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Rural and Regional Affairs and Transport Legislation Committee
25/02/2014
Estimates
AGRICULTURE PORTFOLIO
Grape and Wine Research and Development Corporation

Grape and Wine Research and Development Corporation

[10:30]

Senator EDWARDS: My questions are to the Wine Australia Corporation and the GWRDC. Where is Dr Thomson?

Mr Parker : Dr Thomson and the Hon. Rory McEwen have both got prior engagements. They are in Tasmania at the moment.

Senator EDWARDS: Did you let the committee know that he would not be attending?

Mr Parker : I cannot speak for Dr Thomson or the Hon. Rory McEwen.

Senator EDWARDS: If you would not mind, just let them know that I was expecting them this morning.

Mr Parker : I will feed that back.

Senator EDWARDS: You two—the Wine Australia Corporation and GWRDC—are about to come together on 1 July. What meetings have taken place, since the election, to ensure the smooth transition to that combined group?

Mr Clark : There are a number of processes in train at the moment at a high level through the department. We have convened a chairs committee and—

Senator EDWARDS: Has there been one meeting or two meetings or—

Mr Clark : I will give you the numbers shortly. I will have to give you later the precise date the chairs committee last met but there is a meeting coming up, scheduled for 25 March. That is for the chairs of both of the statutory authorities and the two peak industry bodies.

Senator EDWARDS: Is there an agenda for that meeting?

Mr Clark : The department will be putting forward the agenda. I have not seen it as yet.

Senator EDWARDS: Could you table it with this committee when it becomes available?

Mr Koval : Certainly.

Senator EDWARDS: What is the quantum of levies from industry that you collect, or will collect as of 1 July?

Mr Clark : From Wine Australia's perspective the two levies fund operations which will roll forward into the merged entity. We receive the wine export levy and we also receive a portion of the wine grape levy. Next year we are forecasting that that will be in the order of about $5.6 million. I will let my colleague Mr Parker speak to the research levies.

Mr Parker : We receive the wine research levy and the other half of the wine grape levy. The total amount will depend on this year's crush but we are expecting it to be around $11½ million, based on a crush figure of 1.65 million.

Senator EDWARDS: In round terms that is $17 million, combined. What other revenues will you receive on top of that $17 million?

Mr Parker : For us, there is Commonwealth matching.

Senator EDWARDS: So, you will get another $11.5 million.

Mr Parker : Approximately, depending on the phasing of expenditure. We receive matching on expenditure and not on supplementary income.

Mr Clark : We also receive approximately $3.5 million, which we are expecting, next year, from our export approval services. This is cost recovery fees the industry pays for a range of export services that we provide. In addition to that, we are forecasting approximately $1.8 million direct from industry voluntary contributions to our collaborative marketing activities, which we conduct both in Australia and on a global basis.

Senator EDWARDS: You have a collective budget in the low $30 millions. Can you run your operation on that?

Mr Clark : We have been in discussions with the peak industry bodies through their recent review they have undertaken.

Senator EDWARDS: For the record, who are the peak industry bodies?

Mr Clark : The Winemakers Federation of Australia and Wine Grape Growers Australia. WFA, as it is known, undertook a comprehensive review of industry profitability last year, and one of the findings of that review was that as an industry, as a sector, we need to invest more heavily in growing the demand opportunity. We made a number of submissions to that review and we concur with the findings on that particular aspect.

Senator EDWARDS: How do you collect the levies? Who does it? How much does it cost?

Mr Clark : Levy collections are undertaken by the department.

Senator EDWARDS: This department?

Mr Clark : Correct.

Mr Koval : A levy is revenue service.

Senator EDWARDS: What percentage of the levy collected does that cost you? Does the department charge you for that service?

Mr Clark : Our most recent revised estimate from the department for this financial year was that it was going to cost Wine Australia $726,000.

Senator EDWARDS: What is that as a percentage? Seven hundred and twenty-six thousand to collect your $5.6 million?

Mr Clark : Correct.

Senator EDWARDS: How much does it cost you, Mr Parker?

Mr Parker : Our last figure was $490,000 on a levies revenue of approximately $11 million.

Senator EDWARDS: Why is there a disproportionate amount? It costs you nearly half to collect twice as much. And you, Mr Clark, are obviously a troublesome person! It costs you $726,000 to collect $5.6 million.

Dr Grimes : Senator, it may be that those questions which go to the costs incurred by the department may be more appropriate to refer to the department as to the costs of levy collections which, of course, is—

Senator EDWARDS: I will give it to you on notice, because it is not really where I want to go. The main point is: I want to understand why it costs so much to collect from one side and not the other and whether those costs have increased over the last 12 months beyond CPI.

Dr Grimes : Would you like us to answer those at the moment, Senator?

Senator EDWARDS: If you can work on those I will come back to them, because I am very conscious of time. You would agree that the formation of the new board of this new combined body is going to be an important board to settle in the two marketing and research functions of the previous entities. Can you give me an update as to whether nominations for those board positions have been called, or when they will be called, and when they will close?

Mr Clark : I think it falls to the department to respond to that question.

Mr Koval : We are in the process, Senator, of setting up a selection committee for the new board.

Senator EDWARDS: The chair has just pointed out that I am a winemaker, and I should probably have mentioned that off the bat.

CHAIR: Not a bad drop, either.

Senator Abetz: I think it is on the public record; but it is always good to be reminded.

Senator EDWARDS: That is right. You will have a board in place by when, Dr Grimes?

Dr Grimes : By the time the new body is established.

Senator EDWARDS: So by 30 June you will be up and ready to go.

Dr Grimes : It will be considered and resolved by the government.

Senator EDWARDS: Regarding the process of that, will the minister choose the board?

Dr Grimes : We will follow the normal process for appointments of boards, including advice through to the minister. We will provide advice to the minister on the appointment of a board, yes.

Senator EDWARDS: In Wine Australia how do you measure your achievements?

Mr Clark : We have a range of key performance indicators that we set for each part of our business each year. Some are more readily measurable than others. With our export approval services we have the raw data, we have turnaround times and we have our client service charter. We measure our success against them.

Senator EDWARDS: That is one side of your business. How do you measure your marketing side?

Mr Clark : Measuring marketing efforts is somewhat an art rather than a science, I think—it is generally accepted. Before each activity we undertake, we set what we are trying to achieve out of that particular event. Post-event we conduct surveys with all the participants to ascertain the results that they have generated out of attending that particular event. Sometimes the broader objective is around building the brand; for others it is around generating commercial sales. Ultimately, we are in the business of building the overall brand for Wine Australia.

Senator EDWARDS: Do you use a return on investment metric or just an evaluation metric?

Mr Clark : An evaluation.

Senator EDWARDS: Have you ever thought about using a return on investment metric?

Mr Clark : It is a subject of ongoing discussion.

Senator EDWARDS: I know. That is why I bring it up.

Mr Clark : We are always looking at better ways in which we can try and measure—

Senator EDWARDS: You have just, by your own evidence, said it is nebulous and then that it is subject to a long discussion over many years. How about we stop having the discussion and get a different metric so we can actually measure it? It is something to take into the next era. What feedback have you received from the major players—that is, Orlando, Treasury, Accolade, Lion Nathan, Australian Vintage and Casella—regarding the benefits they receive from your organisation? Do you ever quantify how much they pay? If you have, can I have those figures? Do you ever survey them as to the results of your activities?

Mr Clark : With regard to the first question, we do not undertake an exercise of working out which levy payer contributes a particular amount.

Senator EDWARDS: But you would know.

Mr Clark : We do not have visibility across the wine and grape levy, for example.

Senator EDWARDS: So who takes the money from them when they write the cheque? If I write a cheque, you would know it comes from me.

Mr Clark : The department collects levies.

Senator EDWARDS: Do you have that information? Could you just give me the top 20 levy payers in their order at some stage, on notice, please?

Ms Evans : I would have to take that on notice.

Senator EDWARDS: That is absolutely fine.

Mr Clark : With respect to the other aspect of your question, we have reference groups that we consult regularly, particularly with respect to our market development activities. Those reference groups have broad membership drawn from different players in the industry, covering the large, medium and small ends of town. We have a broad cross-section.

Senator EDWARDS: You are to be known as the AGWA. What research process was undertaken to establish the new agency's name? Was it market tested in our international markets? The Australian Grape and Wine Authority—pretty sexy, not. You are a marketing organisation. Was it tested? Was anybody asked how the branding of this would be perceived in China, America, Sweden, the UK or India?

Dr Grimes : I cannot answer that question at the moment. I do not know whether there are any officers who can. I do not know whether we can add any—

Senator EDWARDS: So nobody knows how we came about this name?

Dr Grimes : Otherwise, we would have to take it on notice. Mr Ottesen will see if he can give us any further information on that specific question.

Mr Ottesen : There was no market testing of the name. It is the name of a statutory body and it has a number of—

Senator EDWARDS: Which carries out marketing functions all over the world.

