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Rural and Regional Affairs and Transport Legislation Committee
23/05/2012
Estimates
INFRASTRUCTURE AND TRANSPORT PORTFOLIO
Department of Infrastructure and Transport

Department of Infrastructure and Transport

[20:37]

CHAIR: We will now call Surface Transport Policy. Welcome, Ms Gosling.

Ms Gosling : Thank you.

CHAIR: Questions, Senator Williams?

Senator WILLIAMS: Thanks, Chair, and welcome, folks. I will go back to my favourite subject about how is it all going for the 1 January start next year for the national regulator and the national consistent laws. Is everything coming into place? You had a meeting last November. The ministers have met. Ms O’Connell, could you fill us in? The legislation will go in late this year in Queensland. It will set the standard, I could say?

Ms O'Connell : Just to give you an update across, I am assuming, heavy vehicles, rail and maritime—the three transport reforms—last August, COAG first ministers signed off on the national partnership agreements that underpin those three national transport regulators. The law for the national rail regulator has been introduced and passed in the South Australian parliament, so that is ready to go for 1 January. It will require each jurisdiction to pass an applied law.

Senator WILLIAMS: So South Australia is showing the lead on the rail and the Queensland on the road?

Ms O'Connell : South Australia is the host for the national regulator for rail, so it is the appropriate and understood mechanism that they would pass the laws for the rail regulator. Now that has taken place—about two weeks ago, 1 May—each jurisdiction will now pass their applied law to give effect to South Australian law as the national rail regulator. That is ready to be implemented for 1 January. Maritime we just covered. That will be introduced tomorrow into the Commonwealth parliament with a view to effect from 1 January as well across all jurisdictions.

On the National Heavy Vehicle Regulator, there are in fact two bills that need to pass in the Queensland parliament because Queensland is the host jurisdiction. The first bill was introduced in February but then, with the election being called, it lapsed. It is now planned that it be reintroduced in very early June, then referred to committee, then back and passed; then bill No. 2 will be introduced. The standing committee, the transport minister’s meeting, last Friday agreed the content of the drafting instructions for the second bill. That now progresses to finalisation of the actual written bill. There will be a vote of ministers in July on a national heavy vehicle regulator bill No. 2.

Senator WILLIAMS: So you are getting good support from the new Queensland government and the new New South Wales government? Those transport ministers are onside?

Ms O'Connell : That is right.

Mr Mrdak : They are very strong supporters.

Senator WILLIAMS: Good. I am sure you will have no problem with Duncan Gay. On those finer details—and I have raised this with you before—I think it was in November that they were going to talk about the details. I have raised, for example, volumetric loading for livestock before.

Ms O'Connell : Yes.

Senator WILLIAMS: It is a real problem. I live near the Queensland border in New South Wales. We have an abattoir. Under Queensland regulations, they get to the border, they have to unload five per cent of the livestock off the truck. It is costly; it is time-consuming. Do you know if the other states have adopted or are in support of the volumetric loading or is Queensland going to change their current system when they lead off on it?

Ms Gosling : In terms of those sorts of arrangements, at the moment we are working very hard to actually make the national regulator a reality for 1 January. We are working through a whole range of details about how the heavy vehicle industry works. The mass load limits for livestock et cetera is one of the many things that the national regulator will need to work through in terms of trying to develop nationally consistent standards across the country. To some extent, it is still a work in progress.

Senator WILLIAMS: I find that concerning, because Queensland have had that volumetric loading for many years and they are leading the way on these regulations. I would be most surprised if Queensland changed their current system of volumetric loading. I am just concerned that the rest of the states might not follow.

Mr Mrdak : No, there is no suggestion that Queensland will change their system. What we are trying to do, as Ms Gosling has indicated, is get other jurisdictions to be more consistent with Queensland. That is our intention. You are right. I think the New South Wales government certainly is seeing opportunities now to lift productivity and we are very hopeful. The initial stages will at least lock in the productivity gains and productivity measures across the jurisdictions. Over time we want to get everyone moving to what is the most productive and safe system.

Senator WILLIAMS: Why didn’t Western Australia sign up for it? Did they give a reason?

Mr Mrdak : Western Australia has a long-held position that they will not accede to national type arrangements. They will pass what they call mirror legislation where they will replicate the national law in their own jurisdiction. That is a position they have taken. They have indicated that they will enter the national heavy vehicle arrangements. They have not signed as yet.

Senator WILLIAMS: In other words, they will run parallel to the basics?

Mr Mrdak : At least initially, but we remain optimistic that at some point they will accede to fully align.

Ms O'Connell : So they have supported the National Heavy Vehicle Regulator.

Senator WILLIAMS: You were seeking applications for CEO for the regulator. Have those applications closed?

Mr Mrdak : There is a process now under way. An initial round of applications has closed. There is a process now under way to short-list those with the chair designate, Bruce Baird. That process will take place over the next few weeks.

Senator WILLIAMS: So the applications have closed. How many applications did you receive?

Mr Mrdak : I would have to take that on notice. I do not have those details with me.

Senator WILLIAMS: What selection process is in place? You just told me you are getting it down to a short list now.

Mr Mrdak : That is correct.

Senator WILLIAMS: Does a panel conduct the interviews and make a recommendation to the minister?

Mr Mrdak : No, the appointment will be done by the board of the National Heavy Vehicle Regulator, chaired by Bruce Baird. On Friday, ministers agreed the full board of five which will be on the National Heavy Vehicle Regulator. We can give those names to you. Essentially we—the Director-General for Transport in New South Wales, the director-general in Queensland and I—are assisting Bruce Baird to undertake a short-listing at the moment. Mr Baird and his new board will then make the appointment.

Senator WILLIAMS: Will the minister have the power to override the selection of the board?

Mr Mrdak : No. Under the legislation, the board makes the appointment of the CEO.

Senator WILLIAMS: How long will a CEO’s contract be and who do they report to? Do they just report to the board?

Mr Mrdak : They will be responsible to the board. Under the draft legislation which is to be introduced into the Queensland parliament they will be appointed by the board and be accountable to the board. The term of the contract will be negotiated by the board with the CEO.

Senator WILLIAMS: The finer details of axle weights, volumetric loading, driver hours et cetera still have to be finetuned as far as the legislation into the Queensland parliament goes?

Mr Mrdak : They will be.

