategy, which was released in July 2015. Then, in September, we took every business unit off site for a single meeting for them to start to understand and adapt their own business to what the new strategy means for those new businesses, including O&A. There were 270-ish staff at that function.

Senator WHISH-WILSON: Was that new strategy making money—commercialising their—

Mr Roy : We can table the new strategy for you.

Senator KIM CARR: Perhaps if we can let him finish his answer.

Mr Roy : We then asked each of the CSIRO businesses—Oceans and Atmosphere, Agriculture and the like—to develop their own business plan in response to that. They did that and they presented those to the executive team formerly known as the SICOM group, but all the members of the executive team were there in October. Given it was the first year in the strategy and given it was Dr Marshall's first year as well, we introduced an additional step, and between November and December the CFO, Dr Marshall and I and the responsible executive spent half a day with the leadership team of every business unit—so it was a significant time investment—and we discussed the strategy of their individual business unit, what markets they were facing, what their forward pipelines were like, what the strength of their capability was, what the strength of their partnership was. So it was a key strategic discussion. We also asked them to describe to us options for growth, so if they thought they could grow into new markets, do new things, what were they? And we asked them to describe options which they would divest areas of the business of to fund that growth as well.

We then, in December, as an executive team, had the more complete picture, and we also were in discussions with the board through December to say, 'These are the sorts of options we are contemplating.' That was the discussion we had with the board at that stage, so we were still at the options phase. We then started to converge toward some options, and there was further discussion with each of the business unit leaders, particularly those that were impacted, either positively or negatively, by those changes. Then we held an executive team meeting—

Senator KIM CARR: I need a date for that, please. What date was that last round where the positive and negative conversations took place?

Mr Roy : It was not a specific date, but most of them were in the lead-up to the Christmas period. It would have been in those two weeks predominantly. In some exceptions where people went on leave earlier, there might have been early weeks in January, but it was that sort of period of time.

Senator KIM CARR: So over the Christmas and New Year period, you talked to people about the options still?

Mr Roy : Yes.

Senator KIM CARR: You were still at options?

Mr Roy : We were still at options at that stage, because we had got to the position where we wanted to understand more about consequences—if one selected that particular option. We then reformed as an executive team in late January, went through those options and formed a view as to what the portfolio of options would be. I know we are focusing on one very important aspect at the moment, and that being changes in O&A, but there were some other changes, ups and downs, that we needed to contemplate as well. Ahead of Dr Marshall's release on the Thursday—the one we have been talking about—there was consultation with the board through an engagement with the board.

Senator KIM CARR: So the board was told.

Mr Roy : The board was aware and supportive of what—

Senator KIM CARR: They were told about the specifics of your announcement made on Thursday. What date was that?

Mr Roy : I did not have the briefing, but I —

Senator KIM CARR: That is alright, but you can give me a date.

Senator RICE: So—

CHAIR: Senator Rice, Senator Carr has the call. If you want to—

Senator RICE: I just wanted to clarify—

Mr Roy : It was within—

CHAIR: Senator Carr, do you have a follow-up question?

Senator KIM CARR: Sorry?

Mr Roy : It was within 48 hours that, I understand, the final briefing happened.

Senator KIM CARR: We are talking Tuesday of last week?

Mr Roy : I would have to clarify from the chief executive.

Senator KIM CARR: We could ask the chief. What was the date on which the board was advised? Was it Tuesday of last week or was it Wednesday of last week?

Dr Marshall : I do not remember the date, so I would have to take that on notice.

Senator KIM CARR: But you must know whether or not it was Tuesday or Wednesday, surely. It is only last week.

Dr Marshall : I think it, possibly, was before that. Certainly, with the chairman, it was before that.

Senator KIM CARR: That is not what Mr Roy has just told us.

Dr Marshall : That is why I would like to take the question on notice to give you a precise answer.

Senator KIM CARR: Let's be clear about this, Mr Roy. In your opinion, when was the board advised beyond the options as to the specifics of the announcement?

Mr Roy : Let me be really clear here. I was away for that particular week. Dr Marshall had spoken to the chairman on the way through. My understanding is that they saw a copy of the release before it went out publicly.

Senator KIM CARR: When you produce a release, do you produce it days ahead or on the day or the day before?

Mr Roy : It was being formed between the executive team meeting on, I believe, the 28th or 29th. I can clarify that date with someone else here, and when the final release was.

Senator KIM CARR: I just want to know the day on which the board was informed of these specifics. That is the question I put to you. I am getting information here that suggests it is Tuesday or Wednesday of last week. Can you confirm that?

Mr Roy : We will take it on notice.

Dr Marshall : We want to give you an accurate answer, so we will take that on notice.

Senator KIM CARR: Yes, but is it not before then?

Dr Marshall : We will take that on notice.

Senator KIM CARR: I am surprised that with all the resources—

CHAIR: Senator Carr. They have taken it on notice, and you can be surprised as you like—

Senator KIM CARR: No. I will be surprised when all of these resources here, that the officers of this fine organisation cannot tell me the day on which they advised the board of the decisions that the management team had taken.

CHAIR: I do not know what I did last Tuesday; I do not always look at my diary.

Senator KIM CARR: I bet you they do. I bet, Dr Marshall, that you do know what you did last Tuesday.

Dr Marshall : Actually, Senator, it has been rather a hectic time.

Senator KIM CARR: What was the day in which you advised the board is the specific question, and you are trying to tell me you cannot remember.

CHAIR: Senator Carr! They have taken it on notice!

Senator KIM CARR: They cannot remember—

CHAIR: Stop badgering the officers.

Senator KIM CARR: Tell me this. What was the day on which you advised the minister?

Mr Roy : Sorry, I can complete the previous answer. I have just been given advice. It was Tuesday, 2 February, when formal consultation happened with the board.

Senator KIM CARR: Thank you very much.

Mr Roy : That does not mean that there were not some prior discussions with the board, but—

Senator KIM CARR: I am sure that is right. I am sorry, that is what I expected. You could tell me, precisely.

Mr Roy : I could, because I have great assistance there.

Senator KIM CARR: I am not surprised that you could do it! But what was the day on which you told the minister?

Ms Bennett : We briefed the minister's office by telephone on Friday, the 29th. Formal briefs were provided on Monday, the 1st, and a subsequent update on Tuesday, the 8th.

Senator KIM CARR: Thank you. Because the minister, I think, is on the public record as saying it was the day before, or was not told about it until then. I will check the Hansard on that.

Senator WHISH-WILSON: The minister and the secretary of the environment department saw it on Monday.

Ms Bennett : So the department—

Senator KIM CARR: But you are saying that it was a bit earlier than that?

Ms Bennett : The date of the briefs that SARA provided into the minister's office were Monday, 1 February, and Tuesday, 8 February.

Senator WHISH-WILSON: So Dr Dickson and Mr Thompson were both given briefs on 1 February.

Dr Wonhas : That is a different department. That is the environment department.

Ms Bennett : That would be the Department of the Environment.

Dr Wonhas : And I briefed them.

Ms Bennett : So, for clarification, I was referring to our minister.

Senator KIM CARR: Was the Prime Minister's office advised?

CHAIR: As a matter of procedure, Senator Carr, I did promise Senator Wang that I would give him five minutes before the 3.30 break. I am just alerting you. Do you reckon I am going to be able to do that?

Senator KIM CARR: Of course I will make sure he gets a turn. I understand we have to share this.

CHAIR: Thanks.

Senator KIM CARR: I am interested in following up: what was the date on which you advised the Prime Minister's office?

Ms Bennett : We briefed Prime Minister and Cabinet on Monday, the 1st, and Tuesday, the 2nd.

Senator KIM CARR: I might turn to your partners, as you described them. What was the day on which the Bureau of Meteorology were briefed?

Dr Wonhas : I had advised Dr Vertessy the day before the public announcement.

Senator KIM CARR: The day before?

Dr Wonhas : Correct.

Senator KIM CARR: Is there any reason why you gave them such short notice?

Dr Wonhas : As you would appreciate, this is a very sensitive matter. We were frankly quite concerned about the messages reaching staff before they heard from management, so we tried to keep this information relatively tight beforehand.

Senator KIM CARR: They are partners, as you say. They funded a great deal of this research.

Dr Wonhas : That is correct.

Senator KIM CARR: Have you ever had a problem about leaking from the bureau before?

Dr Wonhas : No, Senator.

Senator KIM CARR: But that is what you are saying, really, isn't it? You were worried that the story would leak.

Dr Marshall : Just to go back to what I said earlier, this is the very first step in a process. The second step in the process is to engage more deeply with our partners to ensure that these processes continue.

Senator KIM CARR: Dr Marshall, was it your intention to announce this last Thursday? You were saying before that your hand was forced a bit. When did you intend to announce this?

Dr Marshall : We were planning to send out that all-staff email on that day, but I believe the media leak happened several hours before.

Senator KIM CARR: So you had always planned to put it out on the Thursday of last week.

Dr Marshall : I do not know if—

Senator KIM CARR: On a parliamentary sitting day the week before estimates, you planned to distribute an email of this type. Is that what you are saying to me—that you chose to do it that way?

Dr Marshall : The planning process, the data gathering and the strategic discussion were not at all related to the sitting week or the estimates date. It was related to the operation of CSIRO. Once we realised that people's jobs could be impacted we felt it was very important to communicate that to staff as soon as possible.

Senator KIM CARR: I am surprised that you chose to release it on Thursday and that you actually set out to do that in that way. Of all of the things you have said today, that has been quite extraordinary. It was a deliberate decision to release it in the middle of a parliamentary week—the week before estimates. You chose to do that.

Dr Marshall : We chose to make the announcement pretty much as soon as we realised that people's jobs could be affected by decisions.

Senator KIM CARR: I see. So this is a question of openness and transparency that you are referring to, is it?

Dr Marshall : I believe I answered your question, Senator.

Senator KIM CARR: Can I ask you about the conversations that you had with alternative partners to this. If I understand you correctly there has been no conversation up until this point about people that might take over these roles.

Dr Wonhas : As you have already highlighted, we have a very close relationship with the Bureau of Meteorology. We certainly have, on a hypothetical basis, explored alternative arrangements before.

Senator KIM CARR: Hypothetical?

Dr Wonhas : Correct, Senator.

Senator KIM CARR: That means you have not talked to anyone.

Dr Wonhas : That is not what I have said, Senator.

Dr Marshall : Again, we are at the beginning of this process. As I mentioned, the second step in the process is the consultation with our partners.

Senator KIM CARR: I will leave it on this point: at your first appearance you said to us that you saw your role as one of stabilising the organisation. Do you recall those words?

Dr Marshall : Yes, Senator.

Senator KIM CARR: You said:

… my first priority is to try to stabilise the organisation so that the scientists and the great people of CSIRO can get on and focus on what we do best, which of course is creating great technology and solving critical problems for our nation. There are great and dedicated people across the organisation, many of whom are lighthouses of international excellence. They have been through a tough year and it is up to all of us to remind them of just how crucial they are to our nation's future.

In retrospect, do you really think that sending out that email the way you did fulfilled your ambition to stabilise the organisation?

CHAIR: Are you asking for an opinion? It is subjective.

Senator KIM CARR: I am asking this directly: have you stabilised the organisation as you said you were going to do at your first appearance here at estimates?

CHAIR: I am not sure that you are not asking for a subjective opinion. If you want to reframe it I will be happy—

Senator KIM CARR: It is a simple proposition: do you believe that your actions stabilise the CSIRO?

CHAIR: You are asking for an opinion.

Senator KIM CARR: No. Is that your intention?

CHAIR: You are asking for Dr Marshall's—

Senator KIM CARR: Is that your intention: to stabilise the CSIRO by these actions?

Dr Marshall : I sent out three all-staff emails and perhaps, if the committee will bear with me, that will help answer your question. This is about strategy, and the first all-staff email I sent out in the new year was reminding everyone that last year we had spent about six to eight months developing the strategy, involving all 5,000 team members across the organisation, and our partners, in delivering the strategy.

The most difficult question that we had to answer in that crowdsourcing process across all 5,000 people—so every team member had a voice—was: is CSIRO like a university? Do we do research and science? Is that all we do, or are we something different? Do we do research and do we take responsibility for delivering those wonderful inventions and that wonderful science to solutions and impact? In other words, do we do invention and innovation? That was really the big question. The overwhelming consensus across the organisation was that we are an innovation organisation. We do both. That is not a new thing, Senator. Almost 100 years ago we focused on solving the prickly pear problem: great science, great solution. We do not bat flies away from our faces anywhere near as much today as we did when I was a child, because we introduced the dung beetle. Again: fabulous science, fabulous solution. That is the fundamental difference between CSIRO and a university. So I reminded the staff of that fundamental strategic decision, that fundamental shift. I reminded them of the wonderful achievement that we made, being honoured by our government with some of the NISA initiatives, being given responsibility to increase funding into the digital area, given responsibility to carry pretty much the only science accelerator program in the nation across to the universities and the other PFRAs, and to develop a national innovation fund to help the translation of science into solutions.

I also reminded them that there were consequences to the strategy and that we had gone through a long planning process, and I believe that was reported in the media last year as 'deep dives'—that Mr Roy alluded to. All of this is in response to last year, which was about new strategy. Unfortunately, as all organisations must do within a finite funding envelope, when we choose to shift priorities to one area it means we must reduce effort in another area.

Senator KIM CARR: Thank you very much.

CHAIR: Senator Wang.

Senator WANG: I welcome the announcement that CSIRO is going to change its focus from pure science to innovation and that it will deliver that science and invention to places where it can actually have an impact and turn into true innovation. My first question is: does CSIRO have a budget for shark-related research?

Senator MARSHALL: For shark-related research? I believe Dr Wonhas is the expert in this area.

Dr Wonhas : We do not have a dedicated budget towards shark research but I think we are a significant contributor to shark research in Australia.

Senator WANG: You do not have a budget, but do you a measure of how much money you have spent on shark-related research?

Dr Wonhas : I do not have the information at hand but I am very happy to take that on notice.

Senator WANG: Yes, please. What are the focuses of the shark-related research to date?

Dr Wonhas : What we are trying to do with regard to shark research is actually understand the movement and biology of sharks. We have a very successful tagging program of sharks that has helped us understand, and greatly enhanced our understanding of, shark movements around Australia.

Senator WANG: Given that you are going to shift your focus into finding practical solutions, do you think there is any benefit if CSIRO can shift its focus on shark research to mitigation of shark attacks on humans?

Dr Wonhas : As we discussed the other day, we had a look at a range of different technologies currently out there that try to protect humans from shark attacks other than physical barriers. It is actually our view that it is very difficult to protect humans from shark attacks. Even if we found ways to protect humans against sharks it would be very costly and, depending on the measure taken, there may also be side effects that need to be considered, for example, on other marine species.

Senator WANG: I am glad you said that it could be a costly way to mitigate shark attacks. That is where potentially money could be made, don't you agree, if you found a practical solution?

Dr Wonhas : I will not go into the cost-benefit analysis of saving a life by preventing shark attacks through maybe other measures. I remind you that there is already significant investment going into understanding and promoting shark deterrents, in particular from the New South Wales government and the WA government. I would have to get the figure for you, but it is in the magnitude of $10 million to $20 million announced. Actually our contribution to this work is we are working very closely with the community to try to understand the efficacy of those different deterrents.

Senator WANG: Many of the deterrent technologies are actually personal equipment, snake oil spray, wetsuits et cetera.

Dr Wonhas : I am sure there would be what you would refer to as snake oil technologies out there, yes.

Senator WANG: Does CSIRO play a role in informing Standards Australia of appropriate testing benchmarks for new technology, new equipment and new products out there?

Dr Wonhas : We are currently not playing a formal role in advising Standards Australia.

Senator WANG: Do you think CSIRO should be playing a role, given that CSIRO is the leading science and technology organisation in this country?

Dr Wonhas : CSIRO is very comfortable to work with our collaborators. That is actually another NESP hub to inform state governments and the federal government so, yes.

Senator WANG: Do you think there will be a potential benefit if there is a dedicated budget for such a task?

Dr Wonhas : If there were investment into this type of research, we would have to obviously weigh that up against all the other priorities and make a decision.

Senator WANG: Ultimately who makes that decision?

Dr Wonhas : It depends really on the size of the decision. We have some fairly clear guidelines: smaller financial decisions are done by our program directors or business unit directors and larger decisions are taken by me, the chief executive or even the board.

Dr Marshall : Senator, can I answer your question a little more broadly?

Senator WANG: Yes.

Dr Marshall : It is an important question. Something we wrestle with inside CSIRO frequently is where to prioritise our research and where can we have the biggest impact. It pretty much always starts with: what does Australia need the most? We have some guideposts though and some road maps that really help. There are the national science priorities: for example, food, soil and water, transport, cybersecurity, energy, resources, advanced manufacturing, environmental change and health.

We must always balance our efforts for the most return to Australia, and that is triple bottom line—so not just financial return but societal benefit to Australia. For example, we often combine areas such as advanced manufacturing and resources. You may have read about the titanium sternum we created that saved a man's life—his sternum was replaced and without that operation he would have died. We also saved a man's leg by replicating a titanium heel to save his leg being amputated. In our health area, we developed unique sensors and digital technology to improve the mortality in the ER; I think showing some of the first scientific evidence that lives could be saved by data mining. We must always balance these priorities, so in the case of sharks, how many lives could we save by doing this and how much resource would we need to divert from other areas where we could perhaps save more lives? This is a difficult balance, and one of the big challenges that we have in, frankly, running the organisation.

Senator RICE: I want to start off with some clarification on the CSIRO climate cuts. We have the Oceans and Atmosphere Flagship which has currently got 420 staff, approximately?

Dr Marshall : I think it is 422 but I will check with Mr Roy if you need exact numbers.

Mr Roy : That is indicative.

Senator RICE: Yes; ballpark. Within that, there are multiple programs, of which there are two core climate science programs, as I understand it, which are Oceans and Climate Dynamics and Earth System Assessment.

Dr Marshall : Correct.

Senator RICE: I understand that the staff in those two core science programs is around 140 FTE?

Dr Wonhas : Yes.

Senator RICE: Could you table the documents relating to your deep dive process?

Dr Marshall : Perhaps Mr Roy could briefly outline the criteria of the deep dives. That might help with the line of questioning.

Mr Roy : I am very happy to do that. The difficulty with us tabling documents in full is that a lot of them are commercial-in-confidence because they actually pick out target companies that we are seeking to partner with, target organisations. It is a little bit like a prospectus that we are asking these business units to come up with, in terms of what they were.

Senator RICE: Could we have redacted versions of them?

Mr Roy : We will take that on notice and check the basis of it. We also ask those leaders to comment on capability areas that they would expect to grow and shrink, and, given that they are evolving and go to informing discussion, where we have not gone forward with those changes I think it would be inappropriate to staff to share that at the moment given it is not an action that is going to play through. I think we need to be very careful. We will take it on notice though.

Senator RICE: We might put in an order for production of documents and then you will go through that process and work out what would be appropriate to share with us.

Mr Roy : We will follow the right process to do whatever we need to do.

Senator RICE: What was the level of cuts indicated for that deep dive process—the indicative level through that process with those two climate science programs?

Mr Roy : Just for clarification, are you saying what came out from the executive?

Senator RICE: Yes. After the deep dive process that you say was completed by December, I am just interested in what sort of level of cuts was being proposed to the climate science programs through that deep dive process?

Mr Roy : I would say, between the end of December and when the final decision was taken at the end of January, there was not a material difference in that particular part of the portfolio, from what the outcome has been. Dr Marshall released a net change of 65 people across that business unit.

Senator RICE: I am specifically thinking about the cuts—we have 100 FTE cuts approximately, I understand, to the existing climate science program. Perhaps you would jump forward and see that was what I understand was communicated to staff, that there would be 100 FTE from the existing climate science programs.

Mr Roy : Let me clarify there; we said approximately 100 across the whole business unit. You are correct; two of those programs are around 140 FTE; we do not expect all of those changes, the 100—and I will keep reiterating, it is a net 65—to be placed across those two programs of the business.

Proceedings suspended from 15:30 to 15:45

CHAIR: I welcome back the officers of the CSIRO. Dr Marshall, I believe you have some additional evidence?

Dr Marshall : I am sorry I could not give you the exact date of the first discussion with the board. It was 8 December, which was our December board meeting. My chief executive report, bearing in mind we were part of the way through the deep-dive process—

Senator KIM CARR: That was still the at the options stage, wasn't it?

Dr Marshall : Yes.

Senator KIM CARR: Have you be able to confirm when you told the board of your specific proposals?

Dr Marshall : I think Craig already answered that.

Senator KIM CARR: You have? You are not changing your evidence on that?

Mr Roy : Formal consultation happened on the Tuesday, the date we put in the previous evidence, two days before the announcement.

Senator KIM CARR: Thank you; that is all I need.

Senator RICE: Diving back into the deep-dive review: specifically, I want to know whether the findings of that deep dive support a hundred-person cut to the climate science programs.

Mr Roy : Let me try and interpret a little bit around the question. My interpretation is, 'Was the proposal put forward by the oceans and atmosphere business unit the same as the outcome?'—was that the question?

Senator RICE: Presumably there is a bit of analysis in the review, and then you have findings at the end of it with the areas to be cut and growth areas.

Mr Roy : The findings coming out of that were that we would grow a number of areas and, specifically on the O&A, there would be a reduction of the order of 100 FTEs, with a reinvestment of 35. For the specifics at program level—you mentioned the programs within that business unit before—I would have to ask Dr Wonhas to talk to that.

Dr Marshall : Would it be helpful to describe some of the areas?

Senator RICE: No, that is fine. The results of that were, at the end of December, after that deep-dive review, you came to a position of cuts of 100 and an increase of 35 in other areas.

Mr Roy : Before Dr Wonhas picks that up, just to correct something: it was not the finalisation at the end of December. We were still at the options phase and we went back to a number of business leaders and asked them to do some more work on some of those options. We were still working up options at that stage, just to clarify the record.

Dr Wonhas : To add on another clarification, Senator, you were referring to a hundred-FTE cut in the climate science area. I should also stress that this is preliminary, because we are going through the process of consulting with both staff and external stakeholders on how we manage the transition. At the moment our hypothesis is that the two programs you referred to—ocean and climate dynamics and earth system assessment—reduce by half. That is not a complete cut, but it is a significant reduction. The remainder of the reduction will then come from the remaining three programs across that unit.

Senator RICE: Thank you for that. Was the chief of the Ocean and Atmosphere Flagship, Ken Lee, consulted with in the process of reaching that decision to cut 100 staff from his flagship?

Dr Wonhas : Dr Lee, as part of that already referred to deep-dive process, put a suggestion forward to the executive team, as Mr Roy has explained. He was then asked to make a more significant reduction in his business unit for reinvestment into other business units.

Senator RICE: When was he asked to do that?

Dr Wonhas : I spoke to him—I would have to look up the precise date for you—and asked him, prior to Christmas, to explore options for how that would look if a more significant cut was asked for. He then responded to me and that information flowed into the discussion of the executive team at the end of January.

Senator RICE: Regarding the 100 cuts and the reinvestment of 35, what proportion of those coming from the climate science programs went to the executive team?

Dr Wonhas : What went to the executive team was an indication from Dr Lee that, given the criteria that we are applying for the deep dive process, a large share of those reductions would come from the climate area.

Senator RICE: 'A large share' meaning—

Dr Wonhas : A large share of the 100.

Senator RICE: The 65 that you are looking at at the moment, or more than that?

Dr Wonhas : At that point in time we did not quantify that in detail, because, as you appreciate from the discussions that we are having now, it is very difficult to do that because it requires consultation and drawing on a lot of sources of information. But I think there was an awareness that it would be a significant reduction.

Senator RICE: Were specific research groups identified to be cut?

Dr Wonhas : No, that was not the information that went back to the executive.

Mr Roy : This was an evolving process that happened. To categorise the discussions with Dr Lee and the deep dive: he was accompanied and supported by his broader executive team. I would hate to couch the picture that this was purely the work of the leader. There were some proposals in there about what we thought was important. Chair, if you comfortable, I am happy to go through some of those key criteria that we used. I think it is important for the committee to understand.

There were proposals that we needed to make some changes to the climate area of CSIRO They came from the business unit. As Dr Wonhas put into evidence, the executive team then asked Dr Lee, as the leader of that team, to say, 'If we went a bit further than what you are saying, what would the consequences of that be and what would that option look like?'

The overarching criteria we use is relevance—the relevance of CSIRO and what we deliver to the strategy, and the relevance of what the nation asks us to do and the impact we derive from that. There are six key areas that we examined across the whole nine business units we have. There is the impact value that comes from the investment in the science that we do: that it has clear, significant value to the Australian economy, society and/or the environment. Customer need and market attractiveness is the second area. That talks about: where are the customer needs going based on where the science is today; what is the market attractiveness; and are we seeing changes in the market—whether it is manufacturing, agriculture, climate research or health research, for example. The third area is how competitive are we globally—this is clearly one where we rated very strongly in the—

Senator WHISH-WILSON: Who would the customers be for climate science research?

Mr Roy : That is a very good question. Because much of the science is foundation science it provides a platform for others to leverage, so it could be Australia's agricultural sector or the global agricultural sector that takes the underpinning science and then provides informed advice to that particular sector on how they might work on a seasonal or longer term basis, or how we might have to adapt some grains or stocks. It might be the building sector. It might be a range of different sectors. It could be public policy, as well. There are a range of potential customers, and we were looking at what interest those customers had in advancing where we are now.

The fourth criteria is the performance of the particular business unit against what its normal performance indicators are. This involves financial attractiveness—we live in a real world, as you would fully understand—and what is the value that is created from a financial standpoint. We need to be able to fund the business. What is the financial investment required by CSIRO on a whole-of-cost basis to the organisation? Because, again, we were looking at this very important part of the business in the context of all things we do. Whether it is the examples Dr Marshall used before around the marriage of health and 3D titanium printing or whatever else, these are big responsibilities—to try to weigh up the various options—

Senator WHISH-WILSON: Is there any public good science associated with this? I am not being facetious.

Mr Roy : We understand.

Senator WHISH-WILSON: Customers of climate change research are not just human beings; they are whales, penguins and all sorts of things that we study. How do you factor those into your considerations?

Dr Marshall : The notion of a 'customer' is a new one for many scientists. It is an important cultural shift for CSIRO. Last year that was another one of the really thorny discussions hotly debated in the crowd platform, because you are quite right: sometimes the customer is the environment, animal life or plant life. The idea of a 'customer' is more to instil a notion that it is our responsibility to always understand that we are not doing the research out of curiosity. We are not doing the science for entertainment reasons. We are doing it because we have a mission and an objective to deliver value. So there are really three questions we have posed: who is the customer, why do they care about what we are doing and what value are we delivering?

Senator WHISH-WILSON: One of the most famous examples is the discovery of wi-fi. It was discovered out of curiosity by astronomers. How does that fit in with the analysis you just gave us?

Dr Marshall : Wi-fi is perhaps not the best example for that argument. I do agree with the argument in part. One of the inventors of wi-fi said, 'You got it wrong. We looked at our networking capability and intentionally decided to develop this, thinking it would be an opportunity.' So it is not the best example. To use my own example, I invented a laser technology which changed the way eye disease is treated and saved the sight of many people. I did that completely by accident. I did not know what the application would be when I started. I agree with you that oftentimes you do not know what to use great science for, so you always have to have a little bit of blue sky.

Senator WHISH-WILSON: Think you, Dr Marshall. I will take this up with you later.

Senator RICE: Thank you, Mr Roy, for going through those criteria that informed the deep-dive process. I have been told that that deep-dive process ended up with a level of staff cuts for the Oceans and Atmosphere Flagship of no more than 35, that it was completely unexpected for it to be facing a reduction of 100 staff and that at staff a meeting after your announcement, Dr Marshall, Dr Lee said that 100 EFTs would be cut from the two climate programs of the flagship and that the changes were more significant than anticipated in the deep dive, which identified 30 reductions and 30 increases with no net change. I ask for your response to that.

Dr Wonhas : I will respond to that. It is correct that the plan that the leadership team of the oceans and atmosphere unit put forward contained a cut of 35 staff. I would have to look up exactly where they would have been coming from but probably primarily from the climate space. The additional reduction was a task that this team was given by the executive.

Senator RICE: When was that communicated to Dr Lee?

Dr Wonhas : As I said before, I spoke to Dr Lee prior to Christmas to investigate that—

Senator RICE: But when was your final decision on the cuts of 100 to what seems to be the climate science programs at this stage? You might have moved somewhat from that, which I am pleased to hear, but when was that decision communicated to Dr Lee?

Dr Wonhas : Again, I would have to check the records to find out precisely, but I would think that within 24 hours after the decision of the executive team I would have informed—

Senator RICE: That was the executive team meeting on 29 January?

