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Foreign Affairs, Defence and Trade Legislation Committee
Department of Foreign Affairs and Trade

Department of Foreign Affairs and Trade


CHAIR ( Senator Back ): I welcome Senator the Hon. Marise Payne, Minister for Defence, who will be sitting in briefly for Senator the Hon. George Brandis QC, representing the Minister for Foreign Affairs; Mr Peter Varghese AO, Secretary; and officers of the Department of Foreign Affairs and Trade. Minister, I imagine you will not have an opening statement, but I wonder, Secretary, whether you wish to make a brief opening statement.

Mr Varghese : No, thank you.

Senator McEWEN: I understand, Mr Varghese, this will be your last Senate estimates in this portfolio.

Mr Varghese : It will indeed.

Senator McEWEN: We will miss you very much.

Mr Varghese : I will try not to smile.

CHAIR: It has been widely rumoured that one of the major reasons for having the two days of estimates at this time was to ensure that you got one last dose of estimates.

Senator Payne: That is cruel and unusual punishment, if I may say, Chair.

CHAIR: Before going to Senator McEwen I again thank you, Minister Payne, for offering to sit in. I welcome the Attorney-General, Hon. George Brandis QC. Do you have an opening statement, Minister?

Senator Brandis: I do not. Might, though, I inquire politely at what time we expect to move to trade estimates?

CHAIR: That really is in the hands of the committee. I think I would be brave at this stage to make a prediction, Minister.

Senator McEWEN: Mr Varghese, I want to address compliance with the Senate order for unanswered estimates questions taken on notice. I acknowledge that the ministers for trade and foreign affairs wrote to the President of the Senate yesterday in that regard. The due date for providing the responses was not later than 10 days before the commencement of the budget estimates. That date would have been Tuesday, 26 April 2016. Why was the response from the relevant ministers only received yesterday?

Mr Varghese : I think the two ministers did provide the Senate with the relevant details. We took 286 questions on notice at the additional estimates hearing on 11 February, which included 71 from Efic. We provided all 286 responses to ministers' offices on 8 April. We provided 102 of the 286 responses to the committee on 15 April, a further nine responses to the committee on 20 April and 175 responses to the committee on 3 May. They were with the ministers' offices on 8 April and the subsequent provision of answers was as I have outlined.

Senator McEWEN: So, of the 286 questions on notice, all of the answers were provided to the ministers' offices on 8 May?

Mr Varghese : On 8 April.

Senator McEWEN: Sorry, 8 April. Of those 286 answers, 175—more than half—were not provided until 3 May, which was well after the due date of 15 April. Is that correct?

Mr Varghese : That is correct.

Senator McEWEN: Of the answers that were late—as in provided after the due date of 15th of April—which ones were relevant to Minister Bishop and which ones were relevant to Minister Ciobo?

Mr Varghese : I do not know if I have that breakdown with me, but I will just check if a colleague might have it. If not, I will take that on notice.

CHAIR: One of the difficulties, Secretary, of taking questions on notice will be the timeliness of replies.

Senator McEWEN: I presume this information can be provided during the conduct of this hearing and before we go to the Trade portfolio?

CHAIR: Please bear that in mind.

Senator McEWEN: Maybe in an hour or so?

Mr Varghese : I will see if any of my colleagues have that information on hand. If not, we will do our best to get a response.

Senator McEWEN: So the responses to the 175 questions taken on notice were provided by the department to the minister by 8 April but those responses were not provided to the committee until Tuesday, 3 May. Why were those answers sitting in the ministers' offices for 25 days?

Mr Varghese : I would have to seek a response from the relevant ministers.

Senator McEWEN: It has been a problem for the last few estimates hearings that we are not getting these answers by the due date. Do you have any comment to make about that, Mr Varghese?

Mr Varghese : No, I have nothing to add to what I have said.

Senator McEWEN: If somebody could provide that break-up, that would be good. You are aware, though, that the letter does provide—I have answered my own question.

Mr Varghese : Unfortunately, I do not have the letter with me.

Senator McEWEN: The letter to the President of the Senate does provide the answer. It says, 'Of the remaining 175 questions on notice, 142 were provided to the minister in the foreign affairs office, four were provided to the minister for trade and 29 were to both offices.' So clearly this is a problem in the Minister for Foreign Affairs' office. Would you agree?

Mr Varghese : I cannot go beyond the time line I have shared with you. If you want to know further information about the reasons the answers were late after they were presented to the ministers' offices, I would have to check with the ministers' offices.

Senator McEWEN: Is there anything you can lend to this examination, Minister?

Senator Brandis: I think Mr Varghese has answered all your questions.

Senator GALLACHER: Thank you, Secretary Varghese. I think you finish on 1 July?

Mr Varghese : That is correct.

Senator GALLACHER: A lot of us may well be wondering what is happening to us on 2 July, so we share something in common about that date. The percentage of the aid budget in relation to the GNI is a matter of discourse in the community and in the media. Are you able to confirm the aid budget is now 0.23 per cent of the GNI, Mr Varghese?

Mr Varghese : I will ask Mr McDonald if he could respond to that.

Mr McDonald : Yes.

Senator GALLACHER: Would that also be a historic low? Have we ever been at 0.23 per cent of GNI before?

Mr McDonald : We have records back to 1984 and that is the lowest in that time, yes.

Senator GALLACHER: So as far as records have been kept we are at a historical low. Is it incorrect to assert that the budget has been reduced by 30 per cent since the last election?

Mr McDonald : I would have to take that on notice unless Mr Wood has that. Certainly the budget that was implemented this year was consistent with the decision in MYEFO in 2014-15 and in terms of last year's budget as well, so there has been no further reduction.

Senator GALLACHER: Mr Wood, you are the chief financial officer of the department. It is a straightforward question: has the aid budget been reduced by 30 per cent since the last election?

Mr Wood : I do not have the information going back historically. As you know, we have been discussing at estimates some of the reductions from previous budgets, but I do not have anything that would allow me to confirm that 30 per cent figure. As Mr McDonald said, there were no new reduction measures in this year's budget.

Senator GALLACHER: No new reduction measures in this year's budget—that is last Tuesday's budget we are talking about?

Mr Wood : Correct.

Senator GALLACHER: That is not the question I have asked. Can you confirm that the aid budget, so the bucket of money you get for aid, has reduced by 30 per cent since the last election?

Mr Varghese : Senator, could I just ask a point of clarification. Are you asking for the reduction between the last year of expenditure under the previous government and the proposed expenditure for the 2016-17 financial year? Is that what you are asking for? Of course, aid budgets have the forward estimate and as you know, the forward estimates in the aid program, under both this government and the previous government, have varied—they have gone up and down.

Senator GALLACHER: What about if we look at the 2014 budget, the 2015 budget and up until the other night? Has there been a decline over that period and is it measurable?

Mr Wood : The official development assistance budget for 2016-17, for next year, is $3.8 billion. As we have noted in our budget correspondence, the ODA budget for 2015-16 was $4.0 billion.

Senator GALLACHER: You have given me 2015-16 and 2016-17.

Mr Wood : Correct.

Senator GALLACHER: What about giving me 2014-15?

Mr Wood : I do not have that information.

Senator GALLACHER: You do not have it or it is not a figure you keep in your back pocket? You do not work with that figure often? So no-one knows, on your side of the table, what the 2014-15 foreign aid budget was.

Mr McDonald : I think it is publicly known that the budget in 2014-15 was, I am going to say, around $5 billion. We went through this in detail at the last estimates, I think. It is all on the public record.

Senator GALLACHER: I always get a wry smile when someone says, 'We went through this in detail at the last estimates.' The absolute lifeblood of parliament is repetition and re-examination, so I do not know why people are surprised at having to recast the answers of a previous hearing or estimates. But thank you for that. So that was $5 billion. What did we get? When was the $3.8 million attributed?

Mr Varghese : The $3.8 billion is for financial year 2016-17, so in the budget that was just brought down.

Senator GALLACHER: Even I can work out—and I am not a chief financial officer—that that is a substantial reduction. Really, it probably would not be altogether unfair to characterise the $3.8 billion as Australia's weakest aid budget ever. Would it be unfair to put it that way?

Mr McDonald : I think that there are two measures of that. One is the GNI that you have talked about. The other is the volume—the actual money that is provided. The $3.8 billion is not our lowest volume of funding for the aid program.

Senator GALLACHER: It is not our lowest. What is our lowest?

Mr McDonald : In volume, I would have to check, but it is lower than that.

Senator GALLACHER: While you are checking that, I am just trying to ascertain whether the department can confirm that the contributions of the global health programs, of the global education programs and to the Green Climate Fund have been cut by 60 per cent since last year's budget. Does that accord with your figures or is that a—

Mr McDonald : No, it does not.

Senator GALLACHER: Is there a cut, and how much is it?

Mr McDonald : No, the replenishment amounts for the Global Partnership for Education, the global fund, Gavi and the Green Climate Fund will all be met in full.

Senator GALLACHER: There are no cuts, then?

Mr McDonald : There are no cuts to the replenishment amounts that the government has announced.

Senator GALLACHER: In trying to work out where these reduced funds have gone, can the department confirm that sectoral allocations for health and education have fallen whilst infrastructure and agriculture have not. What has happened there?

Mr McDonald : I will ask Mr Wood to confirm that, but certainly in relation to the health sectoral amounts, for example, because of the way the replenishments have worked with our global health programs, some of the funding was brought forward into an earlier financial year, which meant that sector went up. This year, it reflects a lower amount. I think it is about 13 per cent, from memory. In terms of a reduction, it is primarily the change to replenishment profiles of global funds. That is the reason. It is not an actual reduction of the global fund. As I said, that has just been reprofiled.

Senator GALLACHER: So health and education have not fallen and infrastructure and agriculture have been maintained?

Mr McDonald : No. I think the sectoral has fallen to 13 per cent for health, as I mentioned, but it depends on how the replenishment profile goes of the global fund, for example. We have a contribution of $200 million over three years. We have already paid $190 million of that and we will provide the final $10 million next financial year. So, by definition, the amount spent on health for this financial year is reduced because the majority of that has been paid. Mr Wood can clarify more. It can be misleading to think it is just a straight cut, because it is not; it is just how the funds work.

Mr Wood : I agree with Mr McDonald. When the government agrees a multiyear replenishment with these types of organisations, they will agree to an amount paid over a period of years—four financial years or four or five calendar years—and sometimes there is lumpiness in the profile of those cash payments.

Senator GALLACHER: What causes that?

Mr Wood : It could just be an agreement between the donor and the global authority and the fund—sometimes when they wish to have the funding.

Senator GALLACHER: How does the Pacific fare? Is the Pacific down in terms of aid? Is it down $20 million?

Mr McDonald : In terms of all the bilateral programs, they are the same as last year. In terms of the regional program, it has been reprofiled over the forward estimates. It has a reduction this year but not over the forward estimates. That money will be re-added in the forward estimates.

Senator GALLACHER: What does 'reprofiled' mean?

Mr McDonald : 'Reprofiled' means the amount of money you are going to give over a four-year period, for example, is just carved up in different amounts.

Senator GALLACHER: So it is the same money; there are just different junctures?

Mr McDonald : It is always the ODA budget that you are working with over the forward estimates and it is just how that is profiled over the forward estimates period.

Mr Wood : If I could just follow on from Mr McDonald, in our Australian aid budget summary, we have a table that shows total aid, total flows, to regions and countries. On page 8 of that document, we note that in 2015-16, we have budget estimate for the Pacific of $1.119 billion and in 2016-17 we have an estimate of $1.138 billion.

Senator GALLACHER: I would like to go back to something that Mr McDonald said. Regarding reprofiling, if you had $100 million at $25 million a year over four years and you shifted to $25 million, $25 million, zero and $50 million, that is reprofiling?

Mr McDonald : Yes. We have major replenishments with, say, banks or multilateral funds and from year to year the actual funding profile of those will change. We need to make sure we are working within the budget envelope, and that is something that has occurred since ever I have been in the aid area.

