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Economics Legislation Committee
Australian Research Council

Australian Research Council

CHAIR: I welcome Professor Sheil from the Australian Research Council. I have got indications of questions from Senators Bushby, Mason and Rhiannon, so we will proceed in that order. Senator Bushby, you will kick off.

Professor Sheil : Sorry. With your permission, I would just like to make a very brief opening statement, if that is okay.

CHAIR: Proceed, Professor.

Prof. Sheil : Senators, this will be my last appearance at estimates before I leave to take up a position at the University of Melbourne, and I would just like to acknowledge a few people who have been particularly helpful to me during my four and a half years at the ARC. In particular, I have had the privilege of serving three ministers—Ministers Bishop, Carr and Evans—and all of those ministers and their staff have been tremendously helpful and supportive. I have also had the privilege of working with three portfolio secretaries—Ms Lisa Paul, Mr Mark Paterson and Dr Don Russell—and they and the officers of their respective departments have been tremendously helpful, and we have managed to work in close collaboration with those officers and to the benefit of both the portfolio and the ARC. I am grateful to many other colleagues, who I will not name, but in particular, I would just like to single out Dr Jim Peacock, who was the Chief Scientist at the time I was appointed; the current Chief Scientist, Professor Chubb; and Professor Warrick Anderson, CEO of the NHMRC; who have provided a great deal of personal support to me and helpful advice over the years.

It is a privilege to lead the ARC. It provides a unique opportunity to engage with and facilitate the work of a hugely talented pool of researchers across Australia who deliver great benefit to the Australian community. It is also a privilege because the ARC itself is an organisation filled with very clever, dedicated and hardworking staff who work very hard for that research community. Finally, I would like to thank you, Senator, and your predecessor, Senator Hurley, for the courtesy and respect that you have shown me and your colleagues have shown me during my appearances at estimates. Thank you.

CHAIR: Thank you very much for those kind remarks, Professor. I am sure I am speaking on behalf of the committee. We all wish you very well in future endeavours and for your future career movement, and we thank you for your assistance and kind remarks. We will now go to Senator Bushby.

Senator BUSHBY: Thank you, chair, and thank you, Professor, for the work you have done and best wishes for your future career. I just want to follow up some questions that I have asked previously about the ARC Centre of Excellence for the History of Emotions, which focuses on emotions in Europe from years 1100 to 1800. An answer to the question asked at last estimates said that research at the centre takes place between four programs. Can you detail the budget allocation for each, or how much has been spent on each, since the program started?

Prof. Sheil : I indicated at the last estimates that we would be able to do that when we received the first of the annual reports of that centre, which is due to be received on 31 March of this year, and we will be able to provide that information at that time.

Senator BUSHBY: I will ask about that in the next estimates then. One particular project, which we have also discussed before, and that is Hearts and Stones, apparently asks the difficult questions about how stone can make us think and feel. I understand that the professor overseeing the project described that as 'intense' and said the participants were 'exhausted by the emotionality of the topic of how stone can act as a conduit of emotion'. How much has that particular project cost so far?

Prof. Sheil : Again, we do not have that information until we receive the annual report of the—

Senator BUSHBY: So no idea whatsoever of how much has been put into that?

Prof. Sheil : No, we would not normally receive that information until we get the annual report.

Senator BUSHBY: Okay. So the centre has entire decision-making control over how much goes to the projects that it funds?

Prof. Sheil : The process is that we award funding to the centre based on an indicative budget, and then they report back to us each year on the progress in relation to that budget.

Senator BUSHBY: And the funding agreement does not allow you to have any say whatsoever as to the projects they fund?

Prof. Sheil : We would only act if we had information received in the annual report that we had a concern about.

Senator MASON: I will be brief because I know we are under time pressure. Professor, in early December, the then minister, Senator Carr, announced the Industrial Transformation Research program to support 'quality R&D partnerships that will help transform Australian industries so that they can prosper in a richer, fairer and greener Australia.' The program will, among other things, focus on research areas that are vital for Australia's future economic prosperity, such as engineering, materials science and nanotechnology, communications, chemical engineering and biotechnology—no mention there of law, I might add; presumably not necessary for Australia's wealth—and also support industrial PhD students and foster important partnerships between business—

Senator Chris Evans: I am happy to defend that decision, if you like.

Senator MASON: and foster important partnerships between business and universities. My question really is: how do these industrial transformation research hubs differ from the cooperative research centres, and how are they similar? When I read about this, I thought, 'How are they different from what is existing?'

Prof. Sheil : The basis of this program is that we have taken essentially half of the existing ARC Linkage Projects scheme and reprioritised it into this new program. The rationale is to try and provide larger-scale projects with more targeted investment than the current linkage scheme. There are a number of key differences from the CRC program. One is we envisage these to be smaller partnerships with lower transaction costs—so fewer partners, one or two universities, one or two key industries or an industry sector coordinated in some way by an industry body. The funds will continue to be awarded to the universities, as we do with almost all of our funding, and we anticipate that we will be able to assess these and make decisions on them four times a year. So there is an opportunity to do this quickly in response to industry needs and priorities.

Senator MASON: Are they in effect more nimble?

Prof. Sheil : More nimble and smaller scale—$1 million to $2 million a year, maybe $3 million at the greatest end, with one and a half million from industry.

Senator MASON: Is it your sense that the CRCs were perhaps insufficiently nimble and insufficiently flexible? Was that the concern? Are you, with this new project, taking lessons learnt from the CRC experience?

Prof. Sheil : To some extent, yes. As you would be aware, I sit on the CRC committee, but it is mostly actually lessons learnt from our own ARC Linkage Program, where we have had a small number of these large linkage grants in the past and seen very real benefit from those.

Senator MASON: I look forward to seeing how it goes. Chair, can I just flag this. I know Senator Rhiannon has questions, so I will not detain the committee, but I do have questions about the innovation dividend on research excellence index that I know Professor Sheil knows all about, the 2011 Higher Education Research Data Collection, an online publication that we have touched on before, and regulation and compliance costs. I just flag them. I just flag them for the benefit of the department. If we get to them later on, that is great; if not, I understand the competition for time.

Prof. Sheil : Yes. And the higher education research data collection is managed by the department, so it would be appropriate to ask officers of the department.

Senator RHIANNON: Thank you, Professor Sheil, and all the best for your next move. As there are a number of universities receiving corporate funding and sponsorship for research, what sort of independence and quality control on the research is exercised on public universities that are engaged with privately funded research?

Prof. Sheil : I can speak about the controls and the provisions in funding agreements in relation to where there is co-sponsorship with ARC grants. I cannot, in my current capacity, speak about the controls exercised within individual universities. We have provisions within both our funding rules and our funding agreements in relation to ARC funding involving industry in relation to issues such as moral rights of publication, intellectual property, and management of conflict of interest. We monitor that and we occasionally, from time to time, receive reports from individuals or others asking us to investigate various aspects in relation to those agreements.

In addition, all the universities that receive ARC and NHMRC funding are required to comply with the code of responsible conduct for research, and within that code there are provisions in relation to moral rights, intellectual property, management of students and so on. We, from time to time, receive reports from universities in relation to people who have not complied with that code. We have mechanisms in place to receive those reports and refer them back to the university and ultimately, if people remain unsatisfied with the processes followed by the university, we have the Australian Research Integrity Committee, which can consider complaints of that nature.

Senator RHIANNON: You said that you are periodically asked to investigate. Do you investigate those complaints yourselves, or are they then moved over to the university?

Prof. Sheil : No, we refer them back to the university and ask them for the outcomes of their investigation, and as I said, if people remain unsatisfied they can then refer it to either ourselves or the NHMRC for consideration by the Australian Research Integrity Committee.

Senator RHIANNON: . So when those investigations are undertaken, is that information collated? Is it on the website where there have been complaints so people can track it through?

Prof. Sheil : Quite a lot of that information would be received or managed in confidence, so we do have a register within the agency and a process for handling complaints of research misconduct. ARIC has only been in operation for a year. It has only considered one matter, and it has got one further matter under consideration. When we have sufficient numbers of matters considered by ARIC we will consider how we can make that information public in a way that does not identify individuals.

Senator RHIANNON: Would it be fair to say that you would consider a public database listing any conflict of interest or material benefit publicly-funded universities are involved in it?

Prof. Sheil : No, because we would not be in a position to maintain that information, receive that information, or monitor it.

Senator RHIANNON: So how do you think it could be made available publicly?

Prof. Sheil : Everything that we do is public, so all the grants that we award in collaboration with industry partners are public.

Senator RHIANNON: I mean where problems arise, so people can actually track what is going on. That is what I am just trying to understand. Is it more that you are saying you do not have the resources to be able to present this data, or you do not think it is necessary?

Prof. Sheil : It depends on the data, but there are a whole range of legal complexities around issues of misconduct, complaints, conflict of interest and so on. In general, our funding agreements and our processes rely on the universities managing these processes and informing us when there is an issue, and, as I said, we have got these additional processes with ARIC and so on. We would not be in a position to collate that information or publicise that information, or, indeed, even if we were in a position to do so, we would have to take very careful legal advice if that was the case.

Senator RHIANNON: How much funding has been allocated to climate change programs linked to an agricultural perspective?

Prof. Sheil : I could not provide that information. We would have to provide that information on notice, and we would need some definition about what you mean by 'an agricultural perspective'.

Senator RHIANNON: So there is nothing to share? Even just asking in the more general sense, has there been any priority within ARC in terms of funding research linked with climate change in general?

Prof. Sheil : No. Generally most ARC schemes operate on a bottom-up system, whereby we rely on the researchers to propose good research, and we have that reviewed, and the amount allocated to each project depends on the quality of the individual proposals. We report on the national research priorities. We have had a centre of excellence in climate change science, funded in 2010. We can report back on the number of projects that involve funding for climate change science—and I can give you that in total, I just cannot provide a breakdown from an agricultural perspective.

Senator RHIANNON: And within that would it be then possible to give a comparison of the research funding to the mining sector and to the renewable energy sector?

Prof. Sheil : Generally, most of our grants are categorised in relation to fields of research, not necessarily industry sectors. So we could do some of that, but it would depend on the specific—there would be caveats around how we would extract that data and provide that data.

Senator RHIANNON: Thank you. I will put them on notice. Thank you, Mr Chair.

CHAIR: Thank you, Senator Rhiannon. Senator Cameron, do you have one question?

Senator CAMERON: Professor Sheil, thanks for the work that you have done, and certainly I also look forward to your new role and hope that it goes well for you. But you have had some tough times before the senate estimates over the period, certainly in the time I have been here, and not from me. But we have just had Professor Chubb—

Senator Chris Evans: Senator, compared with university politics, this is dead easy.

Senator CAMERON: We have just had Professor Chubb on, and I asked Professor Chubb about the growing anti-scientific position that has been developed I think in parliament, to some extent, and in the general community. It seems to me, again, that it continues here with some of the questions I have heard this morning which are anti-intellectual. Do you have a view that—can you tell us how that has affected the work of the ARC and whether you do feel there is a bit of antiscience and anti-intellectualism creeping around both parliament and in the community?

Prof. Sheil : I think that is almost an impossible question for me to answer, Senator.

Senator CAMERON: You are a professor; try your best.

Prof. Sheil : Certainly the ARC relies on peer review for the vast majority of its decisions. So everything that we do relies on a process that also underpins scientific publication. It is the same process: sent to experts, we receive advice, and our work relies on that. Anything that impinges on the integrity of peer reviews indirectly impinges on the work of the agency. That is why myself and others in my position around the world continue to promote the integrity of peer review. I was at a meeting in India late last year with the heads of the Asian research agencies where, at the initiative of the National Science Foundation, the heads of global research agencies are attempting to develop and publish standards and protocols for peer review. So to the extent that the sorts of issues that you are referring to impinge on the integrity of peer review, that does affect the ARC.

Senator CAMERON: Thanks. You could have gone out with a bang—that was your opportunity!

CHAIR: Professor Sheil, thank you again for your assistance. Again, the committee wishes you well in your future endeavours. Thank you to and your officers for being of assistance this morning.


CHAIR: That now leads us to outcome 1 of the Department of Innovation, Industry, Science, Research and Tertiary Education, so I would ask the relevant officers to come forward. I understand, Senator Evans, you are leaving us and we are going to be joined by Senator Carr.