Mr Ottesen : One would assume that it would develop marketing programs with marketing messages attached to those.

Senator EDWARDS: The marketing and branding may be quite different to the name of an authority.

CHAIR: You are talking in dream talk. Put it on notice.

Mr Clark : I can make one comment. It is certainly our intention—and obviously it falls to the new board once they commence on 1 July onwards—to continue to run with Wine Australia as our international branding. That is the branding we have had for many years.

Senator EDWARDS: So why don't you just still call yourselves Wine Australia?

Mr Clark : That is not a decision that I can comment on, but that is certainly our intention and that has been our practice in the past when our corporate name was the Australian Wine and Brandy Corporation but our marketing name in external markets was Wine Australia.

CHAIR: This is circle work so let's wind it up.

Senator EDWARDS: The Treasury in December 2012 moved to close an unintended consequence of legislation—rebates for the wine equalisation tax to producers. Have there been any figures that you are working with from Treasury that would suggest that that has saved Treasury quite a bit of money and that would lead the industry to desist from briefing journalists about rorting in the Australian wine industry?

Mr Clark : Tax matters are not an issue that my organisation gets involved with.

Senator EDWARDS: Does it concern your board, which is interested in growing the Australian wine industry's presence around the world, that the industry calls in friendly fire on itself in calling each other rorters?

CHAIR: That is the final question.

Mr Clark : The position of our organisation, which was conveyed to the winemakers federation through the expert review, was that we welcome any initiative that helps set the right policy framework for the sector and removes any market distortions. From there, we leave it to the industry bodies to work through what they think those distortions are and advocacy.

CHAIR: That is the perfect bureaucratic answer. Senator Edwards, you might wish to put some more questions on notice.

Senator EDWARDS: I will.

Senator BACK: I want to ask about a topic that we are both keenly interested in—that is, the influence of wild dogs. Has AWI been able to do any work at all on what you estimate to be lack of productivity in the industry as a result of the burgeoning numbers of wild dogs around Australia?

Mr Merriman : Some three or four years ago AWI became concerned about the area of wild dogs and its impact on the national flock, particularly in Queensland and northern Western Australia. To that end, the board decided to offer baits to landholders to dedicated dog groups around all the different states as a first-up measure. It has proved very successful. Since then there have been calls from the dog affected community for coordinators. We have responded to that. Our funding for dogs is some $2.2 million. That is becoming finite and is becoming a large cost in our budget as more needs to be done. If you asked me what governments could do tomorrow, it would be to build a dog fence in Queensland.

Senator BACK: In Queensland and elsewhere. It is a state government issue so to what extent can the federal government assist the state governments and industry?

Mr Merriman : If I were running the federal government I would offer joint finance with the states and with landholders. There is a very good project in the Barcaldine area in Queensland where landholders, state governments and other bodies have funded a dog area where they are going to encircle some one million acres. It is a very good model for other governments and other sources of funds are to follow.

Senator BACK: Is AWI or others that you are aware of made some cost estimates as to what the impact would be, what the cost would be and what the benefit would be?

Mr Merriman : There is a figure of some $66 million of benefit—that is the loss to the industry. I would suggest it is far more than that.

Senator BACK: So would I.

Mr Merriman : The human cost alone is great. You will get last sheep people left in a valley with cattle people around them. They are baiting; the cattle people are not. Then they get a dog attack and it is just the last straw. We are also doing a social impact study through ABARE, which is close to being available.

Senator BACK: Thank you.

Senator FARRELL: I just wanted to follow up on that wild dogs issue. Minister Joyce recently made a comment that wild dogs cost the industry about $66 million a year, and strong leadership, and a co-ordinated, on-the-ground effort, was required. Do you recall that statement by the minister?

Mr Merriman : Yes.

Senator FARRELL: What do you think he is talking about there in terms of that 'strong leadership and co-ordinated, on-the-ground effort'?

Mr Merriman : At the moment—we started in this space—we are about the only organisation that is doing it. Years ago you used to have government dog control 'departments', for want of a better term. You had a dog fence that was patrolled and maintained. There are more dogs inside the dog fence than there are outside now. There are huge amounts of dogs out there. I heard—it might have been from you, sir—talk about productivity a while ago. The quickest way to improve productivity in the merino sheep industry, and the sheep industry, is to kill dogs.

Senator FARRELL: Did the minister get some advice from you in relation to that statement?

Mr Merriman : I presume the minister has been talking to our company, but I will get Peta to answer that.

Senator FARRELL: So he had sought some advice?

Ms Slack-Smith : Through the office, yes, and through the department.

Senator FARRELL: In relation to the nature of the problem, or the cost?

Ms Slack-Smith : I think the minister and the department is well aware of what the issue is, in terms of what the impact of wild dogs has been on the industry for a number of years. AWI has been speaking quite closely with DAFF in particular, and with the minister's office, in terms of the investments we have made over a number of years in this area, to try and mitigate the risk and impact of wild dogs on the industry.

Dr Grimes : From the department's point of view this is obviously a very significant issue for the industry, and a significant issue for us as well. As I think Mr Merriman has indicated, our ABARES area has been doing work directly with AWI on the wild dogs issue, and on the impact that wild dogs are having.

Senator FARRELL: That is why the minister made the statement, wasn't it?

Dr Grimes : I cannot recall it personally, but I would not be at all surprised if the minister has made statements along those lines.

Senator FARRELL: He did consult with the department, and you provided him some advice about it. Does that figure of $66 million come from you?

Mr Merriman : No. I would imagine it is a lot more than that.

Senator FARRELL: I beg your pardon?

Mr Merriman : I would imagine it is a lot more than that.

Senator FARRELL: So he has underestimated the total?

Mr Merriman : Well, I do not know. I do not know where they got those figures. Perhaps ABARES gave them to him, I do not know.

Dr Grimes : I think those figures are ABARES figures, as I am advised, and ABARES has been doing work in this area—but irrespective it is a significant issue, there is no doubt about that.

Mr Koval : I can confirm the numbers for you, if you like, Senator.

Senator FARRELL: The ABARES figures?

Mr Koval : Yes.

Senator FARRELL: But you think the figure understates the problem?

Mr Merriman : I do, yes. They could be historical figures, too.

Senator FARRELL: Did you tell that to the minister? Have you advised the minister that the figure is understated?

Ms Slack-Smith : Senator, I think the key issue is that we—as the research, development and marketing organisation for the Australian wool industry—have been aware for a number of years, that woolgrowers have been telling us that this is a significant issue, in terms of a risk to their productivity. As a result, AWI has invested significantly in this area, and obviously the matching funds through the government have borne witness to the activities we have been doing on the ground.

CHAIR: It is dogs, pigs and air-conditioned tractors that are doing the damage. The young blokes just like to get in the tractors and keep going.

Proceedings suspended from 10:53 to 11:03

CHAIR: Thank you very much, ladies and gentlemen. In resumption, we are now onto biosecurity policy. If there are no questions there, we will move on. You have five minutes each.

Senator SIEWERT: Because biosecurity comes up in various areas, if I am asking the wrong section, just tell me to move on. I want to know where we are up to with biosecurity legislation. Obviously, a draft has been put out, and the previous committee was looking at the previous legislation.

Dr Grimes : Deputy Secretary Rona Mellor will be able to give you a short update on where we are there.

Ms Mellor : Obviously, when the parliament prorogued last year the legislation lapsed. We are in a stage of briefing the government on the next approach or approaches it may take. It is all subject to advice to government.

Senator SIEWERT: Maybe I could ask the parliamentary secretary what the government's time line is for biosecurity legislation.

Senator Colbeck: We do not have a time line at this point in time. As Ms Mellor said, the department is briefing us on the legislation. In fact I think I had a briefing last week or the week before. We are looking at a lot of the issues that were raised during the inquiry. We are taking notice of the evidence that was received from the inquiry and looking at how that might work in the context of the legislation, and then it will work into the legislative flow of the government. It needs to find a slot within the legislative program. They will be part of the process when it comes up as well.

Senator SIEWERT: Are we looking at within the next 12 months or further out?

Senator Colbeck: I am sorry, I do not have the detail on that at this point in time. I could take that on notice for you.

Senator SIEWERT: Thank you. In relation to what you will be taking into account, you have said already that information came up during the Senate inquiry. There will also be all the previous work—the Beale inquiry as well.

Senator Colbeck: It makes sense for us to take into account all the information that is available to the government in the preparation of the legislation, and it will then be presented back to the parliament as part of our legislative program.

Senator SIEWERT: Can I ask here about the $20 million to establish the biosecurity flying squad?

Dr Grimes : You could ask here. Essentially, we are in a similar sort of place as with the $100 million on the research and development that we were talking about earlier. It is a clear election commitment for the government; we are working through the details of that through the budget process with the government, and there will be announcements made around the time the budget.

Senator SIEWERT: That is still a commitment that the government is going to deliver on, despite the fact that there is funding coming out of border compliance and also the issues around Customs and Border Protection?

