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Rural and Regional Affairs and Transport Legislation Committee
25/02/2014
Estimates
AGRICULTURE PORTFOLIO
Department of Agriculture

Department of Agriculture

[17:10]

ACTING CHAIR: We will call Food Export Certification.

Senator SIEWERT: I just wanted to follow up what we were talking about this morning, which was around what crops were certified for GM. Is this where I ask that question?

Mr Read : No, I do not think so.

Senator SIEWERT: This is the one about what GM crops are certified for export.

Dr Grimes : We thought that we might have the relevant officers here for it.

Senator SIEWERT: I am sorry. I made an assumption that it would be here that I would be asking about export certification.

Dr Grimes : We will have to check the timetable. I recognise that I have immediately potentially led you astray. I feel personally responsible. I was sure that we had the relevant officers here. We have come on a little earlier with this item. Let us check to see if we can have the relevant officer in this bracket, as I indicated to you that we would earlier in the day.

Senator SIEWERT: I do not know if people have other questions.

Senator EDWARDS: Chair, can I just note that we are running ahead and shortly we are likely to be running ahead even more?

ACTING CHAIR: Yes.

Dr Grimes : We will do that.

Senator EDWARDS: Any senators or staffers out there that have got anything to come out can also take note.

Dr Grimes : We will ensure that we are able to manage ahead and we will have the officers ahead of time.

ACTING CHAIR: Senator Siewert, are you still going?

Senator SIEWERT: While we are trying to get the officers in the room—does anybody else have questions?

Mr Glyde : I would like to ask a question of clarification. My recollection was that Ms Calhoun answered questions in relation to the export certification for GMOs this morning.

Senator SIEWERT: What we were asking about then was what crops had been certified. I would like to ask about how that process happens.

Mr Glyde : That is definitely in her area.

Senator SIEWERT: It definitely was not answered this morning.

Senator Colbeck: We will send for the appropriate person.

ACTING CHAIR: We will go to Senator Farrell and hopefully the officer turns up.

Senator FARRELL: Could you explain what the new government's commitment was in the lead-up to the election in the area of food export certification?

Mr Read : From a couple of perspectives, certainly market access is one side of that. There are also new election commitments around export assistance packages being developed within some of those early announcements.

Senator FARRELL: Do we have a quantum of support?

Mr Read : The quantum announced previously was $15 million.

Senator FARRELL: That was announced in August prior to the election?

Mr Read : That is correct.

Mr Glyde : My recollection is that it was an election commitment of $15 million over four years.

Senator FARRELL: Was it designed to support export growth?

Mr Glyde : The commitment was in relation to rebates for export certification and establishment fees.

Senator FARRELL: For small exports?

Mr Glyde : Yes, small exports.

Senator FARRELL: In particular, registration costs?

Mr Glyde : Yes.

Senator FARRELL: Has that $15 million been made available?

Dr Grimes : I was going to say that, like several of those matters that are election commitments with financial consequences associated with them, they are currently under consideration through the budget process on the delivery mechanisms and arrangements.

Senator FARRELL: Perhaps I will direct this to Senator Colbeck. When you made that commitment, did you express a timeframe to the people who might have been interested in applying for this grant so that they would have been able to work out when it was that they might be able to apply?

Senator Colbeck: I cannot say that we specifically did that, but we were aware that there was an existing program particularly through horticulture that went for a couple of years where there was a reduction in registration fee costs to industry over a two-year cycle starting I think from last year. The new scheduled fee is something in the order of $8,750. There was cycling out of the system some existing assistance to registrants of facilities that will expire I think at the end of this financial year. I think the two cycles fit pretty well together.

Senator FARRELL: Are you saying that you did not anticipate this $15 million being available in this cycle? Is that what you are saying?

Senator Colbeck: There was already assistance in place. I do not see much point in putting assistance on top of existing assistance. We targeted this specifically at smaller operations. I think Senator Sterle will recall that throughout this process, which has been going since 2009, the coalition has expressed concerns around the impacts on small exporters. I raised questions myself when I was sitting on the other side of the table. That is why the policy was focused where it was focused.

Senator FARRELL: The policy was focused on the small exporters. I understand that. Are you saying that when you made this announcement back in August you did not expect that money to be made available in the foreseeable future?

Senator Colbeck: When we make commitments and there is a new government elected there is a new budget and a new budget cycle to be managed. That is effectively what we are doing with our commitments. You have heard that on a number of occasions today; the budget we are currently managing is the budget the previous government put into place. Following our election we are implementing our policies, planning how they will work and then we will implement them as part of the budget cycle.

Senator FARRELL: I understand what you are saying. What I am querying is the situation of a small exporter, concerned about registration costs, who heard you make an announcement before the election last August that $15 million was going to be available if you were elected. You were elected and now it seems that that $15 million is not available; that it is going to be available at some undetermined time in the future. Is that accurate?

Senator Colbeck: I think that is a bit of a stretch.

Senator FARRELL: Tell me where I am wrong.

Senator Colbeck: You are saying that it is some undetermined time in the future. We are saying that it will be implemented in the budget context. I do not think that is some indeterminate period. We are a couple of months from the budget, and we are saying from 1 July. I think that gives people reasonable certainty. I do not think that is a problem.

Senator FARRELL: You are saying that the $15 million will apply from 1 July? Did I hear you correctly there, Parliamentary Secretary?

Senator Colbeck: I think that is correct.

Mr Glyde : With the election commitments there were some that were to be introduced immediately and they were picked up during the MYEFO process. Then there were others that required further development, which are being picked up in the budget process. On the assumption that the government goes through the budget process, the expectation would be that that program would start on 1 July.

Senator FARRELL: An expectation or is that the undertaking that was made?

Mr Glyde : It still has to go through the budget process. All we can tell you is that we, the department, have been working on options, costings and implementation plans for this particular election commitment along with all the other commitments. We cannot really go much further, because the government still has to make the final decision about how it wants to implement that commitment and so on, and the timing over the four-year period.

