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Rural and Regional Affairs and Transport Legislation Committee
26/02/2018
Estimates
INFRASTRUCTURE AND REGIONAL DEVELOPMENT PORTFOLIO
Civil Aviation Safety Authority

Civil Aviation Safety Authority

CHAIR: We will resume the Senate Rural and Regional Affairs and Transport Legislation Committee additional estimates for 2017-18.

Mr Carmody : Could I make some opening remarks?

CHAIR: Yes.

Mr Carmody : Thank you for the opportunity to make a short opening statement. I want to update you on three topical areas before we move to questions.

CHAIR: It doesn't include the word drones, does it?

Mr Carmody : The first is on RPAS, your favourite topic! We continue to make a lot of progress in that space. An important element of our work is finalising the ministerial review into RPAS, which we undertook to share with the committee. You might recall when we met with you in December that I said we had a lot of activities underway but expected to complete the review by March. I'm pleased to advise that I've seen a well-developed draft and I have tabled the review to the department for comment, and then to the minister in the next couple of weeks. I also undertook to seek the minister's approval to share this review with the committee, which I will do.

CHAIR: Separate to this forum?

Mr Carmody : Yes. It will hopefully inform your review, which was what I thought you were after. We currently have quite a large workload in our RPAS branch. It includes that review; a regulatory road map; managing the growth in the sector, which is quite enormous; enforcement activities; complaints; and planning for the inevitable need to fully and safely integrate drones into the Australian aviation system. One of the ways we are doing this is by working with Google's Project Wing locally here in the ACT on the safe and efficient commercial use of drones in our airspace. This is Wing's lead site globally for trialling this activity in airspace. We might get the opportunity to deal with a couple of questions that Senator Gallacher raised earlier tonight on drones as well if you wish.

FalconAir is the second topic that I wanted to mention briefly. I have a number of concerns about the article mentioned in TheAustralian on 3 January, and I know the committee does as well. I am concerned about what the article said but I'm also concerned about what the article didn't say. I look forward to answering questions during this hearing. That said, it's important to make a couple of points just to set the scene. Firstly, contrary to the article, CASA did not ground FalconAir. CASA had identified a number of FalconAir pilots who were either not current or had not been validly checked, and if those pilots continued to fly they would be in breach of both their own operations manual and the provisions of the Civil Aviation Regulations. FalconAir management chose, quite sensibly, not to operate with those pilots.

Secondly, CASA discovered that competency had lapsed on eight out of nine of FalconAir's pilots, as they were either not validly checked or not current. This was not, as one so-called aviation expert was quoted to have said, 'sheer absolute bastardry'; these were egregious breaches and show clearly that their check and training system was busted. Both the chief pilot and the two senior check pilots were not current. I have no tolerance for this, considering that they are flying high-performance jets, often with passengers on board. An effective check and training regime is fundamental to aviation safety. It ensures that pilots not only maintain their competency in normal flight sequences but also are well prepared and proficient to deal with abnormal and emergency situations.

Thirdly, FalconAir asked repeatedly that we simply overlook the various breaches of regulations and the safety risks these posed simply by exempting them from the requirement to comply with the law. Let me be absolutely clear here: the final decision not to allow this was mine. As Australia's director of aviation safety, I formed the view that, pending a closer examination of the systematic problems that allowed this situation to arise, it was unsafe to allow the pilots involved to conduct FalconAir flights without meeting their proficiency requirements.

Fourthly, TheAustralian article referred to a heart transplant flight that FalconAir was supposedly unable to conduct—a flight which we were advised of some five days after the event. The committee might be interested to know that there are up to 10 providers on the east coast who are capable of providing this service. FalconAir doesn't hold a monopoly in that area, either. CASA also reminded FalconAir that they could enact mercy flight options if lives were truly at risk.

Fifthly and finally, what the article did not say was that, given my particular concerns with regard to the availability of medical flights over the Christmas period, on 21 December as director of aviation safety I signed an exemption to allow their Falcon 50, FalconAir's most capable aircraft, to operate over the Christmas period. Having taken the relevant safety related considerations into account and identifying the pilots with the least significant shortfalls in their proficiency obligations, I was satisfied that an exemption could be granted allowing this important service to continue over the Christmas period. Let me make this clear: this was not taken lightly. The committee would well understand the consequences if something had gone wrong on one of those flights. In the event, I'm sure I would be here today explaining why I allowed the operator to continue operating in that way given the findings we had made. We continue to work with FalconAir to ensure that their training and checking obligations are maintained.

To finish on a more positive note: in November last year we announced major changes to how we will manage medicals in future. This includes extending the delegation to make certain medical decisions to medical professionals, allowing non-passenger-carrying commercial operations to be conducted by air transport pilots holding full class 2 medical certificates and creating a new category of private pilot medical certificates, the basic class 2.

I'll be announcing tomorrow our planned rollout of these well-anticipated reforms, which will open up pathways for our most experienced pilots to return to limited commercial activities such as flying training and aerial application activities like crop dusting. These changes will start to take effect as early as this week. Mr Chairman, thank you very much for the opportunity.

Senator PATRICK: Mr Carmody, I want to have a look at some of the events that took place in relation to the FalconAir grounding. You say it's not a grounding. I'll discuss that with you. I believe you've brought Mr Campbell with you?

Mr Carmody : I have.

Senator PATRICK: Can we also have him up here?

Mr Carmody : Certainly.

Senator PATRICK: Mr Campbell, can you tell me what your role at CASA is and what functions you've performed in relation to FalconAir.

Mr Campbell : I'm a certificate team manager in the Sydney office.

Senator PATRICK: You have intimate involvement with this particular set of incidents?

Mr Campbell : I was involved in it as the oversighting manager for the team that looks after FalconAir.

Senator PATRICK: I'm led to believe, in terms of the sequence of events, that the pilots' licensing for checking of pilots was discovered when you were preparing for a check flight for the Pel-Air pilot in command. Is that correct?

Mr Campbell : Yes.

Senator PATRICK: In the process of doing that, you discovered that up to three pilots had not completed a minor check. Is that correct?

Mr Campbell : About a week before the flight was due my manager asked me to double-check that the check pilot who was conducting that check was valid. We asked for the checks to be provided, and they were not valid. Then I was asked to organise an audit, prior to the flight, to make sure there was nothing else that would affect the Dominic James flight.

Senator PATRICK: You determined it wasn't valid. I think you started this process around 1 December or thereabouts, and the first audit of the company took place on 6 and 7 December?

Mr Campbell : That's correct.

Senator PATRICK: When you were looking at the fact that these pilots hadn't completed a certain check necessary for them to carry out checks on other pilots, did you consider the matter of Royal Queensland Aero Club v Civil Aviation Safety Authority, which dealt with a similar matter?

Mr Campbell : I did not.

Senator PATRICK: Are you aware of that matter?

Mr Carmody : I am aware of it, and I did give that some consideration. But I'd be seriously concerned if I thought that the effect of that decision of the Federal Court would impact on me making a safety-related decision. I'm confident—and Dr Aleck, our general counsel, can come forward and speak to this if need be—that the actions we took in relation to FalconAir don't conflict with the law as stated in the Royal Queensland Aero Club decision. But I know what the decision was about. If I understand it correctly, it was about cascading approvals. The point that I made in my opening remarks was: the entire system was busted. I had no confidence in the people who were checking the people. I wasn't interested in the cascading approvals. I was interested in the fact that their head of check and training and their chief pilot were well out of currency—significant times out of currency—and that was not good enough, so how would I know that they had conducted the other checks appropriately?

Senator PATRICK: We'll come back and explore that. In that ruling, the justice who was in charge of the proceedings said:

A person who possesses sufficient skills to satisfy CASA that he is competent to perform CASA's own flight testing functions and thus competent to be delegated to perform those functions does not ordinarily cease to possess those skills the instant his flight instructor rating expires, even though the exercise of his delegated authority to test others is conditional upon his keeping that rating current.

That judicial determination suggests that, if someone falls outside of the requirements that you set, they don't instantly become unsafe. The judgement goes on to say that for people that person might have tested, 'If the person has passed the necessary flight test and satisfies other relevant requirements for the issuing of a rating, CASA has no discretion to refuse a rating to such a person.' So the people that followed, who had done a check under someone who, it turns out, wasn't validly qualified, had completed their test. I don't think there was any doubt that they'd completed their test, and they'd completed the test satisfactorily. Would you agree with that proposition?

Mr Carmody : I might pass over to Dr Aleck, who might be able to provide an interpretation of that.

Dr Aleck : Thank you. We are familiar with the case. We are familiar with all cases that impact on our decisions, particularly those that involve CASA as a party. You're looking at the well-recognised principle that like cases should be decided alike. The complementary provision is that cases that are not quite alike should not be decided the same way. The critical issue is deciding how alike they are. While there are some superficial but not insignificant similarities between the Royal Queensland Aero Club case and the FalconAir situation, there are some fundamental differences.

The threshold question is whether it's different as a matter of law. Legally, the most significant difference is that the actions of the Royal Queensland Aero Club involved decisions taken by a delegate of CASA—effectively, government decisions, which are normally governed by principles where you can dispense with an insignificant administrative aspect if no-one's adversely affected by it and take a decision that is more rational, irrespective of a shortcoming in meeting an administrative requirement. This was not such a situation. This was a situation in which there was a failure to comply with a regulatory requirement.

Senator PATRICK: That particular case involved a chief pilot issuing, effectively, a pilot's licence to a number of students. That person was a delegate of CASA, in the same manner in which the chief pilot for FalconAir was a delegate able to check pilots.

Dr Aleck : With respect, the chief pilot is not a delegate. The chief pilot is an employee of the operator who has the privilege to exercise certain powers under the provisions of the legislation. It may sound picky but, legally, it's quite significant.

Senator PATRICK: I'm very familiar with court matters. When there is a case, the role of counsel is to differentiate and suggest why that case doesn't apply. The general principles in this situation are that the chief pilot didn't immediately lose his competence. He had 30,000 hours of flying time, so one would presume that he had some level of competence. I don't think there's any question that he then checked, completed, their tests.

Dr Aleck : I take your point and I'm appreciative of the fact that you recognise that these issues can be argued. I'll make two points here. Firstly, if the question is whether we fail to apply as a matter of law a case that would have determined the outcome, that would be concerning. In this case, it doesn't. Are there issues—general principles, as you say—that are informative? There are. The significant issues here are the facts. As Mr Carmody indicated earlier on, this wasn't a question of competency, it was a question of proficiency. No-one was questioning the competency of these pilots. They are capable of—

CHAIR: Competency or proficiency?

Dr Aleck : Competency means you're able to do what it is you're authorised to do. So you can operate the aircraft; you know what to do. A proficiency check doesn't put a person in the aeroplane and say, 'Fly the aeroplane; do what you would normally do.' It quite deliberately throws up challenging, unusual situations. That's the critical issue: 'Are you able to handle abnormal situations?' A pilot can fly for a year, and that's a critical term, in this case, and encounter no unusual circumstances. A proficiency check deliberately introduces those challenging circumstances to ensure that if and when they do arise the pilot will be capable of dealing with the circumstances.

Mr Carmody : If I may add something, these are medical evacuation flights. The type of operation that happens at one o'clock in the morning—someone gets a phone call. The pilots don't know where they're going until they're going. They've got to deal with the weather, the circumstance, and do all of the planning. We've had a long discussion about Pel-Air many times in this hearing so the irony is not lost on me. Planning appropriately for a flight like this, having to divert potentially on the way because of weather—that's about proficiency. I have no confidence that the checking and training regime was operating so that these pilots were proficient. Many of them were outside the operational proficiency checks, including the chief pilot—well outside. So I don't know what he has done but I know what they will be held to account for if there's an accident in one of those high-performance jets.

CHAIR: That's accepted and I should allow Senator Patrick just to move on. I was just trying to clarify those two things. But perhaps the best way for us to deal with these is to let Senator Patrick get right through his line of questioning, and you might make some notes and we can come back on these points because I think that's where you will find some involvement from the balance of us.

Senator PATRICK: Thank you, Chair. I know you were being helpful. So somewhere between 1 December and 7 December—in fact it sounds like before that—you were of the view that the chief pilot was not authorised to fly. Is that correct?

Mr Campbell : I think you're referring to the check pilot.

Senator PATRICK: Check pilot. Sorry.

Mr Campbell : We discovered he wasn’t authorised to fly—I'm not sure of the exact time—five or so days before the Dominic flight.

Senator PATRICK: Okay. And that caused you, Mr Carmody, to have a concern as to their safety.

Mr Carmody : Well, what it caused me to think about is: what are lead indicators here? This organisation put up somebody—we've had a long discussion about Mr James's flight and being proficient and this went on for a month, about how we organise how to do a flight. It came up here in estimates as well. We turn up, and the person they put up to check him is not qualified and they don't know. That is lead indicator No. 1. We go back and have a look at the rest of their pilots. Lead indicator No. 2 is when we find that lots of them are not qualified. That's what auditing is about. They were not current.

Senator PATRICK: But they're not qualified because they were checked by the same pilot.

Mr Carmody : They're not current. There's a whole litany of people who were not qualified in various ways.

Senator PATRICK: On the basis they were checked by that particular pilot; that is my understanding. That's the cascading effect and indeed some of those pilots—

Mr Carmody : Not only that—

CHAIR: I see a contest. It may be helpful, Mr Carmody, if you were to particularise by name and circumstance as to why you say they weren't qualified. Is that all right with you, Senator Patrick?

Senator PATRICK: Yes. Absolutely. Thank you, Chair.

CHAIR: Let's just get that laid down and we will see what we are dealing with. You don't necessarily have to give their names, I don't think. Is there any particular need for their names at this stage?

Mr Carmody : I don't think so.

Mr Crawford : No.

CHAIR: So you can call them pilot 1, 2, 3, 4, 5, 6. Mr Crawford, you look like you're poised and ready to go there.

Mr Carmody : We can go through it in detail. Do you want to—or I can do them; I'm ready to go.

Mr Crawford : I will do it. Just a couple of key facts: basically, eight out of nine of the pilots at FalconAir were not compliant with their own operations—

CHAIR: I'm going to interrupt you because I know how these things go. Let's just go down: 1, 2, 3, 4, 5, 6, 7, 8. And, if you tell us No. 2 is the same circumstances as No. 1, we will do the ditto thing.

Mr Carmody : Chair, I can take that, because I've got them lined up here. So why don't I run quickly through them? The first pilot—who was going to be actually conducting the check, who was nominated—conducted a successful instrument proficiency check and operational proficiency check on 31 August 2017. It would appear he had not conducted any other check before that date since the middle of 2016. On the assumption—

CHAIR: Sorry—

Mr Carmody : So he was well out of—the checking and training regime requires you to conduct two flights a year.

Mr Campbell : Two flights a year not closer than four months apart.

CHAIR: For yourself. This is for you to be checked and tested?

Mr Carmody : Yes. Not closer than four months apart.

CHAIR: Okay. So on 31 of the eighth he was checked and tested, and we ticked that. But, preceding that, when was the previous one?

Mr Carmody : Before June 2016.

Senator PATRICK: An OPC is a significant—

Mr Carmody : Operational proficiency check.

Senator PATRICK: And that's a significant test in a simulator somewhere isn't it?

Mr Carmody : Yes, it is.

CHAIR: So let me get this right. On August 17, he is properly checked and tested in a simulator. We will tick that. In June 16, he is properly checked and tested in a simulator. We will tick that. What you're suggesting is that there were at least two events in between those two where he should have been checked and tested in a simulator and was not?

Mr Carmody : Yes. That's essentially correct. As we work back all the way through—

CHAIR: Is there anything else—

Senator PATRICK: Didn't he do a check but in the wrong aircraft?

Mr Campbell : He did a check in late 2016 in—I believe it was a Duchess, which is a small piston-engine twin, and then went back to flying duties after a medical event. He had a period away for a medical issue and then came back to flying duties without being rechecked to line in a company aircraft with a—

CHAIR: In late 17—that even where he was checked and tested in the piston aircraft—does that qualify as one of these two ticks?

Mr Campbell : No.

Mr Carmody : No, it doesn't.

CHAIR: The wrong type?

Mr Carmody : It does not qualify in accordance with the ops manual.

Mr Campbell : It's very specific. It's not done in a company aircraft. It was not a company check. It didn't cover the parameters of a company check and it was an aircraft totally different.

Senator PATRICK: He had previously done a check in an aircraft in another company in the same aircraft, hadn't he? So my understanding is that he was of the view that he could. That was a mistake. He accepts that was a mistake. But in his previous company he had checked in a Duchess and that was legal because the company had a Duchess.

Mr Crawford : The issue is that it's not compliant with FalconAir's operations manual.

Senator PATRICK: No, I understand that. What I am suggesting is that it was not a deliberate action. The pilot, having checked himself in a Duchess at his previous company, went and did the same thing at the new company he was working for, FalconAir. So he has made a mistake. That's clear.

Mr Carmody : He made a mistake.

Senator PATRICK: Okay.

Mr Campbell : Whether it was a mistake or it was deliberate, I don't know.

Mr Carmody : Don't know. And that's part of the challenge in this process.

Senator PATRICK: Sure.

Mr Carmody : According to the company, 'just a little bit of paperwork'.

Senator PATRICK: Sure.

Mr Campbell : I do know that he was well aware of the legal requirements, because I had interactions with him in the previous company and this one, where we had discussed it as part of proficiency checks.

Dr Aleck : I might add, if it were a mistake, all CASA expected was that he should fix the mistake.

CHAIR: Yes. Let's come back to that, because I have a series of questions and I don't want to interrupt Senator Patrick. Let's go to person No. 2. Let's list this down.