Dr Grimes : This is a matter that is proceeding through the budget process and will proceed through the budget process over the coming months.

Senator SIEWERT: Does that mean that we expect to hear an announcement after the budget on this?

Dr Grimes : Yes, I would be expecting that the announcements would be made at budget time or shortly afterwards.

Senator SIEWERT: Is this where we follow up on questions around border security?

Ms Mellor : Later in the day.

Dr Grimes : That would be handled under border compliance, which is on at 21 at 6 o'clock.

Senator SIEWERT: I will follow those up then.

Senator FARRELL: Mr Williamson, you were asked some questions about the biosecurity flying squad; that was obviously an issue that the then opposition raised prior to the election. I think Dr Grimes said that that was an issue that was going to be dealt with in the budget. There were a couple of other issues that the then opposition, now government, raised before the election, and I wonder if you could update us on their progress. The first was the strengthening biosecurity and quarantine containment. Can you tell us what the government has been doing in that regard?

Ms Mellor : I will answer that. The measure that was announced with the biosecurity flying squad had a number of parts. One was the flying squad itself, one was a containment fund and one was to look at some prioritising and processes in the IRA—the import risk analysis—process. All of those matters contained under the stronger biosecurity announcement are subject to the development of advice to the government for the budget.

Senator FARRELL: So nothing has happened on them?

Ms Mellor : We are in the course of advising government for the budget.

Dr Grimes : We are actually in the active process of developing the implementation arrangements for the government's consideration.

Senator FARRELL: There has been no practical implication, application or introduction of any of those items that were raised by the opposition prior to the election?

Dr Grimes : They are being actively worked on at the moment. They are to be considered through the budget process and the final announcements will be made as part of the budget, and then implementation will be from next year.

Senator FARRELL: Nothing has happened on any of those undertakings thus far?

Dr Grimes : All of them are in the implementation stage, and we are working through the details with the government.

Senator FARRELL: When you say the implementation stage, are you talking about finding the funds to do it or are you talking about actually doing the work that was anticipated?

Dr Grimes : Developing up the detailed arrangements to give effect to the government's commitment.

Senator FARRELL: But it is still fair to say, is it not, Dr Grimes, that whatever it was that the government was intending to do in its undertakings prior to the election have not yet been committed?

Dr Grimes : It is in the process of development and will be rolled out after the budget.

Senator FARRELL: Is it right, Ms Mellor, that the then opposition, now government, committed $20 million to this area?

Ms Mellor : That is correct, $20 million over the forward estimates; hence, it is part of the budget process.

Senator FARRELL: That simply, as Dr Grimes indicated, is now part of that budget process. Did I correctly understand your answer to the previous questions in that it is part of the $100 million?

Dr Grimes : No, this is an additional amount.

Senator FARRELL: This is an additional amount of money. So, in addition to the R&D $100 million, there is a further $20 million committed to this area?

Dr Grimes : That is correct.

Senator FARRELL: Dr Grimes, your website under 'biosecurity' states that work is being undertaken to develop new biosecurity legislation to replace the Quarantine Act 1908. Is that correct?

Dr Grimes : That is correct. Those were the matters that were dealt with a short while ago. The development of the legislation is currently under review by the government.

Senator RUSTON: I go back to the $20 million for the biosecurity flying squad. Have you gone far enough into your planning process to be able to give us a little bit more information about it? I have this impression of Biggles flying around in his aeroplane. What does it do, how does it fit within your organisation and how does it fit within existing biosecurity and border compliance initiatives et cetera?

Dr Grimes : These questions are under consideration by the government at the moment. The government has not made final decisions on these matters. It will do as part of the budget process. So, when we are here at budget estimates, we should be in a position to provide you with an update on the precise implementation arrangements.

Senator RUSTON: If you cannot give us some details about what it is going to actually look like, can you tell us what the development is predicated on? What are we trying to achieve by the initiative?

Dr Grimes : Probably the best thing to refer to is the government's own election commitment. Ms Mellor might be able to make a few other comments about that. Effectively, we are not in a position at the moment to be responding to those sorts of questions, because they are matters which the government is considering. We will be in a position to make announcements after the budget.

Senator RUSTON: You are probably in the same position in relation to the development of the biosecurity bill?

Dr Grimes : Indeed, at the moment the government is reviewing that legislation.

Senator SIEWERT: I have got two specific areas of questioning around biosecurity for Tasmania and Western Australia. Should I ask that at point 21 or here? It is about the reduction in services for Tasmania and around AQIS WA closing an office.

Ms Mellor : That is border compliance.

Senator SIEWERT: So 21?

Ms Mellor : That is right.

[11:14]

CHAIR: We will now move to biosecurity plant.

Dr Grimes : The Chief Plant Protection Officer, Dr Findlay, is unable to join us today. She is overseas at the moment on international negotiations. But Mr Aldred and his team should be able to cover any relevant questions.

Senator FARRELL: I am aware that there is a case in Western Australia involving cross-pollution in respect of genetic modification. Are you aware of that case?

Dr Grimes : We are certainly aware of the court case that is currently underway.

Mr Aldred : This is not the correct division under which to ask about genetically modified organisms.

Senator FARRELL: Where should we ask those questions?

Mr Aldred : My belief that it is our Agriculture Productivity division. But we can take that on notice.

Senator FARRELL: Maybe if we could ask them a question and see if we could get little more detail—

Ms Mellor : Or we could get officers on notice.

Senator FARRELL: There is a case proceeding in Western Australia in respect of genetic modification and cross-pollution. I am not going to ask you about those proceedings because obviously they are ongoing matters and because of sub judice and because all the general rules apply. But can we deal with the situation of what planning the department is doing in the event that, at some point, a group is successful in seeking compensation due to cross-pollination events? In other words: is any planning been done in the department in case there is a successful outcome in one of the cases that is currently proceeding?

Dr Grimes : The relevant policy work here is actually done in another part of the department. I think it is mainly covered under agricultural productivity. But we can see if we can make officers available on that a little later in the program.

Senator FARRELL: All right; I am happy with that.

CHAIR: Senator Boswell, do you have a quick question?

Senator BOSWELL: Are there any applications for the importation of bananas?

Mr Aldred : No.

CHAIR: Are you happy with that?

Senator BOSWELL: Yes.

Ms Mellor : I do not mean to put too fine of a point on it, but there has not been movement on bananas, in terms of the relevant government interaction and work plans and quality assurance processes, for a number of years. So you would expect that, even if we got an application, we would not be issuing a permit until all of those processes were in place with an exporting country.

CHAIR: The biggest banana producer in the Philippines is no longer the minister for agriculture there, is he?

Ms Mellor : I am not aware of who the biggest banana producer is—

CHAIR: He used to be.

Ms Mellor : but at this point there is no movement on that front.

Senator RUSTON: I was particularly wanting to speak to Plant Health Australia, but they are obviously not here.

Ms Mellor : It is a different organisation, Senator.

Senator RUSTON: On that: can you explain to me the relationship between the department and some of these authorities that are set up by instrument?

Mr Aldred : Plant Health Australia and Animal Health Australia are independent companies jointly owned by the Commonwealth, state and territory governments and industry representatives. In Plant Health Australia the Commonwealth has a third share, state and territories have a third share, and about 37 industries are also members. Plant Health Australia does a range of work. First and foremost, I think, is looking at the overall plant health status of Australia and looking after that as the custodian of the Emergency Plant Pest Response Deed. The organisation also manages, with its industry partners, a whole range of industry biosecurity planning and does other work where funding comes into the organisation.

Senator RUSTON: Is it funded by a levy payment?

Mr Aldred : Membership fees are paid by the Commonwealth and state governments. In some case, industry members choose to use a Plant Health Australia levy to pay their subscriptions.

Senator RUSTON: Does the federal government pay?

Mr Aldred : Yes.

Senator RUSTON: What is the level of that?

Mr Aldred : Our membership for Plant Health Australia is $780,000 a year.

Senator RUSTON: I have some questions which you may be able to answer. If not, I will seek to get answers directly from Plant Health Australia. But I will give it a go. There is no guessing what I am going to ask about: it is fruit fly. In the National Fruit Fly Strategy that was collaboratively developed, there were 15 broad project initiatives outlined. In response to some questions in estimates in November, Plant Health Australia said that a number of the actions in the implementation had been completed and that a number of others were deemed 'significantly progressed'. Are all those initiatives under the purview of Plant Health Australia or are some of those initiatives undertaken outside of that?

Mr Aldred : They are largely outside of Plant Health Australia. Plant Health Australia managed the National Fruit Fly Strategy project. While they put some funding in, it was of the nature of one of those projects I mentioned earlier—where government has provided additional funding and so on to have it done.

Senator RUSTON: Who is responsible for it?

Mr Aldred : The Fruit Fly Strategy is sitting with Plant Health Australia. There have been efforts to have an implementation group of governments and industry to oversee it and to try to take charge of the various projects. That implementation group has not met in recent times—or necessarily been formed.