Dr Wonhas : That is correct. I am sorry, I think it was 27 January. We can check those dates but that is very close.

Senator RICE: Could I request documentation of the communication to Dr Lee?

Dr Wonhas : Yes.

Mr Roy : To clarify the record: most of the discussions that were had, in terms of communicating the outcome, as I understand it, were in a telephone call between Dr Wonhas and Dr Lee. Is that correct, Dr Wonhas?

Dr Wonhas : To make sure that everyone is on the same page, I think I have written this down so I am sure I can find that for you.

Senator RICE: Can I clarify that in those telephone calls to Dr Lee your position was that those 100 cuts were to occur within the two climate science programs: the Earth System Assessment and Oceans and Climate Dynamics?

Dr Wonhas : No, I do not think it was that specifically identified. I would have referred to the criteria that Mr Roy has mentioned to actually identify in detail the areas where those reductions would be coming from.

Senator RICE: But you would acknowledge that the majority were going to come from those two programs?

Dr Wonhas : That was certainly the expectation.

Senator RICE: What were your expectations of where the majority would come from? What proportion of the 100 would you have expected to come from those two climate science programs?

Dr Wonhas : Maybe 70 of the 100.

Senator RICE: And out of the two programs that have 130 staff?

Dr Wonhas : 140. Yes.

Dr Marshall : As I mentioned earlier, it is about half of the labour capability—the head count—in measurement and modelling capability in oceans and atmosphere.

Senator WHISH-WILSON: With your indulgence, Senator Rice, can I ask Mr Marshall how many of those are coming from Tasmania and other geographical locations?

Dr Marshall : I do not have that detail.

Dr Wonhas : As I said, we have not yet identified the individual staff members so it is very difficult for me to answer that question at this point in time but—

Senator WHISH-WILSON: Could you provide a breakdown by location as it is now in terms of proportions?

Dr Wonhas : Let me try to find something for you on that. In the oceans and atmosphere unit we have 193 FTEs located in Hobart. They might obviously be affected.

Senator WHISH-WILSON: Can you break those down into the Oceans and Climate Dynamics program and the other program Senator Rice talked about?

Dr Wonhas : That is correct. They would be split across those two programs and there would be some in the other programs. What we do not know at this point in time is where the 35 additions will happen. Some of them might happen in Tasmania.

Senator WHISH-WILSON: And Aspendale and the other locations?

Dr Wonhas : I do not have the figure here for Aspendale but we can certainly provide the staff numbers at Aspendale at the moment.

Senator RICE: After the cuts have been made, do you know whether there will be a critical mass of staff remaining at Aspendale?

Dr Wonhas : I do not know at this point in time. What we have decided to do in terms of process is firstly we want to ensure, given the circumstances, that we maintain the best possible capability for the nation and then we will review the viability of the different sites.

Senator RICE: Of the 35 new positions, will any be going to climate research programs?

Dr Wonhas : That is ultimately a decision that needs to be made in the coming weeks.

Senator RICE: What is the criteria for those new positions?

Dr Wonhas : The criteria are the same criteria that Mr Roy has referred to which is really our investment criteria.

Dr Marshall : I appreciate, Senator, that it must be a bit frustrating that we are not able to give you more concrete answers but, again, we are very much at the beginning of this process.

Senator RICE: In your current situation, it sounds like there has been some shifting and that you are now looking at cutting fewer staff from the climate science programs?

Dr Wonhas : No, Senator. The numbers that have been communicated to oceans and atmosphere at the end of January are consistent with the numbers that we are talking about now. I think what might have happened is some of the other communications that have unfortunately gone out have basically confused this matter.

Senator RICE: The labs that are being affected are in Hobart and Aspendale. At Aspendale, in particular, the research there is almost entirely in those two affected programs; hence, my question as to whether you think there will still be a critical mass of people available to continue those labs at Aspendale.

Mr Roy : Senator, just to clarify the question from you before: we have 100 people as at the end of 2015 at Aspendale and 290 in Hobart, which is clearly broader than O and A. It was signalled to the organisation, I believe, in 2014 that it is our long-term strategy, quite separate from this, to move our Aspendale staff. It is a very old site, as you may well know. It is not a site that, if I were a world-leading scientist coming into a new organisation, I would be proud to walk into. It needs work. We wanted to relocate those staff in good time to Clayton, anyway, and we signalled that quite separately.

Senator RICE: You are looking at your current plan to have only about half of the staff. If you were cutting half of the staff from those two programs, you would be having a staff cut of at least 50 from that 100.

Dr Wonhas : It depends on how it exactly plays out, but that is a possible outcome. Can I just also clarify, because we have spoken about this before: one of the nationally important records is kept at Aspendale, which is our atmospheric record. So, even if we moved away from the site, we would certainly ensure that that record gets maintained in an appropriate way.

Senator RICE: That would be quite a significant move, I understand. Incidentally, Dr Marshall, have you visited the Aspendale lab?

Dr Marshall : Senator, I am sad to say that I have only been able to visit about 22 of the sites. There are a lot more than I realised and they are a lot further away than I realised.

Senator RICE: So you are having this very substantial impact on these scientists, without visiting them. Do you know much about their work?

Dr Marshall : Probably not as much as I should. Although, I would like to correct one of the media announcements today that I do not have any scientific qualifications at all. I do actually have a PhD in physics and I was a very active scientist for a long time.

CHAIR: It is nice to get that on the record.

Senator RICE: Following up on some of the questions that Senator Carr was asking about Cape Grim: your clarification statement, Dr Marshall, said that the Cape Grim station is to be retained, as is the RV Investigator. How many staff are required for the research functions associated with Cape Grim and the Investigator? Are we going to be able to have enough of those staff, given the magnitude of the cuts that you are outlining?

Dr Marshall : Senator, I will get Dr Williams to answer detailed questions about the RV Investigator. As for Cape Grim, one of the things we are looking at with Cape Grim is to use more technology to help us gather data, potentially with less manual labour required.

Dr Wonhas : Maybe to build on Dr Marshall's statement—again, I know this might be frustrating—we are currently working through this to really understand the requirements, but—

Senator RICE: 'To really understand the requirements', after having announced these massive cuts! It seems to me that you should have understood those requirements beforehand.

CHAIR: Excuse me. We will keep to the questions, we will lower the ambience and we will just stick to how we go.

Dr Wonhas : Senator, just to give you an indication of the level of engagement currently happening at Cape Grim: this financial year the bureau is supporting us to the tune of $460,000 at Cape Grim and we are contributing $234,000 for the measurement component in conjunction with the bureau. That is probably one indication of what is currently ongoing at Cape Grim.

Senator RICE: As I understand it, there are basically three types of scientific jobs at Cape Grim. There is the actual collecting of samples, which Dr Marshall has said you are going to seek to further automate—but I understand that is pretty automated anyway—translating those samples into data, which I understand occurs at Aspendale at the gas lab there, and then the analysis and interpretation of the data. Are you still intending to maintain staff doing all three of those types of roles?

Dr Wonhas : We will ensure that the vital measurements will continue. What the exact nature of our work going forward is going to be, as I said before, is subject to the work that we have just started.

Senator RICE: When you say 'of a vital nature', what do you mean?

Dr Wonhas : That is something that we obviously need to discuss with the people who are working in the space.

Senator RICE: Again, I am astounded that you are foreshadowing cuts of this magnitude without understanding what the consequences of these cuts would be.

Dr Wonhas : We have taken an overall look at the organisation. We are now in a position to work with staff and our stakeholders at the next level of detail. What I have just provided you is that we believe there is a total effort of around $700,000 per annum going into the work, together with the bureau, supporting Cape Grim.

Senator RICE: My question was that there are three types of jobs. From what I could read between the lines—correct me if I am wrong—you are essentially saying that you have a commitment to maintain the collecting of the data at Cape Grim, presumably maintaining the gas lab to turn those samples into data. Do you have that intention to maintain that level of work?

Dr Wonhas : As I said before, we will work through the specifics, but since you mentioned the gas lab, to give you at least a flavour of the kind of discussions that we are currently having, we already have had an informal exchange with the bureau concerning whether they, for example, want to take on some of the measurement equipment that we have. This is not a decision—

Senator WHISH-WILSON: Was this in the last few days, as a matter of interest?

Senator RICE: It is part of the transition program you have realised is necessary.

Dr Wonhas : That is correct. To avoid any confusion here, we have not made a decision yet. I think it is important at this point of time to look at the different options and the implications of these options and then to take a decision on those. That is what we are currently doing.

Senator RICE: I am glad to hear that. In proposing this reprioritisation, is it your intention or do you feel that this work no longer needs to be done in Australia, or just that CSIRO should no longer undertake it and other institutions should pick it up?

Dr Wonhas : To be very clear, we believe that the measurements of CO2 concentration in the atmosphere and the other measurements that, as you would know, are done at Cape Grim are a very vital record for the nation. They are longstanding record and that needs to be maintained. The problem we are currently trying to solve is, in a frankly constrained environment what is the most effective way to maintain that service to the nation?

Senator RICE: What I hear you say is that if you are going to maintain that, the areas that you would see as being much more likely to be cut are the work of the scientists who are doing the interpretation and analysis of that data.

Dr Wonhas : If I start to speculate on what the outcome is, I think it can just start a lot of discussion that ultimately leads to nothing.

Senator RICE: Can I go back to my other question. If you did decide that that is no longer going to be done at CSIRO, do you believe that this work should still be done in Australia and that we should still have Australian scientists working on doing that analysis of the data, and doing the scientific research and writing papers, or that other institutions should pick up the work that CSIRO is currently doing?

Dr Marshall : CSIRO does much more than just climate measurement and climate modelling.

Senator RICE: But you have a world-significant team of scientists. The statement from the World Meteorological Organisation this morning underlines that.

Dr Marshall : We are in the top 0.1 per cent of world research in agriculture as well, and in a number of other fields—

Senator WHISH-WILSON: Which are all tied to climate science.

Dr Marshall : in which we are investing—for example, precision agriculture to better inform the farming community.

Senator RICE: Excuse me, Dr Marshall. We do not have much time, so I would like to stick to climate science at the moment.

Dr Marshall : My point is that we have to weigh up—

CHAIR: I point out that we have been back for half an hour.

Senator RICE: I have one question.

CHAIR: Senator Whish-Wilson came to me earlier and said he was speaking for the Greens here today. I take it that you are now speaking to the Greens today.

Senator WHISH-WILSON: I still have some questions.

Senator RICE: The area that I want to continue on is a similar theme and the area that we have also heard is proposed to be cut, and that is some of the modelling capability of the CSIRO. You have talked of the ACCESS model outputs continuing to be available for others to use. Do you intend to continue to employ scientists to have ongoing development of the models?

Dr Marshall : As I said at the beginning, in terms of headcount, the number of CSIRO team members working in measurement and modelling will reduce by about half. We are not stopping in either area, but we are reducing the labour content. At the same time, we are trying to be smarter about our use of technology and also leveraging the much broader community.

Senator RICE: I am specifically talking about computer modelling, which is all technology. Then you have scientists who interpret that and further develop the models.

Dr Marshall : Open sourcing is a very common way that many pieces of software are maintained and supported.

Senator RICE: Are you proposing that the CSIRO ACCESS model should have open sourcing in it?

Dr Marshall : The CSIRO access model is open sourced already. I was using that as an example. It is a great example of how the community can help support CSIRO. My point is that the output of environmental research in Australia is twice the world average, which is a phenomenal achievement. CSIRO is only 16 per cent of that output. It is a much broader community. Over the years more and more funding has moved away from CSIRO to the university sector, which is very natural. So we need their help to support the model. We are not stopping the model and we are not cutting climate science.

Senator RICE: Are you proposing to continue to put resources into ongoing development of the models? Because otherwise the model will quickly become outdated and irrelevant

Dr Marshall : The whole community contributes to the model.

Senator RICE: I am reading your answer as no, you do not intend to do that.

Dr Marshall : We are still working through the process.

Dr Wonhas : May I try to answer that question? Firstly, in the statement that Dr Marshall has made to staff earlier this week, I think we put on the record that we believe, as the national science organisation, that Australia needs access to a world-class climate model, because that is vital, as we all know, in particular to inform adaptation efforts. Similar to the discussion around Cape Grim, it is now our task to work out what is the most appropriate way to deliver that in the long run because, as we also know, this issue of climate change will be with us for a long time.

There are a number of different options on the table. At this point in time I do not want to exclude any. There is the option of continuing with ACCESS. There might be an option in working more closely with the UK Met Office, with whom we are already working very closely. If we go down that path, we need to ensure that critical things for us in the Southern Hemisphere, such as Southern Ocean dynamics, are appropriately reflected in that model. We also have probably a world leading capability in land-sector-atmosphere interactions. we need to work through what the best outcome is, but while we are making a reduction overall in the climate science area, there will be continued investment and we will ensure that that investment, amongst other things, achieves access to a climate model.

Senator RICE: How about the use of that model in the climate projection science—what are your intentions there? That is, actually turning the outputs of the model into products that are usable by the people who need to be adapting to climate change. That is absolutely critical to climate adaptation.

Dr Wonhas : Absolutely, that needs to happen. Since you want to have more detail on the process that is currently ongoing, I had breakfast with Dr Vertessy this morning and we spoke exactly about how we are doing that. We explored the option of whether the bureau or CSIRO provides that. At this point in time we are basically pursuing the both of those options.

Senator WHISH-WILSON: It is good that you acknowledge that, Dr Wonhas, because I think there seems to be some confusion around the idea that a lot of this science is only being done to prove that climate change is real, not that we actually need that science to combat climate change and use it for adaption and mitigation. I am glad you have admitted that, because there does seem to be a bit of confusion in the community on this issue.

Dr Wonhas : I am sorry about the confusion, but I hope my statement has been very clear on that.

Senator KIM CARR: Could I go back to the reduction in head counts in land and water and manufacturing divisions.? You have given me some figures before. Can I go to the detail there? In manufacturing we are talking about a net loss of 40, are we?

Dr Marshall : Yes.

Senator KIM CARR: And a net loss of between 40 and 60 in land and water—is that right?

Dr Marshall : I will clarify the land and water figure. I think the net number was about 50, but I will check with Mr Roy.

Mr Roy : That is correct.

Senator KIM CARR: We can agree that 50 is half of '40 to 60'. what particular areas of each of those divisions will those people come from?

Dr Wonhas : In land and water, again applying the criteria that Mr Roy has spoken about, there will be three programs in particular affected. They are the ecosystem program, the urban system program and the economic and social science program.

Senator KIM CARR: How many are in each of those?

Dr Wonhas : I can provide you with those figures. I do not have them off the top of my head.

Senator KIM CARR: And in manufacturing?

Mr Roy : To be very candid, I know that the leader of that business unit at the moment, Dr Keith McLean, is working through that with this BU, so I would not want to announce that here ahead of staff. To be very clear, I do not know—

Senator KIM CARR: Can you take it on notice?

Mr Roy : I can take it on notice.

Senator KIM CARR: In regard to manufacturing, the whole rationale within the political debate is about the importance of innovation to develop advanced manufacturing. As you know, this is a particular interest to me, given that in my time this was an area that was developed. It raises the question about priorities. It was clearly a priority under the previous government. It is no longer a priority under this government. Is that how it works?

Mr Roy : That is not how it is working inside CSIRO. In the reductions that were made through the integrated reform program—you might remember that we provided previous testimony about that—we effectively protected the manufacturing business unit, predominantly, from those changes. Any changes made there were through changes in the external market—their external revenue. We were not going to provide additional money to fill the hole that was coming from external revenue. In these most recent rounds of changes there were not quite specific interventions that said that we need to reduce it outside of where the market was taking us.

You spoke about priorities. We could provide this on notice—

Senator KIM CARR: I would appreciate it if you would.

Mr Roy : but one of the areas that we continue to provide strong support to is the manufacturing business unit.

Senator KIM CARR: Perhaps you could explain to me how that happens. The social and economic area was a another area of priority. Why are you reducing that?

Dr Wonhas : Social and economic science is quite important for a number of questions that we are trying to address as an organisation. We are trying to grow the amount of social and economic science that is working closely across all of the other areas of science, because that is often where the capability need is. Where we might rate the reductions is in science areas within that that are much less connected to the rest of the organisation.

Senator KIM CARR: So how do you pick that? How do you determine to reduce capacity in that area, given what you have just said about the importance across the whole organisation?

Dr Wonhas : We are looking at, for example, the current and historic deployment of staff and how they have connected across the organisation.

Senator KIM CARR: This is relatively new, isn't it?

Dr Wonhas : Social and economic science has been done for a long time within CSIRO. Bringing the whole group together—you are correct—is relatively new. What we want to do is to ensure that all areas of CSIRO are very well connected to this capability and that it is not an isolated capability.

Senator KIM CARR: Perhaps you can explain to me how it is that this function, which, it was felt, was necessary to be brought together very recently, is now to be disbanded. How do you get that sort of shift in such a short period of time?

Dr Wonhas : Sorry, Senator, I have not said that this is a function that will be disbanded. What I have said is that we are making some very targeted reductions in those areas that are not connected to the other parts of our organisation.

Senator KIM CARR: Surely, then, this is a reflection of government priority rather than your priorities? Under the previous government these areas were built up; under this government they are being reduced. Tell me that that has nothing to do with your relationship with government.

Dr Wonhas : The—

Senator KIM CARR: How do you determine the priorities if in one period, when the government has a particular view, these areas are expanded and this capacity is developed, yet when a new government comes along there is a reduction in these quite specific areas? Explain to me why that has nothing to do with the government. Is it just a coincidence?

Mr Roy : Across the nine national research priorities—I might have the terminology slightly wrong there but we both know what we mean—CSIRO plays considerably across food, soil and water, cybersecurity, growing. You know the story there. Part of our response was about the financial viability of these business units. When we see a change in the market, when we see a signal that funding is actually reducing, whether that signal is from industry customers, government customers—I put government as a customer—domestic customers or international customers, we need to respond and find alternative funding if we are to stay viable.

Senator KIM CARR: Then explain to me how it is reduced from those particular sources, particularly from government. If you now regard government as a customer—and given that you are public enterprise, a public statutory corporation, I find regarding government as a customer unusual—what have been the factors that have led to these changes in priority, particularly given your customer base?

Mr Roy : Let me clarify—and I will hand over to the Chief Finance Officer or Dr Wonhas to give the specifics of the answer.

Senator KIM CARR: Take it on notice; we are short of time. I presume you will have some detailed statistics to provide on that.

Mr Roy : To clarify 'customer', there are two separate relationships that we have with the government. One is, as you spoke of, around block funding. But government also come to us to say, 'We've got particular problems to solve and we've a cheque to write to help you solve them.' I was referring to that capacity.

Senator KIM CARR: Okay. And a considerable amount of your so-called external revenue comes from government contracts with other government departments—is that what you mean?

Mr Roy : That is correct.

Senator KIM CARR: So you are saying those other government departments have also reduced their moneys?

Mr Roy : There has been a shift in priorities there, Senator, that we have had to respond to in part—

Senator KIM CARR: Perhaps you can explain to us how that actually works.

Ms Beauchamp : I think there are probably a couple of facts that need to be clarified. One, funding for CSIRO goes up over the period of the forward estimates. So that is the bottom line.

Senator KIM CARR: There was a $115 million reduction announced in 2014.

Ms Beauchamp : Can I just say that over the forward estimates—going forward from here—the funding for CSIRO goes up. The second thing is that it is very clear what the government priorities are through a number of mechanisms. They are all available on the website, whether they are in the Statement of Expectations or the Statement of Intent from CSIRO. Certainly there is a focus on advanced manufacturing, which you would also see through the NISA agenda and certainly the CRC program.

Senator KIM CARR: Thank you, Madam Secretary. I just cannot see how that follows through to the decisions that have been taken. That is the point I am trying to get to: how do you account for this? If they are saying it is because there is less contract revenue coming in, and that has led to a reduction of staff, let us see what the detail of that is.

Dr Marshall : If I may—and I believe you know some of this already—CSIRO has a well-established co-investment model. We have had that for about a decade, I believe.

Senator KIM CARR: Yes, but you got rid of the external funding targets at the time that you got rid of the big, hairy, audacious goals. The last CEO got into this sort of business.

Senator RICE: We are deep diving now.

Senator KIM CARR: Yes. That is called deep diving, indeed. It was Dr Garrett's expression, remember, about big, hairy, audacious goals—BHAGS. We were going to have them all over CSIRO. It led to the development of these so-called external funding targets, all of which have now collapsed. Are you telling me now that you will reimpose external funding targets as part of your strategic plan?

Dr Marshall : I was just remembering the BHAG. I think it was Josh Lerner 20 years ago that came up with that concept.

Senator KIM CARR: But Dr Garrett took it up with some enthusiasm as head of CSIRO. It was met with a similar reaction to what you are getting at the moment, I might suggest to you.

Dr Marshall : What I was going to say to you was that some of our external revenue comes from state governments, some comes from federal governments, some comes from foreign government and some comes from industry. We also get some philanthropic funding as well. That is the revenue envelope, if you like, and that changes. We have to project into the future. It is subject to market shifts. Part of the process of planning forward, not knowing how the market is going to change—we have seen a lot of change already this year—the responsibility of the management team is to make sure that we balance those priorities across the portfolio of investments and look at the potential funding revenue grants, or whatever, that feed each of those elements of our work. If there is a decline in the global market, or a shift in the global market, that impacts revenue. If that happens, people lose their job in those business units.

Senator KIM CARR: Are you telling me external funding targets have been reimposed?

Dr Marshall : I am not saying there is anything about targets. It is just that, for us to do what we do to deliver the highest value to Australia, part of what we do is work with commercial companies, part of what we do is work with state and foreign governments. That determines our income.

Senator KIM CARR: I understand that, Dr Marshall.

Dr Marshall : When we have a good year, we get more money in and we are more able to invest more back into science, and that is better for the country.

Senator KIM CARR: I am asking the question: do you have external funding targets for divisions at the moment?

Dr Marshall : We do not have a target. General philosophy in co-investment is a way to validate the significance of an area. One of the challenges of evaluating the science or the importance of an area is by the presence of a need in that area. One of the ways that indicates the need is the market.

Senator KIM CARR: So you are measuring demand in terms of external revenue?

Dr Marshall : That is one measure. It is not the only measure, but it is one of the criteria that Mr Roy mentioned.

Senator KIM CARR: Your are off to Silicon Valley next week, aren't you?

Dr Marshall : I am.

Senator KIM CARR: You are heading up a delegation?

Dr Marshall : Not so much heading up a delegation, but I am part of a delegation.

Senator KIM CARR: What is the purpose of that?

Dr Marshall : It is Australia Week in the United States.

Senator KIM CARR: So you will be able to explain to them the success of this reprioritisation, will you?

Dr Marshall : I think that should be fairly easy in the US, given that 75 per cent of US funding goes to mitigation and only 25 per cent to measurement and modelling.

Senator KIM CARR: But given so much of the criticism coming out of the United States, this will be the opportunity for you to be answer that, I presume. Do you see it that way?

Dr Marshall : That is not the reason I am ongoing, but given that 75 per cent of their funding—

Senator KIM CARR: Who is on the delegation?

Dr Marshall : Do you mean from CSIRO?

Senator KIM CARR: Yes.

Ms Bennett : There are 16 CSIRO officials, including several members of the executive, business unit leaders and other senior managers from other areas.

Senator KIM CARR: And this is for the Australia Week celebrations in San Francisco, is it?

Senator Sinodinos: Is it the Australia-US Business Week?

Ms Bennett : Yes.

Dr Marshall : It is the Australia-US Business Week in the US—as a trade delegation.

Senator Sinodinos: Andrew Robb is coordinating this across a number of areas.

Senator KIM CARR: Where are you going with that—what cities?

Dr Marshall : I am going to San Francisco and then, also, Silicon Valley. Part of the purpose of the trip is the government delegation, the other part is to meet with some potential customers in the US, one of whom is investigating or looking at some of the work we have done in water, for example.

Senator KIM CARR: Can you tell me who is Mr Richard Archuleta? Is there a consultant you have put on called Richard Achelles? I understand he is an integration manager.

Mr Roy : Otherwise known as 'Ach' and he is the integration manager of Data61, is my understanding, but let me just confirm.

Senator KIM CARR: Is he on a short-term contract?

Mr Roy : He is on a contract.

Senator KIM CARR: Was it advertised?

Dr Williams : I can answer that question. 'Ach', as he is known, is on a short-term contract and actually leaves within the next week.

Senator KIM CARR: His contract finishes, does it?

Dr Williams : Yes.

Senator KIM CARR: Was it an advertised contract?

Dr Williams : No, it was not. It was an integration contract to help with the integration—

Senator KIM CARR: What was that for?

Dr Williams : The merger of NICTA and the digital productivity business unit.

Senator KIM CARR: What was the value of the contract?

Dr Williams : I have not got that with me. I would have to take that on notice.

Senator KIM CARR: I am told it was about half a million, is that right?

Dr Williams : I do not know.

Senator KIM CARR: But it was not actually advertised?

Dr Williams : No.

Senator KIM CARR: How many other consultants do you have on short-term contracts?

Dr Marshall : I would have to ask our CFO for that information.

Senator RICE: A lot of climate scientists?

Ms Bennett : Can I just check? I believe you are talking about short-term contracts rather than consultancies?

Senator KIM CARR: Let us just do it in the old-fashioned way. How many consultants do you have?

Ms Bennett : Our consultancies in the period from July to December were a total of five consultancies let during that period.

Senator KIM CARR: How much was the value of the consultancies?

Ms Bennett : It was $202,900.

Senator KIM CARR: Thank you. I am told this Ach's contract is around the half a million mark. Is that right? Maybe those figures are wrong.

Ms Bennett : I do not have that information. This would be—

Dr Williams : Ach was appointed by NICTA at the time, as soon as the merger was announced.

Senator KIM CARR: It was a carryover contract?

Dr Williams : Yes, it was a carryover. The estimate I have just been given is about $250K.

Senator KIM CARR: How many short-term contracts do you have? Is that on top of the consultants?

Ms Bennett : Short-term contracts in terms of employment style would be on top of the consultancies.

Mr Roy : Are you referring to staff who are on term?

Senator KIM CARR: I am interested in the short-term ones—the ones that have been put on in the last six months.

Mr Roy : I would have to take that on notice.

Senator KIM CARR: Thank you. And the total value, please, if you would not mind?

Mr Roy : We will do that.

Senator KIM CARR: And how many of them were actually advertised?

Mr Roy : Again, I would have to take that on notice.

Senator KIM CARR: Thank you very much. Is it not a part of the enterprise agreement that you actually have to consult with the union about significant staff changes?

Mr Roy : I have spoken to the unions earlier this week.

Senator KIM CARR: This is after the announcement?

Mr Roy : Yes, after the announcement. I do know that other members spoke to them after the announcement as well. Our obligation—and I would say we do have a good relationship with our staff association—is that after critical decisions are made, like this, then we will consult around how best to implement those decisions, and that is what we are doing now.

Senator KIM CARR: So you see the process as about implementation? It is not about the actual decisions?

Mr Roy : That is what the EBA says around critical changes.

Senator KIM CARR: Dr Marshall, at the last estimates hearing—and in fact at every estimates hearing—we have spoken about staff morale. Would you agree it is at a pretty low level?

Dr Marshall : At the end of last year, it was at a very high level but that is anecdotal—probably a little bit more than anecdotal because of the feedback I received. Following the announcements, I have received probably more positive emails from people than negative, but I have definitely received negative ones. It is inevitable with a change like this that there will be a decline in morale. I do not believe it is as widespread as, for example, the dip in morale when we did the IRP.

Senator KIM CARR: Tell me, what are you doing? Could you remind me of the measures you are taking to improve staff morale?

Dr Marshall : I think we have used the open crowd platform—that enables all team members to contribute to, for example, the strategy—as a conduit for better communication; and the open company philosophy which, obviously, in a way, led to the leaks in the media about these plans which are still in process. I think communicating more clearly and directly to staff, and being clearer about our intentions. It is a cultural change, to be sure, and it is inevitable that not everybody will be able to make that journey. It is very good, I might add, to have my new chairman—someone who is very experienced in managing cultural change, if you remember his journey with Telstra.

Senator KIM CARR: When you first appeared here you said you were on a two-year contract. That is halfway through now. Have you approached the minister about an extension?

Dr Marshall : I have not approached the minister.

Senator KIM CARR: Has the board?

Dr Marshall : I might refer to my CFO since it is about my situation. It would be better if someone else answered that question.

Ms Bennett : I am not aware of the conversation between the chair and the minister—I am not privy to that conversation—but I know that discussions are being had regarding Dr Marshall's contract.

Senator KIM CARR: I will put the rest on notice.