Senator FARRELL: The work that you are doing at the moment is on the assumption that there is a starting date at 1 July?

Mr Glyde : That is correct.

Senator FARRELL: Are you able to tell us what the average cost for a food export certification for a small exporter might be?

Mr Glyde : We have that information. I think we would have to take it on notice. It varies across the various export sectors. There is different charging for different—

Senator FARRELL: What are the variables?

Mr Read : It is a registration charge. Registration charges apply to horticulture and a range of establishments within the red meat sector, such as cold stores, abattoirs and further processing, dairy establishments, seafood arrangements and so forth. Generally what you identify is where you have an establishment that is then required to have some form of regulated program attached to it—often they are an approved establishment or an approved program—connected with that typically has been a registration charge. Again, that rate will vary depending on the nature of that sector. Each of those sectors has different rates. There are different rates in horticulture I think ranging from maybe $2,000 up to $6,000 or $8,000, depending on the sophistication of the markets the product is going to. I think cold stores are about $10,000. Further processing abattoirs are about $15,000 and so forth. All of that is transparently available in our fees and charges. You can refer to those.

Mr Glyde : I would certainly be happy to provide it on notice. I just do not have the detail with me.

Senator FARRELL: That is fine. I would appreciate your supplying that. What definition do you use for the purpose of defining a 'small exporter'?

Mr Glyde : That is one of the matters that we are considering in the implementation process. It is one of those difficult things to determine.

Senator FARRELL: Will you be looking at volumes or will you be looking at sales?

Mr Glyde : There is a range of different ways in which we can do it. We are trying to find a cost-effective way that meets the intent of the election commitment.

Senator FARRELL: When you heard the government's commitment what figure did you think constituted a small exporter?

Mr Glyde : That is what we are working towards.

Senator FARRELL: So, you did not have anything?

Mr Glyde : What we heard was that there was a $15 million commitment. Our job is to try to find out the best way to implement that or give the government options about how it might best implement that in a cost-effective way to make sure that the majority of the funds end up in the hands of the small exporters.

ACTING CHAIR: That is going to be a big job.

Mr Glyde : Every company you define as being small—I am sure you will be questioning us about those.

Senator FARRELL: You have statistics on what companies export. That is presumably your starting point, is it?

Mr Glyde : There is that question. This is in part to try to encourage industries into exporting. You might be a potential exporter and you might be ready to rock'n'roll, and this assistance might help you in there. That is another factor to take into account in the design.

Senator FARRELL: So, you are not necessarily looking at a benefit for current exporters; you are looking at a benefit to encourage people who are currently not in the export market?

Mr Glyde : All I can say is that we are trying to come up with definitions that are cost effective and able to—

Senator FARRELL: I am trying to help you with some ideas.

Mr Glyde : Thank you.

Senator FARRELL: I am always happy to help.

Senator Colbeck: It is a pity you did not come up with some ideas when you were in government.

Senator FARRELL: Talk about cheap shots!

ACTING CHAIR: You have been hanging around Senator Abetz too long. It has taken you a couple of hours to warm up.

Senator Colbeck: Senator Abetz is a nice guy.

Senator SIEWERT: We still have six to go.

Senator FARRELL: Do I take it from what both you and the parliamentary secretary have said that this will be ongoing funding; this is not just a one-off commitment?

Senator Colbeck: At this point in time we have made an election commitment. We intend to honour that election commitment. As the budget cycles roll around we will consider where we go from there.

Senator FARRELL: Is it $15 million annually or is it $15 million over four years?

Senator Colbeck: It is $15 million over a budget cycle.

Mr Glyde : Over the four years.

Senator FARRELL: Can you tell us whether the department is currently working on changing the legislative requirements for the food export certification?

Mr Glyde : We certainly have contemplated over time changes that we might make to try to improve the system, and we are still working on that.

Dr Grimes : I think it is reasonable to recognise that any legislative change would be subject to recommendations that we might make to the government and then government consideration.

Senator FARRELL: Is there any active consideration by the department at the moment to making some legislative changes?

Dr Grimes : Across all areas of our operation we are always reviewing and keeping an eye out for areas that we might in future be advising the government on.

Senator FARRELL: Have you spotted anything in this area?

Dr Grimes : Almost by definition we are considering all relevant areas of legislation, and in due course we will be advising the government at the appropriate time.

Mr Glyde : Following on from the secretary, the government has also made a commitment to reduce red tape and what have you. There is quite a process going on across government to look at all of our systems that we have, particularly the cost recovered systems, to try to find out what we can do to reduce costs on the rural economy.

Senator FARRELL: Who is doing that? Is that your section of the department?

Mr Glyde : Yes. One of the commitments was the government came in with us to establish a deregulation unit in every Commonwealth department. We have done that. We have established that. We have done an audit of our regulatory burden that we impose on the economy, and we are busy going through identifying where we can reduce red tape.

Senator FARRELL: Have you come up with anything so far?

Mr Glyde : We have indeed. One I am more familiar with is live animal exports, where the SK system is quite a regulatory burden. We are always on the lookout for ways in which we can streamline that as well. Mr Read would be able to tell you that over the years there is constant pressure from industry and others, because they are the ones that are paying for these services, in a large part, to reduce or to find more efficient ways. Indeed, the discussion we had earlier on about AEMIS was entirely driven by finding more effective ways to certify Australian meat products.

ACTING CHAIR: Do you have some questions?

Senator GALLACHER: Yes. The committee took some evidence in Mildura about growers who had high value, low volume, had a customer overseas, who had a genuinely good product but could not get it to market because they could not afford your costs. I think the costs that have been mentioned were $10,000 for a packing shed and that sort of thing. Has anything been done for those people or are they still on the drip until next July?

Mr Glyde : In essence, in the horticultural industry that is one of the drivers behind the election commitment. There is a thought that that registration—that establishment fee—is a real deterrent to producers entering the export market. That is the logic behind the design of providing rebates to small exporters. We are aware of that and it is one of those judgments you have to make. We have cost recovery guidelines that we have to follow in terms of what we can and cannot charge for. The current system, which was developed with the agreement of industry, is such as it is and from time to time we have to look at it to make sure that it still works. If it is the case that it is not working, we will have to go back and look at it again. That certainly has been put to us as well; there is that initial hurdle of getting established let alone the transaction fees that would then follow on. The plant division is well aware of the concerns from the horticulture side.

