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Rural and Regional Affairs and Transport Legislation Committee
09/02/2016
Estimates
AGRICULTURE AND WATER RESOURCES PORTFOLIO
Fisheries Research and Development Corporation

Fisheries Research and Development Corporation

Senator CAMERON: Welcome, Mr Ashby and Dr Hone. Dr Hone, what is the current situation with the proposed relocation for Hobart?

Dr Hone : It is very similar to the last Senate estimates. We put a proposal to the government that involves a whole range of options. Part of those options is about maintaining a headquarters in Canberra and putting in regional offices. We put that proposal to the government and the government has accepted the proposal that we are looking at, the various regional options, and now we are just waiting for the announcement of that.

Senator CAMERON: So this is the face-saver for the minister option, is it?

Dr Hone : Since the last time we talked about this FRDC has been going through a whole range of processes to improve what we think is our business. We have been around for a while and we do think there was an opportunity for renewal. Part of that is the fact that our industry has become a lot more sophisticated than it was even 10 years ago and what we are trying to do is devolve a lot more responsibility for priority and planning to the actual industry sectors. To do that we believe that we need a better regional presence.

While Hobart was one option, it was just a singular option. We actually thought it would be better to have multiple options, given the diversity of locations that FRDC works in and also because of the need to make sure that we keep costs down. Obviously if you have one group just based in one location it becomes quite expensive to service places like WA, Broome, Darwin, Cairns et cetera. So we have been looking at how we can actually create a better way of working with that group. The result is that we are now looking at establishing a variety of regional options to support our planning and prioritisation for industry.

Senator CAMERON: This is not really about renewal, is it? This is about a pork barrel by the minister.

Dr Hone : I am not going to comment on that.

Senator CAMERON: You are not going to comment—there is a surprise.

Senator Ruston: Senator Cameron, you do realise that the relocation into South Australia of the FRDC is going into the federal electorate of Adelaide. I believe federal Adelaide is held by a Labor member.

Senator CAMERON: Dr Hone, have you seen any business plan that backs this change that you are putting in place?

Dr Hone : The FRDC has done quite a lot of assessments about how we are actually going forward with our new business model. Part of that is not just about creating a regional presence. It is also about creating improved service delivery. That is particularly around extension and adoption. There are a whole range of costs associated.

In regard to the ability to actually put someone in regional Australia, one of the locations that we are moving to is Adelaide to establish an office with Wine Australia. It actually turns out to be almost cost neutral for an equivalent position in Canberra. We are housing ourselves with another R&D corporation. A lot of the fixed costs associated with the building infrastructure we just share with them. So the cost of actually doing it is negligible for us.

Senator CAMERON: This was not your idea, was it?

Dr Hone : We commenced planning for the restructure and reorganisation for FRDC well before we got the letter from the minister about Hobart. When we got the letter for relocation for Hobart, obviously that expressed that—

Senator CAMERON: What did you do when you stopped laughing?

Dr Hone : We did not laugh. We tried to work out, like we always do when we get stakeholder input, what is the best way to meet a government objective plus meet our objective. I have to say, I think the outcome that we have achieved for the FRDC is actually a really good outcome for our industry sectors. We are looking very forward to what we are doing.

Senator CAMERON: You have been reading the minister's speaking notes, haven't you?

Dr Hone : I do not know what the minister's speaking notes are.

Senator CAMERON: What was the feedback you got following the consultation with stakeholders on this move?

Dr Hone : The original proposal to relocate to Hobart did not get a lot of support.

Senator CAMERON: Did it get any support?

Dr Hone : Most of the correspondence did not come to us; so I am not privy to that correspondence. I know some of the correspondence and I would say everything, except one piece of correspondence, supported us staying where we were. I am not privy to all the correspondence.

Senator CAMERON: Can you provide copies of that correspondence to the committee?

Dr Hone : I can provide you a copy of some of the correspondence that we have got, yes—the correspondence we have received, yes.

Senator CAMERON: Why only some of the correspondence you have?

Dr Hone : I can provide you all our correspondence. I do not have all the correspondence to the government. That is what I am saying.

Senator CAMERON: Yes, what you have.

Dr Hone : I think we have letters from the Australian Agricultural Council, Southern Rock Lobster Ltd—

Mr Ashby : And NSIA, which is the National Seafood Industry Alliance.

Dr Hone : NSIA, yes. I think there are about three letters we have got.

Senator CAMERON: All saying, 'This is stupid. Don't do it'?

Dr Hone : Just saying that they did not support it, no.

Senator CAMERON: Did the minister, the minister's office or the department provide you any business reasons for the move?

