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Finance and Public Administration Legislation Committee
Department of Finance

Department of Finance


CHAIR: We are going to start with outcome 1 of the Department of Finance. I welcome the Minister for Finance, Senator the Hon. Matthias Cormann; Ms Jane Halton, Secretary of the Department of Finance; and other officers. Minister, do you wish to make an opening statement?

Senator Cormann: No, thank you.

CHAIR: Ms Halton, do you wish to make an opening statement?

Ms Halton : No, thank you.

Senator McALLISTER: Before we open questioning, I just want to check that the documents that we requested to be tabled area going to be tabled.

CHAIR: Yes. There was a request which I think was communicated through the secretariat as to the departmental structure. Is that correct?

Senator McALLISTER: No, it was in relation to arrangements.

Senator WONG: It was the usual documents in relation to MAPS staffers.

Ms Halton : Sure, we will get that.

Senator WONG: If we could get that ahead of time, that might save time later.

Ms Halton : Absolutely. I will get someone to bring it in. I am sure the person who has it is here somewhere. We will go and get it.

Senator WONG: Minister Cormann and Ms Halton, I am sure you will be pleased to know that we are keen to be efficient about this estimates process.

Senator Cormann: Good.

Senator WONG: I trust that there will be, therefore, some facilitation.

Senator Cormann: I am very keen to be very facilitative.

Senator WONG: That depends on how much you talk!

Senator Cormann: It also, of course, depends on the framing of your questions.

Senator WONG: Of course. If you are able to be a little flexible, it might facilitate things. We are technically starting with outcome 1, but I may move around a little bit.

Senator Cormann: We are happy to be flexible.

Senator WONG: I appreciate that. Ms Halton, on what date were you first informed that the 2016-17 budget had been brought forward one week?

Ms Halton : On whatever date the Prime Minister announced it. I do not actually have what date the Prime Minister made a public announcement.

Senator WONG: It was 21 March.

Ms Halton : Yes, that is when it was.

Senator WONG: Did you find out before or after his public statement?

Ms Halton : When he made the public statement, someone came in and told me that he had made a public statement.

Senator WONG: Had that been discussed with you previously?

Ms Halton : No, it had not.

Senator WONG: Just to be clear, you were not aware prior?

Ms Halton : No, I was not.

Senator WONG: And that puts you in the same position as the Secretary of the Treasury. At least it was ecumenical.

Ms Halton : It was ecumenical. I cannot speak for the Secretary of the Treasury, but I can tell you that is when I—

Senator WONG: Sorry, he has confirmed on notice.

Ms Halton : Has he?

Senator WONG: He also found out when the Prime Minister made his announcement. I assume there were a few timetable and process changes you had to implement as a result of being advised of that?

Ms Halton : Senator, as a former finance minister—

Senator WONG: That was a long time ago now.

Ms Halton : It does not change. You would understand extremely well that there was speculation, so we had thought about it just in case. But we did not actually change any of the timetable until there was a decision.

Senator WONG: On 21 March, tell me what key decisions were implemented in terms of the departmental process around timetabling.

Ms Halton : Budget group people can take you through the precise detail.

Senator WONG: I am sure they can. Thank you.

Ms Halton : A lot of Gantt charts were prepared to think about how we could actually get—

Senator WONG: Sorry?

Ms Halton : Gantt charts.

Senator WONG: Gantt?

Ms Halton : You know the process of managing a project?

Senator WONG: I am sure you could tell me all about that. Go ahead.

Ms Halton : The team can take you through the change to the timetable.

Ms Huxtable : As you would be aware, we had a budget timetable obviously heading for the budget on 10 May, so we reviewed that timetable. Based on the media speculation that had occurred the week before, we had done some scenario planning at that point around how the timetable could change and there was talk that there was—

Senator WONG: Ms Huxtable, can I pause you there for a minute.

Ms Huxtable : Sure.

Senator WONG: Sorry, I just wanted to sequence this. You said, I think, based on the media speculation of the week before you had done some provisional planning. I might be putting some words in your mouth.

Ms Huxtable : I had spoken to Ms Blewitt after reading in the media I think on the Thursday before the announcement—sorry, I cannot remember the actual days now—

Senator WONG: All I am trying to work out is: was that the first time you had been asked to consider a revised budget timetable?

Ms Huxtable : No-one asked me to consider anything. On the basis of the media speculation that I read at that time I asked Ms Blewitt to do some thinking around how the timetable would change in the event that there was an earlier budget

Senator WONG: So the minister's office, PM&C, did not ask you prior to—

Ms Huxtable : No.

Senator WONG: Let me just finish the question. I think I know what the answer is, but let's finish the question. The minister, the minister's office, Prime Minister and Cabinet—no person from any of those entities asked you to prepare provisional revised timetables for a 3 May budget. The preparation on that only commenced when you saw public speculation. Is that correct?

Ms Huxtable : That is correct.

Senator WONG: Do you want to tell me, just briefly, what changed then in terms of the timetable?

Ms Huxtable : My recollection is that there was not a need to change the timetable that dramatically, because the timetable that we already had had many of the key milestones occurring in a time frame that actually would have enabled us to deliver an earlier budget. That was my recollection. So, while there was some tweaking around when some of the timing of some of the final consolidations was scheduled, I think on the whole we did not have to do too much in terms of the timetable. At that time it was very early thinking, but afterwards, after 21 March, obviously we quickly moved to actually prepare a revised timetable.

Ms Blewitt : That is correct, as Ms Huxtable said. I do not have the timetable in front of me, but off the top of my head the key changes were making sure the estimates variations were locked away earlier, and we got advice out to the agency advice units in case agencies were asking them for any changes. As Ms Huxtable said, some of the consolidations, which you would be familiar with, were actually brought forward to be earlier.

Senator WONG: When was the final consolidation run?

Ms Blewitt : I do not know that off the top of my head.

Senator WONG: Someone would know.

Ms Huxtable : Probably the Thursday before the budget, or the Friday. Yes—it was the Thursday but, as usual, it was on the Friday we produced the tables, which is consistent with past practice. It was the last Thursday.

Senator Cormann: A week ago?

Ms Huxtable : Yes, that is right.

Senator WONG: It seems like a long time ago, but the budget was only—

Senator Cormann: That is because we had so much fun in the Senate this week, Senator Wong!

Senator WONG: And how long does a consolidation take these days?

Ms Huxtable : It depends on which one it is. The first ones usually take a while and the last ones not long at all.

Senator WONG: How long did the final consolidation take?

Mr Greenslade : The final consolidation, as you may well recall, is much quicker than the first one. It is at the end of the process. This one took more or less as long as it normally does, which is about four or five hours.

Senator WONG: When was the penultimate one?

Mr Greenslade : The one before the Thursday?

Senator WONG: Yes.

Mr Greenslade : I would need to check that, Senator.

Senator WONG: Mr Greenslade looked behind and no-one nodded, waved or did anything.

Mr Greenslade : My recollection is that it would have been the Wednesday or the Tuesday, but I will check.

Senator WONG: And the length of that?

Mr Greenslade : That would have been about five hours.

Senator WONG: Senator Cormann, when were you aware that the budget was being moved to 3 May?

Senator Cormann: I became aware of the decision to move the budget when it was announced—the actual decision to move the budget.

Senator WONG: You became aware of the actual, final decision to move the budget when the Prime Minister announced it?

Senator Cormann: As the Prime Minister indicated at the time, the decision was made that day and it was announced that day.

Senator WONG: Were you advised before he stood up? I understand. I think you have indicated in the Senate that there had been some discussion of options. That has been on the public record, certainly from the Prime Minister. But with the actual final decision—bang, we are going on the 3rd—were you advised before the Prime Minister stood up in the Prime Ministerial courtyard?

Senator Cormann: I was involved in the internal discussions, as you have already indicated. Obviously you would not expect me to go into the specifics of what is discussed within cabinet, but I was aware on the day that the announcement was made that the budget would be brought forward to 3 May.

Senator WONG: All I am asking about is whether you were aware that the Prime Minister was going to announce it before he did.

Senator Cormann: I was aware that the budget would be on 3 May on the day that the announcement was made.

Senator WONG: So you do not want to tell me if you knew before he stood up?

Senator Cormann: I am not going to go into the internal cabinet deliberation process.

Senator WONG: I am not asking about cabinet.

Senator Cormann: That is what you asking.

Senator WONG: Actually, I am not. I am just asking about timing. I did not even ask where or when. Before he stood up, did you know that he was going to stand up and did you know what he was going to say?

Senator Cormann: I have given you the best answer that I can give you—that is, I was aware on the day that the announcement was made that the budget would be delivered on 3 May, which, of course, has since happened.

Senator WONG: Why do you not want to tell us whether you knew before he stood up?

Senator Cormann: I have answered that question.

Senator WONG: Why do you not want to tell us?

CHAIR: The minister has provided an answer, and it is clear that is going to be his answer. I encourage you to move along to a further line of questioning, Senator.

Senator WONG: It is a little embarrassing. Minister, I think you said 'actual decision' in an earlier answer. What is the difference between an actual decision and any other sort of decision?

Senator Cormann: You have actually explained that yourself. You said that, obviously, before you make a decision of that nature there are a range of conversations about possible scenarios and options. The decision was made on the day that it was announced, and I was aware on that day.

Senator WONG: Who made the decision?

Senator Cormann: Obviously that is a decision of government.

Senator WONG: Who made the decision?

Senator Cormann: It is a decision of government.

Senator WONG: Were you part of a decision-making process on that day?

Senator Cormann: Again, it is a decision of government. As I have already indicated to you, I was aware of the timing of the budget on the day that the announcement was made.

Senator WONG: When the Prime Minister stood up?

Senator Cormann: I was aware of the revised timing of the budget on the day that the announcement was made.

Senator WONG: How did you become aware?

Senator Cormann: I was aware on the day that the announcement was made, because I am part of the government. It is a government decision.

Senator WONG: How did you become aware of the government's decision?

Senator Cormann: By being part of the government.

Senator WONG: Were you advised of the government's decision?

Senator Cormann: I am part of the government. The government made a decision to bring forward—

Senator WONG: Anybody watching this would see that you are avoiding this answer.

Senator Cormann: I am not quite sure what you are trying to get to by this historical dissecting of—

Senator WONG: It is a very simple question. I want to know whether you, as the Minister for Finance for the country, knew that it was going to happen before the Prime Minister stood up and announced that the budget would be a week early.

Senator Cormann: The Australian people and people watching want to know about our plan for jobs and growth. They want to know how we are going to successfully transition from resource investment driven growth to broader drivers of growth in a strong, innovative and diversified economy. I do not think they are interested in your dissecting of things that, quite frankly, are part of well-established history. An announcement was made—I think it was on 21 March, from what has been said before by the Prime Minister—that the budget would be brought forward to 3 May. You might recall that this follows on from a very long debate in the Senate about reforms to Senate voting arrangements. Obviously in that context and at that time the government had a whole range of conversations about—

Senator WONG: This is a long answer!

Senator Cormann: I am just putting it into context. You have asked for additional context.

Senator WONG: Actually, I did not. I asked you a very simple question. Did you know or not?

Senator Cormann: You have asked me a question, and I am now answering it with some more detail. The context was that, at the time, the government was very keen to ensure that we would get a decision from the Senate about our plans to restore and re-establish the Australian Building and Construction Commission. Yes, there were a whole range of conversations about the timing of bringing back the parliament, about the way that that could be done, about the processes under section 5 of the Constitution and about what the implications of that would be for the delivery of the budget and for the timing of the budget. A decision was made by the government. I am part of the government, and, on the day that the decision and the announcement were made, of course I was aware of the revised timing for the delivery of the budget.

Senator WONG: I think the answer is no.

CHAIR: The answer is obvious.

Senator Cormann: I reject you verballing what I am saying. I think that my answer stands by itself.

Senator WONG: Your very lengthy answer. All right, I will ask the question in a different way: were you aware that the Prime Minister was making an announcement that day, before he stood up?

Senator Cormann: I was aware on the day that the announcement was made that the budget would be delivered on 3 May.

Senator WONG: Are you refusing to answer how you became aware?

Senator Cormann: I am part of the government and I am part of the decision making process of government.

Senator WONG: Was there a decision making process on the day in which you participated?

Senator Cormann: As I have said, I am part of the decision making processes of the government. I am part of the cabinet. I am not going to go into the details of the cabinet deliberations.

Senator WONG: Apparently not on this occasion. Apparently you were out of the loop.

CHAIR: Order! Senator Wong, you should allow the minister to respond adequately to the question.

Senator Cormann: Senator Wong, you are making assumptions which I do not accept. I am not quite sure what it is that you are trying to somehow discover. Everybody knows that the Prime Minister announced the bringing forward of the budget. Everybody knows that we were successful in bringing the parliament back to get a decision from the Senate about the Australian Building and Construction Commission. Everybody knows that the shadow Attorney-General is not smart enough as a lawyer to read all the way to section 5 of the Constitution. Apparently he did not understand the methodology of proroguing of parliament. Everybody knows that history. I am not sure how much is achieved by dissecting this part of the history, which, quite frankly, does not reflect all that well on Labor.

Senator McKENZIE: That is a good analysis. They are the facts.

Senator WONG: I am very happy to get to the facts. I think a relevant fact is whether or not the Minister for Finance actually knew, before the Prime Minister stood up, that the budget he was going to be part of delivering was going to be delivered a week earlier. I think it is very clear, Senator Cormann, in the absence of you doing something other than waffling, ducking and weaving, that you are not prepared to tell us that you were.

Senator Cormann: That is not clear. What you are asserting is wrong. Here are the important points: No.1, we made a decision as a government to bring forward the budget by a week; No. 2, the budget was delivered on Tuesday. The budget that we delivered is our plan for jobs and growth, it is our plan to successfully transition our economy from resource investment driven growth to broader drivers of growth in a diversified economy and it is our plan to put the budget on a sustainable foundation for the future. We are doing that by controlling expenditure, by cracking down on tax avoidance and by making sure that the relevant tax concessions—particularly in the superannuation space—are better targeted.

I understand you want to go through the minutiae of every little movement in any little deliberation at some point a few months ago, but the truth, as everybody knows, is that the budget was brought forward. Everybody knows that the budget was delivered. It was delivered a few days ago, and, perhaps, we might get some questions about the actual budget.

Senator WONG: I am happy to move to that. I will just say this: whenever you start to rattle off your script, we know that you do not want an answer a question.

Senator Cormann: I am just answering your question.

Senator WONG: No, you do not want to answer the question. It is embarrassing that the Minister for Finance was not aware of what the PM was doing.

Senator Cormann: You're actually wrong!

Senator WONG: If I am wrong then you should answer the question.

CHAIR: Order! If you want direct answers to your questions then you should not make the allegations, the insinuations or the inflammatory suggestions that you have just made, Senator Wong.

Senator WONG: Sure. I will move on.

CHAIR: Kind is generally repaid in kind. That is how I see it.

Senator WONG: I think he started it by trying not to answer the question. I think that was pretty clear for everybody.

CHAIR: I am not going to go to who started it and who did not.

Senator WONG: Can I go to the budget overview now. The budget overview states at page 8, 'The government is committed to ensuring that the $13 billion of unimplemented expenditure savings measures are passed by the Senate alternative savings measures identified …'. I want to be clear as to the status as a result of that commitment of various budget—

Ms Halton : Sorry, where were we?

Senator WONG: Page 8 of the budget overview.

Ms Halton : Thank you. I just did not catch the page reference; I am sorry. Sorry, can you ask the question again. Sorry, Senator.

Senator WONG: The last paragraph. The government has made clear in this it is committed to the $13 billion of unimplemented saves, so I just want to make sure we are clear about what the government remains committed to and what remains in the current budget. Okay? Are we right?

Senator Cormann: Yes, I know what you mean.

Senator WONG: I will not do all of them, but I just want to be clear. I want to try to make sure we are clear about what is included in that $13 billion.

Senator Cormann: We might have to take that on notice.

Senator WONG: Can I just put a few things and then see if people can answer them, and then—

Senator Cormann: That document that you are raising is actually a document put together by Treasury, and I think we have had this conversation in the past.

Senator WONG: Sure.

Senator Cormann: It is not a Finance document, so if you want any specific detail in relation to numbers that are published in this document you will have to put those questions to Treasury tomorrow.

Senator WONG: Oh, come on! Finance, I am sure, can answer what saves are where. I use that as a shorthand to get to what remains in your budget bottom line, so we can do it that way if you want. I am sure you can answer questions about what remains in the forward estimates in terms of savings which have not been legislated but which the government has included and therefore remains committed to. Does the government remain committed to, and does the budget reflect, the savings from the increasing co-payments and safety net thresholds to the Pharmaceutical Benefits Scheme?

Senator Cormann: Yes.

Ms Halton : Yes.

Senator Cormann: The answer is yes.

Senator WONG: Thank you. Does the government remain committed to the cessation of the pensioner education supplement?

Senator Cormann: I think you know that if measures are in previous budgets then—

Senator WONG: I know.

Senator Cormann: Let me just make a really simple statement here which will address all of this. You might want to go through a shopping list, but here is my—

Senator WONG: No, I want to talk about six or seven, and then we will—

Senator Cormann: Here is my very helpful overarching statement: unless we have made announcements in this budget or in previous budget updates where we changed budget measures in budgets past, they remain the government's policy. So any budget measures which were included on the revenue or on the spending side of the budget in previous budgets, unless they have been changed and announced as changes in subsequent budgets or budget updates, remain government policy.

Senator WONG: I understand that. I am just going to go through a few. In light of your statement, the government remains committed to, and reflects in its budget, the cessation of the education entry payment?

Senator Cormann: As I have said, there is an overarching position, and I am happy to repeat it again. Any measures that are reflected in previous budgets of our government since September 2013—

Senator WONG: Why don't you just say yes? This just lengthens it.

Senator Cormann: unless they have been changed or reversed in subsequent budgets and budget updates, remain the government's policies.

Senator WONG: Can we just get a yes. So included in that is the education—

Senator Cormann: I am going to answer your questions in the way I feel that they are best answered.

Senator WONG: That includes the education entry payment ceasing—correct?

Senator Cormann: What I would say again, as a general rule, is that, wherever budget measures have been included in previous budgets, unless they were changed in subsequent budgets or budget updates, or reversed in subsequent budgets or budget updates, they remain budget policy.

Senator WONG: Does it remain budget policy to remove the double dipping from paid parental leave?

Senator Cormann: Again, what I would say in a generic sense is that, for any budget measure that is part of previous budgets, unless they were changed or reversed in subsequent budgets or budget updates, they remain government policy.

Senator WONG: Okay, but I am asking a specific question. Please stop avoiding it. Just confirm to us that the removal of double dipping remains in the budget and remains government policy. Is that correct or not?

Senator Cormann: I am obviously talking about this year's budget.

Senator WONG: I understand the generic, but—

Senator Cormann: It is a very simple proposition, and it is the same proposition that was in place under previous governments of both political persuasions.

Senator JACINTA COLLINS: Yes, but previous governments answered questions.

CHAIR: Order!

Senator WONG: This is ridiculous.

Senator Cormann: This is our third budget in government.

Senator WONG: You do not want to tell us what your policy is.

CHAIR: Senator Cormann, you have the call.

Senator Cormann: This is our third budget in government.

Senator JACINTA COLLINS: Are you going to sit here all day and—

CHAIR: Senator Collins, you are not being helpful.

Senator JACINTA COLLINS: Is that what he is going to do?

Senator WONG: We can just stay.

CHAIR: Minister, just wait.

Senator WONG: This is ridiculous.

CHAIR: You can state your answer again in a moment. It is not helpful if people are interjecting on the minister while he is giving his answer.

Senator WONG: It is ridiculous. It is a simple measure.

CHAIR: Senator Wong and Senator Collins, notwithstanding the answers you might like, you can ask your questions and the minister can answer them in the manner he chooses.

Senator WONG: Is the removal of the double-dipping—

CHAIR: Minister, have you concluded your answer to the previous question?

Senator Cormann: No. I was starting my answer before I was rudely interrupted.

Senator WONG: It looks like we are going to be here longer, everybody.

Senator Cormann: If I could answer the question. As I indicated in response to previous questions of a similar nature, all the measures that have been included on the revenue and on the spending side of the budget in previous budgets of this government since September 2013, unless we have changed or reversed them in subsequent budgets or budget updates, remain government policy. That is a very clear and unequivocal statement. I understand that Senator Wong is keen to go through a political exercise, but that is my answer and that will be my answer to every question of this nature, because it is the most accurate answer that I can possibly provide.

Senator WONG: Has there been any change to or alteration of the government's position on the removal of double-dipping for paid parental leave in the budget?

Senator Cormann: Obviously the government released the 2016-17 budget papers on Tuesday night. All of the measures on the revenue and on the spending side of the budget are included in Budget Paper No. 2.

Senator WONG: Who did BP2? You budget proofed your BP2. There is no change to the double-dipping of paid parental leave, is there?

Senator Cormann: I am taking these questions. Budget Paper No. 2 is the budget paper—

Senator WONG: So the finance minister is not allowing this committee to ask questions—

CHAIR: Order, Senator Wong.

Senator WONG: Chair, this is an extraordinary level of obstruction.

CHAIR: You asked a question and then the minister was responding.

Senator WONG: I am asking if there has been any alteration of it, and he will not answer that and he will not allow officials to answer it.

Senator Cormann: Hang on—

CHAIR: He is providing an answer.

Senator WONG: I know it is embarrassing that these things remain your policy and you do not want people to know that, but they are. Why don't you front up and defend them?

CHAIR: Order! Senator Wong, you know that it is perfectly within the prerogative of the minister to take questions for himself, and he is responding to your question. So please, if you have questions, ask them and the minister will respond.

Senator Cormann: If I could respond, please. Obviously Budget Paper No. 2 is there for all to see. I am very confident that Senator Wong, as a former finance minister, would have had a very close look at Budget Paper No. 2. I am very confident that Senator Wong knows what is and is not in Budget Paper No. 2. I am very happy to answer questions about measures that are in Budget Paper No. 2 of 2016-17. But, just to confirm the position again, in relation to budget measures from previous budgets, unless they are changed or reversed in subsequent budgets or budget updates, they remain government policy. I am very confident that Senator Wong knows the answer to her own question and that she is just going again through a political exercise because she does not want to talk about our plan for jobs and growth.

Senator WONG: Have there been any changes as a result of parameter changes to the costing of the removal of double-dipping from PPL?

Ms Huxtable : As part of the budget we look at whether there need to be any estimates variations in respect of legislation that has not yet passed. I have a list which is in very small font, so I can hardly read it. I think that that is one of the ones that may have been affected.

Senator WONG: Are you able to table that later in the hearing? This is an estimates variations list, right? It is over and above—

Senator Cormann: It is actually a document—

Senator WONG: Can I just finish the question? It is over and above what has been publicly released?