Senator Chris Evans: I think so, Senator, but I think the secretary has got an opening statement which will go to the machinery government changes. So if there were going to be questions on those, I thought I would stay for those.

CHAIR: In that case, we will open it up and we will wait for Senator Carr to arrive in due course. I think you have a statement, Dr Russell.

Dr Russell : Yes. Last time I appeared before the committee as Secretary of the Department of Innovation, Industry, Science and Research. Since that time, the roles and responsibilities of my department have been expanded to incorporate the tertiary, skills and international functions from the Department of Education, Employment and Workplace Relations. The new Department of Industry, Innovation, Science, Research and Tertiary Education reflects a wider remit which I believe will strengthen our strategic objective of working to accelerate productivity growth and secure Australia's prosperity in a competitive global economy. Australia is going through a period of intense structural change, and this strengthening of the department is particularly important. The addition of tertiary education, skills development and the international promotion of Australia's education and training sectors under outcome 3 recognises the benefits of strong linkages with the science and research base under outcome 2, and dovetails neatly into outcome 1, which aims to support the sustainable development and growth of Australian industry.

The new department will more effectively bring together business, research bodies, the tertiary education sector, other elements of government and the broader community. The focus will be on productivity and on ensuring that the benefits of technology and social and environment innovation can be maximised to build new businesses and strengthen existing ones. Work has been going on since the initial announcement of machinery of government changes on 14 December last year to incorporate the new functions, which includes approximately 1,000 additional staff and associated programs. There has, of course, been some disruption. However, the organisation is rising to the challenge. We are focused on working to ensure that the disruption to staff and our key stakeholders is minimised. There has been an active program of engagement with staff to ensure that they are kept informed of changes in arrangements. Actions are underway to relocate staff and ensure that appropriate systems and resources are in place to support programs.

The Portfolio Additional Estimates Statements 2011-12, tabled by the minister, and which we are discussing today, reflect the cohesion that the department has achieved since the MOG changes were announced in addressing its resourcing challenges. Any costs associated with the new arrangements will be managed within existing departmental resources. As ever, much time has been devoted to preparation, and we look forward to being of assistance to the deliberations of the committee.

CHAIR: Thank you very much for those opening remarks, Dr Russell. Senator Evans, do you have anything to add at this stage?

Senator Chris Evans: No.

Senator MASON: Dr Russell, you mentioned that the department will strengthen the strategic capacity of Australia to address issues facing its economy, and I thank you for that rationale. Can I just add that tertiary education is my principal remit, and I know there is no malign intent here on behalf of the minister or anyone else, but it just makes the parliamentary oversight of higher education very difficult when we have moved from a four-hour coverage in estimates down to, what, an hour and a half. I just flag that, if that is all right. I will do my best, but, Dr Russell, it is quite difficult.

Senator Chris Evans: Senator, can I make the point that I understand there has been some concern about that. Obviously, in the next round, it is a larger round of estimates. I am happy to have another look at it, but clearly, when we transfer a new department we have got to put it in one committee or another. People have been arguing for us to split the department but I do not think that is appropriate. I do accept there is a lot in the economics portfolio now, but I am happy to have a discussion with you about what would be a more suitable arrangement.

Senator MASON: We could spend all Friday doing it, minister. I just raise it because we have got about two-thirds less time than we had before and I am not saying there is any malign intent at all, but I just want to flag that for the Chairman.

Senator Chris Evans: I am happy to discuss it, Senator, but we have got what we have got, so if we do not discuss this we can move on. I am happy to have a chat to you later.

Senator MASON: Okay. Dr Russell, do you have an updated detailed organisational chart for the new structure? Is that available yet, sir?

Dr Russell : I do. I thought that was available to members of the committee.

Senator MASON: How many departmental or agency staff have been directly affected by the move from the education department?

Dr Russell : There are about 1,000 in total who are moving as a result of the MOG changes.

Senator Chris Evans: That is skills as well, Senator.

Dr Russell : Yes, and also the corporate support that would go pro-rataed with such a large transfer.

Senator MASON: How many, Dr Russell, have moved so far? Has everyone come across of the 1,000 staff?

Dr Russell : They have. We are functioning as a new group. There are still issues to be discussed with DEEWR as to accommodation, and what have you, but they are certainly functioning, yes.

Senator Chris Evans: And the vast majority of staff were happy to come across, which I am really pleased to say. The team is basically intact.

Senator MASON: Yes, because in a sense you are taking concise parts of DEEWR across.

Senator Chris Evans: Yes.

Dr Russell : I should technically say that they have not been formally transferred as yet. That remains to be done, but it will happen.

CHAIR: Without wanting to go into too many details, because I understand there are current negotiations with staff and the CPSU and so forth, but what is the position in relation to the reported differences between the two departments' workplace agreements—because I understand every department has different workplace agreements—and the potentially impact on the entitlements of staff? Is it correct that some staff will face pay cuts as a result of the transfer?

Dr Russell : No, they will not face pay cuts. There are obvious complexities involved in incorporating a group of people from another department who have a different and, in many cases, a higher level of remuneration, where their conditions are different. We had to face that issue when we incorporated the staff. What happens in these MOG changes is that the staff move off the enterprise agreement from the originating department and then move onto the enterprise agreement of the new department, and that has happened. There are safeguards to make sure that individual staff are not worse off. What I was put in the position of having to do was to think through how this would be effected, and essentially I had three options. The first option was to safeguard their existing wages and remuneration—

Senator MASON: And conditions, Dr Russell.

Dr Russell : No. You see, the conditions are attached to the enterprise agreement. So I really had three choices. The first choice would be a very strict interpretation of the arrangements—that the staff would move across onto our conditions. Their salaries would be frozen until the salaries within the existing department caught up. That would have been a strict interpretation. The second option would be that they moved across onto our conditions, but that we then allowed the transferring staff to be entitled to the three per cent wage increases which are embodied in our agreement. And the third option was to sit down and have an extended period of discussion and negotiation with the transferring staff as to some combination of that—whether some of the conditions were kept and whether the three per cent may have been modified. I was also very conscious of the fact that we are going to have to go through this exercise when the existing enterprise agreement expires. Over time we are going to have to bring everyone together. It seemed better to at least start from a uniformity of conditions. I think it will be quite a complex negotiation with the union when we sit down and work out how we are going to accommodate the various wages within the department, but we will do that. In the meantime I thought that it was better to arrive at a simple and clear arrangement for the transferring staff. That arrangement was that we would not freeze their salary, that we would actually pay the three per cent—that was done—but that to make things clearer and simpler they would transfer on to our conditions. And that is where things stand at the moment.

Senator MASON: Is there any objection to that? Is there any discussion about it—are people concerned about the conditions? You might be a harder bargainer than Ms Paul, I do not know.

Dr Russell : She drives a pretty hard bargain. We are still discussing arrangements with Lisa, but that is all going fine.

Senator MASON: It is under discussion.

Dr Russell : That is under discussion. But it was something that I had to do in terms of the overall arrangements for all the staff, because I am responsible for everybody, as well for keeping within the department's budgetary arrangements.

Senator MASON: I understand that.

Dr Russell : I think the arrangement we have struck has been well appreciated by most, because I think there was some concern that the salaries may well have just been frozen until the rest of the department caught up.

Senator MASON: So that isn't an issue.

Dr Russell : I am sure there are those who take different views, but I think on balance it has been accepted.

Senator MASON: I might follow up in the budget estimates. What specific programs or functions that were formerly under outcome 3 in DEEWR have not been transferred to the new department and will be retained by DEEWR. Are there any of those? I can't follow it, Minister, that is all. Dr Russell might—

Dr Russell : I am turning to my expert and if she can't follow it then I am—

Senator MASON: Then we are in trouble.

Dr Russell : Then I think—

Senator Chris Evans: Either that or when Mr Griew is here later on perhaps.

Dr Russell : No, I think we have an answer. We are very familiar with what was transferred. What wasn't—

Ms Weston : My recollection is that there was one element in three—and I will clarify that for the committee today—that did not come across and it related to one of the Indigenous programs. We will clarify that today for you and make sure you have the answer.

Senator Chris Evans: Perhaps when the tertiary group come on we will answer that at the start of that, if we can.

Senator MASON: That might make it easier.

Senator Chris Evans: So it may put it in context for you.

Ms Weston : It may so.


CHAIR: We are now going to go to outcome one and the myriad matters that are listed there in the various programs. Just as an indicator what I think we might do, because this is fairly important to the government and it is a matter of some public comment, is to let Senator Ryan go reasonably exhaustively through auto. Then I know Senator Cameron has some interest there. When Senator Ryan has concluded on auto I will flick it over to Senator Cameron who has foreshadowed some questions on auto as well. Then we will go to Senator Colbeck who is going to work through a range of other issues in the program. But I just make the point this is a huge department and we have limited time.

I welcome Senator Carr to the table. Senator Carr, do you have any opening remarks you wish to make?

Senator Carr: No.

Senator RYAN: The first question is on AusIndustry. I assume AusIndustry do have records of the departmental administered expenses for individual programs and I was wondering if it could advise, either now or on notice, what has been spent on departmental expenses since the start of 2008, financial year 2008, for—and I will just name a couple of programs here, because I appreciate it would be an exhaustive list otherwise—the Green Building Fund and the TCF Strategic Capability Program. Do you need to take that on notice?

Mr Lawson : Yes, I think so. It was a bit unclear as to whether you were talking about departmental or administered funds.

Senator RYAN: Yes, departmental expenses I meant to say.

Ms Butler : Departmental funding from the 2007 financial year to 2011-12 for programs delivered by AusIndustry was, for the Clean Business Australia Green Building Fund in 2007-08, zero; 2008-09, zero; 2009-10, zero; 2010-11; $66,000; and 2011-12, $153,000. The total to 2011-12 was $219,000. For the TCF Strategic Capability Program, which commenced in 2009-10, expenditure for 2009-10 was $310,000; for 2010-11, $307,000; and for 2011-12, $380,000. That is a total of $997,000 to 2011-12.

Senator RYAN: With respect to advertising agencies that AusIndustry uses, do you normally run tenders for individual programs that need advertising components or is there a set agency that you tender groups of them with—a multiplicity of programs in a given year?

Ms Butler : AusIndustry as a division of the department is subject to the Financial Management Accountability Act and therefore we will place all our advertising in the Australian Government Central Advertising System, or CAS. The Department of Finance and Deregulation administers the CAS and that consolidates all the government advertising expenditure. We deal with the two master media agencies. We deal with Universal McCann for campaign advertising and we deal with adCore for the non-campaign advertising.

Senator RYAN: Presumably, if there were changes to programs, those arrangements would allow you to withdraw, insert or change ads at relatively short notice.

Ms Butler : While there is some flexibility with material deadline for advertising placements, we do have the capacity to accommodate changing priorities and AusIndustry has taken advantage of this in the past. AusIndustry, since 2007-2008, has delivered around 50 programs and that obviously gives us some flexibility to be able to swap advertising through the range of programs or for particular branding purposes.

Senator RYAN: And do you have the numbers there for how much AusIndustry spent on advertising in 2010-11 and what the budgeted amount is for 2011-12?

Ms Butler : Yes, I do. AusIndustry's advertising spend for 2010-11 was $287,139, which included all advertising for program, branding and recruitment placements through the CAS agencies.

Senator RYAN: And do you have a budgeted amount for 2011-12?

Ms Butler : The budgeted amount for 11-12 is $809,000, which includes the same thing, advertising for program and recruitment placements through the CAS agencies.

Senator RYAN: The first number you read out was $287,000?

Ms Butler : Yes, it was.

Senator RYAN: Is there a quick explanation for the $530,000-odd jump?

Ms Butler : Yes, there is. We are implementing a number of new programs this financial year. One of them is the R&D tax incentive and there has been some program implementation advertising associated with that. The other will be the clean technology programs.

Senator RYAN: I might come back to you on that with some questions on notice. I now turn to cars, Senator Carr and Dr Russell. Aside from the incoming ministerial brief that Minister Combet would have received following the reshuffle in December, how many written briefings has Mr Combet requested about the car industry?

Mr Durrant : I will have to take that on notice. I don't have that information with me.

Senator RYAN: Could you also supply the dates of those requests?

Mr Durrant : Will do.

Senator RYAN: I understand all of the applications for grants under the Green Car Innovation Fund would have been assessed by now. Is that correct?

Mr Durrant : That is correct.