Mr Wood : For some of those organisations, our funding agreement is based on a calendar year. In some cases it may be the difference between paying something in July rather than in June.

Senator FAWCETT: On a point of clarification, changing the funding profile so that your envelope over forward estimates is the same is fundamentally different to, for example, what happened in 2012, where the diversion of funds to pay for the blow-out in onshore processing meant that things like the maternal and neonatal health programs in the Philippines were cut and the Tuvalu programs around technical and vocational education were cut. So we are talking about quite different outcomes there.

Mr McDonald : From my point of view, I was responding to Senator Gallacher in terms of the reprofiling. The reprofiling means the money we had planned to allocate for that period of time will still be allocated, but we have changed how that will work from year to year. Mr Wood also highlighted that whether that is paid in June or July can often mean something because they are often calendar year payments. I know there have been reductions in the aid program since 2012.

Senator GALLACHER: What would cause you to reprofile? Failure of the program, weather, disasters—what else?

Mr McDonald : There are a couple of things that are important in trying to manage the budget. One is often that—Senator Gallacher, I think you would be familiar with this—in some of the developing countries our plans for either completing approval of a program or for the progress of the program do not work as quickly as we thought they would. Therefore, the expenditure does not occur as quickly as we thought it would. That is one example. Another is clearly disasters. I agree entirely with your comment. You see that, for example, with the Fiji cyclone that we have recently had. The impact of the cyclone means that the expenditure is not proceeding as we thought at that time, and therefore we need to reprofile or reprioritise that funding. In relation to this I think another important aspect has been, as I mentioned earlier, that we were aware of how the budget was going to roll out over the forward estimates, so that gave us opportunity to plan 18 months ahead for the 2016-17 financial year.

Senator GALLACHER: A very direct question: is there $20 million less in aid to the Pacific or is it simply reprofiling?

Mr Wood : No. As I mentioned referring to our aid budget document, there is an increase in total aid going to the Pacific.

CHAIR: That is from $1.119 to $1.138.

Mr Wood : Correct, Senator.

Senator McEWEN: Is that adjusted for inflation? Are those nominal values or real values?

Mr Wood : They are all nominal values. We do not adjust the figures for inflation.

Senator McEWEN: So what would it be if it were a real value?

Mr Wood : I would have to use some maths, but it would obviously be—

Senator GALLACHER: It wouldn't be unusual for a chief financial officer to have to use maths, I take it.

Mr Wood : It would obviously be two per cent higher.

Senator GALLACHER: We received some evidence in our Senate inquiry into Papua New Guinea which said that six out of seven programs were at risk. I think that is what the department's evidence was. Is that another profiling issue, that with the best intentions and the best of endeavours, you are not succeeding?

Mr McDonald : Senator, I have not heard that evidence.

Senator GALLACHER: It came from your department.

Mr McDonald : I was not in attendance.

Mr Varghese : I think Mr Sloper, who is the head of our Pacific division, may be able to respond to that.

Senator GALLACHER: This is for Papua New Guinea. Six out of seven programs were deemed by the department to be at risk.

Mr Sloper : I cannot recall that specific figure, but what I can tell you with assurance is that the funding for Papua New Guinea ODA directly through the bilateral program has not reduced at all in the last two financial years. If any programs have stopped it has been based on judgements about their effectiveness, or they have entered the conclusion of that particular project.

CHAIR: And going forward?

Mr Sloper : Going forward there is no drop in direct bilateral ODA for Papua New Guinea or for any other Pacific bilateral program.

Senator GALLACHER: I just raise it because if your department's evidence to a Senate inquiry—and we have most of the responsible people from the department here—is that six out of seven programs are at risk, I am a little shocked that no-one at the table is able to give us an explanation for that.

Mr Sloper : I do not have the evidence with me. I was part of the submission. I can assure you that we did not cut or reduce six out of seven programs in the Papua New Guinea program. I can go and check that reference and come back.

Senator GALLACHER: The evidence to the inquiry—your evidence to the inquiry—was that out of the seven programs six were deemed by the department to be at risk. I am not talking entirely in terms of whether they are funded but whether the governance and success of those programs are at risk. I am not sure what you were referring to and I was trying to get more information about that. I would like to have a little discussion about the reduction of 500 staff in Austrade, outsourcing and privatisation. Who would be the best person to give me a snapshot of that?

Mr Varghese : Mr Fisher, our Chief People Officer, I think would be able to go into the details.

Mr Fisher : Since 31 October 2013, 987 A-based staff have separated from the department and 526 A-based staff have commenced with the department. Of those separations, 406 were through voluntary redundancies. This financial year, 247 A-based employees have separated. I can give you a little more detail, but essentially we continue to recruit to fill vacancies but, like any organisation, we have people who resign or retire and we need to fill those vacancies.

Senator GALLACHER: What is the total staffing? Can you put those figures into context?

Mr Fisher : Our headcount of A-based staff—APS staff, if you like—was 3,786 in March this year.

Senator GALLACHER: So you have probably had a 25 per cent turnover, with the 987, is it?

Mr Fisher : That is since 2013—that is correct.

Senator GALLACHER: What is your normal turnover of staff?

Mr Fisher : Our normal attrition rate is around three per cent. That is a normal attrition rate.

Senator GALLACHER: Has that caused you many difficulties? I imagine it would have caused you some difficulties if you have had a 25 per cent turnover of staff with their relative years of experience and knowledge.

Mr Fisher : Of the 1,700 former AusAID staff, we still retain approximately 1,250 of them, so a significant proportion—72 per cent.

Senator GALLACHER: Has it meant that you have needed to engage with private contractors or the private sector more because of this reduction in staff and the turnover of staff?

Mr Fisher : I think every area would have a different approach to their staffing profile depending on the particular needs. There is no centralised approach to that.

Senator GALLACHER: So what do the three big contractors do for you—Cardno, Coffey and Palladium? Are they taking up an increased role with this reduction of staff?

Mr Fisher : Typically contractors are handled by line divisions and not by a central staffing area, so they would have to speak to the particular roles that contractors are undertaking for the department.

Mr McDonald : Senator Gallacher, I think you also asked about the percentage figure last time. From memory, I think it was about 20 per cent for those contractors you talked about, including the top three that you just mentioned. That has been fairly consistent over the last few years.

Senator GALLACHER: Are there any projections for 2015-16 and 2016-17? Is that 20 per cent going to increase?

Mr McDonald : We expect it to be similar based on historical evidence. We also expect the others splits for NGOs and the like to be similar as well. So no, I do not expect a major increase.

Senator GALLACHER: In relation to the outsourcing of Australia's aid delivery, how do you know that you are getting value for money? Presumably, these entities need to be profitable and make viable businesses of themselves. How do you know that you are getting value for money for Australia's aid dollar versus, say, an NGO who may not need to make a profit?

Mr McDonald : Certainly the majority of our contracts go through a tender process and, as a result of that tender, there is an assessment of value for money through a valuation committee that is set up to assess the tenders. It is a competitive process to identify that. That is the fairest way to test—

Senator GALLACHER: I accept that that can test the marketplace. I accept that.

Mr McDonald : NGOs play a big part in our program. About 14 or 15 per cent of our work goes to NGOs as well. We then have systems in place to monitor and evaluate the delivery of the program, consistent with the contract that has been entered into. We have a centralised contract area that goes through and provides consistency in both the assessment of the tenders and also the application of them in terms of standard contracts and requirements that we have in place.

Senator GALLACHER: Does this outsourcing arrangement decrease or increase DFAT's own capacity in capabilities to manage programs?

Mr McDonald : No. When you say 'outsourcing', we do not outsource responsibility for the program. The responsibility of the program sits with the department, and, as I said, we monitor and evaluate that. So we do not outsource it in that regard. In terms of delivery of the program, contractors have been delivering in the aid program for a long period of time. This is not something that is new.

Senator GALLACHER: Who does it more effectively: DFAT, contractors or NGOs?

Mr McDonald : Just adding to my answer, in terms of performance, we have performance assessment in place for each of these programs as well that we report against each year. There was a Performance of Australian Aid report put out in February that goes through our programs and evaluates those against a set of criteria as to their effectiveness, and that shows you for each of them how effective they are.

Mr Varghese : I think it is horses for courses. The reason why we go through a tender process, which looks at both capacity and efficiency, is to make a judgement as to who is best placed to deliver the service that we want, and in some cases that would be an NGO, and in other cases it would be a commercial company. I think you can only make these judgements on a case-by-case basis, depending on the nature of the program, where it is being delivered and how you want it delivered. I do not think we can say as a general rule that NGOs are more efficient than private companies or vice versa.

Senator GALLACHER: Okay. So the single biggest delivery of Australia's bilateral aid program is the tender to take over in Fiji. Is that correct? Do you have a tender out for the delivery of Australia's bilateral aid program in Fiji?

Mr McDonald : I believe we have. If Mr Sloper is available, he would be best to answer that for you.

Senator GALLACHER: So that would be to outsource all of our aid delivery in Fiji to one contractor. Is that essentially what it is?

Mr Sloper : We have a number of facilities across the Pacific, as you do elsewhere in the aid program. Just to build on the comments from Mr McDonald, whether we use a facility or we deal directly with our partners, they go out to tender on a commercial basis. What we have done here is consolidate, if you like, a number of different programs into one. Our intention there is to make the program more efficient in its management structure and give us a greater deal of flexibility. But making that change does not necessarily change the content, if you like—the implementation of the aid programs. And you are right: we are about to go through a tender process in regard to Fiji.

Senator GALLACHER: Can you give us an example of the inefficiency in the existing program.

Mr Sloper : It varies across the individual programs, but if I give you an example—

Senator GALLACHER: In this particular program, if they do.

Mr Sloper : I will try to give you an example in terms of our administrative costs associated with multiple contracts. This is a nominal example. If we have one member of staff managing a $5 million contract, as opposed to one member of staff managing a $20 million contract, what we are trying to do is remove the administrative burden that might be associated with your having four $5 million contracts rather than one, if you like. The numbers we are talking about are different, but obviously the administrative costs associated with managing that contract increases, and we would like to try to focus on the strategic engagement of our individual staff looking at the outcomes, so we might look at better monitoring and evaluation and working with those partners, and that administrative cost is borne by them. The people who are bidding for these are often the same companies that are doing those same programs on an individual basis, but they are consolidating their administrative costs as well.

Senator GALLACHER: So the driver for this is volume and administration costs.

Mr Sloper : That is right. It will vary according to the country and the program as to whether we judge we should go down that path.

Senator GALLACHER: Do have any plans for New Guinea? We are spending $471 million there. Your own evidence says six out of seven programs are at risk.

Mr Sloper : I am not sure if that is my own evidence, but I can undertake to check that.

Senator GALLACHER: I have certainly got detail alongside it.

Mr Sloper : I have only the executive summary of our submission and it does not refer to that, but I can look further into the submission.

Senator GALLACHER: I am reliably informed by the secretariat that it is the performance review that you undertake of your own programs. That is where that evidence comes from?

Mr Sloper : That suggests that we were thinking of reducing six out of seven of our programs?

Senator GALLACHER: No, no. It says that six out of seven were at risk. Whether that means of meeting their objectives or falling over, I do not know. I am just asking the questions.

Mr Sloper : I do not know the specific example. That might be talking about investments at risk. We have a performance check process internally within the department across our whole program. If we judge that programs are not working well, we rate them as 'at risk' and try to take measures with our partners to address them. That is unrelated to the budget situation. That relates to the performance of individual programs. And it varies at times across all of the Pacific, as it does in others.

Senator GALLACHER: It is probably relevant to this discussion. If your own performance review rates programs 'at risk', then that would add merit to administration and volume to actually get a more sensible outcome with the taxpayers' aid budget. So, anyway, Fiji is driven basically off consolidation to make it, instead of five $4 million contracts, a one $20 million contract, and there are efficiencies and administration in both the providers and in the department.