Senator Cormann: We will have to take that on notice. We will consider it on notice.

Senator WONG: I will just ask questions, then. What is the estimates variation on the removal of double-dipping from the paid parental leave policy?

Ms Blewitt : In 2016-17 there is an adjustment of $128 million—

Senator WONG: What is that as a result of?

Ms Blewitt : due to the delay in the start date. Is that correct?

Senator Cormann: The delay in the start date, yes.

Senator WONG: No others? What about the increase in the age pension qualifying age?

Senator Cormann: That does not come into effect until well after the forward estimates—

Senator WONG: I assumed that, but I just want to confirm that there is no—

Senator Cormann: so there would not be an estimates variation—

Senator WONG: Nothing on that—okay. And the PBS? The first question I asked was on the co-payments and the safety net thresholds.

Mr Hunt : There was an estimated impact of legislative delays of around $118 million over the forward estimates.

Senator WONG: Which is just a start date—

Mr Hunt : It is a slip in the start date.

Senator WONG: So the assumption around the start date is the beginning of calendar 2017 or June 30?

Mr Hunt : It is the beginning of calendar 2017.

Senator WONG: Calendar 2017—okay. The freeze on eligibility thresholds—same again?

Ms Huxtable : I think that was incorporated in the figure that you gave. The figure we have includes both the increase in payments and the safety net threshold.

Mr Hunt : That is right.

Ms Blewitt : That is an increase in co-payments and the—

Senator WONG: Sorry, I was going to a different measure.

Ms Huxtable : Okay.

Senator WONG: It is the freeze on eligibility thresholds for government payments for three years.

Mr Hunt : There is an impact, Senator; we might have to get back to you on what it is .

Senator WONG: That is fine.

Mr Hunt : It should not take us long, but I cannot identify—

Senator WONG: It would be useful—it would truncate the process, if you are able to table something and I can come back to it. But why don't you have think about it?

Senator Cormann: I think we have got a number for you.

Mr Hunt : It is $2 million in 2016-17.

Senator WONG: What about the—I think BP2—this is the higher education policy. You have got—I am just trying to understand what is included and what has been taken out of the budget.

Ms Halton : Is this on page 77, Senator?

Senator WONG: I have not checked yet, but thank you—yes, the further consultation measure. I am just trying to unpack that table: CP277—I am indebted to Ms Halton. Senator Cormann, just so you are aware, I am trying to unpack what underlies this.

Senator Cormann: I would just make an overall statement up-front though: obviously, this is a measure in the education portfolio so, as always, we will seek to be as helpful as possible, but it might well be that some of your questions may be more appropriately directed to the education portfolio.

Senator WONG: I am just trying to understand the basis of the costing. There are a number of elements to the government's higher education package, as previously announced. They are now delaying implementation of some of the reforms, which have been previously announced by an additional year, to undertake further consultation. It says:

Higher education funding arrangements for 2017 will be in line with currently legislated arrangements.

The government has made a policy decision not to proceed with the deregulation of fees. So can I just go through it sequentially? Any cost impact, obviously—or revenue impact—of the deregulation of fees has been taken out of the costing?

Senator Cormann: I have got to say, I think here you have got to go for this sort of detail to the education department—

Senator WONG: Mr Thomann is quite capable of answering this question; he would have done the costing.

Senator Cormann: It is squarely a matter for the education portfolio.

Senator WONG: All I am asking about is the costing; I am not actually asking about the policy—

Senator Cormann: Squarely—

Senator WONG: and you would have had to do the costing.

Senator Cormann: Squarely, a matter for the education portfolio.

Senator WONG: What I am trying to understand is, first, the costing over the forwards includes previous legislated arrangements on indexation—correct?

Senator Cormann: The costing of this measure includes everything that is in the measure description.

Senator WONG: But it is not—

Senator Cormann: but if you want to go into more detail—

Senator WONG: there is more. What I am trying to, which sort of the relates to our earlier discussion about what remains in the budget from previous—the 20 per cent reduction per undergraduate place, is that still assumed in the costing?

Senator Cormann: Again, you are—

Senator WONG: You would have done this costing.

Senator Cormann: I refer to my previous answer: all budget measures that were included in previous budgets and budget updates—and the measure actually says this specifically; it actually talks about the higher education reforms announced in the 2014-15 budget and in the 2014-15 MYEFO. Our government's policy, unless changed—and there is a change that is announced in this measure: it has got two components to it and it is in the measure description. One is a further delay by one year to enable Senator Birmingham, the Minister for Education, to conduct some further consultation with relevant stakeholders. The other component is not to proceed with one component of the measure that was in the 2014-15 budget, which is the deregulation of university fees. Beyond that, if you have any more questions about specific details in relation to this policy, it is squarely a matter for the Education portfolio to provide answers.

Senator WONG: You and I both know that that is ridiculous, because Finance does the costings. What cost per student does this costing assume? Does it assume the 20 per cent reduction per undergraduate place?

Senator Cormann: The costing assumes the measure description that is published in the—

Senator WONG: But that is not in the measure description, because it is in the previous measure descriptions.

Senator Cormann: If you want any more detail you have got to go to the Education portfolio—

Senator WONG: Oh, come on. Are you moving away from the 20 per cent reduction per undergraduate place?

Senator Cormann: I refer you to the Minister for Education and the Education portfolio estimates.

Senator WONG: It is pretty funny. You should actually be prepared to defend your policy. So you are not going to let me ask Mr Thomann, you are just going to keep running interference about—

Senator Cormann: I am taking questions—

Senator WONG: No, let me finish the question, please.

Senator Cormann: in relation to my budget papers.

Senator WONG: Let me finish the question. I want to ask the official, as senators are entitled to do, about an element of the costing which he would have been part of, and you are refusing to allow him to answer. Just so we are clear on that.

Senator Cormann: What I am clear on is that—

Senator WONG: Why are you so ashamed of your policy?

Senator Cormann: You are asking me a question. Can I answer it, please?

CHAIR: For the benefit of Hansard, it is easier if we do not talk across each other. When a question is asked it is appropriate for an answer to be given without interruption. Senator Wong, I think you did ask a question so, Minister, you have the call to respond.

Senator Cormann: Thank you. As I have said previously, in relation to specific questions about the specific detail in underlying costings of the approach to higher education, that is appropriately a matter to be addressed to Senator Birmingham and the officials in the Education portfolio.

Senator WONG: Chair, that has never been the approach in this committee. Finance has always been able to answer on elements of costing. If there are matters of policy then we will go to the departments. I am just flagging that if that is the new rule, then if we are in government that will be the rule that is applied. It is ridiculous.

CHAIR: You know that I cannot set the rules as to the answers to given. I can only ask that the officers and the minister cooperate in responding to your questions to the best of their ability.

Senator WONG: He is not even allowing the officer to answer.

CHAIR: It is not a matter of him allowing the officer to answer—

Senator WONG: He isn't. He has not, Chair.

CHAIR: Just a moment. It is not about—

Senator WONG: Okay, let me ask the question and see if he is allowed to answer.

CHAIR: Order! Senator Wong, it is not a matter of not allowing an officer to answer. It is entirely within the standing orders and entirely reasonable for the minister to undertake to respond to questions himself. That is in my opening statement, and that is entirely for the minister's discretion.

Senator WONG: Minister, I want to ask Mr Thomann if the 20 per cent reduction is still in the costing. Are you going to let me ask him that?

Senator Cormann: I have taken that question as the minister responsible at the table, and I have referred that question to the Education portfolio and the Education estimates.

Senator WONG: Okay. I do want to ask about the fiscal-UCB different accounting. Presumably someone in Finance is allowed to tell me that.

Mr Thomann : The drivers of the difference in the fiscal impact and the underlying cash impact go to the accounting of concessional loans so, in relation to the two parts, the reversal of fee deregulation has a positive fiscal impact due to the fact that we are no longer incurring estimated upfront costs in fiscal balance terms.

Senator WONG: In other words, lend less?

Mr Thomann : We will be lending less, but the concessional nature of the loans that would have been lent were a cost at the time of that costing which is now reversed, which is a saving.

Senator WONG: To the … ?

Mr Thomann : To the fiscal. That goes to the accrual.

Senator WONG: That is what is driving the $2 billion?

Mr Thomann : That is what is mostly driving the $2 billion.

Senator WONG: What else?

Mr Thomann : The other part is the deferral by one year of removing loan fees, and that—

Senator WONG: Sorry, of the?

Mr Thomann : The other part, in terms of the packages of measures originally announced by the government; deferring that by a year. The main fiscal impact relates to deferring by one year the policy of removing loan fees. That would have been a cost. That has now been moved a year, and we are now getting a fiscal save for that year.

Senator WONG: Can you break the $2 billion down into the three components you have just outlined?

Mr Thomann : There are a number of elements, obviously, in the original measure. Roughly speaking, the reversal of fee deregulation delivers about one and a half billion of the two billion and the net effect of the movement of all the other measures originally announced by the government by a year gives us the other half billion.

Senator WONG: Why is cost in UCB? That is the second part of the sentence.

Mr Thomann : The cash goes to interest received from the loans. Originally we would have costed getting that interest and now that number has been removed. That is then a cost.

Senator WONG: Is the entirety of the $596.7 million simply the interest?

Senator Cormann: No, that is not right.

Mr Thomann : No. I am talking about major drivers.

Senator WONG: I am just trying to get a sense of what is driving the $596.7 million cost.

Senator Cormann: There are two components here, of course. It is clearly outlined in the measure description. One component is a further one-year delay in the implementation and the other component is the bit that you have just gone through. In terms of the specific details of all of that, as I have previously indicated, the best place is to ask these questions in the education portfolio.

Senator WONG: Come on! Fiscal UCB is Finance. I am just asking what is driving it.

Senator Cormann: And we have dealt with the fiscal UCB. And I just answered your question.

Senator WONG: What proportion of the $597 million is as a result of not receiving the interest payments?

Senator Cormann: As you can see in the measure description, the total cost of this higher education measure is $596.7 million over five years. There are several components to this cost. One is the decision to delay by another year the implementation of relevant 2014-15 budget and MYEFO measures. The other is related to the component that Mr Thomann just explained, which is not receiving certain interest payments on the back of loans that have been written.

Senator WONG: Thank you for repeating the evidence. We all know that.

Senator Cormann: The total cost is $596.7 million. In terms of the detail beyond that, as we have established on a number of occasions now, that is the total UCB cost of those two decisions. If you want to have further detail beyond that it ought to be addressed to the Department of Education and Training.

Senator WONG: I have been given one element of UCB cost. What are the other elements? I do not need them broken down.

Senator Cormann: I have just given you both. One element—

Senator WONG: No, you gave me what is driving the fiscal change.

Senator Cormann: No, I have not. I have given you the two elements that are driving the UCB change. One is the one-year delay and the other is the reduced income from interest payments on the back of these loans that are now not going to be provided.

Senator WONG: Any other major elements in the UCB?

Senator Cormann: No. There would not be any other major changes. If you want more detail from us we would have to take it on notice, but it would be much better if you took the advice to ask these questions—

Senator WONG: I am sure he has got it in a folder.

Senator Cormann: It would be much better if you ask these questions in the appropriate place.

Senator WONG: He has got it in the folder in front of him and you will not let him answer.

Senator Cormann: The appropriate place for asking questions about higher education is the education portfolio.

Senator WONG: Why don't you just say: 'We are cutting funding to universities'?

CHAIR: Let's just rule a line under this for a moment. If you cannot behave in an appropriate manner we are going to go to Senator Rice, who will behave in an appropriate manner, I am sure.

Senator WONG: Maybe they will answer her questions.

Senator RICE: We will see, won't we.

Senator WONG: It is ridiculous. They are embarrassed about their—

Senator RICE: We will see whether they answer my questions. I want to ask about the Public Service efficiency dividend, which as I understand is proposed to stay at 2½ per cent until the end of 2017-18 and then two per cent in 2018-19. I want some details as to how it is proposed that efficiency dividend is going to be rolled out. Is it going to be applied equally across all agencies?

Dr Bartlett : Efficiency dividend is applied in a generally consistent but varying way at the moment. There are certain agencies that are partially exempt or fully exempt from it.

Senator RICE: Which agencies are exempt?

Dr Bartlett : I can give you a list, Senator. The ABC is fully exempt; the SBS is fully exempt; Safe Work Australia is fully exempt; the Office of National Assessments is fully exempt; the office of the Inspector-General of Intelligence and Security is fully exempt; 89 per cent of funding for the Department of Defence is exempt; 88 per cent of funding to the Australian Institute of Marine Science is exempt; 85 per cent of funding to the Australian Nuclear Science and Technology Organisation is exempt; 70 per cent of funding to the Commonwealth Scientific and Industrial Research Organisation is exempt; the Australia Council is exempt in relation to grants to major performing arts organisations; Immigration and Border Protection has an exemption in relation to Coastwatch contractual arrangements for surveillance aircraft and helicopters and the import-processing charge; the Australian Maritime Safety Authority is exempt in relation to funding for search and rescue activities and aircraft contracts; and the National Disability Insurance Agency is exempt in relation to funding for the reasonable and necessary care and support for participants program and the sector development and support program.

Senator RICE: Seventy per cent of the funding to the CSIRO is exempt, you just said. How does that work? That means that there would be a cut of 30 per cent to funding?

Dr Bartlett : Thirty per cent of funding would attract the efficiency dividend.

Ms Blewitt : While that is correct, ministers do have discretion to apply the efficiency dividend across their portfolio.

Senator RICE: How does that work then? You are budgeted to have the efficiency dividend that is based on a cut to funding across the board—and, as we said, there are agencies that are exempt. So how would it work for the minister to have that discretion?

Ms Blewitt : The minister, in his portfolio, would still need to find that actual equivalent dollar amount to the efficiency dividend but has the discretion, subject to the agreement of the Minister for Finance, to apply that across the portfolio.

Senator RICE: In terms of the CSIRO, given the big cuts that have been made to CSIRO over the previous years, is there any recommendation or indication? If CSIRO was going to be completely exempt, I would have thought that it would have been 100 per cent in the budget papers.

Ms Blewitt : In terms of process, this particular initiative has been provisioned in the contingency reserve. We have not been out to agencies yet. Post budget, which is standard practice, we would go out to agencies and issue an estimates memorandum asking them to complete the relevant workbook. It is a workbook where they will look at their appropriations and do their calculations. It is normally part of that process. If a minister wants to seek the agreement of the Minister for Finance to apply the efficiency dividend across other parts of the portfolio, that would happen then.

Senator RICE: So in other parts of science they would then be hit harder in order to save CSIRO from being subject to 30 per cent of its funding.

Ms Halton : Let's be clear about this. It is pretty clear from the way the exemptions that have just been read out that what happens is that administrative activity is largely subject to the efficiency dividend. In this particular case, my understanding is that CSIRO has a series of scientific activities which are not subject to; hence, the 70:30. I normally write out to portfolio secretaries asking them to indicate to me—and our expectation is that they work with their minister—how the efficiency dividend is being applied. There is a point at which we cannot answer your questions because, as the officers have already indicated, we have not gone to that process yet.

The macro numbers on the efficiency dividend are known. That is what we do as part of the budget process. The percentage is known. You would be aware that the measure this year includes us keeping aside a pool of money to reinvest in modernising and streamlining public sector administration. That is a new measure as part of this budget. But beyond the specific allocation, noting the exemptions which have been outlined by the officer, you would really need to talk to the relevant portfolio. They may or may not be able to answer your question yet, because the process has not even started.

Senator RICE: At this stage, in terms of the global budget of CSIRO, 30 per cent of the CSIRO budget would be subject to this efficiency dividend, unless there was a case made to the minister that it should not apply or that it should be made up elsewhere in the portfolio.

Ms Halton : The numbers are calculated based on the exclusion of the 70 per cent, to give the aggregate portfolio number. Then we ask them to tell us where those savings are being sourced from.

Senator RICE: So the default is that that efficiency dividend would be expected to be coming from that 30 per cent of the funding from CSIRO? That is what your calculations are based on.

Ms Halton : I think it is important not to use words like 'default'. We calculate the numbers and then they tell us where it is coming from. I have seen many pieces of correspondence over the years where people have said, 'I'm going to take it from here, here and here.' That is at the discretion of the minister of the portfolio, and the portfolio secretary writes back to me. We cannot answer on their behalf.

Senator Cormann: The important point to make also is that this only relates to the departmental funding component—so it only relates to the departmental funding component.

Senator RICE: Yes, but government funding is a critical funding component to CSIRO.

Senator Cormann: But when you say 'government funding', that is actually both departmental and program. Government funding goes much further than departmental funding. Departmental funding is literally just a small bit that goes into administration. Program funding, which is also funding, is what—

Senator RICE: But that is the 70 per cent that is exempt.

Senator Cormann: Program funding is not subject to the efficiency dividend, and—

Senator RICE: Yes, but isn't that the 70 per cent that is exempt?

Senator Cormann: You cannot make an assumption—

Senator RICE: Can I clarify that? That the 70 per cent that is exempt is the program funding?

Senator Cormann: All—100 per cent—of program funding is exempt, because the efficiency dividend only applies to departmental funding. The other point that I would make is that you cannot make an assertion in any way, shape or form of which agency this would apply to, because these decisions have not actually been made yet.

Senator RICE: But the budget papers presume that 30 per cent of the departmental funding to CSIRO will be subject to the efficiency dividend.

Senator Cormann: That is not right.

Ms Halton : Actually, no, senator—they do not. As the officers have indicated, the aggregate number is put aside in one place in the budget. It is not distributed in the budget. We do not make an assumption of where it will fall. That is exactly why the numbers are kept in one place.

Senator RICE: But the way that that aggregate number was developed was based on the assumption—otherwise you have no basis for where your—

Senator Cormann: No. I can tell you exactly how the number was developed. We have extended the 2½ per cent efficiency dividend by one further year so, instead of stepping down in 2017-18 we are stepping down a bit later. But we are stepping down, ultimately, into the same destination, so it is essentially just an extension of the 2½ per cent efficiency dividend that has been in place for some time by one more year. That comes up with the number that we just reflected in the budget papers.

Senator RICE: But without it being reallocated from somewhere, 30 per cent of the CSIRO departmental funding is subject to the efficiency dividend?

Senator Cormann: That is not right. That is not an assertion that you can make, because that is a decision that has not yet been made.

Senator RICE: We were just told that 30 per cent of CSIRO funding is not exempt from the efficiency dividend.

Ms Halton : For the purposes of the calculation of the aggregate quantum.

Senator RICE: I can understand that the minister for science can then have negotiation with the finance minister and say that it has to come from somewhere else rather than from CSIRO. That is what I understand I was just told.

Senator Cormann: No. That is not so. You were told that the minister for the portfolio makes the decision on how the efficiency dividend is applied—that is right. But the important point here is that there has not been a judgement on individual agencies or on assumptions on how the efficiency dividend would apply to individual agencies. What has been done is that with relevant departmental funding from right across government on a whole of government basis, obviously there is a dollar amount that reflects the total departmental funding across government. There is a percentage amount which reflects the efficiency dividend, which is 2½ per cent. That 2½ per cent efficiency dividend has been extended by one more year, and there is a dollar amount that comes out at the bottom. How that is spread across government is work that is yet to be done.

Senator RICE: But there is no ruling out at this stage that that efficiency dividend would apply to 30 per cent of the CSIRO funding, because that is what the assumption is.

Senator Cormann: Again, that is not actually something that departmental officials in Finance or, indeed, the Minister for Finance can answer. At risk of saying the same to you as I said to Senator Wong, if you want to find out more about the intentions of the relevant minister when it comes to agencies in his portfolio, then you have got to really address that to the relevant industry portfolio estimates which, I believe, are tomorrow.

Senator RICE: Given the government's supposed focus on science and innovation, was there any consideration given to 100 per cent of CSIRO funding being exempt from the efficiency dividend?

Senator Cormann: Sorry, can you say that again?

Senator RICE: Given the government supposedly has a focus on science and innovation, was there consideration given to CSIRO being 100 per cent exempt from the efficiency dividend, like other agencies such as ABC and SBS are?

Senator Cormann: This is not the science and innovation part of the estimates.

Senator RICE: No, but it is the efficiency dividend part. We are told that some agencies are 100 per cent exempt; I would have thought that, given the government's focus on science and innovation, there would be a strong case that CSIRO should have been 100 per cent exempt from the efficiency dividend.

Senator Cormann: The efficiency dividend does not apply to CSIRO program funding—

Senator RICE: But it still applies to 30 per cent of CSIRO's funding we have just been told.

Senator Cormann: The efficiency dividend across the whole—

CHAIR: I did not give you the call so that you could interrupt the minister. Let us get through it. We will deal with his answer.

Senator RICE: My questions are not being answered.

Senator WONG: As if all the senators are not going to interrupt the minister as he endlessly—

Senator RICE: I think I have as much of an answer as I am going to get.

CHAIR: I stand by my previous advice: courtesy is contagious, and you will get much a greater response from the minister if you do not interrupt him. Minister, did you have anything further to add?

Senator Cormann: As I have indicated, the efficiency dividend is applied to departmental funding on a whole-of-government basis. No specific decisions have been made about individual agencies at this point.

Senator RICE: Thank you, Minister.

Senator McALLISTER: To follow up on some of Senator Rice's questions, in your explanation about how the efficiency dividend flows through to agencies I think you advised that you tell them the number and then they tell you how the efficiencies are to be achieved—is that correct?

Ms Halton : That is correct. As I have indicated, we keep the aggregate amount in the one pool. Then, as has been indicated, we provide guidance and then write out to the agencies to say, 'Please advise us', because we cannot attribute the efficiency dividend we have in respect of each portfolio without that advice.

Senator McALLISTER: In practice, that means that you do not understand what the impact on jobs will be, for example, in a particular department?

Senator Cormann: I have to intervene here. I just had to smile at Senator Wong, because in the lead up to the last election similar efficiency dividends were applied by the previous government. The specific answer to your specific question about the way we are treating efficiency dividends across the government is that we are treating them in the exact same way as the previous Labor government.

Senator McALLISTER: I am seeking clarity.

Senator Cormann: It is the exact same way that Senator Wong applied the efficiency dividend.

Senator McALLISTER: I am seeking clarity, for the purposes of this estimates hearing, of how that works. Ms Halton was explaining it to me.

Senator Cormann: But the very important point here is that it works in the exact same way as it worked under your government.

Senator WONG: May I jump in there, Chair?

CHAIR: Yes, you may.

Senator WONG: Mr Tune gave evidence about the methodology—that finance did, at the aggregate level, assume what proportion of the aggregate savings is from staff and non-staff costs. Mr Tune gave very clear evidence about that. These are based on the assumption that 55 per cent of those savings will come from staff costs; the other 45 per cent would come from non-staff.

Senator Cormann: We have not made that assumption.

Senator WONG: If that is the case, you are not doing it in the exact same way.