Senator RYAN: Could you please tell me the date that the last of the applications was assessed?

Mr Durrant : I will defer to my AusIndustry colleagues.

Ms Kennedy : The final application was for a stream B grant, which, in addition to the assessment by Innovation Australia's Green Car Innovation Committee and Innovation Australia itself, was also required to be assessed by cabinet under the arrangements for the program. I don't believe I have the date of the actual cabinet meeting.

Ms Butler : We can have a look for the date and will try to get back to you before the end of the session.

Senator RYAN: That would be much appreciated. Is it possible to also get a simple list of dates of applications and when assessments were made going back through the program?

Ms Kennedy : For those that were approved?

Senator RYAN: Yes, for those that were approved.

Ms Kennedy : We can provide that.

Ms Butler : We will see if we can do that again during the session.

Senator RYAN: Do you have handy how many applications were made in total for assistance through the Green Car Innovation Fund?

Ms Butler : We have 50 programs so we will just have to go through the contents a little bit.

Senator RYAN: I appreciate that.

Ms Kennedy : Following the formal opening of the program, there were 33 applications received, of which four were withdrawn prior to consideration. There were 29 applications considered and 18 approved. However, one application did not take up the offer, so we have a total of 17 projects supported under the program.

Senator RYAN: What was the total amount of all the grants paid out through the Green Car Innovation Fund, or how much is budgeted to be paid out?

Ms Kennedy : The total amount awarded, recognising that payments are made on a progressive arrangement, is $415,350,654.

Senator RYAN: I appreciate your preciseness on that, Ms Kennedy. How much of that has been expended so far?

Ms Kennedy : As at 31 December, $219.36 million has been paid.

Senator RYAN: After the last of the Green Car Innovation Fund applications were assessed, what was done with any balance of funds that remained in the fund and had not yet been reallocated or designated as savings through other government decisions? Was there a balance of the fund after the commitments were made?

Ms Kennedy : There was a small component, because at the time the announcement was made to close the program we were required to take on board all applications that were on hand at the time. Following the assessment of those applications, there was one application that did not receive funding, that was not successful, and it was to the value of $1.5 million. That amount remained within the fund. Within the program guidelines there is provision for recipients under the fund to seek a variation to their contract for additional funds. This reflects the fact that the program supports research and developments through to precommercialisation and that, on occasion, there is a need for additional funding to be made available.

Senator RYAN: So was that the one application you mentioned earlier that didn't take up the offer?

Ms Kennedy : No, that is a different one.

Senator RYAN: So that is the balance of the uncommitted funds within the Green Car Innovation Fund, that 1.5 million?

Ms Kennedy : For which the department has been allocated, yes.

Senator RYAN: Was there another balance of funds that was not allocated to the department after all the commitments or is that the only pot of leftover money after all the assessments were made and after the government announced savings measures in January last year?

Ms Kennedy : Yes.

Senator RYAN: That was the only money left?

Ms Kennedy : That is the only money left in the administered funding.

Senator RYAN: I am sorry if I am not expressing myself correctly. After the government closed the fund or closed the applications and you made the assessments—which we will get the dates of later—and after this $1.5 million had been left in there, was there other money left over in the balance of the fund which has been reallocated elsewhere back into the budget in some other way?

Ms Kennedy : No.

Senator RYAN: I noted earlier that you mentioned that one decision went to cabinet. Was it standard procedure for Green Car Innovation Fund grants to be approved by cabinet or was it generally a ministerial decision in consultation with, say, the Minister for Finance and Prime Minister?

Ms Kennedy : The requirement was for all applications that were recommended by Innovation Australia for funding over $10 million to be referred to cabinet. For grant amounts below that, depending on the level of funding sought—

Senator RYAN: Sure, you went through the other FMA processes at that point.

Ms Kennedy : So the Green Car Innovation Committee either had the delegation from the Board of Innovation Australia to make recommendations to me as the program delegate to approve funding or, for applications over a certain amount, they referred them to the Innovation Australia Board, in addition to the committee, for their consideration.

Senator RYAN: How many applications were made for grants under $10 million of that number you mentioned earlier? I am not after a breakdown under that, more just trying to get the threshold.

Ms Kennedy : Around 11.

Senator RYAN: In terms of departmental and other operating expenses for the Green Car Innovation Fund, am I correct in asserting that $23 million was spent on departmental and other operating expenses for the Green Car Innovation Fund? If not, what would be the number?

Ms Kennedy : That is not correct.

Senator RYAN: Please then take me through the correction?

Ms Kennedy : The total budget for the departmental expenses associated with the Green Car Innovation Fund from its inception through to 2015-16, which takes account of the ability to finalise the program following the ending of grants, is $20,774,000.

Senator RYAN: So I was close—out by a couple of million dollars. Is it possible, and I understand you might have to take this on notice, for a breakdown of that just under $21 million—how that was spent? What was it spent on? You can take me through it now if it is easier.

Ms Butler : I can start by giving you an indication to date what was spent in each year if that helps to break it down.

Senator RYAN: That would be helpful, yes.

Ms Butler : The figures I have are that in 2008-09, we spent $1.590 million; in 2009-10, $3.471 million; in 2010-11, $3.745 million; and in 2011-12, $3.741 million. To date that totals $12,547,000. And in terms of expenditure items, it would be spent on activities such as ASL. Quite a significant amount of AusIndustry's funds are spent on staff. It would also be spent on the costs associated with committees and boards. There is an element in there of a corporate overhead, which would be our contribution to property operating expenses and IT systems and those sorts of things. I am not sure, but there could have even been a small element to deal with the policy around this as well. So those are the sorts of things we spend it on.

Ms Kennedy : The $20.774 million relates to the departmental overheads. Then, in addition to that, there was that $1.7 million available for operating expenses which also included the marketing at the outset of the program and other activities—legal.

Senator RYAN: So I was relatively close. I may place on notice some questions seeking information about breakdowns of those expenses. Do you have that information?

Ms Butler : We can take that on notice. I am pretty sure we would have that information. It would be in our cost centres and we would have to have a look at making those available.

Senator RYAN: You mentioned some of the larger areas before. I am not looking down to an accounting of every cent, but, potentially, at the overwhelming 70 or 80 per cent: the major cost centres that incorporate those departmental overheads and expenses would be appreciated—broken down, if possible.

Ms Butler : The major would be in ASL.

Senator RYAN: Sure.

Ms Butler : It would be.

Senator RYAN: That would be appreciated. Senator Carr, have you received a formal briefing from Treasury about the economic impact, broadly construed, of the funding for car industry programs?

Senator Carr: From Treasury?

Senator RYAN: Yes—have you received any briefing?

Senator Carr: Why would I receive one from Treasury?

Senator RYAN: I am just asking if you have.

Senator Carr: No.

Senator RYAN: Okay. Last year in May, Mr Durrant mentioned that a top-level evaluation of the Green Car Innovation Fund would be undertaken by the department. Has that commenced?

Mr Durrant : No, it has not.

Senator RYAN: When do you plan to commence it? Last year in May my reading of the transcript indicated that it would at least have commenced by now and, potentially, even finished.

Mr Durrant : Given our priorities and given that the program has actually closed, we have not progressed that as yet.

Senator RYAN: Will you be progressing it?

Mr Durrant : Under normal circumstances, as part of the normal departmental review of programs, we will do so.

Senator RYAN: Do you have a timeline?

Mr Durrant : No, I do not, sorry.

Senator RYAN: Minister, do you have a timeline for when that evaluation might commence?

Senator Carr: No. The matter will be discussed with the secretary.

Senator RYAN: Mr Secretary, do you have a proposed timeline for this evaluation?

Dr Russell : I think we just have to incorporate that within the overall workload and demands upon the department. As you can imagine at the moment, given the pressures in manufacturing, the department has to devote the resources to those areas which are of greatest immediate concern. But, as Mr Durrant said, it is a closed program and it is important that there be some evaluation of it. I think we will have to—

Senator RYAN: You rightly point out the pressures on manufacturing. I was wondering what prioritisation you or the minister might place on this, given that, presumably, evaluation of past programs is very important in designing new programs. I appreciate the workload on the department, but surely evaluation of significant programs would be a high priority in dealing with the challenges you mention.

Senator Carr: Yes. What I can say to you is the automotive program is subject to the normal processes of review, and, given the amount of attention it has been getting in recent times, I think it is subject to a very substantial public review. I am very confident the green car fund initiative was very successful. So we are not in any way concerned about any delay. The question is: what priority do you give in circumstances where the industry is facing acute pressure at this time? And so the resources and my time have been focused on the future, rather than what we have done necessarily with that particular program.

Senator RYAN: Minister, I was just asking how much focus has been put on learning the lessons of the past.

Senator Carr: The lesson is that it has been a highly successful program—highly successful in attracting new investment, and highly successful in transforming the industry, which is part of the new car plan. The program, of course, is adaptable, and we are in the process of now dealing with a whole set of new issues that have come forward and that is our focus.

Senator RYAN: There was a commitment to a top-level evaluation. I am not particularly necessarily interested in your rhetoric on that. I was more interested in whether—

Senator Carr: It is not rhetoric, Senator. It is a statement of fact that the program has been highly successful.

Senator RYAN: Minister Carr, in a Financial Review article of 12 January, you were reported as saying that the bulk of any soon-to-be-announced assistance to Holden would come from the Automotive Transformation Scheme.

Senator Carr: Yes.

Senator RYAN: And it was also reported that you said to the journalist that the recently announced $34 million grant to Ford at that time and any imminent grant to Holden will be budget neutral and has already been appropriated.

Senator Carr: Yes.

Senator RYAN: Those are accurate comments?

Senator Carr: Yes.

Senator RYAN: I wanted to seek confirmation, firstly, that they were accurate and that you stand by that—

Senator Carr: Yes.

Senator RYAN: that the money has already been appropriated both for the Ford—

Senator Carr: Yes.

Senator RYAN: Was all of the money paid to Ford from the ATS?

Senator Carr: I will let the officers describe the process. It will be the quickest way, I am sure.

Mr Durrant : No money has yet been paid to Ford.

Senator RYAN: The money that will be paid to Ford will come from the ATS?

Mr Durrant : That is correct.

Senator RYAN: All of it?

Mr Durrant : Correct.

Senator RYAN: Is it—and excuse me if this is on the public record; I have not seen it—is it going to be a staggered payment, or is it a lump sum payment? Are there already agreed timings around payments?

Mr Durrant : Senator, the actual contractor negotiations are nearing conclusion, so it will be a staggered payment.

Senator RYAN: It will be. Are the details of those payments likely to be made public, Minister? I am not talking about commercial-in-confidence details.

Senator Carr: The contracts are not, as a rule.

Senator RYAN: No, I appreciate the contract is not.

Senator Carr: But it is the normal process of the provision of support, in regard to the milestones which are determined in the contract, and so there will be a normal process, and I would not necessarily—

Senator RYAN: Sorry, Minister, I thought you were going to say something. I understand the contract will not be made public, but milestones and payment dates—are they made public?

Mr Durrant : What is public is in the PAES; $34 million has been allocated, I think—I refer to page 21 of the PAES.

Senator RYAN: Sorry, can you speak up. I missed that. Sometimes the acoustics in these rooms are not ideal.

Mr Durrant : Yes, excuse me. On page 21 of the PAES document you will notice that an allocation has been made to Ford of $34 million.

Senator RYAN: That will give me, presumably, in future years, details of in which financial years payments are made?

Mr Durrant : Yes, the payment will be made in the financial year 2011-12.

Senator RYAN: I appreciate if you have not yet finalised this—is it likely to be a single payment or staggered?

Mr Durrant : What is under negotiation at the moment is a staggered payment.

Senator RYAN: When do you anticipate that those contract negotiations will conclude?

Mr Durrant : Very, very soon.

Senator RYAN: Days, weeks?

Mr Durrant : Weeks.

Senator RYAN: In the announcement of this, there was a reference to a figure of 300 jobs being supported by this payment. Where did that figure of 300 come from?

Senator Carr: The Ford motor company itself made that comment.

Senator RYAN: So it is only the company's word?

Senator Carr: No. You have asked where to find it, and you will find it in Ford's statement. That is subject to the process and terms of the development of the particular project.

Senator RYAN: I have got a transcript of a press conference here, where I think it is the Prime Minister that also says there will be an additional 300 jobs as a result.

Senator Carr: Yes.