Mr Sloper : That is right. It reduces costs of overheads and administrative burdens. I must stress, Senator, that the figures they use were nominal. As an example, I would have to take on notice the specific figures in regard to the Fiji facility. You asked, I think, at a previous session about whether we had facilities elsewhere, and you have just raised that question again. Yes, we do. We have gone out to tender for a governance facility in Papua New Guinea. For a number of years, we have operated one in the Solomon Islands.

Senator GALLACHER: So, with this Fiji situation, it has gone out for tender, and there will be a selection process shortly?

Mr Sloper : That is right.

Senator GALLACHER: Is there a time line for that?

Mr Sloper : I would have to take that on notice, but I expect it to conclude soon.

Senator GALLACHER: We have had the discussion all day about taking things on notice. After Saturday, we will not exist as a committee, so we will not be able to receive the answers. So, if you have an answer, it is best to give it today. Do we know when the consolidated operation would begin—in a quarter or in 12 months time?

Mr Sloper : I would expect in the next quarter. Once we have concluded contracts, we would look to establishing as soon as we could.

CHAIR: Can I just ask you to take a break there for a moment, Senator Gallacher. Secretary, just in terms of the aid budget, can you give the committee some advice on the Emergency Fund and whether there has been a reduction or an increase in funding for 2016-17.

Mr McDonald : The Emergency Fund has increased from $120 million to $130 million for next financial year.

CHAIR: Obviously, it is a reserve fund, is it?

Mr McDonald : It is the fund that we use for things like the Fiji cyclone. We have previously worked on the basis of around $10 million a month. You will recall that that was increased from $90 million to $120 million under this government. It has now moved to $130 million. We will be using that for events as they arise across the globe.

CHAIR: Given that we are six weeks out before the end of the financial year, can you tell me—or can Mr Wood tell me—what proportion of the $120 million for this financial year has been expended. Secondly, would any unexpended funds go across to 2016-17?

Mr McDonald : The answer is: there is about $24 million left of the $120 million that was allocated—the last I looked. Yes, it will be all expended this year because the humanitarian needs are never met—they are so great. What we will do, though, is keep in reserve until later towards the end of June in case we get hit with another disaster.

CHAIR: The Gender Equality Fund—can you tell me its fate?

Mr McDonald : The Gender Equality Fund has increased from $50 million to $55 million for 2016-17.

CHAIR: And that will be expended principally in the Pacific?

Mr McDonald : It is principally in the Pacific, in our region. As you will recall, Senator, it has a competitive basis to it. As well as there being internal proposals, there are also proposals from outside—private sector and NGOs.

CHAIR: And scholarship funding?

Mr McDonald : I will have to ask Mr Wood to answer that.

Mr Wood : Our allocations for scholarships, showed in our regional programs, will stay the same. The line item we have on regional scholarships and education will be maintained at $101.8 million.

CHAIR: And, finally, Syria. Have we reduced our expenditure in 2016-17 and beyond in Syria?

Mr McDonald : In Syria we have spent around $54 million this financial year so far. The government has committed $220 million over three years from 2016-17 on, so there is some certainty around multiyear funding, which was an outcome of the summit in February in London.

Mr Wood : As the minister's media release says, in total we have provided $213 million in response to the Syrian crisis.

CHAIR: $213 million?

Mr Wood : Since 2011.

CHAIR: As to expenditure with NGOs generally: we have addressed some of the questions in specific answers, but, across the board, what provision is there?

Mr McDonald : It is about 14 or 15 per cent of the program. For this year the Australian NGO Cooperation Program has been maintained at its current amount of $127 million. Our partner NGOs put that against their priorities across the globe, not just in our region.

CHAIR: So they are not facing a cutback.

Senator GALLACHER: Can we have an updated version of the committed and contracted funds table for our aid program?

Mr Wood : I do not have a copy with me. At this current point in time I think we have expensed and committed about 80 per cent of the aid budget for this financial year. Obviously, for the future financial years, we are just adjusting that, based on the budget.

Senator GALLACHER: But you do have a table of committed and contracted funds? You would have a list or a table, not in your pocket at the moment, but—

Mr Wood : Yes.

Senator GALLACHER: We would appreciate it greatly if we could get a copy of that prior to your leaving here, because otherwise we are going to have to wait until August or thereabouts to get a look at it. If we could get a copy of committed and contracted funds, that would be much appreciated, if that is possible.

Mr Wood : It would be possible for the current financial year. For the future years we are going through a review of those allocations based on the budget that was handed down Tuesday night. We are in consultations with program areas from Wednesday morning regarding the future commitments. The information is still being worked on.

Senator GALLACHER: It is not a new request. I think that Senator Wong has had the request met in the past. We accept that it might be a work in progress, but we would like to have a look at what has been committed and contracted.

Senator McEWEN: Across the forward estimates.

Senator GALLACHER: Yes, across the forward estimates.

Mr McDonald : To clarify, we cannot do that across the forward estimates because we have just had the budget handed down. We can certainly do it for this financial year.

Senator GALLACHER: We will drop the forward estimates part if we can get a snapshot in time of what has been committed and contracted.

Mr Wood : Yes, that is fine.

Senator McEWEN: I want to ask about innovationXchange. I note that a $2 million tender was put out for innovationXchange on 15 April 2016 for something called the Innovation Resource Facility. Can you explain what that is? Is that the innovationXchange?

Mr McDonald : Yes, it would be. There are number of challenges that have been put out. I will have to look up the resource facility for you. If you have a specific question, I am happy to have a look for that.

Senator McEWEN: So there are a number of other tenders related to the innovationXchange?

Mr McDonald : Yes. We put out a humanitarian challenge—we talked about this last time we were here—where we have identified three particular areas of problems in the humanitarian area, and we have had 129 proposals come in, in relation to that, which were then whittled down to 10. There are a number of challenges, and they all have a figure associated with them, like the $2 million that you have talked about, to invite solutions to those issues from across the globe. They could be communications; they could be logistics. And of course they lead into the humanitarian summit later this month.

Senator McEWEN: This is DFAT tender 117?

Mr McDonald : Yes.

Senator McEWEN: I am still not really sure what exactly you are tendering for. You have the innovationXchange set up, you have people working there, they have called for contracts or ideas and you have received 129. So what is this? What are we asking people to tender for? Have you not got enough innovative people in the innovationXchange to determine which of the 129 proposals is going forward, or what?

Mr Wood : I do not know if it may assist, but the innovationXchange manages something called the innovation fund and that has a budget over four years of $140 million. The budget for the last two years has been $20 million and for next year it is $50 million. In this case, it may be for something that would be paid through that fund.

Senator McEWEN: But you do not know exactly what it is?

Mr McDonald : I am able to give you information and answer that question for you. My understanding is that it is about sourcing expertise in design and assessment of innovation products and the like. But I will get more detail for you because I would like to provide the detail you are after.

Senator McEWEN: So you think it is about buying in, if you like, additional expertise and design, but presumably we have already asked people who are submitting for allocation of money under the fund to build in that expertise and design in their bids.

Mr McDonald : The challenges that I have referred to require quite different skills in terms of their design. If I can give you an example—I have talked about the humanitarian one—there is the Blue Economy and aquaculture. In order to evaluate those tenders properly and to ensure that they are designed effectively, we need to make sure we have access to relevant expertise. This is what this facility would be about. I am happy, as I said, to get more detail and give it to you shortly.

Senator McEWEN: Maybe you should get some fish tanks, along with the bean bags and the ping-pong table.

Mr McDonald : Aquaculture is very important in terms of protein and as a food source for people in developing countries. I think the challenge we are doing on that, which has input from the science community, universities and across the globe, is very important in the potential to help with some of the food shortages that are going to be faced in development in the future.

Senator McEWEN: The purpose of the $2 million tender is to do something that the current innovationXchange and its current staffing level cannot do. Is that right?

Mr McDonald : The way I would describe it is that it provides standby capacity for us to source people with skills to assess and design the programs. The example of aquaculture that I just gave is a good one. We need the right people with the right skills. They are not necessarily sitting in the innovationXchange at the moment.

Senator McEWEN: I do not have the nitty gritty of the tender document but does the $2 million include the potential to employ people? It would mainly be for employing people, wouldn't it?

Mr McDonald : It would be, for example, to engage—

Senator McEWEN: Consultants.

Mr McDonald : Yes. Consultants who are experts in the field—for example, scientists.

Senator McEWEN: Who or what will make the ultimate decision about the successful tenderer?

Mr McDonald : There will be a process—which I described earlier to Senator Gallacher—in terms of a tender panel that will assess the proposals against the criteria.

Senator McEWEN: With regard to innovationXchange staff, what is the combined annual salary spend for all of the staff at the moment? Are there still 11 staff?

Mr McDonald : There are 11 staff at the moment. I do not have the salary figure.

Senator McEWEN: Would you be able to find that before the axe falls.

Mr McDonald : Yes.

Senator McEWEN: Is Bjorn Lomborg still on the innovationXchange advisory committee?

Mr McDonald : He is on the Innovation Reference Group, yes.

Senator McEWEN: When did the department last engage with him to receive advice?

Mr McDonald : I would have to take that on notice.

Senator McEWEN: You cannot provide that? You could have anticipated we would ask questions about Mr Lomborg.

Mr McDonald : They are a reference group that meets once or twice a year, and the innovationXchange will engage with the reference group, depending on what the particular matter is that is being looked at or considered by the innovationXchange.

Senator McEWEN: Do you know when the reference group last met?

Mr McDonald : The reference group last met in September.

Senator McEWEN: Would he have been part of that configuration of the reference group?

Mr McDonald : You asked me this last time.

Senator McEWEN: I did.

Mr McDonald : In the end I think I got it right. I think he was not in attendance, but can I just check that.

Senator McEWEN: If that was the last time the reference group met and he is only on the reference group then presumably you have not met with him since, prior to September 2015?

Mr McDonald : I have not met with him, although people from the innovationXchange may have met with him at other events, but I think it is important to note we do liaise or communicate as we need to with the reference group.

Senator McEWEN: Has he been in Australia?

Mr McDonald : I do not know. He certainly has not met with me in Australia since September, no.

Senator McEWEN: I think last time we asked the question he was not remunerated. Is that right?

Mr McDonald : That is correct.

Senator McEWEN: There is no change to that?

Mr McDonald : There is no change.

Senator McEWEN: I might come back to this.

Senator FAWCETT: Mr Varghese, last estimates I put on notice a question about a briefing received by Ms Plibersek on East Timor, and the answer that came back confirmed that she had not received a detailed briefing on legal or technical issues associated with the boundary dispute. Can I clarify this. My understanding is that the Greater Sunrise gas field is located more closely to Indonesia than it is to East Timor.

Mr Varghese : I will have to take some advice on just what the distance of the boundaries are from Australia and East Timor.

Senator FAWCETT: But the implication is that opening up the border discussion is not as simple as just a discussion between Australia and East Timor, but it could become a multiparty discussion.

Mr Varghese : It could, particularly if the laterals get involved in the negotiation of the maritime boundaries, because if you shift the laterals that will have implications for the boundary between Australia and Indonesia. So it may start bilateral, but it could then flow into a trilateral issue.

Senator FAWCETT: Looking at news reports, I notice there was a protest outside our embassy—

Mr Varghese : Yes.

Senator FAWCETT: in East Timor. Clearly there is a campaign here from people who see it as a simple issue and are trying to put pressure on the government to act, and that has resulted in things like protests. Did you have to take security measures because of protests like that?

Mr Varghese : We kept a very close eye on the protests. They were large protests, and any time a large protest is planned in front of one of our missions we do take that very seriously. Fortunately, as things transpired, there was no threat to our staff or our property and we did maintain a close liaison with the East Timorese authorities about our concerns.