Senator Cormann: You are saying that you did assume staff cuts?

Senator WONG: Finance, under Mr Tune, was prepared to tell this Senate committee what, after the last election, the assumption was about staff and non-staff costs, which is why you were able to play some politics with it, because he was prepared to be up front. Is someone prepared to be up-front about what is the staff and non-staff assumption behind this figure?

Senator Cormann interjecting

Senator WONG: You are not going to let the secretary answer? This is the question Mr Tune answered.

Senator Cormann: It is my prerogative to answer questions.

Senator WONG: Right, so you are not letting her answer?

Senator Cormann: Your commentary is interesting, but if I might answer your question? It says in the budget measure:

The Government will achieve efficiencies in the operation of the Australian Public Service by increasing the standard annual efficiency dividend by 1.5 per cent in 2017-18 …

In practice that means that we are continuing with the 2½ per cent efficiency dividend that is in place at present for one more year. That comes down to one per cent in 2018-19 and half a per cent in 2019-20. Importantly, we are proposing to reinvest about half a billion of that $1.9 billion saving into the transformation and modernisation of the public sector.

We believe that we can achieve a significant efficiency dividend from the digital dividend. We believe that across important parts of government the digital dividend is able to unlock efficiencies that will be able to contribute towards this efficiency dividend number. The detail in the ordinary course of events will be worked through and reported as we progress through the next few years. Remember that this is a measure that only takes effect in 2017-18. This is not something that takes effect next year. We are talking about something that starts to take effect from 1 July 2017, more than a year away, and in that period over the next year the government will be working with all of the relevant agencies on ways to maximise the digital dividend and minimise any other implications.

Senator WONG: I am assuming that, given what you have said about the gross number—I think Senator McAllister will go to that—the measure description should have been 1.5 percentage points.

Senator Cormann: The measure description does say that the increase in the standard dividend—

Senator WONG: No, not 1.5 per cent of the current.

Senator Cormann: By increasing by 1.5 per cent. The standard efficiency dividend is one per cent. Increasing it by 1.5 is saying it is 2.5 percentage points.

Senator McALLISTER: Mr Bartlett, you outlined for Senator Rice the list of agencies which are exempt. Has that list changed from the last budget? Are there any inclusions or exclusions?

Mr Bartlett : That is not my understanding, but I would have to take that on notice to confirm it. My understanding is that it is the same, but I would need to take that on notice to confirm absolutely that that is the case.

Senator McALLISTER: Is that something you could check in the course of the hearing?

Mr Bartlett : It should be possible.

Senator McALLISTER: I would appreciate it.

Senator Cormann, I think you were referring then to the $500 million for specific initiatives to assist agencies with managing their transformation. That cross-portfolio measure is the same investment that you are talking about now in terms of the digital dividend?

Senator Cormann: When I talk about the digital dividend, I mean that is a way that we believe we can achieve increased efficiencies, and that is why we think continuing the 2½ per cent efficiency dividend from 2017-18 onward for one more year before bringing it down progressively by half a per cent every year to 2019-20 is a way that we can achieve those efficiencies. The $500 million is essentially our funding envelope to invest in specific initiatives to assist individual agencies with managing their transformation and unlocking these efficiencies. We are saying that there is a gross save but we are reinvesting about half a billion in order to ensure that we can achieve and unlock these efficiencies in a way that is sensible.

Senator McALLISTER: Let's talk about that half a billion then. Can you talk us through the kinds of activities that that half a billion might fund?

Senator Cormann: Again, as I have indicated in answer to a previous question, we are talking here about something that will take place in the period from 1 July 2017, more than 12 months away. Over the next 12 or so months, the government intends to work out the best possible program to support the modernisation and transformation of the public sector to realise the efficiencies we have budgeted for, including in particular by making use of what we believe is an available dividend from the digital transformation of the public service.

Senator McALLISTER: You must have some idea, though, because you are placing a lot of faith in the digital dividend. You must have some advice.

Senator Cormann: We have come up with a costing of the saving based on extending the efficiency dividend at 2½ per cent for another year and then having the step-down as indicated in the budget measure. We have made available a budget allocation out of that gross saving in order to reinvest in the transformation and modernisation of the public sector. The specifics will be worked out in an orderly and methodical fashion prior to the implementation of this measure, which is more than a year away.

Senator McALLISTER: I understand that detailed consideration of the program of investment has not yet taken place. It beggars belief, though, that you have no idea of any of the categories of expenditure that you may investigate in the next year as part of preparing that program of expenditure.

Senator Cormann: We do have an idea. Obviously there is a lot of interaction between federal government administration and the public, and we believe that it can be made both more user friendly and more efficient and that, by using ICT technology and seeking to access the digital dividend, there will be a capacity to realise the efficiencies that we have budgeted for.

Senator McALLISTER: So that $500 million is principally about ICT?

Senator Cormann: Again, you are asking me about a program that is due to start on 1 July 2017. I suggest that there will be opportunity for us in future estimates to go through this in some more detail. At the moment, these are obviously estimates of the saving that we can achieve by keeping the efficiency dividend at 2½ per cent for another year, and we have made a funding allocation of about half a billion dollars to reinvest into the modernisation and transformation of the public sector. That detail will be worked out over the next 12 months.

Senator McALLISTER: You have repeated those words.

Senator Cormann: You asked me the same question. I have got to give you the same answer; otherwise, you would think my initial answer was inaccurate.

Senator McALLISTER: My concern is that your initial answer shows an extraordinary lack of detail for a half-billion-dollar planned expenditure.

Senator Cormann: We are planning ahead.

Senator McALLISTER: You must have some idea about what this digital transformation is going to involve. Does it involve, perhaps, external contractors managing or outsourcing data? What kinds of activities are you going to direct your department to investigate as part of the program of expenditure that you are imagining will take place just 12 months from now?

Senator Cormann: The way it works is a budget is a four-year plan, so there are some things that will start on 1 July 2016, and these are the things we are, obviously, prioritising when it comes to implementation. There are some things that start 1 July 2017. Others start 1 July 2018 or 1 July 2019. The way this works is that you work your way through your four-year program in an orderly, prioritised and sequential manner. When it comes to the decision of the government to extend the efficiency dividend and to reinvest a proportion of that into the modernisation and transformation of the public sector, including to unlock the digital dividend that we believe is available, as I have said to you openly and transparently, that is something that we expect to take effect from 1 July 2017. That is what it shows in the budget measure. There is a body of work to be done between now and then. We are very confident that it can and will be done, that it will be done competently and effectively and that it will help to transform and modernise the public service so that it continues to deliver the high-quality advice to government and high-quality service to the community that the federal public service is known for.

Senator McALLISTER: This would be a process—and I am speaking now of the half-billion-dollar investment—that would be run by the Department of Finance in partnership with agencies. Is that correct?

Ms Halton : Yes.

Senator McALLISTER: What part of finance would be looking after that?

Ms Halton : It will probably be Dr Helgeby's area principally, but it will potentially involve Ms Huxtable's area and to a certain extent Mr Edge's area.

Senator McALLISTER: Dr Helgeby, you are obviously going to be in charge of quite a big project. Have you seen any evidence that suggests that the efficiencies that will be generated by this digital dividend will be sufficient to meet the efficiency dividend that is being proposed in the budget?

Dr Helgeby : It is very clear that the APS has many opportunities to become more streamlined, to become more efficient, to move from complex processes to streamlined processes, to do things like shared and common services and to undertake a whole raft of its business in a way which is more in line with what happens in the rest of the economy than it does today. As the minister indicated, this is about a program. The program will emerge over the course of time. It is not about a single initiative. There is a significant range of opportunities that could be taken provided investment was made in things like technology, in things like process redesign and in things like looking for the right kinds of partnerships not only within the public sector but also with partners outside the public sector.

Senator McALLISTER: So we might be talking about outsourcing, data management or introducing contestability about delivery payments or some of those kinds of roles where you might look to a third-party provider to play a role?

Ms Halton : I do not think we can actually speculate. What you are actually asking the officer to do is to give you answers to a hypothetical question in this space in which there is not yet a plan.

Senator WONG: But you have put half a billion dollars on that plan.

Ms Halton : If I could finish.

Senator WONG: Sure.

Senator Cormann: It is from 2017-18 onwards. I think that is good planning

Senator WONG: You started off with half a billion dollars in the costings, Ms Halton. Finance agreed to the costings.

CHAIR: Ms Halton was halfway through her response and she did request the opportunity to conclude.

Ms Halton : As you know—we have talked about it here before—we have set up something called the Secretaries Committee on Transformation. We have been working with colleagues on a series of pieces of work which go to shared activities, streamlining, a whole series of things. That program which is being developed in collaboration across the public sector and the way we have been working is exactly what we are going to do in this context. So I really think it is not an area I can ask my officers to speculate on because it would not be consistent with the way we have been working with colleagues on making sure that we advance this program in the way that is most effective and most efficient. We will obviously be in a position to talk to you about that as it develops but it really would not be reasonable because, you and I both know, hares will start running. We need to have a conversation with our colleagues about where the best places are to work and to address in order to deliver the best outcome for the public sector and for the things that we value, which are good advice and great public administration.

Senator WONG: How did you come up with the costing and the savings? You said $500 million. That is a lot of money.

Senator Cormann: That is obviously a part of the government process.

Senator WONG: Are you going to think about it? Are you saying, 'It is a year away and we do not want to talk about it.' So how do you justify that costing? Can someone justify the costing?

Ms Halton : The minister has taken you through the approach to extending the efficiency dividend.

Senator WONG: I understand that.

Ms Halton : He has indicated that we are reinvesting a portion of that, which we are. Beyond that, I think we are getting into hypotheticals, which, we all know, is not something we will go to in answering questions.

Senator Cormann: The alternative would have been to take the blanket save without investing in the transformation and modernisation of the public service. That is not the judgement that we have made. If you are suggesting that you think—

Senator WONG: Don't do a strawman; it is really boring.

Senator Cormann: That is entirely the implication of your question.

Senator McALLISTER: Senator Cormann, that is not the implication—

Senator Cormann: That is 100 per cent the implication of the question.

CHAIR: Senator Cormann, you are responding to an inquiry, continue. Have you concluded?

Senator Cormann: Yes.

Senator McALLISTER: Ms Halton, from your earlier remarks, is it correct that this interdepartmental committee that we talked about here before—I have forgotten the name—

Ms Halton : It is SCoT—the Secretaries Committee on Transformation

Senator WONG: It is not Bon Scott?

Ms Halton : It is not Scotty either.

Senator McALLISTER: Can you remind me who is on the SCoT, Ms Halton?

Senator Cormann: We could call it 'operation Scotty'.

Ms Halton : You have just given him an idea to call it 'operation Scotty' so I am now going to live with that.

Senator McALLISTER: Ms Halton, can you remind me who is on the SCoT?

Ms Halton : It is comprised of a subgroup of the secretaries board and all secretaries are welcome and indeed sometimes do attend for particular meetings or for particular items as they wish. There is a nominated membership, which one of the colleagues may have with us, but all the secretaries can attend and it is usually run in conjunction with the secretaries board meeting.

Senator McALLISTER: Can someone inform me who are the nominated attendees?

Mr Bartlett : I can get the list; I do not have it.

Senator McALLISTER: Could you do that before we conclude?

Ms Halton : Yes. For example, it includes the head of the Department of Social Services, it includes the head of the Department of Human Services and it includes representatives from the Department of Immigration and Border Protection, but we will get you the proper list.

Senator McALLISTER: So they are the areas where we have major expenditure, major customer service roles and the greatest potential to reap the digital dividend. Is that the proposition?

Ms Halton : Basically we set up this group because these are very important issues that need to be managed across the public sector. There is no point us in Finance dictating to people how this gets done; it is much better we do it collectively.

Senator McALLISTER: I am sorry to interrupt you but I am conscious of the time. My question is: why those agencies?

Ms Halton : Because they indicated the most desire to be on it. It is not like they all said they want to join and I said, 'You, you and you,' or the Department of the Prime Minister and Cabinet said, 'You, you and you.' It was self nominating—as in, 'We think for us this is incredibly important and we should be party to this.' My earlier point was, in any event, it has always been on the case that when the committee was set up it was agreed that any secretary could attend at any time for any meeting or put anything on the agenda if they wished.

Senator McALLISTER: So when is this issue going to be put on the agenda of the SCoT?

Ms Halton : We have a special meeting and I do not know if we have set the date. But normally we have them backed into secretaries board meetings. We are rescheduling because obviously the timetable over the next little while is a little uncertain. But we will be having one probably in the next month.

Senator WONG: I want to check what involvement Finance had in the figures, the measures comprising the Ten Year Enterprise Tax Plan?

Senator Cormann: Can you repeat that question.

Senator WONG: What was Finance's involvement in the measures comprising the government's Ten Year Enterprise Tax Plan?

Senator Cormann: It is entirely a matter for the Treasury portfolio. As you know, it is a measure on the revenue side of the budget. It is not a matter for Finance estimates.

Senator WONG: I asked what involvement Finance had. That is a perfectly legitimate question.

Senator Cormann: It is not a matter that Finance would have been involved in other than being a part of the expenditure committee review process.

Senator WONG: Well, they can give that answer.

Ms Halton : As the minister says.

Senator WONG: Is it only as part of the ERC?

Ms Halton : Yes.

Senator WONG: There are a number of measures in that policy in which Finance was asked to participate in or consulted about costings.

Ms Halton : Let me confirm my understanding that the answer to that is 'no'.

Senator Cormann: Hang on, are you talking about the tax package as a whole or are you talking about a specific feature?

Senator WONG: I think my question was clear: There are a number of measures that you described as your Ten Year Enterprise Tax Plan. I am asking what involvement of Finance had in preparing those costings. I have been told they were only as a result of being on the ERC and I just wanted to confirm there were a number of elements to it. Were there any elements of the plan on which Finance was consulted, was asked to do work or to participate in costing?

Senator Cormann: Let me answer it this way: It is obviously a package that comes out of the Treasury portfolio but the way this process works—I am not sure how it worked in your government—in our government is obviously the Treasurer's office, the Prime Minister's office, and the finance minister's office work very close together as do our respective agencies. From time to time in relation to key parts of the package, there would be obviously a level of consultation and engagement. The responsibility and the best agency to ask questions on costings on the Ten Year Enterprise Tax Plan would be the Treasury portfolio. But if you have got any specific questions about specific aspects, ask as those questions.

Senator WONG: I just did. Do you want me to ask for a third time?

Ms Halton : Revenue measures, as you know, we do not validate any. Do you understand that?

Senator WONG: In respect of the revenue measures, was there any point in the process in which Finance was asked about or consulted on a costing?

Ms Halton : I do not believe so but let me check. Consulted on a costing on the revenue measure?

Senator WONG: Yes.

Ms Halton : I am happy to take it on notice. I have got to find out.

Senator WONG: Were you consulted on any costing a revenue measure in the Ten Year Enterprise Tax Plan?

Ms Halton : No.

Senator WONG: There are a number of elements in the Ten Year Enterprise Tax Plan. Are you able to tell me whether Finance was consulted on costings for any of the measures?

Ms Halton : I will take it on notice. I will have to ask officers whether there were some discussions that I am not aware of.

Senator WONG: Are you taking it on notice forever or just for five or 10 minutes?

Senator Cormann: Not for five or 10 minutes—we are taking them on notice as we can and we will bring it back in the ordinary course of events.

Senator WONG: There is no need to be sensitive about this. I was actually just checking whether she wanted to have a discussion with people and come back to it or whether she wanted to take it on notice.

Ms Halton : I probably will need to take it on notice, because you know as well as I do—

Senator WONG: I don't remember anything!

Senator Cormann: We are taking it on notice anyway.

Senator WONG: It is probably because of children and no sleep—I'm brain dead!

Ms Halton : We understand.

Senator WONG: So Finance had no involvement in costing the 10-year cost of the company tax cuts?

Senator Cormann: That is a Treasury measure.

Senator WONG: I am just confirming.

Ms Huxtable : No, it is a Treasury measure.

Ms Halton : I do not believe so.

Senator WONG: Senator Cormann, do you know what the 10-year cost is?

Senator Cormann: We traversed this at length in Senate question time yesterday, of course.

Senator WONG: Yes, you refused to answer the question.

Senator Cormann: I answered the question the way it is appropriately answered: the cost over the forward estimates is $2.7 billion. That is reflected in the budget papers. As you also know, the cost of a measure like this, with a 10-year plan outlined the way it is, is reflected in our medium-term projections. If you look at our medium-term projections, after a projected return to surplus in 2020-21, the budget is projected to remain in surplus over the medium term. That clearly indicates to you that the cost of this measure, this 10-year company tax plan, which is part of our plan for jobs and growth and which is part of our plan to attract more investment, to improve productivity, to increase the level of job creation and to increase, over time, real wages and living standards across Australia.

Senator WONG: Here comes the script.

Senator Cormann: This is not only fully costed but also fully funded. I know that whenever you do not like the government talking about our positive plans for our economy you start giving us snide little interjections, but the fact of the matter is that the answer to your question is that the cost of that measure over the forward estimates is $2.7 billion. It is fully paid for by revenue measures in other parts of the budget—principally by our crackdown on tax avoidance and by various integrity measures in our tax system—and, of course, it is fully paid for over the medium term, which is reflected in our budget documents.

Senator WONG: I will take that answer. You say it is fully paid for over the medium term. Don't you have to know how much something costs in order to assert that it is fully paid for?

Senator Cormann: I refer you to my previous answer. The budget is projected to go back to surplus by 2020-21, which is, incidentally, on the same timetable as in our half-yearly budget update before Christmas. It remains in surplus over the whole medium term. The cost of the company tax cut measure is reflected in our budget estimates over the forward estimates period and over the medium term. Given that we remain in surplus all the way through, it is self-evident that the measure is fully paid for. It is a central part of our efforts to make our tax system more growth friendly. It is a central part of our national economic plan for jobs and growth. It is a central part of our plan to secure our successful transition from resource investment driven growth to broader drivers of growth.

The reason we are pursuing a more competitive company tax rate is that we understand that a more competitive company tax rate will help us attract additional investment. It will help us improve productivity, it will help us increase the level of job creation and it will help us increase, over time, real wages and living standards. That is exactly what the Australian economy needs right now—instead of Labor's approach, which is to increase taxes to spend more. That, of course, would hurt the economy and cost jobs. At the next election, people across Australia will have a very clear choice between our plan for jobs and growth and your push for more new taxes, which would hurt the economy and cost jobs. That is what we are putting forward.

Senator WONG: Your Ten Year Enterprise Tax Plan is, as you have described, a central part of your plan. You have said it is fully funded. Just to be clear: you will not tell us or the Australian people how much it costs over the 10 years?

Senator Cormann: I refer you to page 3-11 of Budget Paper No. 1.

Senator WONG: You shouldn't be showing that, it's a Treasury chart!

Senator Cormann: You are asking me Treasury questions.

Senator WONG: Come on, Ms Huxtable, you cannot have it both ways. You give him a chart to get himself out of trouble, but it is a Treasury chart—so you can answer revenue questions too.

CHAIR: Order!

Senator Cormann: You are asking me questions that are squarely in the Treasury portfolio—

Senator WONG: The finance minister cannot tell us how much a 10-year tax measure costs.

CHAIR: Minister, you are being abundantly helpful, but it would—

Senator Cormann: I was answering her question directly.

Senator WONG: I can read that chart.

Senator Cormann: This chart proves that our company tax cuts are fully paid for over the medium term.

Senator WONG: But you will not tell anyone how much it costs? What a joke!

Senator Cormann: This chart proves—

Senator WONG: What a joke!

Senator Cormann: Look at it! It's fully paid for!

Senator WONG: 'I don't want to give you a number, but look at the drawing! The drawing says we are fine. The drawing says everything is alright.'

CHAIR: If we can confine our questions to elements of the Finance portfolio, it would be very helpful. Do you have any further questions, Senator Wong?

Senator WONG: I do, actually. The Prime Minister was on David Speers and he was asked a question, which I will quote. He was referring to the cost of the Ten Year Enterprise Tax Plan and, in particular, to the cost of the company tax reduction. Mr Speers said,'The economist Chris Richardson reckons it is about $55 billion.' The Prime Minister said, 'He may well be right. He may well be right, in the dollars of 2026-27.' Is the Prime Minister right?

Senator Cormann: The Prime Minister has not actually made any statement there other than in relation to what the cost estimate is in our budget forward estimates. He is providing a comment in response to a question about what Chris Richardson appears to have said. Again, I will refer you to Budget Paper No. 2 and to the costing that is included in our budget papers. It is consistent with the costings conventions under the Charter of Budget Honesty. On page 41, 'This measure is expected to have a cost to revenue of $2.7 billion over the forward estimates period.' You are still asking me Treasury questions, in the Finance portfolio. If you go to page 3-11 of Budget Paper No. 1, you will see a graph which shows that, over the medium term, the budget remains in surplus—

Senator WONG: 'The picture means we can fund it, but we won't tell you how much it costs! Look at my picture—that is my budget costing!'

Senator Cormann: and that includes, of course, the cost of the Ten Year Enterprise Tax Plan, which is a central part of our plan for jobs and growth. I am happy to explain the importance of our plan for jobs and growth to you again at this juncture, when we are transitioning from resource investment driven growth to broader drivers of growth.

CHAIR: I am going to draw this back. Do we have any further questions in the Finance portfolio?

Senator McALLISTER: I actually do have a question. I want to go back to the table at page 3-11 in Budget Paper No. 1 that you were holding up.

Senator WONG: Now tell her it's a Treasury document so she can't ask the question!

CHAIR: That is not relevant.

Senator Cormann: I can't win! I have to respond to that interjection. I was asked questions outside of Finance and I tried to refer you to other portfolios.

CHAIR: Senator Wong, I suggest that you use Senator Dodson as an example. While Senator McAllister is asking questions, he is sitting there patiently and listening. Sit there patiently and listen while Senator McAllister is asking her questions.

Senator McALLISTER: Senator Cormann, can I just ask you about the chart there?

Senator Cormann: It is a Treasury chart, as Senator Wong quite helpfully pointed out.

Senator McALLISTER: I understand it is a Treasury chart. However, you have raised it and you have brought it as evidence. Can I ask you some questions about it?

Senator Cormann: In response to Senator Wong's questions—but I think we really ought to direct questions in relation to these measures to the appropriate estimates, which is the economics committee tomorrow morning.

Senator McALLISTER: We will do that, but I want to confirm that the goal is still a surplus of one per cent of GDP. Is that still the government's strategy?

Senator Cormann: That is part of our fiscal strategy, which is reflected in the relevant part of the budget papers. If you go to page 3-7 it actually sets it out. You can see there that the question that you have asked me is directly answered in the budget papers. I will quote directly from the budget papers:

The Budget repair strategy is designed to deliver sustainable budget surpluses building to at least 1 per cent of GDP as soon as possible, consistent with the medium-term fiscal strategy.