Senator WILLIAMS: When Queensland puts that legislation in place later on this year, the other states will have a fair say in what they have finally agreed on, I would imagine?

Mr Mrdak : We have made a lot of progress, as we have discussed, to get consistency across the jurisdictions on fatigue regimes and the like. I think we now largely have agreement on those, so there will be a much more consistent system with the new legislation. We are hopeful that the Heavy Vehicle Regulator from 1 January will start to pick that up some more, particularly with the greater focus on access and productivity.

Senator WILLIAMS: I do know that one of the first things New South Wales roads minister Duncan Gay did last year was take the load widths from 2.5 metres to 2.7 metres because every load of wool was overwidth when the wool bales bulged at the edge. Every load of hay was overwidth when you put the outside on the coaming rail to get a bit of lean-in for your load. There was something else, I think: wool, hay and some other issue. So I hope when they finetune all this, we do not go back to crazy minimum standards where every load of wool you see on the road is actually overwidth and faces being charged.

Mr Mrdak : No. I think the most pleasing aspect has been the way the jurisdictions, particularly east coast jurisdictions, are now getting some unanimity of approach on this. You are right, New South Wales has been critical to doing that.

Senator WILLIAMS: Obviously all of them would be concerned about productivity. I think it will be a very good thing when it all comes in. Let us hope it works—productivity and safety all combined to—

Mr Mrdak : We agree. On 1 January there will be still a range of issues to work through, but we will have made an important step forward on getting rid of a lot of the inconsistencies and trying to go to a much better system.

Senator WILLIAMS: So overall, you are very happy with the way it is progressing?

Mr Mrdak : There is a lot of work to do, but I think everyone involved has done a tremendous job to get it to this point. As I said, we were very pleased with the legislation coming out of the Queensland parliament to at least give us the basis. As Ms O’Connell said, we achieved something three weeks ago: we now have a single piece of national law for rail in Australia. That is a huge achievement.

Senator WILLIAMS: Yes, and the thing is, if the Queensland government does agree with it, they will have no problem passing it through their parliament, you wouldn’t think.

Mr Mrdak : It should not be an issue.

Senator WILLIAMS: Thanks, Chair

CHAIR: Thanks, Senator Williams. Are there any other further questions of Surface Transport Policy? Is that a yes? Would you like to ask one question, Senator McKenzie?

Senator McKENZIE: I do have one question, but I am willing to cede to the shadow.

Senator COLBECK: I am not the shadow. I am just like you.

CHAIR: Senator McKenzie.

Senator McKENZIE: Thank you. My question goes to a media article from the Labor member for Bendigo around the last election in relation to energy-efficient vehicles. I am hoping this is the right place to ask this question.

Mr Mrdak : Yes.

Senator McKENZIE: Excellent. Steve Gibbons, the member for Bendigo, stated during the last election that the Labor government would arrange for the Blade car, which he had running around Castlemaine, to be included in future federal government department assessments for energy-efficient vehicles. Has that occurred?

Mr Mrdak : The department has contracted to purchase a Blade vehicle for our own use. We have a contract in place with the company, but we are yet to receive delivery of the vehicle. There have been some production problems with the vehicle and we are currently in discussions with the company in relation to that. It is envisaged that when we do take receipt of that vehicle we will operate it as one of our departmental fleet vehicles. We currently operate another electric car which we use as a departmental vehicle. The Blade will be similarly used by departmental officers.

Senator McKENZIE: I am getting that this is not a plural, that this is one purchase. Is the contract for one car?

Mr Mrdak : It is for one car.

Ms O'Connell : It is for one car. We already have a different brand of electric car, the Mitsubishi i-MiEV.

Senator McKENZIE: Where is that manufactured?

Mr Mrdak : The Mitsubishi i-MiEV is manufactured offshore. It is fully imported.

Senator McKENZIE: How many of those do we have in the fleet?

Ms O'Connell : One.

Senator McKENZIE: We have one Mitsubishi?

Mr Mrdak : That is right.

Senator McKENZIE: And we are going to get one Blade?

Ms O'Connell : One Blade, that is right.

Senator Carr : I think you would be interested to know that across the country last year we probably sold 112 electric vehicles out of a vehicle sales fleet in excess of a million. So it does tell you something about the market position of electric vehicles.

Senator McKENZIE: Yes. Thank you for contributing to the sale of energy-efficient cars. Thank you. I am done.

CHAIR: Senator Colbeck.

Senator COLBECK: Thanks, Chair. I want to go, firstly, to the $20 million given to Tasmania to support the freight effort out of Tasmania. I would be interested to know where the negotiations on the expenditure of that funding are at.

Ms Gosling : We are in the process of discussing the details of the funding agreement, a project agreement, with the Tasmanian department of transport on behalf of the Tasmanian government. We are still in the process of negotiating the final terms of that agreement in terms of the outputs and the milestone arrangements for the payment of that $20 million.

Senator COLBECK: Do you have a scheme designed yet that will distribute that funding?

Ms Gosling : Yes. We are in the process of ongoing discussions around the detail with Tasmania. It is not signed, sealed and delivered as yet, but we are well and truly advanced in trying to get those details finalised.

Mr Mrdak : Can I add that I think Mr Deegan from Infrastructure Australia outlined today that his report to the minister is shortly due.

Senator COLBECK: Yes, he was talking to me.

Mr Mrdak : That will contribute some further thinking in relation to the terms of the arrangements, and we anticipate that over the coming weeks the minister and the Tasmanian government will announce the details of the arrangements.

Senator COLBECK: So we will not see a final answer on the allocation of that funding until the report from Infrastructure Australia is released?

Mr Mrdak : Certainly the finalisation of Mr Deegan’s report will be one of the inputs into finalising the program.

Senator COLBECK: Do we have any sense of over what term the funding will be available? It is described as a short-term measure—I understand that—but do we have any sense yet over what sort of period of time?

Mr Mrdak : The Commonwealth will make the payment this financial year to Tasmania. It will then be a matter for the Tasmanian government as to the period over which they make payments available. I will just check with my colleagues.

Ms O'Connell : I think those will be announced when the government is in a position to make an announcement on those details.

Ms Gosling : That is right. As Mr Mrdak said, it will be a payment to the Tasmanian government. Once we have settled the exact detail of how that money would be allocated, then the allocation of the funds would be a question for the Tasmanian government.