Dr Hone : It was a preference by the minister. We have had quite a lot of conversations with the minister about how you can actually create centres of excellence in research in regional Australia. We are very strong supporters of research in regional Australia, the concept of actually doing the sorts of things the minister was trying to achieve. We had lots of discussions about how that can be achieved through not just relocating FRDC but how we actually expressed our research portfolio better.

The FRDC does not just employ core staff, it employs a lot of people in research contracts and part of our discussion has been about how we actually achieve a better regional presence for our research. You are probably aware that FRDC is a very strong supporter of regional universities such as the Charles Darwin, the JCU et cetera, because they are absolutely fundamental to us. We have been looking very closely at not just that but also the state research institutes and the private research institutes to create the sorts of outcomes that Minister Joyce was looking for.

Senator CAMERON: Regardless of that little homily, it was basically a choice of the minister? It was the minister who kicked this off. It was not your board. It was not you, it was the minister, wasn't it?

Dr Hone : I am happy to provide the letter. We have been doing our own organisational reviews et cetera. Part of that is this input from the minister. The letter from the minister had various elements in it. Obviously there was a regional location, and the minister's preference was Hobart. But there was also an association with regional universities, which is something which we support, and also collocation with other R&D corporations, which again is something that we have supported. We see lots of synergies for that.

As part of our other organisational design we have been looking at how we can meet the major elements. A major element that we have managed to achieve is obviously the collocation with the RDCs, which is with Wine Australia, and we are also looking now at how we can actually develop a better regional presence with universities as well. The bit that we have not gone ahead with is the location to Hobart. We are still looking at Hobart as a possible location for some of our staff in the future because it is a major fishing centre for us. It is Australia's largest, by economic value, commercial fishing.

Senator CAMERON: As to the uncertainty in relation to relocation, what have been the implications of that for the work that you have carried out?

Dr Hone : It has had really very few implications for the work that we have carried out. Obviously it takes some time in managing it in terms of a board and from the senior management. But FRDC has a lot of issues that take time by senior management—

Senator CAMERON: Yes, but not thought bubbles. You have lots of things that take time but not thought bubbles from the minister. Surely you can do without that.

Dr Hone : FRDC takes on board lots of constructive views from the government about where it sees research and direction.

Senator CAMERON: But your shareholders did not see this as constructive, did they—not your shareholders; your stakeholders?

Dr Hone : Stakeholders.

Senator CAMERON: They did not see it as constructive, did they?

Dr Hone : It is fair to say that the stakeholders did not see the Hobart component as constructive, no.

Senator CAMERON: So the main push by the minister was not constructive and yet you had been bullied into doing it, really?

Dr Hone : Senator Cameron, can I reiterate: as to the outcome that we have achieved with the headquarters in Canberra, we are looking to be part of a very innovative rural research hub that is a collaboration between a whole group of people in Canberra. Also, the collocation with Wine in Adelaide is an amazing opportunity for us. I do not think we have even really started to think through all of the opportunities that we can have between wine and seafood. I think everyone already knows that we are a pretty good match. In terms of research and marketing, we see significant opportunities there.

Senator CAMERON: There was a budget measure where, in shorthand, you would pay the cost of Australia's membership on a number of regional fishery organisations; correct?

Dr Hone : Correct.

Senator CAMERON: The legislation is yet to pass both houses of parliament; correct?

Mr Quinlivan : Yes, I understand that is correct.

Senator CAMERON: If this became law, would you have to pay the department of agriculture's $1.146 million membership in 2014-15?

Dr Hone : At the moment the proposal is that from the financial year 2014-15 onwards we would pay retrospectively, plus going forward, the cost of RFMOs. But it is not quite a payment. What effectively happens is the money will be paid by the department and we will just get less that component as part of Australia's commitment to regional fisheries management organisations. I have to say that FRDC has been a very big supporter of the RFMO structure. In fact, some of the RFMOs which we have managed to achieve, the CCSBT and others, operated as well as the ones Australia works in.

Senator CAMERON: So you are saying this budget measure is having no negative impact on your budget?

Dr Hone : It will obviously have a negative impact on our budget, yes.

Senator CAMERON: Tell me how you will handle that negative impact?

Dr Hone : You quoted a number, I think, of 1.4. I did not actually—

Senator CAMERON: 1.146.

Dr Hone : That is better. I thought you said 1.4.

Ms Freeman : The total number of the membership fees for all relevant commodity organisations—so not just the FRDC—is $1.62 million in 2014-15.

Senator CAMERON: For all of them?

Ms Freeman : For all of them.

Senator CAMERON: What about FRDC?

Ms Freeman : Just give me a moment and I will see if I can find it.

Senator CAMERON: Do you know, Dr Hone? Do you know how much you would have to contribute?