Senator McALLISTER: When is 'as soon as possible'?

Senator Cormann: It is as soon as possible.

Senator McALLISTER: We have previously said 2020-21, but that is not the target anymore.

Senator Cormann: No. Just to be very clear, right now, based on the information in front of us, in terms of global economic conditions and all of the factors that impact on the budget that are outside of our control and based on the policy decisions that the government has made which are improving the budget bottom line, our current projection is that the budget will return to surplus by 2020-21, which is on the same timetable as we projected in the half-yearly budget update before Christmas. But our objective continues to be to achieve a sustainable surplus of at least one per cent of GDP and to achieve that as soon as possible. We are not locking ourselves into an artificial timetable. We will do it as soon as possible and we will do it in a way that is economically responsible and that is sensible.

Senator McALLISTER: In that chart that you held up earlier, nonetheless, it does not show the budget returning to a one per cent surplus at any point before 2026-27, does it?

Senator Cormann: The chart on page 3-11 of Budget Paper No. 1 shows that, based on the policy decisions that the government has taken so far and based on everything that we know about economic and other parameters, the budget is expected to return to surplus by 2020-21 and remain in surplus all the way through to 2026-27, which means all of the medium term, which is why I am putting it to you that the cost of the Ten Year Enterprise Tax Plan, which is of course reflected both over the forward estimates and in the medium-term projections in our budget, is fully funded as part of our budget estimates. That is the chart that proves that beyond doubt.

Senator McALLISTER: One of your MPs has tweeted today—I am sure you have seen it:

If Corman was more focussed on his job as finance minister, and less as powerbroker arranging preselection, would be less deficit.

Is that your assessment?

Senator Cormann: Let me assure you that everyone in the Turnbull government has been fully focused on our plan for jobs and growth. We have all been focused on helping to secure the successful transition of our economy from resource investment driven growth to broader drivers of growth.

Senator McALLISTER: That is not Mr Jensen's assessment, is it?

CHAIR: I have to get back to this.

Senator Cormann: You asked the question. I would like the opportunity to have a clear run at answering it.

CHAIR: Yes, but I also am not sure we should be going to Twitter for personal reflections, least of all if you refer to—

Senator Cormann: I am happy to answer the question.

CHAIR: Only so far as it refers to your portfolio.

Senator McALLISTER: It is fairly directly in relation to the portfolio. It speaks to the deficit in a very direct way.

Senator Cormann: It would be an appropriate courtesy to at least let me answer the question in a clear run. I am happy to reassure the committee and Dr Jensen that everyone in government, me included, has been totally focused on putting together our plan for jobs and growth, totally focused on putting together our plan to help secure the successful transition of our economy—

Senator McALLISTER: I think we are going back to the script.

Senator Cormann: from resource investment driven growth to broader drivers of growth in a strong, diversified and innovative economy, and all of us have been focused on making sure that our budget is on a strong and sustainable foundation for the future. The way we are achieving that is by controlling expenditure, by bringing down expenditure as a share of GDP over the forward estimates, by paying for all required spending increases by spending reductions in other parts of the budget and by cracking down on tax avoidance and better targeting relevant tax concessions. So we are focused on the job at hand. It is an important job that we are doing for the Australian people, and the Australian people will have the opportunity to pass judgement on the job that we have done and on our plan for the future at the next election.

Senator JACINTA COLLINS: While we are on this graph, I have one further question, Chair, if you do not mind.

Senator Cormann: It is a Treasury graph, which really is a matter for the economics committee.

Senator JACINTA COLLINS: It may be, but just while it is here.

CHAIR: Just before we go there, we are trying to facilitate some management here. Senator Wong has a discrete set of questions which go across an element of outcome 1 and outcome 2 in this portfolio and that she assures me you should be in a position to answer.

Senator Cormann: We are fine. We are happy.

CHAIR: But I want to say that we have not fully progressed to outcome 2, because—

Senator Cormann: If we keep talking about the Treasury.

CHAIR: Yes, but we have other senators that have issues, so I need to inform them when we are going to move on. But, if we stray into outcome 2, it does not necessarily mean we are moving there straightaway. Senator Collins, you had a question.

Senator JACINTA COLLINS: Yes, a very quick question—since the minister raised this graph, and I am attempting to understand it, it may ultimately be a question for Treasury. Senator Cormann, can you explain why the budget line from 2023-24 through to 2027 is completely flat?

Senator Cormann: From when to when?

Senator JACINTA COLLINS: From 2023-24 all the way to the end. It is just completely flat.

Senator Cormann: It is not actually completely flat; I think you will see that there are small chinks in it. The point here is that this graph is a reflection of what we know today about economic parameters, other parameters and the effect of policy decisions on the spending and revenue sides of the budget over the medium term. What it shows is that we are on a steady trajectory back to surplus. On current indications, our expectation is to return to surplus by 2020-21 and, based on current policy settings, current economic parameters and other parameters, we expect to remain in surplus for the whole remaining period over the medium term. The reason I point to this—

Senator JACINTA COLLINS: Chair, he is not answering my question. Let's not waste the committee's time. He cannot explain that.

Senator Cormann: is that the policy decisions that the government has made do, of course, include our Ten Year Enterprise Tax Plan.

CHAIR: Anything further from you, Senator Collins, on this?

Senator JACINTA COLLINS: I am not going to persist; there is no point.

CHAIR: Thank you. Senator Wong.

Senator WONG: I will quickly do a couple of things. The DFAT $74½ million efficiencies measure on pages 97 and 98 of BP2—I assume, because some of it is already in the bottom line and there is a reprofiling, that is why the table and the measure description quantum do not add up?

Senator Cormann: Sorry, which—

Senator WONG: Pages 97 and 98, BP2, Foreign Affairs and Trade Portfolio—efficiencies: $74½ million.

Senator Cormann: If I can take you to the second last paragraph, it says:

Provision for this funding has already been included in the forward estimates. The expenditure impact identified against DFAT reflects changes in the timing and nature of the efficiencies since the original saving was provisioned.

Senator WONG: I think I said that at the outset—

Senator Cormann: The numbers that are there are the net effect—

Senator WONG: Can I just ask a question? I understand that is the net effect; I said that at the outset. I just wanted to understand how exactly—you have four dot points on page 98. Can someone just tell me that breakdown and say in respect of the four dot points?

Senator Cormann: Again, to be consistent—and I am nothing, if not consistent—this is actually a question for the Trade portfolio in the foreign affairs and trade estimates.

Senator WONG: I did not know that Finance's new baseline, under this government and this secretary, is that cold questions about the breakdown of costings, which Finance does, are no longer being able to be asked in these estimates. That is contrary to how we have approached these estimates for many years.

Senator Cormann: Let me just be really helpful here. As you know, we have estimates truncated into two days. This is not information that the finance department has. In the ordinary course of events what we would do is take it on notice, but then you would not get the answer before the election. If you genuinely want an answer, instead of just doing a little bit of grandstanding in the committee, you would ask the question of the appropriate portfolio. But, if you want to persist with us, we will just take it on notice and provide you with the answer after the election.

Senator WONG: Can someone at least just assist me with the balancing item then. The numbers in the table which, I assume, are the reason for the reprofiling—a $49.6 million spend for DFAT, a net save of $24 million for Austrade and therefore a net spend of $25.6 million. Can you just explain how you get to the $74.5 million. I just want to understand what has already been provisioned in the budget.

Senator Cormann: We will have to take that on notice.

Senator WONG: You are not able to tell me that?

Senator Cormann: We will take that on notice.

Senator WONG: I have some questions about NBN and the budget measure associated with that, but it starts obviously with the NBN investment, which is at 3-33 Budget Paper No. 1, and the measure which is at 94—financing strategies. Mr Edge, am I asking you questions?

Mr Edge : Yes, Senator.

Senator WONG: Thank you. Just to confirm as a backdrop to this I think what 3-33 tells me is that there is NBN investment in 2015-16 and 2016-17 of $7½ billion and $8.8 billion, respectively; correct?

Mr Edge : That appears to be correct, yes. That is what is in the document.

Senator WONG: And then no further investment by government over the estimates or projection period?

Mr Edge : Those figures represent government equity injections into NBN.

Senator WONG: So there are no further government equity injections for 2017-18, 2018-19 and 2019-20?

Mr Edge : That is correct.

Senator WONG: Remind me because I have not been engaged in the NBN issue for some time, what was the cap on government equity that the government has publicly—

Senator Cormann: $29.5 billion.

Senator WONG: Once those two budgeted equity injections are made is that then the totality of the equity investment by government in accordance with government policy?

Senator Cormann: If I can refer you to page 8-6 in the 'Statement of risks', it actually explains all that in some detail.

Senator WONG: Yes, I am just asking. Is that the full $29 billion at that point?

Senator Cormann: The answer to your question is actually literally laid out in the third paragraph on that page.

Senator WONG: Sorry, what am I looking at?

Senator Cormann: The 'Statement of risks' on page 8-6 and the third paragraph, which starts with, 'The Australian Government has committed $29.5 billion'—

Senator WONG: 'fully utilised by the end of the 2016-17 financial year', okay. So that is the end of government equity injections under this government, which means that presumably if NBN requires more financing it needs to go to market.

Senator Cormann: Look at the next sentence, which says:

Consistent with nbn’s 2016 Corporate Plan, nbn is expected to raise debt from external markets of between $16.5 billion and $26.5 billion (with a base case of $19.5 billion) …

So it is all laid out in the budget papers.

Senator WONG: I am just trying to see here what rate of return was outlined in the last corporate plan. Do you remember, Mr Edge, in the 2016 plan?

Mr Edge : I would have to check that.

Senator WONG: Would 2.7 per cent be right? Page 70 of the corporate plan. What is the assessment of the likelihood of being able to get private sector investment with a rate of return at 2.7 per cent?

Mr Edge : Just to be clear: the private sector funding that is envisaged in the corporate plan is private sector debt, not equity. So it would be effectively debt financing.

Ms Halton : Senator, if you go to the second paragraph on page 8-6—

Senator WONG: Sorry, can you just give me one second. I am trying to respond.

Ms Halton : I am sorry.

Senator WONG: Thank you. If I may, Ms Halton, just go back to Mr Edge's answer.

Ms Halton : Yes, sure. Sorry.

Senator WONG: I am just trying to understand. Basically you have set up this strategies committee or whatever you are calling it. Is there any concern about the capacity to obtain debt financing with a rate of return at 2.7 per cent?

Mr Edge : The debt financing would have an interest rate which would be whatever was determined by the market, so that would be whatever it is. There is no direct link to the IRR.

Senator WONG: Sorry, Ms Halton, I interrupted you.

Ms Halton : No. To be honest I was actually going to say very much the same thing. I was going to point you—and possibly you have already looked at this sentence—to the sentence which actually says:

nbn is currently undertaking the necessary preparatory work on the proposed debt raising.

As the minister pointed out, that is why this section is in the 'Statement of risks'—because they are currently doing the work; it is not complete. We are expecting them to do that work and then come back and advise us. But we are not in a position to make comment until they have done those soundings, and that is what we are expecting them to do, and that is exactly why we wrote this large section in the statement of risks.

Senator WONG: Which leaves open the possibility of additional government financial support and interim funding support in the event that NBN is unable to raise sufficient debt finance?

Senator Cormann: That is a hypothetical assertion.

Senator WONG: Hang on. I am reading the sentence you so helpfully referenced.

Senator Cormann: That is my point. That is why it is in the statement of risks.

Senator WONG: 'Interim funding support may be required,' so it leaves it open.

Senator Cormann: We are only going to be in a position to make relevant judgements once we cross relevant bridges that we have not crossed yet. That is my point.

Senator WONG: When was the decision made to set up this financing strategies body?

Senator Cormann: If you are looking for a specific date, I would have to take that on notice.

Senator WONG: It was already—

Senator Cormann: It was a decision that was made as part of the budget process; that would be the accurate—

Senator WONG: Funding for the measure had already been provided for by the government, so I am assuming it was made prior to MYEFO, no?

Senator Cormann: It was a decision that was made as part of the budget process. In order to give you an accurate answer, I am going to take that on notice.

Senator WONG: Fine. At whose request was it, or which department initiated it? How did it come about?

Senator Cormann: This is something that is an initiative of the government, which comes through the deliberative—

Senator WONG: Oh, come on!

Senator Cormann: processes of government and—

Senator WONG: 'Deliberative processes of government', as the chair would say to you—and he is a fair chair—is not a basis on which you say you cannot answer something—

Senator Cormann: Cabinet deliberative processes—

Senator WONG: I am not asking about cabinet.

Senator Cormann: That is where it was initiated.

Senator WONG: Thank you. I did not ask that, but thank you for telling me that. When did cabinet discuss it?

Senator Cormann: I am just telling you I am taking the specifics on notice in terms of times and dates.

Senator WONG: Okay. Was the need or the proposition around setting up this task force—is that what you call it? No. What do you want to call this measure?

Senator Cormann: Which page are you looking at?

Senator WONG: BP 2, page 94.

Senator Cormann: The measure is pretty self—

Senator WONG: I am just trying to find a shorthand way we can all agree on it. I was going to call it a task force, but you do not want to call it a taskforce—so you are seeking independent advice on strategies. Does it include—it is BP 2, page 94.

Senator Cormann: This is business as usual. I am not quite sure what the—

Senator WONG: You put it in the budget paper as a measure.

Senator Cormann: Sure, because that is appropriate because there is a decision that was taken.

Senator WONG: Okay, a decision was taken by cabinet—and you will take on notice when—that you would task the Department of Finance, with Communications and Treasury, to seek expert advice on strategies to meet nbn co limited's future funding requirements. My first question is: who is engaged in that process? Mr Edge, are you leading that, or is there someone else in the department? Who in Treasury? Who in Communications?

Mr Edge : We are working with colleagues in both Treasury and the Department of Communications and the Arts. I am involved in it and—

Senator WONG: Finance is the lead agency?

Mr Edge : That is right.

Senator WONG: Is that you? Is that your primary responsibility?

Mr Edge : Yes, I am responsible for that activity in the department.

Senator WONG: As part of this measure, which is already being funded by the government, have you commissioned any independent consultants?

Mr Edge : Yes, we have.

Senator WONG: Who have you commissioned?

Mr Edge : Lazard.

Senator WONG: When did you do that?

Mr Edge : I would have to check the dates.

Senator WONG: Was it this year or last year?

Mr Edge : It would have been very late last year.

Senator WONG: Hence it has already been provided for by the government. What is the cost of that contract?

Senator Cormann: We may have to take that on notice.

Mr Edge : We might have to take it on notice.

Senator WONG: You have come to an estimates committee without knowing—you do not have a list of which contracts you have signed off on?

Mr Edge : Not that I can readily reference.

Senator WONG: Can people come back with that?

Senator Cormann: We will.

Senator WONG: I would like costs to date. Oh, you have it. Thank you.

Mr Jaggers : The contract price is $500,000.

Senator WONG: Half a million over what time frame?

Mr Jaggers : Over this financial year.

Senator WONG: Just this financial year? Is it ongoing?

Mr Jaggers : Yes, it is ongoing this financial year.

Senator WONG: Sorry, that was a poor way of expressing it. So half a million is for this financial year. Is the contract intended to continue or is there any arrangement to continue to the next financial year?

Mr Jaggers : There is currently no intention.

Senator WONG: Expenditure to date?

Mr Jaggers : There has not been any expenditure on the contract to date.

Senator WONG: Why is that?

Mr Jaggers : We have entered into the contract.

Senator WONG: I thought it was entered into last year. It is now May.

Mr Jaggers : Some work has occurred. No payments have been made against the contract.

Senator WONG: Right. What is the scope of the contract or the task that is being undertaken?

Mr Jaggers : It is to provide specialist advice to the department in relation to NBN.

Senator WONG: Why to the department?

Senator Cormann: Because we are one of the two shareholders in the NBN, that is why.

Senator WONG: That I am aware of, but it is NBN who is going to market to try and obtain debt financing, not the government.

Senator Cormann: Yes, but as shareholders—

Senator WONG: Can I finish.

Senator Cormann: we obviously have to assess the interests of the Commonwealth in all of this. We have a $29.5 billion equity stake in this. As you have pointed out, we have transparently disclosed in the statement of risks that there some potential financial implications if certain things do not happen the way they are planned. So you would expect, as part of a prudent and cautious government focus on good management, that we would take the necessary advice to make sure that we are very clear on what we can and cannot do and what we should and should not be doing.

Senator WONG: Sure, but I want to be clear. It is nbn co which is going to market, not Finance—not the government. Is that correct?

Mr Jaggers : That is correct.

Senator WONG: Right. This consultancy—did you say $500 million?

Mr Jaggers : No. I said $500,000.

Senator WONG: Five hundred thousand. I wrote down 'million'. I thought, 'That can't be right.' That would be extraordinary, wouldn't it? This offer is to Finance—to government—and not to nbn co. Is that correct?

Mr Jaggers : Yes.

Senator WONG: I presume, therefore, it is not advice to nbn co about how to approach the market. It is advice to government about how to manage the risk of nbn co doing so.

Mr Jaggers : It is to provide advice on a range of issues in relation to the financing of the nbn co.

Senator WONG: Including in relation to whether or not further government involvement is required?

Mr Jaggers : It could inform those discussions, yes.

Senator WONG: What funding was provided to Finance for the measure that is at BP 2, 94?

Mr Jaggers : I might have to take that on notice. I might need to check.

Senator WONG: Was there additional departmental funding or administrative funding provided?

Senator Cormann: The officer has taken it on notice. We will see what we can do.

Senator WONG: I am just going to add some detail. You have a contract, so were you funded for that? Were you funded for any additional work, Mr Edge?

Mr Edge : The funding was effectively for the independent expert advice. There was no additional funding for extra positions or other departmental costs.

Senator WONG: Thank you. That is all I wanted to know. The government is leaving open the possibility of more government equity for NBN.

Senator Cormann: No. The equity cap that is in place is $29.5 billion, and our planning is for nbn to source the remaining funding requirements by raising debt from external markets. We have outlined that very clearly. We believe and are confident that that will be able to be achieved. But we are seeking relevant advice now. Obviously we do not know what we do not know. And we are being open and transparent in disclosing that, if certain things that we intend to happen and believe will happen do not happen, we have to make some further decisions.

Senator WONG: 'In the event that nbn is initially unable to raise the necessary debt on acceptable terms, interim funding support may be required.' You are not ruling that out, are you?

Senator Cormann: That is what we have openly and transparently disclosed in the budget papers.

Senator WONG: Sure. Thank you.

Senator Cormann: But what I am saying to you is that the government's policy decision is to limit the equity contribution to nbn to $29.5 billion and for nbn to source any additional requirements from external debt markets.

We have quantified that here in the budget papers for you and, obviously, depending on how that all proceeds, we may or may not have to make some further judgements down the track. But we cannot possibly predict at this stage what that might be, which is why this is listed in the statement of risks.

Senator WONG: Sure. I think you said that you may have to make judgements down the track. My point is that the government, in statement 8—and thank you for referencing it for me—has left open both interim funding support and additional government financial support.

Senator Cormann : We are openly and transparently disclosing our thinking in relation to the financing requirements for NBN.

Senator WONG: The Tax Integrity Package that tasks the Tax Avoidance Taskforce: what role, if any, did Finance play in the costing of that measure? This is BP 2, page 33. This is a revenue measure.

Ms Huxtable : We considered the departmental elements, so it is a revenue measure that has an ATO departmental—

Senator WONG: Sorry; I cannot follow you.

Ms Huxtable : It is a revenue measure that has an ATO departmental expense. We considered the ATO element.

Senator WONG: That is the ATO component—actually, it is an ATO measure. Were you asked or consulted on the calculation of revenue gain whereby the government asserts that a $678 million investment will yield a $3.7 billion revenue gain?

Ms Huxtable : No. We considered just the expense side of the measure.

Senator WONG: There is the super reform package, Budget Paper 2, pages 25 and 26. There is a NFP expense for Finance. Can you tell me why it is 'not for publication'? I understand why it is hard to calculate, but can you tell me why it is NFP?

Mr Smyth : It is NFP for commercial reasons, in relation to potential IT systems changes that the CSC may need to implement.

Senator WONG: That is all it is, is it?

Mr Smyth : That is correct.

Senator WONG: Okay. Is there anywhere in which the effect on the Commonwealth defined benefit schemes is set out—the government superannuation measures?

Mr Smyth : Yes; there are some Treasury papers on their website.

Senator WONG: I will look at those. Indigenous Land Corporation: this is in BP 2, isn't it? There is a measure.

CHAIR: Senator Wong, I think ILC is coming up in PM&C this afternoon.

Senator WONG: They have a concessional line.

CHAIR: It is related to finance—

Senator WONG: I will find out what involvement they have, how about that?

CHAIR: Right.

Senator WONG: Just remind me, Minister: the only role the finance minister has in relation to the ILC is in terms of the obligations under the PGPA Act—there is no shareholding or other interests?

Senator Cormann: That is right.

Senator WONG: The concessional loan; were Finance consulted on this?

Senator Cormann : I was consulted; yes.

Senator WONG: Was the department consulted?

Senator Cormann : Obviously, anything that goes through the budget process involves the finance department in the appropriate way. This is a budget measure, so it went through the usual proper budget processes.

Senator WONG: Who consulted you about it, Minister?

Senator Cormann : Obviously, as you would expect to be the case, I was consulted by the Minister for Indigenous Affairs before he initiated the relevant proposal, which went through the proper process.

Senator WONG: Senator Scullion raised it with you before he essentially started to talk to other people about it?

Senator Cormann: He raised it with me before putting a formal proposal into the budget process.

Senator WONG: About when was that?

Senator Cormann: I would have to take that on notice; I am not trying to be unhelpful but the whole budget process—

Senator WONG: That is fine. Are we talking this year? This has been ongoing for a couple of years.

Senator Cormann: This would have emerged this year. It was part of this budget process that this was discussed.

Senator WONG: Did he raise that with you personally or in writing?

Senator Cormann: The Minister for Indigenous Affairs and I had a conversation before he submitted a formal proposal to the budget process.

Senator WONG: Was it your understanding that this was something that the current or previous chair of the ILC had raised with the minister?

Senator Cormann: I am not aware of all of the history and, if you want to know what may or may not have been raised with the minister, you would really have to ask him.

Senator WONG: I will ask him; I am just asking what your understanding was. Was it your understanding that this was Senator Scullion's idea or that the ILC had asked him to put that as an option?

Senator Cormann: This was considered through the budget process in the appropriate way. A decision was made; it is reflected in the budget papers. If you want more detail you really need to ask Senator Scullion.

Senator WONG: What terms and conditions have been set for the loan?

Mr Hunt : The interest rate?

Senator WONG: And that is an FP?

Mr Hunt : It is the seven-year bond rate.

Senator WONG: What due diligence was undertaken prior to the loan being approved?