Senator RUSTON: Is the department concerned that this strategy was developed in 2008 and that, I believe, the implementation plan was finalised some 18 months later, and yet, in the time since that has happened, the fruit fly exclusion zones of Victoria and New South Wales have been totally overwhelmed by Queensland fruit fly; we have had Mediterranean fruit fly get completely out of control in Western Australia, particularly in the Perth Hills; and, in recent times, we have seen outbreaks of Mediterranean fruit fly in metropolitan Adelaide and, of even more concern, two outbreaks of Queensland fruit fly in the Riverland in South Australia—which has never had fruit fly before?

That raises a question. We have spent all this money on developing a strategy, we have spent money on getting an implementation plan, and I was advised at the last estimates that the implementation action plan had been largely completed and that other initiatives in it had been significantly progressed. Yet we are sitting here today with a situation that it is extraordinarily urgent we do something about. But we are still talking about trying to get an implementation committee together. I would just love somebody to say to me: 'The responsibility for this rests here' or 'The responsibility rests there'—so we can get on with it.

Mr Aldred : The responsibility for the on-ground management of fruit fly rests with states and with industry. The Commonwealth's responsibility on fruit fly is as part of our export certification arrangements. In that respect, we overwhelmingly rely on the systems and arrangements in place in each of the jurisdictions, upon which our inspectors are able to certify produce for export.

Senator RUSTON: On that basis, obviously with the protocols that are in place for some fairly significant export markets, what role can we hope to see being played by your department in assisting in that area alone? This has ended up being the most frustrating exercise.

Mr Aldred : I understand the frustration. If we go back a few years and look at where a substantial amount of funding for the National Fruit Fly Strategy and so on came from, it came from the Commonwealth. That was not necessarily done under a direct responsibility, but it was a reflection of trying to bring the parties together to have a strategy. A number of the elements of that are still being carried forward, as Mr Fraser advised at last estimates, so there is work being done. The Fruit Fly Strategy is a relevant document in that work.

Senator RUSTON: Could you maybe point out some of the things that are actually on foot?

Mr Aldred : I will take it on notice and give you a more comprehensive rundown. There are about 20 recommendations in the Fruit Fly Strategy and we can run through those. A range of it related to the coordination of R&D and the nature of whether or not sterile fruit fly strategies could be examined. There are quite a range of things. Some of them require funding, so the communications and engagement component requires funding to do some of those things. In trying to coordinate that, we would obviously like to see the implementation group get up.

ACTING CHAIR ( Senator Sterle ): The chair has a prior engagement, so I will be chairing, and Senator Edwards is the delegated deputy chair. I noticed that we should have had the Australian Chief Plant Protection Officer at the table.

Dr Grimes : As I indicated earlier, the Chief Plant Protection Officer is currently overseas with international negotiations, but the officers here will be able to answer any questions.

ACTING CHAIR: That is tremendous.

Senator RUSTON: You can probably take this question on notice. One of the things that has become extraordinarily apparent in this whole thing is that there are all of these silos of various activities undertaken. A huge amount of money is being spent in relation to fruit fly across Australia. Has there been any attempt, either through your organisation or through organisations that you are aware of, to try and coordinate and consolidate the research and the activities and actions of fruit fly?

Mr Aldred : Yes.

Senator RUSTON: Where is it and when can I see it?

Mr Aldred : For example, there was some work several years ago as part of and as a result of the Fruit Fly Strategy. It was called the Body of Knowledge project, where we tried to bring it together and actually have. I will provide the web link. It was a fruit fly body of knowledge that included looking at all of the grey literature and those sorts of things. A range of work is ongoing. There is coordination through the arrangements of the Plant Health Committee. We work with our state counterparts and with industries in considerable detail in managing outbreaks and in dealing with the market impacts of those. So I would not like to think it is a mess or totally uncoordinated. I understand some of the frustration, but I think when we look at it some of the fundamentals are about the arrangements of the three states.

Senator RUSTON: With the greatest amount of respect, we are heading to a horrible place if we do not do something. So, as I pointed out previously, for all the good will in the world with all of the things that we are talking about, they are obviously not working.

Senator FARRELL: I obviously appreciate that the Chief Plant Protection Officer is not here. Mr Aldridge, the secretary, indicated that you could answer some questions.

Mr Aldred : I will do my best, Senator.

Senator FARRELL: Can you tell us what the roles and the responsibilities of the position are.

Mr Aldred : Of the Chief Plant Protection Officer?

Senator FARRELL: Yes.

Mr Aldred : I think the Chief Plant Protection Officer provided an outline on notice at the last hearing. It was question 190. I can read out the relevant extracts.

Senator FARRELL: Can you perhaps summarise for the committee what you consider to be the important aspects of that work.

Mr Aldred : Essentially, the Chief Plant Protection Officer is the technical leader for science in plant biosecurity and national plant health status for the organisation. Dr Findlay is our representative on the International Plant Protection Convention. She chairs a range of committees, including emergency response committees. She looks at the strategic elements of our national plant health status. She has been at the forefront of a number of our technical market access negotiations, which is where she is at the moment.

Senator FARRELL: Where is she at the moment?

Mr Aldred : She is at the Plant Health Quadrilaterals in San Francisco at the moment and then will be proceeding to technical discussions with our Chinese counterparts next week.

Senator FARRELL: In China or in—

Mr Aldred : In China.

Senator FARRELL: Can you perhaps indicate for us the key areas of work that are currently being undertaken.

Mr Aldred : As I just indicated, a significant amount of work has been on some of our technical market access work, particularly with a focus on China and doing some of the industry liaison there. She has a significant body of work in terms of the IPPC—so participating in the international standard setting arrangements on plant health and biosecurity matters across the globe.

Ms Mellor : Can I add to that, Senator. As the Chief Plant Protection Officer for Australia, we also have Dr Findlay involved in quality assurance processes over import risk analyses in relation to plant based commodities.

Senator FARRELL: Obviously she is networking with overseas groups right now. Can you tell us whether there are any discussions going on with other countries regarding genetically modified standards.

Mr Aldred : It would not necessarily be the area that Dr Findlay would be involved in. Australia's engagement there would largely be through the Office of the Gene Technology Regulator, which is, I think, in the industry department.

Senator FARRELL: So, as far as you know, there are no discussions going on—

Mr Aldred : Not by Dr Findlay.

Senator O'SULLIVAN: My question is directed to the secretary. Are you familiar with the procedural changes for the inspection of meat production from the AQIS based process to the Australian Export Meat Inspection System?

Dr Grimes : Only in the broad, but we do have officers who have been involved at a very detailed level.

Senator O'SULLIVAN: Are you aware that an audit was conducted on this by the European Union and they released their findings in December?

Dr Grimes : It may be more appropriate to pick this up when we have the relevant officers involved here. It would be covered under food export certification at item 20. We will have officers then who will be able to directly respond to that line of questioning.

Would I be able to seek guidance from the committee on a small point right now? Senator Farrell had some questions relating to a case on genetically modified foodstuffs a little earlier on. We have some officers here now who can respond briefly to those questions.

ACTING CHAIR: Then we will deal with those now.

Dr Grimes : We may be only of limited use on this line of questioning, but we will see what we can do.

Mr Koval : I did not hear the question, so can you please repeat it.

Senator FARRELL: Thank you very much. As Dr Grimes just indicated, I have raised the issue of a case that is currently proceeding in Western Australia where the issue of genetic modification of crops vis a vis organic crops has been raised. I do not want to talk about the specifics of the case because obviously it is an ongoing matter before the courts and sub judice rules apply. Is any planning being done by the department in the event is an adverse decision by the courts and a successful application for compensation in relation to this issue? In other words, if you assume at some point an adverse decision is going to be made on this issue, is the department doing any planning for that eventuality?

Mr Koval : You mention the court case that is currently in Western Australia at the moment. It is the Office of the Gene Technology Regulator and Food Standards Australia New Zealand that regulate GM crops in Australia. The states and territories then have the rules around how they are grown and cultivated within their jurisdictions. Should there be an adverse finding—and depending on which side you sit is how you would define an adverse finding—

Senator FARRELL: I guess I am talking about compensation. If there is a decision on compensation—

Dr Grimes : That is obviously a case that we have no involvement in at all. It is a little difficult for us to speculate when the case has not been resolved. Clearly the question after the case is resolved would be whether there are any implications for state governments or not. As Mr Koval has indicated, the key responsibilities would be with the gene technology regulator, as I understand it. The states and territories have many of the planning responsibilities. So any implications may be for states to consider. It is obviously not appropriate for us to speculate, even broadly, on the outcome of a court case.

Senator FARRELL: I am not asking you to speculate on the outcome. I am asking, if there is an outcome that results in compensation being—

Dr Grimes : What we are indicating is that we are not doing any specific work.

Senator FARRELL: That was the question and that is your answer.

Senator GALLACHER: In the event that genetically modified crops are crucial to the productivity of Australian agriculture, what is the department doing about the coexistence of genetically modified crops and organic crops?