Senator COLBECK: Where precisely would I find it within the budget papers?

Ms O'Connell : In Budget Paper No. 3.

Senator COLBECK: It is not in the infrastructure and transport portfolio budget paper?

Mr Mrdak : No. Because it is a payment to a state, it is done through the Treasury process and will appear in the Treasury process and it will be under the budget paper that deals with Commonwealth-state fiscal arrangements.

Senator COLBECK: Given that it is made in that context, does it have any other implications for other financial distributions or is it over and above that process?

Ms Gosling : No, it is a separate allocation, a separate payment.

Senator COLBECK: So it will not have any implications for Commonwealth Grants Commission payments?

Ms O'Connell : No. They are an issue for Treasury, in terms of how the guidance is set for those distributions.

Senator COLBECK: So you do not know whether it will have an impact on that or not?

Ms O'Connell : That is right. We do not. It is a matter for Treasury.

Mr Mrdak : We do not know the detail of that. You would get advice of that from the Treasury.

Senator COLBECK: Is it possible for you to get me that advice on notice?

Mr Mrdak : I think it would be better if you sought that directly from Treasury. Given it is a Commonwealth-state fiscal arrangement, I think it would probably be better that you seek it through your process.

Senator COLBECK: We will be talking to them next week as it is. Can I ask you about a media article, in the lead-up to the budget, about an additional $20 million to attract Toll vessels from Burnie to Bell Bay on a fortnightly basis. Have you any understanding of that?

Mr Mrdak : I am not aware of that particular media article.

Senator COLBECK: Mr Deegan was, and I did talk about it earlier, as you might have heard.

Mr Mrdak : Yes.

Senator COLBECK: And he was aware of some correspondence around it.

Mr Mrdak : I think that this part of Mr Deegan’s discussions with various parties in Tasmania, which the department was part of. There were various suggestions of how best to assist Tasmanian exporters. I am just checking if that was one of the proposals brought forward.

Ms Gosling : Could you refer us to the article?

Senator COLBECK: There was an article on 6 May in the Examiner, where the member for Bass, Mr Geoff Lyons:

... said he would like the Commonwealth to fork out another $20 million in the 2012 federal budget to pay Toll to use Bell Bay port once a fortnight ...

as an additional interim measure over and above the $20 million that was allocated through the process that we discussed earlier in the evening.

Mr Mrdak : I am not specifically aware of such a proposal, but, as I said, there were a number of proposals put forward in the consultations which have been taking place in relation to the best way to provide assistance, utilising the funding that the Commonwealth has put forward.

Senator COLBECK: So if anything were to happen, it would be the $20 million that has already been allocated?

Mr Mrdak : There is only the $20 million that has been allocated.

Senator COLBECK: We had a conversation earlier about the status of the Tasmanian Freight Equalisation Scheme and the potential WTO implications of extending it to incorporate exports. Can you give us any understanding of what advice you might have in relation to what the potential implications of that might be?

Ms Gosling : Yes. In terms of the potential to expand the scheme to exports, obviously that would be a government decision. The question of whether there might be some infringement of the WTO in relation to exports has been on the record really since the Productivity Commission report back in 2006, so there would be some potential issue there that could be explored if the government were to look at expanding the program. At this stage that is really not under consideration by the government, so it is not something that we are actively advising on.

Senator COLBECK: You are telling me that there was some advice in the Productivity Commission report?

Ms Gosling : There is mention of it in the Productivity Commission report.

Senator COLBECK: And it said?

Ms Gosling : I can quote from page 80:

Nonetheless, it remains that expansion of the TFES to explicitly take exports into account could raise WTO issues.

Senator COLBECK: That does not give me a definitive answer. Do you have a definitive answer as to whether it would or not?

Ms Gosling : No, we are not exploring that or providing advice to government in terms of expanding the scheme at this point.

Senator COLBECK: It has been put to me that there is a similar scheme in Canada—I think it is on Prince Edward Island—and that has not been challenged under any WTO arrangements. Have you had a look at that scheme to see what the implications might or might not be?

Ms Gosling : No, but if we were to be doing that obviously it is something we would have to do in conjunction with and in close liaison with the Department of Foreign Affairs and Trade. We would have to look at what other economies around the world were doing and how that would line up under the WTO arrangements. As I said, we are not at this point advising in that area.

Senator COLBECK: In the context of the port of Melbourne becoming a regional freight hub—and we already know that there is no longer any export service out of Tasmania—does that change the permutations in relation to that matter or is that not something you have explored?

Ms Gosling : It would be a government decision to expand the scheme to exports and that is not actively under consideration.

Senator COLBECK: You are not actively advising the government in relation to that matter?

Ms Gosling : That is right.

Senator COLBECK: In relation to the operation of the scheme itself, there is an annual review of rates. I think I referred to that as a ‘parameter review’ that would be done on an annual basis.

Ms Gosling : Yes, that is right.

Senator COLBECK: When is the next parameter review due?

Ms Gosling : I am not sure. I could possibly get that information for you or take it on notice. I am going from memory now, but I think there was one done at the end of last year.

Senator COLBECK: I have a letter from Searoad here that advises of a significant increase in freight rates across Bass Strait as of 1 July. In this particular case, briefly, the increases arise from the federal government’s carbon tax which will become effective on 1 July 2012 and which is applicable to the fuel consumed by Searoad ships. Secondly, the Victorian government’s legislation to levy on the Port of Melbourne Corporation an annual port licence fee, which the Port of Melbourne Corporation intends to recover by increasing current tariffs, wharfage, channel fees and other charges, will become effective from 1 July.

TT-Line has said to their customers that there will be increases to freight rates as a result of the carbon tax, as a result of the port licence fee in Victoria and also a general rate increase. They say that their increase will be in double digits, so in excess of 10 per cent. Would that sort of price increase be a trigger for a parameter review? That is a fairly hefty increase in the cost of freighting goods backwards and forwards across Bass Strait. What plans does the government have to deal with that?

Ms Gosling : Certainly they are factors that would be taken into account during the parameter review.

Senator COLBECK: Are there any current plans to conduct a parameter review?

Ms Gosling : As I said, I would have to take on notice when one would be due.