Senator RYAN: What role does the department have in advising or checking up on the claim of the company that there were going to be 300 jobs created? Was modelling undertaken?

Mr Durrant : No.

Senator RYAN: Was there work with Treasury?

Mr Durrant : No. But part of their application process included information such as jobs.

Senator RYAN: It was simply Ford's number?

Senator Carr: It is the number that Ford has been using.

Senator RYAN: It is a number that the Prime Minister uses too.

Senator Carr: Yes, I am saying to you that I think you will find that, if you actually check what Ford's statements have been, they are confirming the figures.

Senator RYAN: I am just trying to check up: what checking up did the department do? Is this likely to be a condition of payment, or is it simply an assertion that has gone out in statements?

Mr Durrant : You would appreciate, I think, that the department reviewed and analysed the application put in by Ford, and we came to a view through that process about the number of jobs.

Senator RYAN: So you assessed the application by Ford who asserted 300 jobs would be supported, and you stand by that number.

Mr Durrant : That is correct.

Senator RYAN: As to the grant to Ford, was that a ministerial or a cabinet decision?

Mr Durrant : I think it was a cabinet decision.

Senator RYAN: A cabinet decision. Minister, have you sought advice from the department regarding any quantum of assistance that should be given to Holden in what has been described as an imminent grant?

Senator Carr: There is a process, as I think I have indicated publicly on numerous occasions. There is an application currently before the government which is being assessed in the normal way.

Senator RYAN: Have you requested written advice from the department about that?

Senator Carr: There has been a substantial set of advice provided by the department.

Senator RYAN: I am just asking: have you requested—

Senator Carr: No, I do not need to request advice when the department provides the advice on a regular basis.

Senator RYAN: How regularly is that advice is provided?

Senator Carr: I am not going to go to every piece of advice, but there is substantive engagement with the department throughout this whole process which goes back to October.

Senator RYAN: Sure. I understand that, in answer No. B146, which is from budget estimates in 2010-11, there is an indication that just over $57,000 was spent on advertising the Green Car Innovation Fund from 1 February to 31 May 2011. I am happy to be corrected if that is not a correct assertion, but that is the way I read the answer to the question on notice from then Senator Barnett. Why was money spent on advertising the Green Car Innovation Fund after the Prime Minister had announced that the fund was, effectively, being closed to new applications?

Ms Kennedy : Senator, can I—I am sorry, I missed the earlier part of that—

Senator RYAN: Sure. I will give you the question. The question was BI46 for budget estimates in May last year, and the answer to the question at the bottom of the second page outlined that there had been $57,043.74 spent on advertising the Green Car Innovation Fund from 1 February 2011 to 31 May 2011. And, as I said at the start, if I have read it incorrectly, I am happy to be corrected.

Ms Kennedy : I will have to get back to you.

Ms Butler : Sorry, we are just trying to find the BI.

Senator RYAN: No, that is reasonable.

Ms Butler : We will get back to you before the end of the session. I have just noticed this answer. We will have to have a look at that. It might have been a closure announcement that we had to advise companies about, so, because we do advertising related to program implementation, we may have done some advertising relating to actually letting people know that the program had closed for further applications. So I will check that for you.

Senator RYAN: You would do that by advertising?

Ms Butler : We would do some of that by advertising. Yes, we would, and other—

Senator RYAN: $60,000 of it by advertising?

Ms Butler : As I said, I will get that checked for you, Senator Ryan.

Senator RYAN: I would appreciate an explanation as to how that amount of money was spent advertising a program after its closure, because I would assume that, with your deep involvement with this sector, the department might be able to communicate with potential applicants in different ways, other than through advertising.

Ms Butler : I will take it on notice and get back to you.

Senator RYAN: Can you take that on notice and also get me copies of some of the advertisements that that money was spent with?

Ms Butler : We will get straight on to it and, if we can do it in this session, we will bring you those.

Senator RYAN: I appreciate that very much. Can I be told how much has been spent, in full, or committed and expended—and I appreciate the difference—on the ATS to date, including the capped and the uncapped amounts, in the capped and uncapped elements of the program?

Mr Sexton : In the 2010-11 year, under the capped amount the amount is $148.935 million, and under the uncapped $49.462 million.

Senator RYAN: That is for the financial year of 2010-11.

Mr Sexton : 2010-11.

Senator RYAN: I know you might have to take this on notice. Would it be possible to take on notice the full amount spent out of the whole program up until the end of 2010-11? You have numbers for previous years?

Mr Sexton : That is the first year of the program.

Senator RYAN: Sorry, I am getting my years wrong.

Mr Sexton : For 2011-12 to date, or up to the end of January, I should say, under the capped it is 153.535.

Senator RYAN: Yes.

Mr Sexton : Sorry, I retract that: 147.531.

Senator RYAN: Yes.

Mr Sexton : And, under the uncapped, 50.787.

Senator RYAN: Do you have budgeted amounts out to the future years for the capped and uncapped elements of the program?

Mr Sexton : The budget for this year is 412.048.

Senator RYAN: Yes.

Mr Sexton : There is a budget for next year, which is 2012-13—

Senator RYAN: Is it possible to break that down into capped and uncapped? I am happy for you to take this on notice.

Mr Sexton : It might be easier to take it on notice.

Senator RYAN: Thank you, Mr Sexton.

Mr Sexton : There are a lot of figures.

Senator RYAN: Is there an easy explanation to the calculation method for the uncapped payments?

Mr Durrant : Yes. I will attempt to do that. The uncapped is a little bit easier than the capped. The calculation for an uncapped payment is A x B x C.

Senator RYAN: Yes.

Mr Durrant : So A is the maximum claimable value of allowed production, B is the assistance multiplier and C is the assistance rate. Currently, the assistance multiplier is 8.5. And the assistance rate is 15. The assistance multiplier reduces regularly to 2017 when that multiplier is one.

Senator RYAN: I appreciate that, Mr Durrant. Is funding for the Automotive Industry Innovation Council drawn from the ATS, or is it separate?

Mr Durrant : It is separate.

Senator RYAN: How many businesses in total have registered for assistance under the ATS, and how many have actually received assistance?

Mr Durrant : I will defer to my colleague who administered the program.

Mr Lawson : As to that previous question you asked about the budget estimates for the capped and uncapped Automotive Transformation Scheme, if your staff look at page 44 of the PAES, that is where that is reported.

Senator RYAN: And that just goes out to the budget forecast?

Mr Lawson : The forward estimates, yes.

Senator RYAN: Do you have any numbers beyond the forecast years?

Mr Lawson : We want to take that on notice as to whether we release them—

Senator RYAN: Sure.

Mr Lawson : Because they are less reliable—

Senator RYAN: I appreciate they are less reliable. But I appreciate there probably would not be a commercial in-confidence element to them. I would appreciate it if you would take that on notice. So, sorry, the previous question was: how many businesses have registered for assistance under the ATS?

Mr Sexton : Senator, there are currently participating in the ATS program 163 businesses.

Senator RYAN: Is that the number who are receiving assistance?

Mr Sexton : Yes.

Senator RYAN: Is there any difference between the numbers who are registered but not receiving any assistance?

Mr Sexton : No. If you are registered for the program, you are receiving assistance.

Senator RYAN: What is the total amount that has gone to motor vehicle producers out of the money that has been expended so far? I understand the way the program works is that there will be motor vehicle producers, effectively the big three, as well as components and others.

Mr Sexton : Senator, I will have to take that on notice. There are two pools of funding within the program.

Senator RYAN: Sure.

Mr Sexton : The car companies or the motor vehicle producers in the supply chain both participate in one, and in another it is just the motor vehicle producers who are participating.

Senator RYAN: I appreciate that. As part of the conditions for registering and applying for assistance, companies are asked to provide you with business plans, I understand.

Mr Sexton : That is correct.

Senator RYAN: Are there any mandatory requirements with respect to what is included in those business plans? And, by that, I am referring to: are there requirements for numbers around employment, R&D spend, productivity, sales, production, export or any other elements? What are they required to give?

Mr Sexton : It is all of those.

Senator RYAN: What are they are required to—

Mr Sexton : They are required to identify their planned expenditures in those areas going forward.

Senator RYAN: So is there a simple—either on your website or in another way publicly available, departmental, what must be included in the business plan as a mandatory requirement for applying for assistance? Is there a set of boxes you have to tick before it does not quality as a business plan?

Mr Sexton : It is not a hard and fast rule. There are certain data that we need to be provided with, but there are also some qualitative data which vary in terms of their robustness, depending on the size of the firm and so on.

Senator RYAN: Is it possible to get a list of what the mandatory requirements are—the ones that are common regardless?

Mr Sexton : I will take that on notice.

Senator RYAN: I understand smaller components manufacturers have a different capacity from General Motors to provide that. Are they required at any stage to provide you with a copy of enterprise agreements?

Mr Durrant : Excuse me, Senator; I was just—

Senator RYAN: As part of those requirements, are they required to provide you with a copy of their enterprise agreements?

Mr Durrant : I do not believe so.

Senator RYAN: That is not the requirement. Minister, given Mr Yasuda's comments this month about workplace culture and the car industry in Australia, have you actually directly discussed that issue with him since?

Senator Carr: Yes.

Senator RYAN: When? Has it been a once-off, or has it been on multiple occasions?

Senator Carr: I have had a number of conversations with Toyota. I talk to each of the companies on a regular basis and they are not necessarily specifically geared to a particular newspaper article. But on this particular occasion, Mr Yasuda actually rang me. I do not wish to go to the detail of those conversations, but I can just indicate to the committee, Senator Bishop, these are regular, routine, standard operating procedures.

Senator RYAN: Do you agree with his assertions?

Senator Carr: No.

Senator RYAN: Pretty simple answer. I probably did not expect much else, Senator Carr.

Senator Carr: What do you want me to do?

Senator RYAN: I was complimenting you on brevity.

Senator Carr: I think what we can say is that it is very unusual for Toyota to do an interview such as that. And the extent to which Mr Yasuda's comments have been accurately reflected in that article, I think is a matter of some discussion.

Senator CAMERON: It would have been Murdoch press that reported it.

Senator Carr: No, this was another outlet. What I can say is: I have facilitated conversations between the union and the company directly to deal with these particular questions. The assertion that the Fair Work Act is not sufficiently flexible to deal with these questions, I believe to be incorrect. I am not altogether certain that that was the intent of the remarks, although I understand that that was the way in which the newspapers sought to present them.

Senator RYAN: I will briefly turn back to a previous answer just regarding some of the numbers I was provided with. As to the budget for the Green Car Innovation Fund this year, did I record it correctly? I wrote down $412 million.

Ms Kennedy : For this year?

Senator RYAN: For 2011-12. I am trying to get down my handwriting.

Dr Russell : $412 million, Senator? That was the ATS figure.

Senator RYAN: Thank you. How much has been spent in total on the Automotive Industry Structural Adjustment Program thus far? Is it possible to get a breakdown for each financial year?

Mr Durrant : I think I can help you with that. I certainly have in front of me the totals.

Senator RYAN: Yes.

Mr Durrant : The program fund allocated is $47.64 million.

Senator RYAN: How much of that remains unspent or unexpended and, indeed, if it is different, uncommitted?

Mr Durrant : Programs funds remaining today are $12.07 million.

Senator RYAN: That is unspent or uncommitted?

Mr Durrant : That is uncommitted at this stage.

Senator RYAN: Is there a significantly different number for the funds that are unspent?

Mr Durrant : In this case, the funds unspent and uncommitted are the same.

Senator RYAN: How are payments through AISAP calculated?

Mr Durrant : There is an application process where a company indicates the amount of dollars it requires for assistance in order to undertake a structural adjustment. An assessment is made of that and advice is provided to the minister.

Senator RYAN: And those decisions are made by the minister?

Mr Durrant : Yes, that is right.

CHAIR: Senator Ryan, we will interrupt here and go to lunch.

Proceedings suspended from 12:45 to 13:49

CHAIR: The committee will come to order. We will continue on budget estimates for the Department of Industry, Innovation, Science, Research and Tertiary Education. We will resume discussion of auto. Dr Russell.

Dr Russell : We have some figures from earlier. If it were helpful we could provide that now.

CHAIR: Yes. Ms Butler.