Senator RICE: I just have one point of clarification about the access models, which you were stating were open-source models. Are you certain about that?

Dr Marshall : I have not used it, so I am not certain, but that is what I was told. Perhaps Dr Wonhas can explain.

Dr Wonhas : Open source is a broad term, but what we are certainly trying to do is provide access to a lot of our university collaborators, for example, in the ARC centre for climate system science.

Senator RICE: I have been told that it is not an open-source model and, in fact, to be one would be in conflict with the agreement that you have got with the British Met Office.

Dr Wonhas : The UK Met Office components? That is quite possibly true.

Senator RICE: Which means that, in terms of the development of your model, unless you put capacity into development, that model would become out of date and redundant very quickly, given the ongoing development that models require.

Dr Wonhas : Just coming back to the previous topic, one of the options I think we should explore is: whether there is, for example, a deeper relationship possible with the UK Met Office to ensure that Australia actually stays in the flow of those model updates, as I also previously highlighted, with sufficient insight into the specific Southern Hemisphere problems.

Senator RICE: So you do agree that to have a model you need to keep on developing it. Otherwise, it is a waste of the investment.

Dr Wonhas : Yes, I do.

Senator RICE: Thank you.

Ms Bennett : May I please just correct the record for my answer to the question regarding the number of officials travelling to the US for business week: I indicated 15; it is actually 16.

CHAIR: Okay. Did you forget yourself?

Senator KIM CARR: Can I just follow up on a question on notice. You have indicated several times, Dr Marshall, that Australia spends 75 per cent—or the US spends 25 per cent—on its measuring and modelling. How much does Australia spend, as distinct from the CSIRO; and what proportion of Australia's contribution to the measurement of climate change does the CSIRO undertake? Can you provide that on notice?

Dr Marshall : It is probably better if we take that one on notice. We have been searching for those numbers, and they are complicated.

Senator KIM CARR: You have used a figure several times. I would be very surprised as to what extent—let me wait. I look forward to your analysis of the comparison that Australia spends—and, by that, I mean the whole country and then a subset of that as CSIRO's contribution.

Dr Marshall : Certainly.

Senator WHISH-WILSON: I might just start with one of the most common questions that I have received in the last week. Dr Marshall, could you explain what you mean by 'mitigation and adaption', and give us some examples?

Dr Marshall : Sure, but it is probably better if our expert gives you those examples.

Senator WHISH-WILSON: Okay, but you have made some very clear and slightly controversial statements within the science community that you want to reprioritise energy, resources and funding towards mitigation and adaption. Perhaps if I could give you the background before you answer it, Ms Bennett. Most of the scientists that I have been speaking to also believe that the work they have been doing in the last 10 years—particularly in the ocean and climate dynamics program, as an example—has been used for mitigation and adaption, rather than for proving that climate change exists. The IPCC 2007—I think we were all glad that that came out. I want to get an idea of what exactly you mean by mitigation and adaption.

Mr Wonhas : I might take this question, Senator. In the mitigation space—we could have a very long discussion about it—it probably falls broadly into two large categories. One is, ultimately, technologies that reduce emissions from electricity, transport, industrial processes et cetera. I think we have been quite successful in some of those areas to develop new technologies—I will not bore you with examples, but one I was quite proud of is, for instance, a company called BuildingIQ, that just listed on the stock market in December, that helps commercial buildings reduce their energy consumption by 10 per cent to 25 per cent.

The second large area of mitigation is from the land-use sector. For example, as we have also demonstrated in our national outlook work, it has significant—at least medium-term—potential to abate emissions. It might also become quite important, if we actually want to achieve a 1.5 degree climate trajectory to negative emissions, because then we might have to use that as, at least, the front-end of a sequestration process. So I think that that is what I would broadly define as the key mitigation areas. And then, obviously, there are a whole range of different efforts that we are currently undertaking in the adaptation space—for example, working with some of the agricultural industry to—

Senator WHISH-WILSON: So around weather variability and that kind of thing—extreme weather events, bushfires?

Mr Wonhas : Correct.

Mr Williams : One example that has that has just been published is around bushfires, where over the last eight years there has been an increase in bushfires of about 30 per cent—that is about 1,200 more fires a year. That has been put down to climate change shifts. And CSIRO, working with Tasmania, have actually concluded a study that allows a better prediction of where the fires will be a week ahead of time—so you get a better response to fires and better preparation. That is an example of adaptation and mitigation that is working with climate change theory—that the climate has changed and the susceptibility to bushfires has changed across the nation.

Senator WHISH-WILSON: So how much of the work that is being done—for example, in the Southern Ocean and how Australia's climate is changing—is being used for informing these kind of adaptions and the decisions to mitigate?

Mr Williams : I could not answer on that specific example I just gave, but they are certainly building a new model based on weather forecasting data and climate data to improve the predictability of bushfires.

Dr Marshall : If I may, one of the areas is sustainable fisheries management in the southern oceans.

Senator RICE: I think the key point is that the scientists who work in those two climate programs have put very strongly to us that the majority of their work, in fact, is for informing those sorts of adaptations—whether it is looking at how bushfires are going to change or the production of regional climate projections so that land managers, landholders and people who are managing agriculture know what the climate is going to be doing. They have certainly expressed to us that they feel it is a complete misrepresentation of the bulk of their work as being about measurement and modelling.

Senator WHISH-WILSON: Perhaps I will put that into a question: does adaption to future climate change require up-to-date knowledge of the details of future climate change?

Dr Wonhas : Yes.

Senator WHISH-WILSON: That is pretty straightforward, but isn't some of what we have discussed today where the potential job losses are—and I know when we talk about job losses we are talking about individuals, their families and the impacts on communities like mine in Tasmania. But some of these people are some of the world's best scientists that we have managed to attract and bring to our communities to work. They are going to be very difficult to get back, and it concerns me that that knowledge and experience that we have that is respected around the world is potentially going to be irreplaceable. That is a really important.

Mr Marshall, you said—I cannot remember which one of your statements or media releases it was:

No one is saying climate change is not important, but surely mitigation, health, education, sustainable industries, and prosperity of the nation are no less important.

I have got a letter from a senior scientist who said, 'We all agree with Mr Marshall. What he is missing is that Australia needs climate science precisely because these goals are not achievable without it. We cannot mitigate emissions effectively without any ability to see that it is working or if what we are doing is working. We cannot adapt to climate change that we are unable to anticipate. Our industries will not be sustainable or profitable unless they manage the risk of climate change to their business and they need information about what is coming to do that effectively.' Do you agree that that is a reasonable and quite balanced response to your comments in the media?

Dr Marshall : It is a reasonable response, but I think I said earlier we are at 16 per cent of the output of a much larger system. As we do, whenever there are staffing reductions, we try to help our scientists find positions at prestigious universities and, given that many of them are world-renowned scientists, that usually isn't too difficult. So I would argue that CSIRO goes to great lengths to help our people find new positions.

If I can go back to the point the scientist made that they understand the fact that we have to balance across a wide portfolio and a number of priorities, one of the other inputs we must consider is: Australia is twice the global average in its climate science as measured by the Chief Scientist. It is two times below the global average in physics, chemistry, math—so in STEM—

Senator WHISH-WILSON: So we have an inherent competitive advantage in climate science.

Dr Marshall : And these skills are fundamental to, as I said, what the US is investing is 75 per cent of their money into technology solutions to climate change.

Senator WHISH-WILSON: I do not disagree with what you are saying about—economies have all sorts of mixes. Let me give you an example: as a proud Tasmanian, we have an Antarctic gateway in Hobart, so we have a competitive advantage because of where we are geographically situated. It makes sense that global experts will move to a community like Hobart and work out of an Antarctic gateway, because they are right on the doorstep of the Southern Ocean. We have the resources through our Antarctic Division and joint ventures through IMAS, the University of Tasmania and other organisations. It is an area where we can be globally competitive and attract the best people in the world. How do you respond to that; and, surely, looking for where our competitive advantage is, we should be proud of the fact that we are double the average on our climate science. I think that is a really good thing. It is not a green thing—I just think it is something that Australia does well and we should be very proud of it. It guts me to think that we are going to ripping resources out of this area that is so important not just to climate science but to our economy and the communities that rely on and have built up around these scientists.

Dr Marshall : It makes me very proud that we are twice the global average in our environmental science area as well and also proud that CSIRO has been a huge part of that and will continue to be part of that. Again, we are at 16 per cent of the system, the output, in that area, so it is much bigger than us. What worries me is we are two times lower than the world average in these other critical areas and actually—

Senator WHISH-WILSON: Can you remind me what they were again?

Senator RICE: Which critical areas?

Dr Marshall : Physics, chemistry, maths, engineering—

Senator WHISH-WILSON: But they are part of climate science, too—

Dr Marshall : Right, but—

Senator WHISH-WILSON: You know that as a physicist—

Dr Marshall : We are—

Senator WHISH-WILSON: fluid dynamics are essential to oceanography, which is essential to ocean currents, which is essential to salinity and changes in the ocean —

CHAIR: Senator Whish-Wilson, this is not a game of who knows more than the other—

Senator WHISH-WILSON: I think it is a really important point to make—

CHAIR: Well, okay, we will just—

Senator WHISH-WILSON: We will have to—

CHAIR: answer the questions—

Senator WHISH-WILSON: new climate scientists if we have more chemists and more physicists.

Dr Marshall : I am just quoting the Chief Scientist. What is actually more alarming is how far off we are in terms of innovation—in other words, delivery of value from science.

In the United States, 21 per cent of GDP comes from innovation; in Australia it is something like 0.1 per cent—200 times less. That is a profound problem in a world that is fundamentally changing—and not just climate changing: everything changing. Australia could well be left behind if we do not recognise that trend and adapt to it. It is not just climate adaption. No-one is saying that climate adaption is not important—

Senator WHISH-WILSON: Can't we walk and chew gum at the same time?

Senator RICE: Yes. But you are, because you are cutting those positions.

Senator WHISH-WILSON: I agree with what you are saying—

Dr Marshall : I am saying that we have to choose where we invest to deliver the most value, which is, 'What can CSIRO do to change things? Where can we be really unique? What are the areas we need to work on?'

Fortunately, we have the nine national science priorities, of which climate is one—actually, sorry, it is environmental change, so it is broader than just climate. It says that we must respond to, take action and mitigate environmental change. But it is one of nine priorities. We also have six growth centre priorities, which are areas that have been focused on four big growth opportunities for Australia. These are part of the process—they are not the whole process, but they are part of balancing—

Senator WHISH-WILSON: You have a very important job. You have been brought in to do it. I understand that you are going to bring your expertise and flavour to your position. In fact, Mr Medcraft, the head of ASIC, was sitting in your chair earlier today and he said that an organisation's culture starts at the top. So are we looking at a culture in CSIRO of monetising science? Is it going to be privatisation further down the track? Where is this going, if a big component of it now is public-good science and scientists cannot easily justify making a commercial return on what they do?

CHAIR: Senator, you are well and truly into policy ground here—

Senator WHISH-WILSON: Well, of course—that is what we are here to talk about!

CHAIR: I understand that, obviously, Dr Marshall has been brought in because of his global expertise and his high level of understanding of all the issues in this sphere. But to ask him to project what he thinks the government's position is going to be in the future is just not a question that is within his remit.

Senator RICE: It is—

Senator WHISH-WILSON: It is what Dr Marshall brings to the culture of CSIRO. That is important.

CHAIR: Well, you can reframe your question—

Senator WHISH-WILSON: I am not going at it in a negative way; I am just saying—

Senator Sinodinos: You can all debate the value of the philosophy there. What I took Dr Marshall to be saying was that it is beyond monetising science. It is about maximising the social and economic outcomes from our scientific effort. That is broader than 'marketising' things. Marketising is important, because we have to be competitive internationally, be innovative and think around corners. But CSIRO has a broader mission than that, and that is reflected in its priorities.

Senator WHISH-WILSON: I understand that, but there are some things that are not easily monetised but add incredible value in other areas. This gets back to what we were discussing earlier—what we focus on tonight is very anthropogenic, as an example. But the benefits are quite hard to monetise of all this work that has been done by scientists going into models that are informing us about things like extreme weather events. How do you monetise that? How do you value these things, because—

Dr Marshall : If I may? It is not about monetisation. CSIRO has a world-leading water capability. We are investigating helping a large overseas country which, frankly, needs our help badly in solving some serious water problems. When we look at that opportunity, we pause and ask, 'How does this help Australia?' We do not ask, 'How much money can we make?' We ask, 'How does this help Australia? Will we learn something by working with this other country? Will we improve relations? Will it open up other opportunities that are important to Australia?' The money part of it is to help grow our research capability, which needs money.

Senator WHISH-WILSON: As does climate science.

Dr Marshall : Yes.

Senator WHISH-WILSON: We need more climate scientists and research capability, not less.

Dr Marshall : I can absolutely assure you that the people in Oceans and Atmosphere have tried to be as creative as all the other parts of our business—

Senator WHISH-WILSON: Creative in the sense of making a return?

Dr Marshall : No, to find sources of funding.

Senator RICE: Yes, to make a return.

Senator WHISH-WILSON: As a public good, science should be funded by the government.

Dr Marshall : It is not making a return.

Senator RICE: It is.

Senator WHISH-WILSON: Then maybe we have some philosophical differences.

Dr Marshall : I have 5,000 mouths to feed.

Senator WHISH-WILSON: Going back to the Antarctic division, which is one of the stakeholders Senator Carr mentioned who said that they had had 24 hours notice. Some of their programs are very heavily reliant on CSIRO, and I asked them that a few days ago. One example I gave was the discovery that the East Antarctic Ice Sheet is melting, I suppose is the word, faster than everyone expected, and what implications that had for informing the IPCC and other models that CSIRO play such a critical role in. That would not have been discovered without the ongoing research of Dr Rintoul's team, which I understand is also in the division that is looking at getting chopped. That kind of thing would not have occurred had that research not being ongoing, with that kind of data being fed into these models. If that stops and we lose that capability, how are we going to look at something like a massive ice sheet that is melting faster than we expect? That is going to have implications for current, ocean temperature and weather. It is all interconnected, and it is very hard to say that that has monetary a value on it; I think of course it has. But how do you justify cutting those kinds of divisions for that basic research, which we need for everything else?

Dr Wonhas : Just to clarify that: I do not think any decision has been made around cutting our ocean modelling. In fact, I expect that we will continue to do ocean modelling, because, as you have rightly said, this is a critical part of science that underpins climate science but, frankly, also underpins a lot of economic activity in Australia. So therefore we believe that that is vital.

Senator WHISH-WILSON: The Senate had a big Southern Ocean inquiry last year, which had good tripartisan support across the board. One thing that became very clear as Tony Press was writing his 20 Year Australian Antarctic Strategic Planwas that, for our claim of sovereignty on the Antarctic, the currency for that treaty is climate science. The work that we do down there is absolutely critical to our claim on that sovereignty. Once again, they are the kinds of projects that I am very concerned that we have not thought through the impact on if you cut resources to those teams. So there are a lot of unintended consequences here. Without being rude, it seems to me—or I think to the average person who is watching what is going on here—that you guys have this 'arse-about'—you have not looked at the consequences before you have gone out there and announced that you are going to cut these areas. Why—

CHAIR: Do you have a question? The officers are probably very happy to listen to you and respect you, but you are now boarding on lecturing.

Senator WHISH-WILSON: I do. I will ask some specific questions on this issue about your stakeholders that you work with, like the Antarctic division. I would like to ask you a few questions on transition. The Chief Scientist said today that CSIRO has this week committed to work with stakeholders. You have mentioned that several times. Can you give us some more details about when you expect these transition plans will be finished?

Dr Wonhas : It is fair to say that this is a fairly complicated space; however, as we have also discussed before, it is actually quite important to finish that in a timely fashion because of the uncertainty of staff and also making sure that we retain essential capability. I see really four phases to this work. The first one, which we have already discussed, is around understanding the national needs and the needs of our stakeholders. Secondly, we then need to define the capability that we require to deliver to that need. Thirdly, we need to identify what is the right institutional arrangement to deliver that—again, ensuring longevity of that. Then I think the fourth step is to solve over what period of time and with what mechanism we transition on that. Those, I think for me, at a high-level, are the phases. As I said before, our aspiration is to complete those by the end of March.

Senator WHISH-WILSON: Senator Carr made a very valid point earlier about continuity of research funding and that this is a big advantage of CSIRO. In that transition plan, are there discussions going on about budgeting requirements—if other institutions take on these roles and responsibilities?

Dr Wonhas : As we are aware, the whole reason we are having this discussion is budgets are obviously quite important, and that needs to be realistically and frankly addressed.

Senator RICE: Just in salaries alone: with 65 staff at an average of $130,000, you are looking at almost $10 million in staff costs alone—let alone on-costs. You cannot expect other institutions to take on these capabilities in the staff, without extra budgets.

Dr Wonhas : And just to clarify that: having spoken to quite a number of the other partners in the system, I think all of the players are financially constrained. So it will require a combination of understanding what is really essential; it might require doing some things in a different way, a way that might be more cost-effective. For example we discussed some of the things around the UK Met Office; can we rely more on some of the things that are not essential for us as a country? Then it is maybe also around a greater sharing of the burden across the whole system because. For example—talking about access—at the moment, CSIRO is carrying that capacity almost exclusively on behalf of the nation.

Senator RICE: Isn't that what CSIRO exists for—to be doing that long-term solid scientific research? Isn't that the whole nature of your institution?

Dr Marshall : That is part of our function. Part of our function—

Senator RICE: It is the 'CS' in the CSIRO. It sounds to me that—

Dr Marshall : Actually it would be the 'NF' in the CSIRO—which does not exist, but it is the national facilities. We manage, build, maintain and improve a number of major national facilities for the use of the entire academic community. That is a part of our function. Part of our function is to support our government's priorities. Part of our function is to work with our industry. And, again, we work across many, many different domains of science within a finite envelope. We have to make tough choices about where we prioritise. If one part of our effort is in a more difficult market situation, we can choose to take funding from other parts of the organisation to prop that up if we think it is a temporary dip.

Senator WHISH-WILSON: I do not think climate science has a market situation, to be frank. I understand what you mean, but I do not think it is that easy for an area like the public good—climate science.

Dr Marshall : In astronomy, for example, we were successful in attracting $10 million from a Russian physicist who was passionate about part of astronomy; a very creative way to increase capacity in astronomy.

Senator WHISH-WILSON: Philanthropy?

Dr Marshall : With the national marine vessel, we were very fortunate to be able to secure funding from Chevron, which funded—

Senator WHISH-WILSON: You and I probably have a different view on that.

Dr Marshall : Senator, we did not rent the ship out to the oil company; we had the oil company fund a trip with our scientists.

Senator WHISH-WILSON: I would rather see that used for 300 days of climate science research than given to an oil company. But quickly—

CHAIR: No, mate, we are going round in circles—

Senator WHISH-WILSON: I have some questions here I would just like to finish them, Chair. I will not be very long. This is about honouring commitments. Can you explain how cuts this deep will impact forward commitments and contracts for climate science? How will you honour your ocean and atmosphere program in land and water? Will you be reneging on any agreements?

Dr Wonhas : It is absolutely our intent to maintain major contractual commitments. In the climate space—again, for clarity—we do want to honour our commitment to the leadership of the NESP Earth Systems and Climate Change Hub. We are also expecting to honour contractual commitments to IMOS. Similarly, in the land and water space, for example, there are a number of initiatives currently underway with regard to northern Australia. We will certainly deliver against those as well.

Senator WHISH-WILSON: What about international commitments such as the UNFCCC—the Paris agreement, the Montreal protocol—how will this impact our contributions to those?

Dr Wonhas : We are obviously needing to understand all of these. You mentioned Paris as one example. There is obviously a commitment that the Australian government has made to the Paris process, and we look forward to working with our other stakeholders in government to determine what that means for CSIRO.

Senator WHISH-WILSON: In terms of future projections for emissions, future projections require carbon emissions to drop to zero between 2050 and 2070. Certainly we have a more ambitious target in my party. Does CSIRO have a plan for the industry pathway to achieve this outcome? I know you have done some work in that area yourself, Dr Wonhas.

Dr Wonhas : You are referring to our national outlook. We have looked at a range of different scenarios that the nation could take and we certainly think that Australia could meet some very ambitious emissions reduction trajectories if we are particularly focusing on two areas. The first is innovation and low-emissions technologies and a very significant use of the land-use sector in Australia. I should also say that that is a double-edged sword and there are a lot of implications with extensively using the land-use act of carbon abatement. But that is certainly something we have looked at.


CHAIR: Come on, Whishie.

Senator WHISH-WILSON: I have two more questions and they are quick and they are straight to the point.

CHAIR: We are mates, I know, but—

Senator WHISH-WILSON: There are no more sermons, I promise. In terms of looking forward at future emissions, without maintaining the observations and the interpretation of that data and the modelling, how will we have the scientific expertise to assess how we are tracking towards goals such as the Paris agreement?

Dr Wonhas : As I have already mentioned, we aim to maintain a national capability in both measurement and modelling.

Senator WHISH-WILSON: You aim to maintain all of those capabilities?

Dr Wonhas : Not all of them, but a critical capability that certainly helps us to track whether we are on track to the target or not.

Senator WHISH-WILSON: You have been quite clear tonight that you have not finalised the detail of this kind of thing, yet you are confident enough to tell us here today that we will have the capability to continue to do these kinds of things?

Dr Wonhas : It is correct that we have—literally this week—started the work with our partners to work that out. I have given you a time line on how we want to achieve that. I hope—and I will work very hard—to achieve that target.

Senator WHISH-WILSON: They said the same thing. They said they were going to work very hard with you to make sure they got the resources and the climate things they needed to continue their programs as well. Thank you. I have finished.

CHAIR: Thank you, Dr Marshall. Thank you for coming in. There are very few questions on notice in comparison to the questions that were fired at you. Thank you for that. And there has never been a more exciting time to be in the CSIRO.

Senator Sinodinos: There has never been a more exciting time to leave the committee, I think.

CHAIR: Thank you for your attendance here today and to your officers and all your support staff. Thank you. We will see you in May. I remind senators that we will be going to dinner at the stroke of 6.30.


CHAIR: We now move on to outcome 1, cross-portfolio everything—program 3.

Senator KIM CARR: Can I ask a question on automotive—the punch proposal. The reason I do it here and not elsewhere is because this matter goes to whole-of-government coordination questions.

CHAIR: I was going to do the very same.

Senator KIM CARR: Could I begin by asking you, Minister, whether you have seen an article in The Guardian by the Lenore Taylor on 20 January about a proposal from Punch International to take over General Motors Holden's plant in Elizabeth and to continue manufacturing the Commodore platform here in this country. Are you familiar with that article?

Senator Sinodinos: I do not know that I have seen the specific article, but I have heard about the proposal.

Senator KIM CARR: Thank you. I am pleased that you are aware of the proposal. The article refers to a letter of support from Minister Pyne to the CEO of Punch, Mr Guido Dumarey. Are you aware of that letter?

Senator Sinodinos: Yes, I am.

Senator KIM CARR: Does that letter from Minister Pyne reflect government policy?

Senator Sinodinos: It has been written in the minister's capacity as a minister. It is a positive letter.

Senator XENOPHON: Can you table it?

CHAIR: Can we let the minister speak, please?

Senator Sinodinos: I will take that interjection. I think we can table the letter. Let me say that I think it is a positive letter encouraging further interaction and engagement.

Senator KIM CARR: I am pleased to hear that. Would it be open to—

CHAIR: We all agree that you can table the letter.

Senator Sinodinos: Do you want to see it, Mr Chairman, so you can be sure that—

Senator KIM CARR: It is the same letter.

Senator XENOPHON: If the minister is happy, then surely—

Senator KIM CARR: We would be delighted. Let me say that this is one occasion when I would be delighted with the tabling of—

CHAIR: Go for it.

Senator KIM CARR: If it is the same letter.

Senator Sinodinos: You show me your letter and I will show you mine! What can I do?

Senator KIM CARR: Thank you very much, Minister, for that. While I am waiting for that letter, I understand that representatives from Punch met with Minister Pyne and also had a meeting with the Prime Minister. Is that correct?

Senator Sinodinos: I understand there was a meeting. I do not have the details and I do not know whether the secretary can elaborate on that.

Ms Beauchamp : They certainly met with Minister Pyne—yes, that is correct.

Senator KIM CARR: What about the Prime Minister?

Ms Beauchamp : I would have to take that on notice.

Senator KIM CARR: I understand they did meet with the Prime Minister.

Senator Sinodinos: I think they did too, but I will check to make sure.

Senator KIM CARR: I would be interested to know whether the minister for industry was actually with the Prime Minister at the time of that meeting.

Senator Sinodinos: We can find that out.

Senator KIM CARR: Was anyone else from the department there?

Mr Chesworth : There was certainly no person from the department of industry there, but of course that is predicated on confirmation of whether that meeting actually took place.

Senator KIM CARR: I understand it did take place and that—

Senator Sinodinos: I think they were separate meetings.

Senator KIM CARR: it was a very productive meeting.

Senator Sinodinos: Senator, I think they were separate meetings.

Senator KIM CARR: So the Prime Minister's meeting was separate to the one with the minister?

CHAIR: It has been taken on notice. I do not think there is any intention—

Senator KIM CARR: I find it hard to believe that the Prime Minister would meet with the company without the industry minister being present.

CHAIR: There are a lot of things that you might find hard to believe, Senator Carr.

Senator Sinodinos: Sorry, could I add something?

CHAIR: Yes, absolutely.

Senator Sinodinos: We are all trying to be very positive in the interests of South Australia. The meeting was with the PM's office; no staff from the department of industry. The PM did a very brief meet-and-greet and then left.

Senator KIM CARR: Thank you. I am advised that there were also quite productive meetings with the state governments in Victoria and South Australia. They received letters of support or they indicated that letters of support would be provided by the state governments. Are you aware of that?

Senator Sinodinos: I am not. I do not know whether Mr Chesworth is.

Mr Chesworth : I am not aware of those letters and I have not witnessed—

Senator KIM CARR: My question goes to whether the Prime Minister would be providing a letter of support. I understand that the minister of industry has provided a letter of support. Will there be a prime ministerial letter as well?

Senator SINODINOS: I would be surprised. There has been no request, as I understand it—no formal request—but in normal circumstances I do not think that would be the case.

Senator KIM CARR: I know that Mr Shorten has provided a letter of support. There was a request, and I would be surprised if there has not been a letter—

Senator Sinodinos: Minister Pyne is at least equivalent to Mr Shorten.

Senator KIM CARR: I suspect we could do a bit better than that. I understand that there was a request for a letter of support.

Senator Sinodinos: I will have to check for you.

Senator KIM CARR: Would you take that on notice?

Senator Sinodinos: Yes.

Senator KIM CARR: I would agree with you that this letter from Minister Pyne is very supportive: 'I strongly commend further consideration of this proposal. I am available to discuss it and clarify what the Australian government can offer ...' It is a very positive letter. Given the government clearly supports this initiative, what is the level of coordination across government—the Commonwealth—between the industry department, which is where a lot of these programs would normally initiate, and other departments: transport, foreign affairs, trade—

Senator Sinodinos: Off the top of my head, I cannot tell you that. I do not know whether the secretary from her perspective can answer that.

Ms Beauchamp : We have very close working relationships with most other portfolios which—

Senator KIM CARR: Who is responsible for coordination for this project?

Ms Beauchamp : For this project, we are looking at working on behalf of the minister. I would not say it was a coordination task as such.

Senator KIM CARR: Why not?

Ms Beauchamp : It is making sure that other agencies understand what our relationship is; what facts and figures we are giving; what meetings are occurring; and what we can provide to support Minister Pyne's letter.

Senator KIM CARR: Mr Chesworth, you are responsible for the automotive program, are you not, within the department?

Mr Chesworth : Yes.

Senator KIM CARR: Have you had a conversation with Prime Minister and Cabinet about this proposal?

Mr Chesworth : Personally no, but officers within my division may have.

Senator KIM CARR: Would you be able to name one of those? What level that discussion would have occurred at?

Mr Chesworth : I am not quite sure. I would have to confirm whether those discussions have taken place. I would say that we have fairly close discussions with PM&C on a range of issues. It is quite likely to have come up, given the amount of press coverage it has had not only in The Guardian but also in the South Australian press and other avenues.

Senator KIM CARR: That is true. I am surprised then that you cannot name the officer that has undertaken the coordination work.

Mr Chesworth : The meeting with Punch took place on 2 February in Minister Pyne's office. I was present at that meeting. Punch indicated to us that their first order of business was to understand the way that they could progress their work with General Motors Holden. I received some correspondence this morning from the consultant who is working closely with Punch—

Senator XENOPHON: GRA Cosway [the name of the consulting firm].