Senator FAWCETT: In terms of Australian involvement in that, I think I raised previously the role of Janelle Saffin. Were you able to clarify whether she was on the payroll of the Timor Leste government?

Mr Varghese : I would not have information about any payment that she may have received. I think it is well known that she was acting as an adviser to the East Timor government. Whether that was pursuant to a contract that included payment, I do not have that information.

Senator FAWCETT: What about Mr Bracks? Has he fulfilled a similar role?

Mr Varghese : Mr Bracks has certainly also engaged in a range of advice to the East Timor government and has been involved, through NGOs and in other ways, with East Timor over a long period of time.

Senator FAWCETT: So, from the department's perspective, are these kind of incitements to community agitation here and protests in East Timor helpful, in terms of seeking to resolve this issue whilst maintaining the safety of our staff?

Mr Varghese : Our view is that we have in place a very effective and mutually agreed framework for dealing with the question of maritime boundaries—and that is, essentially, the CMATS treaty. It imposes a mutually agreed moratorium on maritime boundary negotiations in order to allow the Greater Sunrise project to proceed with a degree of certainty and stability. We do not believe that there is any basis to revisit those arrangements. They still have a very considerable shelf life remaining in them. Others are obviously free to advocate a different position. But, in terms of our own interests, we think the current arrangements serve Australia's interests well. I might add: we think that the current arrangements, if properly implemented, provide a very fair and, indeed, quite a generous deal to East Timor.

Senator FAWCETT: Okay. Thanks very much. Thanks, Chair.

CHAIR: Good. Now, Senator Gallacher.

Senator GALLACHER: I would just like to go to the 2015 budget announcements of the five-year posts and the situation arising from the change of plan in Buka. What were the parameters in the first place? How did it come about that we had a plan that went to budget, funds were allocated and then we decided not to do it? What parameters have changed with respect to the new post?

Mr Varghese : Senator, maybe I could begin an answer to that, and Mr Sloper may wish to add to it. In the course of putting together last year's budget—not the budget that has just been brought down, but the 2015-16 budget—we did plan to open a consulate in Buka. We had held some consultations with the government of Papua New Guinea about that intention, but, I regret to say, the issue had not been considered at the highest levels of the PNG government prior to our announcement of it in the budget. It meant that, following the announcement, the view was expressed by the political leadership in PNG that they would prefer that we did not open a consulate on Bougainville. They were concerned that that could be misconstrued in relation to the proposed referendum that needs to be held between now and 2020 on the future constitutional status of Bougainville. So, obviously we abided by the wishes of the PNG government. We have since indicated that we will open a post in Lae, and that was announced in the 2016-17 budget.

Senator GALLACHER: Do I take from that report, Mr Varghese, that you personally were not involved? Did you delegate these negotiations to someone who did not have access to the highest political levels within the Papua New Guinean government?

Mr Varghese : I think the department was involved. Our post in Port Moresby was involved. But, in the end, I think it is fair to say that we had not secured the appropriate level of approval from the PNG government at the appropriate time. I think, in part, that was probably because the normal confidentiality provisions that apply to the framing of a budget probably meant that we were overly constrained in terms of when we raised these issues with the government of PNG.

Senator GALLACHER: But we did not get the approval of the Prime Minister of Papua New Guinea, or—

Mr Varghese : No, we did not. We did not and we should have.

Senator GALLACHER: We did not seek it, basically?

Mr Varghese : We did not and we should have. It was not handled, in the end, to anyone's satisfaction.

Senator GALLACHER: When was the actual decision made to cancel the establishment of the full post? Is there a date for that?

Mr Varghese : Once it became clear that the government of PNG did not want us to proceed we did not proceed. As these things need to be handled, they can only be done so with the consent of the other state.

Senator GALLACHER: Are there any lessons out of this? Do we not handle it at the appropriate level—

Mr Varghese : Yes, there are lessons out of it, and one of the lessons is that you make sure that you have the right approvals at the right level before you make an announcement.

Senator GALLACHER: Are we going to be able to pin the tail on the respective donkey, figuratively speaking?

Mr Varghese : The lesson I learned is that the next time we do it we do it right. I am not in the business of bashing heads for what has happened in the past.

Senator GALLACHER: Has this ever happened to us before?

Mr Varghese : I do not have an encyclopedic knowledge of Australia's diplomatic history, Senator.

Senator GALLACHER: I am sure you have a much greater knowledge than I have! For the Hansard record, the Attorney-General was vehemently nodding that Secretary Varghese has a much higher knowledge of foreign affairs than I do. We are all in agreement.

Senator Brandis: Or, I dare say, anyone here, Senator Gallacher.

CHAIR: Maybe it is just yourself, Senator Gallacher.

Senator GALLACHER: So, it is a very unusual circumstance—and you have been fully frank about it.

Mr Varghese : I would certainly hope, Senator, that it is an unusual circumstance.

Senator GALLACHER: Okay. We do not know the exact date the decision was made to cancel the establishment?

Mr Varghese : Senator, as I said: once the PNG government indicated that they did not want it to proceed it did not proceed. It did not require a very formal decision from us to be taken.

Senator GALLACHER: Was there then a subsequent discussion? When was the decision made to go to Lae? Was that a compromise position?

Mr Varghese : We did it right with Lae. We had discussions early and at the highest levels with the PNG government. Their agreement was secured, and we announced it in the budget.

Senator GALLACHER: What are the factors that make Lae a suitable decision compared to Buka? Are there any similarities, or are they just two different posts?

Mr Varghese : They are two different posts. Bougainville has a particular set of issues and a particular position in our aid program; Lae, I think it is fair to say, is weighted more towards our business investment and consular interests. Mr Sloper may wish to add to that.

Senator McEWEN: Sorry, I just wanted to ask: who recommended to the minister that it be Buka? Did you do that?

Mr Varghese : We had undertaken a diplomatic footprint review after the last election, and that footprint review canvassed the merits of opening a very wide range of posts, one of which was Buka. So, the merits of opening in Buka were something that the department did agree with and recommend.

Senator McEWEN: The department?

Mr Varghese : Yes.

Senator McEWEN: Right. And Buka is different to Lae because Bougainville is going through the process of independence?

Mr Varghese : Bougainville is an integral part of Papua New Guinea, and we recognise it as such, so there is no constitutional difference between Buka and Lae. There is an autonomous government in Bougainville, but it is a part of the national territory of Papua New Guinea.

Senator McEWEN: But it is, presumably, on a trajectory to independence?

Mr Varghese : Not necessarily. That is the whole idea of the referendum.

Senator McEWEN: But did that have any influence on why Buka was nominated as a potentially good place to have a diplomatic posting?

Mr Varghese : We have a very large aid program in Bougainville and we thought that an enhanced presence in Buka would assist us in the implementation of the broad set of interests that we have in Bougainville.

Mr Sloper : If I might just add two points to that. Reflecting the size of the aid program, we have an aid office operating in Buka. That is with the agreement of the Papua New Guinean government and continues to operate in Buka now, irrespective of the decision in regard to the consulate, because it is in support of the aid program. The decision to open an office in Lae relates to, as the secretary has suggested, the commercial links, and the gateway is to the Highlands, where a large part of PNG's economy is.

Senator GALLACHER: Has the head of mission been appointed, and is just now going to Lae, not Buka?

Mr Varghese : No. We did not get to the point of selecting a head of mission for Buka, because it became clear, soon after the budget announcement, that that post was not going to proceed. We have not yet made a decision on the head of post in Lae. We have not opened the office in Lae, so it will take some time to get the post open.

Senator GALLACHER: In relation to Ulaanbaatar, did the foreign minister meet with the heads of mission for Ulaanbaatar and Makassar before they were deployed? How does it work? Do you get appointed as head of mission and then you have a meeting with the foreign minister?

Mr Varghese : Certainly an outgoing head of mission or head of post would seek an appointment with the foreign minister. That is not always possible. Whether, in the case of Makassar and Ulaanbaatar, they met with the foreign minister before their departure, I do not know, but certainly the foreign minister would have met with our head of post in Makassar, because she opened the post. Would certainly have met him on the spot, as it were.

Senator GALLACHER: In the scheme of things, normally the head of mission would meet the foreign minister on their way to the new post.

Mr Varghese : It depends entirely on the foreign minister's diary and program. She, as you know, is a very busy minister—travels a lot and is often not in Canberra—so it would really just depend on whether her diary permitted it or not.

Senator GALLACHER: In your experience, how long would a meeting like that take? An hour or half an hour?

Mr Varghese : Depends on how much time the foreign minister has. It certainly would not take an hour.

Senator GALLACHER: You would not get an hour of the foreign minister's time?

Mr Varghese : I think, as much as the foreign minister would like to spend an hour with all of her ambassadors and high commissioners designate, it may not always be possible.

CHAIR: Staying with diplomatic footprints for a moment. The budget has made an allocation for increased diplomatic presence in China, I think.

Mr Varghese : That is correct.

CHAIR: Could you or one of your officers give us some advice on where that is and what the background behind the decision is?

Mr Varghese : We are not yet in a position to advise the location of the office in China, because we still have to conclude some further consultations with the government of China. Having spent the last 10 minutes discussing Buka, I think you would understand why it is sensible for us to ensure that those consultations are concluded before we make an announcement. Therefore, the reasons behind the choice, I think, might also have to wait until we can tell you where it is.

CHAIR: Would capitalising on the China-Australia Free Trade Agreement be a catalyst for planning in this direction?

Mr Varghese : Certainly, our trade and investment interests would be a very large element in choosing to create another post in China and will be a very large element in the particular post that we plan to open.

CHAIR: Thank you.

Senator GALLACHER: Secretary, you wrote to all DFAT staff following the budget. Is that correct?

Mr Varghese : I did. I sent out a message about the budget the day after the budget, I think.

Senator GALLACHER: Is it possible to get a copy of that letter?

Mr Varghese : I send out messages periodically to staff. They are communications between the head of the organisation and all of the members of the organisation, and my very strong preference is to keep those communications in house. They are in-house communications. There is nothing particularly sensitive in the message I sent out on the budget, but I think that, just as a matter of sound management and good principle, it is a good thing if a CEO can communicate with staff without the expectation that that communication goes outside the house.

Senator GALLACHER: You have 3,700 staff. I am sure we could probably get it from one of those. It is not exactly a confidential document.

Mr Varghese : No, it is not a confidential document, but we all talk to each other in different ways, and I think that within an organisation I would prefer to have the sort of climate where I can do that in the knowledge that it remains an in-house discussion.

Senator GALLACHER: Okay. If you had a major priority and your footprint was going to be increased by five new posts, and it is often not possible to meet with the foreign minister, who would the next person be that those heads of missions would meet? Who would convey their mandate to those heads of missions—you?

Mr Varghese : I certainly meet with all outgoing heads of mission. I meet with them when they come back on their mid-term consultations, and I would meet with them, from the larger posts, if they were back in Canberra for any other reason, accompanying a head of state or a head of government or for a major meeting.

Senator GALLACHER: Did you meet with these five new—

Mr Varghese : Yes. I meet with everyone who goes out, so I met with the ambassador-designate to Mongolia before he left, and I met with the consul-general-designate to Makassar before he went.

Senator GALLACHER: Which posts went without instructions—any?

Mr Varghese : I would be very surprised if anyone were to head off on a posting without instructions.

Senator GALLACHER: So the others met with the foreign minister, did they?

Mr Varghese : I do not have a list of with whom the foreign minister has met, and I explained why it may not be possible for the foreign minister to meet with all outgoing HOMs.

Senator GALLACHER: Thank you.

Senator McEWEN: I want to ask about the foreign minister's attendance at a couple of events. One was the 85th international wool conference in Sydney in April, and the other was at Melbourne fashion week in March. Did the department provide any support for either of those two events?

Mr Varghese : Mr Tranter may be able to answer that.

Mr Tranter : In regard to the wool event, the department supported input to the minister's speech. I am not aware of further support for that event. For the Melbourne event, as far as I am aware, there was no support from the department.