Mr Carmody : So the next person—I'm just trying to work out how to mention him without mentioning him—is the chief pilot. He doesn't appear to have complied with the requirements of their own training and checking manual, and he doesn't appear to have complied with the obligation to ensure that checks and tests are conducted in accordance with both the manual—

CHAIR: So that's the indictment—

Mr Carmody : Yes.

CHAIR: One thing that he—and he had not—

Mr Carmody : He is responsible for the check and training system.

CHAIR: I appreciate that. His indictment is: he is responsible for the check and training system

Mr Carmody : He is not checked himself.

CHAIR: No, I appreciate that. There's a manual that would lay that out for him with the acceptable processes.

Mr Carmody : Yes.

CHAIR: And he failed to apply the terms of that manual to person No. 1 because of person No. 1's failure on two other occasions to be checked and tested. Is that right?

Mr Carmody : He is the head of checking and training and he failed to apply it through the whole system, including person 1.

CHAIR: Certainly with No. 1.

Mr Carmody : Including person 1.

CHAIR: Yes. And then, is it a cascade effect then? Because he did not do it with 1, then it contaminates 3, 4, 5, 6, 7, 8? Is that the indictment on him?

Mr Carmody : No.

Mr Campbell : Not with No. 2.

Mr Carmody : But the indictment with No. 2 is that he is fundamentally responsible for this system.

CHAIR: I accept that. We accept that. But I want to know any other misdemeanours on 2. That's it?

Mr Carmody : Yes, that's it.

Mr Campbell : That's it.

CHAIR: Right. No. 3?

Mr Carmody : No. 3 appears to have conducted his last instrument proficiency check outside of the regulations, so therefore it was not a valid check for the purposes of meeting the requirements set out in FalconAir's training and checking manual, compliance with which is required by the regulations. In this instance, his last valid check under our regulation 217 would appear to have been on 12 December 2016, more than 12 months old.

CHAIR: And how frequent were those supposed to be?

Mr Carmody : The same, so two checks per year and they must be more than four months apart.

CHAIR: So he did one check in the year of 2016?

Mr Carmody : Yes. The end of 2016.

CHAIR: And then—

Mr Carmody : He doesn't appear to have done any in 2017.

CHAIR: Nothing in 2017.

Mr Carmody : And again, Chair, if I may explain as we work through them—you've got an instrument proficiency check and you've got an operational proficiency check. They're different checks but they're part of the same checking and training system.

CHAIR: Yes. He's guilty on the instrument proficiency, according to—

Mr Carmody : Well, he's guilty on both, because he doesn't seem to have done an OPC at all. He's done an instrument proficiency check.

CHAIR: And what's an OPC?

Mr Carmody : An operational check. I think my colleagues would explain it better than I would, but that's the type of check which would create varying situations for when you're flying. You know, the weather's just turned, plan a diversion, something has gone wrong—is that right, Malcolm?

Mr Campbell : Yes.

CHAIR: That's a supervised event; someone's overseeing it?

Mr Carmody : Yes, absolutely.

CHAIR: He's failed to do it, no one has overseen it?

Mr Carmody : Yes.

CHAIR: So he's unrelated to No. 2 and No. 1, except that No. 2 ought to have had an audit within the organisation to have identified those two things.

Mr Campbell : He should have planned those flights.

CHAIR: No, just hear my question, so we don't watch the sun come up here.

Mr Campbell : So we don't know if it was No. 1 or No. 2?

Mr Carmody : No. 2. What Mr Campbell was saying—

CHAIR: No. No. 3, insofar as No. 1 had nothing to do with No. 3. I'm not trying to do the butler in the lounge room with the candlestick. No. 1 had nothing to do with No. 3. No. 2's failure was, in this global failure, that he had a manual, he was responsible to see that everyone was properly checked and tested and in the case of No. 3, he did not.

Mr Carmody : Well, firstly, two things: he did not. He is supposed to plan the flights and make sure they occur—

CHAIR: Sure.

Mr Carmody : and make sure the regime actually works, and that all of their pilots are checked.

CHAIR: Yes.

Mr Carmody : And secondly, the No. 3 himself did not ensure that he was qualified.

CHAIR: No, I accept that. Was that No. 4?

Mr Carmody : No. 4 was that the last operational proficiency check was conducted on 29 June by person No. 1, when person No. 1 wasn't authorised to conduct a check.

CHAIR: Yes, so we'll call that a No. 1 event.

Mr Carmody : Yes.

CHAIR: Is there anything else from that particular pilot?

Mr Carmody : No, nothing, Senator.

CHAIR: Have you got any women in there? I'd like to share this around a bit; they're all men! No. 5?

Mr Carmody : No. 5 had done an OPC and an IPC on 9 November 2017. But it appears that he had not complied with the previous checks. So in other words, he hadn't done them in the 12 months, but he'd actually done something recently in 2017. And he was the one that ultimately, if I may, was the least egregious and who I allowed to fly later on.

CHAIR: Yes, but let's just deal with this. And Senator Patrick, you jump in—

Senator PATRICK: No, you're doing a great forensic job there.

CHAIR: He had done something on 9 November 17—

Mr Carmody : Yes.

CHAIR: which would have bought him into time. His crimes were historical before that?

Mr Carmody : Yes.

CHAIR: And to what extent were they historical? He failed to do a second OPC at all in the year of 2017?

Senator PATRICK: An IPC.

CHAIR: An IPC, is it?

Mr Carmody : I haven't got the details—

Senator PATRICK: An IPC and an OPC.

Mr Carmody : Mr Campbell might know.

Mr Campbell : My understanding is that the second check was done about nine days late, give or take. It was relatively close to the due date. That's what allowed the exemption to take place.

CHAIR: Yes. We'll come back to this, I'm sure, but his crime was that he'd done what he was supposed to do at particular intervals within a calendar year, but the second one was nine days late. That was his crime?

Mr Campbell : I believe so.

CHAIR: Okay. No. 6?

Mr Carmody : No. 6 and No. 7, because they're both pretty much the same. Both undertook line checks with No. 5, when he had not undertaken timely and valid proficiency checks.

CHAIR: Yes, the nine-day thing.

Mr Carmody : Yes.

CHAIR: Right.

Mr Carmody : There is one more, too, which isn't on my list.

Mr Campbell : Yes. The chief pilot, which is pilot No. 2.

CHAIR: No. 2.

Mr Campbell : His co-pilot on the Falcon 2000 had not completed an operator proficiency check at all.

CHAIR: He was a co-pilot?

Mr Campbell : Yes.

Mr Carmody : So he'd not completed an OPC at all?

Mr Campbell : Not at all with the company. And he had not completed his emergency procedures training. That's about evacuating the aircraft and oxygen requirements, that sort of stuff. So it's a simple check.

CHAIR: And how long was he out of date for that? Had he done one? One assumes that he—

Mr Campbell : He'd never done that.

CHAIR: would have done them previously.

Mr Campbell : No, he'd never—

CHAIR: Never in his life?

Mr Campbell : Never in the company.

Mr Carmody : Never in the company—

CHAIR: Never in his life, in the company, had he done either. Well, what is the OPC? Just break that down for me; it's a—

Mr Crawford : Operators proficiency check.

CHAIR: And explain—

Mr Campbell : There are the two checks. We talk about an operator proficiency check: it's a series of circuits and approaches with emergencies thrown in, so a flying check. And this other check that he hadn't done, was a 20.11 emergency procedures check. A 20.11 is a Civil Aviation Order, and it's about evacuating an aircraft, loss of oxygen pressure and things of that nature.

CHAIR: I think for the purposes of Senator Patrick's examination we have covered the misdemeanours.

Mr Carmody : You've got a pretty fair indication.

Senator PATRICK: So pilot No. 1 was the check pilot, just to clarify—yes?

CHAIR: No.

Mr Carmody : One of three check pilots.

CHAIR: No. 2 is the chief pilot.

Senator PATRICK: No. 2 is the chief pilot—okay. So you've decided that this is an unacceptable situation, that it's dangerous, and that these people shouldn't fly.

Mr Carmody : Yes.

Senator PATRICK: Mr Campbell, on 8 December did you fly with any of these pilots?

Mr Campbell : On 8 December was the Dominic James flight to lift the conditions off his air transport pilot licence that were invoked after the Norfolk accident.

Senator PATRICK: Who was the pilot in command?

Mr Campbell : The pilot in command for that was David Grant, the check pilot, who was No. 1.

Senator PATRICK: Despite the fact that it was too dangerous for these guys to fly, you allowed one of your staff—in fact, two of your staff, I believe—to go flying with these people. Is that correct?

Mr Carmody : That's correct.

Senator PATRICK: I don't—

Mr Carmody : It was a private flight. We can discuss the difference between the two. We were confident that we could manage that flight. That flight had been planned.

Senator PATRICK: The CASA people on board are not pilots. They can't assist if something goes wrong in the aircraft.

Mr Campbell : I was in the rear of the aircraft. We had a qualified Falcon 20 pilot in the jump seat supervising and monitoring.

Senator PATRICK: That was pilot No. 1.

Mr Campbell : No.

Mr Carmody : No, it was one of our staff.

Senator PATRICK: And he's qualified?

Mr Campbell : He's qualified.

Senator PATRICK: He's done all of the checks? The OPC? The IPC?

Mr Campbell : He's done the IPC. He's not within that company, so he doesn't do an operator proficiency check.

CHAIR: He wouldn't have been legitimate to fly either. He had the same status as No. 1.

Mr Carmody : No, he was legitimate to fly. He was completely qualified.

CHAIR: Sorry. Again, I am interfering in your line of questioning.

Senator PATRICK: No, I think you're asking questions that need to be asked.

CHAIR: He hadn't had his proficiency check in an aircraft of that particular company.

Mr Campbell : No, but he had of that particular type.

CHAIR: The distinction was made before, when it was asserted—not disputed—that No. 1 had done that too in another company but it didn't count.

Mr Campbell : Correct.

CHAIR: So the fellow in the jump seat, in the copilot seat, wouldn't have traditionally qualified to fly that aircraft.

Mr Campbell : He would in a private situation. The operator proficiency check specifically details—

CHAIR: Let me tell you this. We get a bit excited here from time to time. If your defence around this is some split hair between 'it's a private flight' and 'it's a commercial flight', that doesn't wash with me. I'll be up-front with you. That's one cent either way on that.

Mr Crawford : Can I try and answer that?

CHAIR: No, we'll come back to you, Mr Crawford. I just want to clarify this. In the jump seat. In the copilot seat. So you are telling me there are different standards for private flights.

Mr Campbell : If I could explain.

CHAIR: Of course. That would be helpful.

Mr Campbell : With an operator proficiency check, one of the key points is crew coordination, where you've got specific company procedures that are different from company to company. So an interaction between a flying pilot and non-flying pilot in normal situations is coordinated, rehearsed and documented. In an emergency, it is coordinated, rehearsed and documented. So it's a drill. They don't have to think about it. That is what part of the operator proficiency check is. The operator proficiency check also includes an element of training. That training brings people's proficiency back up to standard prior to the check.

CHAIR: I appreciate that. But your fellow wouldn't have qualified under No. 1.

Mr Campbell : He wasn't qualified in that organisation, but he wasn't in the control seat. He was in the jump seat. He was sitting behind the two crew. He was familiar with their procedures because he was the oversighting inspector.

CHAIR: Mr Campbell, I'm sure you've heard the old nursery rhyme about having your cake and eating it too. You've got to choose here. If your defence to Senator Patrick's line of questioning is 'We had a pilot in the right-hand seat who did not qualify to fly that aircraft and we had a pilot in the left-hand seat who didn't qualify to fly that aircraft'—in a technical sense; they both seemed to be competent pilots of type—then I'm looking for, and I think Senator Patrick was looking for, the distinction between those circumstances. All I have heard is 'private versus commercial'.

Dr Aleck : There are distinctions between private and passenger carrier fights. The standards are different. The idea is that what might seem like being picky to you in a technical sense is 'How can we conduct this check flight in a way that doesn't conflict with the technical requirements of the law?' Conducting it as a private flight didn't invoke those higher requirements. One can argue philosophically whether there should be different levels of safety, but that is the norm in every single country. This is not making fine distinctions for the sake of having one's cake and eating it. It was a fact of the situation. It was a relevant consideration at the time. It's a perfectly typical way in which these kinds of checks are conducted everywhere in the world. You'll have the pilot from the regulatory authority sitting in the jump seat, who certainly won't be qualified to fly a revenue flight for that company because he is not checked to those standards and he doesn't operate within that environment, but he is capable of making judgements about whether the flight being conducted meets the applicable standards. This is the way it's done.

Mr Crawford : One of the distinctions as well is that in a private operation you're talking about informed participants taking part in assessing a pilot. If you go to the other environment, where they're doing a medical evacuation, there are uninformed participants in the form of passengers in the aircraft. That is where the OPC is essentially making sure both pilots are capable of handling an abnormal situation when you have passengers on board. That is the distinction.

Senator PATRICK: I wouldn't necessarily try and make a distinction between lives. I think Mr Campbell's life is just as important as—

Mr Crawford : I was not making a distinction between lives. I was explaining the difference between private and commercial.

Mr Carmody : It was a distinction between informed participants and non-informed participants.

Senator PATRICK: Going back to pilot No. 6, he had not had any checks. But my understanding was that he was only new to the company. So he had not had any checks with that company.

Mr Campbell : This was the one I brought up at the very end.

CHAIR: No. 7. He had not had line checks.

Senator PATRICK: They had not had line checks within that company, but they were new to the company.

Mr Campbell : I'm not sure which one you are referring to now.

CHAIR: Mr Carmody has got them.

Mr Campbell : We didn't number them.

Mr Carmody : We're just reading through now.

CHAIR: Take your time. This is important.

Mr Campbell : Yes, they were line checked. That's correct.

CHAIR: What does a line check involved? You'll have to give me some tolerance on this, Senator Patrick, because you are a pilot and I'm not.

Mr Carmody : Mr Campbell is a pilot.

CHAIR: What's a line check?

Mr Campbell : After you've completed your training and got the required minimum hours to fly, you do a check—which can be done on a revenue flight, because it does not involve actual emergencies. It discusses emergencies, but it's more a check of following operating procedures and the crew drills which I talked about before, to make sure that you are safe.

CHAIR: In these circumstances who would conduct a line check?

Mr Campbell : An approved check pilot within the organisation.

CHAIR: Which is No. 1.

Mr Campbell : Depending on the type. There are three check pilots for the different aircraft types.

Senator PATRICK: So we are in a situation where we have got a number of pilots who have not validly met their licence requirements. But I think we're saying they're competent to fly—is that right? Not proficient but competent.

Mr Carmody : I'm not saying competent to fly. I don't believe that they've conducted their instrument proficiency and operational proficiency checks. I think in a proficiency sense they're competent to fly and many of them have many hours, but they have not completed their operational proficiency, or I'm not confident their cascading checks—because they are the leaders of the company who should be managing the other checks—have been done satisfactorily. I do not know. Why would I have confidence, if they hadn't been able to keep their own checking and training up to date, that they had checked everyone else appropriately? At this stage I do not know. That's why I made the decision.

Senator PATRICK: No-one in CASA was contacted prior to the 16th, when this flight took place or when there was a request for a heart transplant.

Mr Carmody : Not as far I know.

Mr Campbell : I'm not aware of any contact being made.

Mr Carmody : We were told on the 21st or 22nd by the owner of that company when he came in and said that he'd had to turn down a heart transplant flight and the patient had died—they were the two things that we were told. That's when we questioned why that had occurred. That was the 21st. As far as I know, we have no indication that there was any contact prior to that. I understand the timing was very short, between 1.30 and 3.30 in the morning or something along those lines.

Senator PATRICK: In your opening statement, you made the point that the company grounded itself; it wasn't CASA that grounded it.

Mr Carmody : That's correct.

Senator PATRICK: Are you aware of an email that was sent by Mark Burgin on 8 December to the company?

Mr Carmody : No, I'm not.

Senator PATRICK: Let me read from it. It says: 'I respectfully ask you to ensure that any flight crew members identified through this audit process who have lapsed from the period of competency checks does not participate in FalconAir operations until the requisite competency checks are completed.' Would it be reasonable to expect a chief pilot or other pilots, having received that email, to then decide against that request?

Mr Carmody : I think that they'd already made up their mind—they already knew they were outside the regulatory requirement.

Senator PATRICK: No, I think they stopped flying after that email. I'm asking you: if someone received from a CASA official, the flying operations inspector of the safety assurance branch, words to the effect, 'Please ensure that these people do not participate in FalconAir operations until the requisite competency checks are completed,' you don't see that in any way as something that would—

Dr Aleck : That would be a statement of the law. A person who falls out of proficiency doesn't lose their licence; they lose the privilege to conduct certain kinds of flights—

CHAIR: No, the burden of the question is: how would a reasonable person interpret that? Would they interpret that their operations can't continue while these seven people are in—

Dr Aleck : No, I think, with respect to each of those pilots, a reasonable pilot would say, 'Jeez, you're right: I am out of proficiency; I'd better go do this,' and the company would say, 'Jeez, you're out of proficiency; you'd better go do it so you can continue to exercise your privileges.'

Senator PATRICK: What would have happened if those pilots had continued to operate?

Dr Aleck : Without being in proficiency?

Senator PATRICK: Yes.

Dr Aleck : They would have been committing an offence.

Mr Carmody : They would have been committing an offence under CAR 217 and CAR 215.

Dr Aleck : Yes. The offence would have been articulated in the company's own operations manual that says, 'You must not do these things unless you meet these tests,' and the regulations simply say, 'You must comply with the provisions of your ops manual.'