Mr Chesworth : Elise Temer—and they are going to get back to us on how they get along with Holden. As you would be aware, and has been reported in the press, Punch is seeking access to the Zeta platform. The premise of their push is essentially, if Holden is leaving, then they would like access to it and the associated intellectual property so that they can develop 15 to 30 models over the next five to 10 years.

Senator KIM CARR: I understand that. I thank you for that advice. However, there will be a need for assistance in the development of the business case; access to government programs, for instance, will be required; and coordination with state governments—who is responsible for that?

Mr Chesworth : I would suggest it probably falls to me given that I am named as the contact point at the end of the minister's letter.

Senator KIM CARR: Yes, I see that. So you are responsible for coordination with Prime Minister and Cabinet. When will that arrangement be undertaken?

Mr Chesworth : I would suggest that we still need to wait to hear from Punch to see how they are progressing this.

Senator KIM CARR: What assistance will you be providing Punch with their discussions with General Motors?

Mr Chesworth : They have received the letter of support from the minister and that is all that Punch—

Senator KIM CARR: Has that been communicated to General Motors?

Mr Chesworth : I am not sure. That is certainly in the press, so General Motors would know about it—

Senator KIM CARR: The letter is not in the press.

Mr Chesworth : No, but it is in the press that the minister has written a letter of support. As well as that, that is all that Punch has sought from the government. They were very specific about that.

CHAIR: The minister's letter says, 'I have conveyed that view to the senior management of General Motors Holden here in Australia and have asked them to give your proposal a receptive hearing.'

Senator KIM CARR: That is very good. And when did that happen?

Mr Chesworth : I am not sure.

Senator Sinodinos: We would have to take that on notice.

Senator KIM CARR: I think it was actually before the 2nd. My point is that this project has not just happened since the 2nd. I am interested to know what the level of real support is from the Commonwealth in terms of liaison with other departments and with General Motors—for instance, our Foreign Affairs and Trade people—what coordination is taking place with state governments. I understand that there is a state delegation going to Detroit. Are you aware of that?

Senator Sinodinos: Which state?

Senator KIM CARR: South Australia and Victoria.

Mr Chesworth : No, I am not aware of that.

Senator KIM CARR: Well, I understand that it is the case. Perhaps you can tell me if I am mistaken.

Mr Chesworth : No, I do not even know whether you are mistaken.

Senator KIM CARR: I am just wondering whether the Commonwealth will be able to participate in such a delegation.

Mr Chesworth : I guess if we are invited and if it is something that we could perhaps take up.

Senator KIM CARR: My experience with these things is that you talk to folks about getting things done; that is my point. Has that been done? And I am urging you to actually make sure that it is done. Obviously we will need to pursue this matter and see where it takes us.

Senator XENOPHON: Thank you to the cabinet secretary for this letter. It is a very encouraging letter, a very pleasing letter to read. During a radio interview on the Leon Byner program on radio FIVEaa in Adelaide on 5 February Minister Pyne made some remarks about the Automotive Transformation Scheme. Are you the right person to speak to about that?

Mr Chesworth : I am the right person to speak to about the Automotive Transformation Scheme but perhaps not about Minister Pyne's remarks, but let's see how we go.

Senator XENOPHON: Okay; it is not a trick question. He said:

The scheme is legislated to continue until 2021 and right now I am working with Punch Corporation, a guy called Guido Dumarey, who is talking to GM in Detroit about how he might be able to take over the operations in Elizabeth …

He went on to say:

So the scheme is not closing ... if there is another car manufacturer accessing it it will continue.

My question is: do the minister's comments reflect government policy that the ATS is not closing and will continue as legislated? If that is the case, I am delighted to hear that and I am sure industry will be delighted to hear it as well, but can someone here at the table confirm that that is government policy?

Mr Chesworth : The ATS remains as legislated. It has not been amended, and that is both the legislation and the regulation.

Senator XENOPHON: Thank you. And can you tell the committee how much taxpayer funding has been spent on General Motors Holden in relation to the ATS and its predecessor schemes under the Howard government in terms of capital and R&D funding?

Mr Chesworth : We did a little bit of homework on this.

Senator XENOPHON: I think I asked some questions on notice, where I got a very unsatisfactory response.

Mr Chesworth : We have been given a little bit of a head start, thank you. We found some public documentation that Holden itself had drawn from a number of Productivity Commission inquiries into—

Senator KIM CARR: Perhaps you can explain—there are some commercial-in-confidence questions here and restrictions in the act as to what you can say.

Mr Chesworth : Most certainly.

Senator KIM CARR: I am constantly asked to provide this particular information that you are about to.

Mr Chesworth : This is information that is on the public record, and it goes from 2001 to 2012. I am happy to provide this to you. The information post-2012 is subject to a range of confidentiality.

Senator KIM CARR: What is the figure?

Mr Chesworth : The 2001 to 2012 figure?

Senator KIM CARR: Yes.

Mr Chesworth : It is $2,174,947,531.

Senator XENOPHON: So that is $2.7 billion of taxpayer funds, public money. That is pretty much consistent with the figure—not the $947,531, but that is consistently what Mike Deveraux, the then Managing Director of GM, provided to a Productivity Commission inquiry in December 2013.

Senator Sinodinos: So there you go: you provide all this money, and you cannot keep the industry going. Where is the lesson in that?

Senator KIM CARR: This is across two governments—

Senator XENOPHON: You are not being helpful here, Cabinet Secretary.

Senator Sinodinos: I am just saying—

CHAIR: That is a lot of kahunas in anybody's language.

Senator Sinodinos: Absolutely. Think if we had put that money into other things in South Australia.

Senator KIM CARR: Just imagine if you had not tried to drive them out of the country.

Senator Sinodinos: Come on: what about Mitsubishi? That was on your watch.

Senator XENOPHON: We were doing well. Let's try to be cross-partisan on this. Cabinet Secretary, thank you for that entree to what you have just said. Another way of looking at it—I am trying to be nimble here—is this. Given that Australian taxpayers have put so much money into providing R&D and capital and assistance to General Motors Holden, not hundreds of millions but billions of dollars, is there a role for the Commonwealth to constructively engage with General Motors Holden to encourage them to have good-faith negotiations with Punch Corporation so that they can access the Zeta platform that Australian taxpayers have effectively paid for to a large extent, if not wholly? If they on fair commercial terms could access that platform that we have effectively paid for as taxpayers, that could mean a significant investment by Mr Dumarey in the order of, I understand from what he has told me, $150 million, of the Punch Corporation's money, plus I presume all the other investments. That would save many thousands of jobs.

Senator Sinodinos: But what leverage do you suggest that we have over Holden?

Senator XENOPHON: No, but is there—

Senator Sinodinos: You are saying that we should say, morally, we are giving you all this money so you have an obligation to deal in good faith with this other person. Well, they should deal with them in good faith anyway, but what leverage do we have? The money has gone out the door. We never made it conditional on us taking the IP or keeping the IP.

Senator XENOPHON: This is a broad policy question that I will put to you. Other countries, as I understand it, in terms of their assistance, investment with industry, do have some levels of conditionality in terms of that, and what has happened in the past has happened. But is there a lesson for the future in terms of whether there is going to be a significant degree of taxpayer funding or taxpayer assistance for a sector that there ought to be some appropriate conditionality, if not in terms of IP then in terms of having access to that if for some reason the party that has had the benefit of that is no longer in the country?

Senator Sinodinos: If we look at what CSIRO are now seeking to do with their innovation fund, for their co-investing and all the rest of it, presumably they will be coming to arrangements around who owns what in terms of IP and the rest going forward. But what happened under the old automotive assistance plans was that, for example, if we go back to '97 or '98, when the issue of further tariff reductions came up, and there was the issue about whether they could get through the Senate and all the rest of it, I remember that—

Senator XENOPHON: Was the Senate troublesome then too!

Senator Sinodinos: there were sort of undertakings given by the companies, for example, about the sorts of high-end research facilities they might have in Australia, which they might use as a platform for research and design in the automotive space in the region. So, it was not as if there was complete unconditionality—

Senator KIM CARR: That is true; that is absolutely right. But the question is—and in fact depending on which scheme you are talking about, or the degree of detail; for instance, in the textile program there are different levels about what can be used with old equipment and the like—the point that Senator Xenophon is making here is that there is an issue here about how we maintain capacity in this country given the level of public investment that has occurred in creating that capacity. And it is untrue to say that the government has no leverage.

Senator Sinodinos: No, I was asking the question of—

Senator KIM CARR: Given that we are on the public record here, I do not—but it is just untrue.

Senator Sinodinos: I was asking the question; I was not making an assertion one way or the other.

Senator KIM CARR: And there are many things that international companies require of this country and require of government. My question is—

CHAIR: Do you guys want to go out the back?

Senator KIM CARR: I just think we should correct any assumptions here that the government has no capacity. It is a very good letter, a very strong commitment from the government. The question is how you translate that into action.

Senator Sinodinos: If there can be a bipartisan or a tripartisan approach—

Senator KIM CARR: There certainly is a bipartisan approach.

Senator Sinodinos: Or tripartisan or whatever.

Senator KIM CARR: We have made that very clear publicly.

Senator Sinodinos: But I am saying in terms of—

CHAIR: We are having a good chat—and it is good and it is very positive—

Senator KIM CARR: We stand ready to have a serious chat about what can be done on this.

Senator Sinodinos: I am sure the minister does too. I will convey the sentiment to him.

Senator XENOPHON: I think the sentiment is a strong and positive one. Perhaps the department could take this on notice, Cabinet Secretary. What is the knowledge of the department of what other countries may do—countries such as Germany, where their manufacturing as a percentage of GDP is 22 per cent, and ours is well under seven per cent at the moment? Has there been that level of conditionality and what is your view of the general proposition of an alternative motor vehicle manufacturer being willing to co-invest in maintaining vehicle production at Elizabeth, in what is now the General Motors Holden plant? Do you agree that such a proposal could be of immense value and is worth serious consideration in terms of both jobs and economic growth?

Senator Sinodinos: We will take that on notice.

Senator KIM CARR: A further consideration may well be some understanding of what happened with the General Motors plant that Punch took over in Strasbourg and the fact that that plant has gone from 1,000 people to 1500 people. What action did the French government undertake to assist the transfer?

Senator XENOPHON: I think it was a very similar set-up, even though we were talking about automatic transmissions. When you get in your Comcar tonight, you should know, Cabinet Secretary, that the automatic transmission was made by Punch in Strasbourg.

Senator Sinodinos: I will think of you as I get into the Comcar.

Senator XENOPHON: You do not have to think of me; you can think of Punch.

CHAIR: And you can think of Senator Xenophon as he gets into another Comcar and goes home.

Senator XENOPHON: That is right.

Senator Sinodinos: You can ring me and say, 'Let's think about what's in this car as we go home.'

CHAIR: That is right. I guess the thing that I would just temper all this with is that that is a gearbox component factory; it is not a car-making unit with dealers and marketing and all of those things. I have a great deal of empathy, as I know everybody in this room does, with the workers in South Australia trying to do this, but let us keep it in perspective.

Senator KIM CARR: That is right, and I emphasise that it is not just the workers in South Australia.

CHAIR: Sorry—and Victoria. You are quite right to point that out.

Senator KIM CARR: And just about every state in the Commonwealth has a direct interest in the automotive industry.

CHAIR: Your point is well made.

Senator KIM CARR: This project, if successful, if viable, can produce many thousands of high-quality jobs.

CHAIR: You are quite right to make that point. Are there any further questions on automotive?

Senator KIM CARR: I will have further questions later on, but in terms of cross-portfolio, if I might turn to another matter—

CHAIR: Sure. Go right ahead.

Senator KIM CARR: Can I ask about the Office of Innovation and Science Australia, which is the new office that is, I understand, being announced? Page 15 of the national innovation statement makes reference to it. It is listed on the organisational chart as standing alongside the Office of the Chief Scientist. Does it have the same standing in the department, the same level of independence, as the Office of the Chief Scientist?

Ms Beauchamp : The Office of Innovation and Science Australia is to be established formally from 1 July. We have put in place interim arrangements to transfer the Innovation Australia board, under Bill Ferris's leadership, towards that date, including interim arrangements around the office.

Senator KIM CARR: Will it have the same standing as the Office of the Chief Scientist?

Ms Beauchamp : We are currently looking at that in terms of the legislative requirements to support the innovation and science agenda. It will be similarly resourced, like we resource the Office of the Chief Scientist.

Senator KIM CARR: That is good. So you are talking about a legislation foundation for it, are you?

Ms Beauchamp : That is one of the options we are looking at, yes.

Senator KIM CARR: I was not aware that there was legislation that underpinned the Chief Scientist. Can someone correct me there? What is the legislation that underpins the Chief Scientist?

Ms Beauchamp : I think the Chief Scientist is a statutory officer and—

Senator KIM CARR: Yes, he is, but is there a legislative basis that?

Ms Beauchamp : The office itself is staffed by public servants of the department.

Senator KIM CARR: Yes, it is, but is there legislation to underpin the Chief Scientist's role?

Ms Urquhart : No, there is no legislation underpinning the role of the Chief Scientist.

Senator KIM CARR: See, there is legislation here about the board and the operations of the board. It is not to do with the Chief Scientist though. Are you proposing to actually make amendments to that act to incorporate this office?

Ms Beauchamp : There are a number of options under consideration for government.

Senator KIM CARR: When will the government make a decision?

Ms Beauchamp : The new arrangements—we are working towards that transition on 1 July.

Senator KIM CARR: I presume that the new office would appear before estimates—if it is on the same basis as the Chief Scientist?

Ms Beauchamp : The office could be asked by the committee to appear, yes.

Senator KIM CARR: Who is going to chair the new office?

Ms Beauchamp : I do not think it is a chair—

Senator KIM CARR: Who is going to run it?

Ms Beauchamp : It will be run by a chief executive officer, and Mr Ferris and the board have put out a proposal using a search company for the selection of the CEO.

Senator KIM CARR: It is not operational at the moment though, is it?

Ms Beauchamp : As I said, I have put in interim arrangements to support Bill Ferris in this transition, so we can get work underway as was outlined in the announcement last December.

Senator KIM CARR: Do you anticipate that legislation will be prepared prior to the establishment of the office?

Ms Beauchamp : If legislation is required and to what extent, yes.

Senator KIM CARR: As I understand it, it will be required, and the Industry Research and Development Act will require it. You have not had advice to that effect?

Ms Beauchamp : As I mentioned, we are currently looking at a range of options to put to government, and we are looking at the options from a very minimalist legislative requirement to one that is much more comprehensive.

Senator KIM CARR: Yes, but the board itself functions within the act. You will be in breach of the act, won't you, unless you change the act?

Ms Beauchamp : Particularly for the name, yes.

Senator KIM CARR: Yes. And there is not a lot of time between now and 1 July in terms of parliamentary sitting for that to actually occur. When will we see an exposure draft, for instance, of such legislation, if you consider it necessary? And, if you do not consider it necessary, how will your actions be consistent with the current act?

Ms Beauchamp : Those sorts of issues will be considered by government shortly, and as soon as government has looked at those options then I am sure you will see the outcome of those deliberations.

Senator KIM CARR: It does not seem to me as if you have made a lot of progress in getting this sorted out.

Ms Beauchamp : As you would appreciate, there are 24 measures under the innovation and science agenda—over $1 billion worth of measures. This is putting in place appropriate governance arrangements through the ISA board and the CEO, so a lot of work has gone on in terms of assisting Bill Ferris with getting the governance arrangements in place and commencing the work plan. So a lot of work has actually gone on, and that needs to be formalised through the processes.

Senator KIM CARR: What about vacancies on the board itself—the current board, the legislative board? On 22 October there were nine vacancies and there were four upcoming. So what is the status of those vacancies?

Ms Beauchamp : The minister and government are actively considering those vacancies and suitable appointments.

Senator KIM CARR: And I suppose you are going to be able to tell me that the board is currently quorate.

Ms Beauchamp : Yes.

Senator KIM CARR: How is it quorate?

Ms Beauchamp : It requires, I think, a minimum of four, and there is a minimum of four.

Senator KIM CARR: That includes officers from the department, though, does it?

Ms Beauchamp : I think I should explain the current board, under Innovation Australia, has a requirement of having between four and 15 members, including the chair and the ex officio.

Senator KIM CARR: How many are there at the moment?

Ms Beauchamp : There are currently four members.

Senator KIM CARR: And how many of them are officers of the department?

Mr Hazlehurst : There are currently four members plus the chair plus the ex officio member.

Senator KIM CARR: So you have at least two beyond quorum—is that what you are telling me?

Mr Hazlehurst : That is correct.

Senator KIM CARR: MYEFO, on page 195, tells us that the government is going to provide $8.1 million over the four years to establish the agency. Can you tell me how that money is going to be spent.

Mr Hazlehurst : It could be a mix of things, and it will be subject to decision making by the CEO once appointed as well, but we would expect it to be a mixture of staffing, consultancies and other matters that would support the operations of the board.

Senator KIM CARR: So when will you know where that money is going to be spent?

Mr Hazlehurst : As I say, the details of those will be subject to consideration by the CEO. What I can say is that we already have some staff on deck performing the duties of the office, including my colleague Ann Bray.

Senator KIM CARR: How many?

Mr Hazlehurst : There are five officers.

Senator KIM CARR: What is the establishment going to be, then?

Ms Beauchamp : It will be within the funding envelope.

Senator KIM CARR: And that is my point. You obviously have a funding estimate prepared.

Ms Beauchamp : Yes.

Senator KIM CARR: That is why you got $8.1 million, and you must have had some assessment as to why you needed $8.1 million. What is the basis for that estimate?

Ms Beauchamp : I am not going to put words in the mouth of Mr Ferris, who is chair of the board, or indeed the new CEO.

Senator KIM CARR: The government has made a decision to allocate $8.1 million to this project.

Ms Beauchamp : Indeed.

Senator KIM CARR: What does the government expect it to be spent on?

Ms Beauchamp : It is to provide core operational funding for the board and the CEO and to develop the work plan and other priorities, as was announced last December.

Senator KIM CARR: Where will it be located?

Ms Beauchamp : That is to be determined.

Senator KIM CARR: How much is in there for rent?

Ms Beauchamp : Those issues are to be determined once the CEO is in office.

Senator KIM CARR: How did you persuade Finance on the $8.1 million if you are so vague about how it is going to be spent?

Ms Beauchamp : I did not mean to appear vague. I think there is a clear work program and a clear purpose of the ISA board, the CEO and the office, and we made an estimate in terms of the core staffing requirements, particularly to support the governance and operational aspects.

Senator KIM CARR: So what is the core staffing requirement, then? What number?

Ms Beauchamp : There are currently five, but I would have to have a look at it.

Senator KIM CARR: What is the core, though? Is that the full complement?

Mr Hazlehurst : We do not have that detail here today. We are happy to take that on notice.

Senator KIM CARR: Thank you.

Ms Beauchamp : We are happy to take that on notice, but I just want to add that I expect the office to draw on skills and expertise from both other agencies and outside in terms of supporting its operations.

Senator KIM CARR: Tell me this: how will the innovation and science agency operate?

Ms Beauchamp : The Office of Innovation and Science?

Senator KIM CARR: Yes. How will it actually operate?

Ms Beauchamp : It will be there to support the operations of the board.

Senator KIM CARR: So it is a secretariat?

Ms Beauchamp : No, I think the work program has been outlined in terms of the requirement and the oversighting, exactly. The government's investment in the innovation and science system—

Senator KIM CARR: So it will have program responsibilities?

Senator Sinodinos: No, it will advise on all science, research and innovation matters across government. It is going to be a whole-of-government body. It is going to be located within this particular portfolio, but it is a whole-of-government body, and the whole idea is spreading the idea of an innovation mindset across government.

Senator KIM CARR: I see. So will it have any program responsibilities?

Ms Beauchamp : They are the sorts of things we are going through at the moment.

Mr Hazlehurst : For example, Senator—as you would know, of course—the current Innovation Australia board has a role in respect of a range of programs.

Senator KIM CARR: Sure, but how many staff does the current Innovation Australia board rely upon?

Mr Hazlehurst : The current board also relies on both a secretariat function, which would continue to operate—

Senator KIM CARR: So that is the departmental function?

Mr Hazlehurst : That is a function that we have which provides secretariat services to a range of boards and committees.

Senator KIM CARR: So how many people are involved in that currently?

Mr Hazlehurst : There are about eight or nine, I think, but they service more than one board, and they also, of course—again, as you know—support the subcommittees of Innovation Australia.

Senator KIM CARR: But they have a number of functions. The board has a number of functions—specific legislative functions, particularly in regard to the subcommittees.

Mr Hazlehurst : Yes.

Senator KIM CARR: But you are not able to tell me what this new office will do. Will it take over those functions?

Mr Hazlehurst : If I separate out the office, as opposed to Innovation and Science Australia—so there are the two things—Innovation and Science Australia is expected to supersede, if you like, Innovation Australia. And then the question of the legislative changes, which Ms Beauchamp referred to before, is still something that the government is considering. That would go to the question of whether, for example, Innovation and Science Australia retained the role that the current IA board has.

Senator KIM CARR: The reality is it cannot take over those functions without legislative change.

Mr Hazlehurst : Exactly.

Senator KIM CARR: It cannot. So it is not a question about if or when—you need a legislative change. You cannot give people access to the R&D claims, for instance, without a legislative change. Is that correct or not?

Mr Hazlehurst : That is certainly correct.

Senator KIM CARR: So why hasn't this been built into the program? Not if or why, but when.

Ms Beauchamp : I think it has been built into the program, and that is why we put a 1 July start date.

Senator KIM CARR: And start-up date. You will have legislation ready by 1 July?

Ms Beauchamp : We are hoping to have it ready by 1 July.

Senator KIM CARR: How many sitting days are there between now and 1 July?

Senator Sinodinos: Not a lot.

Senator KIM CARR: I am just wondering how practical the proposal therefore is.

Mr Hazlehurst : It is the program that we are working towards.

Senator KIM CARR: I might turn to the review of the R&D tax incentive. Have you got officers there that can help me with this? The fact sheet for the innovation and science states that the agency—this is the new science agency—will review the R&D tax incentive as one of its first tasks. Is that right?

Ms Beauchamp : That is correct.

Senator KIM CARR: Have I understood that correctly?

Ms Beauchamp : Yes, you have.

Senator KIM CARR: Again, it assumes the operation will actually be in place by 1 July. Is there a legislative requirement for that?

Mr Lawson : I am the head of the strategic policy division.

Senator KIM CARR: You are head of what?

Mr Lawson : Strategic policy division.

Senator KIM CARR: Strategic. You could help us with the punch proposal, couldn't you? Head of the strategic policy division. You might even be able to get across all those different agencies in government. Maybe you could talk to the states. Maybe you could even talk to the embassy in Washington. Head of the strategic policy—

Senator Sinodinos: Are you angling for another job?

Senator KIM CARR: I am just wondering. He might be the man I need to talk to.

Mr Lawson : I am sure my colleagues are—

Senator KIM CARR: Delighted to hear this, yes.

Mr Lawson : doing a fine job. The government appointed the three individuals to head up that review. It is under the auspices of Innovation and Science Australia, but it is not part of the legislative requirements of Innovation Australia or the future Innovation and Science Australia. As you know, Bill Ferris is the chair of Innovation Australia. The incoming Chief Scientist—

Senator KIM CARR: The clear point I want from you is: does it require legislative change? You are explicitly saying no.

Mr Lawson : Correct.

Senator KIM CARR: Thank you. Now, the Chief Scientist told us yesterday that there has been this task force established to look at the R&D tax incentive. Are you familiar with that task force?

Mr Lawson : Yes.

Senator KIM CARR: Is that the same review that is mentioned on the website chaired by Bill Ferris, Finkel and Fraser?

Mr Hazlehurst : There is a task force in the sense of staff supporting the three reviewers. So the three reviewers are in charge of the operation. They have been supported by a group from within the Department of Industry, Innovation and Science. We have a secondee from Treasury and a secondee from the tax office.

Senator KIM CARR: There was a reference there to a report date of April 2016. Is that your intention, to be able to report by then?

Mr Lawson : Yes, our intention is to report to government in April 2016.

Senator KIM CARR: When did the task force commence?

Mr Lawson : It was announced on 7 December. The first meeting with Mr Ferris was on 9 December. The first meeting of the task force as a group was, I think, 17 December—

Ms Beauchamp : The 14th.

Mr Lawson : The 14th. So we have had a series of task force meetings, and if I get my paper out I will find the exact dates. The first meeting of the review panel was on 17 December, and we have had a series of panel meetings after that and individual meetings and so on.

Senator KIM CARR: And do you think you will be able to meet the time line?

Mr Lawson : Yes.

Senator KIM CARR: I am pleased. Where did the initiative come from to establish yet another review?

Mr Lawson : It came out of the government's processes through the National Innovation and Science Agenda and was announced in that context.

Senator KIM CARR: There was an issue paper released yesterday—is that right?

Mr Lawson : Yes.

Senator KIM CARR: What is the purport of that?

Mr Lawson : To help people—it goes to the consultation process. As you may know, the department had initiated a review of the R&D incentive to feed into the tax white paper.

Senator KIM CARR: Yes.

Mr Lawson : The tax white paper had its process and had explicit questions about the R&D concession and people made submissions to that. There have been parliamentary inquiries on innovation that recently occurred where people made submissions on the R&D and to that process. What we put out in the material on and so on is indicating that the review panel will look at people's original suggestions—there is no need to resubmit submissions—but they felt it appropriate to put out a bit of a discussion paper of the current facts of what is going on with the R&D tax incentive so that, should people want to make any further submissions, they are available, and submissions have been invited.

Senator KIM CARR: And you are expecting them by the end of the month—is that right?

Mr Lawson : Yes, by 29 February. That had been out for some time. That was announced a while ago.

Senator KIM CARR: Are you expecting to have written submissions only?

Mr Lawson : We have engaged with various people talking and have had individual conversations—

Senator KIM CARR: Conversations with people.

Mr Lawson : Emails went out to the 10,000-odd people who are in the R&D community and so on.

Senator KIM CARR: Will you be using Senate submissions?

Mr Lawson : Yes, we have got the Senate submissions. We are reviewing those.

Senator KIM CARR: The Senate report?

Mr Lawson : Yes.

Senator KIM CARR: Will you be looking at a premium rate, for instance?

Mr Lawson : It is up to the panel members to look at what they want to look at, but we certainly have advised them that we are preparing summaries of the submissions for them and the reports that were made, so they are fully aware of what has gone before.

Senator KIM CARR: One of the Senate recommendations—for instance, will you be looking at those recommendations?

Mr Lawson : We are preparing summaries of all of the material that is available and providing them to the panel for their consideration.

Senator KIM CARR: And you anticipate that recommendations will be ready to go to government by April?

Mr Lawson : Yes.

Senator KIM CARR: Very brave! On the question about the use of the scheme itself, there has been further commentary. My colleague drew my attention to a report in The Australian Financial Review claiming that the R&D tax has blown out by 40 per cent. Given that it is a demand-driven system—an entitlement system—I do not know how you can have a blow-out of 40 per cent, but that is the claim that The Australian Financial Review has made. Are you looking at the usage?

Mr Lawson : The announcement was that we would look at the effectiveness, integrity and additionality of the program, and so we are certainly looking at the use. The purpose of the program is to encourage additional firms to do additional R&D, so if additional firms are doing additional R&D that is a success.

Senator KIM CARR: That is a good thing.

Mr Lawson : That is a good thing. One needs to examine: is that exactly what is happening? There is lots of media reporting about tax evasion and tax avoidance and those sorts of things. We just need to make sure of the integrity of the program.

Senator KIM CARR: Mr Lawson, these claims have been around for a while. We held a major review of the whole scheme, what, three years ago? There have been constant reviews for the last two years.

Mr Lawson : That major review led to substantial changes—

Senator KIM CARR: Legislative changes?

Mr Lawson : yes, legislative changes—which made a substantial increase in the benefit to—

Senator KIM CARR: [inaudible]

Mr Lawson : small and medium low-revenue firms in tax loss.

Senator KIM CARR: So is that one of the issues you are looking at?

Mr Lawson : That is an issue that I think we need to look at.

Senator KIM CARR: Right.

Mr Lawson : But that is a personal view. That is where a lot of the growth is.

Senator KIM CARR: I accept that. The other issue is collaboration. It is argued that this may well be the most effective form of encouraging collaboration between public research agencies and private firms. Are you looking at that issue?

Mr Lawson : Yes. The Chief Scientist is interested in that issue: does the program effectively facilitate collaboration? It is not part of its current legislative framework. It is not required to promote it.