Ms Butler : On the Green Car Innovation Fund, you asked about the departmental expenditure and what it was utilised for. I will remind you that I indicated that it was $1.6 million in 2008-09, $3.5 million in 2009-10, $3.7 million in 2010-11, and $3.9 million in 2011-12. Eighty-two percent of these amounts is used for our ASL costs, so that is for our staff, and about 18 per cent of that funding goes towards overheads, including corporate overheads, IT, property, operating expenses and so on. In addition, there are administered operating expenses as follows. In 2008-09, $788,000; in 2009-10, $317,000; in 2010-11, $204,000; and in 2011-12, $100,000. These are broken up into: in 2008-09, information sessions and consultants at $277,000; for that year only, marketing costs in 2008-09, $200,000; 2009-10, $100,000; 2010-11, $5,000; and 2011-12 it is nil. I need to report that BI46 is, in fact, incorrect and the comments made by my colleague Ms Kennedy at the February estimates that it was $5,000 spent on marketing in the Green Car Innovation Fund is in fact correct. We will have to review that particular response. Finally, we had money for boards and committees of $171,000 in 2008-09; $217,000 in 2009-10; $200,000 in 2010-11; and $100,000 in 2011-12. In the year 2008-09 we had $140,000 for legal.

Senator RYAN: Thank you for that information. With Question BI46, was $5,000 the correct number?

Ms Butler : Correct. That figure was wrong. That will have to be corrected.

Senator RYAN: I would obviously appreciate some sort of explanation, because it is not a minor error. It is a factor of 11—$57,000 as opposed to $5,000. I would not want anyone embarrassed by using a number that was subsequently corrected, if it were a number relied on from a question and answer to budget estimates.

Ms Butler : My understanding is that figure was a budgeted figure which was transposed to a spend figure.

Senator RYAN: So, that money was reallocated within the department?

Ms Butler : Yes.

Senator RYAN: It was reallocated pursuant—

Ms Butler : Yes.

Mr Sexton : Before we go on, Senator Ryan was asking earlier about the Automotive Transformation Scheme business plan application form. I have a copy now that I am quite happy to table, which will answer all the questions that you were seeking.

Senator RYAN: That is very helpful. Thank you.

CHAIR: Is there any other commentary from the table? No. Senator Ryan.

Senator RYAN: I would like to ask a couple of questions following up from earlier and to revisit the Green Car Innovation Fund numbers. I just want to confirm that no further savings from that fund have been announced or detailed in any budget papers by the government since the Prime Minister’s announcement of 27 January last year when the program was closed. I want to make sure I have not missed anything.

Ms Butler : That is correct.

Senator RYAN: With respect to payments under the ATS, I understand that they are made retrospectively, after a quarter’s performance, so to speak.

Mr Sexton : That is correct. Registrants lodge a quarterly return in relation to expenditure incurred in the previous quarter.

Senator RYAN: Have there been any occasions when money was paid under that scheme in advance that you are aware of?

Mr Sexton : No.

Senator RYAN: With respect to the budget estimates in May and question BI92, I would like confirmation that the answer is correct, that the minister has no role in payments under the ATS. It is basically an entitlement program based on applying and fulfilling the commitments of the program.

Senator Carr: That is right.

Senator RYAN: Again, if my notes are correct, the payment to Ford was made out of ATS funds?

Senator Carr: That is right.

Senator RYAN: Why was the payment to a program that the minister has no role in, which is an entitlement based program based on performance, made with cabinet approval by yourself or why is the payment going to be made outside the normal auspices of the ATS?

Mr Durrant : There have been a number of parameter changes that have occurred and which have affected the automotive industry and the green car plan. Examples of those parameter changes are the global financial crisis—

Senator RYAN: So by ‘parameter change’, you do not mean government policy parameter changes?

Mr Durrant : No.

Senator RYAN: You mean environmental change, so to speak?

Mr Durrant : That is correct. The value of the high Australian dollar is another one, and things like consumers moving to smaller cars and SUVs. This has resulted in less production of Australian-made cars and as a consequence of that new information provided by the industry about the production levels has meant that there will be monies that will not be taken up in the ATS uncapped element.

Senator RYAN: Do you have a number on the element of ATS uncapped payments that are not going to be taken up?

Mr Lawson : If you look to page 33 of the forward estimates, that is described as a change in the estimates variation.

Senator RYAN: Minister, I appreciate no contract has been signed and no conditions have been agreed upon yet, so is this a policy change from the government that ATS funds in the uncapped element are now able to be used outside the ATS scheme or is this a one-off?

Senator Carr: No. What the officers have just explained is that there are parameter changes to the program and that there is money available. The Prime Minister and I, in February of last year, stated that there would be no further reductions in the program.

Senator RYAN: Can you speak up a bit.

Senator Carr: Did you hear what I said?

Senator RYAN: I missed the last phrase.

Senator Carr: As a result of the parameter changes there is money available in the ATS which the government has made available to the industry for particular program initiatives. That is how we funded the Ford program.

Senator RYAN: When was the decision made to change the arrangements within the ATS to use that uncapped element for other initiatives?

Senator Carr: I would have to check the precise date, but it was in November of last year. It was a cabinet decision in November.

Senator RYAN: Was an announcement made about those particular changes in policy?

Senator Carr: We will check the precise date.

Senator RYAN: So, this means that the manufacturers can access funds in the ATS that they do not qualify for under the ATS through this other procedure that you have outlined?

Mr Durrant : I need to say that the payment of uncapped assistance is determined by legislative formula and that formula has not been changed.

Senator RYAN: No, I appreciate that. I was referring to the minister’s comments that, due to the parameter changes, as you both described them, there would be an element of the uncapped process that was not taken up. I would like to clarify that the element of the uncapped ATS program that has not been taken up is now the element that you are making available through this other procedure that you highlighted with Ford and Holden, but it is also money that they do not qualify for under the ATS with the existing formula? I need an answer for the transcript, rather than a head nod.

Mr Lawson : Yes, that is correct.

Senator RYAN: You have taken on notice when the decision was made by cabinet. Was there an announcement of the decision that I have missed? Was there a press release about it? Was there a statement about it or a note in one of the chambers?

Senator Carr: I made a statement to FAPM at that time outlining there were a number or sources of money for initiatives. Other than that, there has been no specific statement as to the cabinet decision.

Senator RYAN: We went through some ATS numbers earlier. I would like to clarify that the capped amount budgeted to 31 January was $147.531 million?

Mr Sexton : That is correct.

Senator RYAN: The uncapped element to 31 January was $50.787 million?

Mr Sexton : That is correct.

Senator RYAN: What was the budgeted element number for the entire year?

Mr Sexton : That was the number of $412 million.

Senator RYAN: There is basically just over $210 million that has not been spent. Do you anticipate that being expended before the end of the year and, if not, given what Senator Carr said earlier about all the uncapped element not being taken up, how much do you anticipate not spending out of that budgeted amount this year?

Mr Sexton : It is a timing issue.

Senator RYAN: I appreciate that.

Mr Sexton : These numbers really refer to the first quarter of the financial year. The second quarter is about to be paid, so that will bring up the numbers considerably.

Senator RYAN: When is the fourth quarter due to be paid?

Mr Sexton : The scheme operates on a calendar year basis and we report on a financial year basis.

Senator RYAN: You are quite right.

Mr Sexton : The first quarter is actually the March quarter, but in this case we are talking about the September quarter. The September quarter has been paid and that would have been paid in December. The December quarter will be paid in early March.

Senator RYAN: When will the March quarter be paid?

Mr Sexton : In May/June, and then we will have an accrual. Remember that these figures are accruals.

Senator RYAN: Minister, I understand that it has been brought to your attention by at least one Australian textile company that has invested in environmentally friendly and advanced technologies for the domestic car industry that manufacturers have shown no interest in acquiring this technology ahead of cheaper products produced overseas and imported. I will turn to local content very soon. Have you taken any specific action regarding that issue?

Senator Carr: You would have to be a little bit more specific. I would need to know the name and—

Senator RYAN: Have you taken up the issue of local content with respect to textile companies in the automotive industry having trouble getting their product into Australian manufacturers?

Senator Carr: We have had conversations with the companies about the issue in general but, I am sorry, you will need to be specific as to a company.

Senator RYAN: In the interests of time, I will move on. With respect to what we discussed and grants out of the uncapped, unused element of the ATS, do you have criteria for when companies come to you to request specific funds out of that pot of money? Do you have specific criteria by which you are judging applications?

Senator Carr: A range of criteria are being used for the assessment of applications for government support—

Senator RYAN: Extra government support, I think. This is extra government support, because the government support through the ATS has already got program guidelines, applications and approvals.

Senator Carr: Sure.

Senator RYAN: This is extra government support.

Senator Carr: This is for the use of this particular money and it is on application. Those matters are currently before government.

Senator RYAN: Do you have set criteria by which you are judging all applications?

Senator Carr: There are criteria and they are the normal range of criteria that we operate in this program.

Senator RYAN: We have criteria for the ATS, but this is spending money that the ATS is not spending. It is money that has already been applied for and committed, so this is like a second program in some ways. Do you have criteria by which you are going to judge applications from Toyota, Ford and Holden? Will Holden be judged by the same criteria as Ford?

Senator Carr: They are specific initiatives, and the government will make decisions based on the specific application.

Senator RYAN: But there are no set criteria by which you are measuring all three applications?

Senator Carr: For this particular program, no, there is not a published set of criteria. But the normal set of criteria that would operate in the assessment of programs of this type will be considered by the government, and this will be a decision of cabinet.

Senator RYAN: Just to clarify, there are no published criteria? You are being very general rather than specific about criteria. If it is your decision or the cabinet’s decision, feel free to say so. But what I am asking is: within government, is there a specific set of criteria by which the department and you are judging this?

Senator Carr: There will be. No decision has actually been made.

Senator RYAN: But a decision has been made with respect to Ford.

Senator Carr: Yes, but there were criteria in that regard.

Senator RYAN: Are they the same criteria that are being used—

Senator Carr: I thought you were talking about the other companies.

Senator RYAN: Are the same criteria going to be used for Holden if they apply and Toyota if they apply as were used for Ford?

Senator Carr: They are very similar to all the applications, but each of the applications will be assessed on its individual merits.

Senator RYAN: But they are not similar to the applications under the ATS, because this is money that is not being taken up under the ATS. I have just got the form here; thank you for providing it. That is a public program. There is not the same level of public disclosure you have just described, Minister, about this second program using unspent money from the uncapped funds. I am after whether or not there are specific criteria by which all applicants will be equally judged.

Senator Carr: I think it is widespread public knowledge that there is an application before the government at the moment. The criteria on which the government makes that decision will in the normal course of events be made available.

Senator RYAN: Do we have the criteria for the decision on Ford?

Senator Carr: I beg your pardon?

Senator RYAN: We have made one decision. I appreciate the details are in negotiation, but one decision has been made. You and cabinet have made a decision with respect to Ford. There were criteria for that. Can we have the criteria for that decision?

Senator Carr: I will have to take on notice the method by which information can be provided. We just want to have a look at it in terms of negotiations that are currently underway regarding the contract.

Senator RYAN: Can you guarantee that other applicants will be judged by the same criteria as Ford?

Senator Carr: They will be judged very fairly, very rigorously and—

Senator RYAN: We can do that on different criteria.

Senator Carr: with a great deal of public scrutiny.

Senator RYAN: That can be done with different criteria, though.

Senator Carr: They will be done in accordance with each of the projects that are put before the government.

Senator RYAN: Sorry; they will be judged on what?

Senator Carr: Each of the projects that is before the government. The Ford project was a very different project from what is being considered in regard to General Motors. They are very different projects.

Senator RYAN: I appreciate that, but we have a program that is not small and that involves quite significant funds and transparent criteria that every applicant knows they are judged by. You have a pot of money from underuse of that program. You seem to be indicating you can judge each application based on different criteria, and so there is very little confidence that people like the ATS—

Senator Carr: They are very similar. They would all be very similar. As I said, I will take the particulars on notice, but you have us at a disadvantage insofar as these matters are subject to processes that are currently underway.

Senator RYAN: It would strike me as odd that you are making decisions about significant amounts of taxpayer funds—I appreciate that they are underway and I am not asking for the details of your negotiations with General Motors or Ford, or anything like that—and you do not have strict criteria by which you are making those judgments. Normally, when you are looking at significant expenditure of taxpayers’ funds you would set down the program objectives and the criteria by which applications are to be judged and then call for and judge applications.

Senator Carr: There is not much more I can add to what I have said.