Senator McEWEN: Did any staff advance or attend either of those events?

Mr Tranter : Not to my knowledge.

Senator McEWEN: Was there any expense incurred by the department in facilitating the minister's participation in either or both of the events?

Mr Tranter : Not to my knowledge.

Senator McEWEN: Except for the preparation of the speech.

Mr Tranter : That is some staff time to contribute to the speech.

Senator McEWEN: Do you know what the minister's role was at each of those events?

Mr Tranter : I understand that she was a keynote speaker at the wool event, and I am not certain about the exact role of the minister in the Melbourne event.

Senator McEWEN: So you are not sure what her role was at the Melbourne Fashion Festival?

Mr Tranter : I am aware that she was a participant at the event.

Senator McEWEN: It occurs to me that at those two events it would have perhaps been more fitting for the trade minister to appear, given that we are talking about exporting fashion and wool.

Mr Varghese : Economic diplomacy is a key component of Australia's broader diplomacy, and that involves both the foreign minister and the Minister for Trade and Investment, so an event promoting the wool industry would be a natural thing for us to pursue in terms of our economic diplomacy. We do export, I think, just shy of $3 billion worth of wool, so it is entirely appropriate for the foreign minister to be involved in such an event.

Senator McEWEN: Did the trade minister go to those events; do you know?

Mr Varghese : I do not, but Mr Tranter may.

Mr Tranter : As far as I am aware, no, the trade minister was not at the events.

Senator McEWEN: Or a junior trade minister? I am sorry; I presume there is one, but I cannot remember his name.

Mr Tranter : Not to my knowledge.

Senator McEWEN: How many staff hours would it take to write a speech for the foreign minister at the wool conference?

Mr Tranter : I do not have an estimate on hours for that speech.

Senator McEWEN: What was the message of the speech then?

Mr Tranter : The speech is on the public record. We can have it tabled for the committee.

Senator McEWEN: That is all right. I can have a look.

CHAIR: Just while we stay on fashion diplomacy—if I may, Senator McEwen—can somebody give us some indication of what the value of the fashion industry is to Australia's economy? Does anyone know that, or do we ask people in the trade portfolio?

Mr Varghese : I have some material that might go to that question, Chair. If you look at the fashion industry in terms of both the raw materials and finished garments, we exported a billion dollars worth of cotton, $2.9 billion of wool and half a billion in finished garments. The Australian Fashion Chamber estimates that the sector employs 220,000 people in design, manufacturing, retail and production of high-quality primary resources and adds $12 billion to Australia's economy each year.

CHAIR: Thank you.

Senator McEWEN: I am still on fashion—you will be pleased to know, Senator Back.

CHAIR: Oh, good—not that I am much of a contributor to it!

Senator McEWEN: Me either.

CHAIR: When it comes to the wool industry, I think it is very usual for a vet to have a keen interest in it.

Senator McEWEN: With regard to the fashion designer Johanna Johnson and the G'day USA event, did Johanna Johnson and/or her fashion get selected to represent Australia at that event last year?

Dr Hammer : Yes, some of Johanna Johnson's fashion wear was selected for that event.

Senator McEWEN: Did she attend the launch? I presume there was a launch. Yes, there was a showcase runway. Did Ms Johnson attend that?

Dr Hammer : Ms Johnson did not attend personally. There was a showcase runway, but her fashion was not on display on the showcase runway. It was on display at a reception, so in a less prominent way that was part of the event.

Senator McEWEN: Senator Back just asked, 'What is a showcase runway?' Did Johanna Johnson attend that reception?

Dr Hammer : No, she did not.

Senator McEWEN: Did she go to America at all for G'day USA?

Dr Hammer : My understanding is that she has not attended any G'day USA events this year.

Senator McEWEN: How did her fashion get selected for G'day USA?

Dr Hammer : There is a process of selection. What happened was that the designers who were selected were chosen through a discussion between the organisers of LA Fashion Week and the G'day USA steering committee, which essentially is run out of our consulate-general in Los Angeles.

Senator McEWEN: The office of the consul general made the decision?

Dr Hammer : No, the decision was made in collaboration with LA Fashion Week. The fashion week people ultimately made the selection, but there was a discussion that took place between our consulate-general in LA, which is part of the steering committee for G'day USA, and the fashion week organisers.

Senator McEWEN: So the LA Fashion Week organisers would have approached the Australian government via the consul general's office, saying, 'We'd like you to participate—nominate someone'? Is that right?

Dr Hammer : I am not sure whether that was the exact process, but there was certainly, if you like, a joint organisational activity there between the G'day USA steering committee and—

Senator McEWEN: Then what would the consul general have done? Presumably they do not have a lot of in-house fashion experience. Who would they have approached to say, 'Gosh, we've received this invitation to display Australian fashion'? Where would they have gone to find someone appropriate to represent Australia?

Dr Hammer : I would have to take that on notice, but there is a fair bit of expertise. What we do in the department in these situations overseas, in posts and what have you is that we have networks and we draw on others, take advice and what have you. I would have to say that Johanna Johnson was not the only or even the most prominent Australian fashion house that was showcased. There were two others who were on the showcase runway, so they were more prominent.

CHAIR: Do you have their names, Dr Hammer?

Dr Hammer : Yes, I do. The designers featured were Emma Mulholland and Zhivago.

CHAIR: Zhivago?

Dr Hammer : Yes.

Senator McEWEN: Did Foreign Minister Bishop attend the showcase runway?

Dr Hammer : Yes, she did.

Senator McEWEN: Was it at that event that she wore a Johanna Johnson dress?

Dr Hammer : I am not sure. I was not at the event, and I do not know. We can find out, I guess, but one thing I would say is that the department does not have anything to do with the decisions the minister makes about what she would like to wear.

Senator Brandis: Are these really the great issues on which the future of the nation depends, Senator McEwen—what designer dress the minister wore to a function?

Senator McEWEN: She did wear a Johanna Johnson dress to the Australian American Association's gala dinner and the Canberra Midwinter Ball last year. When was the decision of the consul general to recommend Johanna Johnson as one of the designers to be showcased at LA Fashion Week made? When was that decision made by the consul general?

Dr Hammer : I am not sure. We would have to take that on notice. But I would emphasise that it was not the consul general that made the decision; it was made—

Senator McEWEN: Who put forward these three designers to be represented during that very important fashion week? When was that decision made?

Dr Hammer : I am not sure. I would have to take that on notice.

Mr Tranter : Perhaps I can assist. There was a recommendation of six names put forward from the consul general's office, and Ms Johnson was one of the six that were put forward to the organisers. The organisers themselves had a list of around 10 Australian designers that they were interested also in showcasing. Through a process of discussion, the final three were selected. That was in June 2015.

Senator McEWEN: I understand that you do not have the answer to the question about what designer the foreign minister wore at the showcase runway or at the reception, but we know that a Johanna Johnson dress was displayed there. Do you know who wore it, or was it worn by a dummy?

Dr Hammer : I am sorry, I do not know. I will have to take that on notice.

Senator McEWEN: The foreign minister has been asked by the media, I understand, whether or not she has received gifts or loans of fashion from Johanna Johnson. Her answer was that she has met 'the requirements of the register of interests' of this parliament. She has not actually answered the question, though, as to whether or not she received gifts of fashion from Johanna Johnson.

CHAIR: You can help me, Senator McEwen: would a garment from Johanna Johnson be worth $300 or more, or would it be less?

Senator McEWEN: I know most of us, Senator Back, declare anything that we are given regardless of the cost to avoid any perception of conflict of interest.

CHAIR: For my information, would the garments be likely to be worth more or less than $300?

Senator McEWEN: I do not know. I am asking the question whether or not—

Senator Brandis: Senator McEwen may be unfamiliar with the designer Johanna Johnson, but, Senator McEwen, the foreign minister has made all the relevant declarations and that is the end of the matter.

Senator McEWEN: Well, she could have answered the question when it was put to her.

Senator Brandis: She did. She said she had made all relevant declarations—

Senator McEWEN: She could have answered—

Senator Brandis: Have you checked the register?

Senator McEWEN: Most would have answered, 'Yes, I did,' or, 'No, I did not.'

Senator Brandis: Have you checked the register? Have you taken the trouble to do that?

Senator McEWEN: I think Senator Back made the point that you do not have to declare things that are less than $300, or whatever the relevant amount is in the House of Representatives.

Senator Brandis: I am just wondering whether before embarking on these question you have bothered to check the register.

Senator McEWEN: No. I have not—

Senator Brandis: You have not bothered to. Thank you.

Senator McEWEN: I do not look at the foreign minister's register of interests very often, because I would expect her to fill it in.

Senator Brandis: So she has answered the question, she has referred you the register and you have not bothered to check it before persisting with this line of questioning.

Senator McEWEN: I am not questioning what she has written in the Register of Members' Interests. I am not questioning that at all. What I am saying is—

Senator Brandis: In any event, we will take this and all other matters in relation to this matter of Johanna Johnson on notice.

Senator McEWEN: When will you provide a response?

Senator Brandis: We will be time limited by the committee.

Senator McEWEN: How convenient. I will move on from fashion. I would like to ask some questions about the foreign minister's use of VIP aircraft for routes that cannot be accessed commercially. I understand that in regard to her duties, if you like, to visit Pacific Island nations within our region—which obviously she needs to visit as foreign minister—the foreign minister has not always used VIP aircraft, which in this case makes access to those islands more timely and efficient because, as we know, they are very difficult to get to on commercial aircraft. Do we have any information about how often the foreign minister has used VIP aircraft to visit those Pacific nations within our region and when she has used commercial aircraft?

Ms Logan : The minister does, on occasion, travel on RAAF aircraft and special purpose aircraft when she is visiting the Pacific and elsewhere. This is consistent with the guidelines.

Senator McEWEN: Does she always use RAAF VIP aircraft?

Ms Logan : No, she does not.

Senator McEWEN: Explain to me the process for the foreign minister to have access to VIP aircraft. So she needs to visit a country; who does she make the submission for access to a VIP aircraft to?

Ms Logan : Usually the process is the foreign minister's office would contact the Minister for Defence's office, and then it will ultimately be a decision for the Prime Minister.

Senator McEWEN: How many applications for use of a VIP aircraft has the foreign minister made since she has been in that portfolio?

Ms Logan : How many applications? I would have to take that on notice. I do not know exactly.

Senator McEWEN: How many requests for use of a VIP aircraft for the foreign minister to undertake her duties have been refused by the Prime Minister's office?

Ms Logan : I do not know, Senator; again, I can find out for you.

Senator McEWEN: Can we find that out today?

Ms Logan : Yes.

Senator McEWEN: Good. Have any requests to use a VIP aircraft for the foreign minister's duties been refused or denied by the Prime Minister's office?

Ms Logan : Not that I am aware of, but I could not be absolutely sure.

Senator McEWEN: When a refusal is made or access denied by the Prime Minister's office for use of a VIP aircraft, is a reason given to the foreign minister?

Mr Varghese : Ms Logan has indicated that typically the department is not directly involved at the point at which the availability of a VIP aircraft is explored by the foreign minister's office. These are issues that are handled office to office, and so if you have a series of questions about what did or did not happen and how many times the VIP aircraft was requested, how many times it was agreed and how many times it was refused, we would have to get that information from the foreign minister's office. It is not information that the department routinely has.

Senator McEWEN: I am asking you to get that information.

Mr Varghese : Whether we can do that, we will.

Senator Brandis: We will take those questions on notice, Senator McEwen.

Senator McEWEN: So you are going to take that on notice and provide a response today. Are there any occasions that we—

Senator Brandis: We may not be able to provide a response today.

Senator McEWEN: The official said they could, Minister.

Senator Brandis: We may not be able to provide a response today because the procedure when arranging for travel in a VIP aircraft, except in the case of the Prime Minister of course, is to make a request in the first instance to the office of the defence minister. I do not know whether it will be necessary to contact the defence minister's office as well. I am not saying that we cannot, but it may be that more is involved than you think.