Senator KIM CARR: That is right. In fact, that is a substantial weakness, it could well be argued, in the current arrangements. Will you be looking at cost reductions in terms of outlays?

Mr Lawson : That is a matter for government to examine.

Senator KIM CARR: Is that one of your terms of reference?

Mr Lawson : No, the terms of reference were to look at the effectiveness of the program, the integrity of the program and encouraging greater additional R&D.

Senator KIM CARR: Thank you very much, Mr Lawson. It is much appreciated. I turn to the $28 million advertising campaign for the innovation statement. Can I get some assistance with that?

Ms Cook : Yes, Senator.

Senator KIM CARR: Thank you. On 6 January, Minister Pyne made a statement in regard to the $28 million in advertising for the innovation agenda. Were you directly involved in that campaign?

Ms Cook : Yes, my branch is involved in managing that campaign.

Senator KIM CARR: Is the $28 million figure correct?

Ms Cook : Yes, that is correct.

Senator KIM CARR: Can you give me a breakdown of how the $28 million is being spent and over what period of time?

Ms Cook : The $28 million is spread across 2015-16 and also the next financial year. For this financial year it is $25.5 million and for 2016-17 it is $2.5 million.

Senator KIM CARR: So the bulk of it is being spent in the election year; is that right?

Ms Cook : The $25.5 million is being spent in this financial year.

Senator KIM CARR: You may want to take this on notice; I appreciate the detail may not be here with you. I would like to know the relevant contract ID numbers of each element of the campaign, as well as the name of the company the contract was awarded to, a description of the service that is to be provided, the value of the contract and the date the contract was executed. Can you take that on notice for me, please?

Ms Cook : Yes.

Senator KIM CARR: What is the purpose of this ad campaign?

Ms Cook : At the highest level, the campaign is about cultural change.

Senator KIM CARR: Who is it aimed at?

Ms Cook : The target audience is a mixture of start-ups, SMEs, students and their influences—which covers the STEM element—and also the broader public and researchers.

Senator KIM CARR: What platforms are you seeking to use to reach these folks?

Ms Cook : Phase 1 of the campaign that you may be aware of started on 7 December and ended on 19 December, and that was digital only. Phase 2 of the campaign, which has now begun, has a number of platforms, and they include television, online video, print, digital and social media.

Senator KIM CARR: How much is being spent on television?

Ms Cook : I do not have the breakdown for each element, but I can tell you that the media buy for phase 2 is $15 million—$15 million for $454,545.

Senator KIM CARR: Thank you. What is the period for the $15 million of phase 2?

Ms Cook : Phase 2, as I understand it, ends on 30 June.

Senator KIM CARR: When does it start?

Ms Cook : It started on 7 February.

Senator KIM CARR: So the ads are already on air?

Ms Cook : Yes.

Senator KIM CARR: I just missed them. They are obviously not aimed at me.

Senator Sinodinos: They are good.

Senator KIM CARR: You like them, do you?

Senator Sinodinos: I do not think they are political at all. They just talk about promoting the ideas boom.

Senator KIM CARR: Oh, I see. You do not think a major government initiative is political?

Senator Sinodinos: No; it is promoting the ideas boom.

Senator KIM CARR: It is a sheer accident that it is occurring until 30 June.

Senator Sinodinos: No, as the general manager said, it is all about cultural change.

Senator KIM CARR: Cultural change—nothing to do with getting people to vote for you?

Senator Sinodinos: Well, that would be a great cultural change.

Senator KIM CARR: That is exactly right, yes.

Ms Beauchamp : Could I also say that these ads have been through a robust research process too, so what—

Senator KIM CARR: I bet they have, and we will come to that right now. I am pleased that you have raised the topic! Tell me this: how much have you actually spent on market research?

Ms Cook : I can tell you that the contract we have signed for developmental research, which is on AusTender, is for $414,400, excluding GST. That is developmental research. We also have the evaluation research, which is $53,790, excluding GST. I beg your pardon—the evaluation research is $413,900, excluding GST.

Senator KIM CARR: Hang on. There is nearly $450,000 for evaluation research, reference number 12940. That is nearly $450,000—is that right?

Ms Cook : Four hundred and thirteen thousand nine hundred dollars, exclusive of GST.

Senator KIM CARR: Then there is another one for $453,000—is that right?

Ms Cook : Four hundred and fourteen thousand four hundred.

Senator KIM CARR: So it is over $800,000. Is that on top of the $28 million?

Ms Cook : That is part of it.

Ms Graham : The difference between the numbers that you have is the GST component, and the $800,000 is a part of the $28 million.

Senator KIM CARR: So it is part of the $28 million; it is not additional.

Ms Graham : That is right.

Senator KIM CARR: Madam Secretary, you have mentioned the rigour of the approach that has been taken. I am told that you are required to sign off to certify that this is within the government guidelines. You have done that, I take it.

Ms Beauchamp : That is correct.

Senator KIM CARR: Also, the Independent Communications Committee is required to sign off on it.

Ms Beauchamp : That is correct.

Senator KIM CARR: Has that been done?

Ms Beauchamp : Yes.

Senator KIM CARR: When was that done?

Ms Cook : I could take that on notice.

Senator KIM CARR: If you would not mind. The Department of Finance website tells us that they have written to you twice to advise that it has approved the two stages of the campaign, first in December and again on 27 January. That is correct, isn't it?

Ms Beauchamp : Yes.

Ms Cook : That is right.

Senator KIM CARR: When were each of these phases of the campaign referred to you for certification?

Ms Beauchamp : I would have to take that on notice, but I can remember signing off two certifications.

Senator KIM CARR: Perhaps you could provide on notice the date on which the certificate was granted.

Ms Beauchamp : I am just clarifying it with the officer. The last one was on or about 5 February.

Senator KIM CARR: Presumably within the time frames that were indicated.

Ms Beauchamp : Certainly, yes.

Senator KIM CARR: You have taken it on notice to provide me the outline of the scope of the cost of each phase of the campaign. Is that part of what you have taken on notice?

Ms Graham : That is right.

Ms Cook : Yes.

Senator KIM CARR: Thank you very much. Did you put the certification on the website?

Ms Cook : I believe it is published—I will take that on notice.

Senator KIM CARR: Would you? And perhaps you could provide us with copies of the certifications. They normally would be made available online.

Ms Graham : We will take that on notice.

Senator KIM CARR: In case we cannot find them, maybe you could provide them to me. The National Innovation and Science Agenda publication including an appendix table showing the cost of each component of the package, and they add up to about $1 billion. There is no mention in the fact sheets of the $28 million. Is there any reason for that?

Ms Graham : My understanding is that the advertising was a part of another measure.

Senator KIM CARR: What other measure was that?

Ms Weston : That was part of the Inspiring all Australians in digital literacy and STEM measure.

Senator KIM CARR: So the detail of the $28 million for this ad would be on another fact sheet somewhere, would it? Part of the government's initiative was to produce a fact sheet on this $28 million, was it?

Ms Beauchamp : There is not a fact sheet on the $28 million; there is a fact sheet on each of the measures referred to in the Innovation and Science Agenda document.

Senator KIM CARR: And is the $28 million advertising campaign referred to in any of those fact sheets?

Ms Beauchamp : I would have to take that on notice.

Ms Graham : We will take that on notice.

Senator KIM CARR: There are a couple of other contracts here and I wonder if they are the same. Maybe I have confused them. There is a contract for research services communication for $455,840 dated 21 December awarded to AMR. I have a contract number here; I take it you need to know the last four digits—they are 2189. Do you have that one there?

Ms Graham : We do not have the contract numbers with us, but the one you were talking about, for AMR—did you say that was $450,000?

Senator KIM CARR: Yes, $455,840.

Ms Graham : I think that was the one for developmental research that Ms Cook referred to previously. It is that contract, as I understand it.

Senator KIM CARR: And that is part of the $28 million?

Ms Graham : That is right.

Senator KIM CARR: I go to the contract for editorial publishing and printing services of $2.5 million, dated 21 December, awarded to Whybin\TBWA Group. Is that part of this process as well?

Ms Graham : Yes, that is correct.

Senator KIM CARR: So that is part of the $28 million?

Ms Cook : Yes.

Senator KIM CARR: So when you provide that list I will see that. Thank you. What is that for?

Ms Cook : That is the creative agency.

Senator KIM CARR: The contract for research services valued at $297,000, dated 14 December, went to Colmar Brunton Social Research. What is that for?

Ms Cook : If you will just give me one moment.

Ms Weston : While my colleague is looking at that, you asked about where the $28 million was recorded and I said it was in the STEM measure. It was not actually in the booklet on the STEM measure but rather in the more formal MYEFO documents.

Senator KIM CARR: It is in the MYEFO document?

Ms Weston : Page 196, yes.

Senator KIM CARR: You would have expected it to be with all the other stuff advertising the package, wouldn't you? You understand, Ms Weston, I might be a bit surprised it is not with the rest of the information about the package.

Ms Weston : It is certainly referenced here in the formal documents.

Senator KIM CARR: I know it is a public document—it is MYEFO—but it is not together with the rest of the material associated with the measure.

Ms Cook : To go back to your question where you mentioned Colmar Brunton, that is expenditure associated with the country of origin labelling campaign—

Senator KIM CARR: I see. That is a different thing.

Ms Cook : which is a different campaign that is still in an early stage of development.

Senator KIM CARR: How much are you spending on that?

Ms Cook : That campaign has been approved at $15.2 million.

Senator KIM CARR: What is that for? It is country of origin labelling, but is it for TV as well?

Ms Cook : My understanding is that this campaign is still in very early stages of development, but it is to basically raise awareness and understanding among the community and the food industry about reforms to country of origin labelling for food.

Senator KIM CARR: When do you expect that campaign to get underway?

Mr Squire : We are expecting that campaign will commence close to the end of this financial year—circa May-June.

Senator KIM CARR: Is that this financial year or next?

Mr Squire : No, the current financial year.

Senator KIM CARR: So we are talking about June, are we?

Mr Squire : Correct.

Senator KIM CARR: When would it start? Do we have a date?

Mr Squire : We are currently in the process of conducting the market research to support that campaign. On the exact timing of that campaign, I do not have the detail with me as yet because that work has not concluded.

Senator KIM CARR: But it would be in June?

Mr Squire : The intention is for that work to be completed by the end of June.

Senator KIM CARR: Will there be TV ads?

Mr Squire : A combination—informed by the research—of TV, online, social media et cetera. But some of that money, as my colleague mentioned, also goes towards the development of some online tools to assist businesses with the reforms et cetera.

Senator KIM CARR: When would you expect the ad campaign to conclude?

Senator Sinodinos: It has not started yet, has it?

Senator KIM CARR: It is about to start. I am sure you are well aware of this campaign. But I am all ears, so tell me this: when will it conclude?

Ms Beauchamp : As the officer said, we are still in the very early stages of development. There is a lot of work going on with the country of origin labelling, consulting with the states and territories—

Senator KIM CARR: But if we know roughly when it will start—

Ms Beauchamp : We need to yet go through all of the government approval processes.

Senator KIM CARR: Yes, of course.

Ms Beauchamp : Once we have done that, then we will have a clearer idea about that date.

Senator KIM CARR: But you are anticipating that this campaign will begin at the beginning of June, and the question is: will it end at the end of June like the other one?

Ms Beauchamp : We will be able to take that on notice and advise you once it has gone through the approval process—

Senator Sinodinos: It sounds like an information campaign to me.

CHAIR: Senator Carr, I have Senator Macdonald with 10 minutes, and we are going to—

Senator KIM CARR: I have just about finished this line of questioning. I have one more. There is another one for ORIMA for $455,000. This one is 7061—research services, market research, focus groups and survey. That is for $455,000, is it?

Ms Cook : That is the ORIMA Research one that we referred to before—the $413,000 one, excluding GST—and that is for the evaluation, research, benchmark and so forth.

Senator KIM CARR: So they will be focus group evaluations, will they?

Ms Cook : It will follow the normal process for whole-of-government for research.

Senator KIM CARR: How much is the department spending on advertising this financial year?

Ms Cook : I would have to take that on notice for this financial year.

Senator KIM CARR: You do not know?

Ms Cook : I can tell you the amount of information that is in the annual report for 2014-15, but I would have to take on notice—

Senator KIM CARR: That will help me for a starter. What does the annual report tell me?

Ms Graham : The annual report will tell you the advertising expenditure in the department for the last financial year.

Senator KIM CARR: I want to know this financial year. Where do I find that information?

Ms Beauchamp : We would have to take that on notice. Advertising covers not just the government campaigns, but advertising for jobs, providing information to businesses—

Senator KIM CARR: You can separate out the types of advertising. I am interested in knowing how much you are spending on TV advertising, social media advertising—campaign advertising, if you like—for government programs.

Ms Beauchamp : We can take that on notice. As usual, we have provided that sort of detail in questions on notice, so that is not a problem.

Senator KIM CARR: All right. How much did you spend last year?

Ms Graham : I just have to look in the annual report.

Senator KIM CARR: You are reminding me about the annual report. That is very good of you. I thought we could get some comparison.

Ms Beauchamp : We did not have any campaign advertising, I do not think, last financial year.

Senator KIM CARR: No. It is not an election year, is it? You only do this sort of stuff in an election year.

CHAIR: Senator Carr, do you have a question?

Senator KIM CARR: No. It is a statement of fact, isn't it?

Senator Sinodinos: It takes a long time to develop—

CHAIR: Are you done?

Senator KIM CARR: No, I am waiting for the answer.

Ms Beauchamp : The annual report indicates $1.5 million.

Senator IAN MACDONALD: Can you explain and perhaps provide me with a chart on the set-up of the department now that energy, resources and northern Australia are in the portfolio. Congratulations, Ms Beauchamp, on your ascension to what I consider the most important part of governance—that is, northern Australia. Can you explain how it is all going to fit in. You are now the department for two senior ministers.

Ms Beauchamp : That is correct. The organisational arrangements are on the website. We do have under Minister Frydenberg the resources, energy and north Australia component. Then we have got the industry, innovation and science areas under Minister Pyne. Then there are a number of areas that support both ministers—for example, the analytic and economic area, the parliamentary area, the corporate area, ICT and the like. We have outlined in the organisational arrangements divisions around energy, resources, economic and analytical services. The Office of Northern Australia is listed separately on that.

Senator IAN MACDONALD: And this obviously is the right estimates to come ask questions about that in detail as time goes on.

Ms Beauchamp : Yes.

Senator IAN MACDONALD: Does the organisational chart on the website have the number of personnel in each division or group—what is the terminology in your department?

Ms Beauchamp : It has not got the number of personnel. It has the senior leadership team. That goes down to the branch manager. We can provide details on the number of either full-time equivalents or ASLs associated with each of the functions—for example, the Office of Northern Australia.

Senator IAN MACDONALD: Is that still in a state of flux or all resolved?

Ms Beauchamp : We have actually established the head of the Office of Northern Australia. We have got, as you are aware, a presence in Townsville. We have got the office now being headed by Mark Coffey in Darwin. We are in the process of making sure that we fill in vacant positions. There were some positions that were transferred from the department of infrastructure and transport that we are in the process of filling.

Senator IAN MACDONALD: Your understanding is that most aspects dealing with the northern Australian white paper will now be the responsibility of Mr Frydenberg and your department?

Ms Beauchamp : You say responsibility. Of course we have an overarching monitoring role in terms of the northern Australian white paper. As you would appreciate, a billion dollars worth of measures cover a number of different portfolios, and the Office of Northern Australia is to keep tabs on how they are going, look at relationships with the states and territories and indeed other organisations to make sure that all those measures are being delivered in accordance with the white paper process.

Senator IAN MACDONALD: So obviously things like roads and money will stay. In the white paper there was quite a lot of talk about northern roads and beef roads. Dams will now also be in respective department of infrastructure and water management or whatever it is called.

Ms Beauchamp : That is correct.

Senator IAN MACDONALD: Will your department have a role in decisions and implementation of those decisions? For example, will your department have anything to do with the money that was committed for what is loosely called 'dams' but is water management, water reticulation and investigations into that, or will that be entirely in the agriculture department?

Ms Beauchamp : Agriculture department. Dr Kennedy, do you want to talk about how it operates?

Dr Kennedy : I have responsibility for resources, energy and the Office of Northern Australia. Responsibility for program delivery stays with those departments in the usual way. The minister—in that case Minister Joyce—makes the decisions around, for example, grant programs. The particular role of the office, as the secretary said, is to keep an eye out for Minister Frydenberg that they are being delivered to the schedules that they said they would be delivered but also to make sure that, because there is a lot of crossover between those various programs, they are all talking to each other and complementary. Mark Coffey, who is the head of the Office of Northern Australia, is coming to the table now.

Senator IAN MACDONALD: Mark and I did meet a couple of weeks back and had some of this in a casual chat.

Dr Kennedy : Particularly because he is travelling a lot through northern Australia and located in Darwin, he is designed to be eyes and ears—having a person up there on the ground with his staff supporting him, feeding directly back into those departments delivering their programs. But financial accountability—the important part in the administration of government—must stay, as it will, with the departments responsible. The minister will have a particular role in getting through cabinet the delivery of the overall package, and Mark will support the minister in that process as well. The intention of the office is, as I said, beyond just coordinating or monitoring; it is to assure that input is being fed through.

The other thing we have already noticed is that, if stakeholders feel their message is not being heard, Mark is an alternative route—I am sure you hear from stakeholders as well—through which those concerns can come through. We can feed them through to Minister Frydenberg and encourage him to discuss them with his colleagues and elevate issues that way.

Senator IAN MACDONALD: Is the one-stop shop development your department?

Mr Coffey : Yes, that is the Major Projects Approval Agency. It is in place in Darwin.

Senator IAN MACDONALD: It is a coordinated generalist type of agency, is it? It is to help with proposals for investment across all avenues of federal government and the relevant government—in this case, the Northern Territory government—at the same time. Is that the idea?

Mr Coffey : Yes. It is specific to the Northern Territory but it is for project proponents to come to a one-stop shop. They will assist proponents to get through the regulatory processes, give them an indication about time and cost and also link them in with any processes through the territory government.

Senator IAN MACDONALD: I will explore a lot of these in future estimates. Unfortunately, we are almost running out of time and I have another 20 to go to after dinner. I see the Northern Australia Infrastructure Facility on the program and do not want to ask a lot of questions about it; I am familiar with it. But how is that going to operate? Is that entirely your department, Ms Beauchamp, or is it Treasury as well?

Ms Beauchamp : The set-up of the facility is Minister's Frydenberg's responsibility. We are supporting him in that. The function was transferred from the Treasury to us with the northern Australia function.

Senator IAN MACDONALD: So you control the money of the loan facility.

Ms Beauchamp : That is correct.

Senator IAN MACDONALD: Okay. I do not think we are going to have time to go through how that process will work, but I am conscious that a discussion paper was put out a few weeks ago with a very short response period. Has that response period finished?

Dr Kennedy : Late last year we put out a paper which had, for example, a draft investment mandate and those issues in it. The short consultation period we put out for recently was on the draft legislation. We exposed the legislation that will support the establishment of the facility. The government is looking at this stage—

Senator IAN MACDONALD: Did you get many responses to that?

Dr Kennedy : About 13 submissions.

Senator IAN MACDONALD: To the draft legislation?

Dr Kennedy : Yes. They were from the two state governments and the territory involved and from possible proponents and a couple of other interested parties. We already had a lot of feedback through that earlier consultation on how it might work, and the government had previously foreshadowed the structure of an independent body and the potential for it to work with a body like Efic so it could get going quickly in terms of lending arrangements. I would have to say there is quite a bit of consensus out there at the moment about the structure of the facility. The intention is that it will be up and running by 1 July this year.

Senator IAN MACDONALD: The draft legislation had comments that have come back. Do you anticipate that there will be some amendments to the draft legislation as a result?

Dr Kennedy : There were no significant concerns with the draft legislation. It was well received.

Senator IAN MACDONALD: So you had responses from most of the states?

Dr Kennedy : Queensland and the Northern Territory put in a response. Western Australia we contacted directly. I do not think they put in a formal written submission, but we are certainly in contact with them on an ongoing basis. I note the minister is also in contact with the relevant ministers.

Senator IAN MACDONALD: And the other submissions were from—

Dr Kennedy : Beyond the states, off the top of my head, there were a couple from possible proponents. There were—

Senator IAN MACDONALD: I would not want you to name them, but they are from private industry and people who might see themselves as accessing this at some time?

Dr Kennedy : Yes, exactly. It is a combination of government and private.

Senator IAN MACDONALD: Is my time finished?

CHAIR: It is.

Senator KIM CARR: Can I ask one question before we go? I have asked the officers for the aggregate on advertising but I did not ask if there are any other campaigns this year. We mentioned the country of origin. We mentioned science and innovation. Are there any others?

Ms Beauchamp : They are the only two we are working on.

Senator KIM CARR: Thank you.

CHAIR: Thank you very much. We will suspend this session. We will be back at 7:30 pm and continue.

Proceedings suspended from 18:30 to 19:30

CHAIR: We will recommence.

Senator O'NEILL: I want to go to the R&D tax incentive. Is it still government policy to cut the value of the R&D tax incentive by 1.5 percentage points?

Mr Lawson : Yes, that is still before the Senate.

Senator O'NEILL: That is what I was seeking to confirm, that the legislation remains before the Senate and the legislation is constructed in a way that it would mean that the R&D tax incentive is to be cut by 1.5 per cent. Mr Lawson, could you advise me of exactly how long that legislation has been sitting on the Notice Paper?

Mr Lawson : I am afraid that is Treasury legislation and—

CHAIR: That was this morning.

Mr Lawson : it has been there for quite a while.

Senator O'NEILL: Is there anyone who might be able to assist?

Mr Lawson : We will see if we can find someone.

Senator O'NEILL: It is quite a long time, hasn't it?

Mr Lawson : It was first introduced on 27 May 2015—sorry, that was when it was reintroduced.

Senator Ryan: I can take on notice when it was first introduced. I do not have that information on me.

Mr Lawson : It was part of the 2014-15 budget.

Senator O'NEILL: The reintroduction was 27 May 2015, after the first introduction which we assume was sometime before. Do you have a rough estimate of when that was?

Mr Lawson : It was withdrawn in March 2015 and reintroduced on 27 May 2015. It did come out of the 2014-15 budget. It was announced in the context of the 2014-15 budget.

Senator O'NEILL: So sometime between May and when it was withdrawn in March and then reintroduced in?

Mr Lawson : May 2015.

Senator O'NEILL: So for most of the period of this government this particular piece of legislation has been on the Notice Paper in one form or another. Is that a fair characterisation?

Mr Lawson : As I said, it was announced in the context of the 2014-15 budget by the Treasurer.

Senator O'NEILL: The then Treasurer, Mr Hockey. When this measure was first introduced, it was done as a 'save'—I think, in the government's terms; otherwise known to us as a cut—of $620 million over the forward estimates; is that correct?

Ms Beauchamp : These questions should be directed to the Treasury. The Treasury have policy responsibility and certainly for that measure they are responsible.

CHAIR: If that is all you have, we will probably move on.

Senator O'NEILL: Could I ask, if this is in order: with the initial $620 million save, has anything changed in the time since that went on the Notice Paper the first and second time and at the moment, where it continues to sit on the Notice Paper?

Senator Ryan: With respect, that really goes to the department that has policy responsibility for it—Treasury. You can put them on notice, or they can be referred to Treasury, but I think it is unfair to ask a department not responsible for it to answer such detailed questions.

Mr Lawson : I could add that the issues paper for the R&D tax review was put on the website and there is a graph on it showing changes in the estimate for the total cost to revenue of the program. The cost to the revenue of the program changes over time.

Senator O'NEILL: Thank you. I am happy for the detail to come on notice. But could I just clarify that the legislation around the R&D tax incentive that arose out of the 2014 budget is still live and on the Notice Paper currently.

Senator Ryan: I will take it on notice on behalf of the minister, because I do not know.

Senator O'NEILL: Mr Lawson, you are indicating that is the case?

Senator Ryan: To be fair, Senator O'Neill, again you are asking a question about the status of legislation for which this department is not responsible. I will take that on notice, because that is appropriately question that I just cannot answer off the top of my head. But this is not the department who owns that legislation.

CHAIR: They were here, but they were here yesterday.

Senator O'NEILL: Senator Ryan, would it be too difficult for you to get that information this evening? It is only a matter of looking at the Notice Paper.

Senator Ryan: To be honest, this is not my portfolio. I will have a look on the iPad, but I am sure your staff could as well. But it is not my direct portfolio responsibility and I am not in any way—

Senator O'NEILL: If you can come back and put it on the record, it would be appreciated.

Senator Ryan: I will see what I can do but, if you are just directing me towards the Notice Paper to answer your question, you could also look at the Notice Paper.

Senator McLUCAS: I want to go to some questions about the northern Australia infrastructure fund, if I could, please. I understand that some questions were asked before, but I was in another committee. So if I canvas things that—

CHAIR: We will tell you.

Senator McLUCAS: Just tell me if I am being boring.

Ms Beauchamp : Senator Macdonald asked a number of questions in relation to this.

Senator McLUCAS: I have a copy of the exposure draft, the overview paper and all the bits. I feel as if I am doing a legislation inquiry a little bit, so tell me if I overstep the mark.

Ms Beauchamp : We have had the exposure draft out for consultation. I think we sought submissions by 3 February and we had a number of submissions on the exposure draft.

Senator McLUCAS: I understand that. Can you explain to me what the identified gaps in the infrastructure financing market in Northern Australia are, please?

Mr Dal Bon : Can I just clarify your question? You say 'gaps'. Can I ask you to elaborate on that question, please.

Senator McLUCAS: Sure. I am quoting from page 1 of the overview document, where it says:

The Bill will establish the NAIF to address gaps in the infrastructure financing market for northern Australia.

This is the purpose of the NAIF, so what is the problem? I would like an enunciation of the problem, please.

Mr Dal Bon : There are a number of issues associated with northern Australia with respect to infrastructure. There is a perception with respect to the small population spread across a very large geographic area. There is a question about whether you are going to attract the necessary private investment in infrastructure in those remote locations. There are a number of issues associated with the infrastructure market in Australia. For example, at the moment—this is the intelligence we get from talking to people across the infrastructure sector—typically when you get bank finance for infrastructure projects you are essentially looking at repaying both the capital and the interest over a five- to seven-year period. So for greenfield projects in particular, where you are starting from scratch, having enough cash flow in those early years to cover both capital and interest is very difficult. So you have a refinancing risk. Also, because of the five- to seven-year period, there is a perception that there is a gap in terms of the longer term debt with respect to infrastructure in Australia. There is also a perception of information gaps, particularly for that region, both from project proponents preparing business cases to attract private capital and also from the investor side. For a lot of them, putting in the effort to have a look at a number of these smaller projects is just not worth it. They tend to focus on the bigger projects. Going back to the small population, if you think about a lot of the infrastructure that gets funded in the South, you have higher patronage. If you think of the roads, for example, where you can charge tolls and so forth, you have high patronage with respect to people using the infrastructure. Obviously, that is a concern up in the North.

Senator McLUCAS: You use the word 'perception' a bit, which troubles me, frankly. Is there an economic assessment of the failed financing market for infrastructure in northern Australia? Is there something more than the fact that there are not many of us, we are pretty spread out and making a business case to put a thing between somewhere and somewhere else can sometimes be hard? Have you gone to the next step to do the proper economic modelling around that? If you have not, you have not. What you have said about distance and population, we all know. But have you gone to the next step that says, 'Yes, this is the economic model that we have to deal with. Therefore, a $5 billion loan fund is the way to go'?

Mr Dal Bon : What I was referring to in terms of the five to seven years issue with respect to financing for greenfield projects is going to that next level. The original decision to set up the Northern Australia Infrastructure Facility was a decision that was taken by the then Treasurer. A lot of these issues obviously came up at that time.

Since the Department of Industry, Innovation and Science have taken it over, it has been more about the implementation. We have been out there, talking to various stakeholders about the implementation. We have also been talking to them about what the problems are so that, when we design this, we can attempt to design it in a way that addresses the problems in the most effective way. We have spoken to a lot of stakeholders from both sides. From the project proponents side, we have spoken to them in terms of whether they can get infrastructure finance and whether they can get it at a reasonable cost. Similarly, from a finance provision perspective, we have spoken to a lot of stakeholders in terms of what they are looking for in investing in infrastructure projects. A lot of those consultations are essentially reflected in the consultation paper from last year that you are referring to. In particular, the eligibility criteria with respect to the size of the projects and the proportion of Commonwealth debt that will go into a particular project reflect consultations that we have had with a variety of stakeholders.

Senator McLUCAS: That would be expressed in the investment mandate, as I read the bill? Is that right?

Mr Dal Bon : Sorry—what would be expressed in the investment mandate?