Senator COLBECK: You head up the section in the department that looks after that. Are you aware of those increases in price that have been notified to people within the industry? It is not a secret. I am happy to give you a copy of the letters.

Mr Mrdak : We are certainly aware of notifications of price rises now being made to shippers. As you said, the port of Melbourne levy and other cost factors are certainly flowing through now to the prices being quoted. We are aware of that. We will come back to you this evening or as soon as we can with the actual details of the next parameter adjustment and how that will operate. I do not have the right officers at the table, but I will get that for you as a matter of urgency.

Senator COLBECK: I thank you for that, Mr Mrdak, but I would have thought, being aware of double-digit increases in freight rates across Bass Strait, the government would be active in this space right now, surely. There is one difficulty in getting the finite details of the price, because details of the carbon tax are not available to give a full detailed price increase yet, which I find quite disturbing in that context. People are trying to set up their businesses for transport in and out of the state and they cannot work out what the fees are going to be post 1 July and we are five weeks away from that date. That is one question. Surely the government would be active in looking at a parameter review with that significant an increase coming down the line.

Mr Sutton : With the parameter reviews that are published and the way the scheme works, the parameters are a function both of the freight rates that are actually charged and the equalisation element, which is what is happening with road transport rates.

What the parameter reviews have shown over time is that the relationship between the two has been declining, as in the actual freight rate differential of the amount that is being equalised has been falling over time. The actual rates of assistance under the TFES have remained unaltered since 1998, notwithstanding that change in the relativities between the freight rates and what is happening with road freight rates. The outcome there, which will be looked at in the next parameter review, is a function of how those two things are changing.

Senator COLBECK: My recollection—and we have talked about this before, Mr Sutton—is that what has occurred is that there has been a review of prices on an annual basis and on many of those occasions there has been a very marginal change and those have not been implemented on that annual cycle. Over a period of, say, four or five years those have amounted to move the numbers fairly significantly, but this is a pretty major increase in price. We are talking in excess of 10 per cent. The portion of the assistance that incorporates the intermodal section would be, I would have thought, impacted by the Melbourne port fee changes, which is something in the order of $20 a container, as I understand it.

That is again a fairly significant change. Why aren’t we actively looking at what is happening? I accept what you are saying in respect of the relationship, but the change that is going to occur on 1 July is quite a significant one and it is due to a significant piece of legislation. Why wouldn’t we be looking at those numbers as part of the overall process of assessing the scheme?

Ms O'Connell : We will be doing that parameter review and that will inform what the rate should be, but I think the cumulative difference that Mr Sutton is referring to has meant that the TFES at the moment overcompensates to—I think it is a cumulative effect—about 20 per cent over what it should be through the parameter review. That is how we stand at the moment.

Senator COLBECK: Ms O’Connell, the exporters and importers in and out of Tasmania are not going to be amused when they hear it is going to cost them probably $130 to $140 more per container to move freight across Bass Strait, and you are telling them that they are already being overpaid so there is nothing in it for them.

Mr Mrdak : No, I think Ms O’Connell is commenting on the parameter adjustment and what the implications are of that. But, as we discussed earlier, the government is putting in place the arrangements for the $20 million to try to ameliorate and assist exporters so that—I do not think it is fair to say—

Senator COLBECK: Mr Mrdak, I appreciate your efforts in relation to the question, but that is to do with exporters. Ninety per cent of what comes in and out of Tasmania is not just about export.

Mr Mrdak : No.

Senator COLBECK: I am talking about everything that comes and goes. The vast bulk of it comes across that strait on six vessels, and TT-Line are saying their figures are going up in double digits. SeaRoad are saying that they cannot tell us what it is yet but I bet it is close to what TT-Line say, and I doubt that Toll will be any different. It is a significant impact on the Tasmanian economy, and my rough look at what happens in Tasmania is that when there is a reduction in the cost of access or an improvement in the capacity across Bass Strait, the economy moves in a positive direction. It is bad enough as it is down there now. We do not need an additional weight hung around our neck in the context of this. It is not just about export.

Mr Mrdak : I understand that.

Senator COLBECK: We appreciate the fact that there is some work being done in relation to the export and the discussion we had earlier about the overall freight task, and the report that is being done by Mr Deegan is certainly appreciated, but those things are not going to happen overnight either. They are medium- to long-term. Carbon tax starts on 1 July; the port licence fee comes into effect on 1 July—

CHAIR: Senator Colbeck, this is a very important issue but, if you do have questions, you have only three minutes left. I know how important it is to Tasmanians.

Senator COLBECK: We are actually three-quarters of an hour in front of time.

CHAIR: We are going to smoko, mate. You can keep talking if you like. It is your move.

Senator COLBECK: Okay, I will come back after. I am concerned that there is no activity from government in relation to the matter.

Mr Mrdak : I think the discussion you had earlier with Mr Deegan indicates that the measures being looked at as part of this package are not just around exporters. It is around how to deal with this issue—

Senator COLBECK: Yes, but they are medium- to long-term, Mr Mrdak. I appreciate that that work is happening and that is good, but what I am looking at is the impact on the Tasmanian economy from 1 July. Our unemployment rate went from 7.2 to 8.3 per cent last month and this does not help. Can you come back to us pretty quickly and tell us what your action is going to be and when?

Mr Mrdak : Certainly.

Senator COLBECK: Thank you.

Senator Carr : Can I just correct the record? I indicated to Senator McKenzie that there were 114 vehicles sold last year in Australia. In fact, it was in 2010 and it was 112. I was going from memory. In fact, there were 47 electric vehicles sold in Australia last year.

Senator COLBECK: How many in the Comcar fleet?

CHAIR: Sorry, I did not hear you, Ms O'Connell. Did you want to put that on—

Ms O'Connell : No.

CHAIR: Is that it? Am I taking it that we are now going to the break and we are finished with AMSA?

Senator COLBECK: We finished with AMSA ages ago.

CHAIR: Yes, I know—Surface Transport Policy. I'm just making sure you are listening! Ms Gosling and Mr Sutton, thank you.

Proceedings suspended from 21 : 14 to 21 : 27

CHAIR: We will move to Policy and Research. I welcome those officers. Senator Nash, have you questions?

Senator NASH: Seatbelts in buses: does that fall with you?

Mr Mrdak : It probably falls with Ms O’Connell and me. We are the last survivors, I think.