Dr Hone : Ours was 1.14, but that was the—

Senator CAMERON: You would be 1.14.

Dr Hone : That was the number for 2014-15. I am not sure what the 2015-16 one would be.

Ms Freeman : There is a number for various international organisations that are attributed back to FRDC. I am happy to provide them to you on notice, if you like.

Senator CAMERON: Mr Quinlivan or Dr Hone, have you been advised about when this matter may come before the Senate?

Mr Quinlivan : No, Senator.

Senator CAMERON: So is that in limbo?

Ms Freeman : The legislation is yet to pass.

Senator CAMERON: It is in legislative limbo. Is this membership fee an annual fee?

Ms Freeman : Yes, and for a range of organisations. So within fisheries there is a range of different organisations that the subscriptions cover.

Senator CAMERON: This $1.14 million, Dr Hone, for your organisation—what are the implications for your research capacity of losing that funding?

Dr Hone : If it were to pass and the funds were to be spent on those subscriptions, obviously we would have less funds for research.

Senator CAMERON: Have you done a cost-benefit analysis of your research in the fisheries industry?

Dr Hone : Yes, we have.

Senator CAMERON: What return do you get on a dollar invested in research?

Dr Hone : I would have to say it varies. We do thematic programs. Some of our programs become quite difficult to do economic analysis on. If we look at some of our environmental research, which we do in the public good space, the best we usually end up with is somewhere about 1.5—$2 per $1 invested. With some of our industry specific research—so if you look at Atlantic salmon farming, tuna farming, prawn farming—you might get benefits of four or five to one in terms of investment. It depends on the—

Senator CAMERON: If you use that $1.14 million for research in one of your commercial research proposals there is a possibility you could get up to four times that return?

Dr Hone : Just to be clear: FRDC receives two types of money. We receive money which is for public good research and money which is industry specific. The money for industry specific research, the dollars, would not be affected at all by this RFMO.

Senator CAMERON: So it is public good research?

Dr Hone : It would just come from the public good. The industry dollar is preserved.

Senator CAMERON: Tell me about the public good research. What type of research is that?

Dr Hone : We would do everything from recreational fishing to indigenous and cultural fishing. We do research on protected species where they interact with recreational, commercial and indigenous. We do work on habitat research, habitat rehabilitation and habitat restructure. We do a lot of work on biosecurity and aquatic animal health because obviously the marine environment, the aquatic environment, has a big issue with biosecurity. There is a large array of research that happens.

Senator CAMERON: You would accept, Dr Hone, that thematic research can benefit the commercial sector because if you do not deal with the issues that you have just outlined, the capacity of the commercial sector to operate productively and in profitability can be affected?

Dr Hone : I would agree with that proposition.

Senator CAMERON: So it does not matter whether this money is taken out of thematic research or commercial research; the implications are the same. The research is not being done and that is a drag on what could be the productivity and profitability of the industry.

Dr Hone : I think you really need to talk to the department. This is the opportunity cost about whether Australia would be best served to maintain its current membership with these RFMOs or the marginal cost of doing the additional piece of research. That is not something that we have done research on.

Senator CAMERON: That is one way of putting it without trying to offend the minister. The other way is that he is raiding the piggy bank around the place to have one of his pet projects up and running. Surely if the thematic research has got a benefit to the industry you would be better off keeping it, wouldn't you?

Dr Hone : Senator Cameron, again, these RFMOs are incredibly important to Australia. I would not call them 'pet projects'. They have been around for some considerable time. If you take the CCAMLR group, without CCAMLR we could do all our research and it would be a waste of time. In some ways Australia's commitment to those groups is absolutely critical to our research. If the government has made a decision to maintain that commitment to RFMOs, without it we would not be able to have a platform to put our research.

Senator CAMERON: In your annual report, on the goods and services supplied, on page 151, legal fees for 2015 were $31,824 and for 2014 legal fees were $79,387. What was this amount of expenditure on? What legal fees were involved?

Dr Hone : I am going to have to take that on notice.

Senator CAMERON: Is there no-one here that can help me?

Dr Hone : FRDC's legal fees go up and down. For example, the year that we had the virus outbreak in Victoria the legal fees went up and in the year that we had some mortality events with one of our fish farming operations. It depends on the year. What was actually the cost last year? We are a group that goes to legal fees at the last resort. We are not very big on liking going to lawyers. It actually takes money away from research. I would have to find out exactly what we spent the money on last year.

Senator CAMERON: Thanks, Dr Hone.