Mr Crawford : That email was also sent when Mark Burgin knew of only five of the pilots not being current. He later found out that eight out of nine weren't current. So that's an important factor. He said, 'Those pilots shouldn't operate;' he was of the understanding that the rest of the pilots—he didn't really know the status of the rest of the pilots.

Mr Carmody : Neither did we.

Mr Crawford : And neither did we.

Mr Carmody : If we're going to hypothesise about what they might have thought about it, we need to hypothesise also that we only knew that there were five out of currency out of their nine, so, theoretically, Mr Burgin might have expected that they had other pilots who were competent because we hadn't been through that check at that time.

CHAIR: Mr Carmody, or maybe Mr Campbell, when you learn that, No. 1, the check-test man in the company is not proficient—and I'm assuming he was one of the two you're talking about that you did know about—wouldn't your very next question be, 'How many of these others have you checked and tested?'

Mr Crawford : That was exactly what happened.

Mr Campbell : That's what triggered the two-day audit on the 6th and 7th.

CHAIR: Of?

Mr Campbell : December, two days before the Dominic James flight. The discussion was, 'If he's out of check, who else is? Let's go and have a look.'

Mr Carmody : So they put a pilot forward who was out of check. As I said to you before, Chair, they put a pilot forward who was out of check. That surprised us, so we went in for a very quick audit or a very quick check on the 6th and 7th to have a look, and then we found more. Subsequently—

CHAIR: What date is this, Senator Patrick?

Senator PATRICK: This was on 6 and 7 December that the audit took place, and then the flight took place on—

CHAIR: What date was on that email?

Senator PATRICK: The 8th.

Mr Carmody : So it was quite legitimate to expect that that was based on the views of the 6th and 7th. We went in subsequent to that and found more. So the lead indicator that we had from the first failed check pilot was correct.

Mr Campbell : That would be consistent with what we would do with anyone.

CHAIR: But you did an audit on the 6th and the 7th?

Mr Carmody : We didn't get to see all the records, did we?

Mr Campbell : No. We weren't expecting to find what was found. It was a very short—

CHAIR: But was it conducted on the 6th and the 7th?

Mr Campbell : Yes.

CHAIR: By the end of business on the 7th, did you have a sense that the out-of-date check and test pilot had checked and tested any number of pilots in the company? You would've had to have known, because—

Mr Campbell : I wasn't in the office then, because I was out doing the Dominic flight.

CHAIR: Let's just do it hypothetically then. If you've sent a team of competent people in to do an audit over a two-day period—and that's the full length of the audit: started one day and finished at the end of the other—would you expect that they've completed their work?

Mr Campbell : The view was that they had to go back in because they ran out of time.

CHAIR: So two days wasn't enough?

Mr Campbell : No. They notified the company that there was a two-day audit and they'd planned their own staff around two days, so it wasn't reasonable to extend it.

CHAIR: Do you know, either directly or through what you've been told, what they knew at the end of the second day in respect of how many of these pilots had been checked and tested by the check and test pilot? Let me just place this fairly firmly. If you're going in to do an audit and it's a general audit, not specifically about this, but you already know that the check and test pilot's out and, by default, the cascade effect, that they're all out—

Mr Crawford : They're not all out. It depends on—

Mr Carmody : There are three check pilots and it depends on the aircraft. It doesn't necessarily cascade that way.

CHAIR: Sorry. Everyone checked on that particular type by that pilot is out. And we now know that four, five, six and seven are out. Would you not have expected that that audit would have turned that up at some time in the two days? Wouldn't that be one of the first focuses? You know there's a weakness to follow.

Mr Crawford : What we found was, as you mentioned earlier, that the check captain or check pilot wasn't current. Then we found that four of his colleagues, including one of the other check pilots, weren't current. Then we ran out of time and said, 'We'll be coming back to have another'—

CHAIR: How many pilots have we got in this—

Mr Crawford : Nine.

CHAIR: So by the end of the two days you've run out of time but you know five are dusted—right?

Mr Crawford : We knew five. We asked the organisation to check the remaining four, which took them about three or four days. Then they advised us—I think it was on the 12th—that they weren't current as well. So they then decided to cease their own operations.

CHAIR: They weren't current because of No. 1, or they weren't current because—

Mr Crawford : It wasn't just No. 1. They also didn't have their OPCs within the last 12 months, or some for multiple years.

CHAIR: So now we've got 12 pilots—

Mr Crawford : No, nine pilots—eight out of nine.

CHAIR: Eight out of nine are not current, for one reason or another.

Mr Campbell : That is correct.

Senator PATRICK: You went on to use your discretionary power to permit one of the pilots to then fly.

Mr Carmody : I did. That was after multiple representations. I did that, on the 21st, because I could see where this was going and I felt that the interests of aviation safety would be well served by having someone available to conduct these flights over Christmas. The person that I chose was the least egregiously out of date. I knew that he would be able to go there and check a couple of other pilots—for which I received a thank you email immediately from the CEO of the company saying, 'It's the best Christmas present I've had'. We made the decision, and that was a risk-based decision. If that had gone wrong, that is on our head. It was a very fundamental decision.

Senator PATRICK: But I think that throughout this entire episode there are a number of competing factors. One of them is air safety, and I realise that is your bailiwick.

Mr Carmody : It's a pretty significant factor.

Senator PATRICK: There's another one, which is the safety of the people that might need retrieval.

Mr Carmody : Correct.

Senator PATRICK: I know that you are aware of at least one email where there was a plea to let these guys back up in the air, because you were in the email trail.

Mr Carmody : That was the one that was forwarded on to us by the company.

Senator PATRICK: It might have been, yes.

Mr Carmody : I think it occurred after we found out about the one that they had turned down. As I have said, with respect, there are almost 10 companies on the east coast that do this. They're not the only ones. We can give you the names of them if you wish. They're not the only ones—that is the first point. The second point is that the other element that plays into this company, which I think is worth mentioning, is that when we turned up to do the Dominic James flight on 8 December—we had sorted this out and we were doing it as a private flight—I understand all of the discussions we've had—the aircraft was not serviceable. We could have just walked then and said, 'Call us when you're ready.' But we wait all day until they got the aircraft serviceable so we could conduct the check and get this thing going. But then we have a lead indicator on their maintenance. So we've gone back in now to look at their maintenance, and we're not particularly thrilled with what we're finding, as well.

Mr Campbell : I might clarify that point. There is pilot number 1. When we were having a discussion and briefing of Dominic of how the events were going to play out, he made general conversation: 'The fuel gauge is unserviceable, but I haven't written it up because the engineer said they have to drain the fuel to fix it.' I said, 'You don't have a choice—you have to write it up.' There's probably an MEL, which means there's a period in which you can keep it unserviceable, as long as you document it and follow a set procedure in the manual of how you establish fuel quantity in flight. He ummed and aahed, then he wrote it up. Fair enough—we can tick that as a bit of education. He is fully aware of this anyway; it's not something that's new to him. Then an hour later, after he had walked back out to the aircraft a few times, he said, 'I've found a defect on the aircraft. I'm going to have to write it up.' It was a broken navigation light lens. There were no spares in the country. We had to get an engineering order designed to fix it, and they had to have repair scheme carried out on the aircraft. We left between 3.30 and 4 o'clock that afternoon. I believe that that defect didn't occur just then, and I suspect that he was aware that when I walked at the aircraft it would be pretty obvious, and at that point we would be saying, 'What about this?'

Senator PATRICK: There was a hole in a navigation light—that was the issue, was it?

Mr Campbell : It's a lens cover. It's an aerodynamic piece, which had a hole in it.

Senator PATRICK: It was a pinhole or something, was it?

Mr Campbell : It wasn't pinhole. It was a hole you could put your finger in.

Senator PATRICK: I'm just establishing the facts of this, and giving you an opportunity—

Mr Campbell : The ramifications of that—

CHAIR: We get a steady stream of people in front of us. They tell us things, and we'll put it to you.

Mr Carmody : Mr Campbell was just making a point on the ramifications of that, for what it's worth.

Mr Campbell : This is in the leading edge of the wing, with electronics, and it's a water and ice hazard. In flight water contamination will short out the lighting. So it was a significant issue. It wasn't just cosmetic.

CHAIR: I have a question for Dr Aleck. I want to get my ear in tune with this. It's a legal question. Obviously Mr Carmody has discretions. I'm assuming he couldn't exercise discretion for me tonight to go out and fly a jet plane when I've never flown the jet plane. That's an extreme example. What's the threshold where he would not be able to exercise his discretion?

Dr Aleck : His discretion to permit something that would otherwise not be permitted?

CHAIR: Is there some test that we can apply as we listen to this about how far he can exercise discretion?

Dr Aleck : I wish there were a magic test. The test is the risks that are presented can be mitigated to the point where the risk is not unacceptable in the interests of safety, balancing all the other relevant considerations. That is exactly the process Mr Carmody went through in allowing this one pilot an exemption to do what needed to be done. As Mr Carmody said, there was a risk attendant upon that. The irony is not lost that this was a defect.

CHAIR: In the case a mild nine days out of time—you could argue a position.

Dr Aleck : There are two things here. I think Senator Patrick was onto them. He was saying, 'A few days out—we're talking about people who are reasonably competent.' There was this case that said this delegate who had not maintained proficiency conducted all these tests. How unfair it would be to all these people who paid money to have their tests conducted on the good-faith assumption that the person who was conducting them was capable of doing it. One of the things the court took into account there was that there were any number of people who had done this in good faith, without any reason to know or believe that the person who was conducting the test had fallen foul of a condition of his delegation.

The delegation was never removed by CASA, so he had the delegation. As part of the process you have to register your intention to conduct a test, and, in fact, he registered his intention to conduct a test at a time when he was not proficient. CASA systems at the time—we're going back a few years now—didn't pick up that fact. So there were a lot of reasons that the delegate himself might not have even recognised, at lease at one point, that he was not meeting the requirements of the condition. These innocent people were affected, but they said that, after all, it wasn't such a big deal, and look at all these innocent people who have been affected by it.

This is a significant difference: in this case there were no outsiders. They were all within the company. They all knew, or ought to have known, what their particular proficiencies were. None of the individuals were told, 'Anything you've done you no longer have,' as the individuals in the Royal Queensland Aero Club case would have done. They would have said, 'You know that instrument rating you were issued, it's no good because the guy who conducted the test wasn't able to do it, so you're going to lose it.' The court said, 'If you think they shouldn't have it, initiate action to take away.' In this case it wasn't a question of taking anything away, but a question of granting an exemption from a requirement with which they didn't comply. It wasn't a group of any number of innocent people. This is balancing whether it matters if they are innocent or not. The court took that into account and we took that into account and we said, 'No, this isn't a group of people who, in good faith, relied on the qualifications of a CASA delegate who held his delegation. This is a situation where, within a company, everybody involved knew. Frankly—although it would have been embarrassing and probably uncomfortable for the individual pilots—the only person who was disadvantaged by this was the operator.

Mr Carmody : That's right. Can I just make one more point, before you start again, and then I'll be quiet. The other factor that's relevant to me is, as I've said, these are medical evacuation flights or emergency flights. They're very significant flights and we've had lots of discussion about those in the past. Most of the time their passengers are highly qualified surgeons or medical staff who are going there to do something. They are very highly qualified. If I were to ask any of them if they expected the people up the front of the plane to be qualified, think I know the answer that I would get. This is pretty fundamental.

CHAIR: But this isn't a question about—

Mr Carmody : It is for the company, Senator, and that's where I lost my confidence.

CHAIR: protection of qualifications. There are separations. I'm not going to split hairs here. I hear your case.

Senator PATRICK: In the instance of the case with the chief pilot and the bunch of students he was granting licences, it's not true to say that CASA was comfortable with that, because he litigated against one of the pilots.

Dr Aleck : He truly did. I might add that I was out of the country at the time, but the point is that the case was litigated and CASA was brought to book. They didn't use the term of being 'somewhat complicit' in this, but the judge did make the point of saying, 'Hang on, you never took away his delegation. You registered tests that he was going to conduct at a time where you should have known, by looking at your own records, that he didn't hold the qualification. It's really not fair for you, CASA, to be taking this action.' That's one of the reasons the decision went the way it did.

Senator PATRICK: In the decision, in the legend of the start of each decision—I don't know what the legal term is for that—they make reference to the de facto officer doctrine. It's not a good faith test; it's simply a case in law. We're very familiar with that particular doctrine here in the Senate, because it's the doctrine that means we don't have to go back and count votes again simply because a senator is later found to be ineligible.

Dr Aleck : The court found that the de facto officer doctrine was inapplicable in this case. It was a clear finding. The decision of the court said, 'We hear that argument; it does not apply in this instance.' There is no de facto officer, because a de facto officer has to, in fact, meet most of the technical requirements for what it is the person is supposed to do. I'm happy to discuss that or correspond with you about that, but the case is unequivocal that the de facto officer doctrine did not apply in that case. It was rejected.

Senator PATRICK: In this particular case it took from 6 or 7 December until 16 January to allow this company to resume full operation. That was six weeks in total. That's on the back of what I might call administrative matters. We understand these pilots can fly. They know how to fly. One of them had 30,000 hours and may well have been much more qualified than someone who had only 3,000 hours in a similar aircraft but had met all of the validity requirements. In the case of Pel-Air, where there was a ditching off Norfolk, it only took five weeks to get Pel-Air back in the air.

Mr Campbell : That is not quite correct.

Senator PATRICK: No?

Mr Campbell : They were progressively returned back to the air initially limited to, if I am correct, metro freight flights. Their jet operation did not return for quite some time. It was a progressive return in accordance with a management action plan.

Senator PATRICK: On 18 November 2009, Pel-Air ditches off Norfolk Island. On 24 December, five weeks later, Pel-Air resumes flying Westwind aircraft.

Mr Campbell : I'm not sure that is the case. It could be. I believe there were staged flights. The last part of recommencing flying was the Westwind medivac flights.

Mr Carmody : They were also flying on 21 December because I gave them approval to fly their F-50 from that date.

Senator PATRICK: They only had one pilot but I think it requires two pilots.

Mr Carmody : They had two people who were qualified.

Mr Campbell : He was the check pilot. He went up and did those two checks that weekend.

Mr Carmody : Therefore they were up and ready to go over Christmas, which was the decision we made and the risk that I took so I don't think it is reasonable to say they were out from the sixth until 18 January.

Mr Crawford : They actually had an F-50 crew with the check pilot and two pilots.

Mr Carmody : I understand the point you're making.

CHAIR: If we woke up one morning in a perfect world, how long would it take No. 1 to correct as a check and test pilot his credentials? Is that available in Australia? Is it available where he lived?

Mr Crawford : As long as it takes him to get to Paris and go on a flight simulator for a couple of days.

CHAIR: Into Paris?

Mr Carmody : Yes, to a simulator.

Mr Crawford : Flight safety simulator.

Senator PATRICK: I understand that is what they attempted to do but over Christmas the simulator was shut down.

Mr Carmody : They did approach us in early January and said they could not get any simulator time.

Mr Crawford : They said they could not get any simulator space but we found slots.

Mr Carmody : We found some for them and called the simulator operator to try and get them slots and told them to get on their bike and go and get it done.

Mr Crawford : We tried to assist them.

CHAIR: Let's just pretend he's come home from Paris, how long would it take him in reasonable circumstances to get three, four, five, six and seven backed up, checked and tested?

Mr Campbell : For him, it is a three- or four-day check depending on the provider.

CHAIR: Per person?

Mr Campbell : For the check pilot to get current in the simulator.

CHAIR: That's what he does in Paris?

Mr Campbell : He then comes back and it is a one-day flight per person.

CHAIR: So what are we talking about? Flying around one hour, two hours, three hours, five hours?

Mr Campbell : There would be some ground briefings, some questions, which could take typically couple of hours, and then the flight time would typically be two hours or so.

Mr Carmody : So you get them back online pretty quickly. To be frank here—I have to be—this is that operator's commercial issue; my issues are different. I understand his commercial issues but my issues are different. I have been sitting here listening to things like the Pel-Air debate for a number of years. I still hold firmly to the view that this needs to be a safe operation. These are big jets. This needs to be safe and that's it in a nutshell.

CHAIR: Let's put a bit of background to this. One of the problems is of course that at some stage during this they thought your people—you, Mr Campbell—were pissed off at them and therefore acting unreasonably.

Senator PATRICK: You did have history with the check pilot, didn't you, from a previous occasion?

Mr Campbell : I've known check pilot No. 1 for many years. He is quite volatile but we have a good working relationship. Every now and again he blows up because he doesn't like CASA. I often wear the brunt of that but we had a conversation on the morning of the Dominic flight discussing his retirement. I did not know of any animosity between us.

Senator PATRICK: There was an incident straight after where you were annoyed on 9 December.

CHAIR: I think you need to put the circumstances. You can't link that.

Senator PATRICK: Someone posted something on an internet site that you got annoyed with. Could you describe it?

Mr Campbell : I'm not sure it was pilot No. 1 or the other one. Yes, we got back from the flight about nine o'clock at night.

Mr Carmody : This was the checked flight.

Mr Campbell : At about that time, someone had put on the pilot network some disparaging comments about how the process went. I don't remember the details. It was sent to me by the other flying ops inspector. The owner of the company, Mr De Stoop, had previously spoken to me and said he was furious with his pilots posting stuff on the rumour network. He doesn't agree with it, it's disruptive, and he told them to stop. It was really disappointing to see that it had happened again after this, when we'd gone out of our way to make sure this flight went ahead when it could've easily stopped quite legitimately at any point. When I passed it onto him it was alerting him: it's still going on. He rang me just after I emailed him and said he was quite disappointed.