Senator NASH: The last survivors on the buses. Okay. Government funding for seatbelts on regional school buses: is there funding for that?

Ms O'Connell : Yes, there is. There was a budget announcement for $4 million over four years, starting next financial year. It is for continuation of the seatbelts for school buses scheme.

Senator NASH: That is in the budget.

Ms O'Connell : That is correct.

Senator NASH: Have there been any existing funds at all to refurbish the buses?

Mr Mrdak : Yes.

Ms O'Connell : Yes, there have been.

Mr Mrdak : This was a lapsing terminating program which the government has now decided to extend.

Senator NASH: Fantastic! Excellent. Up until this point in time of this announcement, how much funding has been allocated to it?

Mr Mrdak : How much has been spent each year?

Senator NASH: No, how much has been allocated? Then I am going to ask you how much has been spent.

Ms O'Connell : In the budget it allocated $4 million over four years, starting next financial year.

Senator NASH: Sorry, existing funding that has gone to the—

Ms O'Connell : In past years?

Senator NASH: In past years, yes.

Ms O'Connell : There has been quite a difference between the amount allocated and the amount actually spent. The amount spent has been in the order of $1 million a year. I will find the precise figures, but the allocation has been far more than that. We have been out for rounds. The rounds have been fully subscribed to the tune of about that $1 million a year spend.

Senator NASH: All right. Have you got those figures there somewhere? If you have, that would be great. If you have not, please put them on notice. It would just be easier to have them now.

Ms O'Connell : Since its introduction in 2007-08 the program has provided $4.2 million to install seatbelts in school buses. That will be up until the end of this current financial year. That is the spend, $4.2 million; less than $1 million a year over that period of time.

Senator NASH: Sorry, how much was actually allocated?

Ms O'Connell : I do not have that but it was certainly in excess of that. That has never been fully spent.

Senator NASH: It is quite important that I get that differential, so if you could provide on notice—even if maybe somebody could dig it out and give it to us tomorrow perhaps rather than in the next few months. That would be great. Has there been any communication with stakeholders by the department or bus companies to try and figure out why there has not been a full take-up of the prescribed funding to do this?

Mr Mrdak : The eligibility criteria had not changed for some time. The eligibility criteria which were put in place when the program was first brought into existence have continued. Essentially, we have certainly worked closely and in a number of rounds we have actively sought application from school bus operators for this program. As Ms O'Connell says it has been continuously undersubscribed.

Ms O'Connell : Senator, the program has upgraded 267 school buses around Australia. This means quite a number of school buses that—

Senator NASH: What is the target? How many school buses?

Ms O'Connell : I do not know what the target full population is. We would have to go around each state and ask what the full target of school buses is.

Senator NASH: But surely they would know how many school buses were on the runs. There has to be a figure somewhere.

Ms O'Connell : We can certainly ask.

Senator NASH: It is a really important issue. A certain amount of funding is being allocated to do a job; but, if you do not know how many buses there are that actually need to be retrofitted, how do you know if you ever achieve the target?

Mr Mrdak : We certainly have estimates of numbers of buses and we can get that for you.

Senator NASH: Yes, if you could, that would be great. I am really interested to see what sort of percentage of the 267 could use that. What I am trying to draw down into—and no aspersions on the department at all—is if there are buses that have not taken up the opportunity of this funding, why not? We need to know why not, because it is a huge safety issue. There may be things that the department can do that can rectify the low take-up rate.

Mr Mrdak : In some cases it has been simply that some buses just have not had the design features—the necessary ability to retrofit seatbelts into them because of the structural nature of the bus. So, for some situations, it just will not work. The current guidelines require that the applicants have to have a contract with a state or territory government to operate a school bus and be licensed and accredited as a bus operator. They have to operate a school bus outside a capital city metropolitan area and they have to be assessed under the national guidelines as being in what is called a high-risk area, because of the nature of the regional and rural roads which they are travelling on. Also that they are not getting assistance under any state or territory programs. So there are a range of criteria and that has been consistent for some time.

Senator NASH: What is the definition of 'high risk' in terms of a high-risk area for regional roads?

Mr Mrdak : I can get you the details and guidelines.

Senator NASH: Yes.

Mr Mrdak : These guidelines were adopted some years ago by Australian Transport Council ministers in relation to areas in which they are operating the bus above certain speeds and on certain road conditions outside metropolitan areas which may be higher risk than other areas.

Senator NASH: Yes, if you could take on notice those few things for me. Because I think it is really important we get an understanding of, out of all those regional buses, the buses we are trying to assist—in effect, the children we are trying to make safer. I think it is important to know, as a percentage, how many of those buses have done. It would also be useful to know out of those criteria, across the number of buses in the regional areas, what percentage fit the criteria, or what sort of number fit the criteria, and which fall outside the contract criteria and the other things that you have mentioned. Also, of the money, are there any restrictions on what the funding can be spent on? Is it only the retrofitting of the bus?

Mr Mrdak : The retrofitting is of seatbelts.

Senator NASH: So what does the bus company do? Obviously, they have to take the bus off the road to have this done. What do they do if they have to hire or lease another bus for the period of time? Can they not use that funding to cover that purpose?

Mr Mrdak : No. I think our funding is simply for the cost of fitment.

Senator NASH: I do not know how long it would take. I suspect that in a small country town there is not an operator who can do the retrofit. So I suspect it is a reasonable period of time these buses are going to be off the road. What the guidelines say is that the operator of the bus has to wear the cost of providing the service in the interim? Was that considered at all?

Ms O'Connell : Senator, I think in terms of school bus services there are significant periods of the time when they are not operating as a school bus.

Senator NASH: Yes, I understand that. Are you saying they would have do it in school holidays? A lot of these school buses keep running even during school holidays.

Ms O'Connell : Yes. We will have to check the guidelines to see whether there is any opportunity for payment while the bus is off the road. I do not believe that is the case but we would have to check that.

Senator NASH: If it is something that could be considered. I understand that maybe there is an opportunity to do it school holidays but, again, that is a reasonably narrow window for people. Maybe, Minister, you would not mind taking on notice for me for the responsible minister if this could be considered. It may well be something that just fell through the cracks and people just did not consider that it might be a cost imperative falling on perhaps the owner-operator of the bus. Maybe it could be caught in the funding allocated for this program—the whole purpose of which is trying to make things safer for children. So if you could do that that would be really useful.