Senator Cormann: We might have to take that on notice.

Senator WONG: Did Finance engage in any due diligence?

Senator Cormann: Finance was involved in the process in the appropriate way. It is a budget measure. I have got to take on notice what—

Senator WONG: They are two different questions, aren't there? There is the budget measure then there is the actual approval of the loan. Who approved the loan?

Senator Cormann: We are not yet in a position where the loan has been approved.

Senator WONG: Sorry, I thought it had.

Mr Hunt : No, the interest terms have. The finalisation of the loan agreement has not occurred, which is why it was not for publication with the budget.

Senator WONG: Sorry, I misunderstood your answer. You are still in the process of approval—right?

Senator Cormann: That is why it is difficult for us to—

Senator WONG: Okay, that is clear. Who is the approver?

Senator Cormann: I might have to take this on notice. From memory, ultimately, I have to give approval, as does the Treasurer, in relation to this particular measure.

Senator WONG: At a ministerial level, not a departmental level? No delegate?

Senator Cormann: Obviously, we act on advice. I have to, ultimately—

Senator WONG: Was it delegated to the secretary?

Senator Cormann: No.

Ms Halton : Not that I am aware of.

Senator Cormann: The Minister for Indigenous Affairs, ultimately, has to get final approvals for terms and conditions from the Minister for Finance and the Treasurer. I will check this and, if there is anything else that I need to add to this, I will compliment my answer.

Senator WONG: Who is undertaking due diligence? Is it the Minister for Indigenous Affairs, PM&C or is it Finance?

Mr Hunt : The Department of the Prime Minister and Cabinet has done some work on this and sought some advice. I believe it was from Deloitte, but they should be able to give you some more information this afternoon.

Senator McALLISTER: The Antarctic Traverse and Year-Round Aviation Access—it is on Budget Paper No. 2, page 87. There is a listing for expense and capital for Finance in that measure. Did Finance receive any funding for that measure; and what was the purpose of that funding?

Ms Huxtable : We might have to take this on notice. We are not immediately sure of that.

Senator Cormann: But it is consistent with the approach we have taken across other portfolios. It obviously shows that the government will provide $55 million overall over 10 years, but provision for this funding was already included in the forward estimates. If you want more detail, and if you want to direct a question here instead of directing it in the—

Senator McALLISTER: No, Senator Cormann, the question is actually about Finance's role in this program. The question, specifically, is—

Senator Cormann: You asked about the money.

Senator McALLISTER: did Finance receive funding for this measure?

Senator Cormann: We have got to take the question on the specifics in relation to that on notice in the usual way.

Senator McALLISTER: Is that something that could be answered after lunch, because it seems a quite straightforward question?

Senator Cormann: We will do our best.

Senator McALLISTER: That would be great.

Senator Cormann: We have an abundance of helpfulness.

Senator McALLISTER: I am sure it is not terribly politically controversial; I am just interested to know.

Ms Halton : We will see. This is probably something quite minor, which is why none of us have actually got any visibility of it.

Senator McALLISTER: I am certain that is so.

Ms Halton : Why don't we just see whether we can figure that out, and if we can figure it out we will tell you. My bet is that because none of us have visibility of it, it is something really tiny.

Senator McALLISTER: Sounds good. Can I ask about Budget Paper No. 2, page 171, which speaks to the delivery of inland rail? Why is Finance being provided with $3.8 million for market testing for that measure?

Senator Cormann: Because we are wanting to deliver this project by leveraging the balance sheet of the Australian Rail Track Corporation. I think the measure is pretty self-explanatory in the way it is described. Our contribution here is to provide equity to the Australian Rail Track Corporation, but, obviously, there is work to be done, as it says, to market test and explore what interest there is from the private sector to be involved in the delivery and the financing of this project, but also how we can optimise—how we can best engage the private sector—in the delivery of this project, and we are accessing some expert advice in that context.

Senator McALLISTER: So it is expert advice. Is that $3.8 million exclusively for external support for consultants and contractors?

Senator Cormann: That is right.

Senator McALLISTER: It is. And that is all to be utilised in a single financial year?

Senator Cormann: That is what it shows; 2016-17. That is right.

Senator McALLISTER: Can you tell me what the line of capital for Finance in that measure is for?

Senator Cormann: As it says in the measure:

The Government will provide up to $593.7 million in additional equity—

so that is capital—

over three years from 2017-18 to the [ARTC] …

The ARTC will use that for various things including 'land acquisition, continuation of preconstruction and due diligence activities' and so on.

Senator McALLISTER: Thank you. I am conscious that we are about to break. I have a question that relates to the documentation that we sought at the beginning of the hearing. The documents that have been provided about ministerial staff are dated 'As at 1 April'. The practice is to provide an up-to-date assessment—and you can understand that going into an election it is of more interest than usual.

Senator Cormann: I am not aware that there has been any change since 1 April. I believe it is the most current piece of information, but we will check that over the lunchbreak and we will get back to you after lunch when we have properly verified the information.

Senator McALLISTER: That would be good. I would like to understand whether there have been any changes at all since 1 April.

Senator Cormann: We also have an answer for you on that Antarctic measure, if you want to squeeze that in before the break.

Senator McALLISTER: Yes, let us do that.

Ms Huxtable : Basically, the line in the measure relates to Finance costs associated with undertaking a gateway review process. It would be a very small amount, but if there is an ICT element, then a gateway process is required, and Finance manages that process.

Senator McALLISTER: Thank you.

CHAIR: Just before we break, I just want to clarify this: notwithstanding that there are a couple of outstanding issues in outcome 1 that you are going to seek the answers to, are you happy to move to outcome 2 after the break?

Senator McALLISTER: I have a few more questions.

CHAIR: We will resume with outcome 1 and take it as it comes from there.

Proceedings suspended from 12 : 29 to 13 : 31

CHAIR: Are there any updates on earlier questions, or are they still works in progress?

Ms Huxtable : No. I think we had already answered the one in respect of the Antarctic, and the secretary has the rest.

CHAIR: If the secretary manages to find any updated information, we can deal with that then. We will go to outcome 2.


Senator McALLISTER: Can I ask about Australian Hearing? I think the budget allocates $2.2 million to consider the future of Australian Hearing. Can you tell me what that allocation is for?

Mr Edge : The allocation of the $2.2 million is for external advisory costs for the Department of Finance to progress consideration of the Australian Hearing matter.

Senator McALLISTER: When last reported, I think the scoping study included $547,000 in expenditure for external consultants. What will the $2.2 million do that the scoping study could not?

Senator Cormann: The scoping study was the initial assessment, but I take you to my press release of 12 February, where I announced that the government had received an unsolicited proposal from a consortium led by the Royal Institute for Deaf and Blind Children, alongside Cochlear Ltd and Macquarie University. Once you receive a specific unsolicited proposal like that, you have to go through a process to properly evaluate and assess before you can make decisions. The original scoping study was for the specific purpose, in a generic sense, to assess future ownership options for Australian Hearing.

The background to this is of course the fact that we all understand that in the context of the rollout of the NDIS all of these relevant services become contestable and as such, Australian Hearing would increasingly have to compete for the services they provide with other providers. So there was the original scoping study which looked at how we could best structure the ownership options for Australian Hearing in the context of that market development—which was initiated, incidentally, by your government and supported by us, including now in government. To go directly to your question, that is quite separate from the process we are now involved in, which is to assess, evaluate and ultimately inform decisions by government about how best to deal with this approach by this consortium on the lines I publically announced in some detail on 12 February.

Senator McALLISTER: So it is exclusively associated with the evaluation of the consortium.

Senator Cormann: That is right, yes.

Senator McALLISTER: Is all of it to go to external consultants?

Senator Cormann: Yes.

Senator McALLISTER: I assume the government has been in discussion with the consortium.

Senator Cormann: We have received an approach, and the result of that approach was to set up the process that I announced on 12 February 2016. Since that time that process has taken place. Mr Edge and Mr Jaggers are best placed to explain to you what has happened since then. Personally, I have not been involved in this process since that time.

Mr Edge : Certainly we have been engaging with the consortium, obviously, to progress the work.

Senator McALLISTER: What is the nature of that engagement, Mr Edge?

Mr Edge : There have been a number of meetings with the consortium effectively to work with the consortium to identify what Finance and our advisers would require in order to effectively assess their proposal.

Senator McALLISTER: Are you able to provide any written documentation about any of those meetings?

Mr Edge : I would have to take that on notice. The discussions with the consortium are obviously commercially confidential. It would really depend on the nature of the material that you are requesting.

Senator McALLISTER: I think it would be of interest to understand what kind of information the department will be seeking in evaluating the unsolicited proposal. The nature of that request from you to the proponents is presumably not commercially sensitive, and I think it would help us to understand what is being sought. Is there a kind of staged process of working through this? What is the involvement of the consultants in the evaluation process? Have you commenced the evaluation process or are you still actually receiving the documentation?

Mr Edge : The stage we are currently at is that we are working with the advisers and the consortium. The consortium are preparing material for further consideration. It is an iterative process, but it is still underway.

Senator McALLISTER: Have you engaged any contractors under that evaluation process yet?

Mr Edge : Yes, we have. We have engaged the advisers. The advisers have been working with us for a number of weeks.

Senator McALLISTER: Who are they?

Mr Edge : PricewaterhouseCoopers are the commercial and business advisers. Herbert Smith Freehills are the legal advisers. A legal firm called Maddocks are the process and probity advisers.

Senator McALLISTER: What is the value of each of their contracts?

Mr Edge : I do not have that information. One of my colleagues may. I am not sure whether Mr Jaggers can help you with that.

Mr Jaggers : Yes, I have the value of the contracts for this stage of the process. The Maddocks contract is $77,000. The Herbert Smith Freehills contract is $595,000. The PricewaterhouseCoopers contract is $907,500.

Senator McALLISTER: That represents, I suppose, just over half of the moneys available—the $2.2 million that has been allocated?

Mr Jaggers : It is in that order, yes.

Senator McALLISTER: And what is the term of each of those contracts? Is there an end point?

Mr Jaggers : I am not sure. I can find you the end dates of those contracts. They do go over the financial year and into next year. I think they are at the end of this calendar year but I would have to check that for you.

Senator McALLISTER: Can you do that before the end of today?

Mr Jaggers : I can, Senator; yes, I can do that quickly for you.

Senator McALLISTER: Who initially approached the consortium about developing an unsolicited proposal? Was the government involved in approaching the consortium prior to the submission being received?

Mr Jaggers : I understand the proposal was unsolicited and came directly from the consortium to the government.

Senator McALLISTER: Did Tony Shepherd, the commissioner of audit, approach the consortium?

Mr Edge : I do not have any knowledge of that; it is not something that we would necessarily be aware of.

Senator McALLISTER: Minister Cormann, was Tony Shepherd involved in the approach to the consortium?

Senator Cormann: No, not that I am aware of in any way, shape or form. Is there a context to your question?

Senator McALLISTER: I am interested to understand who was involved.

Senator Cormann: I have not personally had a single conversation with Tony Shepherd about this whatsoever.

Senator McALLISTER: Can you walk us through it. It strikes me that there are two related but concurrent processes being undertaken. The first is the scoping study which anticipated, one imagines, a range of different options for the future of Australian Hearing; and now we have an unsolicited proposal for one specific option for Australian Hearing. How do those two processes interact with one another?

Senator Cormann: Obviously, we have gone through these in some detail in previous estimates. The government in the 2014-15 budget initiated a series of scoping studies which led to a further round of consultations in relation to Australian Hearing. In the context of those consultations, an unsolicited proposal was put forward and the government decided to proceed on the basis I outlined in my public statement on 12 February.

Senator McALLISTER: This is a significant Australian asset. Ordinarily, the sale of an asset owned by the Australian people would have some—

Senator Cormann: I have to correct you there: the way you have framed your question implies an assumption that the government has made a decision to sell Australian Hearing; we have not made such a decision.

Senator McALLISTER: But you are entertaining an unsolicited proposal from a single bidder.

Senator Cormann: We are evaluating an unsolicited proposal to determine what the next steps are, if any, the government might decide to take in relation to that proposal. That is what we are doing. Again, I outlined it in great detail in my press release of 12 February.

Our only interest in this is giving Australian Hearing a strong and viable foundation for the future. We are very mindful of the fact that, when the previous government established the NDIS, it made a decision, which we have since reaffirmed, to make funding for relevant services provided under the NDIS—in that market in the future—fully contestable. That means Australian Hearing would have to compete with other private providers in relation to all the services it provides to Australians with a hearing impairment. In that context, while Australian Hearing has already been competing with private providers in relation to a range of services, this competition will now ramp up as the NDIS continues to roll out. That is why we have been exploring the right future ownership options for Australian Hearing to ensure it has the best possible future and continues to be in the best possible position to provide high-quality services to Australians with hearing loss.

Senator McALLISTER: Senator Cormann, thank you.

Senator Cormann: Sorry, but this goes directly to your question. You are saying that we are entertaining a sale. I am an open book. All of the information in response to the questions you ask is actually contained in my press release of 12 February. Directly in response to that question, the government has not yet made a decision to transfer Australian Hearing into non-government ownership. People with a hearing loss who currently receive, or are eligible to receive, community service obligation services will continue to receive those services either as NDIS participants or clients of the Hearing Services Program. It provides a series of other bits of information that are highly relevant.

Senator McALLISTER: Your position is that $2.2 million is to be used to evaluate the response, if any, to the unsolicited proposal. Can I ask what the test is for whether or not to proceed further?

Senator Cormann: Obviously, that is the work that we are currently doing. We have the outcomes of the scoping study on which we have further consulted. The ultimate test from the government's point of view is: are we satisfied that the proposal in front of us gives Australian Hearing the best possible opportunity to have a strong and viable future to provide valued services to its client base on a sustainable basis? That is the ultimate test. The framework for evaluation, the framework to assess that and the framework to ensure that we make the right decision in relation to this are all currently worked through, and that is why we are accessing relevant expert advice.

Senator McALLISTER: Surely questions of achieving value for money in the privatisation of an Australia asset would also be one of your considerations?

Senator Cormann: I have to tell you: in relation to this, our prime motivation—we have said this on the public record on several occasions—is to ensure that Australian Hearing has a strong and viable future in the contestable NDIS market. That is the context in which we are reviewing the proposal that has been put forward.

Senator McALLISTER: I understand that is your primary interest, and you have told me that, but I want to understand if it is your only interest. There must be other considerations.

Senator Cormann: But the question you are asking implies an assumption that we have made a decision to sell, which we have not. If we were to get there—to entertain your hypothetical question, which is not actually a live question before the government—obviously that would be one of the considerations that you would think about. But it is not actually a question that is in front of us, because we have not make a decision to take that step.

Senator McALLISTER: Are you going to spend $2.2 million on—what exactly? What will we know at the end of the $2.2 million that we presently do not know?

Senator Cormann: We will know at the end whether the proposal that has been put forward by a very credible consortium involving the Royal Institute for Deaf and Blind Children provides the best opportunity for us to ensure that Australian Hearing can have a strong and viable future continuing to provide highly valued services to its client base.

Senator McALLISTER: You will have completed your evaluation and be in a position to accept or reject the consortium's proposal at the end of the expenditure of the $2.2 million?

Senator Cormann: What troubles me about your question is that you are pre-empting outcomes in relation to a process that is currently underway, and it is very hard—

Senator McALLISTER: Then you can enlighten me, Senator Cormann, but I would have thought it was a you or no answer. Either you are going to accept the proposition or you are not. Is there a third option?

CHAIR: You are inviting him to enlighten you.

Senator McALLISTER: Yes, I am inviting him.

Senator Cormann: At the moment, there is a process to assess this proposal and at some point that will come to a conclusion.

Senator McALLISTER: At the end of the $2.2 million, or will more money be required to come to a conclusion?

Senator Cormann: Obviously, we will spend as little as possible and as much as necessary in order to ensure we have the right information to make an informed decision. What is motivating us here—which I would have thought would be what is motivating your position too—is to ensure that Australian Hearing has a strong and viable future in a contestable NDIS market. We believe that this is a sensible investment in the context of making sure that happens.

Senator McALLISTER: Okay, I do not think we are going to be able to get any further, Senator Cormann.

CHAIR: I have some questions in regard to outcome 2, if you are happy.

Senator McALLISTER: Go ahead.

CHAIR: Thank you. Senator Cormann, with regard to Project Tetris, which is about the efficient use of spare space—

Senator McKENZIE: That is very well named.

Senator Cormann: I like the name too.

CHAIR: Are you able to provide me with an update on the ACT leases for the Department of Immigration and Border Protection?

Mr Edge : I think we provided some evidence last time we were before this committee that the Department of Immigration and Border Protection had commenced a process in the second half of last year for its accommodation requirements in the ACT. It approached the market in, I think, either October or November—or it may have even been earlier this year; I can check the detail. That approach to market has concluded, and the accommodation proposals are currently under evaluation and are well progressed in terms of that. One of the factors that was taken into account in this revised approach was the impact of the department potentially relocating from the Belconnen town centre. The approach to market that followed after that reconsideration had requirements around maintaining particular accommodation levels in Belconnen.

CHAIR: So a decision has been made to stay in Belconnen. Is that correct?

Mr Edge : A local impact assessment was done. I think the detail of that local impact assessment was shared with the committee some time ago. That informed the approach to market, and one of the considerations that was taken into account was the maintenance of the department's presence in Belconnen.

CHAIR: So that decision has been taken? The local impact statement and various other things said there is a desirability about that—but that decision has been taken?

Mr Edge : That informed the approach to market in terms of what the department went back to the market to procure for its accommodation requirements. It also involved the Australian Bureau of Statistics in its approach to the market, so there was effectively a joined-up strategy in terms of the accommodation needs of both of those agencies.

CHAIR: Does that mean they are going to be together—the ABS and the Department of Immigration and Border Protection? I am just trying to cut through your—

Mr Edge : I cannot pre-empt the outcome of the process, because it is not completed and announced as yet, but there was a collaborative, joined-up approach to the market to identify the accommodation needs of both the Department of Immigration and Border Protection and the Australian Bureau of Statistics.

CHAIR: I am just trying to cut through these multisyllable words to a system that I can distil it down to. Does that mean—even though a decision has not been taken—the study was about the efficiencies of bringing the ABS and the Department of Immigration and Border Protection into the same environment?

Mr Edge : It is purchasing. It is just basically purchasing office accommodation. One of the key drivers of this is taking a whole-of-government perspective on Commonwealth office accommodation, and managing that in the most efficient way possible.

CHAIR: Isn't Tetris about using surplus space that is already there?

Mr Edge : That is a very important element of it, yes.

Ms Halton : To draw an analogy, it is a bit like if we purchase the licences for software as one big package we pay a lower price than if we go and buy each single thing off the shelf. This is a purchase of property for lease purposes in an area where we need a certain amount of space. It does not mean that all of a sudden the ABS and Immigration are cohabiting in the same space, but we are purchasing—

CHAIR: But you are just negotiating on a block.

Ms Halton : Correct.

CHAIR: They are not necessarily going to be in the same building or on the same floor.

Ms Halton : Correct. We are heading for the best value we can get for the taxpayer. That does not mean that all of a sudden the ABS is going to be sitting cheek by jowl with the department of immigration.

CHAIR: Going back to the Department of Customs and Border Protection and the merger of that and immigration—have property cost savings been part of that merger or integration? Have you seen that?

Ms Hall : There will be savings realised out of this approach to market for ACT accommodation, definitely. The question in relation to the broader savings achieved through the merger would be best directed to Immigration.

CHAIR: Minister, based on the historical evidence we have had substantial savings. I think $200 million was the figure.

Senator Cormann: So far.

CHAIR: Does this budget indicate any further savings for the government?

Senator Cormann: What we have decided is to roll out Operation Tetris nationally. Obviously we will be able to report on further savings in future budget updates but the principle of making sure that we backfill vacant leased office space—leased by the Commonwealth—before entering into new leases is obviously a very important principle, and to have proper coordination on a whole-of-government basis has enabled us to achieve a significant level of efficiencies already, to the tune of about $200 million so far just across the ACT. Clearly the Commonwealth has a particularly significant and concentrated footprint in the ACT, so that is why we have prioritised our efforts here. It will be slightly different on a national basis but we still believe that there is opportunity for efficiency.

CHAIR: These major leases—you used the term 'consolidated under the Commonwealth efficiencies'. Are they ministerial-level decisions or are they departmental-level decisions?

Senator Cormann: We work as a team.

CHAIR: As we all do.

Senator Cormann: We work together to identify opportunities for efficiencies, and the very hardworking and very effective officials in the finance department obviously execute the plan that we all develop together.

Senator XENOPHON: Minister, I understand that the government has been negotiating for some time on the WTO agreement on government procurement, the GPA, which would mean that Australia would sign up for an international agreement. Obviously this is something that DFAT is involved in. What involvement has your department had in respect of DFAT's WTO government procurement negotiations?

Mr Sheridan : There is a team in my division that works with DFAT on the negotiations with the WTO GPA.

Senator XENOPHON: Because time is constrained I will try to keep questions short, and short answers would be terrific. That has been going on for how long—the last 12 to 18 months?

Mr Sheridan : I believe so.

Senator XENOPHON: Are we coming close to a resolution of that agreement?

Mr Sheridan : That is really something DFAT should answer, not me.

Senator XENOPHON: Can the minister advise, given that we are likely to go into caretaker mode in—who knows—the next 48 to 72 hours—

Senator McKENZIE: What do you know? How presumptive.

CHAIR: Speculative questions are out of order.

Senator XENOPHON: As always, I respect the ruling of the chair. Minister, what is your understanding of negotiations on something as important as an agreement such as this? Should the government at some stage go into caretaker mode, will the negotiations still continue—or should I refer that to the Department of Foreign Affairs and Trade?

Senator Cormann: I am not personally involved in any such negotiations, as you have already observed. Clearly, the government would comply with all of the relevant caretaker conventions in the circumstances that you describe. No government in caretaker mode would enter into any such agreement with international organisations or other governments around the world, clearly. As to what extent there is ongoing work or participation by officials in relevant working groups or discussions, Mr Sheridan is probably best positioned to advise you in relation to that. But from the government's point of view—you would not expect us to enter into any new agreements once an election has been called.

Senator XENOPHON: Is it your understanding, Mr Sheridan, that we are at the end stage of those negotiations?

Mr Sheridan : I am not responsible for the negotiations. We provide advice to DFAT. I think your question needs to be addressed to DFAT, not to us.

Senator XENOPHON: Would you not be aware of how close we are to concluding those negotiations?

Mr Sheridan : These negotiations are somewhat episodic. They involve trips overseas, people going to various things and working through a range of details with a range of countries. I could not say exactly where they were; I think DFAT is best placed to answer.

