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Finance and Public Administration Legislation Committee
30/05/2013
Estimates
FINANCE AND DEREGULATION PORTFOLIO
Medibank Private Ltd

Medibank Private Ltd

[09:07]

CHAIR: I welcome back the Minister for Finance and Deregulation, Senator the Hon. Penny Wong, and I welcome Mr Savvides, managing director of Medibank Private. Minister, do you have any comments?

Senator Wong: No.

CHAIR: Mr Savvides, would you like to make an opening statement?

Mr Savvides : Yes, I would. I thought I would give you a little bit of an update on the organisation and how we are travelling. Our number one concern is the benefit costs that we are paying as a health fund. Last year they grew 10 per cent. Our outlay on hospital cover was $3 billion last year. That particular component grew 12 per cent—twice the rate of our premium increases to members. What is driving that is, in part, an indexation we negotiate with the hospitals for their annual reviews. Those contract negotiations are always quite tense. You cannot always meet the expectations of your providers. But the other factor which is fuelling that growth is utilisation driven by population ageing, by new technologies and by improved access to health care. We continue to work through ways and means to coordinate care more effectively to deal with increases in that utilisation—in other words, reduction of unnecessary usage—whilst maintaining and improving healthcare outcomes.

We are also going through a period in which there are some changes around our product itself—means-testing of the rebate; the new legislation going through parliament, which will impact on our systems and the cost structures of our products; and the prepayment which occurred as a result of the timing of the means-testing commencement date. As that runs off, there will be changes to cover and it is likely there will be heightened switching or down-selling in the market. So our organisation is preparing itself for those conversations with customers to make sure they are properly informed in the decisions they make as changes to premiums flow through. That also has a flow-on effect around our prudential cover, so we look at claiming going forward. Our actuaries work in this area and make sure we meet our prudential standards and ensure that we have the right buffers and reserves in place to protect us against the volatility.

Just to remind senators, regarding the $5 billion worth of revenue that Medibank receives every year from members, we pay out a little over $4 billion in claims. If the $4 billion projection, in our assessments, is incorrect—there is some volatility in that—that can have consequences around the margins, which are in the three and four per cent range in terms of operating margins.

What are we doing about this sort of context? Obviously, costs are important—contracting costs and the cost of benefit outlays, but there is also our own corporation and the overhead of the organisation. We have a fairly intense program of cost reduction happening at the moment. We have been able to meet our targets for this financial year. We are continuing that program into next year. We are trying to double the savings target, as we add another significant reduction next year. This contributes to keeping premiums as low as we possibly can.

We are also refreshing the second brand that we own in health insurance: AHM, the original Australian Health Management brand, which we acquired three years ago. That has been repositioned to be targeted at those individuals who, if you like, are looking at a price for health insurance, not so much the benefits, and maybe are in the obligation purchase—that is, if they do not buy a product, they pay the extra Medicare levy surcharge. That reformulation of our product range is going to market as we speak.

Membership continues to grow but at a slower rate. We are seeing an increase in customers coming to us to sell down, to reduce their premiums and have, if you like, lighter cover. There is an increase in that proportion of activity. We are pleased to see our health advice line, which is run by our nurses, is continuing to increase in its calls received. It is a 24/7 service that we provide free for members. We provide more health, in the experience of being a customer of the company, not just an insurance policy or a financial service.

In May, we launched Anywhere Healthcare at a launch in Tasmania. This is our new video consultation platform that links the patient, the GP and the specialist in a video consultation. It is to assist Australians to be able to reach and access specialist services, especially for those who are in regional and rural Australia. It has been a very successful launch. We have had quite a lot of inquiries from general practitioners wanting to install the system and use it as a channel to connect their patients with the nominated specialist that the patient requires through a video consultation. We funded that entirely through our own organisation and we are launching that into the Australian marketplace through the GP networks across Australia.

This month we also launched our research on mental health in Australia. We have worked with the Nous Group to understand more fully the cost of mental health in the Australian population. That is, not just the direct costs that we normally measure but consequential costs in terms of use of the health system more broadly. We were surprised to discover in the Nous research that the costs associated with mental health in Australia are $28.6 billion a year. We are working with the peak organisations to provide coordination of services for those who have mental illness to try to minimise, again, wasted costs that are occurring through random health care, if you like, rather than coordination of care.