Mr Mrdak : We will get some further advice on that, Senator.

Senator NASH: That would be great, thank you very much. Thank you, Chair.

CHAIR: Senator Nash, Senator Ludlam.

Senator LUDLAM: Thank you, Chairman. This is going to seem like a bit of a random segue. Can I ask about electric bicycle regulations in here?

Mr Mrdak : I do not think we can assist you on electrical, not in this part.

Senator LUDLAM: Really?

Ms O'Connell : No.

Senator LUDLAM: Electric bicycles. I know it is a little bit random; I am just doing my job here. I might throw it to you, Minister, if I am in the wrong place. Maybe the Chair can help out. There are in fact electric bicycle regulations sitting before government at the moment. Is that something that the officers at the table have had anything to do with?

Mr Mrdak : No, Senator.

Senator LUDLAM: There are baffled stares all around.

Mr Mrdak : I am happy to take on notice and see if I can assist you.

Senator LUDLAM: Even if all you could do, Mr Mrdak, is point me to the right officers to put that to. I understand there are electric bike regulations sitting before government at the moment. These things obviously sit in a bit of an unusual niche in that they will travel very rapidly and are not necessarily suited to either being on-road or off. I am just trying to find out where those regulations are up to, whoever is able to help.

Mr Mrdak : I will certainly make inquiries as to whether they are captured by regulations. As you know, we have a role in terms of Australian design rules for vehicles entering the Australian market. But it would depend on essentially the capability of the motors involved as to whether they have to meet the requirements of an ADR.

Senator LUDLAM: Yes, are we getting warmer? Am I potentially in the right place?

Mr Mrdak : If it relates to vehicle design standards and whether they trigger a requirement like that in terms of entry into the market, then they would fall in ours. But we will find out and come back to you.

Senator Kim Carr: We will find out where they are supposed to be and let you know.

Senator LUDLAM: Thank you, Mr Mrdak. So just briefly then, I suspect this one may be a little bit more squarely in your court. I put this into IA a little bit earlier in the day. May 2012 IMF report The future of oil: geology versus technology, which proposed the price of oil may well double in inflation adjusted terms over the next decade. Did that report cross the desk of any of the folks in here?

Ms O'Connell : I will ask Mr Williamson to answer.

Mr Williamson : Like Mr Deegan, we had not seen the report and so we will have to read it as well.

Senator LUDLAM: I am presuming you were aware of it, or is my bringing it up on an estimates committee the first you had heard of it?

Mr Williamson : Personally, the first I had heard of it was from you putting it up. It is only a few hours ago and we have not had time to canvas Dr Dolman's researchers, who may well have been aware of it.

Senator LUDLAM: That is something that you might want to review.

Mr Williamson : Yes.

Senator LUDLAM: I know that I probably sound like a bit of an obsessive around this stuff. We had an exchange, I think, last time we were here, about the report 117 that got dumped and then emerged on a completely different topic, which was about peak conventional oil production in decline around 2017—I think was when they estimated. Can you just spell out for us whether it is a unit, a particular researcher or whose desk this stuff crosses for calculating or projecting future oil prices and how that might impact on something, even narrowly, like our balance of payments figures in Australia?

Mr Williamson : Senator, I will ask Dr Dolman to talk about what the bureau does in that area. We do not have a direct responsibility for forecasting oil prices, but obviously assumptions about oil and petrol prices feed into our transport projections. But Dr Dolman will take you through what we do.

Senator LUDLAM: Thank you.

Senator Kim Carr: Can you do that briefly.

Senator LUDLAM: Why 'briefly'? This is important.

Dr Dolman : We do follow the peak oil debate and we do have researchers that produce work. I think I mentioned it at the last senate estimates hearings that here is a paper on our website that looks at fuel price projections, which takes oil prices internationally and converts them to Australian dollars. It looks at a number of different scenarios, including a peak oil scenario but also other scenarios such as that the estimates of oil availability that the International Energy Agency produce.

Senator LUDLAM: Yes, and we did speak of that either the last time or the time before. If you are not directly aware of this IMF thing that I am citing tonight, there is probably not much use pursuing this too much further. Could you take on notice for us whether the projections that you look at would include the scenario that the IMF is warning of there. So by 2022 sustained doubling of spike, a sustained doubling of the world oil price, what that would do to Australia and the infrastructure that we are building today?

Mr Williamson : Certainly, Senator.

Dr Dolman : It is broadly consistent. We do sensitivity analysis around our projections of transport activity across a whole range of areas. The price projections that we use out to 2030 include around $2.50 a litre for petrol.

Senator LUDLAM: We had an exchange earlier that the chair had very strong views about, which was planning for infrastructure expansion. For example, doubling the freight task on Australian roads by 2030 is, I think, within that kind of order of magnitude. Is that assumption of doubling freight volumes on our networks altogether still a safe bet under a $2.50 petrol price? Presumably that is for metro areas. I do not know what that would look like in Kalgoorlie or Port Hedland.

Dr Dolman : I can give you two examples of how that applies. For car traffic, the projection is 165 billion kilometres travelled by cars in 2010. At a price of $1.50 a litre that would rise to 210 billion journeys. If it were $2.50 a litre, instead of 210 billion it would be 200 billion. So there would still be growth but not as rapid growth.

Senator LUDLAM: Makes it sound inelastic, I guess, if you were an economist.

Dr Dolman : Freight activity was my second example and it is an even smaller impact.

Senator LUDLAM: Really?

Dr Dolman : Given that the fuel cost is only a small component of freight rates and even for trucks. In addition, bulk freight is driven more by international demand than the cost of transport in Australia.

Senator LUDLAM: You have offered to take a couple of points on notice. But just to conclude here: if you have time to review the IMF report, is it the view of you folk—and I am not trying to verbal anybody at the table—that we could cop the IMF scenario without substantially changing the way we do business here in Australia?

Dr Dolman : I think we would have to take that on notice and have a look at the report in detail.

Senator LUDLAM: Maybe if I could invite you at the next budget estimate session—I do not know if I am allowed to do this—to bring along some of the researchers who do this specific task for a living, if that is possible?

Senator Kim Carr: You can put it on notice.

Senator LUDLAM: Yes, I have put it on notice, but I am just wondering whether it would be possible to bring some of the relevant expertise to the table.