Senator XENOPHON: Given that your bailiwick is procurement rules, if we were to sign such an agreement, which would put other countries on an equal footing in being able to bid for goods and services being sought by the Commonwealth, what effect would that have on state governments, such as Victoria and South Australia, that have particular rules for their procurement? Has any advice been sought as to whether the WTO agreement on procurement could override or overrule either anything that state governments already have in place or, alternatively, anything the Australian parliament may wish to implement which would have a stronger emphasis on looking at the social and economic benefits of locally sourced goods and services?

Mr Sheridan : The details of those international agreements are best addressed by DFAT, not by us. We are not responsible for state procurement. There are different applications of rules, in international trade agreements, for national and subnational agreements. An example is the threshold for covered procurements, which is $80,000 currently for the Commonwealth and, I think, just under $500,000 for the states and territories.

Senator XENOPHON: Could such a treaty conceivably affect any state government procurement arrangements?

Mr Sheridan : These treaties sometimes affect subnational arrangements, not just national arrangements.

Ms Halton : There is a very standard process inside government. Before a Commonwealth government enters into any such arrangement, every state and territory is consulted. That is the standard treaty-making process.

Senator XENOPHON: Respectfully, that was not the question. Notwithstanding the consultation, any state government procurement rules could be overridden by a WTO agreement on procurement. That is not controverted.

Ms Halton : Fair enough.

Senator XENOPHON: Minister, earlier today I asked questions of the secretary of the DPS in relation to a multimillion-dollar security system for Parliament House. There is currently a first-tier bidder and a second-tier bidder. I understand that the second-tier bidder has put in an underbid. I want to ask about procurement in general terms.

Senator Cormann: Procurement by the parliament is a matter for the Department of Parliamentary Services. You have just indicated in your opening comments that you have already asked them questions in relation to this. As Minister for Finance, I am not involved in the process.

Senator XENOPHON: Can you advise whether the DPS is subject to the Commonwealth procurement rules?

Senator Cormann: The answer is yes.

Senator XENOPHON: Can I put to you, ignoring whatever the DPS is doing in respect of the security system—

Senator Cormann: You do not agree with the separation of powers, Senator Xenophon? You are about to suggest that I should interfere in the decision making of the parliament.

Senator XENOPHON: That is very offensive. I am not suggesting that at all. You are not going to pin a Joh Bjelke-Petersen on me. You cannot do that. I know what the separation of powers is.

CHAIR: Is there separation of powers in the Xenophon party?

Senator XENOPHON: Chair, you are being extremely unhelpful!

CHAIR: I am indeed.

Senator XENOPHON: You aim to be. Under the procurement rules, Mr Sheridan, if there are two bidders there is a preferred bidder. Usually, that is what occurs. There is a first-tier bidder and a second-tier bidder. If the second-tier bidder says, in order to inject some competitive tension, 'We've looked at our figures; we can come back to you with an underbid that is significantly cheaper than our first bid,' what happens? I will leave alone what is happening in this building now about the security system, but how does that work as a general principle?

Mr Sheridan : The process normally requires an open approach to market. Those approaches to market have a closing date. The approaches are provided by various potential tenderers. An evaluation process is undertaken considering the value for money for all of the procurement, not just the price. Having looked at the value for money, a decision would be made about who offers the best value for money, and then the delegate would make a decision in accordance with the Commonwealth procurement rules. If during that process someone sought to adjust their price, it would be relatively unusual. Normally speaking, I do not know that we would entertain a change in those circumstances.

Senator XENOPHON: Even though it would add some competitive tension to the bidding process.

Mr Sheridan : There is already competitive tension in the entire open approach to market.

Senator XENOPHON: Thank you. Minister, you may be aware that the Australian Electoral Commission, under current procurement rules, is importing many tonnes of paper to be used for our ballot papers—presumably on 2 July—in our polling booths around the country. Are you aware of the general principles involved in that and why it is that we cannot use Australian paper, which is readily available at a competitive price, for the ballot papers which will decide who will govern this nation?

Senator Cormann: The first point I would make is that the Australian Electoral Commission is an independent statutory agency, and under the procurement rules every individual department and agency is, of course, responsible for its own procurement. The second point I would—

Senator XENOPHON: But you make the rules.

Senator Cormann: The second point I would make is that we are a trading nation, and our exporting businesses—including our exporting businesses in the space of government procurement—rely on non-discriminatory access to overseas markets in order to be as successful as possible in selling Australian products around the world.

If we were to introduce a procurement framework which was discriminatory in Australia it would hurt Australian businesses seeking to export overseas, because other countries which we discriminate against in the Australian market would no doubt take decisions to discriminate against our exporting businesses in their markets. The reason you do have a rules based framework around these sorts of procurement services is to ensure that that does not happen. We want our exporting businesses to have access to the whole world market instead of just having access to the Australian market, and we want to ensure that Australian exporters are not discriminated against in the world market to the extent that we can achieve that.

Now, clearly, there is still a way to go in relation to this. But, obviously, it would be the wrong thing to do by Australian exporting businesses if we introduced rules here in Australia which would then be used against us in overseas markets.

Senator XENOPHON: So you are saying that you do not take into account—under the current Commonwealth procurement rules, for which you are responsible—the social and economic benefits of having Australian timber workers and Australian based companies, who pay tax here, being able to provide those many tonnes of virgin paper required for the ballot papers?

Senator Cormann: Mr Sheridan has talked you through the procurement framework. I have pointed out that the Australian Electoral Commission, appropriately, makes its decisions at arms-length from the political level of government because—

Senator XENOPHON: But you set the rules, though.

Senator Cormann: they are an independent agency of government. The final point I made, which is the material point, is that we want our Australian exporting business to be as successful as possible in accessing overseas markets. In that context it would hurt exporting businesses in Australia if we started to introduce discriminatory rules when it comes to government procurement in the Australian market. Your line of questioning goes to the proposition that we should be introducing discriminatory procurement rules based on foreign ownership and based on various other criteria.

Senator XENOPHON: No. It is not about foreign ownership, it is about where the paper comes from. When the Prime Minister made his announcement in relation to the rail line for Tarcoola, I take it that that was within the current Commonwealth rules? The very welcome announcement, might I add, to source steel from Arrium steelworks in Whyalla for the Tarcoola rail line.

Senator Cormann: Well, the Australian Electoral Commission is due to appear later today, I believe, and I invite you to—

Senator XENOPHON: No. You are responsible for the procurement rules.

Senator Cormann: Well, I am not responsible for the procurement decisions of the Australian Electoral Commission, which is—

Senator XENOPHON: No, you are responsible for the rules.

Senator Cormann: And the rules do not prescribe the decisions that individual agencies need to make. The Australian Electoral Commission, appropriately, is an independent statutory agency which makes its own procurement decisions within the framework that is set by the government. They are actually appearing later this afternoon—

Senator XENOPHON: So you are personally comfortable that we will be importing, potentially, hundreds of tonnes of paper—

Senator Cormann: That is an inappropriate verballing of what I am saying. Let me just summarise—

CHAIR: That is not an appropriate question.

Senator Cormann: That is an inappropriate verballing of what I am saying. Let me just—

Senator XENOPHON: I am not verballing you.

Senator Cormann: You are totally verballing me. Let me just summarise the position again: firstly, the AC makes the decisions about where they buy their paper and, as I understand it, most of the paper, overwhelmingly, comes from Australian sources.

Senator XENOPHON: You cannot tell us how much though.

Senator Cormann: Honestly, I have referred you to the appropriate agency to ask that question. The second point is that it is actually in the interests of Australian business exporting around the world that we do not discriminate against businesses wanting to import into Australia, because the retaliatory action in other markets around the world would hurt Australian businesses. That is the reason why, as an open trading economy—ever since the Hawke-Keating years, incidentally—given that we have a transition of an open-trading economy engaged with the world pursuing opportunities to be as successful as possible in markets around the world, we are not proposing to introduce a discriminatory procurement framework here in Australia. That would not be in our national interest.

Senator XENOPHON: Finally, maybe you can take this on limited notice, given what is likely to happen over the weekend: are you able to at least tell us which tools you use to make an assessment of how value for money is determined under the Commonwealth procurement rules?

Mr Sheridan : The Commonwealth procurement rules describe the ways of providing value for money.

Senator XENOPHON: I know that.

Mr Sheridan : How individual delegates do that would vary across them. There is not a single set of tools or a single way of saying that it is done. The rules explain what needs to be done, and each delegate makes up their own mind.

Senator XENOPHON: So there is not a consistency of approach?

Mr Sheridan : No, there is a consistent approach in the Commonwealth procurement rules. How that is applied by each delegate depends on the work that they are doing. Each procurement has a different set of requirements.

Senator XENOPHON: So the rules are consistent but the implementation may not be, depending on—

Mr Sheridan : No, I do not think that is true either.

Senator XENOPHON: Thank you.

Senator McALLISTER: I want to talk about government advertising. Could you provide an update on the amount of advertising expenditure for the year to date; and can that be broken down into campaign and non-campaign advertising expenditure?

Mr Smyth : I do not have an actual update on all of those campaigns on me. If we could take that on notice and get back to you—

Senator WONG: Mr Smyth, this is a question that has been asked at almost every estimates committee I have ever been to. Do you think you could come with an up-to-date figure in future, whoever is in government?

Senator Cormann: I have actually made that observation from opposition too, when you were sitting in this spot and you took that question on notice.

Senator WONG: And I think we provided it.

Senator Cormann: No, you provided it on notice, eventually; you did not provide it on the day. We have just taken the question on notice, and I will get back to you.

Senator WONG: Well, what is the latest you have?

Senator Cormann: The latest that we have is actually—

Senator WONG: I am asking him.

Senator Cormann: I am telling you: I provided an answer to a question in the last Senate estimates. That is the most recently available information.

Senator WONG: Come on. Seriously?

Senator Cormann: We have taken the question on notice.

CHAIR: The question has been taken on notice.

Senator WONG: Do you have anything else here?

Mr Smyth : I do not have those up-to-date figures.

Senator WONG: What are most recent figures that you have?

Senator Cormann: We have taken the question on notice.

Senator WONG: You are not going to let him answer?

Senator Cormann: We have taken the question on notice.

CHAIR: No, the question has been on taken on notice, which is perfectly appropriate.

Senator McALLISTER: Mr Smyth, what are the current advertising campaigns that are underway in government?

Mr Smyth : At the moment, there are 18 current advertising campaigns above the $250,000 threshold that have commenced or are in the market as of 1 May.

Senator WONG: I did not hear the start of you answer.

Mr Smyth : There are 18 campaigns currently running

Senator McALLISTER: Above the $250,000 threshold as at 1 May.

Mr Smyth : That is right.

Senator McALLISTER: Do you have the costs relating to those campaigns?

Mr Smyth : No, I do not. Those costs really come in at the end of the campaigns and relate to how much media is actually placed and some of the other costs associated with those. We do not actually—

Senator Cormann: The important point is that the individual campaigns are, of course, the responsibility of the individual portfolios that are running them.

Senator WONG: This is nothing but interference.

Senator Cormann: I am adding to the—

Senator WONG: This is nothing but interference, because you are trying to hide how much you are advertising.

Senator Cormann: I am providing context.

Senator WONG: No, you are interfering. Usually, you do this a little less and with a little more subtlety.

CHAIR: Order! Senator Wong, it is inappropriate.

Senator Cormann: I am adding to the answer to the question asked by Senator McAllister.

CHAIR: You can continue to add to the answer.

Senator Cormann: I am quite happy for us to run through the list of campaigns, but the specific costs at any one time in relation to specific campaigns run in different portfolios are, obviously—where the most current information is—in those specific portfolios. If you have questions in relation to specific campaigns, and the most recently available costs of these campaigns, then you should really direct those to the relevant portfolio.

Senator McALLISTER: Can you tell me what the aggregate budget approval is for the campaigns that are currently on foot?

Mr Smyth : I do not have that. That would be the responsibility of individual agencies.

Senator WONG: What do you have?

Mr Smyth : As I said, I have a list of the campaigns that are currently running in the media, but I do not have the actual costs of those campaigns.

Senator WONG: Do you have what was approved in terms of expenditure on each of those campaigns?

Mr Smyth : Not on me at the moment. Individual campaigns are the responsibility of individual agencies.

Senator WONG: Come on. Finance was always able to advise—

Senator Cormann: We have taken it on notice, Senator Wong.

Senator WONG: I have not finished the question.

Senator Cormann: You are making a commentary. That was not a question.

Senator WONG: Chair, I have not finished the question.

CHAIR: I understand that. You are entitled to conclude the question but, if you are repeating a question they have already taken on notice, it would not be appropriate.

Senator WONG: I did not ask costs to date; I asked what was approved, and it is approved centrally. What has been approved for each of the 18 campaigns?

Mr Smyth : Again, they are the responsibility of individual agencies. I do not have those figures.

Senator WONG: Who approves the costs?

Mr Smyth : Those costs are approved by individual ministers, and they are—

Senator WONG: After they go to—

Mr Smyth : They are in the PBS, usually.

Senator WONG: No, after they go to which committee? Is it called the government advertising committee?

Senator Cormann: Hang on, I have got to intervene in this.

Senator WONG: That Finance auspices?

Senator Cormann: I have got to provide an addition to the answer.

Ms Halton : No, we do not.

Senator WONG: Maybe you should tell me about that.

CHAIR: The minister has something to add.

Senator Cormann: Funding for relevant campaigns—and this is not new under this government; this was under your government and it is under our government—is reflected in the budget papers, when relevant decisions are made in terms of the allocation. Obviously, this is our third budget, and we have had two budget updates. There are portfolio budget statements that provide further details. The funding is allocated against specific portfolios and, on a day-by-day basis, it is not the responsibility of Finance to track where individual portfolios are at with their campaigns that have been allocated to them in the context of the budget.

Senator McALLISTER: Mr Smyth, you have a list of the 18 campaigns that you mentioned that are currently on foot.

Mr Smyth : That is right.

Senator McALLISTER: Are you able to provide those to the committee?

Mr Smyth : Yes, I can go through those.

Senator WONG: Can you table it, rather than reading them out?

Mr Smyth : I am sure we should be able to table that.

Senator McALLISTER: Terrific. In relation to Finance's role in the allocation of funds to each of those campaigns, can you describe to me what role you play in approving the allocation of funds?

CHAIR: Before you answer that, Mr Smyth, do you want to table that document, or is there—

Mr Smyth : I will have to get a separate copy sorted, in case some other material in relation to—

CHAIR: If you can source a sanitised version as soon as is practicable and provide it to the secretariat, that would be appreciated.

Senator McALLISTER: One of the key outcomes under, I think it is 2.5, is to ensure that government advertising is conducted within the constraints of policy. I assume that involves some role in the approval of funding for those campaigns.

Mr Smyth : My communications advice branch that sits within my division does not approve the actual funding of those campaigns. Campaigns are either approved through the budget process—so that would be through one of the agency advice units in consultation with agencies—or from funds that are currently held within portfolios in certain allocations. But my area does not have responsibility in approving funding.

Senator WONG: She asked you about the process, so let's go to those approvals of funds in relation to campaigns, in respect of which there has already been a budget allocation. What is the process—

Senator Cormann: When you say 'approval of funds'—

Senator WONG: Well, approval of the expenditure, or approval of the campaign. So agency X is allocated through a previous budget process a certain proportion for advertising. Does the government still have a process where a request to initiate an advertising campaign is brought to a subcommittee of the cabinet?

Mr Smyth : Yes.

Senator WONG: Thank you. And what is that subcommittee called?

Mr Smyth : It is the Service Delivery and Coordination Committee.

Senator WONG: And does that still involve officers present at meetings as well as cabinet members?

Mr Smyth : I have not attended one of those meetings.

Senator WONG: Does Finance attend that meeting?

Mr Smyth : We attend on an as-requested basis.

Senator Cormann: It is chaired by Minister Pyne.

Senator WONG: I am sure it is.

Senator Cormann: It is, and it is not supported by the Department of Finance. Hence, the questions are not really appropriately directed to us.

Senator WONG: Am I allowed to keep going or do you just want to keep interrupting?

Senator Cormann: We have taken the questions on notice and you are asking questions that do not relate to us.

Senator WONG: I had not finished.

CHAIR: Senator Wong is entitled to ask questions as long as they are related to this portfolio.

Senator WONG: Thank you. Mr Smyth and Ms Halton, you say that you only attend as needed.

Ms Halton : Yes.

Senator WONG: When are you needed?

Ms Halton : Intermittently.

Senator WONG: For what purpose?

Senator Cormann: For example, in relation to campaigns in our portfolio. We would be needed for that.

Senator WONG: That is obvious.

Senator Cormann: You are asking an obvious question and I am giving an obvious answer.

Senator WONG: You really do not want any questions asked about this.

CHAIR: I think he is being very helpful.

Senator WONG: I am sure you do.

Senator Cormann: We are providing an abundance of help.

Senator WONG: In respect of campaigns which are not run in the finance portfolio, does Finance have a role in relation to preparation of advice, documentation, et cetera before the service delivery subcommittee of cabinet?

Ms Halton : We would look at documentation and we would provide a written commentary on the documentation. My officers do not, as a matter of course—in fact, almost never—attend the actual meeting.

Senator WONG: You would provide advice in relation to what? Do you provide an assessment in terms of value for money or do you provide advice on whether it complies with guidelines? What is the nature of your role in respect of advertising outside of your portfolio?

Ms Van Veen : I am sorry, Senator, would you mind repeating that question?

Senator WONG: I think the secretary said that you or your officers would provide advice, written documentation, et cetera. I am trying to ascertain what your role is. What are you doing? What are you assessing? Are you assessing value for money? Are you assessing against the guidelines? What is your role in respect of decisions or consideration of campaigns that go before that subcommittee of cabinet?

Ms Van Veen : We provide communications advice with respect to advertising research that has been provided supporting the creative materials in terms of whether the research is supporting the materials going forward and whether the campaign is a sound one.

Senator WONG: Can I put something to you and can you tell me if it is a fair summation of your role? You look at what the agency is proposing to do and whether that is a sound use of public funds, given the research and given the communications objectives.

Ms Van Veen : Correct. Could just add something to your earlier point? You mentioned consistency with respect to the guidelines. We do not provide advice on that because that is the role of the Independent Communications Committee because they provide the compliance advice.

Senator WONG: Their assessment is supposed to occur prior to the subcommittee of cabinet considering it?

Ms Van Veen : That is right.

Senator WONG: I presume not every campaign—or not every advertising proposal, I should say—requires your engagement for the purposes you have outlined.

Ms Van Veen : It obviously goes through stages and we are providing advice on that process.

Senator WONG: In answer to Senator McAllister you said there were 18 campaigns above the $250,000 threshold on foot. In addition to those, for how many others have you provided the sort of advice you described?

Mr Smyth : Can I take that on notice?

Senator WONG: How long have you been in this role, Mr Smyth?

Mr Smyth : About 12 months now, Senator.

Senator WONG: Where were you before?

Mr Smyth : I was in the Department of Health.

Senator WONG: You do not know how many you have provided to, in addition to the 18?

Mr Smyth : In terms of over $250,000, I could certainly take that on notice and get back to you as quickly as possible.

Senator WONG: I would appreciate that.

Senator McALLISTER: Your role in relation to government advertising changes when we enter the caretaker period; is that correct?

Mr Smyth : Our role does not necessarily change but the caretaker provisions do certainly come into force, yes.

Senator McALLISTER: What does that mean for your job?

Mr Smyth : That means for us that once the election is called the Master Media Agency is instructed to stop all government advertising at that point except for the advertising conducted by the Australian Electoral Commission. We then sit down in consultation with the Department of the Prime Minister and Cabinet and determine what advertising might be recommended to continue over the caretaker period. We provide that advice then to the minister. The minister then has a discussion with the opposition as to what campaigns may, I suppose, restart. Once the decision has been taken we instruct the Master Media Agency to recommence those campaigns.

Senator McALLISTER: Can you provide a list of all of the campaigns that will be reviewed?

Mr Smyth : We will be reviewing those campaigns that are currently in the market.

Senator McALLISTER: So the list that you are to provide us shortly of those 18 campaigns—

Mr Smyth : Yes, that is right.

Senator McALLISTER: All things being equal that would be the list, except if another campaign were initiated between now and the caretaker period.

Mr Smyth : There is likely—assuming the election timetable goes ahead—to be one campaign that has not yet launched. That is the census campaign because the census is on the night of 9 August. The Australian Bureau of Statistics is working through those campaign materials at the moment. So that would be an additional element to some of the caretaker provisions that would be discussed with the opposition.

Ms Van Veen : I want to clarify something. Mr Smyth has said all advertising over $250,000—

Mr Smyth : No, I did not say over $250,000; all government advertising.

Ms Van Veen : Sorry, you said $250,000. It is all government advertising—that list you mentioned.

Senator McALLISTER: Right. So the list of 18 is only those projects over $250,000—

Mr Smyth : Over $250,000 and then there are other ones under that as well that we would be looking at.

Senator McALLISTER: Is it possible for you to table a current list of those smaller campaigns?

Mr Smyth : I am sure we can take that on notice. Again I just do not have a list of all of those—

Senator WONG: No. You have got the 18—and you are getting that cleaned up. We can get that shortly?

Mr Smyth : Yes.

Senator WONG: This one would take longer?

Senator Cormann: We have taken it on notice.

Mr Smyth : It may take a little more time.

Ms Van Veen : These lists are provided with the minister's correspondence when caretaker is called. It is part of the documentation that goes to the opposition through the consultation process—all of the advertising.

Senator WONG: So there is no problem with giving it to us a bit earlier!

Senator Cormann: We have taken it on notice. Let us see what we can do.

Senator McALLISTER: You mentioned that there would be consultation with the opposition about campaigns that may continue. There are obviously some campaigns that are on foot that would need to cease—and I suggest the ideas boom advertising is one of those campaigns.

Senator Cormann: Let me assist you here and take you through the general handling of government advertising campaigns during the caretaker period. When an election is called all campaign advertising by non-corporate Commonwealth entities will cease except advertising undertaken by the AEC. As detailed in the 2016 caretaker conventions, on the commencement of the caretaker period Finance and PM&C will review all advertising campaigns and make a recommendation to the government on whether specific campaigns should continue or be deferred. The government will then consult with the opposition on those campaigns proposed to continue. Campaigns of an operational nature, such as Defence Force recruiting campaigns or public health campaigns, usually continue. There is a process there.

You might want to make assertions of what in your personal opinion should or should not continue. I would leave it to the usual and established processes under the caretaker conventions, which, incidentally, were breached by the previous Labor government when direction was given by the then Special Minister of State, Mr Dreyfus, to the then secretary of finance, Mr Tune, to engage in highly political advertising during the last election in relation to the offshore processing arrangements initiated in the shadow of the last election. We will work within the caretaker convention, unlike the previous government.

Senator McALLISTER: Can I ask about those campaigns where the recommendation to the minister is that they need to cease. What is the process for ceasing the advertising campaign?