Finally, I just thought I would mention Garrison Health, which is the ADF health contract. The commissioning phase is successfully completed. We are now in an operational mode. We are pleased to be able to report that the system is working well. I will be briefing senior officials in the Defence Force this afternoon, as we do our normal regular update. We are very pleased about how that contract is working. We know we are saving the ADF money, but we are also providing a more consistent service to the 80,000 men and women who are part of our Defence Force. I will stop at that point and open it up for questions.

Senator CORMANN: Minister, I was keen in this session to start off with one of my routine questions to you: what is your current position in relation to the potential sale of Medibank Private?

Senator Wong: It remains the same. We remain firmly committed to keeping Medibank Private wholly in public hands.

Senator CORMANN: So the government has not considered the potential sale of Medibank in any way?

Senator Wong: The government's policy is as I have stated.

Senator CORMANN: Is that a yes or a no?

Senator Wong: We are not considering a change of policy.

Senator CORMANN: Not even a partial sale?

Senator Wong: No.

Senator CORMANN: Given that the Medibank Private Sale Act passed parliament in 2006, can you talk us through the work done since 2006 to give effect to that legislation passed by parliament.

Ms Mason : There has been no work done in recent years at all on the potential sale of Medibank. As to work that may have been done closer to the passage of the legislation, I would need to take that on notice and check our records.

Senator CORMANN: What is the status of a bill that is passed by parliament, an act of parliament, that is then not enacted by government? What is the status of that as far as executive government is concerned? Executive government administers the laws. What sort of work as a matter of course do you do in relation to legislation passed by the parliament?

Ms Mason : If it were government policy to proceed with the sale, the department would assist the government to sell the company. But, as the minister has just said, it is not government policy—

Senator CORMANN: But it is parliamentary legislation.

Ms Mason : I think the difference is that the legislation enables a sale to happen, but it is not government policy to sell the company.

Senator CORMANN: What would be the time frame required for the department to give effect to that legislation if government policy changed?

Ms Mason : We would need to take that on notice. A sale process can take some time—it can be done quickly but it can also take some time to prepare for a potential sale and it is not something that we are working on.

Senator CORMANN: Mr Savvides, I am interested in the figures you have put to us around the rising cost of benefit payments in particular in relation to hospitals. You mention an increase of 12 per cent. Obviously there is both utilisation and the increase in cost per service, so to speak. Can you give us a high level indication of the extent to which the increase in benefit payments is driven by increases in utilisation as opposed to increases in the cost of service.

Mr Savvides : Hospital treatments, for example in the published figures for FY 2012, $3.2 billion, grew 10.4 per cent year on year—that is hospital services, not the ancillary or general. If you unpack that I think you will find that it is roughly one-third indexation—the adjustment every year for the inflation effect and CPI effect—and the other two-thirds is utilisation, or volume increase. Something like five to six per cent more members went through those hospitals year on year, and that extra volume is because the population we cover, the four million lives, has grown a year older. The bell curve is skewed to the right—there are more older people in the mix than younger as the baby boomers drift to the right. That volume bubble is manifested in utilisation. It will be there for something like 15 years, and it is not at its peak yet. I am about to go into that space.

That volume is an issue for us because it is represented in real dollar costs that we pay out. There is 10 per cent growth in hospital claims year on year, which our premiums have to cover to ensure our prudential margin. And our premiums are only 10 per cent ahead of our costs, because of the way the claims ratio plays out against our revenue. We do rely on investment income, as you know. We have our prudential reserves, which are invested. We invest conservatively, and primarily our investments are interest-rate based.

Senator CORMANN: You say you rely on investment income, does investment income cross-subsidise—

Mr Savvides : It does.

Senator CORMANN: It does?

Mr Savvides : To some extent it does. It is a small amount. Last year there were $150 million of investments against an outlay of $4 billion. It is a very small amount.

Senator CORMANN: So you have an operating deficit, then, do you, for your hospital insurance—

Mr Savvides : No, our underwriting margins are positive, and our investment income is additive to that.

Senator CORMANN: But you say you do not need it to actually achieve a positive—

Mr Savvides : You can live without it, yes.

Senator CORMANN: So there is $3.2 billion of hospital benefit payments—and obviously that is made up of utilisation and indexation. What about, on the flip side, the hospital insurance premium income—how has that been growing? That is obviously made up of growth in membership as well as indexation.

Mr Savvides : Yes.

Senator CORMANN: What is the correlation?

Mr Savvides : There was around seven per cent growth last year overall in the premium income growth.

Senator CORMANN: And in dollar terms?