Mr Mrdak : I think in Dr Dolman you have the best of the expertise.

Senator LUDLAM: All right. I will leave it there. Thank you, Chair.

CHAIR: Thank you, Senator Ludlam. Thank you very much. Now we will call the Major Cities Unit. I know Senator Nash has a few questions.

[21:43]

Senator NASH: What is the current staffing in the MCU?

Mr Wilson : Senator, the staffing in the MCU is roughly in the same order; it is 10.

Senator NASH: Is there any expectation that it is going to either increase or decrease over the next year?

Mr Mrdak : It is likely to decrease slightly.

Senator NASH: Why is that?

Mr Mrdak : Simply the department has forwarded the budget. We obviously have to make savings across the portfolio. We will do that in some areas of the department we will not fill any vacancies as they fall due.

Senator NASH: You have got 10 or so in this unit, so if somebody leaves you just will not replace them?

Mr Mrdak : We may not.

Senator NASH: Nobody is up for the chop?

Mr Mrdak : No. We believe we can meet the efficiency dividend without requiring redundancies. But, clearly, we will have a close look at where there is natural attrition and whether we fill jobs. But, on the whole, as I said this morning, some areas of the department will slightly increase in staff but most areas of the department probably will not fill vacancies through the year.

Senator NASH: I should not really use the phrase 'for the chop', should I? I retract that. What is your budget for 2012-13?

Mr Mrdak : The division's budget is about $1.4 million.

Senator NASH: Is that roughly the same across the forward estimates?

Mr Mrdak : For the Major Cities Unit, yes.

Senator NASH: These all are just Major Cities Unit?

Mr Mrdak : Yes.

Senator NASH: Can you give us a bit of a sense what the work program is for over the next 12 months?

Mr Wilson : The two major tasks that the division will look at will be the release of the State of the Cities 2012 document.

Senator NASH: When is that due?

Mr Wilson : It is likely to be in the second half of the year, around October-November. The other is completing the internal work in regard to the Active Travel discussion paper that is currently underway.

Senator NASH: There has been a bit of commentary about the failure to invest in infrastructure and how that has cost Australia a significant amount of money in terms of lost efficiency as congestion affects the major cities. Is that commentary that you are aware of? Do you agree with that sort of analysis?

Mr Mrdak : In fact the department has led a lot of the debate on investment because of work that we undertook in 2006 through the bureau and through the COAG process. We established an agenda across COAG to look at the urban congestion as a national productivity issue. The work of the bureau has been ground-breaking in terms of trying to quantify the avoidable cost of urban congestion in Australia. You are right: that is an important economic issue, let alone a liveability issue, for our cities, which has driven a lot of the investment programs since that time.

Senator NASH: How does the Major Cities Unit grapple with that? It is extraordinary—just look at Sydney. it is really landlocked and the population is growing. You are obviously going to get congestion there, but you have got people who do not want to live anywhere but Sydney; they want to stay in Sydney. It is a much bigger issue than just those couple of things, but how do you grapple with the human nature part of this when you are looking at the policy development and trying to address the congestion issue.

Mr Mrdak : There are a range of areas that we and the jurisdictions are trying to deal with. First is getting the right infrastructure investment to support what inevitably will be higher densities in a number of inner city areas and planning arrangements to make sure that proper planning is taking place in relation to linking the urban density uplifts with proper transport infrastructure which needs to support that. As you are aware, one of the critical issues that we have seen as people have looked to increase urban densities is the capacity of the public transport systems in our major cities to cope with the growth. We are projecting about another 30 per cent increase in public transport usage over the next decade of that order. That is going to be very difficult for a lot of our public transport systems to cope with.

The areas that we are focusing on with major cities work is that planning reform, linking infrastructure and land-use planning and also ensuring that the Commonwealth's investment program is tied to trying to achieve some of the objectives of the National Urban Policy.

Senator NASH: Do you think that the planning around greenfields in terms of these transportation links is good enough? I suppose it is a bit of tricky question, but it seems often that there is a bit of a disconnect in the whole picture when you look at greenfields sites of communities that are growing, particularly out in Western Sydney, but there do not seem to be those transport links. The planning does not seem to be as efficient as it could be—and that is the view of an outsider looking in. Is that something the department has considered? Are you happy with the level of attention to detail when it comes to planning?

Mr Mrdak : It is difficult for us. Planning matters reside with the states and territories, so we do not talk—

Senator NASH: I cannot really ask you for your view, can I?

Mr Mrdak : I suppose all I can indicate is, like you, everyone is concerned about the capacity to continue greenfields expansion, particularly given the infrastructure costs involved but also the need to create employment nodes where those people are living. One of the great issues in our cities in terms of the spread of our major cities has been increasingly people are travelling greater distances for employment. That is one of the major issues about economic disadvantage. People who are often living in some of the outer metropolitan areas are disadvantaged in being able to access work because of the travel times and the costs involved. Those types of issues and some of what we have been trying to do with some our Liveable Cities, which is a program which is now operating, is to try and invest in some of those employment nodes. So you are getting a linkage between housing expansion for population growth and employment.

Senator NASH: Just finally: was there any advice given to the government prior to this budget on the quantum of funding necessary to try and address this congestion issue, given the economic impact of the congestion that there has been a lot of commentary about?

Mr Mrdak : I think, as you have seen from the commentary, the cost is almost unlimited. You can invest a substantial amount of money in this. Given that budgets are always going to be finite and will be increasingly finite, targeting the investment into the right areas is a real challenge.

Senator NASH: The trick is, I suppose, utilising the funding wisely and getting a holistic picture of how all this should happen.

Mr Mrdak : That is right. And also reforms like utilising price better as a management tool.

Senator NASH: Excuse me, what was that?

Mr Mrdak : Utilising price in terms of how you operate your transport systems to try and get signals into people's behaviour, into the market signals, into how you better utilise public transport and our road and rail systems.

Senator NASH: Thank you very much for that. Thank you, Chair.

CHAIR: Thank you, Senator Nash. Quick. You have got one, Senator Edwards.

Senator EDWARDS: I have got one topic.

CHAIR: Just to let you know my sense of humour is still fantastic. Some very, short direct questions that will get very short.

Senator NASH: Senator Edwards can take as long as he likes, Chair—as long as he likes.