Senator GALLACHER: From the committee's perspective—and I cannot speak for the chair or the deputy chair—there is a lot of bipartisan work that goes on. This was a very clear, easily identified issue where there was an impediment to a customer getting together with someone who wanted to buy it. Clearly, nothing has happened in that space at the moment? It is in progress?

Mr Glyde : We are working on that. As I said, the work that we are doing in relation to the election commitment would be expected to provide some relief in that area, but that election commitment, I hasten to add, is across all of the sectors. There is always work to do and making a change in the system that might put a greater weight on another charging method might also disadvantage someone else.

We are always looking to try to find ways in which we can encourage export. The future of Australian agriculture is through export, given that two-thirds of what we produce is exported, We have to try to find ways that we can meet the requirements of the countries that these products are going to in the least cost way so that we are not discouraging people out of exporting.

Senator GALLACHER: Thank you.

Senator RUSTON: At the last estimates we had a debate and discussion about at what point a good became prescribed for export. Have we got to a position where we actually have a clear definition as to when a good becomes prescribed for export under the act?

Mr Read : I do not think I was party to that discussion, but it is reasonably clear in the Export Control Act what are prescribed goods and what are outside being prescribed goods and, by that, defined as non-prescribed goods.

Senator RUSTON: But at the point at which it becomes prescribed. If I go out into my orchard and I pick an orange, it is not prescribed there. If I take it inside and I put it in a box it is not prescribed there, but as soon as I get to the stage where I am filling out some sort of documentation or I have indicated my intent to want to send that orange or banana overseas, at what point does it become a prescribed good for export and, therefore, attract the necessary requirements to meet our protocols and so on for overseas markets?

Mr Read : Again, this is the nuance behind that. Certainly with horticulture you are referring to a scenario description of a range of products that fall there. On the food side, the same issues happen somewhat in terms of meat products, as soon as they enter an approved establishment. Certainly the leadership action of progressing a request for export permit against the particular commodity line—some of those will necessitate that they are prescribed; therefore, they do require certificates for each of those prescribed goods. Others fall outside that description and only will be provided with certificates where required by the importing country.

Senator RUSTON: Is there a situation where we are requiring certification sometimes at a point well before they need to be certified, and then the product may end up going through a facility that consolidates a shipment? And they are certified. They are actually paying the registration part twice. They pay at their own point, because they have been deemed to have to pay it by the department under the blanket cover, which we have applied in this cost recovery, and which I will get to in a minute. Then they are obviously going to be charged by the facility that is rehandling their product, because they have to be certified. So, they are going to knock on the charge. They are actually in effect paying it twice. Is that happening at all?

Mr Read : I do not know about the scenario of who is paying twice. For prescribed goods there is a need to keep control and have integrity around the systems that the certificates are issued for that particular line of product. I can envisage for a range of commodities that once it enters a controlled prescribed environment that it may well exit out of that to a domestic market, for example. But equally it could also then progress to those markets requiring official certificates with that product. By the nature of those certifications, it needs to be housed within those controlled environments.

Senator RUSTON: It comes down to the very guts of what you were saying before about it not being a one-size-fits-all situation. That comes back to the fundamental reason that we are even having this discussion. When it was agreed that we had to go to a cost recovery system there was a system that was put in place and that system was a one-size-fits-all system of $8,500 for protocol markets working its way back. That meant that we ended up with a situation where a very large producer or exporter who was exporting hundreds of millions of dollars was subject to the same fees and charges as some little chap like we were describing—our high value, small volume person.

By previous Minister Ludwig's own admission, despite the industry having said to him right throughout the process of negotiation about how they wanted these registration charges to be applied on some sort of tiered system so that we did not have the big guys paying the same amount as the little guys, an arbitrary decision was made within the department and by the minister that they were just going to go for a one-size-fits-all. I suppose I feel a little sorry for you having to sort this out. Notwithstanding that, how are we going to end up with a system where the growers are able to understand the transparency of what is required in the various protocol markets and the various requirements of them when we are sitting here having this discussion? I am quite sure that there is nobody in this room who is entirely sure of what is expected of them, what they are supposed to pay, where they comply and where they do not comply. I am very confused.

Mr Read : Fortunately or unfortunately I was part of those horticultural discussions in terms of those different charging models. We certainly looked at debts. I think we looked at 35 different models in terms of trying to be equitable in the distribution of those costs fairly throughout that export chain. As industries evolve and mature and more within those sectors become astute as to those export pathways and the handling of product, there are still opportunities within them to revise how some of these charges are to be applied in those export pathways to ensure the greatest level of equity. In the course of the next four years, with fees and charges part of the question around that is probably what you are asking, and whether it is horticulture or meat product how at the end of the day that cost can be distributed fairly without it seeing to be borne unfairly by elements within that sector.

ACTING CHAIR: We had allotted 15 minutes to this section, but there have been a lot of questions asked. I know Senator Rhiannon and Senator Siewert have questions, so I am going to keep it going, because we are running early. But at six o'clock we are stopping. That is the timetable.

Dr Grimes : Just to confirm, we now have an officer here who can respond to some of the questions.

ACTING CHAIR: I understand that, but that is not helping me out with getting through the other questions first. We really have gone way in, which is fine, but I will just make senators aware that Senator Rhiannon and Senator Siewert have questions, too.

Senator RUSTON: My only comment would be—and you do not have to respond to this at all—that it was interesting Senator Farrell's prosecution of a situation, which was exactly the situation that was the making of the government of which he was a member at the time. Good luck with sorting this mess out that you have been left with, and I really hope you can. Thank you.

ACTING CHAIR: I missed that.

Senator RUSTON: You should have been listening, because it was really dynamic.