Mr Carmody : I think any suggestion that any relationship between these two gentlemen caused anything in this space is, frankly, spurious. You can see how far we went with this organisation to try and get them up and running. You understand very clearly the decisions that I need to make. I make these decisions on a daily basis. These are important decisions and you're held to account for them. They run an organisation and they need to be held to account for theirs. They needed to have their regime working, and they did not. They can get in the media and say it was a bit of maintenance paperwork or a bit of flight crew paperwork, but there are a lot of other aviators who watch this. They know what we look at too, and they have their paperwork up to date. This is important, in my view. This is my job. This is what I do.

Senator PATRICK: I've talked to a number of pilots who suggested that the regulatory regime that your organisation has created has left pilots in a position where they concentrate more on the regulations than they do on the flying. We get representations made to us from a range of different people, and we try to be balanced about what we hear—

Mr Carmody : On the face of it, I can't completely refute that. I have challenges in our regulatory regime. It's been being rewritten for nearly 20 years. I've been in the job a year and a half. We're trying to work our way through it. We've got pretty big targets. We've got a lot of work going on. I admit the regulatory regime's not perfect, but I will say one thing: these guys understand the regs better than I do. They know what the rules are. It's important to them that they know what the rules are. They might not be perfect.

CHAIR: I don't have any specifics, but it's the policeman pulling you up in a roadside breath test. You don't blow—but calling the name out the window—and the next thing, of course, is your tail light is out. I don't have any specific examples of that, but you'd be well aware—and I'm not laying the charge at CASA—that you are not on the Christmas card list of many, many people in aviation, pilots et cetera.

Mr Carmody : I agree. We've been working on those things time and time again and we deal with issues like that when they occur. I do. A number of people are no longer with us that were with us when I arrived. We will continue to deal with them. Every time I run into somebody who's got a friend of a friend of someone, who something happened to at some point in time, and with at least half of those or more that I track down, there's a fair bit of fault on both sides.

CHAIR: Does CASA have any internal ombudsman sort of capacity?

Mr Carmody : We have an industry complaints commissioner who reports directly to the board.

CHAIR: No, but I am talking about someone active. Someone in this circumstance who on day three thinks that—and I'm not going to direct this to you Mr Campbell. I've heard nothing to suggest you weren't doing your job on the base of what we know. If someone says, 'This is getting a bit spurious', is there some mechanism where these operators can go to CASA and say, 'I want to declare an ombudsman position to come and review this'?

Mr Carmody : They go to the complaints commissioner. It is a separate organisation that was set up and he does investigate. If I go to the case with Mr Campbell with regard to—

CHAIR: I am talking about an immediate response. If he gets a complaint this morning along these lines, saying, 'My whole company's down. It's causing financial—

Mr Carmody : We do deal with that operation. I will give you an example, if allegations are made that the relationship, between Mr Campbell and the operator, might be too close, for the next audit that we send in we ask Mr Campbell to step aside and we bring people in from other states to run the audit. We do that very, very quickly. We did it in this case and I've done it with many others. I am not for a moment suggesting that Mr Campbell did anything wrong, rather like a peer review.

CHAIR: We are talking about hearings—

Mr Carmody : It's a peer review—

CHAIR: where someone suggests that, and I'm not going to use Mr Campbell as an example, there is some unfair treatment and that you're dragging your feet. You're trying to make it difficult—

Mr Carmody : Yes, they come to us quite often—

CHAIR: No, I'm not laying the allegation to you. I'm asking because, when it's a commercial operation, I think we've all got sympathy—their misdemeanours aside—for an operation that goes down for six weeks and the economic impacts of that. Is there no fast-track manner for someone to say: 'I'm having trouble with Fred or Betty. They're being unreasonable to me. Can you just send someone out to get a snapshot of what's happening to see whether there's any validity to it?' There are many organisations that have that capacity. As you know, I'm a retired police officer. They were coming around the corner to review complaints as I was going out the back door.

Mr Carmody : I've just been advised that in this particular case—because that's an exemplary case. They requested a particular inspector rather than Mr Campbell go and have a look at this organisation. That's a good case in point. We turned around and put that inspector on the charge as the lead. He's finding things as well.

CHAIR: How does that fit? Mr Campbell is so far in—

Mr Carmody : He steps aside.

CHAIR: The FalconAir people ask, say, 'Can I have Mr Jones'—

Mr Carmody : 'We think there's an apprehension of bias here. Can we have someone else?' If we've got an inspector around and we can do something, we do that.

CHAIR: I'm really interested in this as a sample case. What happened then? Mr Campbell stood down—I don't mean any reflection on him—and the new inspector went in?

Mr Campbell : I avoid contact with FalconAir, and it's delegated to another certificate team manager.

Mr Carmody : Mr Campbell's got plenty of other operators to look at, so he just steps aside and does other things.

CHAIR: So you send an equivalent inspector, not someone who's subordinate.

Mr Campbell : My manager then takes over the tasking.

CHAIR: Your manager above you took over the tasking?

Mr Campbell : Yes.

Mr Carmody : I don't mean to be picky here, but it was from 7 or 8 December till the 21st, so they weren't actually off for six weeks. They might not have been able to do everything they wanted to do, but, in terms of capability that was available, it was available back on 21 December, and we made sure of that.

Dr Aleck : There's quite a literature of organisations in Australia and elsewhere—certainly elsewhere—where the planning for proficiency checks, because it is a time impost, is problematic. It requires some good business anticipation, recognising that the ability of pilots to operate will be compromised if they don't meet those checks. And so part of the good business practice is: 'Gee, these guys have to have these checks at these times. I need to plan ahead for that.' Without minimising the impact and without minimising the inequities that people who benefit from those services might experience, if a person makes poor business judgements, sometimes—

CHAIR: So how can someone go for a year? Do you not have a bring-up system? If I don't pay my rates quarterly, they pretty quickly cut my water off or give me a letter that says, 'I'm going to cut your water off.'

Mr Carmody : Great question. This organisation got its air operator certificate in August 2015. They went through a very rigorous entry control program just more than two years ago. We've got 800 operators on our books. You have an expectation that, when you develop an operations manual with a team and you bring in rigorous entry control, some of the stuff is going to stick. We're two years out, and they've already deteriorated to a really significant extent, and that's surprising. We would have expected to be looking at them in this year, but—

CHAIR: My question is much more granular than that. Pilot No. 5 as at 9 November was nine days out. Would he expect a letter in the mail the next day to say that?

Dr Aleck : That obligation is a company issue. We wouldn't know if he's in or out unless we heard about it directly.

CHAIR: I get that the company needs to keep a register to bring up that the chief pilot is supposed to do all of this.

Mr Carmody : They have a regime under the civil aviation regulations that requires them to establish and operate a check-and-training regime. We might go and audit that regime as we go and audit lots of other things—their maintenance and a range of other things—but they set it up, they put it in their ops manual and they said: 'This is what we're going to do. This is how we're going to do it. This is how we're going to manage it. This is what we're going to do. Come back and check on us.'

CHAIR: If we did an instant audit on every pilot in the country—do you have a sense of how many pilots there are?

Mr Carmody : There are around 30,000 pilots, give or take.

CHAIR: Let's say tomorrow morning at 10 o'clock without notice we go through them all with a fine-tooth comb, do you have a sense of how many may have fallen into these categories in one form or another? I want a genuine answer. I didn't get the impression that this was a cowboy outfit. You haven't even made that charge.

Mr Carmody : I have not. If I may, the larger operators, the big regular public transport operators—

CHAIR: Qantas et al.

Mr Carmody : have their own very sophisticated regimes. I wouldn't expect them to be lining up in the 30,000, because the airlines as a whole have pretty robust mechanisms. For private pilots it doesn't matter. If you're qualified, you're qualified—well, not quite. It's in the middle order that you would find a few. One of the things we're going to be looking at a lot harder as we do our periodic audits is, in the midst of checking training regimes, seeing whether or not the lead indicator from this operator is a lead indicator to an industry issue. I can't answer your question. We've asked ourselves the question to see where this leads us, whether or not it is a systemic issue. Malcolm, do you have a view?

Mr Campbell : I haven't seen this level of noncompliance in the other auditing we've done of similar category operators. Back in the Airtech Skymaster day it was a similar sort of thing; unfortunately they lost two aircraft.

Mr Crawford : This operator was under the CAR 217 arrangement, which essentially means if you're operating aircraft over 5,700 kilograms, either in charter or regular passenger transport, you have to have a checking and training regime. That was built into their manual. You could argue the people most familiar with that—their chief pilot, accountable manager, and checking and training pilots—should have been aware of this. They should've been keeping on top of this. The other thing is they knew on 6 December that the majority of their pilots weren't current, yet rather than make the effort, particularly with the Falcon 20, to send somebody to the simulator then, they pushed for an exemption. They made a commercial decision.

Senator PATRICK: They might have been trying to get back up into the air. Mr Carmody, you said there were 10 other operators on the east coast that could conduct these operations.

Mr Carmody : There are 10 medical evacuation operators.

Senator PATRICK: How did we get into a situation where we couldn't get a heart transplant moved, when there are 10 other organisations that can do it?

Mr Carmody : I haven't investigated that. I know there are operators out there that people call. I don't know how they do it. My point is they don't have a monopoly in this. The other nine might've closed down for the year. That's one of the reasons I ensured the F50 was operating over Christmas. All I'm saying is there are 10 operators around that do exactly the same sort of work. I don't know whether the person looking only ever dealt with FalconAir and two others; I have no history behind that. I was making the point that there are numerous providers.

Senator PATRICK: But you can see the question that's in my mind—that you have 10 providers, yet someone missed out on a heart transplant, because these guys were out of operation.

CHAIR: In fairness we have to know more about why that happened.

Mr Carmody : Frankly I don't have an aircraft on the ground somewhere either.

Senator PATRICK: The committee were made aware of another flight, where a young boy had to fly from Darwin to Melbourne, that almost didn't happen, because they were preparing for the maintenance audit, and it was all hands on deck. It was only after there was a plea for them to conduct the flight that they did. If there's a market of people that can do this, how do we get to that situation?

Mr Carmody : I don't know the answer. It's interesting to see that we responded to the plea, which is probably a good thing, if that's the case. My interest is in ensuring that patient gets to the other end safely. I'm hearing from this company that a little bit of bad record-keeping and bad maintenance is okay. If Senator Fawcett were here, I'd ask him about James Reason's model. We have to make pretty fundamental safety decisions in this place.

CHAIR: Does anyone else have the same discretion that you've exercised here with that one pilot?

Dr Aleck : Anyone else in CASA?

CHAIR: Yes.

Mr Carmody : The delegations flow from the act, through me.

Dr Aleck : Senior executive officers might have it, but as a matter of policy we tend to refer first-time exemptions to the director.

Mr Carmody : This is an exemption for them to not comply with the law.

CHAIR: I was wondering how far that's delegated. I know your policies.

Senator PATRICK: Was a safety case developed behind that decision?

Mr Carmody : We were discussing that case for extraordinary periods over those few days. There is some written correspondence. I don't know whether it's a safety case per se. My safety case was pretty simple: eight out of nine of their pilots are not current, not qualified, not checked, and I think their system is busted. It's a decision I have to make. I could write a safety case, but at the end of the day it's very important that you make these calls.

Senator PATRICK: Where is FalconAir at now? A maintenance audit took place. Has that been completed?

Mr Carmody : We've checked the pilot records. The audit we were referring to before is the maintenance one. I don't think that has been resolved yet.

Senator PATRICK: I thought there was a surveillance audit and then a more significant audit.

Mr Campbell : A maintenance audit took place before the main audit, which was the first week of February. They were planned together but, because of coordination of the inspectors, had to be split up. I understand your report is for review at the moment with the manager, but because I'm not involved in it, it's not for me.

Senator PATRICK: But do we know what the status of that audit is?

Mr Carmody : I don't. Mr Crawford might know, but I know it's in the wheels.

Mr Crawford : No, I know it's with the regional manager for review at the moment.

Senator PATRICK: Presumably there's nothing in there that's fatal.

Mr Crawford : If there had been an immediate safety issue, we would've dealt with it on the day.

Senator PATRICK: Let's hope the audit comes out successfully.

Mr Carmody : The audit is going to be issued to FalconAir this week. I understand that the audit report is expected to be issued to them by the end of this week.

Proceedings suspended from 20:42 to 21:01

CHAIR: We will resume the Senate Rural and Regional Affairs and Transport Legislation Committee hearing for additional estimates for 2017-18.

Senator STEELE-JOHN: Thanks for coming back, guys. I'm sure you're as sharp and ready for intense scrutiny as I am to deliver it!

First of all, I just want to take you to recommendation 12 of Future cities: planning for our growing population section of the latest IA reform series. In light of recommendation 12 of that report, what intentions, if any, does the government have to prioritise full accessibility compliance across the public transport networks in our cities?

Dr Kennedy : We might answer that question in two parts, if that's okay? First of all, we will just very briefly talk about something I mentioned to you a moment ago, outside the committee inquiry, on the standards that underpin accessibility to public transport. I do think they are directly relevant to that question.

Senator STEELE-JOHN: Yes.

Dr Kennedy : And then, secondly, Mr Yeaman, and his colleagues may come and join him, can talk to you about how accessibility is being pursued through the City Deal process, if that's of benefit?

Senator STEELE-JOHN: Yes.

Mr Foulds : Thank you for your question. The Disability Standards for Accessible Public Transport sit under the Disability Discrimination Act, which is administered by the Attorney-General. This department provides the policy advice for those disability standards, and they are administered by this department. The standards were made to provide public transport operators and providers with advice on how to meet their obligations under the Disability Discrimination Act. They include compliance targets for the percentage of services that must be accessible and by a prescribed date. The compliance targets were set in 2002, with a requirement that they be reviewed every five years. The third review is now underway, and commenced in December of last year.

That review will have a discussion paper—an issues paper—released in March of this year. Three months has been given for submissions to come in from interested parties and public consultations will be held across Australia through until at least mid-2018. They will be open to all stakeholders. In particular, the stakeholder group, the National Accessible Public Transport Advisory Committee, which has in its make-up a number of disability advocate groups and representatives from state transport departments and other interested bodies, will then have a response which they propose to release by the end of the year—in November or December 2018.

The previous reviews recommended the modernisation of the transport standards. I can tell you that of the seven recommendations from the 2015 review, there are three which are underway, a couple which have not started and then two which are noted and which we contribute to work being done, particularly by the Austroads organisation, on how the standards become incorporated into public transport arrangements. From 2002 anybody who develops public transport infrastructure, or buys it or builds it, should incorporate these standards. The purpose of the standards, their existence and the review every five years is to get towards meeting those 2002 standards, noting that they need to be modernised. That's the focus of two pieces of work which are commencing this year and will finish with a regulation impact statement towards the end of this year, and then another one in 2019-20. If you like, that is the policy underpinning of how it works.

Senator STEELE-JOHN: Was there a second contribution?

Mr Yeaman : In the discussion this morning you also referenced our City Deals program and how that would interact. In broad terms, as part of the City Deal framework that we are using, there are six key focus areas which we will pursue through the deals we undertake. One of those areas is liveability and sustainability, and that is very much focused on how we ensure we are promoting healthy lifestyles within cities, the wellbeing of citizens within those cities and environmentally sustainable outcomes. Certainly, the topics you raised fit within that category, and it is an area we seek to pursue through the City Deals in general terms.

Senator STEELE-JOHN: I'm hearing that from 2002 anything built in relation to public transport has to meet a certain standard and that standard has been under a process of review. I am wondering, in terms of dollar value, how much the Commonwealth has provided to the states to facilitate the retroactive upgrade of public transport networks, if you like, since the start of the life of the new government.

Mr Yeaman : I think we need to take that on notice. We don't have that level of detail for projects. We haven't been able to source it in the time available.

Senator STEELE-JOHN: That would be wonderful. Can you give it to me in two ways—within the last decade and from the beginning of the life of the new government—and any trends that can be identified? Chair, how do we usually do this? Do you limit us by time?

CHAIR: This was an unplanned interlude to provide you with answers to your questions this morning. Are Mr Foulds and Mr Yeaman attached to the Infrastructure Investment Division?

Dr Kennedy : Mr Yeaman is the Deputy Secretary for all of our infrastructure divisions, and Ms Hall is the Executive Director of the infrastructure division. They are the people who are on now and so, if you like, we can move straight to that now.

CHAIR: Senator Steele-John, continue.

Senator STEELE-JOHN: I'll take you to the Perth Freight Link. It's my understanding that there is a $1.2 billion contingent liability for the Perth Freight Link within the 2017-18 budget. My colleague, Senator Cormann, has been quoted as saying: 'We are not committed'—and I can't do the voice—'necessarily to a particular route.' His state colleague, Ben Morton MP, suggested that these funds could be used in a rejigged proposal. Does that include providing the upgrades for a Perth Freight Link from Kewdale to Kwinana, which in my opinion is really needed and which was proposed during the Perth network review of 2005?

Mr Yeaman : It's correct that there is still a $1.2 billion contingent liability for the Perth Freight Link. There are still discussions underway about how best to deliver that project in the event that it proceeds, but I'll pass to my colleagues to provide any additional detail.

Ms Garbin : That is correct: $1.2 billion remains as contingent liability should a WA government wish to go ahead with the Perth Freight Link project.

Senator STERLE: So it's not a $1.2 billion spend for Perth; it's only if they build the—

Ms Garbin : It's for that project.

Senator STERLE: It's cute. There was an election promise that it wasn't going to happen.

Senator STEELE-JOHN : Just to clarify—

Senator STERLE: Damn! I thought we were going to get some money back that they stole off us from the GST.