Senator McLUCAS: The quantum and purpose of the grant to be made and all of those elements: they are captured in the investment mandate that the minister provides to the board of the facility?

Mr Dal Bon : Yes. I can step you through the process that we have had so far. We had the discussion paper, which was released by the minister in November, and we had a consultation period that happened around that time. We then took on board all the feedback, and we worked up the legislation in January. That was released recently, and there was a consultation period.

In parallel to progressing the legislation, we have been working out the investment mandate, and the investment mandate is expected to contain the eligibility criteria, among other things. The exposure draft legislation that was released roughly two weeks ago listed at a headline level what would be in the investment mandate in terms of the particular issues.

Senator McLUCAS: But that is not expressed in the legislation. That would be in the document that goes between the minister and the board.

Mr Dal Bon : Yes. The legislation refers to the investment mandate and the key issues that it will cover, and then the investment mandate goes into further detail.

Senator McLUCAS: Yes. It is not a disallowable instrument, I understand.

Mr Dal Bon : It is a non-disallowable instrument.

Senator McLUCAS: Why was that decision taken?

Mr Dal Bon : That was a decision that the minister has taken. I guess he is best placed to explain that. But, in terms of other entities that have used a non-disallowable instrument, CEFC, for example, had a non-disallowable investment mandate.

Senator McLUCAS: As I read the exposure draft bill, the investment mandate is a document that is passed between the minister and the board and is not necessarily published.

Mr Dal Bon : Yes, it will be.

Senator McLUCAS: It will be published?

Mr Dal Bon : That is right.

Senator McLUCAS: How does that happen? It does not seem to be clear in the bill that it will be published.

Mr Dal Bon : My understanding is that, as a non-disallowable instrument, it will be made public.

Ms Beauchamp : It will be tabled in parliament.

Senator McLUCAS: It is a disallowable instrument?

Ms Beauchamp : No, it is non-disallowable, but it will still be tabled in parliament.

Senator McLUCAS: It is non-disallowable but tabled in parliament—okay.

Mr Dal Bon : That is right.

Senator McLUCAS: Minister, why is it a non-disallowable instrument?

Senator Ryan: I will have to take that on notice, this not being my area. I know that, in my time here, certain instruments of some sensitivity have been made disallowable. It is not uncommon, but I will take that on notice and get an answer for you.

Senator McLUCAS: Thank you. Why is it called a facility? It is a quite unusual name for an entity of the Commonwealth.

Mr Dal Bon : I would have to take that on notice. That was the name that we inherited from Treasury, so I could not tell you.

Senator McLUCAS: It is very unusual. Section 3 of the bill says that financial assistance will be provided to states and territories. How does that work? Let me reference it in a potential application. I come from Cairns. Cairns Airport has been touted as an entity that will want to apply to this facility for funds. It is privately owned. But, as I said, in section 3 of the bill it says that the financial assistance is to states and territories. So how does that work?

Mr Dal Bon : Does your question relate to the assistance provided to the states and territories—the grant of financial assistance—or does it relate to the financial assistance being provided to the project proponent?

Senator McLUCAS: If the project proponent is not a state or territory, how do they get access to the funds? My reading of this is that the money can only go to states and territories.

Mr Dal Bon : I will just focus on the project proponent first if that is okay.

Senator McLUCAS: Let's not talk about Cairns Airport. Let's make up a town and talk about some bridge.

Mr Dal Bon : Yes, in general.

Senator McLUCAS: Privately owned.

Mr Dal Bon : The way it is envisaged that it will work is that basically, if you take the project proponent, you will have what is called the NAIF entity. That will be established through this bill. The proponent would be essentially approaching the NAIF with their project, and then the NAIF, though a contracting ethic, would be essentially assessing the proposal. It would go to a board, which is also being established as part of this bill. They would then take a decision. That decision would be referred to the minister to express his approval of that decision. It would then go to the relevant jurisdiction. Hypothetically, if it was Queensland, it would go to the relevant part of the Queensland government for them to basically undertake their own assessment to make sure that they are comfortable and then they would make the final approval in terms of that particular project being financed. That goes to your question in terms of the grant of financial assistance to the states. So the flow of funds would basically go from the Commonwealth to the relevant state jurisdiction and then on to the project proponent.

Senator McLUCAS: What is the rationale for that process to occur?

Mr Dal Bon : That architecture?

Senator McLUCAS: Yes.

Mr Dal Bon : So that architecture reflects the constitutional advice that we have.

Senator McLUCAS: Without asking for advice, can you give me an understanding of why that is required? Is there a constitutional issue for the facility to have a relationship with a private entity without the states being involved?

Ms Beauchamp : It is more the Commonwealth's relationship with the project proponent. So the constitutional requirements look at roles and responsibilities of the Commonwealth and state, and I think it is saying that the state is better placed to administer those sort of funds.

Senator McLUCAS: But there have been circumstances previously where the Commonwealth has had a relationship with the project proponent, surely?

Ms Beauchamp : In some instances, yes.

Mr Dal Bon : Just to add to the secretary's comments, because this is a facility which is focused on northern Australia, the advice that we have—

Senator McLUCAS: It is not across the country.

Mr Dal Bon : yes—is that we need to use sections 96 and 122 of the Constitution, and that if we tried to use other heads of power from the Constitution we would be contravening section 99.

Senator McLUCAS: That explains that. So what impact will that have on a state's budget?

Mr Dal Bon : This is one of the issues that we have been working on and working with the relevant jurisdictions. Depending on how the arrangements are structured between the Commonwealth and the state, you can have a situation where you have a back-to-back agreement between the Commonwealth and the relevant state or territory, and the accounting advice that we have been provided is that you can have essentially a derecognition from the state accounts with respect to the loan or other financial instrument, so it would be a pass-through arrangement.

Senator McLUCAS: A pass-through arrangement?

Mr Dal Bon : Yes.

Senator McLUCAS: I am just imagining, though, that we have $5 billion. Let us say Queensland gets $3 million. How does what you just said mean that the Queensland budget is not impacted?

Mr Dal Bon : Again, it boils down to the agreement that you have in place with, say, in this case, Queensland. If you have a back-to-back agreement where the Commonwealth essentially agrees to take on the responsibility of the loan, for example, if the loan goes bad at some point, the state is not liable for paying that money back to the Commonwealth because there is that back-to-back agreement. The advice we have is that essentially that loan is derecognised from the state accounts.

Senator McLUCAS: And does not affect the bottom line? It will show on the bottom line of the state budget.

Mr Dal Bon : Not for the states.

Senator McLUCAS: It won't?

Mr Dal Bon : No.

Senator McLUCAS: Okay. Thank you. I did not understand all that till now.

Mr Dal Bon : We got specialised accounting advice, and that is the clear advice. We have been discussing that with the relevant accounting authorities in the jurisdictions, and that seems to be where we are in terms of there being a consensus around that advice.

Senator McLUCAS: Okay. Thank you. Another issue is that the bill allows the board to consider a range of financing mechanisms. Does that mean that, if for proponent A we have that set of financing mechanisms at the same time as proponent B wants a different thing or object, we would treat them differently, or does it mean that over time the financing mechanism will change or the financing options will change?

Mr Dal Bon : Just to clarify, you are referring to grants of financial assistance? Is that what you are referring to in terms of this?

Senator McLUCAS: Yes. I did not write down the section.

Mr Dal Bon : The question of exactly what financial instruments will be offered by the NAIF is still to be determined, but the default arrangement at this point continues to be concessional loans.

Senator McLUCAS: In the overview paper it says:

The Bill enables the NAIF Board to consider the use of a range of financing mechanisms.

I am trying to ascertain whether that is saying that, over time, these things will change or whether different projects will be treated differently in the financing mechanisms?

Mr Dal Bon : Just to clarify, when you say that, over time, these arrangements will change, do you mean in terms of the financial instruments on offer?

Senator McLUCAS: Today we might say that the loan rate is going to be five per cent, and then next week the world has changed, so we are going to call it seven per cent. The world changes over time. If there is an application for an upgrade of an airport in the Northern Territory, will it be treated the same as a road in Queensland, if those applications come in at the same time?

Ms Beauchamp : I would probably expect them to be negotiated on a case-by-case basis.

Senator McLUCAS: That has answered my question. Thank you. So it may be different.

Ms Beauchamp : Yes.

Mr Dal Bon : Definitely.

Senator McLUCAS: The facility expires five years from the date that the legislation commences. What is envisaged will happen after that?

Mr Dal Bon : I guess what we are expecting is that the five-year period will be the writing of the $5 billion worth of loans. The board will make the decisions about which projects to invest in. There might be some projects where, for example, the board will take a decision close to the end of the five years but the final execution of that particular loan has not taken place. So there could be a bit of money still flowing after that five-year period. But the majority of the time after the five-year period will be essentially managing the tail of the loans.

Senator McLUCAS: So nothing will be written after the five-year period, but those loans will not be paid up by the end of the five-year period.

Mr Dal Bon : That is right; they may not be.

Senator McLUCAS: Will water projects funded by the NAIF be subject to the objectives of the National Water Initiative?

Mr Dal Bon : I would have to take that on notice.

Ms Beauchamp : We would like to think that the loans would reflect a priority around government policy. But, certainly, we have got to wait to see what sorts of projects come forward from the proponents.

Senator McLUCAS: Would you imagine that the investment mandate would be explicit around compliance with government policies like the National Water Initiative? I know it is early days yet, but this is pretty fundamental.

Mr Dal Bon : I think there is a general expectation that when the board is taking decisions it is doing that mindful of government policy at both the Commonwealth and the state and territory level. Whether there is a requirement or not I guess still needs to be determined.

Ms Beauchamp : You mentioned the word 'compliance'. Obviously they would need to meet any sort of regulatory or legal requirements.

Senator McLUCAS: 'Compliance' was probably not the right word. 'Subject to the objectives of' is probably a better set of words to describe alignment with government policy.

Mr Dal Bon : Yes. I think, generally, that is the broad objective.

Senator McLUCAS: Do you think that would be explicit in the—

Mr Dal Bon : It is still to be determined exactly how that is expressed.

Senator McLUCAS: Will there be any limits for individual investments in NAIF projects?

Mr Dal Bon : When you say 'individual investments', do you mean in particular projects—like a cap on the size of a particular project?

Senator McLUCAS: Yes.

Mr Dal Bon : No, there is not one proposed at this stage, but we are looking for a good geographic spread of projects.

Senator McLUCAS: That was my next question. So, in terms of a geographic spread, have you got any general views about a split between the three jurisdictions?

Mr Dal Bon : No, we do not have a view on: 'X amount of dollars or X per cent needs to go into this jurisdiction or that one.' Obviously the merits of the proposal will be one of the prime considerations. I would have thought, based on the population spread across northern Australia, that you would expect a reasonable amount of investments to be happening in northern Queensland, but we are also conscious that a territory like the Northern Territory does not miss out, given that it has a very small population.

CHAIR: Senator McLucas, how much more—

Senator McLUCAS: I will try to truncate it now. You have been very generous. As to the NAIF board, have you got a process organised for that, or is that a question I should ask you at another time—or is it a question that was canvassed earlier?

Mr Dal Bon : No, it was not canvassed earlier that I can recall. So we are just basically starting a process where we can undertake a bit of a search for potential board members.

Senator McLUCAS: Will there be crossover between the NAIF board and Infrastructure Australia's board?

Mr Dal Bon : Sorry; would you mind—

Senator McLUCAS: Will there be some sort of common membership or relationship between the NAIF board and Infrastructure Australia's board?

Mr Dal Bon : That is still to be determined, but we are certainly keen to have a relationship between the NAIF and Infrastructure Australia. So, whether it is reflected at the board level or whether it is reflected in some other means, through a consultation process, for example, is still to be determined. But certainly there is a general objective to have close consultation, at the bare minimum, between them.

Senator McLUCAS: So, to this point in time, what role has Infrastructure Australia played in the development of the NAIF and the conversation about the board structure?

Mr Dal Bon : We have had discussion with Infrastructure Australia on the design of the facility. To my knowledge, we have not had any conversations yet with respect to the board, but I would expect that to happen in due course.

Senator McLUCAS: My final question goes to transparency of decision making. The board makes recommendations to the minister. The minister then consults with his or her state colleague?

Mr Dal Bon : That exact consultation process is still to be settled, but, given that the relevant jurisdiction will then need to sign the documentation, my personal view, if I can express that, would be that that would be a sensible thing to do.

Senator McLUCAS: When is the list of funded projects published—at what point in that little continuum?

Mr Dal Bon : The list of funded projects?

Senator McLUCAS: Yes. So when does it publish that we get a bridge to Vanuatu, as I would say?

Mr Dal Bon : That will probably be a decision for the board once it—

Senator McLUCAS: The board and not the minister?

Mr Dal Bon : For the funded projects?

Senator McLUCAS: Yes.

Mr Dal Bon : Yes, that will be a decision for the board.

Senator McLUCAS: To publish the successful—

Mr Dal Bon : As to these issues, in terms of the pipeline, or the successful projects, that is a question that is still to be determined, but you can imagine that the board would have to make that information available.

Ms Beauchamp : Ultimately the announcements would be made by the minister, though.

Mr Lawson : We are expecting press releases!

Senator McLUCAS: There has been some discussion about who should be eligible and whether or not we should only have Australian companies eligible for these funds. Is there a view on that at this point?

Mr Dal Bon : Sorry, would you mind repeating that?

Senator McLUCAS: It's okay, Mr Lawson was talking to you. There is a view that has been in some of the media that only Australian companies should be eligible to apply for these funds. Has that been canvassed or has a decision been made about that yet?

Mr Dal Bon : There is no restriction, if you are thinking of project proponents. Whether it is a domestic or international project proponent, there is no restriction.

Senator McLUCAS: Thank you. You have indulged me very much.

CHAIR: Senator Macdonald had a follow-up.

Senator IAN MACDONALD: It is about the issues about doing it through the state. I understand the constitutional reason for doing that, but this is a Commonwealth program administered by a board in a Commonwealth department. The decision will be one of the Commonwealth minister, not of the relevant state government through whom you have to pass the money to deal with constitutional issues. Is that correct?

Mr Dal Bon : I guess there are a couple of decisions that need to be taken throughout this process. It will have an independent board that will take a decision about whether they agree to fund a particular project. That decision would then be referred to the relevant minister at the Commonwealth level, who I guess will only express a view if they disagree with the decision. Then, assuming the decision goes forward, the relevant state would then need to actually approve the final contractual details with the project proponent.

Senator IAN MACDONALD: On what basis is that?

Mr Dal Bon : That is on the basis of the constitutional advice that we have.

Senator IAN MACDONALD: Senator McLucas mentioned Cairns Airport, and I have absolutely no idea if that is a relevant example. It is on Commonwealth land and has nothing to do with the state government, but you are staying the state government would then apparently have a veto on whether this facility goes forward, when it is totally funded by the Commonwealth. Is that what you are telling me the proposal is?

Mr Dal Bon : I cannot comment on any exact circumstances around the Cairns Airport.

Senator IAN MACDONALD: No, I am using that as an example. If it were a dam, clearly a state government would have to be involved because the states control the rivers. But there may be other facilities—for example, an airport—where the state has very little relevance. So I am just wondering if even after the Commonwealth having made a decision and the independent board having made a decision, a state government which does not happen to believe, for example, in dams could then veto the thing. It is probably not a good example because the state could veto the construction on their rivers. I cannot think of an example, but you get the point.

Mr Dal Bon : At the end of the day, the state will need to sign the contract with the project proponent. To avoid a situation where we go through a lengthy process and then end up in that situation the idea is to have a sort of an ongoing consultation process from very early on in the process. When a project proponent first approaches the NAIF, the idea would be to engage the relevant jurisdiction early with the view that if there are any sorts of issues or problems they can be aired early and potentially dealt with early.

Senator IAN MACDONALD: Could I give you another example that is hypothetical but fairly close to the truth: if the Commonwealth voted for a facility for a shipbuilding unit in Cairns but the state government of the day—whoever it might happen to be—did not like the attitude of the owner of that company and then refused to sign it, are you saying that it would not proceed?

Mr Dal Bon : If they do not sign the contract, it will not proceed. But, as I was saying before, we want to set this up in a way that involves state participation very early on in the process.

Senator IAN MACDONALD: And they put not one cent into it.

Mr Dal Bon : They may. It depends—

Senator IAN MACDONALD: I can guarantee they will not! Not any state. Perhaps Western Australia might.

Senator McLUCAS: Be nice to Western Australians!

Senator IAN MACDONALD: I am interested in those answers. This legislation is still at the formulation stage, which I appreciate, and I think you said you have had 14 submissions—and I indicated that it would be inappropriate for me to say who they are from, although you have had submissions from three state governments.

Mr Dal Bon : Two, yes.

Senator IAN MACDONALD: Did any political party make a submission? Again, I do not want names.

Mr Dal Bon : It will take me a minute. I have the list here, if you want to bear with me.

Senator IAN MACDONALD: Yes, but do not name the names.

Mr Dal Bon : My recollection is that there was a letter from one of the political parties.

Senator IAN MACDONALD: Thank you.

Senator McLUCAS: Now you have raised it—

Senator IAN MACDONALD: Well I do not think it is appropriate to ask.

CHAIR: Are we all good on northern Australia? Does anybody else have anything on northern Australia? All right then, anybody associated with northern Australia can get out of here before somebody comes back.


CHAIR: We will go back to automotive.

Senator KIM CARR: Ms Facey, how many firms are currently registered for the ATS?

Ms Facey : At present we have 117 registrants in the Automotive Transformation Scheme.

Senator KIM CARR: That is of this date? What date is that from—today?

Ms Facey : That is as at 31 January. At last estimates we had 119 and since then we had three deregistered and one of those three successfully reapplied. One of the other three is no longer eligible and the last one moved out of the automotive space so they are not eligible any longer.

Senator KIM CARR: Thank you very much. How many firms have applied for national interest provisions?

Ms Facey : The total number is 24. We have had 14 approvals and we have had three rejected and seven are still in train. Of the 14 approved there were actually 11 firms because three of them had actually been approved twice for different periods of time.

Senator KIM CARR: Thank you. I do not know whether you are the relevant officer here, but I would like to know about the national interest provisions. I put a question to you—No. 2647—in regard to the arrangements there asking whether the government would consider allowing manufacturers to maintain their ATS registration for a period of not longer than two successive years. The response that came back said:

… the ATS registration … the option to submit a new application in the national interest prior to the expiration of their current registration …

I am particularly interested in how the scheme actually works. I am especially interested in the regulation of 2.258. As I read, it requires a minister not to grant an application if there has been more than two successive years.

Ms Facey : There are currently three companies in their third, or more, years.

Senator KIM CARR: How do they do that, given the provisions of 2.258?

Ms Facey : Just to explain how the scheme works in terms of successive periods of registration, when a company applies for registration it can be for a period of up to two years. At the end of that period, if they are not eligible under normal provisions, then they must be deregistered. There was a recent decision in the full bench of the Federal Court in relation to automotive components. That was where AusIndustry deregistered the participant because they were no longer eligible at the end of their two-year period of national interest. That meant that they did not get their fourth-quarter payment. In that case, that has been to the Federal Court. It was agreed that they were not eligible for that fourth quarter payment. In that case, for example, if the company were to submit another application, they can then be paid for the first quarter for the following year, but they cannot get that fourth quarter payment at the end of the two years.

Senator KIM CARR: Let me read it to you:

The Minister must not grant an ATS participant permission to continue registration under this regulation for a period of more than 2 successive ATS years.

In the ordinary meaning of those words, can a company receive national interest registration in the third year?

Ms Facey : The way that works is: they have to reapply for a separate period. Two years is okay, but they then have to put in a new application. That is the way it works.

Senator KIM CARR: Can a firm register under ATS for more than two successive years—yes or no?

Ms Facey : They can apply as a separate application. They cannot apply for ongoing registration. It creates that break where they do not get paid for that last quarter.

Senator KIM CARR: I see. If they were to apply for the first quarter of the subsequent year, section 2.258 would not apply?

Ms Facey : It means that they can get that separate registration for the new period, but they do not get the last quarter.

Senator KIM CARR: Let us be clear about this: they can apply in the third year if they are prepared to forgo the last quarter of the second year.

Ms Facey : That is right.

Senator KIM CARR: How many firms have done that?

Ms Facey : There are three companies in their third, or more, year.

Senator KIM CARR: Are you explaining to participants your interpretation of that clause?

Ms Facey : We are actually about to put out a newsletter about that. This has been, obviously, before the court, so we are going to put out a—

Senator KIM CARR: A bulletin. I have seen correspondence from the department. To my reading of it, in the interpretation of that cause—and this was from last year—and in the interpretation of the company on the basis of their legal advice, they could not apply for the third year.

Ms Facey : This is where the new application is okay. You cannot apply for three years, but you can put in the new application.

Senator KIM CARR: That is quite a significant development.

Ms Facey : Of course this has just been decided by the Federal Court.

Senator KIM CARR: What date was that?

Ms Facey : That was in January this year.

Senator KIM CARR: I see. Do you have a date in January? Can I look it up? Or can you provide me with a copy of the judgement?

Ms Butler : We will take it on notice and provide that.

Ms Facey : It was 29 January.

Senator KIM CARR: So that is very recent. Thank you very much. That will be really helpful. Has any consideration been given to the need to change any of the regulations in the light of this judgement to make it clearer?

Ms Facey : Not at this time.

Senator KIM CARR: Will you take that on notice?

Ms Facey : Yes.

Senator KIM CARR: Any ordinary reading of that would give you a different impression from what you have said given this court decision.

Ms Facey : Indeed. That is why we intend to send around a newsletter to our customers to explain how that works.

Senator KIM CARR: And you do not think you would need a change in regulations?

Ms Facey : We have not felt that at this time, no.

Senator KIM CARR: Or you have not considered it?

Ms Facey : We have not considered it, no.

Senator KIM CARR: So will you take that on notice, and will the minister consider changing the regulations if you take into account these new circumstances? Thank you. Mr Chesworth, that was not so difficult, was it? But I have one for you that might be a little bit more interesting: parallel imports. There was an announcement by the government yesterday that the government intends to press ahead with parallel imports of used cars—I say a car with 500 kilometres on the clock is a used car. I know you will tell me that this is someone else's portfolio.

Mr Chesworth : That is correct.

Senator KIM CARR: But what was the consultation with this department about that decision?

Mr Chesworth : It was a decision of the cabinet, so the department was involved in the normal processes that lead to consideration by cabinet.

Senator KIM CARR: Okay. Can you tell me the date of the cabinet decision?

Mr Chesworth : No, I cannot.

Senator KIM CARR: You can take that on notice.

Senator Ryan: I will take it on notice, given my other hat, but I am not sure—with the proviso—

Senator KIM CARR: Which other hat are you talking about, Senator Ryan?

Senator Ryan: My Assistant Cabinet Secretary hat, but with the proviso that I am not sure if we normally provide the dates.

Senator KIM CARR: You do. That is quite a standard question—the date on which it was decided. I am not going to the deliberations of the cabinet but the date.

Senator Ryan: Yes, sure.

Senator KIM CARR: Have you been briefed on what changes are required to the Motor Vehicle Standards Act?

Mr Chesworth : Yes.

Senator KIM CARR: What does that involve? Do you know?

Mr Chesworth : My best recollection of it is that the decision does not come into effect until 2018, so I would assume that there would be a process between now and then of essentially determining the legislation that needed to be changed, if any, and presenting that through the normal processes through parliament. But again this is an issue that is owned by another portfolio.

Senator KIM CARR: Thank you. Has any consideration been given to the maintenance of motor vehicle standards in regard to electronics?

Mr Chesworth : Consideration?

Senator KIM CARR: Yes—imported vehicles with foreign standards for electronics.

Mr Chesworth : Certainly we have had some representations from some manufacturers about issues that can arise. I am sure they would not mind me saying so. Toyota has raised that as an issue, for example.

Senator KIM CARR: And the disabling, for instance, of the tolling arrangements on our freeways—is that sort of thing being considered?

Mr Chesworth : I do not recall hearing that issue, but there have been issues raised in relation to, for example, whether the software available on a car in Japan is the same as the software available on a car sold in Australia.

Senator KIM CARR: What is your advice to Toyota on that issue?

Mr Chesworth : We are there to listen. They make the representations, and it is taken into consideration.

Senator KIM CARR: They would know that the software is not the same, wouldn't they?

Mr Chesworth : As you know, they are a global company.

Senator KIM CARR: That is right.

Mr Chesworth : It may be for some models and not for others, but I think Toyota is best placed to answer those questions.

Senator KIM CARR: Thank you very much. I do not think we can take it much further. I can conclude my questions. I will put the rest on notice.

CHAIR: Thank you. Is there anybody on automotive transformation beyond this?

Senator KIM CARR: Senator Ketter has some stuff on dumping.

CHAIR: But not on automotive?

Senator KIM CARR: No.

CHAIR: If there is nothing on automotive, all the automotive people can go home.


Senator RHIANNON: I want to move on to issues to do with the voluntary site selection process for a national radioactive waste facility.

Ms Beauchamp : This is down into the resources and energy area. I will ask my radioactive waste people to come to the table.

Senator RHIANNON: It is about the voluntary site selection process for a national radioactive waste facility, concentrating on the Hill End issue. Are you aware that the address for the Hill End proposed site that has been advertised in the government Gazette is incorrect?

Mr B Wilson : That is a good question. It is actually quite a complex explanation. The address that we first published in the Gazette notice in November was taken from title searches that we had our property lawyers undertake on the nominated block at Hill End. We had 25 titles come back on that block, 17 of which, from the New South Wales Land and Environment register, showed an address of 3165 Hill End Road. In good faith and after questioning our property lawyers, they indicated that that was the best address to use for that property.

Senator RHIANNON: At that stage did you talk to the person who had nominated their property?

Mr B Wilson : At that stage we had talked to the person who nominated, and they had put down the address of 2641. We were following the advice of the property lawyers. That advice was based on information correctly obtained from New South Wales Land and Environment. I would note that on discovering that there are in fact at least two address systems in place we do know from the New South Wales government itself that there is no authoritative reference addressing system in New South Wales for property. But when we had our first meeting at Hill End many residents at that meeting indicated concern at that address. We also had concern from the owner at the street address of 3165. We did publish a correction notice on the Gazette to 2641.

Senator RHIANNON: What date did you publish that? I have not seen that.

Mr B Wilson : We changed the address on our website on 24 November, and then we put a regazettal notice in on 14 December.

Senator RHIANNON: But what about the coordinates? I understand that the coordinates that you used actually come up for a Queensland property.

Mr B Wilson : Not to my understanding. As far as I am aware the coordinates that we published are correct.

Senator RHIANNON: So, you have not received that complaint?

Mr B Wilson : Not to my knowledge, no.

Senator RHIANNON: And why did you call it Sallys Flat when the locals say it is Hill End?

Mr B Wilson : That is another good question with a good explanation. The address that is published is Hill End Road, Hill End, and we used the street address at the end of the day. We used the label Sallys Flat. The property owner who nominated his block indicated that Sallys Flat was the reference he used. On Google Maps and other mapping devices we actually looked at the location of the block. It is in fact closer to Sallys Flat than to Hill End. We also took advice from the property owner that the person he had purchased the property from, who lived in the area for 100 years, also referenced Sallys Flat. But, again, after that first meeting, when some concern was expressed around Sallys Flat, we then changed on our website the reference to Sallys Flat, Hill End. One of the reasons we did that was that at the first meeting the people there indicated that one of their big concerns was that people would think we were trying to site a radioactive waste facility in the township of Hill End. For us the whole purpose in labelling these blocks was to try to give people the best sense of where the property is, and the property is some 10 kilometres from the Hill End village and some four to five kilometres from Sallys Flat.

Senator RHIANNON: But you are probably aware—I understand that you have been there for meetings—that the problem with the address has added to the perception that the process is being mismanaged, and people do not feel confident about the way it is playing out. Is that something you have confronted with the meetings you have attended?

Mr B Wilson : Certainly from the feedback at those meetings and other discussions we have had around the area that has been less of a concern, but at those particular meetings yes, that was raised.

Senator RHIANNON: Regarding how you conducted the process, I understand that you really attempted to have one-on-one meetings with people and not do the public meetings. Was that based on advice from the consultants who were helping run it? Or was that an internal departmental decision?

Mr B Wilson : At the end of the day it was a departmental decision. In our first—

Senator RHIANNON: But you use the term 'end of the day'. Does that mean there was a point where you were advised to do one-on-one meetings by the consultants who were assisting you?

Mr B Wilson : We took advice from a range of sources, and certainly a company had advised us that at least initially it was better to conduct one-on-one or small-group meetings with people to get a feel for the area before conducting broader, open town meetings. At the end of the day the people in the area indicated their preference—most of them who we talked to, anyway—for the town hall meetings, so that is what we did.