ACTING CHAIR: You are right; I should have been listening, but the preamble to the last question nearly put me to sleep. I am sorry about that.

Senator RUSTON: That was harsh.

ACTING CHAIR: If you want to have a whack at me, be prepared to cop one back. Senator Rhiannon.

Senator RHIANNON: The Kangaroo Industry Association of Australia has produced a recipe book called Roocipes, which sets out that kangaroo meat is best served undercooked or rare. Were food safety checks provided by either the Department of Health Food Standards or by the Department of Agriculture's Food Division or any other section of the department before publication?

Mr Read : I am sorry. I am not aware of the particular recipes and the nature of the Food Safety Standard checks that were considered.

Senator RHIANNON: Did you say that you were not aware of the publication recipes or what the checks were that were carried out on the recipes?

Mr Read : There are a couple of issues. One, you are talking about a recipe for cooking kangaroo. Embedded within what you are suggesting is: are the parameters there sufficient to deal with the food safety risk connected with kangaroo meat? From our experience, the good handling of any meat product is essential to ensure good consumer safety, whether it is kangaroo meat or any other meat. In terms of cooking, as long as it has had sufficient cooking to inactivate any particular pathogens and organisms, then clearly the product will be safe for consumption.

Senator RHIANNON: You have said sufficient cooking to eliminate pathogens, but considering these products have been promoted on the basis of being undercooked or rare and it has been identified that many kangaroo products have high levels of Toxoplasma gondii or salmonella species, are you satisfied with the way this has been handled under projects that have received government funding?

Mr Read : What I am not clear about in the question is the parameters that you are talking about in terms of the cooking of product, what that means in terms of time temperature exposure to the particular meat itself and the surfaces of that product. Again, if that is done properly and reasonably, then the meat would appropriately be safe for human consumption.

Mr Glyde : It might help to point out that the department does not have the responsibility for human health food safety standards in terms of food consumed within Australia. That is a matter for the Health portfolio and FSANZ. I understand that we have provided that in previous answers to this line of questions.

Senator RHIANNON: I appreciate that, but I am still trying to work it out, because there was RIRDC funding for the publication, and the publication promotes 'kangaroo meat best served undercooked or rare'. That would appear to contradict your statement.

Mr Read : I am not contradicting that statement.

Senator RHIANNON: No. I take that back. Your statement about how meat is cooked, that cooking meat adequately can eliminate the pathogens, is not consistent with what we have seen here in the development of this recipe book, which promotes roo meat being undercooked. We know that roo meat undercooked retains these pathogens.

Mr Read : Again, it is probably not our role to be talking about time temperature parameters around the inactivation of particular organisms or pathogens. Clearly from the science in relation to a range of those pathogens time temperature is very short in terms of their inactivation. In terms of toxo, it probably is around 61 degrees for four minutes, which is a very low temperature in terms of its inactivation. My understanding, again in terms of salmonella and E. coli—if those surfaces are in contact with appropriate heat they are inactivated very quickly as well. I am not sure I am saying anything inconsistent with the recipes. I am also not saying that product or any meat product cooked in accordance with that sort of recipe or other types of recipes will be inappropriate for human consumption and present a food safety risk.

Dr Grimes : Given the fact, as Mr Glyde has already pointed out, that we are going further and further into the areas of human health standards, I think the officers are trying to help as much as we possibly can in giving you a steer on some of the key issues, but there are going to be limits to how far we are going to be able to help you given it is not our area of responsibility.

Senator RHIANNON: But department money has been spent. I was interested in Mr Read's comments. To summarise, I understood what you were saying was that the cooking will knock out these pathogens. I would be interested in what you are relying on for that statement. Because with regard to toxoplasma gondii there have been a number of studies, including from the Journal of Parasitology in 2000 that sets out that T. gondii cysts 'remain infectious in refrigerated carcases or minced meat for up to three weeks'. That is probably as long as the meat remains suitable for human consumption. It occasionally may survive deep freezing. Then there are the other papers about undercooking not eliminating these pathogens from meat that is often consumed by humans. That does seem to be at variance with the information that you have just supplied. If you don't have it on you, could you supply and take on notice what you are basing that statement on regarding the elimination of the pathogens with cooking?

Mr Read : Just to be clear, I was not saying anything contradictory to what you have actually read out in terms of that process for cooking meat or kangaroo meat as you described it. All I was suggesting was that, as with any raw meat product, its preparation in terms of a cooking process will inactivate those. I do not have information before me to evidence what parameters are set around when you define something as cooked or undercooked and what that means in terms of time temperature.

Mr Glyde : I think that is the problem. You are using terms like 'cooked', 'rare' or 'uncooked'. This is not an area where we have any expertise at all. Indeed, as the secretary said, this is an area where the expertise is in another department. Mr Read is really just going through the practice we know that, if meat of any type is cooked on the outside, you can generally assume that most of the pathogens are removed at that stage, which is why the Department of Health encourages people to cook meat and not eat raw meat.

Firstly, we really cannot add anything, even if we take it on notice, to the expertise that already exists. Secondly, you mentioned that this was something that the department had put money into. This is a project that was run by the Rural Industry Research and Development Corporation on their own recognisance. I think they are in the best place to explain the use of those funds. We really do not have a whole lot of expertise to bring to the table on this.

Senator RHIANNON: You are saying that you do not have responsibility for how that funding was spent?

Mr Glyde : No. RIRDC is the body that determines the allocation of the money that is provided to it through levies that are raised, possibly against the kangaroo industry, and through money that the Commonwealth provides in matched funding, but the decision making about what RIRDC spends its money on is a matter for the RIRDC board.

ACTING CHAIR: Time is ticking away. I am not into statements but I am going to make one. If the taxpayers realise we just had a 12-minute conversation on raw kangaroo they would be throwing rocks at us as we went out of here. I would throw rocks at you.

Senator RHIANNON: It is a health issue. It is a major health issue.

ACTING CHAIR: I am not arguing. We should put it on My Kitchen Rules. Maybe we will get it sorted out there. I am not knocking you.

Senator RHIANNON: It sounds like it.