CHAIR: We got all the way to nine o'clock before we got into some commentary—

Senator STEELE-JOHN : Just to clarify: am I right in thinking that that money would be accessible upon the undertaking of the proposal only as it was submitted at the time, or could that money be accessed with a rejigged proposal?

Ms Hall : At the moment it's contingent on the current proposal. That's not to say that if the Western Australian government came forward with a similar proposal, or a slightly different one, the government wouldn't consider it. But the $1.2 billion is currently contingent on the proposal that was put forward.

Senator STEELE-JOHN : So, if the WA government proposed the Kewdale to Kwinana link, they could theoretically approve that and access the money for those purposes?

Ms Hall : I think what would happen, if there were actually a change, is that it would have to go back to Infrastructure Australia and get a new business case to be assessed. Then the government would make a decision off the back of that.

Senator STEELE-JOHN : All right. Thank you so much. How do the current City Deals facilitate or address energy efficiency in Australian building standards, especially given buildings account for 25 per cent of our emissions and 50 per cent of our energy use?

Mr Yeaman : As I said earlier, there is a specific key focus area within City Deals to drive urban amenity, sustainability and liveability within cities, so there is a focus on trying, where possible, to drive improvements in energy efficiency and network efficiencies across the board. I might refer to my colleague Ms Wiley-Smith to add to that.

Ms Wiley-Smith : City Deals are negotiated agreements, based on what's needed in a particular place, between three levels of government. If there are buildings that are part of a city deal then certainly we're looking at liveability of the cities, and energy efficiency and energy use are key to that. In the current City Deals, the University of Tasmania, as part of the Launceston City Deal, which is underway, are currently moving into the CBD. They're building a new building in there and they will have energy efficiency measures as part of their new build.

Senator STEELE-JOHN : Would you be able to give me a dollar figure on how much money has been spent through this process on projects that address energy efficiency in new or established buildings?

Ms Wiley-Smith : I'd have to take that on notice.

Senator STEELE-JOHN : It would be wonderful if you would be able to do that. If you could include any projects in themselves that have been funded specifically to address energy efficiency, or with that as a large part of their justification, that would be wonderful too.

This might be a question for you or it might be for someone else here: what's the government doing to address energy efficiency in its own properties? Can you give me an update on that?

Mr Yeaman : That's probably a question best directed, I suspect, to the finance department, who are responsible for government buildings. It's not something we're involved in.

Senator STEELE-JOHN : Yes, I would imagine it would be. I'll be talking to them about a lot of other issues with these buildings. Thank you very much for your time. I really do appreciate it.

Senator URQUHART: I have some questions on Tasmanian infrastructure.

CHAIR: Are you going to do the university?

Senator URQUHART: No, I'm not going to touch on the university. I know all about the university and I don't have any questions on that. Former Deputy Prime Minister Joyce in question time recently referred to inland rail when asked about projects in Tasmania. Can you advise if any federal funding has been set aside in the past four years for inland rail in Tasmania?

Mr Yeaman : No.

Senator URQUHART: Can you confirm that there has been no major road or rail funding committed to Tasmania since the package announced in the 2013 federal budget?

Mr Yeaman : I will pass that to my colleagues.

Ms Hall : In regard to the Infrastructure Investment Program, the government has recently made a commitment to the Tasmanian freight revitalisation package, which I think was a commitment in regard to—

Senator URQUHART: Was that road or rail?

Ms Leeming : It is a rail package.

Ms Hall : The Tasmanian Freight Rail Revitalisation Package.

Ms Leeming : Also, you would be aware of the election commitments—you get a frequent update on Hobart Airport roundabout. There were 14 election commitments—

Senator URQUHART: I have some questions around that in a minute. What was the figure for the freight rail revitalisation package?

Ms Hall : I think it was $59.8 million, for a total funding of $119.6 million.

Senator URQUHART: What applications from the Tasmanian Liberal government for funding for major road and rail projects have been received by this department over the past four years?

Ms Leeming : Not counting the election commitments, which have all been approved projects that the Tasmania government has provided to us? You don't want to talk about those particular projects?

Senator URQUHART: No, over the past four years.

Ms Leeming : We have had conversations with the Tasmanian government on a number of priority projects—

Senator URQUHART: I am talking about applications. What applications have been made to the department from the Tasmania government?

Ms Leeming : There are further Midland Highway projects being developed. They are projects applications that come to us to use the funding that has been committed for the Midland Highway.

Dr Kennedy : To get the precise number of applications, I feel quite certain we will have to take that on notice to be able to add that up, particularly over four years.

Senator URQUHART: Okay. I have a question for the minister. What are the most dangerous parts of the highway network in Tasmania? Do you know, Minister?

Senator Scullion: I'm sorry, but I will have to rely on someone else for that information. I was travelling on the roads down there a fortnight ago to my daughter's wedding, but I don't think that is really sufficient for me to comment. Perhaps you could expand the question, apart from asking—

Senator URQUHART: Maybe the departmental officials can help you there—

Senator Scullion: You're asking what the most dangerous parts of the roads in Tasmania are?

Senator URQUHART: Parts of the highway network. It's okay if you can't answer. I am happy for—

Senator Scullion: Does anybody want to chance their arm at that question?

Mr Yeaman : We may need to take that on notice. There are other areas of the department that deal with road safety generally. We focus primarily on transport infrastructure and funding, so we are not in a position to answer that question here. Other colleagues may be able to.

Senator URQUHART: Has this department seen any representations from the Tasmanian government or from any of the four Liberal state members in Braddon regarding the need for upgrades to the Bass Highway between Marrawah and Detention River?

Ms Leeming : We are tracking various election commitments that are being made through the—

Senator URQUHART: No, I am asking if the department has received any representations from the government or any of the state members in Braddon regarding the need for upgrades? It is not about representations.

Ms Leeming : Which part of the Bass Highway?

Senator URQUHART: Between Marrawah and Detention River.

Senator Scullion: It sounds like we might take that on notice.

Senator URQUHART: You don't know that? The department doesn't know that?

Senator Scullion: The indication at the moment is that they may not have those specifics. I think it would be useful for the record to include that to any representations—

Senator URQUHART: Ms Leeming, you are looking through the records.

Ms Leeming : I don't believe so, but I would rather take it on notice, given the specificity of the—

Senator URQUHART: But you are not aware of it?

Ms Leeming : Not that I'm aware of.

Senator Scullion: Senator, have you made any representations?

Senator URQUHART: I am asking the questions here.

Senator Scullion: I understand that. I am asking you a question. I am just saying—

Senator URQUHART: You don't sit that side of the table to ask questions.

Senator Scullion: That's not exactly how it works.

Senator URQUHART: I am actually asking the questions.

Senator Scullion: You have asked specifically in an estimates process about a Tasmanian colleague. I said we should extend it to everyone and you protested. So I am just asking. I thought you might have done the same—

Senator URQUHART: There have been many representations made—

Senator Scullion: —and that they were going to be taking it up.

Senator URQUHART: I can answer your question. They have been, yes.

Senator Scullion: I am sure they will catch that in the question then. So, if you can include the senator in that answer that would be great.

Senator URQUHART: And there are other people in Tasmania who have made representations.

Senator Scullion: No doubt about it. They will capture that in the question on notice.

Senator URQUHART: The state Liberals have submitted the Bridgewater Bridge to Infrastructure Australia—that is the Bridgewater Bridge project you raised earlier. Can the department advise if any discussions have been held with the Tasmania government on when the construction will start on the Bridgewater Bridge upgrade?

Ms Leeming : No. The business case has been provided to the department, just before the Tasmanian government went into caretaker mode. So it hasn't really been appropriate to have that sort of conversation with the Tasmanian government while in caretaker mode.

Senator URQUHART: Have any federal funds been set aside for the Bridgewater Bridge upgrade?

Ms Leeming : No. As I think we have talked about previously, we would be taking the advice of Infrastructure Australia as the project is likely to be over $100 million, so that is an appropriate course of action.

Dr Kennedy : Of course, it is entirely a matter for the Commonwealth government, should it wish to make a contribution to that, but it has not made a policy decision through us in regard to that.

Senator URQUHART: Going to the Hobart Airport roundabout, I note that the government has committed $24 million for a grade separation to replace the Hobart Airport roundabout. Is that the correct figure?

Ms Leeming : That's right.

Senator URQUHART: I understand that the department has previously indicated that tenders would be sought for this project in late 2017 or early 2018. Is that correct?

Ms Leeming : I think that is still the time frame we're looking at.

Senator URQUHART: When do you expect the projects tenders for the project to be sought?

Ms Leeming : The project itself was approved by the minister on 5 November, so that is an important milestone. We have been informed by the state government that tender award is expected to occur this year. Then, the project itself would be finished in late 2020. That is our timeframe at the moment. Considerable work is being done by the Tasmanian government on design and talking to the community.

Senator URQUHART: The tenders will be sought this year. Can you narrow that down at all?

Ms Leeming : I don't have an exact month, no.

Senator URQUHART: When is construction expected to begin on that project?

Ms Leeming : Shortly after tenders are awarded.

Senator URQUHART: So we could be looking at 12 months?

Ms Leeming : There has been a lot of preparatory work, so there would not be much of a delay between tender award and construction.

Senator URQUHART: Have you put the tender out of the moment?

Ms Leeming : That is not a responsibility of the Commonwealth. It is a responsibility of the state.

Senator URQUHART: Do you know if they have gone out?

Ms Leeming : I suspect that because they are in caretaker mode that would be a difficult thing for them to do.

Senator URQUHART: But you don't know if it happened before?

Ms Leeming : We would be informed if tenders had gone out, and we have not been informed of that.

Senator URQUHART: Why was the profile of funding over the forward estimates not detailed in the budget for that project?

Ms Leeming : The budget doesn't go into that level of detail. The detail for funding profiles is provided, though, through our national partnership agreement. You can find that on the website.

Senator URQUHART: So it's under the national partnership?

Ms Leeming : Yes.

Senator URQUHART: Thank you, Chair, and thank you, Senator Sterle. That's all I have.

Senator STERLE: It's my pleasure.

CHAIR: He only did it because you're the whip!

Senator STERLE: It hasn't helped me so far, but you never know your luck!

Senator McCARTHY: Ms Leeming, I will check a question with you before I get onto the national partnership agreement. In the last estimates, I discussed with you the Bridges Renewal Program. I asked some questions on notice in relation to that. I didn't receive answers.

Ms Leeming : I think all the questions on notice have been tabled except one. It's probably your question.

Senator McCARTHY: Do you have an answer to the question?

Ms Leeming : The minister's office asked for a redraft, so it's with them. I don't think it's far off.

Senator McCARTHY: As in: it's not far off coming to me? Is that what you're saying?

Ms Leeming : That's right. They asked for a change to the question. I think it will be with you shortly.

Senator McCARTHY: Thanks, Ms Leeming. I go to the national partnership agreement. The federal government entered into a new NPA with the state and territory governments in October 2014 which outlines the road and rail projects that would receive federal funding and how much they would receive. It's due to expire in June 2019. Will there be a new long-term funding program to replace the expiring NPA for land transport, which is due to expire in June next year.

Ms Hall : With regard to the national partnership agreement, that's the document that overpins, I guess, our working relationship with the states and territories with regard to what we do with funding, how we deal with savings issues, whether we have to have local industry participation plans—those sorts of things. The schedule that's attached to that is a requirement with regard to the funding mechanism that we use, because the NPA is really a tool that we use to be able to provide the funding through the Treasury. However, that document, which is the pipeline, if you want to call it that, is actually a rolling document. It doesn't necessarily need to have a new schedule attached to it, if that makes sense.

Senator McCARTHY: No. I just wanted to know if it was going to expire in June 2019.

Ms Hall : The schedule at the back, the pipeline, does not expire when the NPA expires.

Mr Yeaman : Senator, I could add to that. The agreement itself is due to expire, as you say. We're giving thought now in the department and we're starting early discussions with the states about what the next form of that national partnership agreement would look like—the kinds of conditions that Ms Hall was discussing, which are essentially the ground rules of how we engage with the states on infrastructure. We're giving thought to that now. The intention would be to put a new partnership in place.

Senator McCARTHY: It is due to expire; therefore, your negotiations have begun?

Mr Yeaman : We're in the early stages of our discussions.

Senator McCARTHY: The Prime Minister advocated the benefits of the Asset Recycling Initiative during his recent trip to Washington. Is there any discussion of linking future funding for infrastructure to states and territories undertaking asset sales and/or privatisation?

Mr Yeaman : There's no current policy decision to continue that scheme. We are certainly giving thought as part of the new national partnership agreement about, in terms of the states, how we deliver on outcomes that the Commonwealth is seeking to pursue. So it may come up in that context.

Senator McCARTHY: So it's still part of a conversation?

Mr Yeaman : It may be.

Senator McCARTHY: I take you to road maintenance. How much federal funding was provided in each of the past five years for road maintenance?

Mr McClure : The government provides $350 million per annum for maintenance of the National Land Transport Network. That money is divided between the state and territory governments based on a formula that takes into account a range of issues around lane length and the condition of the current network. The $350 million per annum is for roads that make up the national network.

Senator McCARTHY: That's for the past five years—how much will be provided in each of the next four years?

Mr McClure : About $350 million has been agreed to continue into the future.

Senator McCARTHY: On federal infrastructure funding—I'm looking at Budget Paper No. 3, if that helps—isn't it correct that the budget papers confirm that federal infrastructure grant funding—the money that goes to the states and territories and local government to deliver roads and rail projects—will almost halve over the next four years, from nearly $8 billion?

Mr Yeaman : When we think about the overall total Commonwealth infrastructure spending it includes grants, but it also includes the significant equity injections and support that the government is providing for infrastructure through other means, such as concessional loans. When we add those figures together, total Commonwealth infrastructure investment support remains at around $9 billion a year over the forward estimates, on our current estimates.

Senator McCARTHY: Sorry, how much?

Mr Yeaman : Around $9 billion a year, on average. It moves around a little year to year.

Senator STERLE: You just move the pots around, do you? Is that what it means? The budget papers show a decrease of nearly half on the grant funding. You're saying that the overall spend will still be the same, so are you moving something around?

Mr Yeaman : It's not so much that we're moving things around. The government has put increased focus in recent years on using more innovative forms of support to financing rather than purely grant funding. A good example is Inland Rail or the Western Sydney Airport. The government is making equity injections which don't show up in the budget papers as a grant, but real construction is going to happen on the ground in terms of those projects. It's still government support for infrastructure spending. So when you include those equity injections in the total figures, the level of infrastructure spending over the forward such projected is remaining at what I would say is historically high levels.

Senator STERLE: But you said it's the same.

Mr Yeaman : I can read the figures—

Senator STERLE: Don't freak out; I'm only using your words.

Mr Yeaman : It's all right. For example, in 2016-17, using that definition, total infrastructure spending is around $9.3 billion; in 2017-18 we expect it to be just under $9 billion; in 2018-19 we expect it to be $10 billion; in 2019-20 we expect it to be $8.9 billion; and in 2020-21 we would expect it to be $8.6 billion.

Senator McCARTHY: Where are those figures? The figures we're looking at are from Budget Paper No. 3, page 46, which are certainly not those figures.

Mr Yeaman : There's not one area in the budget papers where you can pull that figure easily together. It's a combination of the figures you're quoting, which relate to grant funding and other forms of assistance that are scattered throughout the budget papers, including, as I said, equity injections, concessional loans and local untied grant funding for roads.

Senator McCARTHY: Can you confirm that the independent Parliamentary Budget Office in a report entitled 2017-18 Budget: medium-term projections, at page 9, concluded that grant funding for road and rail project as a percentage of GDP will halve from 0.2 percent to 0.4 percent over the next four years?

Ms Hall : I think that paper also went on to say that it did not take into consideration the things Mr Yeaman's talking about, which include equity and concessional loans.

Senator STERLE: The senator is not arguing that. She asked clearly in the medium term projections was the grant funding. That's all she asked. There's no secret here; that's what your paper says. So you can actually say, 'Yes, that's right. That's what it says.'

Ms Hall : I think in regard to what the PBO was trying to say is based on the budget papers as they currently stand, if you read the payments to state support infrastructure. However it clearly acknowledges that that isn't the only consideration that should be taken into account.

Senator STERLE: I understand, but it's not a jailable offence if you actually do say, 'Yes, the grant funding has halved.' It's not a jailable offence and then you can go into your other spiel.

Senator Scullion: But I think it is reasonable that they quote from the same budget paper that you must go on and read. It's reasonable to explain the context of that.

Senator STERLE: I don't have a problem with that. The problem I have is when we get all bullshitty around the terminology. All you've got to say is yes. It's a pretty simple question, and then you can blow the trumpet out all the same at the end of the day. That's not an unfair request, Minister, at 9.30 at night.

Senator Scullion: I just think that they were providing the proper context so people understand that—

Senator STERLE: Just answer yes or no and then you can tack it on, and that saves us going around in circles. We're still waiting for the answer, Ms Hall.

Ms Hall : I think in regard to the paper, as I said, based on the figures that they used in determining it, it is a fair assumption to say yes; however, that is not what the papers actually show.

Senator McCARTHY: With the further infrastructure funding I'm going to have a look at Victoria with a MYEFO statement. Again, let's just walk through this. Doesn't the latest MYEFO statement, attachment D on page 25, released on 18 December 2017 confirm that Victoria is set to receive just nine per cent of federal infrastructure grant funding in 2017-18?

Ms Hall : With regard to the MYEFO budget papers, the issue around Victoria's funding doesn't take into consideration the financial assistance grants, which should also be included and which are in the budget papers as well. Our estimates are slightly higher than the nine per cent.