Senator Cormann: What I have just explained to you is that after we, the government, have received advice from Finance and PM&C we will then consult with the opposition. We will then make a decision together as to what is non-contentious, what might continue and what might not continue. There is a process that is yet to be engaged in the usual way. That process, incidentally, broke down in the lead-up to the last election because your government decided to give a direction, in breach of caretaker convention, to persist with a campaign that was entirely political to try and make it look like the former Prime Minister had a plan to deal with all of the boats that had been arriving in Australia.

Senator WONG: We had a discussion earlier about the ICC and the secretary, I think accurately, stated that the guidelines and the compliance with those are considered by the ICC, is that correct? But the guidelines are guidelines that Finance issues.

Mr Smyth : They are the government's guidelines. They are published. They are out there.

Senator WONG: They are yours, right? Government agrees them—

Ms Halton : The Special Minister of State, traditionally.

Senator WONG: Correct, thank you.

Senator Cormann: They have not changed, by the way. They are the same guidelines.

Senator WONG: I think you have taken it on notice, but I do want to know: how many campaigns have gone to the ICC over the last few months?

Senator Cormann: We have taken that on notice, but I am happy to take it on notice again.

Senator WONG: You do not want to—

Senator Cormann: We have taken it on notice. If you want us to take—

Senator WONG: Are there so many government advertising campaigns that you cannot remember?

Senator Cormann: We have taken the question on notice.

Senator WONG: Did the ICC consider any proposed advertising campaign which included content such as that which was leaked to journalist Paul Murray?

Ms Halton : You might have to give us some more details, Senator.

Senator WONG: There was a script, which ran on television, that was outlined by the journalist Paul Murray, who said that he had been provided with this script. It was a script about spruiking $16 billion worth of savings over four years. Are you aware of that leak?

Senator Cormann: I am not aware. I had never seen the script when it was reported. I am not aware that any such script that ever existed. I am happy to take on notice whether anyone in Finance has ever heard of any such script. I am also pleased to confirm that the government is not undertaking any such campaign.

Senator WONG: All I am asking is: are officials aware of any campaign which went to the ICC which included the script that Paul Murray read out on television?

Senator Cormann: As we have indicated—

Senator WONG: How can you answer whether they are aware? If you want to, take it on notice, but—

Senator Cormann: I am advised that nobody in Finance has ever seen this script and it is not something that we are in any way, shape or form aware of.

Ms Halton : That is true. We have not seen that script.

Senator WONG: I hope everything you say is true. It may not be fulsome, but it is true—

Ms Halton : I am confirming what the minister is reflecting on our behalf. I am confirming what he has said, that indeed we did not see such a script.

Senator Cormann: Again to confirm, the government at no point made a decision to run such a campaign and indeed the government is not running such a campaign.

Senator WONG: You said you were not aware of the script, but you are now ruling out it ever being a campaign, so—

Senator Cormann: Obviously, once this assertion about this script was made in public, as you would expect us to do, we asked some questions. I have to say, everybody was a bit nonplussed and confused as to what this was about. Let me confirm again: we never made a decision to go ahead with such a campaign and, indeed, we are not running such a campaign.

Senator WONG: Can I just ask one question. Funding for the marriage equality plebiscite and the referendum for constitutional recognition did not appear in Budget Paper No. 2 as a measure.

Ms Halton : I am sorry, Senator. Funding for marriage—I got the bit about the plebiscite.

Senator Cormann: I can confirm that there is no measure in the budget—

Ms Halton : There is no measure in there.

Senator WONG: I have not actually asked a question.

Senator Cormann: You have.

Ms Halton : I am sorry, I thought—

Senator WONG: I had not.

Senator Cormann: You asked the question—

Senator WONG: I started the question. I am waiting politely, because you were talking to your secretary.

CHAIR: No, in actual fact, the question was halfway through. I think the minister was trying to be overly helpful by anticipating where you were going.

Senator WONG: Thank you. I had not got there. I note that the Attorney-General made the announcements, in any event, on the night of the budget. Can someone explain to me why, if it was in the contingency reserve but was announced anyway on budget night, you did not just put it into Budget Paper No. 2.

Senator Cormann: Because, as you know, there is a line in the budget papers which says 'Decisions taken but not yet announced'.

Senator WONG: But you announced it on budget day!

Senator Cormann: Let me finish. On the day when the budget was finalised it was still a decision taken but not yet announced.

Senator WONG: Sorry. It was taken in the budget, it was not announced, but we announced it in the budget anyway. Is that the answer?

Senator Cormann: Clearly the Attorney-General announced it, but at the time when the budget papers were finalised it was still categorised as a decision taken but not yet announced.

Senator WONG: Okay—organised. You may or may not be able to help me, Senator or Ms Halton, but does it assume a compulsory vote? The $160 million—

Senator Cormann: You are now straying into the area of responsibility of the Attorney-General.

Senator WONG: That is true. I am happy to go and ask, but I had wondered if you had turned your mind to it. Obviously, funding to the AEC would differ for a referendum as opposed to a plebiscite if the plebiscite did not include compulsory voting. If you do not want to be helpful, that is fine.

Senator Cormann: No, I am going to be helpful. Obviously there are some decisions in relation to this that are yet to be taken. They involve, among other things, some of the things that you talked about and also the timing. That is why the specific numbers are currently in the contingency reserve.

Senator WONG: I do not understand what that answer means. Nothing, I think.

Senator Cormann: The answer means that there is obviously a general commitment that we will run certain referenda—

Senator WONG: A plebiscite.

Senator Cormann: as you pointed out. The plebiscite? Okay. Well, there are two policies.

Senator WONG: I am only talking about the plebiscite now. Obviously with the referendum there is an established—albeit not common—process for that. In relation to the plebiscite, I am simply asking whether or not the costing assumes compulsory voting.

Senator Cormann: And what I am saying in relation to both these processes—and it is a decision taken but not yet announced in relation to the costings—is that final decisions have yet to be made and yet to be announced which go to timing and to some of the matters that you have raised, and that will obviously have a bearing on the final costing.


CHAIR: We will move now onto outcome 3, Support for Parliamentarians and others as required by the Australian Government through the delivery of, and advice on, entitlements and targeted assistance—ministerial and parliamentary services.

Senator McALLISTER: Thank you for tabling the list of personal positions. We have had a brief discussion about that already. That is obviously something that we hope could continue and will continue as standard practice at these hearings. Before lunch we discussed whether there had been any further changes since 1 April.

Ms McGregor : There are no changes to the overall figure. That 425 figure is the one that people—

Senator Cormann: That is the most recently available information. If you want an update from here, we will have to take it on notice.

Senator McALLISTER: Okay.

Ms McGregor : There might be variances, but we would have to go back and see what contracts have come in, gone out et cetera.

Senator McALLISTER: Variances in terms of grade?

Senator Cormann: Not in the overall number but in terms of where they are.

Ms McGregor : Not in the overall number—that stays where it is—but just where people are located.

Senator McALLISTER: Not in terms of grade variation?

Senator Cormann: Again, the information that you have in front of you is the most recently available reconciled information. This is obviously not something we keep track of on a minute by minute basis. If you want more current information in relation to these matters, we would have to take it on notice and provide it to you in due course.

Ms Halton : But we can tell you that, as of today, the numbers have not changed.

Senator McALLISTER: So we can confirm that the numbers have not changed.

Ms Halton : That we know categorically. It is the other stuff—it takes time to compile.

Senator McALLISTER: Turning to the table titled 'Personal positions as at 1 April'—it seems that the government has allocated an additional 14 staff to itself. Is that correct?

Ms McGregor : Do you mean since February?

Senator McALLISTER: Yes. In February we were advised that the grand total for all positions was 423 people. The total of all positions now seems to be 437, which is a difference of 14. Is that correct?

Senator Cormann: Didn't I just say 425?

Ms McGregor : The total is 420, then there are some that sit outside.

Senator Cormann: The answer to your question is no. The number, as you say, was 423 and it is now 425. That is a difference of two, and there are two in the unallocated pool. That is all that is actually in the government ministerial wing staffing arrangement.

Senator McALLISTER: It is just that at the bottom of page 3 it reads, 'Grand total, including allocated and unallocated government pool positions: 437'.

Senator Cormann: There is obviously a series of other non-ministry-related functions in government—including the Special Envoy for Trade, Mr Robb; the Special Envoy for Human Rights, Mr Ruddock; and the chairman of the northern Australia oversight committee—but that is not inside what is comparable with the figures that you are wanting to compare this to.

Senator McALLISTER: Why ought we not include the tax white paper unit, for example, in the figures when we are talking about staff—

Senator Cormann: Because it is not part of the ongoing staffing of the Treasurer's office. This is an established unit but it is not part of the ongoing staffing of the Treasurer's office.

Senator McALLISTER: They are staff housed in the Treasurer's office, are they not?

Senator Cormann: You can obviously categorise it the way you want to categorise it but, for the purposes of the relevant government data, they are not part of the ongoing staffing allocations of the Treasurer's office.

Senator McALLISTER: I simply observe that it seems like semantics to say that five staff who are presently located in the Treasurer's office, working on a key government project, ought not be included in the staff allocated to ministers.

Senator Cormann: It is not part of the ongoing staffing allocation to the Treasurer. It is obviously connected to a specific project, which happens to be related to the government's tax reform agenda for jobs and growth. I am happy to go through that detail again, but the reality is—and you can make whatever observations you choose to make—that this is not part of the ongoing staffing allocation in the Treasurer's office.

Senator McALLISTER: Why is it, then, that in February it was categorised as part of the Treasurer's office?

Senator Cormann: There has actually been no change.

Ms McGregor : Sorry, I do not have the February table in front of me. I was just trying to get hold of that to compare—

Senator McALLISTER: In February it was categorised under the 'Special units of government' heading. It is now categorised in 'Other'.

Senator Cormann: I think you would find that there has not been a change in the categorisation. The tax unit is not part of the ongoing staffing allocation of the Treasurer.

Senator McALLISTER: Ms McGregor might be checking.

Senator Cormann: In the end you can make whatever observations you choose to make. What is your specific question? I am not going to have an argument with you about how you want to characterise certain allocations.

Senator McALLISTER: Ms McGregor, are you checking the approach that was taken in February so that that can be confirmed?

Ms McGregor : We are just having a look back.

Senator Cormann: It is the same categorisation. It is as I say. What was the tax white paper unit, which became the tax policy unit, is obviously not part of the ongoing staffing allocation to the Treasurer. You would have seen in the budget we released a very comprehensive package to make our tax system more growth friendly, to crack down on tax avoidance and to ensure that tax concessions are better targeted to strengthen growth. The work of that unit has come to a close. As such it is now of course being moved out of the arrangements that have been in place while the work was underway.

Senator McALLISTER: Where has it been moved to? Are those staff no longer working in the Treasurer's office?

Senator Cormann: The number has reduced, has it not? What is your specific question?

Senator McALLISTER: Why are the positions for the tax white paper, which were previously included as special units of government and hence counted in the total government pool of positions, no longer counted there?

Senator Cormann: Because the work of the tax white paper unit is coming to a close. We delivered a budget on Tuesday. Senator Wong keeps sneering whenever I mention it but we released on Tuesday our plan for jobs and growth, which included a tax package designed to make our tax system more growth friendly.

Senator WONG: What I am reacting to is this boring, endless, repetitive script.

Senator Cormann: It is not a repetitive script.

Senator WONG: It is a boring, endless, repetitive script.

Senator Cormann: It is a fact.

Senator WONG: It is not. You just trundle out your lines.

Senator Cormann: We released the budget on Tuesday. That is a fact. The work of this—

Senator WONG: Yes you did, and it is non-responsive. It is simply—

CHAIR: Order!

Senator WONG: Chair, you are not bringing him to the question.

CHAIR: I do not need to be told what to do. What is perfectly—

Senator WONG: He simply keeps articulating a script and you just let him get away with it—and you wonder why the opposition gets grumpy. Seriously!

CHAIR: Senator Wong, in the answering of a question, the minister is perfectly entitled to address the question and add whatever extra information he would like to. You may not like that but I certainly think that hearing about jobs and growth and the impact of policies of the government is relevant to the question that was asked.

Senator McALLISTER: The significance, as you well understand, Minister, of the way these positions are categorised is that the opposition staffing levels are directly tied to the staffing levels provided to the government. It is quite important that we have an accurate accounting for the staff that have been allocated to the government. If, as you say, the tax white paper unit is no longer required as part of the government's allocation because that work has concluded, why is it that it appears at all on the table?

Senator Cormann: The document that you have in front of you is a document dated 1 April. As I have said to you, at that time, obviously, the work on the budget—our plan for jobs and growth—was still in full swing.

Senator McALLISTER: Senator Cormann, can I interrupt you.

Senator Cormann: You asked me a question, and I am answering your question.

Senator McALLISTER: In earlier evidence to this committee—

CHAIR: Allow the minister to conclude, and then you can—

Senator Cormann: You have asked me a question; I am answering it. You asked me the specific question of why the unit is still on this paper at all. The reason it is on there is that, at that time, that unit was doing work, but that work was obviously about to come to a close, because the work of that unit was very much focused on the very comprehensive tax package that is in our economic plan for jobs and growth, which was delivered on Tuesday. We are obviously now approaching an election. Obviously we will not have to continue to put another budget together with another comprehensive tax package for some time. As I have said, the 1 April table is the most recent available table that we have. We have already taken on notice to see whether we can provide you with additional information on notice, and we have taken that bit on notice.

Senator McALLISTER: Ms Halton, earlier you indicated that the numbers had not changed since 1 April.

Ms Halton : Yes, 425. That is my understanding of the number of bodies.

Senator Cormann: I have just received advice that opposition staffing levels have increased from 88 to 89 in the last six months, in proportion to the relevant movement in government staffing level over that period.

Senator McALLISTER: Senator Cormann—I am sorry; Minister Cormann.

Senator Cormann: That is okay.

Senator McALLISTER: Any reasonable interpretation of this table would suggest that the government has had a significant increase in staffing since February and that that has not been matched by a similar increase in opposition staffing.

Senator Cormann: I do not know that I accept that characterisation. What I suggest you do is ask your shadow Special Minister of State to write to me with whatever proposition he wants to put to the government in relation to these matters, and we will assess it in the usually constructive, positive and productive way in which we have engaged with the opposition on these matters. I pride myself on taking a very constructive and positive approach to these matters. I do not think that anyone can say that I have been anything other than helpful in relation to working through these sorts of matters, and I am not sure that this line of questioning is particularly helpful. If there is an issue that you feel needs to be addressed, approach me in the usual way and we will work through it.

Senator WONG: You should not be increasing it in the way you have.

Senator McALLISTER: Minister, our ability to make such an approach is dependent on having accurate information, which is the purpose of the question.

Senator Cormann: We have just told you we have given you the most recent available information, which is that of 1 April.

Senator McALLISTER: That is the purpose of today's questioning.

Senator Cormann: I am quite happy—and I have already taken it on notice—to look at whether we can provide you with any additional information. To the extent that there is further conversation that should take place in that context between the government and the opposition, I am happy to have it, as I always am.

Senator McALLISTER: Thank you, Minister. We may come back to the question of the numbers, but there has also been a grade inflation across the tables from the last estimates. Is there a plan to provide the equivalent higher grade positions to the opposition?

Senator Cormann: To be frank, again, it is not something that I can answer on the spot like this. If you have a genuine question in relation to this, the best way to ask it is by approaching the government. That is how every other party in parliament goes about these things.

CHAIR: I have a genuine question in relation to this table, and it is something I have noticed in the Senate things as well. I have been going through the 'personal positions for parliamentarians not affiliated with a major political party', and on a separate page it has a 'recognised party', the Glenn Lazarus Team. What is the significance? Even though there is no significant difference in positions, why are they categorised as different—for example, Senator Bob Day from Family First versus a 'recognised party'?

Senator Cormann: I will have to take that on notice. Believe it or not, these are actually not decisions taken by me in my capacity; these are decisions that, under the act, are taken by the Prime Minister—specifically when it comes to matters of grading and the like. Again, in an abundance of helpfulness, if there are any specific questions I can assist with, I am happy to facilitate a response.

Senator McALLISTER: Can I ask about the allocation of staff to leaders? I note that Senator Abetz and the Hon. Warren Truss have both been allocated staff, given their status as former leaders. I understand the allocation to Senator Abetz is equivalent to that which was provided to Senator Faulkner.

Senator Cormann: I would have to take that on notice. I do not think anybody at this table was around when the allocation was made to Senator Faulkner. I suspect that it would be, but I am happy to confirm that on notice.

Senator McALLISTER: That would be helpful.

Senator Cormann: One of my advisers has just confirmed that Senator Faulkner did have a staffing position allocated to him as a former Labor Senate leader.

Senator WONG: Yes, I think it was that level.

Senator Cormann: I am honestly not aware.

Senator WONG: You can take that on notice.

Senator McALLISTER: How do we determine which former leaders receive a staffing allocation? Who is responsible for that? You have mentioned that it is not your decision, but who is responsible for making that decision?

Senator Cormann: Under the act and under governments of both persuasions, it is a decision for the Prime Minister of the day.

Senator McALLISTER: Is it a decision taken on advice from this department?

Senator Cormann: All decisions are taken on advice, but ultimately it is a decision that is—

Senator McALLISTER: I am sure someone advises him. I suppose I am asking whether the Department of Finance provides advice.

Ms McGregor : No, Senator.

Senator Cormann: PM&C provides advice to the Prime Minister. That is the way it works.

Senator McALLISTER: I am interested in exploring this because—

Senator Cormann: Really?

Senator McALLISTER: Yes, I am. We have a number of former leaders in the parliament, like Mr Swan, the member for Lilley, a former Deputy Prime Minister—

Senator Cormann: He is a former deputy leader, not a former leader. When I last looked he was a former deputy leader.

Senator McALLISTER: Mr Truss is a former Deputy Prime Minister, and that is the basis on which it is indicated he receives the allocation in the table that is provided.

Ms McGregor : I will check for you, but it is my understanding that when it comes to staffing for the opposition, for example, that whilst the overall allocation and levels might be made, it would probably then be up to the Leader of the Opposition to make the allocation in more detail. I will have to check and just see what the exact process is around that.

Senator McALLISTER: Is the implication of your answer that the allocation has already been provided to, say, Mr Swan or Mr Albanese?

Ms McGregor : No, it is more around who would make the decision to provide that person. Other than that, there are sometimes individual situations where members or senators may write to the Prime Minister to make a specific request.

Senator Cormann: Just to be clear, this is actually not part of this outcome and this department. Again, we are straying and being way more helpful than we should be because this is actually completely not related to this portfolio. It is entirely related to the Prime Minister's portfolio. If you really want to pursue this line of questioning, that is where you should pursue it. That is the reality.

Senator WONG: No.

Senator Cormann: But it is true.

Senator WONG: It is not.

Senator Cormann: It is.

Senator WONG: Usually, Finance has been able to answer questions as to the rationale for the additional allocation for leaders and so forth.

Senator Cormann: I do not have authority under the act to make these decisions. That is the reality of it.

Ms Halton : We are not party to these decisions.

Senator Cormann: It was the same under your government, incidentally.

Senator WONG: No, I think we were very clear about allocation to past leaders. Senator Minchin was allocated an adviser, as was Senator Faulkner.

Senator Cormann: Did the finance minister under the Gillard government make the decision in relation to the allocation to Mr Rudd when he ceased being Prime Minister? Was it the finance minister or the Prime Minister who made that decision? That is exactly the way the process works. It is the Prime Minister of the day that is responsible for many of these decisions. That is the way it worked under your government and that is the way it is working under our government. I am not quite sure what you are trying to achieve by traversing this. If you do want to go into more detail in relation to this, the best place to ask these questions is with PM&C.

Senator WONG: We will keep asking questions, and I guess you can answer the ones you want to. Could I jump in for a sec?

There is an asterisk next to Mr Morrison's name in the table, but no note to which it refers. I am just wondering what it meant. There is an asterisk on another page and it refers to something.

Ms McGregor : It usually means a cabinet minister.

Ms Halton : If you go to the front page—

Senator WONG: Yes, it is just on a different page.

Ms Halton : If you go to the front page, they are all asterisked—right?

Ms McGregor : If you turn the page.

Senator WONG: I think Senator Bernardi might have asked this—

CHAIR: I do not have an asterisk.

Senator WONG: Hope springs eternal!

CHAIR: Not from where I sit.

Senator WONG: I was having a little difficulty correlating the budget measure—you might have asked this, Senator Bernardi—about the additional allocation to non-government independent senators and what had previously been the case. Can someone take us through that. You have got a budget measure which says you will provide another five—this is page 94; non-government personal staff. Is that reflecting this or is that additional to this?

Ms McGregor : I think those may already be reflected in this table.

Senator WONG: Can you just—

Senator Cormann: This was announced at the time from memory.

Senator WONG: Correct.

Senator Cormann: The Prime Minister made this announcement on becoming the Prime Minister, and this is consistently reflected in the budget measures and in this table, which, incidentally, is not our table.

Senator WONG: I am not trying to make trouble; I am just trying to understand. Whose table do you say this is? Who produces this table? It has been produced and provided at the F&P estimates since Robert Ray and John Faulkner were in opposition.

Senator Cormann: Indeed, and we have provided it to you now. As many of these decisions are decisions that are made in the context of the Prime Minister's portfolio—

Senator WONG: Can we not have that argument, because I am—

Senator Cormann: No, it is not an argument; that is a fact.

Senator WONG: I am asking a different question.

Senator Cormann: You just asked me—

Senator WONG: No, I did not; I asked this—

Senator Cormann: Hang on, you asked me specifically who was putting the table together.

Senator WONG: I asked Ms McGregor whether or not the budget measure is fully reflected in the document or whether—

Senator Cormann: And I have answered that question by saying yes.

Senator WONG: No, you said you were not sure, so I am just asking to confirm.

Senator Cormann: No, you did not. That is not what I said.

Senator WONG: Is it or is it not?

Senator Cormann: I have told you that it was consistent with the announcement the Prime Minister—

Senator WONG: No. Is it fully reflected? In other words—

Senator Cormann: It is reflected in the budget measure.

Senator WONG: No, fully reflected—

Senator Cormann: Fully reflected.

Senator WONG: Can I finish the question, so we do not have to keep going around in a boring circle.

Senator Cormann: It is fully reflected in the budget measure.

Senator WONG: Can I finish the question?

CHAIR: Let's go with the question first.

Senator WONG: Thank you; hooray.

CHAIR: Well, let's just start with you.

Senator WONG: Are all of the additional staffing allocations, which are outlined in Budget Paper No. 2, reflected in the numbers of staff actually allocated in the table?