ACTING CHAIR: Write to them. Is it just me or is it getting late?

Senator SIEWERT: Are you able to tell me if crops or exports are certified through the GM process as GM free?

Ms Calhoun : At the moment we certify when an importing country requires us to provide some additional certification about non-GMO product. We put that on what we call a certificate of condition, which is an additional certificate we provide in addition to a phytosanitary certificate. We base that certification on information that we get from the Office of Gene Technology. They will inform us as to what crops we can provide that certification for and if we do not have that on our list we will go back and consult with them. We are merely providing the certificate as to condition based on advice that they have provided us.

Senator SIEWERT: It is not on any field work?

Ms Calhoun : No.

Senator SIEWERT: What crops at the moment have that certificate?

Ms Calhoun : I would have to take that on notice, because I do not have a comprehensive list with me today.

Senator SIEWERT: Would it include canola?

Ms Calhoun : No. I believe at the moment we do not do any non-GMO certification for canola.

Senator SIEWERT: If you could take that on notice, that would be appreciated. Are you aware whether the importing country tests that?

Ms Calhoun : I am not aware of that. We have never had any follow-ups for certification that we have provided in regard to that.

Senator SIEWERT: When you say 'follow-ups', do you mean there has been nothing rejected as being contaminated with GM where it has been certified?

Ms Calhoun : Yes, that is correct.

Senator SIEWERT: Thank you.

ACTING CHAIR: Senator O'Sullivan, you will have about eight minutes and then I will have to put the handbrake on.

Senator O'SULLIVAN: I am following on from my inquiries this morning. I am happy for anybody to answer the questions. Can you inform the committee on the changes to the inspection of meat production from one based with AQIS to another model called the AEMIS model in October 2011?

Mr Glyde : Mr Read should have the detail I could not provide this morning.

Mr Read : The change from the old AQIS Export Meat Inspection model to the Australian Export Meat Inspection System involved a number of changes. It is not just relating to companies doing meat inspection. It actually provided a framework where companies can continue to use government services to provide meat inspection, can elect if they wish to use their own authorised officers to perform meat inspection and can source those resources from third parties to perform that inspection if they wish. It brought in a range of performance measures that did not exist and a range of verification measures that did not exist previously. It was about a forensic look at everything that we used to do in meat inspection and determining whether in fact we needed to do that in terms of maintaining market access. We went from one end of meat inspection to the absolute other end of it and eliminated everything that was redundant.

Senator O'SULLIVAN: Thank you. Let me share with you my focus, given the limited time I have. If we have any time left I will come back for some more detail. Are you aware that the European Union has now indicated that those changes do not meet their regulatory requirements for export of those products from Australia to Europe?

Mr Read : I answered a similar question earlier. The premise of those interactions with the European Union, which I led from about 2010, clearly outlined our interpretation of their directives, the system that we were developing to give effect to those directives, and through at least half a dozen meetings in Brussels plus presentation of that system in Australia to them. They essentially were very positive in working with us towards the development of this system and at no time throughout that period up til probably February/March this year did they raise any technical concerns around official auxiliaries not meeting the requirements of their directives.

What clearly has transpired within their assessment of our system is that they were fully aware of exactly what we were doing and when we were rolling it out. They were given every opportunity to provide responses to us of any issue of concern in that system and none was provided. They reviewed our system here late in 2012 and did not in that exit meeting, which I was present in, identify any areas of substantial concern. They certainly did not raise any issue around official auxiliaries as interpretation applied.

They have gone back to Brussels and there has clearly been a range of issues in Brussels. At that time, if you recall, there was a horsemeat substitution scandal. There was also a range of countries, particularly with the employment of official government officers embedded in meatworks, where there were a range of member country sensitivities. As a consequence, I suspect, of those factors they sought to temper the progression with which the system we were applying in Australia to export—

Senator O'SULLIVAN: Notwithstanding that—and I thank you for all of that information—somebody failed. Would that be a reasonable conclusion given that the system that we now have in place is not acceptable to them? Somebody has failed in the due diligence of this process.

Mr Read : No. I dispute the context that someone has failed. Throughout that extensive consultative process with the EU in the rollout of that modernised system every reasonable effort was made for a response from them of concern in relation to that system.

Senator O'SULLIVAN: Can we agree, Mr Read? I am happy to agree that they have no difficulty with the integrity of the system. I am asking you whether they or us failed on the due diligence issue of governance? For example, did nobody ask the question: 'Do you have a problem with the exporter employing the inspector?' Can I ask you whether that question was asked.

Mr Read : That question was extensively put to them over a two-year period directly.

Senator O'SULLIVAN: You will need to take this on notice. Do we have correspondence from them or between us and them on that issue?

Mr Read : We have correspondence of us describing that system to the European Union. The key point—

Senator O'SULLIVAN: I am sorry, Mr Read. On the very question of governance with respect to—

Mr Read : Company meat inspections is the reference you are making. Connected with company meat inspection, can they fulfil official auxiliary roles? That has to be in the context of conflict of interest.

Senator O'SULLIVAN: Yes.

Mr Read : We designed that system to mitigate that risk of conflict of interest over those years of discussion with the EU to bring about a range of deeds, checks and balances in our system to ensure that it stood up to scrutiny against our and their current—expressed in meetings—overview of their directives. As I said, even at the exit meeting that certainly was not even expressed as a concern. What has transpired is a policy interpretation within the EU of what is considered to be an official auxiliary. That is what happened in March 2013, and that interpretation has caused us difficulties with the current company employed inspectors being able to continue to provide inspection into the European Union.

ACTING CHAIR: This is the last one, Senator O'Sullivan, and I would ask that the answer be nice and brief and to the point, if I may.

Senator O'SULLIVAN: Would you take it on notice to provide us with any correspondence between yourself and them in relation to this particular issue?

Mr Read : We will have to look at that as well.

Mr Glyde : We will have to check with the Europeans.

Dr Grimes : We can take it on notice and then consider what issues there may be.

Senator O'SULLIVAN: Thank you.