Senator McEWEN: When you are gathering that information, could you also advise if there have been any occasions where the foreign minister has applied to the Prime Minister's office to use a VIP aircraft for her portfolio responsibilities and because of a late decision by the Prime Minister's office has had to book commercial airfares?

Senator Brandis: We will take that question on notice too. That may, of course, involve an inquiry of the Prime Minister's office as well.

Senator McEWEN: I want to go back to fashion. I know we are all enthralled by that.

Senator Brandis: I do not think there is anyone in the room who seems to be particularly interested, as a matter of fact.

Senator McEWEN: You would be surprised. I asked questions about the wool conference in Sydney and the foreign minister's attendance and the support that was provided to her by the department in terms of speech writing, but I just want to be absolutely sure that when she attended Melbourne Fashion Week there was no support from the department. Is that what you said?

Mr Tranter : I will need to confirm that but, to my recollection, that is correct.

Senator McEWEN: Going back to Johanna Johnson, did the foreign minister write a letter to the Australian Consul-General in Los Angeles either recommending or suggesting that Johanna Johnson and her fashion be one of the Australian companies for LA Fashion Week?

Senator Brandis: We will take all questions in relation to Johanna Johnson on notice.

Senator McEWEN: I am sure you know the answer to this question.

Senator Brandis: The question is taken on notice.

Senator McEWEN: The issue has been traversed extensively in the media, and I would like to know whether the department knows—and I am sure somebody here would know—whether the Consul-General in Los Angeles received a letter or an email or any other communication from the foreign minister saying, 'These are my recommendations for Australian fashion houses to be represented at LA Fashion Week.'

Senator Brandis: We will take the question on notice.

Senator McEWEN: So you are refusing to answer that?

Senator Brandis: No, I am taking it on notice.

Senator McEWEN: You are. I am sure the officers at the table would know.

Senator Brandis: Senator, I told you before that we would take these questions on notice.

Senator McEWEN: I know what you told me. Alright, if you are taking on notice whether such a communication exists can you also take on notice whether, as well as endorsing Johanna Johnson, there were any other designers recommended, suggested, endorsed, or otherwise communicated to the Consul-General in Los Angeles by the foreign minister?

Senator Brandis: We will take that on notice.

Senator McEWEN: I would now like to ask a few questions about the foreign minister's entertaining of the Diplomatic Corps in Tasmania in April of this year. I presume somebody here is aware of that? How many diplomats attended the trip, and is there a list of attendees or embassies and high commissions that were represented?

Mr Varghese : I will ask our Chief of Protocol to respond.

Ms Sachs : Eighty-one heads of mission attended for various components of the visit—it was a 2½ day program. About 37 spouses also accompanied; however, they were not part of the main program.

Senator McEWEN: So there were 81 heads of mission and 37 spouses. Did DFAT cover the cost of airfares?

Ms Sachs : No, we did not.

Senator McEWEN: Accommodation?

Ms Sachs : No, we did not. That was all paid for by the relevant embassies or high commissions.

Senator McEWEN: Did the fact that they had to pay their own way mean that any embassies or high commissions of less wealthy nations could not send representatives?

Ms Sachs : We had a full spectrum of embassies and high commissions represented.

Senator McEWEN: Did any embassies or high commissions request support?

Ms Sachs : No, none of them did.

Senator McEWEN: Obviously, the foreign minister attended; how many departmental officials went with her?

Ms Sachs : About five officers.

Senator McEWEN: Do we know how many ministerial staff?

Ms Sachs : About four or five. I cannot remember the exact number.

Senator McEWEN: Do we have costings for this event?

Ms Sachs : Yes. We are in the process of finalising all the budgets. As you can imagine, this visit was only completed last weekend. At present the estimated costs are about $126,000.

Senator McEWEN: That is for the foreign minister, her staff—

Ms Sachs : No, that is for the entire program.

Senator McEWEN: and the officers of DFAT?

Ms Sachs : No, that is the entire program. That includes staff costs, the events—which were held at a number of locations—and transport costs in Tasmania itself.

Senator McEWEN: So the transport was in Tasmania. Did the individual delegates kick in for their costs for that, or did DFAT provide the buses?

Ms Sachs : We provided the buses for transport.

Senator McEWEN: What about the businesses that were visited? Did they provide the food and entertainment at their own cost?

Ms Sachs : Do you mean the venues where we hosted—

Senator McEWEN: Yes.

Ms Sachs : No, we provided the costs for those.

Senator McEWEN: And that was part of the roughly $120,000?

Ms Sachs : It was $126,000, or thereabouts.

Senator McEWEN: It was just a day and a half—is that right?

Ms Sachs : It was 2½ days.

Senator McEWEN: Were there any formal dinners?

Ms Sachs : Yes, there was a formal dinner at Mona. There was a lunch, which was hosted by the Premier, at Frogmore and there was also a lunch, hosted by the foreign minister, at a place called Josef Chromy.

Senator McEWEN: I presume the Tasmanian government paid for the Frogmore thing?

Ms Sachs : That is correct, yes.

Senator McEWEN: Were the Mona dinner and the Josef Chromy event out of that $126,000?

Ms Sachs : That is correct.

Senator McEWEN: Did that include alcohol?

Ms Sachs : Yes, it did.

CHAIR: Tasmanian?

Ms Sachs : Yes, Tasmanian—I can vouch for that.

Senator McEWEN: Maybe I am just jealous! Was the Frogmore Creek winery event fully funded by the Tasmanian government, including for DFAT staff and ministerial staff?

Ms Sachs : Yes.

Senator McEWEN: Was any special security clearance needed for the hotels that were used, because the foreign minister and all those foreign diplomats were in attendance?

Ms Sachs : What do you mean by security clearance?

Senator McEWEN: Did the Federal Police have to go and vet any of the hotels that were used, to provide a security clearance?

Ms Sachs : We had a police presence, both AFP and Tasmania Police.

Senator McEWEN: Was the cost of the AFP attendance included in the $126,000?

Ms Sachs : No, it is not included.

Senator McEWEN: The AFP was not reimbursed by DFAT for conducting that role?

Ms Sachs : No.

Senator McEWEN: I understand the delegation crossed the Launceston suspension bridge?

Ms Sachs : That is correct, at Cataract Gorge.

Senator McEWEN: Did that require any special vetting of the safety of the bridge and the safety of the delegation?

Ms Sachs : It is a tourist site that is visited by many, many tourists every year.

Senator McEWEN: Were there any private security personnel engaged to provide security for this diplomatic contingent?

Ms Sachs : Not as far as I am aware.

Senator McEWEN: Do we know which members of Foreign Minister Bishop's personal staff attended?

Ms Sachs : Yes, we do.

Senator McEWEN: Can you name them?

Senator Brandis: I do not think it is the custom to name ministerial staff.

Senator McEWEN: Can you give me their positions and titles—for example, was it a chief of staff, a deputy chief of staff?

Ms Sachs : We had a divisional liaison officer, a media adviser, another adviser and, I think, another DLO.

Senator McEWEN: But not a chief of staff?

Ms Sachs : No.

Senator McEWEN: Did any Liberal Party MPs also take part in the tour?

Ms Sachs : They were certainly participating in components of the actual tour. They facilitated certain aspects of it as well.

Senator McEWEN: Federal Tasmanian MPs?

Ms Sachs : Yes, that is correct.

Senator McEWEN: Did any Tasmanian federal senators attend?

Ms Sachs : Yes.

Senator McEWEN: Did the Tasmanian federal MPs and senators attend for the whole two days?

Ms Sachs : No, they attended selected events.

Senator McEWEN: Did they have to pay for themselves?

Ms Sachs : No.

Senator McEWEN: So their costs came out of the $126,000?

Ms Sachs : That is correct.

Senator McEWEN: Were any opposition, Greens or independent Tasmanian MPs or senators in attendance?

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

Senator McEWEN: You must know, Ms Sachs.

Ms Sachs : I am sorry; I cannot answer that question.

Senator McEWEN: Can anybody answer that question?

Senator Brandis: I do not think many people know who some of those Tasmanian Labor Party members are, Senator McEwen. They would not be immediately recognised.

Senator McEWEN: Somebody must know. All right. Presumably the department organised—

Senator Brandis: The question has been taken on notice, Senator McEwen.

Senator McEWEN: the invitations for this. Were opposition, independent or Greens senators or members invited to attend—

Ms Sachs : There were invitations—

Senator McEWEN: whatever it was called—the Tasmanian showcase?

Ms Sachs : There were invitations for the Premier's event. There were invitations extended by the relevant Premier's office. Certainly, for one of the other events, there were invitations sent out by the minister's office.

CHAIR: To all federal members and senators from Tasmania, Ms Sachs?

Ms Sachs : That went from the minister's office.

CHAIR: To all federal members and senators from Tasmania, of any political party?

Ms Sachs : I do not have a list in front of me, sorry, and I cannot remember.

Senator Brandis: That is the question we have taken on notice, Chair.

Senator McEWEN: Can that answer be provided this evening, please?

Senator Brandis: The answers to questions taken on notice will be provided, if they can be, within the time limited by the committee.

Senator GALLACHER: But the committee won't exist to take them!

Senator McEWEN: So we are pretty certain that federal Liberal Tasmanian MPs and senators attended the event—well, we are certain, because we have heard that there were. But we are very uncertain about whether opposition, Greens or independent senators and members were invited and/or attended the event. That seems pretty extraordinary.

Senator Brandis: Senator McEwen, we have taken that question on notice. It would not be unusual for government members to be included in an event of this kind, I would not have thought. Nevertheless, as I have said, we will take the question on notice.

Senator McEWEN: You said, Ms Sachs, that for the Premier's event, which was at Frogmore, the Premier's office sent out the invitations. Were you there, Ms Sachs?

Ms Sachs : Yes, I was.

Senator McEWEN: Were there any state Tasmanian Greens, independent or opposition members of parliament there?

Ms Sachs : I am sorry; I am not familiar with state MPs.

Senator McEWEN: But obviously, Ms Sachs, you have been in the area for a long time. You would be pretty familiar, I would have thought, with opposition and, certainly, some independent and Greens Tasmanian senators and members—but you cannot recall seeing any of them?

Ms Sachs : I am sorry. I have only been holding the job for seven months, and I was overseas for nine years with the department before that.

Senator McEWEN: I know.

Senator Brandis: I think Ms Sachs can be forgiven for not recognising these people, Senator McEwen. Most of the people who work in this building would not be able to recognise—

Senator McEWEN: Get out. Really, Minister!

Senator Brandis: I am serious.

Senator McEWEN: A senior DFAT officer is not provided with a list of attending senators and members? Give me a break!

Senator Brandis: There would be very few people who even work in this building who would recognise some of those Tasmanian Labor Party senators, I tell you.

Senator McEWEN: Give me a break! You don't think someone would have had to provide a list to the Federal Police of who was there? Honestly!

Senator Brandis: I do not think that Ms Sachs can be taken to task for not recognising these particularly obscure people.

Senator McEWEN: So Senator Lambie is obscure?

Senator Brandis: No, no—not Senator Lambie. We all know Senator Lambie, very fondly!

CHAIR: With the Tasmanian diplomatic event, there are a couple of things I want to clarify. It is my understanding that all members and senators from Tasmania were invited to the functions you have mentioned. But I just want to clarify: in the time this coalition has been in government, these diplomatic visits, I understand, have been to Western Australia, South Australia and Tasmania. Is that right?

Ms Sachs : That is correct.

CHAIR: Did this concept start with this coalition government, or do these events go back further in time?

Mr Varghese : I think they originated when Alexander Downer was foreign minister. I think, in the period of the Labor government, Kevin Rudd did one trip to Queensland. And since the last election there have been, as you have indicated, three.