Mr Koval : The rules around coexistence and segregation are set by the individual states and territories. As part of our general remit we work with states and territories around many of these types of things, but it is their responsibility. Some states and territories talk about buffer zones and those types of things to try to minimise that impact, but many of these conversations are conversations between landholders themselves—neighbours sometimes.

Senator GALLACHER: I understand that in South Australia there are allegations that there is a genetically modified crop of wheat and the wind blows and then someone that is doing it organically has a claim. But you are the federal department. In my own personal view, genetically modified crops are the future of our productivity, and you are abdicating your responsibility by leaving it simply to the states and territories. You are not having a look into the future? You do not look at what is happening in America?

Dr Grimes : I think that what we have indicated is that there is a case underway at the moment. It would be inappropriate for us to be even speculating about that case.

Senator GALLACHER: I am not interested in the case; I am interested in genetically modified crops in Australia vis-a-vis productivity and people's right to organically grow. How is the department looking at that into the future?

Mr Koval : From the point of view of looking at future application of technology and what may be coming down the path, developed in other countries or in Australia, certainly we are very interested in making sure that Australian industry has access to those types of technologies. Many of the research and development corporations, for example, are doing a lot of work—either by themselves or in collaboration with their national partners—about looking at the application of these technologies and what it may mean for us. Then we would work through with the states and territories on how, if we did do that, it would apply to Australian circumstances. But, constitutionality-wise, states and territories have their own planning processes and they can decide, 'Yes, we will allow GM crops in this state,' or not.

Senator GALLACHER: So the federal department is not looking at this in a policy perspective at all?

Mr Tucker : I was just going to add that we have seen, for example, the state of Tasmania put in place its own restrictions, in terms of use of genetically modified organisms in that state.

Mr Koval : And South Australia

Senator GALLACHER: So if a bird flies across the Tasman and drops a seed over there then what happens? What is your response?

Mr Koval : Many of the states and territories have rules around what they call low-level presence if there is adventitious presence of a GM seed in a consignment of a product and how they treat that. This is an ongoing debate globally, not just here domestically

Senator GALLACHER: How critical, in your department's view, are genetically modified crops to the future productivity of Australian agriculture?

Mr Koval : Having access to the latest technology—be it GMOs or biotechnology more generally—is very important for the industry, and that is one of the reasons why we continue to encourage the research in this area.

Senator GALLACHER: Am I correct in understanding that you abdicate responsibility for policy in this area to states and territories?

Mr Koval : In terms of cultivation, it is a responsibility of states and territories. Our responsibility is making sure that the products are developed and deemed to be safe for use.

Dr Grimes : I do not think recognising different responsibilities is an abdication on agriculture

Senator Colbeck: I would not characterise it as an abdication at all. There are constitutional responsibilities that each jurisdiction has and they are responsible under that basis for managing those. Different states have made different decisions around allowing the use of GM products. I think Tasmania has an indefinite prohibition. South Australia has just announced a five-year extension to its prohibition. Other states permit it and they manage the arrangements around that within their jurisdictions, as is appropriate. There is capacity for a conversation around those matters and how they might align with respect to 'like for like', but you have very different environmental and local conditions and you might find that, as with agricultural chemicals, different things behave differently in different environments. So I think it is appropriate that things are managed where they are constitutionally required to be managed in that context.

Senator FARRELL: Can imports into Australia that are certified organic contain any threshold of genetically modified product?

Mr Koval : I am not aware of the rules around definitions. I will have to look into that for you, Senator.

Senator FARRELL: Can you do that. Thank you.

Dr Grimes : We will take it on notice.

Senator FARRELL: Did you happen to know the answer, Dr Grimes?

Dr Grimes : I do not know the precise answer off the top of my head. We will ensure that the officers who are able to answer that question do answer it for you on notice.

Senator FARRELL: Thank you. They are all the questions that I have. I appreciate you coming back, gentleman.

Mr Koval : It is my pleasure.

Senator O'SULLIVAN: Mr Grimes, I just want to ask you a question on the same issue but from a slightly different angle. Are you aware of this issue at your level? The European Union are suggesting that certain products will not be exported from Australia because we have failed to comply with the guidelines for the inspection of meat products.

Dr Grimes : I am aware of the issue that is currently being worked through with the European Union.

ACTING CHAIR: Could we just ask the officers to stay. We may need to have these officers here.

Dr Grimes : It may be appropriate if we could get some guidance. Have we now completed Biosecurity—Plant?

ACTING CHAIR: I am of the belief that we have completed Biosecurity—Plant, but I will just check.

Senator SIEWERT: I wanted to follow up on the GM questions that were just asked, which will not take very long.

ACTING CHAIR: Do not worry, it will not be for hours.

Dr Grimes : It is a different line of questioning with a different set of officers. So, Senator O'Sullivan, it may be appropriate for me now to hand you across to Deputy Secretary, Phillip Glyde, if you want to continue.

Senator O'SULLIVAN: Let me defer to the questions on Biosecurity—Plant, and we can come back to my questions.

Dr Grimes : That is a great suggestion.

Senator SIEWERT: I will try to be quick. I want to follow up and just clarify the issue. I totally understand the issues around state decision making. But looking at the big picture in terms of productivity—and I suspect I am coming from a slightly different angle to the line of questioning from ALP senators—from a liability point of view, my understanding is that the Office of the Gene Technology Regulator is not, in fact, responsible once liability and following up contamination of crops gets past a certain point. Are you saying that you have not done any work looking at the consequences for agriculture of this becoming a very significant issue across Australia? I am not talking about individual state management. I am talking about the big picture liability that could be taken on by the spread of GMOs into conventional crops. I just want to be really clear about it.

Mr Koval : The issue of containment, coexistence and segregation, which goes to the heart of the question, is managed by state and territory governments' industry protocols. Have we done an analysis of what it would mean should GM plants become endemic in all crops situations? I am not aware of us having done a detailed analysis of that, but I will check and get back to you.

Senator SIEWERT: It would be appreciated if you could. I want to follow up on the issue of certification. Does the department have any involvement in the certification process? The heart of the previous question went to the certification process for organic produce and products. I thought that was up to the industry responsible for it. Do you have any involvement there at all?

Mr Koval : The Organic Industry Standards and Certification Council is made up of organic certification bodies and the organics industry. We provide the secretariat and assist in that because it is quite often the standard that we use for the export of organics. It is managed by the organics industry.

Senator SIEWERT: Is there any federal legislation around that process?

Mr Koval : I am not aware. I will have to take it on notice.

Senator SIEWERT: I did not think there was. I would be interested to know if there was.

Mr Aldred : We do certify GMO-free for some export markets. I will take the detail of that on notice, along with Mr Koval, and come back to you.

Senator SIEWERT: That would be appreciated. That links to what is the standard for those. Could you take on notice what particular produce is certified in that process?

Mr Aldred : Yes, we can do that.

Senator SIEWERT: That does not then go to the labelling on products, does it?

Mr Aldred : No.

Senator SIEWERT: It is just for if a particular export market wants GM-free.

Ms Calhoun : We provide non-GMO certification to markets that require it, but the certification is based on information that we get from the Office of the Gene Technology Regulator.

Senator SIEWERT: Could you provide on notice the details of the process that you go through to do that.

Ms Calhoun : Yes.

Mr Aldred : I would just like to make a correction. I said earlier that the OGTR is in Industry. It is actually in Health.

Senator O'SULLIVAN: Dr Grimes, you have indicated that you are aware of this problem as it exists today. Do you accept that, if no changes are made, this will affect our capacity to export meat products to the EU?

Dr Grimes : I will refer that to Deputy Secretary Glyde, but I am confident that we are making good progress in working through these issues both with industry and the European Union.

Senator O'SULLIVAN: Thank you for that. My question is quite specific. If we do not make the adjustments that are required by the EU to meet their guidelines, does the potential exists that, subject to that, exports to the EU will not be made?

Mr Glyde : If you want answers in more detail, this is covered at item 20, under 'Food export certification'.'

Senator O'SULLIVAN: I am leaving the technical aspects of it until then.

Mr Glyde : This is certainly an issue that has been raised at the level of the secretary for quite some time. The EU audit first occurred in October 2012, so we have been aware of that. There has been quite a lot of concern about this and we have been heavily involved in that process. To go to the specific answer: the way the system works is that, if the Australian exporters do not comply to the satisfaction of the importing country, then we do not export. So it is important that we get this right. It is important that we understand what is behind the changes that the EU is seeking and that we work with industry to make sure that we can deliver a change in the system at minimum extra cost to the industry.

Senator O'SULLIVAN: Do you accept that, when the changes were made in 2011 to transfer from one system to another, they did not comply for the EU then and, therefore, do not comply now?