Senator RHIANNON: The survey that you conducted: how much did that cost?

Mr B Wilson : The survey that we will conduct—we have conducted a background survey just in the past two days, and we will be conducting a final survey of the community towards the end of the consultation period, which ends on 11 March. We have a budget for that of $384,409. Whether we spend that amount of money is yet to be seen, but that is a contracted amount.

Senator RHIANNON: Is a background survey like a sample of it, and then the final survey is everyone? Could you explain that?

Mr B Wilson : The initial survey we are doing at the moment is really a trial to test the questions to make sure that the survey runs smoothly, that the people receiving the questions find them easy to follow and that it is eliciting the sorts of positive responses we are looking for. There are also some questions to really test whether or not the information that is being provided is getting into the community as we would like. One of the principles we are trying to follow here is informed consent, so we really want the community to be getting as much information as possible. This survey is what they term a calibration-type survey. It is not being used to assess the overall strength of community views; it really is a subset of a statistically significant survey.

Senator RHIANNON: What are you trying to assess with the survey?

Mr B Wilson : To trial the questions—trial the questionnaire and the format of the survey.

Senator RHIANNON: No, what I mean is, with the final survey, is it like a referendum, of saying yes we do or no we do not?

Mr B Wilson : No, it is a survey done by a professional research company that does this sort of survey. They are following standard best industry practice, which is for a randomised survey of the community. So, it will be a subset, but a statistically significant subset, and that will probably be made up of phone and face-to-face interviews across the designated area. It will not be everybody; it will be a statistically significant subset.

Senator RHIANNON: And the aim is to then come out with this many people who support it and this many people do not support it? Or is it more attitudinal? What are you after?

Mr B Wilson : This survey is just one of the mechanisms at the end of the consultation period that we will use in forming up our advice to the minister on the level of community support, the willingness of that community to enter into the next stage of the process. This process is based on a broad, statistically valid survey across the community. It is also going to be made up of face-to-face interviews and surveys of significant subgroups of the community. The minister has asked us to provide him with a comprehensive and robust picture of the community's views. A single survey with just a single number will give you an answer on the question that you propose but it does not provide a complete picture of views, for instance, of the immediate and surrounding neighbours, of local towns in the area, of key groups, such as the council, business groups, social groups in the area. We want to put all that together in a composite picture and provide that advice to the minister.

Senator RHIANNON: So, would this be relevant to that?—it is on page 1 of that colour glossy that you have out about this process, under 'Process to identify a national facility':

At the end of Phase 3, agreement with the community on hosting the facility is essential. The Government has stated it will not impose a repository on an unwilling community, noting no individual or group has a right of veto.

Is what you are doing with the survey feeding into this approach? I am trying to understand. I am just asking in terms of New South Wales, and these are the questions I get all the time.

Mr B Wilson : Thanks for that, Senator, because these questions also apply to the other four communities. There are five other sites but four communities. It is a multistage process that gets deeper and more involved as it goes along. At this stage of the process the minister has six nominations that he is considering. He has not accepted them. In the process of considering which nominations to accept he wants to know whether or not the communities involved are prepared to go to the next stage of the process. At this point we are not asking the communities specifically whether they wish to host a radioactive waste facility. As yet, some of the information that would be required for them to make a fully informed decision on that is not available. That comes in the next stage of the process, where we sit down with those communities, we work up a detailed design, we work up safety and risk cases, we work up environmental monitoring and safeguard controls, we work up what the community benefits would be, how we could structure the project to maximise business opportunities. All that comes at the next stage. At the end of that stage there will be a much more site-specific proposal that communities will be able to see, and at that point they will be asked whether or not they want to host the facility. At this point the survey is really trying to get a view of, 'Do you want the minister to accept the nomination and move into the next stage of the process?'

Senator RHIANNON: With this process that you have outlined will you also take into consideration the motions that are being put to those public meetings, where on a number of occasions it has been unanimously rejected? Will that be part of what you are reporting to the minister?

Mr B Wilson : Absolutely, and I indicated that at the meeting just last Saturday week, that we certainly would be reflecting the views of that meeting. I would note that there were somewhere in the order of 100 to 150 people at that meeting. Obviously not all of them came from that immediate community, but we accept that that was the view of that meeting, and we will faithfully relay that. There were also people who did not attend that meeting, and we have had contact since then from other people indicating support for the process. What I said at the meeting was that we would take all those views on board and at the end of the day reiterated the government's commitment that if the community did not want to proceed then it would not proceed.

Senator RHIANNON: With the property under consideration, would you be purchasing the whole property if you put the dump site there? Or a part of it?

Mr B Wilson : The proposal would be to purchase around 100 hectares. The facility itself we estimate will be around 40 hectares in its actual operational footprint, but we would be proposing to purchase around 100 hectares, maybe a little bit more, taking access roads and other things into account, as a buffer zone. That does take a chunk out of any existing property. And we would purchase that 100 hectares as we have advertised, at four times the market value.

Senator RHIANNON: Perhaps we could move on to some of the comments that have been made by the local member and also by you, when you have been there. Mr Cobb, the local member, said in the initial stages, when the story first broke, in relation to the nuclear waste proposed to be stored at the site, that it was 'safe enough to sleep on'. Is that a statement you would agree with?

Mr B Wilson : You could certainly sleep on it and it would not do you any harm; I would support that.

Senator RHIANNON: Actually sleep on the waste?

CHAIR: Senator Rhiannon, it is a pity you were not here earlier to hear Dr Adi Paterson from ANSTO. Senator Ludlam was. He talked about the repatriation.

Senator LUDLAM: He was not advocating sleeping on the stuff.

CHAIR: It is absolutely safe to sleep on. There you go: I will go and sleep on it tomorrow night!

Senator RHIANNON: You are standing by that—

CHAIR: I will go and sleep on that tomorrow night. If I am invited, I will go and do it.

Senator RHIANNON: Mr Wilson, you are standing by that statement?

Mr B Wilson : I do not recall making that statement—

Senator RHIANNON: I have asked if you dispute that statement, and so—

Mr B Wilson : No, I do not dispute that statement. And I am happy to reassert that I am happy to go and sleep on top of the container whenever I am invited to do so.

Senator RHIANNON: Mr Cobb also stated that if none of the six sites want it then none of them will have it. Is that the process you are following?

Mr B Wilson : That is right. We, and the minister, have reiterated that no community will host the facility where it does not enjoy broad support. We aim to go from six to two or three. But it is possible, surely, that no sites come up in this round. That is a possible outcome.

Senator RHIANNON: Right. I suppose that what is critical here is how you define 'none of them will have it'. That is where we go back to the survey and how you are going to make that assessment.

Mr B Wilson : That is right.

Senator RHIANNON: As you know, there has been concern at Hill End about how the person whose property you are now looking at came to make the nomination. Could you explain what the process was by which the landowner nominee at Hill End was made aware of the request for nomination?

Mr B Wilson : I cannot comment on how the nominator at Hill End sought information to make the nomination, or on his reasons for making it. We accept that he made it in good faith. At the time we ran advertisements: we published a gazettal notice and we ran advertisements in a range of newspapers and—

Senator RHIANNON: So when the other landowners around there say they did not know about it but he did, you are saying that he saw it in the government gazette or somewhere and they did not?

Mr B Wilson : Or one of the newspapers—The Land or the country times or something like that.

Senator RHIANNON: You are saying that there was no other contact?

Mr B Wilson : That is right. We did not solicit any of the nominations.

Senator RHIANNON: With respect to your own comments—and maybe they were inaccurate: I saw them reported but I know that sometimes they can be inaccurate—when you were out there, Mr Wilson, that it would not go ahead: is it accurate that you said that when you were out there at the meeting, where there was considerable opposition?

Mr B Wilson : I said to the meeting that in receiving the community's views through all the mechanisms I outlined at the meeting that if the minister were satisfied there was not broad community support for the process to move forward at Hill End then it would not move forward. That included the final siting decision as well as this point in the process.

Senator RHIANNON: The report said that you had said, 'If the community doesn't want this it stops. It would absolutely stop.'

Mr B Wilson : Yes. That would be an accurate statement, yes.

Senator RHIANNON: Right, okay. So it stands at that: if the community does not want this it stops—it absolutely stops. Thank you.

CHAIR: They tell me that if you eat bananas—

Senator LUDLAM: Who are 'they'?

CHAIR: I will attribute it shortly. If you eat a banana you are consuming as much radiation as you would if you sat on top of this can for 100 years—

Senator RHIANNON: So are you going to sleep on a banana tonight?

CHAIR: I love bananas, Senator Rhiannon.

Senator RHIANNON: Seriously! It is Thursday night!

Senator XENOPHON: Chair, can I just ask about the issue of community consultation in Kimba—one community. Concerns have been expressed. I know there are two sides to the argument. Are you saying that if there are a number of alternative sites and if there is strong community concerns about one particular site, that this would be a factor in the Commonwealth's decision in respect of this?

Mr B Wilson : Yes, absolutely.

Senator XENOPHON: Has the Commonwealth assessed whether there are some sites that have a stronger level of support for the repository than others?

Mr B Wilson : Not at this stage. We have gone into this process with an open mind on all six sites very deliberately. The assessment that we have done so far is a desktop technical assessment using publicly available data on a range of criteria. That framework is available on the website. It mainly looks at technical criteria. This part of the consultation process is actually completing that—looking at the social acceptance. We are very consciously not forming a view until the end of this process, when we have a broad sweep of feedback from the communities. At this stage—and I relay my personal experience—when I have gone into the communities, you can talk to one set of people or another and you will think that either it is never going ahead or it is absolute in-the-bag support. So it is a roller-coaster. We are very deliberately waiting until the end of the process, where we can have a comprehensive view before we form any—

Senator XENOPHON: This is out of left field: have there been any proposals put to you about the community having some sort of say through a plebiscite, if it is that divisive an issue, or where you are concerned there is not a genuine view? I am not suggesting that be done, but I am wondering whether that has been put to you as a proposal.

Mr B Wilson : We have certainly had questions about whether we would run a plebiscite. We are comfortable with the survey method and the direct contact with the various stakeholders groups. I would note we have no legal mechanism by which to do a plebiscite anyway, so any poll that we do would only be a voluntary poll, and then we can have a debate around whether a voluntary poll is better than a statistically valid, randomised survey.

Senator XENOPHON: But you are confident that, at the end of the day, you will be able to get a pretty reasonable and accurate gauge of what the community support or opposition is to a particular proposal?

Mr B Wilson : I am very confident that we can do that. If I give the minister bad advice then we will know it pretty quickly.

Senator XENOPHON: From the minister or from the public?

Mr B Wilson : From the public.

Senator LUDLAM: I have a couple of follow-up questions for the officers. Senator Rhiannon has asked questions fairly comprehensively around Hill End, so I will confine my remarks to the other sites and ask some process questions in general. There is growing concern in South Australia that the nominated sites may also become default nominated sites for proposals—

CHAIR: Define 'growing concern'. There has always been concern. It is not growing. Do not be alarmist.

Senator LUDLAM: Can I just put some questions to the witnesses?

CHAIR: Sure, you can—

Senator LUDLAM: I know you have strong feelings about this, and you are chair of the committee, which means it is quite difficult, when you interrupt, to call on the chair—

CHAIR: Well, we want some reasonable questions. You are putting a slant on it.

Senator LUDLAM: I have barely even asked—

CHAIR: You are putting your own political slant on it. Ask the questions.

Senator LUDLAM: You were pretty good earlier, Senator Edwards. Just let me get some questions out, and maybe leave commentary about bananas and stuff until later. The concern that I am trying to express, if the chair would let me finish my sentence, is that the sites that you are undergoing site selection work for may end up as de facto sites for an international waste dump. We have a royal commission being undertaken at the same time. People are understandably nervous that there may be tie-ins between the two processes. What can you tell us to set my mind at rest and others' minds at rest that that is not actually what is occurring here?

Mr B Wilson : Thank you, Senator. That is a good question—one that you will not be surprised to learn I get asked a fair bit on the consultation processes.

Senator LUDLAM: I guess so.

Mr B Wilson : The answer comes with several different layers, but fundamentally the facility that we are looking at siting will not be used for foreign waste or to dispose of intermediate- or high-level waste, and there are a range of reasons for that: (1) the law currently prohibits—the law does prohibit—the import of foreign waste—

Senator LUDLAM: Commonwealth law?

Mr B Wilson : Yes. The law also prohibits the importation of high-level waste. So, at the legal level, it cannot happen. The National Radioactive Waste Management Act 2012 is also only structured around a site for Australian waste—Australian low-level and intermediate-level waste. Then there are the technical arguments. If future law were to change, you still could not use this site for high-level waste. High-level waste disposal requires deep underground, highly engineered structures. This is a 40-hectare above-ground concrete pad with some buildings around it. The two are completely different. The national regulator, ARPANSA, would license this facility for very specific purposes. I cannot imagine any regulator would allow a site like this to be used for high-level waste, which requires, as I said, a very different approach. The government of the day, if it tried to do it, would lose community support instantly because it is not the purpose for which the facility was put into the community. We are exploring ways to look at developing a contract with communities around the purpose of the site and the nature of the site which would establish a legal or binding contract with that community on it.

Moreover, the best practice and guidelines that the International Atomic Energy Agency—we are a signatory to the act that set that up—establishes for the management of high-level and intermediate-level waste would not allow that to happen, and we would be condemned internationally if that was to occur.

So I certainly understand the concerns that this is somehow a Trojan Horse, but I know from discussions with experts and from the way the acts are structured that it just cannot happen that way.

Senator LUDLAM: Okay. That is a useful summary.

CHAIR: Under the current regime.

Senator LUDLAM: Yes. So there is the legal regime, which is important. I do not think anyone is suggesting that you would try and cram internationally sourced spent fuel into the structure that you are proposing to build for a domestic waste dump, but there is nothing stopping somebody opening up a new licensing process to drill half a mile under the existing site.

Mr B Wilson : That would be a completely new licensing and approvals process that would be completely separate to ours. It would not happen under this act and this process.

Senator LUDLAM: Thank you for the detailed response. I think that is valuable. Is there any crossover, though, between the two processes, the SA process and yours, in terms of personnel or other kinds of collaborations—for example, staff, consultants, advisers or anybody with one foot in both camps—at this time?

Mr B Wilson : We do not have anyone working for us or any consultants that we use that are working for the South Australian royal commission. We do not engage with the royal commission. They have not engaged with us. I think I have had one meeting, when I was in Adelaide, with them. It was a pretty perfunctory meeting. They indicated that they were running a very separate process and they very much emphasised the independence of their process. There is effectively no crossover at all. What I cannot guarantee is that any of the consulting firms we use have not had people in their teams who might have contributed. We do not know absolutely everybody that works for our consulting firms.

Senator LUDLAM: No, it would be more whether anybody was directly involved and had a foot in both camps. It is reassuring to hear you say that there is not. I presume that was intentional.

Mr B Wilson : Yes. In fact, with one of the members of a consulting team that we looked at hiring for our next stage of the process, one of our independent advisory panel members questioned their involvement, given their relationship, or that they had in some way been involved, with the South Australian royal commission. While we did not consider there to be any conflict of interest, in order to provide assurance we asked that person to recuse themselves at least until after the commission was finished.

Senator LUDLAM: Okay. I think that is a good practice. I am not going to try and give you a hard time for not consulting—because I think it is good that the processes are unfolding as separately as possible; otherwise, you are going to get dragged into both—but it has been pointed out to me that public consultation over the nominated sites in your national process are clashing with SA royal commission consultations. For example, in Hawker, yours is on the same night as the SA royal commission public consultation in Port Augusta. Maybe a tiny bit of diary matching is needed. I would not give you a hard time if you at least de-conflicted some of the consultation work that was going on.

Mr B Wilson : That is probably true, but I guess that could provide reassurance—a sign that we actually do not talk to each other!

Senator LUDLAM: That is why I am choosing my words really carefully. But I think, in a serious sense, if people are engaged in this issue and it is happening in the local areas, it is a shame if you have to choose which nuclear waste dump consultation you go to because they are both happening at the same time.

Mr B Wilson : Yes. We locked in our consultation schedule only just recently and were unaware of the South Australian royal commission one. I do not know that we can change ours now. We have advertised where it is. But I take your point, Senator.

Senator LUDLAM: That was not my point, but I think you understand where I am coming from. When does spent fuel cease going to the US for reprocessing and start going to France? Is that a question for you guys or would that be better directed to ANSTO?

Mr B Wilson : I think that is better for ANSTO to answer.

Senator LUDLAM: Just staying on your six site public consultation process, and you might have engaged with this a little bit with Senator Rhiannon, but what is your plan B if all six of the nominated sites do not meet your consent criteria that you were discussing before?

Mr B Wilson : At this point we do not have—I am not going to say we do not have a plan B—

Senator LUDLAM: Because you would never know what happen to that quote.

Mr B Wilson : If we do not get any sites, of course, the government will have to consider what it wanted to do next; whether it wanted to run another round or whether it wanted to follow or develop a new process, but we have not had that discussion and that would be a matter for the minister.

Senator LUDLAM: In relation to the community contribution fund, which I understand—this is second-hand because I have not been yet any of the community consultations—is a $10 million fund. How is that to be allocated and how are decisions made about how that contribution fund, as I think it is being described, would be spent?

Mr B Wilson : That is also good question. The act establishes that, when the site receives a licence to operate, a fund of at least $10 million will be established under the act.

Senator LUDLAM: At least $10 million, so it is uncapped.

Mr B Wilson : There is not a lot of specificity in the act about how that fund would be administered, but basically the minister is then a decision maker over how that fund is allocated. He is to form an advisory committee, and the act specifies a number of people that would have to be on that committee. There are two options there, but essentially it is: the minister; either a state premier or state minister; and at least three experts in certain fields who are resident in that state.

What we have said to all the communities is that it is the overarching structure we have to follow with the act. Under that there is considerable flexibility. We have very deliberately said that we do not think it is right that Canberra turns up and tells communities how the money will be spent. We actually want to have the communities prioritise the projects that they are interested in. We will, ahead of that time, set up an appropriate structure with representatives from the community that will feed into that overarching committee that the act provides for. We want the fund very deliberately to be prioritised and targeted at the community needs.

Senator LUDLAM: But, ultimately, what the act sets out is that it is the minister's call.

Mr B Wilson : That is right. Ultimately, someone has to be responsible for administrating the money.

Senator LUDLAM: I will keep chipping through, because I do not know how much I am testing the chair's patients.

CHAIR: No, you are all right. I am interested. I have heard it before, but it is always good to hear it.

Senator LUDLAM: Some of this is new to me. The government has said it would immediately establish regional consultative committees in each of the shortlisted communities, so we are not calling the six a shortlist—is that when we get down to two or three?

Mr B Wilson : That is right.

Senator LUDLAM: Can you give us an update on when you actually anticipate the shortlisting will occur? When you go from six to two or three?

Mr B Wilson : The minister has indicated he wants to make that decision as quickly as possible so the communities are able to know where they stand, but at this point we do not have a definite time frame, and that is really a matter for the government to decide.

Senator LUDLAM: I am getting news reports that a decision on a preferred site is when we go from six to two or three to one and that the minister was to make that declaration by the end of the year. Is that your understanding as well?

Mr B Wilson : That is correct. The time line that we have roughly put down to communities is the shortlisting decision at the end of this consultation process, and I cannot give you a definite time for that—

Senator LUDLAM: Maybe April or May is possible.

Mr B Wilson : decision on a preferred site—and that decision on a preferred site is not a decision on a final site—will be made by the end of the year. That is the minister's time frame that he is working to.

Senator LUDLAM: And then sketch for me, just for the sake of completeness: how do we go from preferred to final?

Mr B Wilson : After the minister has made the decision around the preferred site there needs to be some more detail engineering and business case development work. That then has to go through some government processes around public works and expenditure of moneys. After that point, once we are confident that the site will meet those tests and has received those approvals, it will then become the final site. At the end of that point, we then have to embark upon the independent regulatory approvals process—the EPBC and the ARPANSA approval processes.

We have indicative time frames on our website around that, but once we start going that far out they are more indicative than real. We anticipate, if everything goes well, that we would be able to receive a licence to start construction around 2018-ish, with a view to having a facility beginning to operate some time after 2020.

Senator LUDLAM: How many times do you anticipate the regional consultative committees would then meet before you went from your shortlist to your preferred site?

Mr B Wilson : We think they will be quite dynamic committees. We have said at each of the consultations so far that, 'If you are a shortlisted community, we intend to sit down with you and work up quite a significant amount of detail before we go to a preferred site.' As I was saying to Senator Rhiannon, at the end of that decision-making process when the minister comes to a decision on the preferred site, we want the community to have a very good understanding of the project proposal. So we will work with them on details, design options for the site, the risk and safety case and environmental monitoring structures. We will work with them on a communication strategy around the site. We will also, importantly, work with them on the community benefits package and other community benefits that might flow from this. We are going to sit down with each community and work out what capacities each of the communities might need to participate in the construction and operation of the site. We will ask whether there is training and accreditation needed for their businesses to be able to take advantage of those opportunities. At the end of the process, each community will have a very good idea of what it is we would be proposing in their area. That is the point at which we would seek their informed consent for hosting the site. That is when the minister will make a decision on the preferred site.

Senator LUDLAM: At what point is there a cut-out? And I am still very interested—as many people are—in what your consent thresholds are. At all six sites you presently have groups of people—not being manipulated from the outside or by enviro groups or us in the Australian Greens but genuine, home-grown, grassroots movements of people—turning up to your consultations saying, 'We don't want to be consulted at; we want this to stop.' What are your consent thresholds? You cannot do this on the basis of pure numbers. How are you going to do it?

Mr B Wilson : At the end of the day, the decision around accepting a nomination and what constitutes community support to move forward will be made by the minister. There is no specified threshold. We are not aware of any methodology or science that indicates a threshold number. It really is a composite picture of community views which will be taken into account in a balanced judgement by the minister at the time. Any single threshold number would be arbitrary.

Senator LUDLAM: It does not quite feel like a numbers game. I do not have the answers. All I know is that you have quite strong opposition at all six sites.

Mr B Wilson : We have experts on this part of the process on our advisory panel. Co-chair Associate Professor Ashworth does a lot of work in this area. There is no standard methodology that can be applied here. It really is a matter for the minister in a balanced judgement. At the end of the day, he is accountable for the decision he makes.

Senator LUDLAM: Indeed. I understand that the annual operating expenditure—and I cannot remember exactly where I sourced this figure from, so tell me if I get it wrong—for the facility will be somewhere in the order of $10 million. That is not to be confused with the community benefits package.

Mr B Wilson : That is right. These are estimates. They are not hard figures. Last year we did an indicative business case which was developed on the basis of a concept design largely based on the model of the Spanish facility at El Cabril. That suggested to us that we would have construction costs of over $100 million and, probably, an annual operating budget of around $10 million. That is the number we are using. We will know more in the next and subsequent phases when we develop the detailed business case.

Senator LUDLAM: I want to bring you to the business case. Maybe this is where we will finish up, and I will put a couple of other question on notice, since we are over time. The most interesting part of the business case work, for me, is that that is where you are establishing what material will actually go to the dump. When will you be in a position to tell the communities in these areas what is scheduled to go to the dump? You will probably have heard me sing this tune before. When will they know whether you are proposing to bring the long-lived, intermediate level stuff there? That, for me, is another threshold question. There is consultation going on, but people do not know the character of the material that you are proposing to put there. That is an important piece of information.

Mr B Wilson : In the consultations that we have undertaken, we have been very clear—I must admit it has not always been understood, but I felt we had been very clear—that the proposal for this facility is definitely for the disposal of low-level waste, with the option of having a centralised intermediate waste store. We do say in the detailed business case process that that is an option that will be tested, but it is the government's preference, at this point, for this to be a co-located facility for the temporary storage and permanent disposal of intermediate. As to when they will know exactly when that will be finalised, I would like to think it would be by the end of the year, but I cannot absolutely promise that.

Senator LUDLAM: You could have gone all the way through to choosing a preferred site, not the final site, and gone through the entire shortlisting process, without anybody—potentially, including even you—knowing what is actually going to be dumped there?

Mr B Wilson : The options that we will be presenting to the community will cover all the options that will be going into the detailed business case assessment. There will not be any possibility that an option will be selected that they do not know about when they are asked about preferred site design.

Senator LUDLAM: Okay. It still seems completely arse backwards to me, but it is your process.

CHAIR: I think we are done with you fellows. Keep up the good work. I keep hearing about the good, thorough work that you are doing. The issue that Senator Ludlam raises is quite right: there is a lot of support and there is a lot of concern in the communities. You need the patience of Methuselah and the wisdom of Solomon. Or is it the other way around? Anyway, you need all that to do it. It is a very delicate issue. What is the saying? It is a good year to be an Australian. Thanks. Get out of here before somebody calls you.

I now call the officers from the Anti-Dumping Commission.


Senator XENOPHON: Mr Seymour, I have questions in relation to the media release that came out today from the Minister for Industry, Innovation and Science headed 'Win for Australian tomato growers and producers'. You have recommended that dumping duties be applied to Feger and La Doria canned tomatoes. I apologise if I got it wrong. It is 8.4 per cent for Feger and 4.5 per cent for La Doria. I am sure you can correct me on the pronunciation of the names. Have interim duties been imposed prior to this time or not?

Mr Seymour : No, not on the two exporters named.

Senator XENOPHON: Have there been any duties imposed on any imported tomatoes in recent times?

Mr Seymour : Almost certainly. The summary at a high level is that, in 2014, about 105 Italian canneries were exporting to Australia. Of those, 103 were captured in the first decision in 2014. Duties for cooperative and non-cooperative exporters range between about three per cent and 26 per cent, depending on whether they are cooperative or non-cooperative. The rates for those were published.

As to the two exporters subject to today's decision, whilst they were found to have dumped, they were found to have dumped at de minimis levels, and a new investigation was undertaken subsequent to the 2014 decision.

Senator XENOPHON: Can I just go to the issues? My understanding is—and I do not know what role the commission has in monitoring this—that, in terms of some of the tomatoes that had duties imposed on them for dumping, and despite the dollar dropping in value compared to the Euro for instance, the prices seemed to remain the same on supermarket shelves. To what extent can the commission drill into issues of circumvention in respect of that? That is a matter where—in the Nexans Olex case that has been referred to—you impose a duty and yet the price seems to remain the same, and, in some cases, some importers are quite brazen about it; they are saying, 'We don't care what they've decided; we're going to cut our margins so we can keep our market share.'

Mr Seymour : There is a very strong and effective anticircumvention jurisdiction now in the Customs Act. It is a reform of this government. It is a very active jurisdiction; there are matters underway currently in a number of sectors. The government established the Anti-Dumping Information Service as part of the Anti-Dumping Commission to provide market intelligence and to better understand the behaviours of foreign markets. As to the circumvention, we take that, obviously, very seriously, and if there is a petition or an application that comes to us from an Australian industry player, I will give consideration to that in the normal way.

Senator XENOPHON: Again, I am happy for you to take some of this on notice, but, just in broad terms: if, on the face of it, you have imposed a duty, and the dollar has gone down, but it still seems to be at the same price or even cheaper on supermarket shelves, to what extent can you look at the books or try and determine whether, in fact, they are engaging in predatory pricing, in a sense, for want of a better phrase, in order to overcome or to circumvent the duties imposed?

Mr Seymour : There are a number of tests—and without going into the detail because, obviously, we will get into a lot of detail and it will drag out—

Senator XENOPHON: I am happy for you to, even if it was just a question of referring to certain material for the purpose, on notice—

Mr Seymour : Essentially, the anticircumvention powers that are in the act now that I can use are wide-ranging and enable me to apply a number of tests around the circumvention behaviours of foreign firms in Australia. Each case is different, obviously, so if you think about the recent Capral aluminium extrusions matter, it was the first decision that we had made under the new arrangements and we imposed an anticircumvention duty of 59 per cent, I think it was, from memory, or 57 per cent—

Senator XENOPHON: A significant amount?

Mr Seymour : very, very significant—on top of the dumping duty regime, which I would have thought sends a very clear message to foreign firms that, if they want to try and circumvent the laws of Australia in relation to their customs obligations, and we find that that is the case, we will remedy that accordingly.

Senator XENOPHON: Do the circumvention duties include an exemplary or punitive duty imposed, in other words, because it is the egregious act of saying—

Mr Seymour : That is essentially what I have said.

Senator XENOPHON: So it goes beyond any direct circumvention—

Mr Seymour : Absolutely, yes.

Senator XENOPHON: Actually there is a penalty clause built into that?

Mr Seymour : It is its own jurisdiction within the legislation—

Senator XENOPHON: So, in the same way that, in the civil courts, they can award punitive or exemplary damages to discourage this sort of behaviour, you are saying it has that sort of punch?