CHAIR: I want to know what are the benefits to the state—in this case to Tasmania, but to the others as well—of such a diplomatic corps visit of 81 heads of mission?

Mr Varghese : I think in all of the three that have been held over the last three years the response of the state governments has been very positive. They see it as an opportunity to showcase their state. They see it as an opportunity to brief and introduce the diplomatic corps to what they consider to be the strengths of their state—in terms of resources in Western Australia: quality of produce, wine, innovation, technology and health services. We have our version of economic diplomacy, which includes making the diplomatic corps more knowledgeable about the diversity, strength and competitiveness of Australian businesses, and the states have their own version of economic diplomacy, and in this case the two come together very well.

CHAIR: Was the Chinese Ambassador or someone from the Chinese Embassy—

Ms Sachs : Yes, the charge d'affaires attended.

CHAIR: So it follows the recent success they had when President Xi visited Tasmania. I know it is only relatively recently, but has the department had any feedback from the diplomatic corps representatives in terms of their response and, most importantly, whether there is likely to be any boost in trade or investment interest in Tasmania?

Ms Sachs : Yes. I have personally received probably about six or seven emails from relevant heads of mission saying how useful and how beneficial they found the visit. A number of them have already indicated as well that they are looking at going back there in order to explore greater economic opportunities with Tasmania.

CHAIR: I am not going to talk about next year because it is too far into the future. Thank you very much for that.

Senator McEWEN: While we are on Tasmania, do we have the details, the position titles, of the DFAT officials who attended—EL1, EL2 or whatever?

Ms Sachs : Yes. I had a director. I attended. There was one of the directors in my section who was responsible for all of the organisation of this, two graduate trainees, one other officer who came down at the last to assist us and a media liaison officer as well.

Senator McEWEN: Thank you.

Mr Varghese : And I was there as well.

Ms Sachs : Yes, my boss was there.

Senator McEWEN: I want now to ask a couple of questions about the Special Envoy for Human Rights. In answer to my questions on notice you said:

A formal letter from the foreign minister outlining the terms and conditions of the appointment was provided to Mr Ruddock.

That is the answer. Can the committee have a copy of the letter please?

Mr Varghese : Let me take that on notice. It is the foreign minister's letter so I think I need to do her the courtesy of conveying your request to her.

Senator McEWEN: You are not aware of the content of that letter?

Mr Varghese : I am aware of the content of the letter.

Senator McEWEN: Can you elaborate?

Mr Varghese : The letter is a letter of appointment to the position of Special Envoy for Human Rights. It sets out what the foreign minister sees as the role of the position and it canvasses questions of remuneration and conditions.

Senator McEWEN: Aha! However, in another one of the answers to my questions on notice you say he is not being remunerated.

Mr Varghese : That is correct, and that is what the letter says.

Senator McEWEN: 'You will not be remunerated'?

Mr Varghese : Correct.

Senator McEWEN: What are the conditions in that letter, then?

Mr Varghese : It essentially says that the costs of travel and per diem would be reimbursed to Mr Ruddock.

Senator McEWEN: What class of travel?

Mr Varghese : Business class—the same as a DFAT official.

Senator McEWEN: And the per diem as a DFAT official or as a parliamentarian?

Mr Varghese : It would be set at the SES rate of DFAT travel.

Senator GALLACHER: Is the per diem for overnight expense or a meeting expense?

Mr Varghese : That is a daily allowance that you get when you travel. It is separate from your hotel bill.

Senator McEWEN: As you know, Mr Ruddock has now indicated his retirement from the parliament. Was there anything in that letter or any other discussions with Mr Ruddock about whether he will continue in the role as special envoy upon his retirement from the parliament? Presumably, that would be on or about 2 July this year.

Mr Varghese : The letter indicates that the appointment continues until it is terminated by notification from the foreign minister or by prior agreement. It does canvass what might happen in the event that Mr Ruddock ceases to be a member of parliament and says that further consideration would be given to appropriate arrangements, were that to occur.

Senator McEWEN: Are they the exact words—'further consideration would be given'?

Mr Varghese : Yes.

Senator McEWEN: Further consideration as to whether the position would continue?

Mr Varghese : No, the position continues until it is terminated.

Senator McEWEN: Have you been asked to contemplate what remuneration and conditions would be extended to Mr Ruddock if the position continues beyond his retirement from parliament?

Mr Varghese : We have been giving thought to that within the department, but—I will have to check this—I will ask Dr Strahan whether we have canvassed any options in that regard with the foreign minister.

Dr Strahan : No, we have had no discussions yet about what might take place post the election.

Senator McEWEN: You have given no thought to it?

Senator Brandis: There has been no discussion.

Dr Strahan : As the secretary said, internally we have looked at what might be the model, should the appointment continue after the election.

Senator McEWEN: What might that model be?

Senator Brandis: I think, Senator, you are really asking the official to indulge in conjecture. So that is not really an appropriate question. He said that there have been no discussions.

Senator McEWEN: Have any arrangements been made for Mr Ruddock to attend events or conferences overseas which might be relevant to this position subsequent to 2 July?

Dr Strahan : No.

Senator McEWEN: If the election is called on the weekend, does the special envoy's role continue? I understand there is a significant international conference dealing with issues of the death penalty in Norway sometime soon. Is he still able to attend that?

Mr Varghese : His status as a special envoy is not affected by the calling of an election. It would be possible for Mr Ruddock to travel to an international meeting during the caretaker period, but I take it from what Dr Strahan has just said that there are no plans for him to undertake such travel.

Dr Strahan : If I could just clarify: there are no plans at this stage for travel beyond 2 July. From now until 2 July, we have arranged two overseas trips for him: one to the 6th World Congress Against the Death Penalty in Oslo from 21 to 23 June; and the second event concerns the CARICOM—Caribbean heads of government meeting.

Senator McEWEN: And when is the Caribbean meeting?

Dr Strahan : On 2 July.

Senator McEWEN: On 2 July?

Senator GALLACHER: An auspicious date maybe—an auspicious date for Secretary Varghese's first day of freedom.

Senator McEWEN: So there is nothing—

Mr Varghese : Quite right.

Senator McEWEN: to prevent Mr Ruddock fulfilling those booked events?

Mr Varghese : No. His status as special envoy continues.

Senator McEWEN: Are there any other special envoys that will be used, if you like, as the benchmark or model in terms of remuneration and conditions for Mr Ruddock in the event that he continues in this position once he retires?

Mr Varghese : I do not think there is an applicable model at the moment. The only other special envoy we have at the moment is Andrew Robb, who is the Special Envoy for Trade, but that function will cease when Mr Robb steps down from parliament. So, if we were to look at a model, it would probably be closer to the model we might use for an Australia based ambassador.

Senator McEWEN: So Mr Robb is definitely finishing up when he steps down from parliament?

Mr Varghese : That is my understanding.

Senator GALLACHER: Can I just ask a question? There was a Richard Butler who was a special ambassador or envoy. Is that a sort of bespoke arrangement that you just design for certain—

Mr Varghese : We do from time to time appoint special envoys for very particular purposes—for instance, when we were running for the UN Security Council, we appointed a number of special envoys to go to particular regions to help drum up the votes. Usually, we do that on the basis that we meet their costs and there is an element of remuneration not in all cases but in some cases.

Senator McEWEN: I want to move onto the decision of government regarding removing consular assistance for dual nationals and permanent residents in countries of which they are citizens. This is a budget saving measure—I understand that. What data was used to estimate the number of dual nationals who do seek consular assistance in countries of which they are citizens?

Mr Varghese : Jon Philp, head of our consular division, may want to add to this, but the background to this is the Functional and Efficiency Review that was done by Brendan Nelson made a number of recommendations in relation to possible savings in the department. One of his recommendations went to the provision of consular services to dual nationals. The recommendation included the suggestion that, where the dual national was in the country of other nationality, we would not, as a matter of course, extend consular assistance. So we may in some circumstances—some exceptional circumstances—do so but not as a matter of course.

Senator McEWEN: Let me go back a step then: is the Functional and Efficiency Review that you mentioned there classified?

Mr Varghese : It is a cabinet document.

Senator McEWEN: And this measure to refuse consular assistance to dual nationals is one of the measures?

Mr Varghese : In the country of the other nationality—it is quite a narrow application.

Senator McEWEN: How do you identify whether someone is a dual citizen?

Mr Varghese : I do not think we have a 100 per cent sure way of identifying whether someone is a dual citizen. Usually we would acquire that information because the person concerned would indicate it to us. I think that is right, but Mr Philp may want to correct or clarify it.

Mr Philp : We do not have a comprehensive way of gaining that information. It is not compulsory for Australians to tell us if they have another nationality or what it might be. In consideration of this particular measure we have begun to seek that information from consular clients, but we have not previously done it as a matter of course.

Senator McEWEN: If you do not really know how many people seeking consular assistance are actually dual nationals or permanent residents in the countries in which they are seeking that consular assistance from Australia, how can you cost this? What is the budget savings measure?

Mr Varghese : Dr Nelson's report contained a whole series of recommendations on cost savings, and this was one. Like with all cost estimates, he had to make certain assumptions about how many such cases might exist and about what financial savings would result. I do not have with me—

Senator McEWEN: Where did he get the data to make those assumptions and to make assumptions about financial savings?

Mr Varghese : We would have worked very closely with him in the framing of his report—we provided a secretariat to him. We would have given him access to whatever information we have in our consular database, but, as Mr Philp said, there is no comprehensive set of numbers on dual nationals.

Senator McEWEN: What is the predicted budget saving from this measure?

Mr Varghese : Mr Wood may have an answer to that.

Mr Wood : The saving over four years for the Department of Foreign Affairs and Trade is $50.5 million. That is set out in Budget Paper No. 2 on page 97.

Mr Varghese : But that is in relation to all of Dr Nelson's recommendations, and this is only one.

Senator McEWEN: What proportion of the $50.5 million would be saved by this particular measure?

Mr Wood : I do not have that level of detail. The measure just refers to a whole range of recommendations that are primarily focused around simplifying business processes and automating certain transactions. That was the primary focus of the review.

Senator McEWEN: Yes, that is right—so you do not really know whether any money is going to be saved by this denial of consular assistance to Australian citizens.

Mr Varghese : I think, on the basis of common sense, if you stop doing something that you were previously doing, you are going to save some money.

Senator McEWEN: Yes, but that all relies on these dual citizens telling you that they are dual citizens, and you do not collect that information at the moment. You do not, presumably, ask people, at the moment, whether or not they are dual citizens, if they are seeking assistance.

Mr Philp : We have started asking them if they are dual citizens and we also have partial knowledge from the country involved. For example, if somebody is arrested, we would often know whether they are arrested on the basis of their other nationality or not.

Senator McEWEN: I presume that the savings that are claimed to be made by implementation of the Functional and Efficiency Review have been fully costed by the PBO?

Mr Wood : No, the PBO would not have been involved in that. This would have been a central agency—the Department of Finance.

Senator McEWEN: So they have been costed by the Department of Finance?

Mr Wood : The Department of Finance would have agreed on the cost of this measure.

Senator McEWEN: So you would have said to them, 'This is what we think'?

Mr Wood : They would have also seen a copy of the Functional and Efficiency Review.

Senator McEWEN: Was any information provided to the Department of Finance to enable them to make the decision which goes to the issue of how much is exactly going to be saved, or how much is predicted to be saved, by the measure announced by the government to remove consular assistance for dual nationals and permanent residents in countries in which they are citizens?

Mr Wood : I do not recall that—

Senator McEWEN: What information did you give to the Department of Finance to enable them to say, 'Yes, that's right'?

Mr Wood : The Department of Finance had a copy of the functional and efficiency review.

Mr Varghese : What happened in this case is that Dr Nelson identified a series of areas where he thought savings could be made—

Senator McEWEN: But he does not do the costing, does he? He thinks there are savings that could be made.

Mr Varghese : Let me finish the answer. We worked very closely with him to put numbers around those recommendations. Those numbers were reflected in his final report and those numbers were shared with the Department of Finance.