Mr Savvides : I do not have the numbers on me right at the moment. I can take that on notice. It is roughly $5.3 billion.

Senator CORMANN: What are the proportions in terms of growth in membership as opposed to rate increases?

Mr Savvides : It is primarily rate increases. The last published membership growth, the FY12 number, was 1.8 per cent, against a premium increase of about, in my recollection, 4.7 per cent. So most of the growth comes through the premium increases.

Senator CORMANN: Obviously, all other things being equal, 4.7 assumes that everybody stays on the product they are on. One of the risks we have talked about in recent estimates is the risk of downgrading the level of cover. Can you talk us through how that has been trending and the implications of that for your premium income?

Mr Savvides : Generally, not specifically—I do not have the specific numbers—we know through our call centre conversations and retail store conversations that, when we do cover reviews, as the consequence of cover reviews, we are seeing an increased amount of sell-down. People are asking, 'What cover can I have for less dollars that covers the essential things that I am looking for?' or 'Will I drop my ancillary cover and only stay with my private hospital cover?' I am not saying that is all conversations. I am saying that the percentage that is sell-down is growing as people are looking for premium relief, especially those who know that they will be means tested and have the higher hit with the rebate being lost off the premium And they are getting a 40 per cent increase, as you know, so they will be looking at $1,000 a year more in premiums for mid-level cover. They may ask, 'How can I save some of that $1,000 a year by being on a lower cover?" We are very concerned to make sure that members understand that we are covering them. This is a human being that we are covering and we are covering their needs as they get older, so they should be very careful about compromising the level of cover that they have in their policy.

Senator CORMANN: Can you give us an update on your level of capital reserves?

Mr Savvides : I do not have those numbers right at the moment. We do not disclose the mid-term position, but in the financial report of last year our prudential reserves are all stated.

Senator CORMANN: What were they?

Mr Savvides : I think approaching $2 billion of all of our prudential capital, including the cap add ratios.

Senator CORMANN: Can you update us on what has been happening in terms of dividend payments since we last met in February?

Mr Savvides : We pay our normal interim and final dividends but we do not disclose those until we publish our annual results. That has been the practice of GBEs.

Senator CORMANN: Obviously in the budget there was provision—not this budget but the budget before although I cannot remember now but it was somewhere along the way; I think it might have been in the MYEFO—and there was an additional special dividend of $300 million. Was it in last year's budget?

Mr Savvides : No, we actually disclosed through a disclosure note in our annual report last year our intention to pay a $300 million dividend.

Senator CORMANN: So has that been paid or not?

Mr Savvides : We don't disclose that until we publish our results.

Senator CORMANN: You don't disclose whether you've paid a special dividend?

Mr Savvides : Most corporations don't disclose until they actually tell the market.

Senator CORMANN: I am sure we have had these conversations in the past where you did actually disclose.

Senator Wong: No, the answer has always been the same.

Senator CORMANN: I don't think that's right. So has a final dividend been determined yet?

Mr Savvides : We have not disclosed our final dividend payments for the prior year.

Senator CORMANN: I am not even asking you how much it is. I am just asking whether it has been paid.

Mr Savvides : So it is the normal process of dividends. There has been no disruption to normal process.

Senator CORMANN: Have there been any fresh discussions on new dividends, new special dividends since we last met?

Senator Wong: I think you are asking in a different way the same question to which Mr Savvides has answered it will be disclosed in the annual report.

Senator CORMANN: We know that since the government changed the status of Medibank Private you have collected about $832 million worth of dividends on top of quite a sizeable amount in income tax, which of course comes from the privately insured members of Medibank Private, running down their capital reserves.

Senator Wong: Yes, and the taxpayers of Australia have benefited from the dividend that you wish to take away from them through privatisation.

Senator CORMANN: Can we have an update on your membership, both in numbers and as a percentage of the total market, Mr Savvides?

Mr Savvides : I do not have that material with me. I could take that on a notice.

Senator CORMANN: We ask about this all the time. It is pretty basic.

Mr Savvides : Those on membership we publish in our annual results. To disclose to competitors, all 30 of them out there, a quarterly update on our position would undermine our ability to compete effectively.

Senator CORMANN: That is the first time I have had this answer in estimates from you. You normally quite freely share with us membership trends and where you track in terms of your market share.

Mr Savvides : I don't think I do.

Senator Wong: I don't think that is true, Senator. I think you probably want him to.