Mr Glyde : I do not think I can accept that. What happened was that, after a lot of consultation with all of our markets—not just the European Union but also the United States, China, Korea and Japan, a lot of the major meat markets—a change was made to the meat inspection service primarily to make sure that we could deliver the same surety to those exporting destinations with a more cost-effective inspection system. At that stage the EU indicated that they had no difficulties whatsoever with our move to the new system. As it has turned out, and as this audit that I mentioned earlier on has gone forward, the EU has in essence changed its view. Part of that is not so much that they are worried about the capacity of our new system to deliver results; it is more a legal issue that they have raised, which is that some of their member countries require there to be an inspector who is independent of the company involved in the certification process. I would say that what has happened here is that we have gone forward in good faith, in full consultation with the EU, and they have realised that the change that had been made was not going to suit them—and that is what was picked up during that audit.

Senator O'SULLIVAN: You may have helped me answer the question—and I will leave the balance for the technical discussion. Are you saying that, at the time the changes were made in 2011, you were satisfied that the changes to the structure of the program, or the policy implemented, met with the approval of the EU and that we have sufficient anecdotal evidence to support that?

Mr Glyde : Correct.

Senator O'SULLIVAN: Later on I am going to ask you to take it on notice to produce the documents that would show us that we made those changes in the honest but now mistaken belief that the EU had agreed that that was an approved process that met their standards.

Mr Glyde : Yes, and I am happy to take those questions on notice. But I would draw your attention to the EU audit report, which did not question the ability of the Australian Export Meat Inspection System to meet either the food safety outcomes or the product suitability requirements, nor did it question the competence of the people involved in doing the authorisation and assessments.

Senator O'SULLIVAN: I accept that.

Mr Glyde : Often you can get a long way down the path on the basis of good understanding and good communication but then finally someone has a closer look at the legal framework and we are in the situation we are in now.

Senator O'SULLIVAN: Somewhere, somebody failed. It is as simple as that. Our processors in this nation have had to incur great expense in establishing new processes in their operations which are now redundant in so far as it applies to the export of meat products to the EU. I will leave it until later, but my interest is to find out who made the mistake and then find out what it is that we are doing to rectify the mistake and, in particular to support our processors.

Mr Glyde : We are more than happy to talk those issues through. The other point I would make is that you have to look at the meat inspection system in the context of the broader global markets and the savings that we have been able to make, in terms of both cost to government and cost to industry, in the broader system of trying to reduce the red tape, reduce the amount of staffing in these systems and still meet the health requirements of the importing countries. So there is a bigger question there. I take your point that there has been a considerable change in the EU's position and that is unfortunate. As I said, we are happy to talk about it. We are certainly working closely with industry. I would add that the industry representatives have been beating a path to our door and we have been doing the same since the 2012 audit.

Senator O'SULLIVAN: Are you saying that, between 2011 and the audit in December, the EU made changes to a standard?

Mr Glyde : No.

Senator O'SULLIVAN: My understanding is that for stakeholders this is probably one of the most predictable governance issues that you could have. Is it your understanding that their underlying concern is the potential of a conflict where we have inspectors employed by the exporter, in this case, as opposed to an independent government agency, governed by regulation, to do the same job?

Mr Glyde : My understanding is that, when they had a closer look at the legislation that existed in a number of the member countries of the EU, it was quite clear that, at that level of inspection, legally the inspector had to be either a government employee or independent of the company. Our move to the AEMIS was to have inspectors and auditors who were employed by the company accredited by the department, by the regulator. That has been accepted in other markets, as I mentioned before, and we went forward on that basis as a cost saving measure to try and have that new system. As it has turned out, on closer inspection the European Union has found that that does not work for them. So we have been working collectively with the European Union and with the industry to find a way forward on this matter.

Senator O'SULLIVAN: All right. I will drill down further later.

ACTING CHAIR: Thank you. Dr Grimes, that completes our section with Biosecurity (Plant) and the Australian Chief Plant Protection Officer. We now call officers from Biosecurity (Animal) and Live Animal Exports Division in the same grouping.

Senator RHIANNON: Where is the scoping process of the review of the poultry code up to?

Mr Chapman : As you are probably aware, in 2013 the Animal Welfare Committee agreed that a review of the poultry code is a priority. On 10 December the members of the AWC agreed in principle the scope of that review. Further engagement with the various stakeholders on the scope of the review and on industry agreements for funding arrangements are required before the review can progress a lot further. The development of those guidelines for poultry is jointly funded by the Commonwealth, the state and territory governments and industry, and Animal Health Australia will manage the review process. The review process will include extensive stakeholder consultation. The process is expected to take at least three years before it is completed. At this stage, a target date and terms of reference have not yet been determined.

Senator RHIANNON: In a response to one of my questions on notice, you stated: 'Preliminary views on scope have been sought from egg farmers of Australia and the Australian Chicken Meat Federation Inc.' I understand that views have not been sought from the Free Range Farmers Association or animal welfare groups. Why was it only sought from the former groups and how do these preliminary views fit into the scoping process?

Ms South : At this point in time the work that has been done on this scoping exercise has been undertaken through the Animal Welfare Committee. The Animal Welfare Committee has engaged with, yes, a limited number of stakeholders to start to form a view around what the scope of this exercise might look like.

When we are talking about scope, we are talking about elements that for example are currently in the existing model code for poultry, so we are getting down into low levels of detail, for example things like behavioural needs and environmental enrichment of animals. That is the level where we are trying to get engagement from states and territories, to inform what this review might look like, how long it might take, how complex it is going to be and how much it is going to cost. That work is still ongoing. There is a more extensive consultation process that obviously needs to be undertaken, but before we can do that we really need that preliminary work to be done and we need to be able to engage with Animal Health Australia, who will ultimately have responsibility for the project management.

Senator RHIANNON: I understand you are still getting down to the details, but will you be covering ducks and other waterfowl, because they do obviously have more specific needs? Will you be getting down to that level of detail?

Ms South : We covered this at last estimates, and other species are being considered. They are also, as I understand, covered in the model code. It is very much mirroring the existing code, or using it as a basis. So the answer is yes.

Senator RHIANNON: Dr Grimes, is the government supporting or considering supporting the reopening of the live export trade to Bahrain?

Dr Grimes : This is really handled in the next item, rather than have us go off track across different areas.

Senator RHIANNON: I also had questions about buffalo exports to Vietnam.

Dr Grimes : That will be Live Animal Exports as well. If the committee is happy to run them both together, then Deputy Secretary Glyde will be able to assist.

Senator RHIANNON: So we are doing all these sections together?

Senator BACK: Biosecurity Animal and Live Animal Exports we are doing together, are we not?

CHAIR: Yes, we are.

Senator RHIANNON: Can I get back to my question, which was whether you have reopened trade with Bahrain.

Mr Glyde : The government is currently considering its policies in relation to reopening trade. I cannot comment much more than that.

Senator RHIANNON: You have said there is consideration. Does that mean that there are talks with Bahrain about this, or talks with the pastoralists, or anybody?

Mr Glyde : There have been discussions with the industry in the sense that the industry is keen to reopen trade where SCAS-compliant supply chains can be established, and there have been discussions across a whole range of different countries, including Bahrain. The government has made very clear its intention to do what it can to reopen the trade, to increase the trade, because of its value to the Australian rural economy.

Senator RHIANNON: Considering Bahrain has completely replaced live Australian sheep imports with Australian chilled and frozen meat, has an economic assessment been done on where the greatest benefit comes to Australia?

Mr Glyde : Certainly the Live Animal Exports Division and the Australian Bureau of Agricultural Resource Economics and Sciences have not done any economic assessment. We might be in a position to describe what has happened to the trade. I think in your question earlier this morning you mentioned that as a result of the suspension of the live trade there had been a significant increase in the import of Australian boxed chilled and frozen lamb, and that is certainly the case. But we have not had an investigation into some of the other factors happening in that market. We also imagine that there would be some substitution of live animals from other exporting countries as well as importing animals for consumption. As you would be aware, there is considerable import of animals to do with particular religious festivals in the region, and those sorts of things do end up distorting the market. Ms Irwin might be in a position to give you the statistics if that would help, or perhaps we could take it on notice and supply what we know about the box trade and the live trade over the last three or four years.

Senator RHIANNON: Concerning the recent high-mortality sheep and cattle shipment aboard the Ocean Drover to Israel and Jordan after the ship broke down for four days near the Cocos Islands, was the department advised that full repairs had not been made and that the ship was only able to continue at a reduced speed?

Mr Glyde : Yes, the department, right throughout the difficulties the Ocean Drover experienced, was fully informed by the company involved, Wellard. We established a critical-incident response team to do our best to make sure that from the government side we could make sure that the welfare of the animals was well looked after and that the vessel was able to make it through. But that is part of our standard practice with any of these voyages.

Senator RHIANNON: Did you understand that there was sufficient food? And, if you understood that, why did the vessel stop at Dubai to allow emergency fodder onboard, if all those checks had been made?