Senator Cormann: Yes, but this is a table, as I said, again; it is not actually a Finance table, but the answer is yes—given that you persist in asking questions about PM&C matters in the finance portfolio—

Senator WONG: You generate this and have generated it for 1½ decades so, if you want to make a change to that, we can have a discussion about it. But can we just get off that topic for the moment. I am sure there is a reason for it, but—

Senator McALLISTER: Again, not trying to make trouble; simply trying to understand the table: why is Senator Lazarus listed as a member of a recognised party?

CHAIR: That was the question that I asked.

Senator Cormann: That is not a question for the finance department.

CHAIR: It is actually a question for the Department of the Senate to be honest, because it is still the same on the Senate Notice Paper, and we are trying to ascertain an answer to that. It does not apply in this, apart from this table.

Senator WONG: Do I assume then, Senator Cormann, given you keep saying that this is PM&C, that all of these questions can be asked and answered when we get to PM&C?

Senator Cormann: It depends on what you questions you are going to ask then. But what I have said to you—

Senator WONG: I think the government should decide where it wants these questions.

Senator Cormann: Senator McAllister was putting a line of questioning to me about which additional personal staff is allocated to which former leader or deputy leader and the grading of positions that go with various non-government members of parliament. These sorts of issues are not decisions of the finance portfolio; these decisions are made by the Prime Minister under the act. These sorts of questions are appropriately directed to the Prime Minister's portfolio. The framework for this table is put together by the Prime Minister's portfolio. The role of the finance department in the context of this is to populate it with the numerical information that we are aware of, but we are not the decision makers in relation to many of these matters.

Senator WONG: Chair, would we be able to request a couple of minutes' break, unless you have some questions.

Proceedings suspended from 15:06 to 15:25

CHAIR: We will resume the hearing of the Senate Finance and Public Administration Legislation Committee budget estimates hearing. We are dealing with the Department of Finance. Senator Wong.

Senator WONG: I want to ask some questions in relation to Melbourne Mailing Pty Ltd and the alleged misappropriation of public funds via that entity. I have only been aware of this through what is on the public record, but I understand that Mr Damien Mantach, who was the director and officer of the Victorian Liberal Party, allegedly misappropriated funds from the Liberal Party but also, it appears, misappropriated funds from the Commonwealth and state governments via an arrangement with Melbourne Mailing whereby invoices were jacked up. There was an alleged arrangement between him and Melbourne Mailing. I understand that there has been some correspondence and communication between the Victorian Liberal Party and Finance, and I want to start first with understanding what the process has been.

Senator Cormann: I have written to the shadow Attorney-General—

Senator WONG: I have that.

Senator Cormann: You have a copy of the letter? That actually sets out the focus.

Senator WONG: I will ask questions from that if you want me to, but I actually wanted to start—

Senator Cormann: I am happy for you to table the letter if you want. That way everyone has the same information.

Senator WONG: Because your letter starts at a certain point, I wanted to start with when Finance first had contact with representatives of the Victorian Liberal Party or Mr Kroger in relation to this matter.

Ms McGregor : The question was about the first contact?

Senator WONG: Yes. Are you the person handling this?

Ms McGregor : We initially were contacted about it because it impacted on senators' and members' printing.

Senator WONG: Sure. What was the first contact with Finance?

Ms McGregor : The first contact was actually more to the whole department. Lawyers acting for the Victorian Liberal Party wrote to the department regarding the alleged misappropriation of the funds.

Senator WONG: Is that the letter of 25 August or is there one prior to that?

Ms McGregor : No, that was the first contact.

Senator WONG: Are you able to table that letter?

Ms McGregor : I do not think I have it here. We can probably get a hold of it.

Senator WONG: I am sorry, Senator Cormann; I would be happy to table your letter, but I have marked it.

Senator Cormann: I am happy to table it. I have a clean copy.

Senator WONG: Okay.

The amounts we are talking about in terms of misappropriation overall have been reported at $1½ million, correct?

Senator Cormann: The difficulty that we have—bearing in mind that this relates to a Liberal Party matter in Victoria, but I am going to say it anyway—is that these matters are currently subject to criminal proceedings. It does make it a bit difficult for us to go through some of the things that are currently part of the relevant investigative and law enforcement processes. With that proviso, I am encouraging Finance to provide, but that is why officials are being a little bit hesitant.

Senator WONG: I understand Mr Mantach has pleaded guilty and been convicted and all we are waiting for is sentencing tomorrow, so I am not sure this is—

Senator Cormann: That would mean that you have more information than me.

Senator WONG: You are right to raise the concern, but this is not a contest of facts.

Senator Cormann: No, but I am not aware of where the process is at. I am not aware of exactly what you have just said. That is the essence of what I put to Mr Dreyfus as well. This matter is currently subject to criminal proceedings, and the advice that I have certainly had from the department is that in those circumstances it was not appropriate to do certain other things until such time as these matters were resolved.

Senator WONG: Okay. How are we going with respect to the 25 August letter?

Ms Halton : We just looked at it. I think the question is that I do not know whether we legally can table it.

Senator Cormann: We will take it on notice. If we can, we will. We will make a decision quickly, but this does relate to legal proceedings, and we do have to take advice on whether there is a public interest immunity or not.

Senator WONG: Okay. In that letter, a cheque for overpayment amounts was enclosed.

Senator Cormann: I was advised by Finance that on 25 August lawyers acting for the Victorian Liberal Party wrote to Finance, advising of the alleged misappropriation of moneys. The letter enclosed a cheque for overpayment amounts paid by Finance over an undisclosed period. I am advised that the reimbursement amount was based on calculations provided to the Victorian Liberal Party by Melbourne Mailing. However, on 28 August 2015 Finance returned the cheque—

Senator WONG: Do you have to read the whole letter out?

Senator Cormann: advising that they would need additional information from Melbourne Mailing in regard to the calculation of the quantum of the overpayments in order to properly verify and account for the returned amounts. Since then, this whole process has been caught up in the relevant criminal proceedings, and I am further advised that, once Finance is able to ascertain the precise amount owed following contact with Melbourne Mailing, repayment by the Victorian Liberal Party will occur.

Senator WONG: Okay. Thank you for reading the letter; we appreciate it.

Senator Cormann: Putting it on the record makes sure that we all know what we are talking about.

Senator WONG: As the minister has just read out, Finance returned the cheque. I infer from that that there was some assessment of whether or not this was an accurate amount. Do you want to talk to me about that?

Ms Halton : I would be delighted to. I can tell you we are going to have a look at whether we can release to you the letter that came. The letter was addressed to me. There are several sentences in the letter, but this one I will read to you. It said, 'Our client is happy to meet with you and provide the calculations at your convenience'—in other words, the numbers that actually underpin the cheque.

Senator WONG: 'Our client' being Mr Kroger?

Ms Halton : Client being 'we act for the Victorian division'—

Senator WONG: of the Liberal Party.

Senator Cormann: Yes.

Ms Halton : That letter actually came to us very late in the day. I remember this. I wrote to him immediately the next morning, asking for that additional information. It is important to understand here that the advice I received internally is that I actually had to understand the nature of the payment and what it was in respect of. We had certain rules about in what period.

Senator WONG: Sure.

Ms Halton : We actually had literally daily contact, trying to understand what the amount was in respect of and seeking details.

Senator WONG: Okay. I would like a copy of correspondence from you to the Victorian Liberal Party.

Senator Cormann: We have taken that on notice because we have got to—

Senator WONG: Can I finish?

Senator Cormann: assess whether there is a public interest reason. We have to assess the public interest.

Senator WONG: I had not even finished the question.

CHAIR: There was an anticipation of what you were doing. I ask you to put your question, and then the minister can respond.

Senator WONG: You want to get out by five, Mathias. So you wrote to the lawyers the next day. Which lawyers were they?

Ms Halton : I think they are called Hope Earle.

Senator WONG: So you wrote to Hope Earle the next day, requesting further clarification. I am asking for a copy of that letter.

Ms Halton : Yes. We will take advice.

Senator WONG: Okay. In that letter you indicate that you wanted more information?

Ms Halton : Correct.

Senator WONG: Was that information in relation to quantum?

Ms Halton : The information was in relation to the specifics. Our understanding based on Hope Earle's advice to us was that this had been effected via an additional charge over what was actually owing.

Senator WONG: Yes. Essentially, allegedly there is a scam—which I think he has pleaded guilty to, so I probably do not have to worry about that—where they inflate the prices, taxpayers buy services at inflated prices and then the funds are used for other purposes. There is a kickback, right?

Ms Halton : I do not know anything about mechanisms. All I know is what was in this sentence.

Senator WONG: Okay. So you wrote back, asking about the basis of it.

Ms Halton : Correct.

Senator WONG: They responded in writing?

Ms Halton : Basically, they indicated that they could not at that point give us the information that we were seeking.

Senator WONG: Which information could they not give you?

Ms Halton : Basically, they simply said they could not answer. They could not provide the information, because they had not received it from Melbourne Mailing, and therefore they could not answer my question.

Senator WONG: And your question went to the basis of the calculation?

Ms Halton : Yes.

Senator WONG: Do you have your own information—I assume you must—about how many invoices went to Melbourne Mailing that taxpayers paid for?

Ms Halton : In the context of while this was going on, people were looking at that kind of information. I obviously do not regularly review that.

Senator WONG: No. But, as a result of the furore about this, I assume you went, 'Let's have a look at how many of these we transacted,' yes?

Ms Halton : Correct.

Ms McGregor : We looked more at who might be affected—how many people had used Melbourne Mailing more at a general level.

Senator WONG: How many members and senators.

Ms McGregor : Yes.

Senator WONG: What was the number?

Ms McGregor : I cannot remember.

Ms Halton : I cannot remember either off the top of my head.

Ms McGregor : I think they are a big company in Melbourne, and so a lot of Victorian people use them.

Senator WONG: Did you then drill down into how much money had been paid to Melbourne Mailing over a particular period?

Ms McGregor : From memory, I think that is when it starts to get harder just because of the way invoices come in and are registered with us. Sometimes we might be getting things directly from a supplier, but sometimes it might be coming through a senator or member.

Senator WONG: But the senator or member still has to certify, and you get a copy of the account.

Ms McGregor : Yes, they have to certify.

Senator WONG: There is a documentary record. It is not like we write in and there is no documentary record of where the money has gone. Have you done an audit from your end? I appreciate the reasons why you cannot talk to Melbourne Mailing. I accept those—I think I do. But at your end you have records which show whichever Victorian MPs and senators have used them and the accounts, whether it is via this or that mechanism. Have you done that calculation?

Ms McGregor : Yes, we did that.

Senator WONG: Okay, tell me what that showed you?

Ms McGregor : I am sorry, but I do not have all the detail. I can probably get a summary.

Senator WONG: What can you tell me? What is the summary?

Ms McGregor : We would not really comment on any individual situations at all.

Ms Halton : What I can tell you is that, as you know, all those invoices are scrutinised as they arrive—

Senator WONG: What do you mean you do not comment on an individual situation? The bloke has ripped off state and federal taxpayers. They have had to pay—

Ms McGregor : No, sorry—I mean on individual senators—

Senator WONG: I am not asking that. I am asking for an aggregate figure.

Ms Halton : Yes, Senator. And as you know, what happens when individual invoices come in is that people look at them and then, subject to there being a reason to follow up—let's put it that way—they are reimbursed. There was nothing apparently in the way those invoices actually looked when they were received, and therefore they had been reimbursed. A retrospective analysis or looking at them did not actually say to us 'you can tell from these what may have actually been the case.'

Senator WONG: That was not my question.

Ms Halton : In that case I have misunderstood your question.

Senator WONG: I presume that you did a retrospective analysis, because what you would be able to work out is which of the funds you needed to invest and which are the reimbursements that you needed to investigate further. So there is a distinction. I do not know if every payment to Melbourne Mailing was a problem, but I am assuming that you would say—because I know Finance is methodical—'Okay. Here is this problem; we need to identify the scope of funds which might be under question in order to investigate quantum. We will, therefore, look at how much have we paid out to this company, directly or indirectly, over the years.' Of course, not all of those may be questionable, right? But that is where you would start. I am asking what was the total, or the aggregate, amount that, when you were retrospectively looking at it, was being considered.

Ms McGregor : I do have a general answer, if that is helpful. There were 98 claims of varying amounts that totalled $723,266; that was from 1 March 2011. We went back to look from 1 March 2011.

Senator WONG: 1 March 2011 to—

Ms McGregor : Until probably 25 August, I would say.

Senator WONG: Okay—to the date of the letter. So $723,000 is the total amount in question; because of the issue of the criminal charges, have you interrogated that amount any further?

Ms McGregor : I do not believe we have. We took stock at that stage, but we were then, obviously, hoping to get further information to do further investigation.

Senator WONG: Would it be fair to say that at this stage you do not know what proportion of that is legitimate and what proportion might be inflated under the arrangements that have been made public?

Ms McGregor : That would be fair.

Senator Cormann: What I can say in relation to this, which has just been brought to my attention, is that Mr Kroger, of course, said on the public record on Sky News on 23 October 2015, and I am quoting him here:

What happened was the former state director, through Direct Mail, allegedly overcharged federal and state governments almost $200,000 for its direct mail program, so I found out about this on 25 August at 3 pm, and I immediately instructed our lawyer to ring the federal and state departments to say, 'Look, you have been the subject of a fraud. We think we know the amounts, we are going to send you a cheque.' So that was done by 4 pm. We rang them and by 5 pm we had posted the cheque, and here is the cheque we sent to the Department of Finance in Canberra—$20,590.68.

That is on the public record, as of October 2015.

Senator WONG: I think Finance's evidence is that as yet they have no way of knowing how much of the $720,000 is under question.

Ms McGregor : Correct.

Senator WONG: Do you have any understanding of how the $20,000 that Mr Kroger provided with you was calculated?

Ms Halton : No.

Senator Cormann: This is consistent with what I pointed to you in my letter, where I said that I am advised that when Finance is able to ascertain—

Senator WONG: Minister, I am not suggesting that you have done something.

Senator Cormann: the amount owed, following contact with Melbourne Mailing, repayment by the Victorian Liberal Party will occur, which of course will be on the other side of the proceedings that are currently underway.

Senator WONG: Minister, thank you for the reading. I appreciate being read to. My comprehension is reasonable, and I am not actually suggesting that you have done anything wrong.

Senator Cormann: I have not.

Senator WONG: I am trying to understand what was the basis of the $20,000. I think what we have established is that Finance cannot answer that question. Is that right?

Senator Cormann: Which is why Finance returned the cheque. That is exactly why they posted it back.

Senator WONG: Was any further information given to you in the first letter or subsequently about how the $20,000 was calculated?

Ms Halton : To this date, my understanding is no. We obviously have continued to seek information, and to date we are not in a position—as Ms McGregor has indicated, our interest is in ascertaining which of those invoices was inflated and, therefore, what the amount actually is. And to date we have not received enough information—in fact, we have not received information; let us be clear about that—that enables us to deal with it.

Senator WONG: This is August 2015; we are obviously in May of the next year. I am trying to get a sense of the chronology. We have 25/8 and then we have the response from the secretary in writing—and you are taking on notice whether you can give me that.

Ms Halton : Yes.

Senator WONG: And you are taking on notice the 25 August one as well.

Ms Halton : Yes.

Senator WONG: Did you get a reply to your first response, which was—what was the date of that? Can you at least give me the date of your letter?

Ms Halton : The 26th.

Senator WONG: So you write on the 26th.

Ms Halton : Yes.

Senator WONG: Did you get a response to that?

Ms Halton : As you have already said, this was happening very late in the day, which I think is consistent with what I said to you earlier—my memory is that it was very late in the day on the 25th when we had this letter—and then we went back to it first thing the next morning.

Senator WONG: So you write back on the 26th. Then what happens? Do you get a letter back?

Ms Halton : Yes.

Senator WONG: What is the date of that letter?

Ms Halton : The 28th.

Senator WONG: From Hope Earle, or Mr Kroger?

Ms Halton : No, from Hope Earle.

Senator WONG: On notice, can I ask for a copy of that letter?

Ms Halton : Sure.

Senator WONG: Are we likely to get an assessment of at least the first letter, whether or not you can table that before this hearing is over, Minister?

Ms Halton : We will have to talk to our lawyers.

Senator WONG: You have to talk to your lawyers? Okay. Then the 28th. Then what happens next?

Ms Halton : Then there was a further letter, because obviously we were pursuing these people by telephone as well, from Hope Earle.

Senator WONG: So the 28th, and then a subsequent one?

Ms Halton : Another one on the 28th.

Senator WONG: Two letters on the 28th?

Ms Halton : Sorry; there was a letter from them to me, and then there was a letter back to them returning the cheque.

Senator WONG: On the?

Ms Halton : The 28th.

Senator WONG: Okay, so you returned the cheque on the same day?

Ms Halton : The advice I received at the time was—and I will get this time frame wrong, and someone can probably tell me—that we basically had to either bank or return a cheque inside a nominated period.

Senator WONG: Yes, that is right.

Ms Halton : So we had been attempting to gather the information we needed in order to bank it, but we did not and could not and, therefore, we returned it.

Senator WONG: Between the 26th and the 28th, when you returned the cheque, were there a number of telephone calls too?

Ms Halton : Yes, there were.

Senator WONG: Do you have—

Ms Halton : No, I do not actually; sorry about that.

Senator WONG: And then what happens? What is the next communication?

Ms Halton : There is a series of people in MAPS—and you would know this well—whose job is to persistently pursue matters. Those officers persistently pursued the relevant interlocutors.

Senator WONG: What does that mean?

Ms Halton : They went to—I do not know these names, so that does not help me.

Senator WONG: Is there any chance you can give—you have a chronology. Can you just—

Ms Halton : Yes, but it—

Senator WONG: Okay, you do not want to help.

Ms Halton : No, it is not that; the issue here is what are matters of legal sensitivity.

Senator WONG: Sure. Okay, who are the 'related interlocutors'? What does that mean?

Ms Halton : There was an independent chartered accountant who had been engaged, as I understand it, by the Liberal Party, and there is another name here. There were lawyers and accountants involved, attempting to give us the information or to find it out.

Senator WONG: So the Liberal Party engaged an independent chartered accountant who dealt with you?

Ms Halton : Yes.

Senator WONG: And who else did you deal with?

Ms Halton : Then I would have to get you the details from the officer concerned, because they were making these phone calls, but I do not know who that is. We can find out—there is an acronym and something advisory here. I do not know what firm it is.

Senator WONG: Can someone behind you help?

Ms Halton : We will find out. Hopefully they are watching and they are going to assist us.

Senator WONG: Would it be correct to say there have been a lot of communications between Finance interlocutors and Hope Earle?

Ms Halton : Yes.

Senator WONG: Over what period? When was the last?

Ms Halton : Basically, there was a period when it was clear that there was going to be a criminal action, when we had put on record all of our requests. Our legal advice was that there was now a criminal investigation and so that needed to continue. My understanding is that that was at some point in October and then, as you probably know—

Senator WONG: I have not been that focused on this matter, so I might not know.

Ms Halton : We alerted senators and members who were potentially affected.

Senator WONG: Yes, I am aware of that.

Ms Halton : I am sure they knew that, but we did them the courtesy of saying: 'We understand this to be the case. We believe you may have been impacted by this.' We rang people.

Senator WONG: You have described a process of engagement with Hope Earle—

Ms Halton : According to the documentation that we have in front of us, our most recent contact with Hope Earle was on 21 January. They advised us that the investigation was ongoing. You have told me something which I did not know: you believe that this was actually resolved in court today. If that is the case, obviously that should open the way to now being provided with these details. I would hope that that would be the case.

Senator WONG: What are the details you are seeking?

Ms Halton : We are seeking to know which of the invoices that we have identified and, in the event that we have not identified all of them, others if they exist—the extent to which and in what way those invoices are impacted by this and the amount that actually has been fraudulently claimed.

Senator WONG: Do you have any estimate as to the amount in question?

Ms Halton : We do not, because we simply do not know the detail of how this occurred or, indeed, what the modus operandi was. This is one of the issues—we cannot tell.

Senator WONG: How are you going with the acronym?

Ms McGregor : I just got a text: 'The general answer is "legal accountants". More to come.'

Ms Halton : PPB Advisory.

Senator WONG: Who are they?

Ms Halton : I do not know.

Ms McGregor : That is them. They are legal accountants.

CHAIR: I think they are insolvency practitioners.

Senator WONG: And in addition a chartered accountant?

Ms Halton : Yes, and we gave you that name before: Mr Shannon, independent chartered accountant.

Senator WONG: I want to give you the opportunity to correct me if I am wrong. Should I understand your evidence to be that the lawyers were not prepared to give you the details you requested until the criminal trial was resolved?

Ms Halton : I was not party to those conversations, so I need to be careful about how I answer that. It may well be that I do not have all the facts. I am happy to check the facts for you.

Senator WONG: What do you understand?

Ms Halton : My understanding is that we were unable to get the information because of the criminal investigation, that the information was being provided through the police and that therefore we needed to wait until that process was complete. That is my understanding. Certainly our internal legal advice indicated that, if there was a criminal matter on foot, that needed to resolve in order then to be clear about the facts.

Senator WONG: To put it a different way, did the lawyers or any of these independent advisers that the Liberal Party commissioned provide you with any detail about the questions you were asking?

Ms Halton : No, we have not been able to receive the detail that we had sought in relation to the invoices that we have discussed.

Senator WONG: Can someone tell me what reason they have indicated? I get that you have your own internal advice et cetera. I am asking what reason was provided by these bodies.

Ms Halton : That I cannot answer here. I would have to take that on notice because I was not party to those conversations.

Senator WONG: Is anybody who was able to tell us?

Ms Halton : I will have to come back on notice on this. We have given you the names of the people involved, but I really think that, because there were a number of discussions here, it would be unfair to those individuals if we were to misspeak in terms of what they were actually saying. As I have said, I have told you what my understanding of it is. We have been very clear in writing about what is needed, many times, and, as you know, we have spoken to members and senators. If you are correct that this issue has been resolved in court today, I can absolutely assure you that Melbourne Mailing will be getting a call and that correspondence will be sent tomorrow morning.

Senator WONG: But is the issue here that you have asked for details about which invoices were affected—or infected, perhaps—and that it has not been provided by the Liberal Party lawyers?

Ms Halton : I do not know whether they know or not. I cannot comment.

Senator WONG: It has not been provided by the accountants who have been commissioned or contracted by the Liberal Party?

Ms Halton : No, it has not—nor has it been provided by Melbourne Mailing.

Senator WONG: Do you want to get some legal advice on those documents?

Ms Halton : I do.

Senator WONG: That is fair enough.

CHAIR: I thank the officials for their attendance at these budget estimates hearings. I ask that the officers of the ASC Pty Ltd please join us at the table. The intention is that we will deal with the ASC in a discrete manner now and then we will move to the AEC.

Senator WONG: Chair, I have one question. I am happy to discuss it with you in the break to see if we can resolve it.

CHAIR: While the officers are there, we will suspend for a minute.

Proceedings suspended from 15 : 58 to 16 : 00