[18:00]

ACTING CHAIR: We will now go to Border Compliance and Post Entry Quarantine Program. Senator Gallacher has a couple of questions.

Senator GALLACHER: Is somebody familiar with the Australia New Zealand Food Standards Code?

Ms Mellor : Insofar as we manage the imported food scheme? Is that where you are going?

Senator GALLACHER: Yes.

Ms Mellor : I have an officer here.

Senator GALLACHER: Basically, do we import organic food from New Zealand?

Mr Liehne : Food coming from New Zealand is not subject to the Imported Food Control Act apart from a few high risk foods. I cannot give you an answer as to what foods may be coming through.

Senator GALLACHER: I will just cut to the chase. If we are importing organic food and there is a mix of genetic and organic is there a threshold level that you test for, check for or just take it as stamped organic and that is it?

Mr Liehne : I cannot answer that. That is an issue for Food Standards Australia New Zealand in terms of the regulation of organic food.

Senator GALLACHER: Is there a stamp 'organic' which allows crosspollination or a minimal amount of genetic modification in it?

Mr Liehne : You would need to ask FSANZ about the standards. I cannot answer that.

Senator GALLACHER: So, we are in the wrong area?

Mr Liehne : I do not know what the standard would entail.

Senator GALLACHER: I rest my case.

Senator Colbeck: There is a mutual recognition of food safety between Australia and New Zealand. I think Australia has about seven organic standards registration organisations or certification organisations that certify food as organic. I could be incorrect, but I would suspect that we would recognise a standards registration in New Zealand as organic here in Australia under that mutual recognition process. I do not know whether or not any of the New Zealand organic standards certification bodies recognise GM in their standards. You would have to check in the New Zealand standards as to whether they recognised that.

ACTING CHAIR: Perhaps we could put that question on notice.

Senator Colbeck: The best place for that to go, though, would be FSANZ. I think that would be the process.

Senator GALLACHER: The issue will not go away so we will just pursue it at a later date.

Senator Colbeck: I think Health is on Thursday.

ACTING CHAIR: Senator Siewert.

Senator SIEWERT: I have some general and specific questions. The question I asked this morning was about the number of jobs that had gone from Border Compliance, and I was advised it was 53.6.

Ms Mellor : Yes. It was less than 60.

Senator SIEWERT: What is the total number of jobs that have gone from Border Protection Services? Is that the total?

Ms Mellor : To be clear, we are Border Compliance. Border Protection is next door.

Senator SIEWERT: Yes, sorry.

Ms Mellor : The total number at the moment is in the order of 60.

Senator SIEWERT: In the order of 60?

Ms Mellor : Yes.

Senator SIEWERT: Do you expect to lose more?

Ms Mellor : I think the secretary this morning alluded to the fact that we have a voluntary redundancy program going on. We are looking at Border Compliance as much as the rest of the department. There is a focus in there. We have reduced numbers in Passenger Clearance and Mail Clearance. I think I have spoken before in this committee about the change of the risk settings. For example, processed food has come off the passenger setting in the sense that people can come through with certain things now that do not pose a biosecurity risk. We are looking for other things now and we do not process as many bags in the sense that people are carrying that sort of stuff. Likewise in mail, although we did have an interesting find in mail today, because we are focusing on the right things. In cargo we will look to see where there can be better processes put in place and that enables us to change the way we deliver the service. Yes, we will look at whether we can make sensible reductions in there as well.

Senator SIEWERT: Do you have targets that you have to meet?

Ms Mellor : At the moment in the Border Compliance area we are looking at up to 180 nationally out of over 2,000.

Senator SIEWERT: That was 180?

Ms Mellor : It is 180 in Border Compliance nationally. That includes staff in Canberra.

Senator SIEWERT: Out of 2,000?

Ms Mellor : Yes. Can I just add to that to be helpful? Some of those functions are cost recovered as well. They are not all appropriation funded. The cost recovery operates in a small part of passengers, a very small amount in mail and fully in cargo. When we are talking about cuts in there we are not talking about cuts driven by appropriation budget cuts, we are talking about changes to service delivery.

Senator SIEWERT: How much are driven by changes to service delivery and how much are changes by budget requirements?

Ms Mellor : That is a hard question to answer. I cannot say there are 11 of these or 26 of those, because at the same time we are redesigning the business processes. The first step that we take is where the biosecurity risk is. The idea is to actually target our staff to the highest areas of biosecurity risk and then to assess through the science process whether there are areas of lower risk where we could apply different standards. When I say 'standards' I do not mean biosecurity standards, I mean standards of service delivery.

It is not a one-for-one type cut issue. It is really about whether we can find some room in a decreasing budget. There are certainly, as you heard this morning in the industry equalisation accounts, issues about deficits in imports in the cost recovery part of the business. Making sure that we can cost effectively run those businesses means that we need to take people out. We have to match up the biosecurity risk and the reduction in staff.

Senator SIEWERT: What process do you undertake in this latest round of consulting with stakeholders with this particular round of changes?

Ms Mellor : There are probably three pieces of consultation that go on. The first is around the biosecurity settings. We may actually need to be talking to particular import groups about changes to process and how that might affect them. Secondly, in cost recovery we have a range of finance committees where we consult on the fees that we will impose. We are in dialogue with a number of import industries at the moment about fees. Thirdly, in relation to changes to our processes, you heard a little bit about BICON this morning. There is another major IT system and business process associated with that around entry management. We have that system in release with a number of brokers at the moment to trial it.

With the consultations around different aspects of the business we have in the importing side of the business quite a large group in a cargo consultative committee that has representation across freight forwarders and brokers. It has Ports Australia and vessels representation as well—a big range of people. We have, for example, a horse committee—all of the people involved in importing horses. A range of committees are involved in importation, and through them we do consultative work through a committee and then with individuals who will, if you like, be user testing systems and processes for us.

Senator SIEWERT: What is the time frame for the 180?

Ms Mellor : That is a consideration in meeting budget for this year and so entering the new year with 180 less.