Senator McCARTHY: What are your estimates?

Ms Hall : In regard to the funding that was put forward, if you take into consideration the contingent liability of the $3 billion for East West Link the funding, over the period 2013-14 to 2020-21, is nearly close to 20 per cent.

Senator McCARTHY: What's your estimate?

Ms Hall : I think it is 19.8 per cent.

Senator STERLE: I'd like to clarify one thing. Mr Yeaman, could you point us to what page and table number on the papers you were referring to when you mentioned the 98.69?

Mr Yeaman : It's a combination of pages across the budget papers. I can see what advice and guidance we can provide about putting that together, but it's essentially an ambulation of a number of different line items in the budget that aren't in one place. I can't point to it now.

Senator STERLE: Join the dots. You've got something with you, because you did rattle it off very quickly. So if you could provide us with the same information—

Mr Yeaman : Certainly.

Senator STERLE: You're looking like I've trodden on something without any thongs on!

Mr Yeaman : No, I'm just trying to think of the best way to support you in answering that question.

Dr Kennedy : We'll take it on notice and provide the table for you. How about that?

Senator McCARTHY: Thank you, Dr Kennedy. At budget time last year the government said it had allocated $8 billion to infrastructure programs and projects in 2017-18; however, the most recent MYEFO statement, released on 18 December last year, revealed that they're on track to spend $7.2 billion, and that's an underspend. I guess my question is: why is that?

Mr Yeaman : There was, as part of the MYEFO, a reprofiling of funds, a movement of funds, out of 2017-18 into the forward years.

Senator McCARTHY: A reprofiling of funds?

Mr Yeaman : Correct. That, essentially, reflected updated information that we receive from the state governments around project milestones and completion dates, delivery time frames.

Senator McCARTHY: Is that a reprofiling of nearly a billion dollars?

Mr Yeaman : Close to that. I think it was $940 million. That was based on the best information we had received from state governments on current projects, delivery dates, completion dates and milestone payments.

Senator McCARTHY: What do you mean by that? Can you expand?

Ms Hall : I think we mentioned, last time, that there's usually a range of factors that need to be taken into consideration, because we pay on milestones. I think we mentioned Cyclone Debbie, for example, which delayed the delivery of a number of projects. Often, we find out, as we go through a project delivery, there might be some environmental approval issues that are holding things up. If that happens, the states come forward to us and say, 'We haven't actually met that milestone.' We don't make a payment if that milestone has not been met, so that milestone gets reprofiled based on advice from the states and territories. If that happens and it pushes money out past a financial year, that money is reprofiled to the next financial year to meet that milestone requirement.

Dr Kennedy : This is often driven by a couple of large projects, basically, slipping in timing, for the reasons that Ms Hall outlined. Perhaps Mr Yeaman could let you know, if you're interested, what those projects were that had slipped.

Senator McCARTHY: Sorry, Dr Kennedy. I'm just having a bit of trouble hearing you.

Dr Kennedy : That reprofiling or slippage of projects really is often driven by a couple of large projects. If you're interested in the projects that caused most of that—

Senator McCARTHY: Yes, please. Can you name them?

Dr Kennedy : Mr Yeaman can let you know.

Mr Yeaman : In particular, in Queensland there are a couple of large projects which were particularly affected by severe weather events—in particular, the Gateway Upgrade North, in Queensland, and also the Mackay Ring Road, which I think was affected by Cyclone Debbie. The other one that was a major driving factor was that there were additional planning and design works needed on the northern ring-road upgrade in Western Sydney. That was undertaken by the state government.

Senator McCARTHY: Anything in Victoria?

Mr Yeaman : They were certainly the most significant projects that drove the majority of that change in this case. There were a range of other smaller movements, but I don't have that detail to hand.

Senator McCARTHY: What was the major project in Victoria?

Mr Yeaman : Sorry, Senator; the ones I referred to in Queensland and Western Sydney were the main drivers. There were other small movements, but I don't have those to hand.

Senator McCARTHY: Smaller ones, okay. It just appears that the underspend keeps happening. In 2016-17 the figure was $1.8 billion. In 2015-16 it was $1.3 billion. In 2014-15 it was more than $800 million. Is that your understanding?

Mr Yeaman : I might just ask my colleagues to check those numbers. There was a deliberate move, as part of the national partnership agreement that you cited earlier, to move towards this process of milestone payments, which was really all about driving better accountability and integrity into the system, to ensure that we're not paying funds at an early stage of the process, ahead of milestones and completions, to keep incentives in the system. I think it's fair to say that, in the early parts of that, there has been a degree of optimism in some of the state governments' planning processes around how quickly those projects will come out. We rely on the best evidence we can get from the states to set those milestone payments, and it's true that there has, over recent years, then been some slippage in those payments. What I would say, though, is that, in all cases, what we are doing is moving money from projects—for example, that was expected to be spent in October or November through to January or February of the next year. That money is still there. It's not cumulative. It still rolls forward each year. But you're correct: there has been, over recent years, some delay in those milestone payments based on the information we receive from the states.

Senator McCARTHY: Isn't it correct, too, that milestone payments have been around for quite some time? They're not new either.

Ms Hall : Milestone payments have been around since the start of this national partnership agreement, which was 2014-15.

Senator Scullion: Senator, in many ways those funds that you indicate are actually an indicator of the failure of the states to meet the milestones. The money's still there and it's still getting paid, but we're actually paying on outcomes, as we would with any other contractor. I have to say it's an approach that, in my portfolio, as you would know, has ensured that the states actually deliver their outcomes. It's just a contractual arrangement. When you deliver the outcomes, we'll pay you. If they don't deliver the outcomes, or those outcomes are delayed, then the payment is also delayed. The funds are there to deliver the outcome, but they actually have to deliver the outcome before receiving the payment.

Senator McCARTHY: Thank you, Minister. Just going back to the examples that you gave in terms of Queensland and Western Sydney, were they the examples for the 2017-18 underspend, the projects?

Mr Yeaman : They were the projects that primarily drove the movement of funds, the reallocation of funds, in the MYEFO as opposed to the budget.

Senator McCARTHY: Thanks for that clarification. Just on New England projects: could you provide an update on progress around the delivery of the following projects: Bolivia Hill upgrade—

Mr Yeaman : I'll ask one of my colleagues to join me to see if they have that information.

Ms Leeming : Can you give me all the projects at once, Senator? It might just be a little easier.

Senator McCARTHY: There are actually three: the Bolivia Hill upgrade, the Scone bypass and the Tenterfield heavy vehicle bypass.

Ms Leeming : There was an environmental assessment done for the Scone bypass that was finalised in April 2016.

Senator McCARTHY: This is for Scone, was it?

Ms Leeming : Yes, on Scone. The design's been completed. The project has been approved; the project was approved by a minister in June 2017. And at this stage we expect the construction project to be awarded in March 2018.

Senator McCARTHY: So next month. What about—

Ms Leeming : Sorry, I just didn't quite hear—

Senator McCARTHY: Can we move on to Bolivia Hill?

Ms Leeming : Yes, Bolivia Hill. We're expecting the construction project to be awarded by the end of March 2018, so very shortly. Open to traffic is targeted for mid-2019. Obviously, once the contract is awarded we'll have a better idea about what the end date is going to be. But that's progressing well.

Senator McCARTHY: And Tenterfield?

Ms Leeming : Tenterfield heavy vehicle bypass is a planning project. That was approved by a minister on 4 July 2017. The design contract was awarded in January 2018. We're expecting the design to be on public display in August 2018. So that's also progressing well.

Senator McCARTHY: And do you have an estimate of job numbers for these projects?

Ms Leeming : I don't, but we can ask the state government if they have an estimate. I don't have it with me; it's possible that we do have it for the construction projects. It could be in our project approvals.

Senator McCARTHY: So that would be for Bolivia Hill and Scone?

Ms Leeming : Yes.

Senator McCARTHY: And in which budget was funding first allocated to these projects?

Ms Leeming : I need a different spreadsheet for that, sorry. Scone was in the 2014-15 budget. It was a post-election 2013 commitment, and the funding was provided in the 2014-15 budget. Bolivia Hill was the same. And I'm not sure when the commitment was made for Tenterfield. Around the same period, I would think.

Senator McCARTHY: It was—

Ms Leeming : I'd need to check Tenterfield.

Senator McCARTHY: Okay, so you'll take that question on notice?

Ms Leeming : Yes.

Senator McCARTHY: Thanks, Ms Leeming. If I could take you to WestConnex?

Ms Leeming : Sure.

Senator McCARTHY: How much of that $2 billion concessional loan for WestConnex has now been taken up and handed over to the New South Wales government?

Ms Leeming : I'd need to hand over to my colleague Mr Pittar, who handles the concessional loan.

Senator McCARTHY: Okay.

Mr Pittar : The total drawdown figure as at 1 February 2018 is just over a billion dollars, so just over the halfway mark. I can give you the precise amount if you want to jot that down?

Senator McCARTHY: Sure.

Mr Pittar : It is $1.052075174 billion.

Senator McCARTHY: Thank you, Mr Pittar. What's the interest bill thus far on that total amount of the concessional loan that's been taken up by the New South Wales government?

Mr Pittar : The interest is capitalised into the loan for the first 12 years of the loan. The interest that has capitalised as at 1 February of this year is, rounded up, $26.9 million.

Senator McCARTHY: Has the New South Wales government requested additional grant funding and/or concessional loans for the project and/or any other toll road in Sydney?

Mr Pittar : The New South Wales government hasn't requested any additional funding for the WestConnex project stages 1, 2 or 3. The commitment that the Australian government made through the concessional loan and the $1.5 billion grant is the Australian government's full commitment to the project. I might refer the rest of your question to Ms Leeming, perhaps, regarding other projects in New South Wales or Sydney.

Ms Leeming : The answer is that the New South Wales government hasn't requested funding for any new toll roads from the Australian government in this period.

Senator McCARTHY: So 'no' is the answer. I note that WestConnex, as currently being built, does not include new, upgraded links to either Sydney Airport or Port Botany. Is that a concern?

Ms Leeming : We're talking about the Sydney Gateway project. The Sydney Gateway project is progressing. It is a project that the New South Wales government is developing at the moment with the Sydney Airport Corporation. I understand that those discussions are going very well. As you're aware, this is Commonwealth land, so the New South Wales government needs the cooperation of the lessee and the Commonwealth in order to build the Sydney Gateway project.

Senator McCARTHY: Wasn't getting traffic to and from these destinations a reason the project received federal funding in the first place?

Ms Leeming : The business case included that as an outcome and as a benefit of WestConnex, that's correct.

Mr Yeaman : I think the New South Wales government is continuing to look at those additional projects that would support the first stage, which is WestConnex. We're in regular contact with New South Wales around the progress of those projects. Those are matters that may be dealt with in future budget updates by the government.

Senator McCARTHY: Has the department had any discussions with Sydney Airport and/or counterparts in the New South Wales government about providing federal funding to the Sydney Gateway project?

Ms Leeming : The discussions with Sydney Airport Corporation have been conducted primarily by our airports division because they have the regulatory responsibility for advising the minister on regulatory impacts and on master plan and major development plan. Those are primarily the nature of the discussions between Sydney Airport Corporation and our department.

Senator STERLE: So they have had conversations?

Ms Leeming : They have had conversations, but they've been of a regulatory nature. There's been no funding request from Sydney Airport Corporation to the department.

Senator STERLE: Senator Rice has been waiting patiently. Senator Rhiannon can wait until the end; Senator Rice is a part of this committee and has been here all day.

Senator RHIANNON: We're still friends!

CHAIR: I wouldn't be that mean, Senator Rhiannon.

Senator STERLE: You will tomorrow when she starts on cattle, mate!

Senator RICE: I've got some questions about a range of projects. First of all, there is a parallel question to my question of Infrastructure Australia about the West Gate Tunnel peer reviews. Infrastructure Australia this morning told me that they haven't received the independent peer review that was done for the West Gate Tunnel from the Victorian government. I just want to confirm that the department has not received those independent peer reviews.

Ms Hall : No, Senator.

Senator RICE: Have you had any recent communication or correspondence with the Victorian government regarding the West Gate Tunnel?

Ms Hall : No, Senator.

Senator RICE: Nothing at all? So there's no indication from the Victorian government that they are going to share the independent peer review that was done of the West Gate Tunnel?

Ms Hall : The Victorian government has not sought any Commonwealth funding for the project, so no, Senator.

Senator RICE: Can you just tell me—you may need to take it on notice—when was the last communication that the Victorian government had with you regarding the West Gate Tunnel Project?

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

Senator RICE: Moving on to the North East Link, what discussions have been had with the Victorian government about the North East Link project?

Ms Leeming : There have been no recent discussions with the Victorian government. You would be aware that we committed some planning funding to the North East Link in late 2016—$15 million—but the Victorian government has advised us that they will fully fund the planning phase. Since that time, we haven't been engaging.

Senator RICE: Just to clarify: they are going to fully fund the planning phase, but you made a contribution towards it. Was that contribution taken up?

Mr Yeaman : We've made a firm commitment for $100 million to support upgrading the quality of the North East rail line—

Senator RICE: No—

Mr Yeaman : Sorry—my mistake.

Senator RICE: another mega motorway tollway project that the Victorian government have planned. Could I just clarify: you offered money towards the planning phase?

Ms Leeming : We offered money as consistent with our aim of being an informed investor early on in the stage of a project so we understand it well. The Victorian government advised us that they didn't want to accept that money.

Senator RICE: How much money was offered for this project?

Ms Leeming : Fifteen million dollars, and the Victorian government announced that they would fully fund that planning project.

Senator RICE: Has there been any work done by the department regarding any potential Commonwealth contributions towards the project overall?

Ms Leeming : It's a major project that the government might consider funding in the future if the business case stacked up, but there hasn't been any detailed work done. There have been no discussions with the state government, which would need to precede such consideration. There has been no business case provided to Infrastructure Australia. So there is not really any basis for us to make any decisions.

Senator RICE: You say there's been no detailed work done; that seems to imply that you've done some work, though.

Ms Leeming : In offering planning money, we looked at the project and said, 'This looks like a major project that the Australian government would want to be involved in or at least be in on the ground floor on.' At that stage, some work was done to look at the project, but only at a very preliminary stage, and since 2016 there has been no contact with the Victorian government over that project.

Dr Kennedy : In general terms, we try and track all of the major projects and initiatives that the states announce, and monitor where they're up to, because, as Ms Leeming was outlining, when this government is taking its budget decisions or its longer-term infrastructure investment decisions, they expect us to be across what the states' own priorities are. So this is one major project in Victoria of a few that we will track, to be in a position to advise the government, but, as Ms Leeming said, we are also expected, consistent with the government's policy, to go through all the infrastructure planning, IA's processes et cetera before any final decision could be made.

Senator RICE: To confirm: there will be no consideration of Commonwealth funding until after the business case has been assessed by Infrastructure Australia—is that correct?

Dr Kennedy : It is entirely up to the government about when it considers funding, under what basis, under conditionality of an IA assessment, but the government has not taken any policy decisions in regard to the North East—

Senator RICE: So it could be possible that there could be a Commonwealth contribution announced before that business case process was concluded, but—

Dr Kennedy : In some cases, governments have made announcements subject to successful business cases; in other cases, they wait for the business case. So the practice has varied. The policy is that all of these projects, either conditional or ahead of decision, must go through the IA process and that IA business case must get published before a final decision is taken.

Senator RICE: And before any money is handed over?

Dr Kennedy : Correct.

Senator RICE: On Melbourne Metro 2: have there been any discussions with the department about Melbourne Metro 2?

Ms Hall : No.

Dr Kennedy : I should inform you that I visited Victorian officials late last year and they gave me briefings on these two projects, but they were not discussions about seeking Commonwealth funding; they were simply updating me on the projects being undertaken in Victoria.

Senator RICE: But were you briefed on Melbourne Metro 2?

Ms Hall : I wasn't; it was the current Melbourne Metro.

Dr Kennedy : Sorry, it's getting late: it was the current Melbourne Metro that they briefed me on.

Senator RICE: So have you done any preliminary assessment—has the concept of Melbourne Metro 2 crossed the desks of the Infrastructure Investment Division?

Ms Hall : Not at this stage, Senator.

Senator RICE: Moving onto the National Rail Program: firstly, can I confirm exactly how much of the program funding will be spent over the forward estimates.

Ms Hall : Currently, in the forward estimates, $600 million has been allocated.

Senator RICE: I understand it's $200 million in 2019-20 and $400 million in 2020-21.

Ms Hall : That's correct.

Senator RICE: So that's still the proposed expenditure. To set the scene, that $600 million was allocated from $1.6 billion of savings from the Infrastructure Investment Program.

Ms Hall : I'll have to double-check that; I might have to take that on notice. I don't think that's right, Senator.

Senator RICE: My understanding was that $1.6 billion wasn't spent in the Infrastructure Investment Program—it was proposed at one stage to be spent in 2020-21 and it's no longer going to be spent, and $600 million of it has been reallocated to the National Rail Program. We've got one of your officers shaking his head in the background there.

Ms Hall : We can take that on notice for you, Senator, but I don't think it's correct.

Senator RICE: What work is the department currently doing on how that $600 million is going to be spent?

Mr Hyles : At this stage, we're still very early in the process. Obviously, last year the criteria for the program were released, but we're still working through those processes.

Senator RICE: Have you got a shortlist of projects on how you expect to spend that $600 million?

Mr Hyles : It's still very much a work in progress.

Senator RICE: How many staff within the department are currently working on the National Rail Program?

Mr Hyles : Within my team, there are about four or five people but they do a range of functions in addition to overseeing the NRP.