Senator EDWARDS: He is verballing. I refer to the MCU's Urban Design Protocol and Reform Council's recent report into capital cities. Criterion A refers to urban design and architecture. Only Adelaide, in my home state, was 'consistent' while three cities were 'largely inconsistent' and four were 'partially consistent'. Has the MCU's Urban Design Protocol been a failure?

Mr Wilson : I will start and Mr Williamson may follow on. The Urban Design Protocol was only released in November of 2011. The analysis undertaken by the COAG Reform Council commenced, I think, in 2009, so it was an analysis undertaken prior to the Urban Design Protocol being released. Having said that, your comment is correct in regard to the ratings that the COAG Reform Council came up with. But since the design protocol was released, something like 40 organisations have picked up and championed the design protocol. So it is a protocol that has been endorsed by a reasonably broad range of stakeholders and has been adopted. But it will take time to flow through.

Senator EDWARDS: I take your point. But if you do not—I hate this word—incentivise to incorporate the guidelines of this, do you reckon that the Urban Design Protocol will become redundant?

Mr Wilson : I do not believe so, Senator. I believe there is a great deal of buy-in in the development of the Urban Design Protocol. It was not a protocol designed and developed just by the Commonwealth. It was a collective document designed by a number of parties within the urban sphere. I do not believe that it requires an incentivisation to get a foothold in the urban design space.

Senator EDWARDS: I guess we will see, won't we, as it unfolds? Just going back to the COAG Reform Council, theirs was a fairly tough report. It found that the Commonwealth had failed to set clear guidelines for the states to follow when seeking funding for major projects as a policy unit and one of the government's lead agencies with regard to city planning. What role does the MCU have in working out these guidelines?

Mr Wilson : I guess the report is fairly blunt in its assessment of all of the jurisdictions in it. It assesses the Commonwealth as bluntly as the rest.

Senator EDWARDS: You didn't get left off, did you?

Mr Wilson : No. It is clear from the report that there is work for the Commonwealth bureaucracy to do to better integrate our consideration of policies and programs in the urban space. That is one of the things that we have committed to do through the National Urban Policy. Through the chairmanship of Mr Mrdak, we coordinate on a quarterly basis a group of the agencies around the Commonwealth to get a better coordination of the rollout of Commonwealth policies and programs. But that also will take time to better integrate that planning process.

Senator EDWARDS: I will just stay on the Reform Council, if I can. It states that the Australian cities planning regimes are woefully inadequate to properly plan for future growth, development and maximise future economic outcomes. What role or responsibility does the MCU play or take from the outcome of that report. I mean are you stepping away from that?

Mr Wilson : Am I stepping away from the finding of the—

Senator EDWARDS: Well, stepping away from how we maximise the future. You have been there since November 2011. They came out pretty harshly recently, in April. Where do we go from here? How do you plan to get the MCU engaged in defining what these states need to go forward to better allow for the growth, the development and to maximise the economic outcomes as the Reform Council says that we are woefully inadequate on?

Mr Wilson : Senator, the results of the CRC review and the allocation of urban issues were considered by the standing committee on transport and infrastructure last Friday. The ministers endorsed a future program in regard to those issues, with the view to Commonwealth and state ministers and bureaucracies focusing on a couple of areas of work targeted at improving the coordination of those issues. I will get Mr Williamson to take you through the detail of that. But the primary mechanism for the Commonwealth to coordinate our investment program with the states is through the standing committee on transport and infrastructure. David.

Mr Williamson : Thank you, Andrew. There were a number of areas that our ministers' council agreed to progress that reflect the recommendations in the CRC report. There was an issue around better national information on cities. Perhaps surprisingly there are still a lot of gaps just in terms of raw data. If you are trying to take some of this planning work forward, some nationally consistent data is still not necessarily there. So there is some work on that.

There is some work picking up the CRC's recommendations around best practice in planning. Whilst the report did make some criticisms of each jurisdiction, including the Commonwealth, it also went to some lengths to highlight examples of best practice across all jurisdictions. So ministers have agreed to try and take some of that work forward over the next 12 to 18 months.

I guess the last area, again to pick up what Andrew said, was to take some of the CRC's findings and apply them in the transport and infrastructure space. So it comes back to the questions that I think Senator Nash was asking about sensible investment in infrastructure, getting transport planning more aligned and consistent and so on. The Commonwealth is front and centre in that ministerial council. Our minister chairs it. And that is where we are taking a fairly prominent role.

Senator EDWARDS: As I brought that up, I probably should take this opportunity to acknowledge a couple of things that the MCU is really getting some traction on, that you should feel very comfortable about and that you are kicking some goals with.

Mr Wilson : In terms of the MCU, the work that they have done in the last 18 months, the National Urban Policy, as a document, for the first time brought together the Commonwealth's interests and directions in the urban space. That was the first time that we have brought it as one document. The Urban Design Protocol, as I think I indicated before, has been a very positive piece of work and well accepted by the planning and development community. The work that we are doing on the State of the Cities report is extremely well accepted. It is a very well sought after document. The two versions have been downloaded over a million times in the last two years. I think the third version that we put out 2012 will be a step ahead again. The work that we are doing through the standing committee on transport and infrastructure will help us to shape that into an even better document.

Senator EDWARDS: Just having a look at all those, do you think that you lack a bit of teeth in trying to get a lot of this stuff implemented?

Mr Mrdak : I think, as I was saying earlier, we are very much reliant on building cooperation with the jurisdictions.

Senator EDWARDS: Okay. I get that.

Mr Mrdak : This is not an area naturally for the Commonwealth. We try and target our investment and planning reforms.

Senator EDWARDS: You can take a horse to water but you can't make it drink.

Mr Mrdak : But also the expertise on many of these matters resides with the states and territories. We are trying to set some directions and better link our processes, but at the end of the day the drivers here are going to be the jurisdictions.

Senator EDWARDS: Thank you.

CHAIR: Thank you very much. Well, look at that, we have finished. On that then, thank you very much to Hansard and Broadcasting—another great effort. Mr Mrdak, it has been an honour and a pleasure to have you and your crew here. Minister, thank you very much. That concludes today's hearing and the committee now stands adjourned. Thank you, Stephen and Cas.

Mr Mrdak : Thank you, again. Thank you, Senators.

CHAIR: Thank you.

Committee adjourned at 22:02