Senator RYAN: I appreciate that. Would you take on notice, please, one of the questions I was asking before the lunchbreak about the Automotive Industry Structural Adjustment Program? Can I have the amount of payments that have been made and to whom they have been made, if they are organisations, not individuals, over the course of the program? In relation to the Bracks review, is there a short answer as to why you went to former Premier Bracks rather than the Productivity Commission to lead that review?

Senator Carr: Four years ago?

Senator RYAN: Yes.

Senator Carr: We made it very clear that we wanted an independent review.

Senator RYAN: Is there a reason you went down the path of a former Labor Premier rather than—

Senator Carr: I have just said that. I have given you an answer.

Senator RYAN: You do not think the Productivity Commission is independent?

Senator Carr: That is what we said. It was an election commitment.

Senator RYAN: The election commitment was to the review, not to—

Senator Carr: No, it was an independent review.

Senator RYAN: Do you not think the Productivity Commission is independent?

Senator Carr: An independent review. Furthermore, you will find that in the old legislation an amendment moved by me was to require the previous government to have a review as well.

Senator RYAN: An independent review. Are you alleging that the Productivity Commission is not capable of independent reviews?

Senator Carr: I have indicated to you the answer.

Senator CAMERON: The reports are biased.

Senator RYAN: Biased in favour of economic growth and jobs; you are quite right.

Senator CAMERON: In fairness to people like you, economic rationalists have not got a clue.

Senator RYAN: It worked out terribly over the last 20 years.

CHAIR: Senator Cameron, questions go to the minister, not to each other.

Senator Carr: I recommend you reread the Hansard from four years ago on this whole issue.

Senator RYAN: You are not alleging that the Productivity Commission is not capable of an independent review, are you?

Senator CAMERON: Yes, I am.

Senator RYAN: I know you are, Senator Cameron. We will hear from you shortly.

Senator Carr: I have nothing further to add.

Senator RYAN: The Hansard will speak for itself.

Senator CAMERON: Let us open up with the Productivity Commission. I am probably in a unique position in this room; I have actually worked in the vehicle industry. I have actually worked at GMH and I have actually worked in the car component sector. As a migrant, it was very important to me to get a job, a highly skilled job and a job that brought in some decent income to my family when I first moved here from Scotland. How important has the car industry been over the years in terms of not only its economic contribution to the country but also its social contribution?

Senator Carr: I will let the officers answer that first. I could talk the leg off a chair on this topic, so perhaps we will truncate it a bit and ask Mr Durrant to speak to it.

Mr Durrant : I will just make some comments, which will include a number of statistics that might go to answering your question. The automotive industry has been described as the industry of industries. Why that is, in the Australian context, is that it is an integral part of the manufacturing industry, which is an integral part of the Australian economy. For example, the automotive industry pays the wages of 46,500 Australians directly and the wages of at least 200,000 Australians in related manufacturing and services industries.

The automotive industry is a major user of locally manufactured items, too, with around $1.3 billion per annum in sales. Similarly, the chemicals and plastic industry consumes $444 million in polymer products and $157 million in chemicals. It also utilises $1.6 billion of professional, scientific and technical services. The industry contributes $4.5 billion to gross domestic product, and around five per cent of manufacture is entirely value-added.

In 2009-10 the industry spent $668 million on research and development. That represents about 15 per cent of manufacturers’ entire business expenditure on research and development. Importantly, it employs over 3,000 people in automotive jobs that are in research and development or design and engineering. The industry creates a number of spillovers in machinery and equipment and other manufacturing and transport areas. An example of those spillovers is that Henry Ford introduced the production line. In more recent times, just-in-time automotive processes have been taken up by various manufacturing sectors.

A specific example of those flow-on benefits, or spillover benefits, for the Australian industry is the company Futuris, which has developed carpets made out of PET bottles, recyclable bottles. This innovative product is now very cost competitive, it is better than traditional nylon, and it is being used by several global automotive OEMs. Significantly, the product has the potential to be used in commercial and residential carpets.

Senator CAMERON: Let us come back to the Productivity Commission and their little bean counters. They have said the Australian car industry is one of the most highly subsidised industries in the world. I have seen other statistics that say that is just rubbish, and I am not surprised given that it is the Productivity Commission arguing that point. What is the real-life situation?

Mr Durrant : There have been a number of assessments of the value of assistance. In its annual report a couple of years ago, the Productivity Commission had a graph that placed Australia as the second highest with assistance. Unfortunately this graph, which was done by the Grattan Institute and reproduced by the PC, had some flaws.

Senator CAMERON: There is a surprise!

Mr Durrant : In the period 2008 to 2010, it took the whole $6.2 billion worth of the new car plan and actually allocated it across those two years as opposed to allocating it across the 13 years that the car plan goes for. As a consequence of that—

Senator CAMERON: Did they actually put in all of the support over a long period in a two-year period?

Mr Durrant : That is correct. It was not the Productivity Commission' it was the Grattan Institute. The Productivity Commission utilised this graph.

Senator CAMERON: But the Productivity Commission was suckered and did not pick that up; is that correct?

Mr Durrant : I cannot comment on that. But I can say that the OECD has since published a corrigendum, because it also utilised that graph where it just pointed out those anomalies.

Senator Carr: Mr Bolt has done a similar thing today in the Herald Sun. He has asserted that each of the jobs in the industry was supported by $160,000. If you actually applied that formula across the number of workers in the industry, the government would have to be spending about $7 billion a year. So we have a set of bodgie figures—which were completely wrong—repeated ad nauseam, producing the claim by the Grattan Institute and other institutions, and being sent to the OECD.

Senator CAMERON: I am not really fussed what Andrew Bolt says. At least he does not say he is an economist. He does not pretend to be an economist. The Productivity Commission do. They should have picked this up. I may have some questions for them later on this issue. But, given—

Senator Carr: But in essence the program went for 12 years from the time of its introduction, and then an assertion was made that the program was only going for two years, or the equivalent was based on a two-year period, which gives you a highly distorted figure. The research that I am pointing to indicates that we are spending per person about $17.80 in Australia, which compares with $27.99 in the United Kingdom, $90.37 in Germany, $96.39 in Canada, $147.38 in France, $264.82 in the United States and $344.18 in Sweden. In Australia we are spending less than the price of a footy ticket compared with what is happening in other countries, which are spending many times more. The support that the industry actually receives from the public purse in Australia is substantially less than in other countries. That is not the impression you would gain from some of these reports.

CHAIR: How do you explain that differential? You say we spend $17.80 or thereabouts and the figure you quoted earlier from Mr Bolt was $160,000.

Senator Carr: It is based on the false premise that a 12-year program was expended over two years, and the number of people employed in the industry is considerably lower than the number of people actually employed in the industry.

Senator CAMERON: Garbage in, garbage out, I suppose.

Senator Carr: If you actually look at the multiplier effect, if you actually look at the number of people employed directly and indirectly, you get an entirely different figure. Remember that the program goes to support people not just directly employed in the three major companies but also employed in the other 163 companies. You can see that the distribution is actually much broader.

Senator CAMERON: Why are governments all over the world putting taxpayers’ funds into the automotive industry?

Senator Carr: There are 13 countries in the world that can do what we do. We are in pretty good company. The evidence that has come to me is that governments around the world regard the automotive industry as absolutely strategically vital to manufacturing. In the United States, something in the order of 25 per cent of the growth in jobs is coming through the automotive industry in manufacturing. It is seen to be an absolutely critical part of so many other parts of manufacturing. In these and other governments, people regard it as critical to the economic prosperity of their nation. That is why governments invest. The experience in countries where the automotive industry has been lost has been that they never get the capabilities back again.

Senator CAMERON: What are those capabilities that are lost?

Senator Carr: There are losses in terms of skilled labour, in terms of the research and development and in terms of the spillover effects in other industries, which Mr Durrant has referred to today. There are also knock-on effects through a range of industries. There are losses of the types of capability that you actually need to sustain industry output in, for instance, aerospace. There is a direct correlation between the work that is done, the training ground that is provided and the ecosystem in the automotive industry, which is of great importance in other parts of manufacturing.

Senator CAMERON: Lots of skills that are learnt in the automotive industry are then spread around the rest of the country—for instance, the mining industry. Workers move from—

Senator Carr: Clearly there is an interrelationship between all sections of the economy. Of course skills that are used in automotive industry are transferrable to so many other sections of the economy, and in my judgment they are critical to sustaining our efforts in so many other sections of the economy.

Senator CAMERON: There have been some arguments that the high dollar is just an excuse to continue pouring funds into the industry and that productivity is the real problem. What is your comment on that?

Senator Carr: The fact remains that, in terms of the long-term averages, the increase in the value of the Australian dollar is about 40 per cent. The long-term average is about 72c, if I remember rightly.

Mr Lawson : It is 74c.

Senator Carr: I would like to know how many businesses can sustain that level of cost increases. The particular difficulty with the dollar is that it is not just rising very quickly; it is also quite volatile. Since the new car plan was introduced it has risen by over 60 per cent. A 60 per cent increase in the dollar changes the business plan quite substantially. In those circumstances the productivity requirements to meet those costs are very dramatic. They cannot be done in and of themselves. I would like to see any business that can take 60 per cent of the cost structure out of the business in such a short time. That highlights the difficulty that the industry is facing. It is not just a question of productivity. This is an industry that has been highly productive. Look at the number of people employed in the industry over the last 10 years and look at the general production levels, which are down at the moment; nonetheless, over that period the output per worker has improved dramatically.

CHAIR: On that argument, in the United States, from memory, in the not too distant past, Ford, General Motors and Chrysler all went into receivership. They had to—

Senator Carr: No, Ford did not.

CHAIR: A number of them went into receivership. They received significant loans from the United States government, which they repaid over time, and they were provided with reduced capital to help them restructure. Part of the restructuring involved industry restructuring, costs being changed through the removal of retirement benefits and medical benefits paid to retired workers, and changes to the United States equivalents of workplace agreements. Does our government have a view on the necessity of that sort of radical cost structure shifting in the domestic industry in this country?

Senator Carr: The Australian government—and I would say this also for conservative governments—has taken the view that we do not purchase shares in automotive companies. General Motors Holden were essentially taken over by the American government, and I understand they still own a significant proportion of the shares. That has not been the approach that the Australian government has pursued. Equally, though, it should be pointed out that there were very substantial structural changes that were initiated through the new car plan for Australian automotive companies, which saw very significant changes in employment arrangements without the government having to buy shares in the particular companies. That was done on a cooperative basis. All of the companies are now profitable here in Australia. While they are facing acute stress at the moment, I think we have been able to manage the changes through the economic crisis that saw the survival of the industry in this country with far less disruption than you saw in the United States.

Senator CAMERON: Now that you have raised the issue of the global financial crisis, one of the arguments is—and you hear this from conservatives continually—that, because the industry is well unionised, because there are collective agreements there, because they would really like Work Choices in the industry, they focus, as Senator Ryan has today, on industrial relations. But industrial relations has been very stable in the car industry, has it not?

Senator Carr: The record of industrial disputation in the automotive industry speaks for itself. There was a significant dispute at Toyota last year, and that was the first time in 20 years that there has been a breakdown in the relationship.

Senator CAMERON: One dispute in 20 years?

Senator Carr: You, of course, would be more familiar with this than I am.

Senator CAMERON: I think there have been some disputes but they have not been of any significance.

Senator Carr: That is right.

Senator CAMERON: I think I might have been involved in some of them.

Senator Carr: That is right. The point is that industrial relations in the automotive industry has been good. The changes that occurred in the industry came about as a direct result of those relationships. The partnerships that were developed between the AMWU and General Motors saw a very significant reduction in the number of people employed in the company, during a period when the company was faced internationally with bankruptcy. Workers in Australia took on the hard decisions through their union. We have seen improvements in employment in recent times as well. We have seen that the companies have invested heavily in Australia when otherwise that was not occurring internationally as a result of their capacity to reach those agreements. In my assessment, the industrial relations arrangements in this country—the ability to build those partnerships and the fact that workers have been very much part of those decisions—have been one of the strengths of our capacity to sustain the industry—.

CHAIR: We might bring this to a conclusion.

Senator CAMERON: What about the claim that the carbon price would add $400 to the price of a locally made car?

Mr Durrant : We rely on information provided to us by the Department of Climate Change and Energy Efficiency. The information provided to us is that the impact of a $23 carbon price will be around $40 in terms of the cost of an Australian made car.