Senator SIEWERT: I am sorry if I missed or misunderstood this, but what is the proportion related to the cost recovery side of the process and the proportion that is not?

Mr Hunter : The breakup goes something like this. There are 1,051, and 233 are FTEs in cargo operations.

Ms Mellor : That is 1,000-odd that are cost recovered?

Mr Hunter : Some, 1,200-odd are cost recovered. In the passengers and mail space, which is largely appropriation funded, we started with a budget there of 686 FTEs at the start of the financial year.

Senator SIEWERT: What proportion of the 180 comes from the nearly 1,300 and what proportion comes from the 686?

Mr Hunter : It is about fifty-fifty. Obviously, we are still working through the service delivery aspects of that, because we cannot just look at these inspection activities as linear activities. To the extent to which we can we try to multiskill our staff to have an inspection workforce. They should be fully functional across all three of those channels, in effect—passengers, mail and cargo. We cannot get a precise number around how many will be impacted in one program as opposed to the other, because it will depend on who put their hand up for that voluntary redundancy.

Senator SIEWERT: That is for the voluntary redundancy. But if you do not get the 180 voluntary redundancies, what process do you use?

Ms Mellor : At this point we have had very heavy subscription for people putting up their hands to be considered for voluntary redundancies, and we have transition teams operating in each of the regions to match where the hand has gone up to where the needs might be. They are in pretty good alignment at the moment and we are fairly confident that we would not move beyond a voluntary redundancy process in relation to that 180.

Senator SIEWERT: You said some are based in Canberra?

Ms Mellor : Yes.

Senator SIEWERT: Where will the others be coming from? How many from Canberra and how many from elsewhere?

Mr Hunter : Approximately 35 to 40 FTEs will be reduced in my division in Canberra, and the remainder will come from the regions.

Senator SIEWERT: You do not know which?

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

Senator SIEWERT: If you could take that on notice. I think that moves me nicely to regional questions. One is about Tasmania. I understand there is going to be up to $700,000 worth of reduction in services. Can I first confirm that that is correct?

Ms Mellor : We operate quarantine services in Tasmania under a service level agreement with the Department of Primary Industries in Tasmania. That has been in place for a number of years. That service level agreement, or MOU, memorandum of understanding, is coming to a conclusion in June this year. Over the course of the last two years we have been having a look at the level of service required in Tasmania. It is diminishing quite substantially. An example might be that we have changed the way that we do certain kinds of inspections or the need for certain inspections. We have been in very close discussion with senior staff from the Department of Primary Industries in Tasmania for the last two years. Yes, it is going to diminish, because the need for the service diminishes.

Senator SIEWERT: I understand that one of the issues that is causing some significant concern about the reduction of services is cruise ships. One of the thoughts is that cruise ships are inspected in Sydney and therefore do not have to be inspected in Tasmania; is that correct?

Ms Mellor : The first point of entry is the place where we do quarantine services into Australia.

Senator SIEWERT: So the point that is being made to me is that there are problems when those ships arrive in Tasmania.

Ms Mellor : I am not aware of any particular problem. The normal process, no matter where the ship tranships around, is the first point of entry; what we are looking for is the entry into Australia.

Senator SIEWERT: Are you saying that none of those ships is inspected in Tasmania, anyway?

Ms Mellor : No, they would not be. If they have been inspected in Sydney or if they have been inspected in Brisbane they have been inspected in their first point of entry into Australia.

Mr Hunter : We have had a practice in the past where we have done what they call day tripper surveillance, but on the basis of some risk assessments that we have done we have almost dismissed that as a function. There is no biosecurity effective outcome for us to be able to do that.

Senator SIEWERT: Do you mean people who are going from the cruise ship onshore?

Mr Hunter : Onto the mainland, yes. They might have first boarded in Melbourne and then have gone to Tasmania and then they day trip in Tasmania.

Senator SIEWERT: Up until when have you done that process?

Mr Hunter : I would have to take that on notice. The bottom line is that we have done a lot of work with the cruise lines and the shipping agents in relation to ensuring that the provisioning of food, which is where the risk is, is not to be taken off board by those day tripping passengers. We have done surveys. There is pretty sound science around all of that that there is no biosecurity outcome for us to continue to do that.

Senator SIEWERT: Even though where they can go is within easy reach of orchards?

Mr Hunter : As I said, there is a lot of surveying and scientific analysis that we have behind all of that; it suggests there is no effective biosecurity outcome.

Senator SIEWERT: You are aware that there is an example of a dog escaping from a cruise ship in Tasmania?

Mr Hunter : No. That has not been brought to my attention.

Senator SIEWERT: Perhaps I can provide that information to you. I have been told that there is an example where a dog escaped from a cruise ship.

Ms Mellor : We would welcome you providing that to us.

ACTING CHAIR: Did they find it?

Senator SIEWERT: I am not sure. I am sorry?

Ms Mellor : We would welcome that. Certainly our colleagues in Tasmania have not provided us with that information.

ACTING CHAIR: Senator Siewert, can I just get an indication of how much you have to go?

Senator SIEWERT: I have this question about WA and then that is it.

ACTING CHAIR: What does that mean?

Senator SIEWERT: I have a question that may require a supplementary depending on the answer. I will do my best to get it in one shot.

ACTING CHAIR: Senator O'Sullivan and Senator Ruston have some questions, I believe.

Senator SIEWERT: Is the AQIS office in WA closing?

Ms Mellor : No. We have a significant presence in Perth, obviously, and we have international arrivals, ship and air, in Perth.

ACTING CHAIR: That is fine. You asked the question and you got an answer.

Senator SIEWERT: I want to know what is happening, then.

ACTING CHAIR: ' No ' is not sufficient ; keep going.

Ms Mellor : I am not sure that beyond 'no'—

Senator SIEWERT: Is there a downgrading of, and funding for, the activities in Western Australia?