Senator RICE: How many full-time equivalents, would you say, are working on it?

Mr Hyles : I'd have to take that on notice.

Mr Yeaman : As Mr Hyles said, criteria have been put out which say: these are the things the government is trying to achieve through this program. There are a range of rail projects, including urban rail projects, which the government has already, through our normal work as part of the Infrastructure Investment Division, been tracking for some time. The government, as you'd be aware, has done some joint planning work with the New South Wales government around Western Sydney Rail. The government has committed funding to investigate the Melbourne Airport rail link, and there are a number of other rail projects which have been in the works for some time and are progressing. The government may choose over time to begin to devote funding towards one of those projects, which are already progressed, and we're also looking at what other projects may emerge through the National Rail Program more broadly.

Senator RICE: When do you intend to announce what that $600 million will be spent on?

Mr Yeaman : It's a matter for government, but we would expect that there'd be some more announcements made in the budget.

Senator RICE: In the May budget, you would expect that there would be announcements as to what that's being spent on?

Mr Yeaman : It's a matter for government, but I think that's likely.

Senator RICE: However, given that the first money isn't going to be spent until 2019-20, you acknowledge that that's going to be after the next election—in fact not a dollar of that $600 million, let alone the $10 billion National Rail Program, is going to be spent before the election.

Mr Yeaman : These projects generally have long lead times and long planning horizons attached to them, so the government has made the commitment of funding to support rail, but it will take time to get that funding out under the program. There are of course other ongoing infrastructure investments in the meantime.

Senator RICE: There isn't actually going to be any money spent in that program before the next election?

Mr Yeaman : At this stage, the first funding is, as you said, in 2019-20.

Senator RICE: You just mentioned the Melbourne Airport rail link. The minister in November said that plans are underway with airport rail link feasibility studies. Can you give us an update as to where that's at.

Mr Hyles : We've been working with Victorian officials. A steering committee has been established. Memoranda of understandings between the Commonwealth and Victorian departments have been signed along with terms of reference for the business case, and work is progressing. Victorian officials have appointed project managers or are in the process of appointing project managers, and work's continuing.

Senator RICE: So, the terms of reference for the business case have been finalised?

Mr Hyles : Yes.

Senator RICE: Are those terms of reference public?

Mr Hyles : Off the top of my head, no.

Senator RICE: Can we have those terms of reference for the business case provided to us?

Mr Hyles : I'll take that on notice.

Senator RICE: Yes, because there is a whole range of different projects. One person's idea of airport rail is very different to another person's. So, you have made a decision then, through those terms of reference, as to what the actual type of project that you're looking at is going to be?

Mr Hyles : The terms of reference obviously include assessment of a range of alignment options, so that's been left open at this stage, to investigate those.

Senator RICE: How can you do a business case if you've still left open the difference between one, which is an extension of the suburban rail network, to another model, being a tunnel for a high-speed connection?

Ms Hall : It's a preliminary business case. So, the appropriate alignment issues are still to be worked out.

Mr Hyles : A preferred alignment.

Senator RICE: So it's actually not a business case; it's an assessment of options, really. Yes? A business case is usually for a project; that is my understanding.

Ms Hall : It's a two-stage business case. The first stage is going to do the alignment and have a look at the options, and then the second stage will actually do the more detailed analysis that you're talking about.

Senator RICE: When is that first stage of the business case going to be completed?

Mr Hyles : That'll be completed towards the end of the year.

Senator RICE: So, you're still promising it for 2018.

Mr Hyles : Yes.

Ms Hall : Yes.

Senator RICE: What's been the consultation on the range of projects that will be included in that business case? I understand that some consultation was done.

Mr Hyles : We've had a stakeholder workshop. Ministers attended that. It was fairly high-level, really discussing the commitment the Commonwealth government's made and the process going forward. The detailed engagement with stakeholders about alignment hasn't happened at this point.

Senator RICE: Is that planned to occur?

Mr Hyles : Yes. That will occur. But the probity process hasn't been finalised.

Senator RICE: But when will that consultation occur? Will it be before the first stage of the business case is completed?

Mr Hyles : Yes.

Senator RICE: Can you take on notice—you probably haven't got the information now—who you have consulted with so far and who you propose to consult with?

Mr Hyles : We haven't consulted specifically on alignment at this stage.

Senator RICE: But you just said 'at our round table'. So, who was at that round table?

Mr Hyles : That was just a general workshop, but we can certainly take that on notice.

Senator RICE: Do you have a plan, then, of who will be consulted with once you've gone through the probity process?

Mr Hyles : That's being determined, I think, at present.

Mr Yeaman : We don't have a list of those stakeholders, but we'll develop that over the coming—

Dr Kennedy : I'm very happy to take it on notice. We'll get you a list of the stakeholders.

Senator RICE: And in terms of the $30 million funding for the development of the business case, where is the expenditure of that currently at?

Mr Hyles : No money's been spent so far.

Senator RICE: When is it expected that that will be spent, then?

Mr Hyles : Before the end of the year. Obviously Victoria's undertaking work already, so they will, at milestones, submit claims for payment.

Senator RICE: So, the Victorian government have done work already that they will be claiming from the $30 million, but they haven't claimed it as yet?

Mr Hyles : Yes, that's right.

Senator RICE: Do you know how much, of the work that the Victorian government has done, of that $30 million is going to be claimed, so far?

Mr Hyles : No. We'd have to take that on notice.

Dr Kennedy : Just to be clear, we're not charging each other for public servants' time in the business case. The moneys being expended from the business case will be for consultancies, maybe geotechnical work and those types of issues. So, they will be against clear contracted arrangements, not to pay Victorian public servants to—

Senator RICE: Okay, but it sounds like you should know what work has already been done that is going to be able to be claimed from that $30 million.

Mr Hyles : It's just not necessarily going to be the case that that is wrapped up in a figure that is easily to hand, because we're not at the point obviously of Victoria putting in a claim for payment.

Mr Yeaman : We can have a look at that and see what we can provide you to give you some clarity around that. We just don't have it in front of us.

Senator RICE: Yes, if you could take on notice what has been already committed to. The Faster Rail program: during the 2017 budget estimates in May we were told that the $20 million given to Faster Rail would be used to help develop three separate business cases. How are these business cases developing?

Mr Hyles : We have undertaken the assessment as part of the second stage and provided advice to government.

Senator RICE: Have you decided what the three business cases are going to be?

Mr Hyles : We've provided advice to government.

Senator RICE: For just three?

Mr Yeaman : I don't have the exact figure in my head, but we received a large number of applications under the scheme. We've been through an assessment process of those proposals against the criteria, and we've provided advice to government on how that could proceed. We haven't yet had an announcement from government, but we would expect that to happen shortly.

Senator RICE: Did your advice to government propose three projects to have business cases, or a larger number of projects?

Mr Yeaman : I think that goes to our advice. We provided advice on the range of projects that met the criteria, and it is now to government. The government stated that they are looking to fund three.

Senator RICE: So you can't tell us whether it was the recommendation for three?

CHAIR: That's standard.

Senator RICE: Well, I would think that it would be of interest to the community to know whether your advice to the government is saying, 'Here are three projects where we recommend the business case', or whether you've essentially given a shortlist to government.

Mr Yeaman : I'm not sure I can add to the answer. As I said, we assessed a range of proposals against the criteria and provided advice to government.

Senator RICE: For those projects where you've provided the advice to government, what criteria were they selected on?

Mr Hyles : They were criteria that were published in the Faster Rail prospectus that was released by the ministers in I think September last year. So, the criteria were published.

Senator RICE: Will that assessment against those criteria be made public at some stage?

Dr Kennedy : That's a matter for government, but our assessment of those criteria forms part of our advice to government as to the next stage of projects to be selected.

Senator RICE: So you're saying that because it's advice to government you can't share it with us?

CHAIR: One moment: the guidelines do indicate that the senator can ask what advice you've given to government. And you are capable of answering that and providing details of that advice to the senator.

Senator RICE: Thank you.

CHAIR: If it becomes a cabinet submission, that's a different kettle of fish. But the senator's entitled to ask what advice you've given to government.

Dr Kennedy : We've given to government advice on the three projects to be selected out of the next stage of this process against that criteria. The government's considering that advice, and we expect that it will make its decision shortly.

Senator RICE: But have you just given three projects, or have you given a larger number of projects in your advice to government?

Dr Kennedy : We rated all the projects against the criteria and formed a merit based list, if you like, against those projects.

Senator RICE: So you've given that whole list, with how they scored against the criteria, to government.

Dr Kennedy : That's correct.

Senator RICE: And your expectation would be that the top three then should be the projects that are chosen by government to go forward? Would that be the department's advice?

Dr Kennedy : I'm getting very close to having to convey to you exactly what the advice is, but let me put it this way: it isn't necessarily the case that three would fall out as the top three. There could be a number that scored similarly, and then it would be a matter for government to choose the relativities across those projects.

Senator RICE: But if you've done an assessment based on your criteria, what other criteria do you think government would use to choose a different selection of projects other than the top three?

Dr Kennedy : That is a matter for government, but we provide our assessment around the criteria that was published. And then the government can look across those projects. It may look across their geographical distribution. There's be any number of matters that it may wish to take into account itself. But our advice goes to, against the criteria they published, how these projects fall out.

Senator RICE: Given that that advice to government isn't a cabinet submission, can that be made available to us?

Dr Kennedy : We'll take it on notice.

Senator RICE: Thank you. What are the time lines for this? What is your expectation of when government is going to make a decision now that you have provided that advice to government?

Dr Kennedy : We expect government to make a decision and announce that decision imminently.

Senator RICE: Sorry?

Dr Kennedy : Soon.

Senator RICE: What does that mean?

Dr Kennedy : I can't read the mind of the minister.

Senator RICE: Minister representing the minister?

Senator Scullion: He also said 'imminently'. By definition it means soon! You're not going to nail it down to a couple of days. I thought imminent and soon were pretty good terms. You can pick either one.

CHAIR: I personally don't think it's far away!

Senator RICE: Okay. We're getting this great sense of anticipation. Thank you for that.

I did have some questions that I was going to ask Surface Transport and am wondering whether you can help me given that Surface Transport was sent home. In particular they are about the road user charging review and where we're at with that.

Ms Hall : We can answer those because they actually now sit within my division.

CHAIR: Senator Rice, we're going to have share the balance of time. It's rare that we do this.

Senator RICE: Okay.

CHAIR: You've had almost 15 minutes. We've got 45 minutes left. We'll do them in 10-minute blocks until we exhaust ourselves. So, if you could start to truncate around that, we'll next go to Labor and then come across to you.

Senator RICE: Thank you.

Senator STERLE: We'll put the rest on notice.

CHAIR: Right. Is there any prospect in either case here that some of your questions could also go on notice to get to Cities? We've held them back.

Senator RICE: Yes. I'll put the rest of mine on notice, but I would like to ask these questions about road users.

CHAIR: That's fine. What about you, Senator Rhiannon? Is there much you can put on notice?

Senator RHIANNON: I'd still like my 10 minutes.

CHAIR: All right. Let's do that. Between the two of you, we'll be completed by half past from your end. You two police each other. We'll go to half past and then we'll go back to Labor.

Senator RHIANNON: Do Labor get the last half hour?

Senator STERLE: We are permanent members of the committee. We have been here since nine o'clock this morning. Will you grant us the respect—

CHAIR: Hold on. We're using up valuable time—

Senator RICE: Depending on the answers I get on road users, this might be very quick.

CHAIR: Okay. But we've got to go to Cities then, Senator Rhiannon. We've kept these good people back. Let's go.

Senator RHIANNON: Okay.

Senator RICE: So where are we at with the inquiry into road user charging?

Ms Geiger : Announcement is expected in coming weeks. The details around the study are under consideration and being settled within government. We're anticipating that it will be in the next weeks.

Senator RICE: Has the eminent Australian who's going to head the inquiry been chosen?

Ms Geiger : These are matters that are under consideration by government at the moment.

Senator RICE: Okay. Yes or no: has the eminent Australian been chosen?

Ms Geiger : A final decision hasn't been made.

Senator RICE: Right. Exactly what steps have taken place since the announcement in November 2016 that this inquiry was going to take place? What work have you done to date in this rather long period of time?

Ms Geiger : There were some discussions with state and territory ministers at the Transport and Infrastructure Council last year. There has been work underway to prepare ourselves for the study. Our main focus to this point has been on the heavy vehicle road reform, knowing that any steps that we put in place for heavy vehicles would be applied to decisions that are taken around any broader road user charging.

Senator RICE: How many people does the department currently have working on the project?

Ms Geiger : There is a team of about five people who are looking at establishing the study.

Senator RICE: What's the time line of the study that's proposed, once its underway?

Ms Geiger : The details of the study, including the timing of how long the study will run for, will be part of an announcement that's made in coming weeks.

Senator RICE: So you're not going to share any more information with us about that, then?

Ms Hall : It's under consideration by government. I'm sorry. As soon as we know—

Senator RICE: Okay, I will leave it at that.

Senator RHIANNON: My questions concern a development down in the Shoalhaven area—the Yerriyong motorcycling complex. There was $10 million secured in a grant for this complex. I wanted to ask some questions about it because development had not been given.

Ms Hall : Senator, I think this is actually a regional funding program. It's not infrastructure investment—road and rail.

Senator RHIANNON: Someone just arrived at the table. I was hopeful.

Ms Hall : Because it was a New South Wales project we thought it might be a New South Wales road or rail project, but it's not; sorry.

Senator RHIANNON: It's not, so I have to ask it in regional?

Dr Kennedy : No, it is in this estimates but we have sent our regional people home on the advice of the committee. I suspect that if the committee decides to have a spillover then there'll be questions of the regional area of the department and that's where these types of grants are handled. I apologise, Senator.

Senator RHIANNON: Thank you.

CHAIR: We'd like to thank the officials at the table, through you Dr Kennedy, for their preparation and effort, and we wish you all the best in your journey home. Could we have the officials from cities?

Senator McCARTHY : With regard to the completed City Deals, what new funding has flowed from the Commonwealth to the cities involved? And for which projects?

Ms Wiley-Smith : I'm going to start answering your question, but then I might hand over to my colleague Ms Kate Lynch to go into a bit of detail. Just confirming: you're talking about the first two city deals that have just been signed?

Senator McCARTHY : That's correct.

Ms Wiley-Smith : This is Launceston and also Townsville.

Senator McCARTHY : I have Townsville City Deal announced on 13 June, Western Sydney City Deal announced on 20 June and Launceston City Deal announced on 24 June.

Ms Wiley-Smith : To clarify, the Western Sydney City Deal hasn't yet been completed so it's still under negotiation. Projects that might be agreed through three levels of government for Western Sydney—we won't know that for a few months yet.

Senator McCARTHY: So the Townsville City Deal and Launceston are the completed City Deals?

Ms Wiley-Smith : They are. They're in implementation at the moment and there's quite a number of initiatives for each of those deals. We can go through the key ones for you.

Senator McCARTHY : Sure.

Ms Lynch : The Townsville City Deal was announced in June, as you mentioned, but was actually finalised and signed as a completed deal in December of 2016. Just to clarify: you're seeking information about the Commonwealth's funding commitment only? Or all funding commitments?

Senator McCARTHY : Yes. With regard to the completed City Deals, what new funding has flowed from the Commonwealth to the cities involved?

Ms Lynch : In terms of the Townsville City Deal, the Commonwealth's funding included $100 million toward the construction of the North Queensland Stadium and $150 million toward the construction of the Townsville Eastern Access Rail Corridor. Those two commitments of funding were included in the City Deal itself. And since the development of the City Deal there have also been two major commitments of financing from the Clean Energy Finance Corporation for the Townsville region. It's $70.3 million in total for the Ross River Solar Farm and the Kidston Renewable Energy Hub.

Senator McCARTHY: What was the second one?

Ms Lynch : The Kidston Renewable Energy Hub.

Senator McCARTHY: And for Launceston?

Ms Lynch : The Launceston City Deal was finalised and all the commitments agreed to in April 2017. The Commonwealth's funding contributions to the Launceston City Deal comprise a total of $149.33 million as part of the actual agreed City Deal. I can run through the major components of that if you'd like. The Commonwealth's contribution included $2 million for the Tamar Estuary work. That was a contribution towards the work of the task force itself, and also some of the catchment management initiatives. The Commonwealth also contributed $130 million for the relocation of the University of Tasmania campus to Inveresk, $7.5 million to implement the City Heart Redevelopment Project and $1.58 million toward the Smart Cities project. That particular contribution occurred in November last year; it was an announcement under the Smart Cities and Suburbs Program. The Commonwealth also contributed $5 million toward the Youngtown Barracks, to accommodate reservists under the Defence Force that were moving from the Paterson Barracks in Launceston; $250,000 towards a business case for the Defence Innovation and Design Precinct; and $2 million toward the establishment of a Launceston hub of the National Institute for Forest Products Innovation. And since the completion of the Launceston City Deal there has also been an announcement of Commonwealth funding toward implementation of the findings of the Tamar Estuary Management Taskforce. This was made recently, and is an additional $45.3 million.

Senator McCARTHY: How much has the department spent on the promotion and marketing of City Deals?

Ms Wiley-Smith : We don't have that information with us at the moment. We do have a website that we run which talks about—

Senator McCARTHY: Would you like to just take it on notice?

Ms Wiley-Smith : I can, but there's not a lot of marketing, other than a City Deal itself, which is also available on the website. But we can certainly take that on notice.

Senator McCARTHY: Has the Cities Division briefed the new cities minister, Paul Fletcher, on the City Deals program?

Ms Wiley-Smith : Yes, we have.