Senator CAMERON: Forty dollars per car? Mr Abbott has also indicated that they want to go back to the Howard government’s position on support for the car industry. I am not sure what that means, because it is one of those coalition positions where it depends who is talking about it and what they say, and where we cannot get a real fix on it. What is your understanding of the coalition’s policy position on the car industry, and what are the implications for employment in the car industry?

Senator Carr: I will answer this. I think that sort of question is unfair for the officers to deal with.

Senator CAMERON: I was asking you, anyway.

Senator Carr: The claim that the coalition would take $500 million out of stage 1 of ATS, in fact, puts in doubt the figure—I think it is only the first stage—because the program that I understand has been outlined is the same as the Howard program, which would see no further assistance from the point of the program from 2016. The effect of that is a reduction of $1.5 billion, and I think the industry itself has said that it ‘would be an ill-advised proposal that would severely damage the local vehicle-manufacturing industry’. I cannot see how the industry would survive. That is why I am of the view that hundreds of thousands of jobs would be put at risk if that position was adopted.

Senator CAMERON: The figures I have seen are that back in 2007 exports from the car industry were $4.7 billion, making the car industry one of the top 10 export earners. Since that time the dollar has appreciated—what?—64 per cent, I think.

Senator Carr: Even in today’s conditions, for automotive exports—and my officers will correct me here—I think it is about $3.5 billion. Is that figure right? Yes, sorry, I said $3.5 billion; it is $3.41 billion. I think that gives you a measure of how important the industry is. That is $1.86 billion in motor vehicles and $1.55 billion in automotive componentry. We have had serious disruptions as a result of the tsunami in Japan. We have seen the serious pressure that our export markets are under in the Middle East. In the United States we have seen very significant drop-offs in demand for Australian vehicles. Nonetheless, that they are still able to produce figures of that dimension highlights just how important this industry is for our export program—for our elaborately transformed exports.

Senator CAMERON: There are two free trade agreements that are, I suppose, relevant for the car industry. They are not free trade agreements; they do not provide total free trade. After the Thai agreement was signed, did they increase their excise on certain cars?

Mr Durrant : I understand that they changed the excise arrangements depending on the size of the engines.

Senator CAMERON: So it was a preferential, bilateral trade agreement with them, not a free trade agreement, and that preferential, bilateral trade agreement was about trying to open the Thai industry up to our exports, but this excise has made it more difficult, has it not?

Mr Durrant : That is what the industry has reported to us.

Senator CAMERON: The excise was increased basically targeted at the type of vehicle that we would export to Thailand; is that correct?

Mr Durrant : It seems that way.

Senator CAMERON: So free trade agreements are a problem at times. When we signed the US free trade agreement, we had significant car exports going from Holden to the US; is that correct?

Mr Durrant : Correct.

Senator CAMERON: Was there any analysis done in that US free trade agreement that factored in massive increases in their currency and the exchange rate between the two parties?

Mr Durrant : It was before my time in automotive. I would have to take that on notice.

Senator CAMERON: But the analysis that the US free trade agreement would bring us all these benefits was based on an exchange rate, probably, of about 64 per cent less than it is at the moment?

Mr Durrant : In that range, possibly.

Senator CAMERON: In relation to the component sector, which employs multiples of the number of people in the actual vehicle industry itself, are there any initiatives to try and integrate the component sector into the global buying power of these companies?

Mr Durrant : Yes. Two of the programs under the new car plan go to that initiative. The Automotive Market Access Program is particular to that, where it looks to open doors for the manufacturing in Australia to different countries around the world and integrate them into international supply chains, and the automotive capabilities development program is about making sure that the potential suppliers do have the underlying capabilities to take advantage of those supply chain possibilities.

Senator CAMERON: Do you have any idea what the employment is in the mining industry at the moment? Who can tell me that figure? While you are looking for that, what is the employment in the manufacturing industry at the moment? How many Australians are employed?

Mr Lawson : Approximately 950,000.

Senator CAMERON: Until we get the figure: there is no way the mining industry is anywhere near that, is there?

Mr Lawson : Correct.

Senator Carr: About 20 per cent, I think.

Senator CAMERON: So, if Mr Abbott’s dream of stopping support for the manufacturing industry comes true and there are jobs lost in the manufacturing industry, they could never all get jobs in the mining industry, could they? It is just an economic impossibility. The mining industry would not grow fast enough to soak up all of the employees in the manufacturing industry or even the car industry.

Senator Carr: The approach that we are taking is to do all that we can to sustain advanced manufacturing—high-end manufacturing—to ensure that the very, very large numbers of manufacturing companies are able to be transformed individually so as to move up the value chain and to deal with the extraordinary pressures that they are facing by being more innovative, more competitive and more flexible, to produce goods that are able to add value as much as possible. So the notion of a prosperous manufacturing sector in this country I believe is attainable. We do not have to have one or the other; we can have both. However, this is a view that I put in the parliament. I think the parliament has the responsibility to actually come together around this issue to sustain the million or so people that are employed in manufacturing. But it is not a question of one or the other as far as I am concerned; it is the ability to manage these changes in such a way as to preserve the skills and the capabilities of this country in such a way as to ensure that the living standards of Australian people can be preserved.

Senator CAMERON: But manufacturing provides one of the biggest multiplier effects in terms of downstream employment, doesn't it?

Senator Carr: Do we have a figure on that?

Senator CAMERON: If you do not have it at hand, I am happy for you to come back with that.

Mr Lawson : A range of estimates exist around the world on multipliers, and there are differences about whether you use them when you are talking about changes in employment or average levels. We can check for you just at the moment what the degree of integration between the mining sector and the manufacturing sector is and what direct inputs it has. I am pretty sure you are right that there is a higher direct input from that multiplier concept in manufacturing than there is in mining.

CHAIR: This discussion is interesting but it depends a lot on definitional matters. If mining is just referring to taking a bit of dirt and digging a hole in the ground, then I can cop the argument that employment is minimal, because it is basically capital intensive. Mining extends to suppliers, to logistics, to consultants, to manufacturers, to construction, to support, to ancillary; it is not just—

Senator CAMERON: As does manufacturing.

CHAIR: That is right.

Mr Lawson : Processing.

CHAIR: Because of the scale of the development there are thousands of people now employed in supplier and support industries attached to the mining industry that were not employed 10 or 15 years ago.

Senator CAMERON: I am not arguing that point.

CHAIR: No, but I am putting it. It is not being put by anyone else; I am putting it.

Senator CAMERON: I would not expect anything else from a Western Australian senator.

CHAIR: Excuse me, I am putting a point that the mining industry is an important industry, is critical to this country, should not be denigrated and is a skilful industry that employs tens and tens of thousands of people and needs to be given the same surety as other industries, not characterised as something out of the past or not of consequence. And this government, with due respect, is entitled to put that proposition.

Senator CAMERON: You should not be so sensitive. I know you come from Western Australia, but that is not the point that I am putting.

CHAIR: I am putting a different point here.

Senator CAMERON: That is fine.

CHAIR: Because you have had the floor for half an hour.

Senator CAMERON: You can stop me talking any time you like. The point I am making is that the manufacturing industry is recognised worldwide as having one of the highest multiplier effects of any industry, including the mining industry.

CHAIR: I am putting just a slightly different point, that the mining industry in this country is recognised as a world-class supplier of services in this country and other countries.

Senator CAMERON: I am not arguing that point.

CHAIR: Good, we are in stunned agreement.

Senator CAMERON: I am not arguing about the industry. I may have a view of the people that are running the industry.

CHAIR: That is a different argument.

Senator CAMERON: I have a view about those running the industry; that is another point.

CHAIR: People had a view about Mr Ford in 1936, too.

Senator CAMERON: Yes.

CHAIR: Okay.

Senator CAMERON: Is that it?

CHAIR: Yes, we are done.

Senator RYAN: I have a couple of brief follow-ups after that interesting exchange. Minister, you mentioned something earlier in response to my question about when changes to the ATS and the use of this uncapped, unused funding had been announced. If I wrote my notes down correctly, you said it was in a speech to FAPM.

Senator Carr: No, I said there were a range of sources available for new initiatives that I referred to in the FAPM speech.

Senator RYAN: When did you make an announcement, if any, about these changes to the ATS?

Senator Carr: I have not made a statement on the parameter changes for the ATS. These changes are listed—

Senator RYAN: I appreciate that. I am just wondering—

Senator Carr: I am just indicating to you that the changes are listed on page 33 of the portfolio additional estimates statements.

Senator RYAN: I am not disagreeing that they are in there. I was just asking about a public announcement about changes to the ATS.

Senator Carr: In terms of the criteria—

Senator RYAN: I was not asking about that. I am happy with where we left that discussion, unless you have something to add.

Senator Carr: I am just making it clear that the cabinet will assess any of these applications based on the criteria which are currently before the government, and that is the process by which we will make a—

Senator RYAN: So you have not yet determined the criteria?

Senator Carr: The processes of determining the criteria are part of the decision itself. Criteria were established in regard to the Ford decision. A similar set of arrangements will apply to any other application for assistance.

Senator RYAN: They will not be the same criteria?

Senator Carr: Not precisely, because each of the projects, as I have indicated, is different.

Senator RYAN: My last couple of questions before handing over to Senator Colbeck are on other issues. Have you or the department, at any time, requested or undertaken any research or consulting firm to provide statistics around the number of cars produced in Australia per capita relative to other car-manufacturing countries?

Mr Durrant : No.

Senator RYAN: You have done no research on that.

Mr Lawson : The number of cars produced is publicly available information, and the population of countries is publicly available information, so it is a sort of long division. It is not a—

Senator Carr: You asked me: has the government engaged a consultant to do that work? The answer is no.

Senator RYAN: Have you done it yourselves? That was my next question, sorry: have you undertaken that analysis yourselves?

Senator Carr: That is not the answer I have given you. You asked me: did we employ a consultant? And the answer is no.

Senator RYAN: And I am saying my next question is: have you undertaken that research yourselves in the department?

Senator Carr: It is a range of assessments that have been provided to me within the department about the current state of the automotive industry in Australia.

Mr Durrant : If your question is cars per population of various countries, I do not think we have done that calculation.

Senator RYAN: Would it surprise you to know that, in cars produced per capita, Australia would trail countries like Japan, the USA, Germany, South Korea, Canada, Poland and Romania? Would it surprise you?

Senator Carr: Your point?

Senator RYAN: My point is: is this something that you think the department or you should look at when you look at the relative strength of the car-manufacturing industry? You mentioned earlier that volumes were an issue.

Senator Carr: I cannot follow why I would ask the department to do that.

Senator RYAN: It does not interest you?

Senator Carr: What is the relevance?

Senator RYAN: It tells you about the relative strength of the industry.

Senator Carr: I think we know the relative strength of the industry.

Senator RYAN: I have no further questions on cars.

CHAIR: To continue the program, we are still on outcome 1.

Senator COLBECK: Mr Durrant, you reeled off a very impressive list of statistics around the car industry. You would not happen to have those available there for the medical devices manufacturing sector, would you?

Mr Durrant : No, I certainly do not.

Senator COLBECK: What about the food-processing industry? We will move on. I just wanted to ask some quick questions around aluminium. Is the department aware of modelling performed for the Victorian government by Deloitte in September 2011 that shows aluminium output in Australia will decrease by at least 30 per cent under the carbon tax? What is your assessment of that figure?

Dr Byrne : I cannot say that I am familiar with that report, but certainly the broad observations and the commentary around potential impact of the carbon tax on that industry and others are something we are obviously aware of.

Senator COLBECK: So you have no assessment or understanding of their view that aluminium output in Australia would decrease by at least 30 per cent under a carbon tax?

Dr Byrne : Those assessments in relation to the evidence presented by that research group and other research groups would have been taken account of in the preparation of advice by the Department of Climate Change and Energy Efficiency in preparing the final decisions about the package. Certainly, as I understand it—and others might want to add to this—there was a process by which evidence was reviewed in relation to all of the various industries that the carbon tax would apply to and which fed into final decisions about the government’s expectations about the impact. So I think we would need to actually ask our colleagues in that department about the process by which they factored in that evidence, together with other evidence, in making a decision.

Dr Russell : I just had some extra information about the medical devices industry which might be of interest.

CHAIR: We have moved on from there now, thank you.