Mr Seymour : The point behind all of this of course is that, as markets become more—for want of a better term—competitive internationally, there are certain motivations and incentives for firms to act in that way. Domestic jurisdictions, if they are serious about trade remedies, need to have the ability to respond effectively. Australia is at the forefront in terms of shaping an anticircumvention jurisdiction. It is not an element of the WTO agreements that is well framed or defined, so we are setting our own frameworks and setting our own standards as we go, domestically, within the laws of the land.

Senator XENOPHON: In terms of the tomato dumping case, are you able to comment on whether you were aware that there were representations made by the Italian government to you or to the department or to the Australian government in relation to the case?

Mr Seymour : In the course of the case, interested parties made submissions.

Senator XENOPHON: And that would have included the Italian government?

Mr Seymour : Those interested parties were many. Obviously, we were in, as you would expect someone in my role to be, close dialogue with the European Commission in an appropriate way. Of course, I also manage what I would describe as high level stakeholder engagement with interested parties at that diplomatic and political level, so in the course of that I spoke to representatives from—

Senator XENOPHON: For instance, was any retaliatory act—often in these disputes, in these matters, retaliatory action may be threatened.

Mr Seymour : No.

Senator XENOPHON: You are not aware of any retaliatory action being threatened?

Mr Seymour : At all times those parties have acted respectfully and within the bounds of decent behaviour.

Senator XENOPHON: Going back to the issue of circumvention, my understanding was that the interim dumping duties were payable by importers, in the event dumping is confirmed on Feger and La Doria, since 11 September 2015. My understanding is that those prices have basically stayed down because the basis for those interim duties was to prevent further injury to SPC. Has there been an investigation commenced in respect of circumvention in respect of Feger and La Doria?

Mr Seymour : Not at the moment, because those rates that you refer to back in 2015 were securities taken by the Australian Border Force on behalf the government. With this decision, we have now essentially set the new rates for both exporters, and this decision, as of yesterday, converts those to interim dumping duties, and it is on that basis that they would be applied.

Senator XENOPHON: From a technical point of view though, does that mean that, from the time that the securities were imposed on 11 September 2015, you cannot consider issues of circumvention from that date? You can only consider them from the time that duties were formally imposed?

Mr Seymour : That is good question actually, and it is quite a novel question—

Senator XENOPHON: It is not a trick question, because I do not know what the answer is. If you could take that on notice.

Mr Seymour : I will take that on notice and make the following observation: this is a reactive system; it necessarily has to be a reactive system. The challenge to the model—

Senator XENOPHON: I am wondering whether the reaction can start from the date—

Mr Seymour : is when you can kick-start the reactive nature of the system.

Senator XENOPHON: Yes, but let us not talk about reactors though—

CHAIR: You will get a reaction.

Senator XENOPHON: Yes; that is right. My broad understanding is it may well have been that circumvention may apply. If the policy intent is to prevent further injury to SPC during the course of the investigation and there were securities imposed, or interim dumping duties—

Mr Seymour : Securities.

Senator XENOPHON: securities rather, sorry—then I wonder whether there is a capacity there to consider issues of circumvention back from the date of those securities? If you could take that on notice—

Mr Seymour : In converting them to interim dumping duties, that applies to the date of the original decision. So any anticircumvention activity by us on request by the applicant, which I guess would be SPC Ardmona, would apply back to that date in any case.

Senator XENOPHON: If you could take that on notice. I want to go to the issue of ethical supply chains. On 30 January this year, Paola Totaro in The Australian—I think she is The Australian's European or London correspondent—wrote an article about the Italian Mafia's use of slave labour to pick tomatoes. I do not know if you saw that article at all?

Mr Seymour : Yes, I did.

Senator XENOPHON: The article highlighted that Mafia gang masters are exploiting vulnerable migrants from Africa and eastern Europe to harvest crops by keeping them in ghettos and controlling their access to food and water—pretty terrible conditions; awful conditions. Does the Anti-Dumping Commission consider labour standards when assessing anti-dumping cases? Can it do so and does it do so?

Mr Seymour : No, it does not; however, the labour input costs in the establishing of the cost basis for the goods, and to have ultimately arrived at a normal value for those goods in Italy, does require us to look at labour inputs. But providing they meet international accounting standards, and Italian accounting standards in this case, we do not take a view about how they are constructed.

Senator XENOPHON: I do not quite understand that, because if slave labour, for want of a better word, is being used—

Mr Seymour : Senator, I can cut to the chase here and say there was no evidence of that nature submitted to—

Senator XENOPHON: Okay, exploited labour—

CHAIR: What is the difference between exploited labour and slave labour? There is no evidence of exploited or slave labour?

Mr Seymour : It certainly was not part of the investigation.

Senator XENOPHON: Okay, to what extent—I might ask Senator Sinodinos a question on this in a minute, to get the government's view, because I know that the official cannot talk about policy issues. I know you are always happy to talk about policy, Senator.

Senator Sinodinos: I love policy!

Senator XENOPHON: I know, that is why I would love to ask you a question about it.

CHAIR: He is a policy junkie.

Senator XENOPHON: That is right; a policy tragic I think, Chair. Let us just use in broad terms 'exploited labour'. Paola Totaro's piece in The Australian was quite graphic: the way people are being used and exploited, clearly not being paid even EU award wages, or whatever the system is in the EU; the allegations of access to food and water being denied—and presumably there are threats that they will be sent back to North Africa if they do not do the bidding of these Mafia gang masters. To what extent does the commission have the ability, the power, to drill into that, or to at least say, on the face of it, 'We can make a presumption that, due to a lack of cooperation or a lack of information being provided, that we think exploited labour is being used here'?

Mr Seymour : One of the tests is: is the data being provided by the exporter a true reflection of competitive costs? But to the extent that labour costs are an input into the overall cost analysis—I sometimes say 'model'; I am reminded that we do not build the model as such, but the cost analysis—if there was evidence provided as part of this submission, you could probably ask the question: are they an accurate reflection of true labour costs.

Senator XENOPHON: But do you do—

Mr Seymour : But that would be on the basis that someone would bring that complaint to us and say that that is the case, and it has not happened.

Senator XENOPHON: Okay, if I were to write to you tomorrow and say, 'Here are these allegations contained in this piece', then on the face of it has been raised by this investigative journalist. Is that something that you would investigate further? I think there have been other issues raised in respect of exploited labour in these sorts of markets. We pride ourselves in this country on strong occupational health and safety standards, a strong award system, fair remuneration for people's pay. How can you deal with it?

Mr Seymour : I have completed the investigations now, and so I would have to think about how I would consider such a request. In the short term, there is a question of whether I have the jurisdiction to do what you are suggesting. I would have to come back to you.

Senator XENOPHON: Sorry—

Mr Seymour : I have completed the investigation.

Senator XENOPHON: Yes, I understand that.

Mr Seymour : We simply do not review those arrangements for 12 months—

Senator XENOPHON: I am still a bit deaf from an Elvis Costello concert I went to in 1977.

CHAIR: Elvis Presley in 1967?

Senator XENOPHON: Elvis Costello in 1977.

CHAIR: Come on! He died in 1977.

Senator XENOPHON: No, Elvis Costello.

CHAIR interjecting—

Senator XENOPHON: To date, have you had an opportunity—and it might be a question of resources—to look at the issue of exploited labour? One of the complaints I have from manufacturers in this country is when they say: 'We do the right thing. We have occ health and safety; we pride ourselves on paying our workers well—at the award or above the award—but we are competing with some pretty dodgy operators overseas, using sweatshops, slave-like labour.' How does that fit into what you are doing?

Mr Seymour : To take the emotion out of the conversation in terms of what it might be based on, and I say this respectfully, the reality is that I am an objective observer of the data that I get through the investigations process.

Senator XENOPHON: But is the data objective?

Mr Seymour : I have an ability to make a determination as to whether I believe that that data reflects—

Senator XENOPHON: How do you make that determination, though?

Mr Seymour : Based on the evidence that is presented to me in the course of the investigation. No such evidence in this case of the type that you are referring to was provided, to the best of my knowledge, in the course of the investigation.

Senator XENOPHON: You would have to physically go there and have video evidence, presumably, of dodgy practices, wouldn't you?

Mr Seymour : Yes. In fact, as the secretary has just reminded me, we certainly do go there, at great effort and expense to the Commonwealth, to ensure that we verify the data on site. Whether I have the reach of the type that you are referring to is a question I would have to take advice on.

Senator XENOPHON: You could always outsource it to Today Tonight, A Current Affair or someone like that. I say that facetiously. I might write to you separately about that, because it is an issue of concern.

Mr Seymour : Certainly.

Senator XENOPHON: Senator Sinodinos, an issue has been raised in a series of articles in The Australian by Paola Totaro about slave-like labour—exploited labour, to use a less emotive term, if you like. This is a common complaint from Australian manufacturers and food producers. These people are being paid next to nothing, not on a proper basis, even in their own country, in terrible conditions. The allegation is that African and eastern European asylum seekers in Italy are not being given access to food or water unless they do the bidding of these mafia gangs. Is that something from a policy point of view that you think the government ought to consider in respect of antidumping or circumvention issues? Please don't say you will take it on notice.

Senator Sinodinos: I think it would be more prudent to do that, because I am not sure we have a capacity to enforce some of this.

Senator XENOPHON: I am just asking: will it be considered?

Senator Sinodinos: What you are talking about is a situation where we would be asking countries overseas to enforce their laws.

Senator XENOPHON: No.

Senator Sinodinos: That is what we are saying.

Senator XENOPHON: No, I am not saying that at all. I am saying that if there is evidence that goods that are being imported to this country, which are undercutting Australian goods—

Senator Sinodinos: Because of these conditions.

Senator XENOPHON: because of shocking labour or occupational health and safety standards, as bad as slave-like labour conditions, is that something that ought to be taken into account more actively in our antidumping regime?

Senator Sinodinos: I think what the commissioner said there is that they act on the information that is made available to them, which could include that sort of information. The question is whether or how readily you can get that sort of information.

Senator XENOPHON: That begs the question: if you cannot readily get that sort of information, ought there to be a presumption of an adverse finding? Presumably, if someone is an ethical employer, if they are paying a decent rate of pay, they will be up-front with their information. They should be able to provide—

Senator Sinodinos: You would have to have some fact base, I think.

Senator XENOPHON: Of course you would have to have a fact base, but if you are not getting information? I think the commissioner has pointed out cases where there has been a refusal to cooperate.

Senator Sinodinos: It is probably a broader policy issue that we need to discuss internally.

Senator XENOPHON: That will do for now, but I will follow that through. I will put a lot of questions on notice. In relation to the high-level dialogue on trade remedies between Australia and China, these dialogues commenced after 2005, when Australia and China agreed to negotiations on a free trade agreement. That is my understanding, and the arrangement got formalised in the trade remedies chapter of the FTA. On notice, can you advise how many dialogues there have been to date and details of what was discussed. It may be that you consider some of this ought to go to DFAT—I am not sure. But has the Anti-Dumping Commissioner participated in any of these dialogues?

Mr Seymour : Yes, indeed I have.

Senator XENOPHON: I might get details from you about that and put that question on notice. I might put a series of questions on notice about that—the dates, the purpose. I think this is quite critical in the context of the ChAFTA. The ChAFTA says that dialogues will be regular. Are they going to be more frequent now that the ChAFTA has been signed and concluded?

Mr Seymour : It may be a question that would need to be referred to the Department of Foreign Affairs and Trade because they are the convenor and the domestic chair, at least, of the high-level dialogue.

Senator XENOPHON: These are technical questions in terms of the dialogue and cases, so I think it is better that I put them on notice. I think that would save time. The only other issues, going back to the issue of the tomatoes: would your job be easier, as Anti-Dumping Commissioner—I am not asking for a policy opinion; I will get the chair's guidance—if there were robust labour standards incorporated in any future EU-Australia FTA, or if there were clarity in respect of labour standards? Would that make your job easier in terms of considering dumping cases and whether there are issues of unfair competition with respect to that?

Mr Seymour : I wonder whether the basis of the question is really a matter for anti-dumping—to be honest with you. As I was trying to explain in the previous answer, I try to be an objective observer of the data and whether the data is robust and reflects a competitive data set, if you like, on which to base a dumping margin, essentially. It is an interesting question to ask me, but I guess my answer would be: I want good data. I know it sounds terribly boring but I want good data on which to base the best possible judgement to be able to calculate the dumping margin.

Senator XENOPHON: I am okay with boring, but can you look behind the data? That is the issue.

Mr Seymour : To a degree we can but, as I say, we would have to be led down that pathway by submissions; we would not be able to just jump off and say we are going to be labour-standard setting or checking in foreign countries. I do not think we would have the ability to do that, as the senator said. To me it is an interesting question but not one necessarily for the Anti-Dumping Commission, potentially.

Senator XENOPHON: Tragically for me, I will probably be drafting a letter for you on Saturday afternoon or Saturday night on this, so hopefully I will get you one on Monday or Tuesday.

Mr Seymour : I look forward to receiving another of your letters.

Senator XENOPHON: All the best. Thank you very much.

Senator KETTER: Mr Seymour, I have some questions about general anti-dumping policy. Just for the benefit of Hansard, could you outline very briefly: why do we have an anti-dumping policy?

Mr Seymour : We have a statute—we have section 15B of the Customs Act that has been in place for some time—that provides for remedy to be provided to Australian manufacturers who have been found to have been materially injured through dumping or subsidisation practices from foreign exports.

Senator KETTER: Do we have an estimate as to the cost to Australian industry from dumping by foreign competitors?

Mr Seymour : It is an interesting question, because in a sense the effective remedy is the value of the dumping duty applied to the product that has been found to have been dumped by foreign exporters in the Australian market. So in a sense you could hypothesise that the level of revenue brought in through dumping duties might reflect, in an economic sense, an economic value of the injury sustained by Australian industry who have proven the dumping in a financial year, I guess.

Senator KETTER: Do you think those duties would cover things like the loss to businesses in terms of lost revenues and jobs?

Mr Seymour : The test under the legislation is just applying a remedy that removes the injury to the Australian applicant. The injury is defined in the legislation. The answer to your question might be broader than that, I think.

Senator KETTER: Have you done any work on, say, the effect of dumping and the cost in terms of lost revenues and jobs?

Mr Seymour : I could take that on notice and come back to you with a more fulsome answer—

Ms Beauchamp : It is probably also worth considering the work that is currently being undertaken by the Productivity Commission around anti-dumping and dumping policy. We probably should wait until we see what they come up with in terms of impact on the economy.

Senator KETTER: Mr Seymour, if you have some data there, that would be useful. Based on your experience, can you tell us which industries are currently experiencing the greatest threat from dumping?

Mr Seymour : Certainly steel and aluminium would be the two areas that come to mind readily. They currently constitute over 80 per cent of our workload. Certainly, the Australian steel-making sector is under tremendous pressure from international competition.

Senator KETTER: What about the tinned tomato industry?

Mr Seymour : Today's announcement is a reflection, I think, of a very active, very effective and robust antidumping system. I take on board Senator Xenophon's comments about ensuring that the duties are effective in a post-implementation sense. The powers we now have to track down and remedy circumvention behaviours post the duty decision is a very important one for us to have, and we are very actively involved in that. At the moment we have four anti-circumvention matters underway. Is that right, Mr Sexton?

Mr Sexton : There are six.

Mr Seymour : Six, so it is an active jurisdiction.

Senator KETTER: I have some questions about the anti-dumping review panel fee. What was the purpose of the fee that was introduced via the Customs (Anti-Dumping Review Panel Fee) Instrument 2015?

Mr Squire : The purpose of the fee was to recover in part some of the costs of providing the services of the review panel.

Senator KETTER: It is not to discourage frivolous claims?

Mr Squire : That is also one of the objectives of the introduction of the fee—or one of the potential benefits from the introduction of the fee.

Senator KETTER: Are you saying that it does act as a cost-recovery mechanism?

Mr Squire : That is correct. The estimates of the total revenue to be raised resulting from the fees based on previous years is in the order of $165,000 a year.

Senator KETTER: Are the two fee levels—$1000 and $10,000—based on that analysis?

Mr Squire : Yes, and an expectation of the number of reviews of decisions that might be sought in any particular year.

Senator KETTER: Is there some sort of modelling involved? What is the calculation?

Ms Beauchamp : Just to confirm, it is a partial cost-recovery model that we are looking at here and so it will not cover the entire costs of the panel, but it will put some discipline around people making appeals.

Senator KETTER: It acts as a bit of a disincentive, does it?

Ms Beauchamp : It is not so much a disincentive. It is looking at avoiding or minimising any vexatious appeals and things like that. The fee structure such as is proposed looks at providing a scalable fee for large corporations, compared to smaller ones.

Senator KETTER: Let's consider SPC Ardmona, which is in the tinned tomato industry. For them to lodge a review of an anti-dumping decision, what fee would they be up for?

Mr Squire : As a large firm, my expectation would be that they would be up for $10,000 fee.

Senator KETTER: And a foreign exporter of tomatoes?

Mr Squire : Again, it depends whether it is a small firm or a large firm.

Senator KETTER: Isn't there a flat fee for foreign companies?

Mr Squire : The distinction is on the basis of the size of the firm. So a small- to medium-sized enterprise is $1000, and a large firm is $10,000.

Senator KETTER: Is that the case for foreign companies as well?

Mr Squire : Yes, and by and large the statistics show that it is a majority of foreign companies seeking a review of decisions.

Ms Beauchamp : It is about an 80/20 split on the current profile of appeals—80 per cent foreign, 20 per cent domestic.

Senator KETTER: The majority of the foreign exporters of tomatoes would face that $10,000 fee. Is that what you are saying?

Mr Squire : Assuming a lot, but yes.

Senator KETTER: What fee would be imposed on the importer of tomatoes if it were, say, a small Australian import business of 10 employees?

Mr Squire : As a small to medium enterprise, it would be $1,000.

Senator KETTER: Getting to the issue: what would happen if a large Italian tomato producer basically asked a small Australian importer of their produce to lodge a review on their behalf? Would that be gaming the system?

Mr Squire : What we have looked at in that regard is that, in order to lodge an appeal, you have to have standing in relation to the original decision. You would have to have been affected or implicated in relation to the original decision to have duties imposed. In other words, you have to have had legal standing to be in a position to lodge a review of the decision.

Senator KETTER: Would it have been possible for an Australian importer to have been part of the original case?

Mr Squire : Certainly, but they would have originally been a small to medium enterprise that had been affected by the decision or a large importer, and the relative fees would apply. I note, as we indicated before, that it is only partial cost recovery. Regarding the extent to which gaming would occur to potentially acquire a $9,000 benefit, I am not sure of the sorts of circumstances in which that would occur.

Senator KETTER: Would you agree that some Australian manufacturers like SPC Ardmona are generally facing tougher times as a result of the dumped products?

Mr Squire : Yes, that is their motivation for seeking to have duties imposed.

Senator KETTER: I guess the question is: why should we slug those Australia manufacturers with that additional fee?

Mr Squire : I would not accept the proposition put in your question because, as I indicated previously, the majority of fees to date have been paid by importers. It is equitable treatment, if you like, between the parties that are potentially seeking review of decisions. So we are not discriminating between Australia manufacturers or foreign companies. Any firm or organisation that is seeking a review of a decision is required to pay those fees.

Senator KETTER: But it is a $10,000 fee. It is not insubstantial for a company that is already experiencing difficult circumstances.

Senator Sinodinos: Wasn't the feedback that SPC Ardmona did not think the fee was a problem or a particular impediment?

CHAIR: Commissioner, do you reckon the fee system can be gamed?

Mr Seymour : Any system that has a financial arrangement to it is potentially open to those types of behaviours, I would have thought.

CHAIR: So it is open to—

Mr Seymour : With this system, it is too early—

CHAIR: It is hard for SPC to hide behind the fact that it is a big company.

Mr Seymour : SPC is the applicant in the hypothetical that we are talking about. This is hypothetical, I assume, Senator. In referring to the company's name, it has to be seen as a hypothetical because I am not aware that SPC are seeking to appeal the decision.

Mr Squire : The other issue to note, of course, is that if there was an attempt to game the system, the large firm that induced the smaller firm to seek the review of the decision would not be the beneficiary if the decision were overturned.

Senator KETTER: Just in terms of the actual application fee, I suppose.

Mr Squire : I guess that is the point I am making. I struggle to see how the large firm would benefit, because, if the decision were overturned, they would not get the benefit of having that decision overturned. So there is no incentive in that sense for them to encourage a smaller importer to seek a review of the decision.

Senator KETTER: Thank you for that. I would like to run through antidumping remedies. I know you have touched on this with Senator Xenophon. What is the process for determining how dumping is occurring in the first place?

Mr Seymour : Typically, under the legislation a submission is made by the affected party domestically. I have a period of 20 calendar days to consider that. That is a confidential process, for obvious reasons. I either accept or reject the submission and then the statutory obligations on me as commissioner commence in terms of actively investigating the matter.

Senator KETTER: How do you examine the exporter's processes and data?

Mr Seymour : Once we have done our initial analysis and I have initiated the matter, which is the first test in the legislation, I then form an investigations team. The investigations team then follows very strictly the requirements set out in the legislation—and I am happy to provide those to you separately; they are quite detailed—and there are many tests in a time line that extends out statutorily to 155 days under the standard model provided for in the legislation.

Senator KETTER: In QON SI-104 the department gave a response that 'The Commission does not collectively track, or formally report on, the number of on-site verifications compared to other types of verification.' With your verification processes in the last 12 months, can you tell me how many were on-site, in-country inspections?

Mr Seymour : The policy that I apply in the commission is that the most significant named exporters in a matter typically will receive an on-site verification. It is a test by volume and standing in terms of the markets that we are looking at. A good example recently was the rebar matter. From memory—I do not have the details in front of me—it was a seven-country investigation and there were multiple exporters. We had to make a judgement, based on volume and significance in those seven markets, as to how many of the exporters in those markets would receive an on-site verification visit as part of the data validation exercise, which follows an initial questionnaire that we send out to the exporters to gather the initial data about the level of potential activity and potential dumping that may or may not have occurred.

This is an extremely expensive and time-consuming exercise but it is a very important one, because stakeholders regularly remind me that the confidence they have in the system of anti-dumping in Australia largely rests on our ability to verify the data on-site through a fairly intensive exercise. We have a policy of sending a maximum of two people on these visits—I am smiling at the Secretary because the Secretary is the approver of the travel—and there is a photo in a particularly large market in steel where there would have been 20 people on one side and two of my team on the other side and they were there for five days intensively engaging on data verification.

Senator KETTER: I am not disputing that. My question, to cut to the chase, is: can you tell me how many verification processes were undertaken in the last 12 months and how many were on-site, in-country?

Mr Seymour : I will take that on notice and come back to you.

Senator KETTER: Sure. Thank you very much. In the same response to the question on notice, the department gave us information that penalties do not apply to exporters who provide incorrect or misleading information. Does this lack of penalties create the risk that exporters can provide incorrect or misleading information to get around dumping duties?

Mr Seymour : I am not sure what the definition of penalties is in the context of that question, but certainly—and this is probably one of the most significant incentives to cooperate with an investigation—should an exporter decide to ignore my request for information or not participate fully, in the event that I find that there is dumping in that marketplace they will receive the uncooperative rate of dumping, which is significantly higher than the cooperative rate, and that would materially impact them. So there is a built-in incentive in the system for them to cooperate with requests for information from the Anti-Dumping Commission as part of any investigation. But I am not sure what the reference to penalties actually is. I am looking at my colleagues to see whether they might know the context of that question.

Senator KETTER: Can anyone else help us with that?

Mr Squire : It might help us if you can—

Senator KETTER: It was 'Answering question on notice, SI104'.

Mr Seymour : The technical answer to, 'Are there penalties as such?'—and I am being very careful, because I am not sure what the definition of penalties in the context is—

Senator KETTER: It is a response from the department, so I am just querying that.

Mr Seymour : The answer is no. There aren't any. But there is a system incentive to cooperate, for the reasons I have outlined.

Senator KETTER: Where it is found that foreign exporters are dumping their products—and I know you have touched on this with Senator Xenophon—what are the remedies, in terms of the dumping duties, that are available?

Mr Seymour : It depends on the behaviour.

Senator KETTER: You have said that it is cooperative versus non-cooperative.

Mr Seymour : Yes. You could have a variety. Indeed, in the decision that we announced today the rates differed between the two exporters. Those exporters are analysed individually, and a rate is applied in that way. There is a general rate for uncooperative exporters in a major investigation, which is applied to all others.

Senator KETTER: Would it be permissible under WTO rules to set higher duties?

Mr Seymour : Obviously, we stay inside the WTO. I like to think that we maximise the value of the WTO agreements in terms of the way our legislation is crafted and the powers that it gives me or the minister through the investigation and decision process. But, certainly, we are not in the business of exceeding the framework or the boundaries of the WTO agreements on antidumping or countervailing and subsidies.

Senator KETTER: Can you tell me the difference between interim and final duties?

Mr Seymour : Basically, the interim duty is what is collected and it converts to final duty on payment. It is a matter for the Australian Border Force to undertake that activity at the border.

Senator KETTER: What process do you follow to determine the final duty?

Mr Seymour : It is, essentially, just the actual payment mechanism, and it is governed by other provisions of the Customs Act and related legislation.

Senator KETTER: What happens when prices have changed since the original investigation or a subsequent review?

Mr Seymour : Basically, an applicant can seek a review. Typically, it would not occur within the first 12 months of any decision that we might make or that the minister would make. There are certain opportunities for accelerated reviews and other activities through the legislation, but, in effect, we try to provide a stable environment and if those numbers have effectively changed, those factors have changed, we would pick that up at any subsequent review that might be made by an applicant. An applicant, for example, could be an exporter not named in the original arrangement, who might seek a determination, if you like, as to whether or not they are captured by the duty regime. So there are a raft of different circumstances there. If you like, I am happy to spell those out for you on notice.

Senator KETTER: In some circumstances there would be refunds?

Mr Seymour : Certainly, yes. There is a duty refund arrangement put in place for a duty assessment. It is an oft used mechanism for traders in the main to seek refunds where they believe that the interim duty that has been paid is over the amount required. That is an active part of our jurisdiction.

Senator KETTER: Does the process to assess the duties only involve a desktop audit?

Mr Seymour : Are we talking about post-implementation?

Senator KETTER: Yes.

CHAIR: Senator Ketter, I am looking at the Anti-Dumping Commission website here, and a lot of the things that you are covering are all on the top line of the tabs—accessing the system, importers and everything like that; all the different industry settings—

Senator KETTER: I have just a couple more questions, Chair, thank you.

CHAIR: All right.

Senator KETTER: So the desktop audit is—

Mr Seymour : I am not sure I would call it a desktop audit. A submission is made; we assess the data. Obviously, we rely heavily on very confidential information provided by Australian Border Force through their import databases and related information sources inside the ABF, we make a judgement about whether the claim is a valid one or not, and we act accordingly.

Senator KETTER: In terms of the refund that I asked about before, could you tell me how much interim duty was collected in the 2014-15 financial year and how much of this was refunded?

Mr Seymour : I think I actually have that. It is a significant number. From memory, the interim dumping duty collected was $37,317,242. That is net to date, in 2015-16. In 2014-15, it was $32,104,000. Refunds to date in 2015-16 are $1.822 million. Last year in 2014-15, it was $1.877 million.

Senator KETTER: Where duties are imposed, what anticircumvention measures are in place to ensure exporters do not simply change their products slightly to get around the duties?

Mr Seymour : As I was referring before in the answer to Senator Xenophon's question, we have a strong anticircumvention framework in place now with the regulation on slightly modified goods. I am on the record as saying, I think, at an earlier hearing of estimates, that, as commissioner, I believe that that framework is a strong and effective one. As I mentioned earlier, we are very actively involved in, for want of a better term, 'chasing down' those who wish to circumvent our dumping laws and applying appropriate remedies in those circumstances. Certainly the aluminium extrusions made by Capral some 18 months ago is a great example; a Queensland based aluminium fabricator where we imposed anticircumvention duties on top of the dumping duties of some 57 per cent. If that is not an indication that we are serious about stamping out the circumvention of duties because of the injurious effects that that circumventious behaviour has on Australian businesses then I am not sure what would be.

Senator KETTER: Thank you very much.

CHAIR: With that, Commissioner; officers of the Anti-Dumping Commission, secretary, Ms Beauchamp, and Minister Sinodinos, we thank you for being here with us. We have now completed the Industry, Innovation and Science portfolio for the supplementary estimates. I also take this opportunity to thank Broadcasting and Hansard for their diligence over the last two days.

Committee adjourned at 21 : 57