Senator McEWEN: But we cannot have the final report because it is cabinet-in-confidence?

Mr Varghese : Correct.

Senator McEWEN: Can tell me how much of the $50.5 million predicted savings will arise from implementation of this measure to remove consular assistance?

Mr Varghese : I would have to take that on notice.

Senator McEWEN: Can you tell me what the three top countries in which this measure will impact are?

Mr Philp : No, I cannot. I can make an assumption that the United Kingdom would be one.

Senator McEWEN: Sorry, which one—the United Kingdom?

Mr Philp : That would be a fair assumption, but I do not know. I would have to take that on notice.

Senator McEWEN: You must know, surely!

Senator Brandis: The officer has told you that he does not know.

Mr Philp : I think until we start getting the data in we will not be able to tell. We can certainly know in the system which countries are most likely to have Australian dual nationals there, but that does not necessarily relate to consular numbers.

Senator McEWEN: Okay, so the UK is one of those. What else?

Senator Brandis: I hope you do not think I am being pedantic, but you have asked a question and the answer was that the officer does not know. He has then volunteered a view based on speculation and he has suggested that, perhaps, the United Kingdom might be one of them. I think it is a little unfair, if I may say so, to press him when his primary answer is that he does not know, because all you are doing is inviting him to speculate.

Senator McEWEN: I will go back to the countries in a minute. It seems to me that you are claiming savings from this measure but that you have no evidence of those savings. You have no evidence that savings are going to be made by this measure.

Mr Varghese : We worked with Dr Nelson to cost those savings as precisely as we could, but, in that particular recommendation, we have to recognise that our data is going to be incomplete because we do not have a comprehensive database on dual nationals.

Senator McEWEN: Yet you are claiming it will be a saving.

Mr Varghese : You make assumptions when you are doing costings all the time. Some assumptions hold up better than others.

Senator McEWEN: Did the Department of Finance agree with your costings?

Mr Varghese : In the end, the budget reflects Department of Finance ticked costings.

Senator McEWEN: Okay, that is a bit of a worry. If we can go back to the assumptions which underlie the cost savings, you said that you cannot tell me what the top three countries in which this measure will impact are. Surely we know the three countries in which Australians seek consular assistance? We would know that, wouldn't we?

Mr Philp : Yes, there would be—

Senator McEWEN: Not just three—the rank.

Mr Philp : The top five in which Australians seek consular assistance are Thailand, Indonesia, Italy, France and the United States, I believe. These are public figures, but I should note that that does not mean that we have that number of Australian dual-nationals who are also nationals of that country.

Senator McEWEN: I understand that. Are any of the nations in our region among, say, the top 10 countries in which Australian citizens seek consular assistance, like Samoa or Tonga?

Mr Philp : Pacific countries?

Senator McEWEN: Yes.

Mr Philp : New Zealand would be in the top 10, I think, but that is off the top of my head. As I said, Thailand and Indonesia, certainly.

Senator McEWEN: But not Tonga or Samoa?

Mr Philp : No, the numbers simply are not there.

Senator McEWEN: Okay. What about Greece? Where does that come?

Mr Philp : I do not have that information to hand.

Senator McEWEN: You mentioned that Italy was one of the countries in which significant numbers of Australian citizens seek consular assistance. If this measure is implemented, will Australian citizens who also hold Italian citizenship and are travelling in Italy be denied consular assistance?

Mr Philp : As the budget statement says, this measure will be subject to a number of exceptions to be determined by the foreign minister. We have not yet consulted the foreign minister on exactly where she would want to see exceptions made and how—on what basis. So I cannot answer that question now.

Senator McEWEN: Do you have any predictions? For example, in Italy, how many people would be affected by this?

Senator Brandis: The officer has just told you that he is not in a position at the moment to respond to this question.

Senator McEWEN: We know that a lot of Australians who hold dual Italian citizenship are elderly and travel back to Italy from time to time. Are those elderly dual citizens—Australian citizens—likely to lose their access to Australian consular assistance because of this measure by the government?

Mr Varghese : I think in the end that is going to depend on what exemptions the foreign minister decides on. If one of her exemptions is to have regard to the age of the person then the answer to your question is: no, they will not be affected. But if that is not one of the exemption categories then, yes, they will be affected. The rule here now is that, if you are a dual national and you are in the country of your other nationality, consular assistance will not be provided, but there will be exceptions to that. The list of exceptions has yet to be determined.

Senator McEWEN: When are those exceptions going to be determined?

Mr Varghese : I imagine it is something we will put to an incoming government.

Senator McEWEN: How can you cost this if you do not even know what the exceptions are?

Mr Varghese : I think we are going around in circles.

Senator McEWEN: I think you are. For example, in Italy, how many Australian citizens seeking consular assistance in the last financial year would have been over the age of 60 years.

Mr Varghese : I doubt that we would have that information at hand, but maybe Mr Philp does.

Mr Philp : No, I do not have that information to hand, but perhaps we are being slightly misleading, because the vast majority of consular cases in Italy in fact relate to passport theft or theft rather than to the kinds of issues that might affect elderly Australians.

Senator McEWEN: Okay.

Senator FAWCETT: While Senator McEwen is—

Senator McEWEN: When you collect that information about consular support—I am just trying to find out what assumptions have been used in this so-called budget saving measure. You must keep records of people who seek consular assistance. You must retain information about their age and what kind of assistance they need—well, you do, because you have just told me what kind of assistance and support they need. How many Australians overseas seek assistance because of a health related issue?

Mr Philp : I do not have that information to hand. I would have to take the question on notice.

Senator McEWEN: What about people who seek assistance because their Australian spouse or parent becomes ill or incapacitated while travelling?

Mr Philp : I am sorry. Let me go back to my previous answer. I can give you some information about that. In 2014-15, we had 1,453 cases of Australians hospitalised or given general welfare and guidance on hospitalisation. That does not necessarily pick up all health issues, but it goes some way to your case.

Senator McEWEN: That is across all countries?

Mr Philp : That is correct. There were an additional 1,282 cases of next of kin of Australians who died overseas, who were given guidance or assistance about disposal of their remains.

Senator McEWEN: How, practically, is this measure going to work in the situation of a disaster—for example, a natural disaster; a tsunami or something like that—where we have Australian citizens seeking consular assistance for evacuation? Are you going to be asking them, 'Do you have dual citizenship?' and then say, 'Well, I am sorry. I am not going to airlift you out of here'?

Mr Varghese : I would not want to pre-empt a ministerial decision, but I would expect that in the case of a natural disaster, that would fall under an exemption.

Senator McEWEN: You suspect, but we do not know.

Mr Varghese : I do not know, because the decision has not been made.

Senator McEWEN: When does this measure take effect?

Mr Philp : Our expectation is that, as the secretary said, we will put it to an incoming government for use in the next consular strategy period, which will be 2017-19.

Senator McEWEN: Does it require a legislative implementation?

Mr Philp : I would have to take that on notice. I doubt it.

Senator McEWEN: So the minister can make a decision about exemptions and also about whether the measure applies?

Mr Philp : The minister can take a decision about what consular assistance is to be provided to Australians.

Senator McEWEN: I will just ask one more time: of the $50.5 million in predicted savings from the functional and efficiency review, you cannot tell me what portion of that will arise because of this particular measure?

Mr Varghese : No. Nothing has changed since you last asked it.

Senator FAWCETT: Can I just follow up on the same topic. Other nations, comparable nations—we mentioned the UK, for example, and there are a lot of Australians there—do they have a similar set-up?

Mr Philp : The United Kingdom, I believe—since we have asked quite recently—is considering its policy on this. Its statements are slightly mixed in terms of its website, but it says it may not provide consular assistance in a country of other nationality.

Senator FAWCETT: Other countries—neighbours, New Zealand?

Mr Philp : New Zealand has a similar policy to the British one. I cannot say about other countries.

Senator FAWCETT: Since the budget measure has come out, has there been any response from think tanks—ASPI, Lowy?

Mr Philp : No, not that I am aware of.

Senator WONG: Can I say, I do not think you are required to give us a running commentary, but surely you can give me something more up to date than the February 2016 estimates?

Mr Wood : Following on from the discussion with Senator Gallacher, we do now have a table which is for the 2015-16 year, with data that is run as at 6 May 2016.

Senator WONG: You are good man. Can I have a look at that?

Mr Wood : We did discuss with Senator Gallacher that this would just cover the 2015-16 year.

Senator WONG: That was the deal he did while I was away? Can you just explain to me the reason why the out years—I do not even remember which question, but you remember this one, yes?

Mr Wood : Yes, correct.

Senator WONG: 'Committed', 'approved' et cetera. Did you explain the reasons why you could not update this?

Mr Wood : Because at the moment we are updating our forward estimates. Obviously the budget came out on Tuesday night, and then from Wednesday we have been discussing with program areas their forward allocations. So it was in something of a state of flux. Obviously, at a future point in time, we would be more than happy to provide that forward data.

Senator WONG: If I asked you for the data as up to the budget what would your answer to that be?

Mr Wood : Obviously, there would not be any areas in the forward estimates that would be overcommitted. You may recall from the previous tables that there were no countries that looked like they were overcommitted across the forward estimates.

Senator WONG: No, I think we are more interested in how much is remaining and where there might have been cuts. Just to confirm, Australian aid will reach its lowest ever GNI percentage level in the 2016-17 financial year, correct?

Mr Wood : Yes. That is what we said earlier.

Senator WONG: I assume those questions have been asked?

Mr Wood : Yes.

Senator WONG: I understand Senator McEwen has probably asked these questions, but in relation to the G'Day USA and the selection process for designers, could you tell me about the tender process? I am sorry; I understand you might have covered a bit of this. I just wanted to—

Dr Hammer : The selection process in relation to what?

Senator WONG: Designers and fashion designers for the G'Day USA event—so this is the Australian fashion showcase runway, is that what it was called?

Dr Hammer : Yes, that is correct. We have already answered that question. The selection process decision was jointly made in consultation between the G'Day USA steering committee, which is essentially the consul general and some others in Los Angeles, and the organisers of the LA Fashion Week.

Senator WONG: Were the CPRs applied?

Dr Hammer : I am sorry, I am not sufficiently familiar with the details of that process. I am not sure whether—

Senator WONG: Oh, come on—Commonwealth Procurement Rules—what do you mean you are not sufficiently—

Dr Hammer : I am not sure whether there was a procurement process involved. There was a decision made about which fashion houses—

Senator WONG: Were they paid or not?

Dr Hammer : No.

Senator WONG: Did you provide any advice to the minister's office in relation to the selection process?

Dr Hammer : I was not directly involved in any process.

Senator WONG: When I say you I mean the department, okay?

Dr Hammer : I know. What I was about to say is that G'Day USA is a rather complicated piece of machinery and I would have to take that on notice.

Senator WONG: You cannot tell us if the department provided any advice about the selection process for the Australian fashion showcase runway?

Dr Hammer : I cannot at the moment, no.

Senator WONG: Just to confirm: is the department aware of any correspondence from Ms Bishop in relation to the selection process sent to the consul general or any other party on this matter?

Dr Hammer : No, we are not aware of that. On that, I am reasonably confident that there was no such correspondence, but to be absolutely sure we would have to take that on notice.

Senator WONG: I assume the public reporting of that was put to you?

Mr Varghese : Yes; there was an earlier question that referred to the media question.

Senator WONG: Just to be fair to you, the public reporting of the fact of the correspondence to Ms Lanyon was put to DFAT. So you are aware of that?

Mr Varghese : Yes.

Senator WONG: If you could take that on notice, and also take on notice, if there is such a letter, could that be tabled, please?

Mr Varghese : Certainly.

CHAIR: That concludes of the examination of the department's non-trade programs and I thank officers for their attendance. We will now go to the trade portfolio.

Proceedings suspended from 17:51 to 17:53