Mr Glyde : Because of the fact that the vessel could not proceed at its previously organised speed, it soon became apparent that even though we do require additional feed fodder et cetera for the animals on top of what you would normally require on a voyage for contingency purposes, that additional amount was not going to be sufficient. So, after consultation, we and the company spoke with the various ports involved and were able to organise for additional fodder to be provided to those animals onboard.

Senator RHIANNON: Why didn't you consider that that boat should have returned to Australia, considering the serious problems onboard?

Mr Glyde : We looked at a number of options in terms of contingency management during that critical-incident response time. We had to contemplate questions such as the length of the voyage back to Australia and the difficulties we might have in terms of animal health and disease in having those animals return to Australia. On balance, the decision was made in the interests of the welfare of the animals that the best solution was to take onboard feed and continue with the journey.

Senator FARRELL: I also have some questions on the Export Supply Chain Assurance System. Can you indicate to us how many noncompliance investigations the department is currently undertaking?

Dr Clegg : We have nine investigations underway. One of those investigations is about Egypt. That actually is not an ESCAS issue; it is about the management of the abattoirs in Egypt, and the department was responsible for that. So there are actually eight ESCAS investigations that are live at the moment.

Senator FARRELL: Are you able to tell us what those investigations are?

Dr Clegg : Yes.

Mr Glyde : We publish those on our website as well.

Dr Clegg : We do. There are the eight investigations. One of them is about Vietnam. It is about cattle in a supply chain in Vietnam. Another is about Jordan, the second investigation into Jordan. That was reported to us on 10 October by Animals Australia. We have an investigation into sheep outside the supply chain in Kuwait. That is also from October 2013. We have an investigation into cattle outside the approved supply chain in Mauritius. That is also from October 2013. And we have a report of sheep outside the supply chain in the United Arab Emirates from October 2013. Then we have a report on cattle outside the approved supply chain in Gaza. That came from YouTube footage that was reported to the department by—

Senator FARRELL: Is that the same one Senator Rhiannon was referring to a moment ago? Or was that a different case?

Dr Clegg : I am sorry; I missed that. But the Gaza complaint is about cattle. The next one is an investigation we are looking into in Malaysia—cattle outside the supply chain. And the most recent report is from Animals Australia about sheep outside the supply chain in Jordan.

Senator FARRELL: So, you have two inquiries ongoing in Jordan?

Dr Clegg : Yes, that is correct.

Senator FARRELL: Can you indicate whether or not the department will be undertaking a review into the system ESCAS system?

Mr Glyde : Senator, it is a matter that we are currently discussing with the minister. There was a review that was conducted that led to the establishment of the ESCAS system by Bill Farmer. In that report he recommended that a review be conducted of the operation of the ESCAS system and a report be made in July 2014. So we are just figuring out what is the best way to do that, in consultation with the minister.

Senator FARRELL: So the report setting up the organisation or the procedure recommended a future assessment?

Mr Glyde : Yes, it made a number of recommendations about establishing the system and a variety of different things as well. So the final recommendation, in essence, was: let's have a look at this to see how it works after a couple of years.

Senator FARRELL: Has that process started?

Mr Glyde : We started the process almost from the start of introducing ESCAS in order to collect the information we needed to be able to report on that. A project board was created to manage that review, so we have been working on collecting the information for the review. Also, as you would appreciate, there has been considerable experience that we as the regulator, but also industry, have had in the operationalising of the ideas in that Farmer review. So we will be drawing on that as well.

Senator FARRELL: Your guess is that there will be a review in conformity with the original decision and you are just working out the specific details.

Mr Glyde : That is really a decision for the minister.

Senator FARRELL: Dr Clegg, you might be able to answer this one. Can you tell us what the most frequent non-compliant issue is with the scheme?

Dr Clegg : I think the most frequent non-compliance that we have is animals outside the approved supply chain. Whether it is sheep or cattle, that appears to be the most difficult aspect for exporters to manage from Australia.

Senator FARRELL: Why do you think that is?

Dr Clegg : I think it basically is that the animals have arrived in the other country. The exporters have contracts with their importers in the other country, and it is up to the importers and their staff to fulfil the contracts they have made with the exporter, and the exporter to enforce the conditions or to encourage the importer to do that. If you think about the number of stock that are sent overseas and the ability to track all of them, you would see that it is quite easy for stock to go missing. I think that that is the most difficult part that exporters have to deal with.

Senator FARRELL: Are you trying to indicate that that is a relatively small problem?

Dr Clegg : I think the majority of the animals that are exported are going to the OIE approved facilities that the exporters have organised with their importer for these animals to be sent to, for sure. We still have small amounts of animals that are identified in market places, in countries where it is common to sell live animals in market places.

Ms Irwin : To give you some context about the issue of noncompliances, I think it is helpful to be aware that at the moment, out of the 65 licensed exporters there are around 30 that are active. There are close to five million animals that have been exported to over 30 markets since ESCAS has been introduced. Indonesia is the biggest market for cattle. Kuwait is the biggest market for sheep. So in terms of the number of animals that are being exported consistent with the guidelines, I think that information just gives you some context to consider the issue of noncompliances.

Senator FARRELL: So you mentioned the figure of five million. Is that sheep and cattle?

Ms Irwin : Yes.

Mr Glyde : Yes.

Senator FARRELL: In the eight cases that you have just referred to, what are we talking about in terms of numbers, there? Just give me a ball park number; it does not have to be an exact figure.

Ms Irwin : Senator, the individual cases are under investigation. We are still working through the process of establishing what number of animals may or may not have been out of the supply chain. So it is a little bit difficult for us to comment on the ones that are currently under investigation.

Mr Glyde : Historically, we can give you some information. We released a report yesterday which involved eight animals being outside a supply chain in Jordan, where there are a couple of hundred thousand animals. We were able to identify them as being from one particular exporter. In other complaints it has been in the order of hundreds. So it does vary quite a bit.

Senator FARRELL: So we are talking relatively small numbers in the export scheme.

Mr Glyde : Yes.

Senator FARRELL: Is that one that you have just referred to in Jordan one of the inquiries that are underway?

Dr Clegg : That is one of the ones that we have completed. That was the first one.

Senator FARRELL: You have completed that inquiry?

Dr Clegg : Yes, that one was about—

Senator FARRELL: Are you able to tell us what the result was?

Dr Clegg : The result with that one was that whilst there were many photos of sheep that looked to be Australian sheep, some of which had ear tags, it was very difficult to trace. We estimated based on the photos—and it is a rough estimate—that about 1,000 sheep were in these photos, and they were in various locations in Jordan and also in Lebanon. We have a mob based identification system in Australia that is applied to ESCAS. That is part of the industry working group arrangement for ESCAS. So we basically account on a mob basis; you would count the number in and the number going out. They are not individually identified. So in all of those pictures of sheep that had some ear tags—I think we had 51 where we could actually see the ear tag—we could identify eight of them to an exporter that had exported that consignment under ESCAS arrangements. That was all we could manage there, and that is one of the difficulties, I suppose, of policing such exports.

Senator FARRELL: So what do you do? Now that you have that report, what is the next step?

Dr Clegg : What we have identified is that—

ACTING CHAIR: Colleagues, time really is short. There are answers to various questions all the way down. I do not want to cut anyone off. We will work together. Every bit of information is important, but let us get to the point quicker, if we can, without being rude.

Dr Clegg : Sorry, yes. So what we do is apply conditions on the exporter, talk to the exporter about what the problem has been and work out ways to tighten up the element of control and how they make the importer manage it.

Senator FARRELL: Thank you for that explanation.

Mr Glyde : The reports are published on our website and detail the actions that we have taken and the conditions that we have applied to the exporters in that particular market.

Senator FARRELL: To each of the results—yes. All right. Excuse me if Senator Rhiannon already traversed some of this area, but The Age newspaper reported on 10 February that Minister Joyce was soon to visit the Middle East and restart live export trade with Bahrain and Iran. Is that correct?

Mr Glyde : We answered that earlier on. The government is currently considering its policies in relation to that, and certainly the government has announced its intention to restart the trade and increase the live export trade. We are currently considering that, and indeed the minister is also currently considering his travel plans for the Middle East.

Senator FARRELL: Thank you.

Senator GALLACHER: I have a quick question. There was some publicity recently about the first shipment of buffaloes from the Northern Territory to Vietnam. Given the twin goals of Indigenous employment and reducing environmental degradation, do you have any studies indicating that that may continue or be successful?

Ms Irwin : We do not have any specific studies about the trade to Vietnam. Clearly it is a commercial matter between the parties but, yes, there was recently a consignment of buffalo exports to Vietnam. I know that the Northern Territory government in particular has been supportive of looking at opportunities within the Northern Territory for exports that may have benefits for the local community in the Northern Territory as well.

Senator GALLACHER: So the goal of 5,000 a month to Vietnam is in your view wildly optimistic?

Ms Irwin : I have not heard reports of a goal of 5,000 a month. I am not in a position to comment on whether that is a realistic goal or not. The government's role is in ensuring that the country-to-country arrangements are sorted for the trade and that the standards from animal health can be met. The volume of the trade is a commercial matter for the parties.