Ms Mellor : No. Insofar as some of that 180 may come out of Western Australia, there will be fewer staff there, as there will be elsewhere in Australia. No. There has been a closure of a quarantine station in Western Australia, which was the Byford Quarantine Facility. That was a dogs and cats only facility. After very careful consideration, the department decided to close that facility because of fire risk. We had to evacuate it several times last fire season, which is very difficult to do—to find alternative quarantine accommodation for dogs and cats. Our staff safety was a concern. We have other quarantine facilities.

At the same, coincidentally, we were reviewing the quarantine period for dogs and cats, which has now reduced for many countries down to 10 days. The separation issue for owners to pets was relieved a little by having that reduced. Some of the staff there were contractors and they left at the end of their contracts. Others have been integrated back into the department's other activities.

Senator SIEWERT: So, there is another facility replacing Byford?

Ms Mellor : No.

Senator SIEWERT: Where are the dogs and cats going?

Ms Mellor : Dogs and cats now go to either Spotswood or Eastern Creek. Spotswood is located in Melbourne and Eastern Creek in Sydney. We are building a new facility in Melbourne, which will be operating from 2015, and both of those facilities will close down and fold into this. There will be one quarantine facility in Australia.

Senator SIEWERT: So, the animals are moved around backwards and forwards?

Ms Mellor : They are. And they are already. Certainly if you live in Brisbane your dog will be going to Eastern Creek or to Spotswood. It depends on the booking—all of that sort of thing.

Senator SIEWERT: It is a little bit closer than Western Australia.

Ms Mellor : I know. They are certainly moved all over the world.

Senator O'SULLIVAN: Would you be kind enough to tell the committee where the post entry quarantine facilities are at the moment? I believe there are four.

Ms Mellor : There are four left now. There is a very large one in Eastern Creek. There is one in Spotswood, which I mentioned—a suburb in Melbourne. There is one at Knoxfield in Melbourne and there is one on Torrens Island in South Australia.

Senator O'SULLIVAN: If I understand the intention of the department, they are all going to be concentrated in one new facility?

Ms Mellor : That is right.

Senator O'SULLIVAN: In Victoria?

Ms Mellor : That is right.

Senator O'SULLIVAN: Are there any additional cost impacts on clients or industry given the rationalisation to one place that they might not otherwise incur at the moment?

Dr Grant : As Ms Mellor has said, some commodity lines—dogs and cats, for example—formerly went into three facilities, now two. That means people returning to Australia or immigrants coming to Australia in Western Australia would now have to send their dogs to the east coast, and then after they have been through quarantine they would fly back to the west coast. That has incurred an increase in cost for the domestic leg of the transfer. But let us be clear, if you are a Northern Territorian, a Queenslander, a Tasmanian or a South Australian and want to bring a dog or a cat into the country, it has always had to go through one of those two facilities or the one that we have recently closed in Perth. The domestic leg after quarantine has been at the cost of the importer.

Senator O'SULLIVAN: Do large animals go there also?

Dr Grant : When we go to large animals we are talking largely horses. Horses are imported currently through one facility in Australia by us, and that is through Eastern Creek. There is a quarantine approved premises, a private facility for racehorses, in Victoria. That is an authorised facility, inspected and audited by us. Basically, horses come through Eastern Creek.

Senator O'SULLIVAN: What are the impacts?

Dr Grant : The impacts are relatively minimal.

Senator O'SULLIVAN: Finally, when do you expect the Mickleham facility to be fully operational? I am a Queenslander; you have to cut me some slack on the pronunciation.

Dr Grant : It is coming into operation in two phases. The first phase will be from the end of 2015, and that will be to accommodate mainly plants. The reason for that is 60 per cent of our capacity and potentially about 70 per cent of our plant capacity is handled through Eastern Creek. Eastern Creek is a leased facility, as are all of our facilities. That lease terminates on 31 December 2015. We intend to be able to have the transfer of plants from that facility and from the Knoxfield facility, which is also a plant facility in Victoria, into the new facility by the end of 2015.

Senator O'SULLIVAN: Thank you.

Senator RUSTON: I have questions about the new facility. One of the things that was raised with me by one of the agricultural groups is that obviously they have a lot of plant material there that is terribly valuable to them. They are wondering whether there is a guarantee that there will not be any interference or increase in the time frame from which they are able to get access to that quarantine material because of the move between the two?

Ms Mellor : I understand the question. Dr Grant points to the fact that the new facility will become operational in late 2015. We are doing quite detailed transition planning, because we obviously will need to be moving quarantine material. Anything that is still in quarantine, for example in Knoxfield or in Eastern Creek, throughout the release of pieces of the new facility, and it will be moved under quarantine. The transitioning planning is quite detailed. You are absolutely right; the material that is in the plant facility is quite precious. We will be moving it under quarantine conditions. It is not our intention to increase the lifespan of the quarantine period.

Senator RUSTON: The other question that was put to me was, particularly given the reasonably long time that this material is in quarantine—

Ms Mellor : For good reasons.

Senator RUSTON: Yes, I quite understand. Is there any opportunity to move it in its second year or its third year into second stage quarantine facilities? I raise specifically the example of the facility at Dareton of Auscitrus, which has the capacity to maintain very high standards of quarantine, and it would enable them to be able to start their commercial operations in relation to these plants. Even if it was a matter of a season earlier, it would have a significant commercial implication to them. I am wondering whether there may not even be some budgetary benefit as long as the risk—

Ms Mellor : That is the thing. I will not go to the specific example that you have given, because I do not know what is in quarantine and what the nature of their facility is, but certainly the stuff that goes into the government's quarantine facilities is at the highest standard. Not all of the facilities elsewhere are at that same level. I think Dr Grant would call it PC3, which is a very high standard. I am sure that through the course of the transition planning for any people that have material that want to put a case to us we would look at it, but we would be doing it against the risk basis that you rightly point to.

Senator RUSTON: It is something that you would be prepared to look at?

Ms Mellor : Yes.

Senator RUSTON: I will organise to get something to you. That would be great. Thank you.

ACTING CHAIR: Thank you. We will now take a break. Dr Grimes, we will come back with ABARES at 7.30 pm.

Proceedings suspended from 18:27 to 19:29