Senator CORMANN: I will send you a letter separately pointing you to your evidence in the past, Mr Savvides.

Senator Wong: Why don't you just ask the question and we will take it on notice and we will see what we can do.

Senator CORMANN: That is a very unusual answer. What is the percentage of your non-health related business?

Mr Savvides : The revenue from non-private health insurance?

Senator CORMANN: Yes.

Mr Savvides : So our Medibank Health Solutions revenue?

Senator CORMANN: Yes.

Mr Savvides : It is approximately $300 million a year in the core activity of Health Solutions. The new contract that has come into play this year is the ADF Garrison Health contract. It is roughly about the same amount. When it is fully annualised, because Garrison did not start in the beginning of the financial year, it would double the revenue of Health Solutions.

Senator CORMANN: So Health Solutions is a profitable venture for Medibank?

Mr Savvides : It is a profitable venture and the specific nature of the profits will be disclosed in our annual accounts.

Senator CORMANN: How is pet insurance going?

Mr Savvides : It is a small category. It continues to be a companion sell to our broader product portfolios, as is travel insurance and life insurance.

Senator CORMANN: Minister, what is the public policy case of the government owning a pet insurance business?

Senator Wong: We own Medibank Private and consistent with the governance arrangements we do not direct them as to how they run their business. I suspect if I did you would be in here being very heavily critical of me.

Senator CORMANN: Hang on, don't you have a role in approving corporate plans and don't you have regular formalised interaction as the shareholder, Minister? You have got a level of it. To suggest that you have got no influence at all I would have thought is understating your role, Minister.

Senator Wong: Yes, we do approve the corporate plan but—

Senator CORMANN: You have 100 per cent shareholding in a pet insurance business?

Senator Wong: We have a 100 per cent shareholding on behalf of the taxpayers—

Senator CORMANN: In a pet insurance business.

Senator Wong: in a very substantial private health insurance business that a lot of Australians rely on, that is performing well and returning dividends to its shareholders, the Australian taxpayers.

Senator CORMANN: So what is the purpose of pet insurance as part of the business you run, Mr Savvides?

Mr Savvides : That is part of the bundle. When we survey our customers—we are constantly surveying them—we ask them how we can meet their expectations within the remit of our business profile. There are many members of Medibank Private, especially those who are very attached to their pets—which, by the way, there is some research around the help of a human being and their companion friendships, especially when they are on their own—who do ask. Overall, it has health outcomes that are beneficial—

Senator Wong: I think—

Senator CORMANN: You talked to us about the claims trends and hospital insurance for humans. What are the claims trends for pet insurance?

Mr Savvides : I will not—

Senator Wong: Let me tell you, I wish my mother had taken out pet insurance for her cat.

Senator CORMANN: How old was your mother's cat?

Senator Wong: Oh, he is quite old and he is costing us a lot, but he is a wonderful cat.

Senator CORMANN: Would the minister's cat have been able to benefit from pet insurance?

Senator Wong: We did not take it out. I just said that I wish we had!

Senator CORMANN: Do you see that? He is shaking his head!

Mr Savvides : We have a 10-year rule on animals!

Senator CORMANN: Because there is no community rating for pet insurance, is there? There is no—

Senator Wong: I am just making the point! It is very expensive.

Senator RYAN: I hope it joined early, otherwise the Lifetime Health Cover—

Senator Wong: No, we precluded, so—

Senator CORMANN: And there is no rebate for pet insurance either, is there?

Mr Savvides : I think there is an assumption you are holding on to, Senator, that I need to correct and that is that we do not have an underwriting risk with pet insurance as a commission.

Senator CORMANN: You do not have a what?

Mr Savvides : An underwriting risk.

Senator Wong: Underwriting risk.

Senator CORMANN: And so essentially you are just using the Medibank Private brand to sort of flog a product?

Mr Savvides : No, it is the other way round. We have a customer base that has a need and we have leveraged our brand to provide a solution for their need. We have not put at risk our balance sheet, because it is a commission sale.

Senator Wong: There you go.

Senator CORMANN: So who is underwriting the insurance for you?

Mr Savvides : We go to the market every three years and test the market. There are multiple providers. I do not have the names at the moment. I will take that on notice.

Senator CORMANN: Sorry, it was quite remiss of me: the government does not actually own a pet insurance business; the government is contracting pet insurance through you.

Senator Wong: A government business enterprise has made a decision that its business plan encompasses providing a service to a portion of its membership. That is what is occurring—without taking on risk. That is right.