Senator GALLACHER: But the trade is up and running?

Ms Irwin : Yes.

Senator GALLACHER: Thank you.

Senator BACK: Can I just go to the situation with Bahrain for a moment. Can you confirm to the committee that, since live exports from Australia stopped, there has been a significant increase in exports of live animals from Saudi Arabia into Bahrain, from North Africa through Djibouti and from Somalia into Bahrain; and that, essentially, what was a supply of livestock from Australia has been replaced by a supply of live sheep from other markets?

Mr Glyde : I cannot confirm that. In an earlier answer to Senator Rhiannon, I said that the facts we have or the information we have is in relation to the volume of the box trade and the volume of the live trade from Australia and that one needed to look at all the other factors operating in that market, including the potential and distinct possibility that our live trade would be replaced by other exporting countries.

Senator BACK: And the advice to me, Mr Glyde, is that that is essentially what has happened.

Mr Glyde : I was just going to say that Meat and Livestock Australia are appearing after us. They may—

Senator BACK: They are.

Mr Glyde : be able to help out with that question.

Senator BACK: Thank you. I agree that they could assist. I go to the circumstances with Egypt, and they are the investigations into both the Ismaila and Ain Sokhna abattoirs. I wonder if you could tell us when the department will be in a position to release its findings on the investigations into both those abattoirs.

Mr Glyde : As you are probably aware, that is still a matter that we are considering. We are still investigating that. Part of the issue there is that it is a joint report with the Egyptian government, because both the Egyptian government and the Australian government are responsible for the animal welfare outcomes in Egypt. It is the only market we do not have ESCAS operating in. So I would not be able to put a time on when that report might come out, but we are quite hopeful of getting that out fairly quickly.

Senator BACK: Sure. Can you confirm that some of the evidence being investigated is from an Egyptian veterinarian, Dr Mahmoud Abdelwahab?

Mr Glyde : I would prefer not to make any statements prior to the finalisation of the report. As I mentioned before, it is a joint report with the Egyptian authorities.

Senator BACK: When it is out, I will be keen to know what, if any, communication you had with him. He tried to communicate with me, and I then of course tried to communicate back with him. The point of interest to me there, Mr Glyde, was that back in July 2012 he was, I understand, the veterinarian who raised the issue of growth hormone promotants in Australian cattle in Egypt at a time when there was no restriction on growth hormone promotants in our cattle, but it held up the whole process for some time. And then, by an absolutely remarkable coincidence, by the time that got resolved, in October 2012—lo and behold—I think he is the same person who then came up with some footage that I understand has been made available to the department. So I will be very keen to see whether you had any more luck than I did in making contact with him.

Going on to the Exporter Supply Chain Assurance Scheme, could you tell me: first of all, are you aware of any other country, any of the other 109 exporting countries, that has a system equivalent to ESCAS imposed on its exporters and, ultimately, its producers?

Mr Glyde : No.

Senator BACK: No, you are not. Neither am I. Can you tell me whether you are aware of any other product or any other commodity exported from Australia or, indeed, from any other country that has something equivalent to ESCAS applied to it, where the exporter is liable for the performance of those in a supply chain remote from the country of origin of that product or commodity?

Mr Glyde : I cannot be terribly specific about other regulatory systems, but I know that this sort of this system is rare. It is certainly the only system we have in the agricultural space that has this sort of requirement, and it is, as we have discussed already, a unique application. Obviously, the Australian government has no control over actions in another country; and so it is a unique circumstance where we require exporters to have commercially valid contracts with operators in another country to try to achieve our objectives of a trade that is consistent with international animal welfare standards.

Senator BACK: Thank you. Prior to ESCAS being introduced, did the department avail itself of that information that you have just so kindly and correctly advised us of?

Mr Glyde : No.

Senator BACK: At what point in time did you become aware of that; and, obviously, at what point would the then minister have become aware of the information you have just supplied to us?

Mr Glyde : I am sorry; I might have misunderstood your question. You are talking about information on other arrangements that are similar to this, like, say, in the handling of nuclear waste?

Senator BACK: That is correct—now applied to the export of animals, livestock, from Australia.

Mr Glyde : I think I would have to take that on notice to refresh my memory about what might have been provided at that time.

Senator BACK: Did the department undertake any modelling that might have suggested what the impact might be on Australian producers and exporters as a result of the ESCAS to be introduced?

Mr Glyde : ABARES undertook a study at the time to do their best to try and pull together the impact that would occur on both exporters and producers as a result the suspension of the trade. I will have to again go back and check what analysis, if any, was done in relation to the introduction of ESCAS itself, but there were certainly some economic studies about the impact of the suspension of the trade in 2011.

Senator BACK: Is that information publicly available or can it be made available to the committee?

Mr Glyde : As far as I am aware, the ABARES report is publicly available.

Senator BACK: And that was produced when? 2011-12?

Mr Glyde : 2011. As I said, I will take that on notice and provide the material if it is not available or if it has been taken down from our website.

Senator BACK: I also wonder whether there has been any update or review subsequent to the original ABARES report that we could have a look at to see whether their predictions were accurate or whether, in fact, the impact was more or less.

Mr Glyde : I do not think so. I think the only thing that would have been published by ABARES would have been its routine reports in terms of what it does for its quarterly and annual forecasts in terms of commodity outlooks, but I will double-check that to make sure. We may well have done some specific work, possibly internally, for the live animal trade.

Senator BACK: There was a time when we exported three million sheep a year to Saudi Arabia. What is the current circumstance with the export of livestock to Saudi Arabia?

Mr Glyde : The current circumstance is that there is no livestock being exported to Saudi Arabia. We are still in discussion with Saudi officials about the terms and conditions for an ESCAS, and whilst a couple of exporters have been trying to establish ESCAS arrangements in Saudi, they have not been successful.

Senator BACK: Can you tell me what, if anything, has been the change in sales of sheep meat and beef to Saudi Arabia from Australia prior to and subsequent to the cessation of the live export trade?

Mr Glyde : I would have to take that one on notice, but we would have those statistics.

Senator BACK: Chairman, will you advise me as to how much time I have got?

ACTING CHAIR: We have run out, actually.

Senator BACK: In that case I will just ask one more question. What action did the department take subsequent to the banning of the live export trade to Indonesia in an attempt to re-establish the trade?

Mr Glyde : Is that with Indonesia?

Senator BACK: Yes, in the relationship between Australia and Indonesia.

Mr Glyde : There has been quite a lot of activity—ministerial-led and officials-led—both in the lead up to the suspension and then, following the suspension, during the re-establishment under ESCAS. There have been numerous meetings and numerous exchanges, so it is probably best if I take that on notice to give you the complete listing of the activities that have been undertaken both at the ministerial and official level.

Senator BACK: As part of that, could you also tell me—and I am sure it is publicly available—how many visits, if any, the previous ministers for agriculture under the last government and this government have made to Indonesia since 2011 as part of that process? Would you also then advise us of the number of cattle that have been exported from Australia to Indonesia, starting with 2009-10 through to your latest records?

Mr Glyde : Yes, no problem.

ACTING CHAIR: We are out of time, but Senator O'Sullivan has some questions.

Senator O'SULLIVAN: I just have some questions on ESCAS, and the balance I will put on notice. What standard is required, with respect to a complaint made, for the agency to investigate the complaint?

Mr Glyde : I think Dr Clegg may be able to be more precise, but essentially when we receive some information or some footage from a third-party or we receive some information from an exporter, there is a requirement on the exporters to notify if they were aware of any leakages in the system or any problems. When we get that information we try to make a quick judgement about the veracity of that material and whether it is possible that it is valid or if it is someone trying to game the system. We make that quick assessment and then we commence an investigation. In that sense, we investigate all of those incidents.

Senator O'SULLIVAN: I will put the question slightly differently. Of all of the complaints made, what percentage have you taken up and investigated versus the balance being rejected and not becoming the foundation for any investigation at all?

Dr Clegg : I think there are two that we have not been able to continue to investigate, and they are also on the website. The ones that get on the website—

Senator O'SULLIVAN: Sorry, that was not my question. I am not asking about your ability to investigate something; I am asking about a complaint made where you have made a preliminary prima facie decision simply to do nothing because it was an anonymous telephone call from someone who sounded like they were seven years of age. That sort of thing. Have you ever had one?

Dr Clegg : Not that has been reported to me—no.

Senator O'SULLIVAN: Does it follow, then, that every complaint made to you is investigated?

Ms Irwin : Like any regulator, we do have a process that we go through and there are examples where we make an initial assessment of the complaint—this process is set out on our website—and in making that initial assessment the decision is either that the matter is investigated or it is not. I do not have the exact numbers before me, but what Dr Clegg was advising the committee is that there are at least two where we have made that initial assessment and taken no further action to investigate.

Senator O'SULLIVAN: And relative to the number of complaints?

Dr Clegg : Out of 26 that we have listed. So it is small.