Senator COLBECK: I am interested in your approach around the manufacturing sector further, in respect of aluminium. Minister, is it correct that the government was directly warned by Alcoa in October 2011 that two of its Victorian aluminium smelters would be extremely exposed to carbon cost impacts and their economic viability was in doubt because of the carbon tax?

Senator Carr: What I can tell you is that the recent review said this was not about the carbon price and that Alcoa, in fact—if my recollection serves me correctly—indicated at the time of the announcements that they had supported the changes that occurred.

Dr Byrne : That is correct.

Senator COLBECK: But I am asking you a question about whether you were made aware by Alcoa in October last year that its two Victorian aluminium smelters would be extremely exposed to carbon cost impacts and their economic viability was in doubt because of the carbon tax.

Dr Byrne : The department can say that we are not aware of that correspondence or any information on that.

Senator COLBECK: You are not aware of that? So, Minister, you are not aware of those either?

Senator Carr: The department would have brought it to my attention and the department is not aware of that.

Senator COLBECK: So, because the department is not aware, you are not aware?

Senator Carr: I have indicated to you that I am aware of what was said at the time of the passage of the legislation. I have also said to you that I am aware of what has been said in regard to the recently announced review. Now you are saying that there is other correspondence. You are saying that correspondence was made available to me, are you?

Senator COLBECK: No, I am asking you, and I will ask you now: on what dates from October onwards have you met personally with the company management of Alcoa?

Senator Carr: I would have to check what date I met with Alcoa last. I met with people this week from Alcoa. I might have to take on notice whether or not there have been any other meetings with Alcoa.

Senator COLBECK: Can you recall how many meetings you would have had with them in your last two months as minister?

Senator Carr: I would have to check that. I meet with a lot of companies.

Senator COLBECK: I would hope that you do, but I would have thought you would have had some sense of the meetings that you might be having, particularly when dealing—

Senator Carr: I have indicated to you that I will check the dates on which I have met with Alcoa.

Senator COLBECK: But you cannot tell me how many times you would have met with them in the last two months of your being industry minister?

Senator Carr: Not offhand.

Senator COLBECK: So you are not aware—

Senator Carr: Equally, I am not aware of any requests for a meeting in that time—is that right?

Mr Lawson : That is my understanding.

Senator Carr: That is right. I am not aware of any requests to meet with Alcoa.

Senator COLBECK: So you only meet with a company when you are requested to?

Senator Carr: Let us not play games here. If a company—

Senator COLBECK: We are talking about—and you are talking a lot about it—manufacturing and the importance of the manufacturing sector. Here is a major manufacturing company which I thought you would have had some interest in engaging with.

Senator Carr: I would not make that assertion, or the inference there, that I do not have an interest. I was asked whether or not there were any meetings, and whether there was a request for any meetings, from Alcoa in that time period.

Senator COLBECK: I was not; I was actually confirming your interest. Your department was not aware of the modelling that showed aluminium output in the country would decrease by at least 30 per cent. You are not aware of the concern expressed by Alcoa.

Senator Carr: No.

Senator COLBECK: I am only going back to your evidence. You are not aware—

Senator Carr: You asked about correspondence; now you are asking a question about whether the department is aware of modelling. They are separate issues.

Senator COLBECK: That was my first question and I have already got the answer to that.

Senator Carr: It was about correspondence, if my memory serves me correctly.

Senator COLBECK: No. My first question was about modelling, so we do not need to argue about that.

Dr Byrne : It was about a specific piece of modelling work, I think, that I was responding to. On the general issue of modelling: we are obviously aware of the activities in relation to the modelling that went into the outcome.

Senator COLBECK: Thank you. We have been through a number of questions here.

Senator Carr: I think you should be aware that Alcoa has met with the department of climate change and the department of energy, so their interactions with the government would have been through a number of different portfolios. I do not recall any application or request for an appointment. I want to check the records as to whether or not I met them in any other circumstances. We will check that out. Your question went to this correspondence.

Senator COLBECK: You go back and check the record on what my question was, because I am quite clear on it. You want to characterise it as you like, but it seems quite surprising that you are now showing such concern for Alcoa and its employees, when the warnings that were coming out of that business from October last year were quite clear and it does not appear that either you or your department are aware of those specific warnings that have come from the company.

Can I move on to the Steel Transformation Plan, please? Can you confirm that the Steel Transformation Plan delivers assistance to just two companies?

Dr Byrne : I can confirm that, yes.

Senator COLBECK: There are obviously a lot of other businesses out there that are not going to receive any of that. This only goes to OneSteel and BlueScope, so there are a significant number of other firms that are going to be hit by the carbon tax but not receive any of the $300 million?

Dr Byrne : There are specific purposes to which the $300 million will be allocated, as set out in the Steel Transformation Plan Bill 2011. The criteria that have been adopted by government in relation to the $300 million are clearly for the two companies that are eligible. Funding for other companies in the supply chain may be available through other mechanisms, including some of the clean energy technology programs, but the purpose of government is to set aside that funding for that purpose.

Senator COLBECK: Does the department have an estimate of how much the steel industry stands to lose financially under the carbon tax before any compensation, and how many steel businesses will it be felt across?

Mr Lawson : The government’s modelling was produced by Treasury on the impact of the carbon price by sector. That is the publicly available information. That is the information we rely on.

Senator COLBECK: That was not my question. My question is how much the steel industry stands to lose financially each year under the carbon tax before compensation, and how many companies will be affected?

Mr Lawson : There are impacts on the two large-scale steel producers which are covered by that program. There are a whole bunch of industries in the steel fabrication and things like that; they are not the same industry. There are a range of programs being made available to them, and some of those programs people have to apply for and have merit criteria. So calculating for each individual company the opportunities and costs of a carbon price is an impossible question.

Senator COLBECK: So you do not have either of those numbers. Coinciding with the introduction of the carbon tax, what amounts are currently allocated to the Steel Transformation Plan for each of the financial years 2012-13 and 2013-14?

Dr Byrne : The administered items are what you are interested in, so, for the 2011-12 financial year, for which the competitive assistance advances will be made available to the two companies, the funding is $164 million. Did you ask for the next financial year?

Senator COLBECK: Actually, I asked for 2012-13 and 2013-14.

Mr Lawson : On page 21 these things are put out. It is 164 million in the first year, zero in 2012-13, zero in 2013-14, and then $23.5 million in 2014-15. The logic of that is that the $164 million is an advance on the amount of money that they will earn in subsequent years. New money does not come on until they have fully earned that $164 million out of the $300 million, and then it kicks back in.

Senator COLBECK: Have we worked out the number of years over which the program is running yet?

Dr Byrne : We have clarified that previously. The actual self-assessment element of the Steel Transformation Plan commences in 2012-13, but the competitive assistance advances commence this year, in 2011-12, and then the program goes over a period of six financial years.

Mr Lawson : There was a difference between calendar-year and financial-year reporting which created the apparent confusion in some circles.

Senator COLBECK: What is the department's assessment of the financial impact the carbon tax will have on the food and grocery industry before any compensation?

Mr Lawson : Again, the modelling work on the financial impact on each sector has been provided by the Treasury and put on the public record.

Senator COLBECK: Minister, are you aware of the impact the government's proposed changes to the shipping regulations will have on the cement industry? I think we have already done this in another forum.

Senator Carr: Am I aware of shipping regulations?

Senator COLBECK: Are you aware of the impact of the government's proposed changes to shipping regulations and what impact that will have on the cement industry?

Senator Carr: I think this is a matter for the transport committee.

Senator COLBECK: I have already been there and asked my questions there.

Senator Carr: I am very pleased to hear that.

Senator COLBECK: In fact, I think you were there.

Senator Carr: Yes, I know. That does not change the fact that this is—

Mr Schwager : I am afraid I did not catch your question.

Senator COLBECK: Are you aware of the impact on the cement industry of changes to shipping regulations?

Senator Carr: Do you have a question that we could have a look at?

Senator COLBECK: I have read it a number of times. I am hoping that people in the room were listening to what we were talking about.

Mr Lawson : The cement industry has not approached us. They may have spoken to the resources department, but as the manufacturing division, we certainly have not had an approach from them concerning that.

Senator COLBECK: Minister, have you had any representations from the cement industry?

Senator Carr: No.

Senator COLBECK: So you obviously would not have made any representations to Minister Albanese on their behalf, given the concerns that they have about these regulations?

Senator Carr: On questions of transport changes, the answer is no.

Senator COLBECK: I would like to go to Ethical Clothing Australia.

CHAIR: Senator Carr, you indicated that you had to leave to go to another meeting.

Senator Carr: I am required at another committee. I understood that this section of the program would be concluded by three o'clock.

CHAIR: I am advised by the staff that Senator Arbib—

Senator Carr: He has just walked into the room.


Senator Carr: If I can be of assistance.

CHAIR: Senator Colbeck has a couple more minutes on ethical clothing and then we will go to small business.

Senator Carr: If that is all right with Senator Arbib.

Senator Arbib: Yes.

Senator COLBECK: I would like to revisit the discussions we had at the last hearings about Ethical Clothing Australia. I am not sure whether the changes in the departmental arrangements actually modify your capacity to deal with this.

Senator Carr: No, it does not change anything.

Senator COLBECK: So the information that you would have available with skills coming into the—

Senator Carr: We have the relevant officers here.

Senator COLBECK: How much has the department provided in total since November 2007 to the Textile, Clothing and Footwear Union of Australia?

Ms Anton : I thought we answered a similar question to this on notice last time.

Mr Lawson : Just to clarify, the industrial relations area of DEEWR did not come over to this portfolio.

Senator COLBECK: There was about $1 million a year that was going in through that agency.

Mr Lawson : Yes. I have the answers to the questions on notice which confirms those numbers. It talks about $720,000, from memory, over a number of years for support for community organisations, namely the TCFUA, to work on assisting unemployed TCF workers to get access to the special structural adjustment scheme and support for transitional assistance. That has been paid and then we itemised a contract to Ethical Clothing Australia, not to the TCFUA, of around $89,000, if I remember rightly.

Senator COLBECK: They are not part of the answers that I have here. Would you be able to tell me whether or not the amount that unions received from government as a whole has exceeded its revenue from other sources?

Mr Lawson : Certainly not. I would not know.

Senator COLBECK: How would I get access to that information?

Mr Lawson : I do not know. I would suggest that you might be able to ask the industrial relations department. I think they publish information on how many members unions have, but we do not engage.

Senator COLBECK: We need to keep moving. How are the service level agreements for ECA awarded?

Mr Lawson : Do you mean: how does ECA—

Senator COLBECK: It depends on the funding that you are providing to them through this part of the agency. So you do not have a process?

Mr Lawson : Correct.

Senator COLBECK: How many companies have been accredited per year through ECA since its inception? Do you have any figures on that?

Mr Lawson : Again, these are questions that would be best addressed to DEEWR because they are the people that fund Ethical Clothing Australia for these activities.

Senator COLBECK: Let us go back to the questions that we talked about last time.

CHAIR: We are short of time.

Senator COLBECK: I know we are and I appreciate that. We talked last time about other ways that you could assess whether or not a company was meeting wage requirements. Have you found any other ways that you might? I noticed in an answer to a question on notice a reference to SA8000.

Mr Lawson : Yes. We certainly investigated Social Accountability 8000. It does not run off Australian law; it runs off International Labour Organisation conventions which the Australian government has not recognised. It is also somewhat moot, as on the public record from SA8000 there is no Australian operation that is consistent with SA8000. We understand that at least one Australian company uses it for its international operations. That is certainly on the public record. We have not spoken to them, but they do not appear to use it in Australia.

Looking at the SA8000 website there is nobody in Australia that uses it. It is also against ILO conventions and it is not Australian government law. Given that the government's policy intent was that they wanted to see an audited compliance of Australian law for outworkers, the only available thing is Ethical Clothing Australia, as we discussed last time.

Senator COLBECK: What about ISO 26000?

Mr Lawson : My understanding is that does not go to the same—

CHAIR: This will be the final question as Senator Carr has to leave.

Ms Anton : We have not investigated the ISO 26000 element. We were looking for something that was an equivalent, in terms of a labour standard. The SA8000 is espousing similar sentiments to what Australian law does, but we did not directly look at the ISO standard that you quoted.

CHAIR: That concludes discussions on that area. We will now go to the area identified in the agenda allocated to small business. Senator Arbib is going to take the place of Senator Carr.