Senator BULLOCK: Just a couple of questions that flow from things that Senator Cameron was asking about the new physical structure of the FRDC. I think it might have been the Grains RDC that first latched onto this idea of a 'hub and spokes' so-called structure. You have a planned spoke in Adelaide. I imagine that the planning is not complete yet. How many other spokes do you envisage on your hub?

Dr Hone : We are an organisation of only 12.7 people.

Senator BULLOCK: Quite.

Dr Hone : It is a relatively small organisation. One of the things that we are very aware of is to make sure that we do not disrupt the services to our clients, whether that is the Australian government, state governments or industry. We are mindful that this has to be done in stages. Adelaide is the first one. We are looking somewhere around four to six people there. As you can see, that is quite a big percentage. Part of the strategy that we have is trying to actually grow ourselves slightly. The way we are doing that is—

Senator BULLOCK: You read my mind because I knew you were small in terms of head count—

Dr Hone : What happens with—

Senator BULLOCK: Do you think this is going to lead to an increase in staff?

Dr Hone : Since we started we have had a lot of projects which almost happen every year. Our goal is to turn some of those research projects which have been externalised into internal operations. A classic one is standards. We currently run the Australian Fish Names Standard. We are looking to internalise the delivery of it and bring that skill set into the FRDC rather than just contracting it out. One of the benefits for that is that our industry—

Senator BULLOCK: Hopefully we have some mandatory application of it.

Dr Hone : One of the things we are looking at is that type of concept. Another one is that we deliver a product called the status of Australian fish stocks. We have externalised that previously. We are now bringing those people internally.

Senator BULLOCK: Dr Hone, as riveting as this is, I did ask how many officers you thought you might end up having?

Dr Hone : The end result is that we believe we will be growing our operation by somewhere between four and six extra people. As we grow that, we are now looking for what was the most logical place to place those people. So the next part of the debate is whether it is in tropical Australia or western parts of the country.

Senator BULLOCK: So maybe three? Maybe Canberra and two others?

Dr Hone : It is probably two others at the moment.

Senator BULLOCK: Given that you are a small organisation, albeit you may be bringing in some functions—and I am excited for you—how can you ensure, given the size of your organisation, that the skills needed in the outlying offices will be able to be met by the available staff? That is not to say that the skills do not exist, but if you have 12 staff and the person with the expertise, as a particular skill set, is in Canberra and those skills are needed in Adelaide, how do you handle that if you have two officers? Do you have to employ a second person with those skills in Adelaide or do you end up with a branch office that is largely answering the phone for head office?

Dr Hone : That is a good question. One of the other things we have done is to change the way we deliver some of our services. What we used to do before was to have people do parts of the operation. We are now changing our structure so that someone is responsible from whoa to go. They start the planning, the prioritisation, the investment, the management, the extension, the adoption impact and then the return. By doing that, the person takes complete vertical integration of the whole program of research. That makes it much easier to deploy people in regional offices than having someone depending on someone doing part of the cycle in Canberra and part somewhere else. With the way we are restructuring it, we feel it is a much better way for us to deliver our services. And it gives continuity to the stakeholders and the person they are actually working with.

Senator BULLOCK: I know Senator Cameron has the view that the minister came up with an idea—what he would characterise as a crazy idea—and tried to impose it on RDCs. It seems to me, having listened to the various RDCs that have had this hub and spoke idea, that they have taken that idea and turned it into a variant whereby they still have their head office in Canberra. Everyone who wants to stay in Canberra stays in Canberra. They grow the empire by having branch offices in regional locations and expand their workforce. It seems to me that clever people like you, Dr Hone, may have outsmarted the minister. But that is just my view.

Senator EDWARDS: Thanks for that assessment.

ACTING CHAIR ( Senator Sterle ): Senator Whish-Wilson.

Senator WHISH-WILSON: I have one question for Dr Hone. Have there been any updates that you know of in relation to country of origin seafood labelling or work done on other species, catch and that kind of thing?

Dr Hone : The only component that we are responsible for is the Australian seafood standard, the fish name standard. That recently got updated, and we were quite excited for those people who are interested in those things. 'Rock lobster' is now two words, not one word. I know that is small but it is big for us. Also, western king prawn is now 'western king prawn', not just 'king prawn', and 'eastern king prawn'. So we did make some changes to the naming. Apart from that, we have no responsibility. We have no impact on or role in country of origin labelling.

Senator WHISH-WILSON: Is your naming standard at retail venues?

Dr Hone : Ours is a voluntary standard. People can adopt the standard. Coles and Woolies are very good, as are some of the other supermarkets, in, where possible, adopting the standard. But it is not a mandatory standard.

Senator WHISH-WILSON: Thank you.

ACTING CHAIR: Thanks, Dr Hone. We will now call AFMA to the table.