Senator McCARTHY: And has the minister requested any changes to the City Deals program?

Ms Wiley-Smith : No. We're working through implementing the government's Smart Cities plan as it was agreed.

Senator McCARTHY: So does the decision-making process around City Deals remain the same, in that it is a decision of the cabinet?

Ms Wiley-Smith : That's correct, yes.

Senator McCARTHY: Is there any process in place to guide decision-making independent of politics?

Ms Wiley-Smith : We work with our colleagues at state level to work through what their thinking is in terms of City Deals for their states. Certainly the Prime Minister has written to first ministers to seek their engagement and interest in City Deals. We have three criteria that we look at in providing advice to government—it's really around assessing possible locations for the future deals—and they are: willing and capable partners; opportunities to unlock economic potential and to transform the city; and an alignment with broader investment and policy priorities.

Senator STERLE: But it is a decision of whoever is in government, whether it be state or federal. You don't go to external bodies, you don't consult with the community. That's the basis of Senator McCarthy's question.

Dr Kennedy : It is certainly a matter for the Commonwealth government what City Deals it chooses to do.

Senator STERLE: It is the easy answer. I'm just listening to you reeling stuff off. You didn't answer; I was just trying to help you out.

Ms Wiley-Smith : We provide a range of advice to government. The decision is theirs. But we do try to have some transparency in the types of criteria that we look at in providing the advice.

Senator McCARTHY: Can cities apply for a City Deal? Do you have application guidelines publicly accessible for cities?

Ms Wiley-Smith : No. We work with our state and territory counterparts to work out what the sequencing for City Deals should be in their jurisdiction. The Australian government is committed to delivering City Deals for all states and territories.

Senator McCARTHY: How can we be sure then that the cities with the best projects and the most need can join the City Deals project?

Ms Wiley-Smith : We are very pleased to see such a high interest in City Deals from cities right around Australia and we encourage them to talk to their state and territory counterparts in the first instance.

Senator STERLE: The ministers?

Ms Wiley-Smith : Officials to start with who would be providing advice to their ministers.

Senator STERLE: And then it goes to the appropriate minister?

Ms Wiley-Smith : Yes.

Dr Kennedy : We can't do a City Deal without the state being involved.

Senator STERLE: I think, Mr Kennedy, it's not hard. I am not as sharp as Senator McCarthy. I just want to hear is it politicians that make the decisions?

Dr Kennedy : I was trying to be helpful.

Senator McCARTHY: How does the City Deal program link to broader strategic urban objectives?

Mr Yea man : One of the benefits of our bringing the cities function into this portfolio is it allows us to have more interaction and integration between the discussions taking place in City Deals and our broader infrastructure priorities and planning across the jurisdictions. So we are certainly working closely. The division that was here previously, Ms Hall's division, the Infrastructure Investment Division had been working closely with Ms Wylie-Smith's team to make sure that the decisions that have been taken in City Deals around planning and investment are aligned with the government's broader objectives in that area.

Senator McCARTHY: I'm going to go to the Townsville and Launceston City Deals. Before I do, I might just note that the MOU for Darwin City Deal was signed between the Territory and federal governments in May last year. Can you give us an update on that?

Ms Wiley-Smith : At officials' level, we have been working through with our colleagues in the Northern Territory on what a City Deal for Darwin would look like. We are in the early stages. We have three main phases of a City Deal. We are still in the early stage, which is really around looking at what the main focus of a City Deal should be and what the vision will be for the city. It has also involved a few of the stakeholders, particularly the university, in that area. I will hand over to my colleague, Ms Lynch, who can provide a bit more detail.

Ms Lynch : As you mentioned, the memorandum of understanding was agreed last year. Over the course of 2017, there was a fairly broad-ranging community consultation process in Darwin to seek input from the community about preferred priority projects that could be pursued under a City Deal. There has been a range of discussions, meetings and workshops between officials and also with some of the local businesses. The most recent of those were in early December and we are anticipating that further meetings and discussions will occur in the next few weeks.

Senator McCARTHY: What were some of the proposals in that?

Ms Lynch : The main objective for us is to steer discussion to looking at the priority issues for a city rather than specific projects in this early stage.

Senator McCARTHY: How did you steer it in that direction?

Ms Lynch : By trying to align the interests and objectives of different stakeholders in a location. There has been a range of projects put forward. The Northern Territory government has identified a range of different projects that they would like to see covered under a City Deal, for example. And some of those stakeholders are also coming to us with suggestions and ideas.

Senator McCARTHY: Can you give us any examples of those suggestions and ideas?

Ms Lynch : There has been range of discussion around trying to improve Indigenous outcomes for community members living in or visiting Darwin. There have been discussions around some projects there both from an Indigenous perspective, and some cultural projects that have been put onto the table

The projects that have been put forward by the Northern Territory government you may be familiar with; they've been made public in media. They include things like the revitalisation of the CBD through some works in the green square. There's also a project to look at building a new museum in Darwin at Myilly Point. They're a couple of examples of the projects.

Senator McCARTHY: Is Darwin any closer to securing a city deal?

Ms Lynch : The government has stated publicly its clear intention to develop a city deal for Darwin. In fact, Minister Fletcher recently stated publicly, in an interview in Darwin, that he's very much committed to pursuing a city deal for Darwin and sees it as having exactly the same status as the City Deals that were announced in Geelong and Hobart recently. So, yes, there's certainly an intent from the federal government to pursue a city deal for Darwin.

Senator McCARTHY: Any time frame?

Ms Lynch : We would hope to see progress this year, but it's one of those processes where it's important we take the time we need to get the city deal right, at the end of the day.

Senator McCARTHY: I can take you to the Townsville city deal. You outlined the specific Commonwealth funding commitments in my earlier questions around them. Can I ask you, particularly, about progress made in advancing the TEARC?

Ms Lynch : Certainly. You're looking at the Townsville Eastern Access Rail Corridor.

Senator McCARTHY: That's right.

Ms Lynch : A detailed business case was led by Building Queensland for that project, and the Commonwealth was represented on a steering committee by our colleagues here in this department. We understand that the business case was completed in late 2017 and is currently under consideration by the Queensland government.

Senator McCARTHY: Is this something the Commonwealth is still committed to delivering?

Ms Lynch : The business case is still to be considered by the Queensland government and the Commonwealth is yet to receive advice from the Queensland government.

Senator McCARTHY: So it's in the hands of the state government, at this moment.

Mr Yeaman : They're considering the findings of the business case and we expect they'll come back to the Commonwealth for further discussions about how to progress that.

Senator McCARTHY: So it's still early days.

Mr Yeaman : Work has progressed but, yes, there still isn't a firm decision on the way forward.

Senator McCARTHY: I might put the rest of the questions on that on notice. I want to take you to the initiative described as 'PortCity'. It says:

Continue to grow the Port of Townsville as a key import and export gateway to service freight demand across northern Queensland.

What's the Commonwealth doing to achieve that, under this deal, that it wasn't already doing?

Ms Lynch : One of the commitments under the city deal was that the Commonwealth would work with its counterparts, its partners under the deal, to look at innovative financing and value capture opportunities surrounding that general precinct. That includes the expansion of the port, also the state development area and the Townsville Eastern Access Rail Corridor, which runs within the state development area on the way to the port.

There has been a range of quite productive discussions with officials, over the past just slightly longer than 12 months now since the city deal was signed. The Commonwealth also made a commitment to finalise and expedite the assessment of the port channel-capacity upgrade project for Townsville under the Environmental Protection Biodiversity Conservation Act. That assessment was completed on time, according to the milestone of the city deal, and it was finalised on 5 February this year. So approval was granted by the federal government subject to conditions.

Senator McCARTHY: Okay.

Ms Lynch : Sorry, just to finalise, very early on this year the Queensland government wrote to the federal government seeking funding support for that project. The request will be considered, along with other priority projects, under the usual processes.

Senator McCARTHY: Can I take you to the section of the snapshot headed 'Defence Hub'. It says: 'Improve visibility for local businesses about defence industry investment in Townsville to encourage involvement.' What concrete aspects of this deal have advanced that cause, and where are the funding allocations?

Ms Lynch : There's no specific funding allocation for this commitment. However, a Townsville defence working group has been established. Terms of reference for that working group were agreed in May 2017, and the first formal meeting of that defence working group was held on 22 November last year. Members of that group include representatives from the three levels of government. Basically their remit is to identify and make publicly available opportunities to enhance commercial opportunities within the defence sector in the Townsville region.

Senator McCARTHY: But isn't it pretty well known that Townsville has a port and a significant military presence?

Ms Lynch : It does, yes, but one of the issues that was raised during the development of the Townsville City Deal, by the Townsville City Council, was their desire to see enhancement of the consultation processes. There are already existing consultation mechanisms between the federal government and the Queensland government, and, in this instance, the city council was very keen to see a specific focus for the Townsville region rather than, for example, a Queensland-wide defence industry consultation vehicle or mechanism to support industry engagement.

Senator McCARTHY: If there's no money or genuine commitments for action attached to these initiatives then I guess the question is: what is the point of having them?

Ms Wiley-Smith : As Ms Lynch has just mentioned, it's really important that we work with the local community. The local council, in this instance, were very keen to actually have greater engagement directly with the Department of Defence on what was happening in their region. It might not have new dollars associated with it, but it certainly involves in-kind engagement and, I guess, resources from Department of Defence, and it's important to the local community. Not all commitments under the City Deals have new money associated with them. Sometimes it can be to look at particular reforms that save time or are more effective with three levels of government working together, and sometimes it's about improving cooperation and engagement with the community.

Senator McCARTHY: You were talking about the three levels of government. Were they not working together prior to the City Deals?

Ms Wiley-Smith : As part of the City deal, in working together we actually increase collaboration, looking at what we can do to really support a community in a particular place, joining up the three levels of government in closer cooperation to look at particular reforms or investments that could be made so that we're making the best decisions for that community, with three levels of government working together for the longer term.

Mr Yeaman : If I could briefly answer, it has actually been an interesting feature of the early city deals and also some international experiences that often there are a number of planning processes underway—for example, across different local councils in a region, between state government and federal government, putting in some cases funding and in some cases other measures into the region. Just the fact that a city deal is put on the table, it brings together those levels of government to make sure those levers are all working in the same direction. That governance and joined-up mechanism has really been important as part of the early city deals.

Senator McCARTHY: Under the heading 'Enabling Infrastructure', the document says: 'Successfully accommodate growth now and into the future with a reliable and secure energy and water supply.' What funding has the Commonwealth committed as a part of this deal to achieve that aim?

Ms Lynch : I mentioned a little while ago the financing that has been made available through the Clean Energy Finance Corporation. That was $20.2 million for the Ross River Solar Farm and $50.1 million for the Kidston Renewable Energy Hub.

Senator McCARTHY: I'm just trying to understand: isn't successfully accommodating growth now and into the future, with a reliable and secure energy supply, the core role of government?

Ms Lynch : Sure. Implementation of all of the commitments under City Deals is distributed and shared amongst the partners to the city deal. In this instance, Townsville City Council actually take the lead on implementation of this commitment. They have plans to develop, in the second quarter of this year—so hopefully by midyear—an energy strategy for Townsville. And they're in the midst of discussions with the key stakeholders, so they're going to be looking for opportunities to finance a range of different sustainable energy projects into the future.

Senator McCARTHY: Can you advise on the status of the local partnership forums?

Ms Lynch : Yes, I can. Under the city deal there was a commitment made to us to create a local partnership forum to provide local knowledge and insight on issues in the Townsville region and act as an active conduit between the community and the executive board, which is a group that monitors the implementation and progress of the city deal and includes representatives from the three levels of government. This local partnership forum has also been tasked with championing the city deal with the community, engaging businesses, looking at opportunities to harness and attract private sector investment for Townsville and identifying emerging opportunities to improve the impact of the investments made through the city deal.

Senator McCARTHY: How often do they meet?

Ms Lynch : The local partnership forum was established in 2017. The first meeting was held in September last year. I may have to take on notice and get further detail to you about upcoming meetings. At the moment, for example, out of session, the local partnership forum is being consulted on the first annual progress report for the Townsville city deal.

Senator McCARTHY: Would that be the same for Launceston?

Ms Lynch : Each city deal is slightly different in the way that they're implementing their community engagement processes. In Launceston, a very recent meeting of the executive board—I think it was the beginning of February this year—resolved that we would create a community and business forum. That body is yet to be formally established, but that's in train.

Senator McCARTHY: I know you're going to take the question on notice about when the local partnership forum in Townsville is going to be, but could you also provide a membership list as well as that meeting schedule?

Ms Lynch : Yes.

Senator McCARTHY: Is it publically available anywhere?

Ms Lynch : We expect that it will be.

Senator McCARTHY: But it's not yet.

Ms Lynch : I'll have to confirm if it is already public, but it certainly would be in the first annual progress report.

Senator McCARTHY: So you're not sure yet if it's online.

Ms Lynch : I'll have to double-check that for you, but I'm happy to do that.

Senator McCARTHY: I'll go to the Launceston city deal. How is the Regional Economic Development Strategy progressing?

Ms Lynch : The Northern Tasmania Development Corporation has been given responsibility for delivery of this commitment. The development corporation has hired a consultant to commence work on a key directions report. That report is progressing very well and outlines the current state of the region and future economic growth scenarios. It's due to be finalised in March, so it's very near completion. The strategy itself will follow on from that key directions report. There'll be further work for subsequent months this year. The strategy is on track to be delivered by the end of this year and will be implemented through to 2022.

Senator McCARTHY: How does it build on other regional initiatives, including the Commonwealth government's $25 million Tasmanian regional jobs and investment package?

Ms Lynch : I would have to take that question on notice.

Senator McCARTHY: I'll give you a couple of examples. There's that; the Tasmanian government's $100 million dollar Northern Economic Stimulus Package to accelerate job-creating projects in the north and north-west of Tasmania; and the Joint Commonwealth and Tasmanian Economic Council's Regional Development Australia priorities, Tasmania's review of the region's capacity to plan for economic development and jobs in the future. How is the Commonwealth government assisting the Tasmanian government and the City of Launceston to explore financing options for upgrades to Launceston's combined sewerage and stormwater system, including through the Clean Energy Finance Corporation?

Ms Lynch : The Clean Energy Finance Corporation     has been engaged. They've had some discussions with the Tamar Estuary Management Taskforce, which was the body created to develop a river health action plan in Launceston. We understand that the CEFC has had some conversations about the nature of some of the priority projects that may be included. However, you may be aware that the river health action plan was very recently released by that task force—I believe it was released on 15 February. So we would need to seek further advice from the CEFC about how they are considering the recommended initiatives. Following the release of the management task force's plan, there was an announcement also by the government to jointly fund the implementation of the recommendations in the plan with the incoming Tasmanian government.

Senator McCARTHY: How was the National Institute for Forest Products Innovation progressed?

Ms Lynch : I'll just find that.

Ms Wiley-Smith : There are a lot of commitments under this deal, so it takes a little while to find the right piece of paper.

Senator McCARTHY: Sure—I should have said it's page 23 of the City Deal report.

Ms Lynch : Thank you. An update on the Launceston hub of the National Institute for Forest Products Innovation: the innovation hub was officially opened by Minister Ruston and Minister Barnett on 14 December last year. It will be hosted by the School of Architecture and Design at the University of Tasmania's Launceston campus.

Senator McCARTHY: I might move, in the interests of time, to the Western Sydney City Deal and put a couple of questions about Launceston on notice. When do you expect the Western Sydney City Deal to be signed?

Ms Wiley-Smith : We're still in negotiations at the moment, but we're hoping that it will be signed in the next couple of months. We're getting quite close with all three levels of government going through their final processes.

Senator McCARTHY: How much money has been committed or will be committed by the federal government to this City Deal, or is it too early?

Ms Wiley-Smith : It's too early to say at this stage. That's a decision for government and, basically, we'll know when the announcement's made what investment all three levels of government will be making along with the wider reforms and also how we work together in terms of governance for the future.

Senator McCARTHY: Are you working on any rail options for the Western Sydney City Deal?

Ms Wiley-Smith : Certainly we're working with our colleagues that are responsible for rail in the Commonwealth, with our Western Sydney unit. They're looking at options for connectivity for the Western Sydney area and we'll be working with them as part of the final negotiations on the City Deal.

Senator McCARTHY: And how has the north-south rail link progressed?

Ms Wiley-Smith : It would be considered as part of the wider work that we're doing looking at the study on rail for Western Sydney and the needs for the future.

Senator McCARTHY: Sorry, I missed a bit of that, but my next question may cover it. Will an announcement regarding rail be made before or after the signing?

Ms Wiley-Smith : That's a matter for the government and also, of course, the New South Wales government.

Senator McCARTHY: It's just that, given it's a key piece of infrastructure and given the local governments have asked for a rail line, how do you expect them to sign a City Deal by the end of the year if they don't know how much money their region is getting and if they don't know whether there will be a north-south rail link?

Ms Wiley-Smith : There's a process underway at the moment where all three levels of government are going through their own approval processes and final negotiations, and there will be visibility for all three levels of government on what's in the final deal before an announcement is made.

CHAIR: I've got some questions—here's my main question: are we all ready to go home?

Dr Kennedy : I'll take that one, Chair!

CHAIR: Dr Kennedy, again, we don't often express ourselves as well as we should here. Your people today, I think we'd all agree, have been very forthright, for the most part. Through you, we'd like to pass that message on to them. We thank everyone, particularly those of you who remained here late, and we wish you all safe travel back home. Thank you, secretariat, and thank you, Hansard.

Senator Scullion: Hear, hear! Thank you very much.

CHAIR: The committee stands adjourned.

Committee adjourned at 10:54