Senator CORMANN: Mr Savvides, just going back to some more serious matters: what is your assessment of the impact on Medibank Private of PHIAC—the regulator—seeking to extend its supervisory jurisdiction, especially into competition?

Mr Savvides : One thing we have noticed is that in interaction with PHIAC over the last 12 months, they have been very keen to try to work a process through, to smooth and make more efficient the annual premium approval methodology. We have had some real gains in that area. So we have been pleased about their efforts, and also defining the roles of the regulator, the department et cetera. That has been really great—the health department.

They have an extended role—I think it is PACU, the unit that they have developed. It does provide a market assessment and commentary. It is still young in its phasing and we have not been disappointed about what we have seen. We have a positive and constructive relationship with the regulator. We just recently conducted a review of our internal systems in our IT, our business sustainability and disaster recovery capability. It was a very exhausting review process over a week—the prework was enormous—and we came through with a very strong scorecard. So we were very pleased.

Senator CORMANN: Sure; and I guess I would not expect you, for commercial reasons, to be in any way critical of the regulator. However, in a generic sense this is an increase in regulation into a sector that is already highly regulated, is it not? What is the implication for Medibank Private in terms of your costs—your compliance costs in particular?

Mr Savvides : I do not think there has been at this stage. For example, let me talk about a positive aspect of it. We have raised with the regulator be the emerging role of aggregators in the health insurance market—the online comparison sites. They are not insurance companies; they just promote the offers. They are like agents. The aggregators churn the market, and that is a cost to the sector. So we have taken our analysis of the impact of the aggregators to PHIAC in this particular unit of theirs and they are reviewing our submissions. They are also researching more broadly the views of others.

We think there ought to be some regulation around the discounting that can occur through regulator channels which cannot occur directly through insurance firms. So we have an unfair playing field, we believe, and we have raised those concerns. It can play a constructive role in ensuring good competition.

Senator CORMANN: Is there a case, still, for having a separate private health insurance regulator as opposed to having an APRA type approach across the financial services sector as a whole?

Mr Savvides : I have heard from other health insurers who operate in both general or life and health insurance and they have to deal with two regulators—APRA and PHIAC. They have often said that it would be better if there were one because it would be one conversation. We do not have that problem at Medibank; we only deal with PHIAC. When PHIAC wish to undertake more intensive regulatory work, they actually use the resources of APRA to do that work. So it seems like that companion activity is already happening, even though the names are still separate.

Senator CORMANN: I just want to go back to some of your opening remarks about the growing cost of hospital benefits, in particular, and the contracts with hospitals. Can you talk us through what the contracting environment with doctors in hospitals is currently like for a private health insurer?

Mr Savvides : It is tense. It is different across the sector. There is the religious not-for-profit sector, there is the private equity sector, which is highly stressed in terms of gearing, and then there are the listed companies that operate in our market. There is the odd group of independents as well. They are all different in terms of needs and where they are in terms of expectations in contracting.

We continue to try to contest the market rather than just do an indexation adjustment. We do the case-mix comparisons under a neutral cost weight basis so that the comparisons are fair and we draw attention to the provider if they are an outlier. If they are charging too much or there is something abnormal about their cost structure, we try to bring them back to average or to the right sort of premium in the market that reflects the services that they offer. That is not often welcomed. But, if we were to ignore the work of contesting the market, our customers would pay a lot more and that would have a negative effect on our market share and our membership.

Senator CORMANN: Going back to Medibank Health Solutions, can you talk us through the progress on implementing the new contract to provide healthcare services to the Defence Force?

Mr Savvides : We inherited an arrangement which was not a national system. There are, I think, about 70 garrisons around the country—that is Army, Navy and Air Force—and many of them had their own arrangements in terms of relationships with local, medical and health service providers as well as on-base clinics. We inherited the lot and our job was to turn it into a consistent integrated service of health coverage for the around 80,000 Australian Defence Force personnel across Australia.

We went out to the marketplace and contracted two off-base health service providers. The first phase of that was quite straightforward. But when we discovered some anomalies in pricing, especially in the area of specialist charges in some of the regions, that became a bit tense. We used the weight of evidence of our private health insurance provider contracting network to make the case of what is reasonable, given that we are a volume purchaser of health care in Australia. We had discussions with the AMA. We did not always agree but, ultimately, we came through with a very substantial network of off-base hospital specialists, ancillary providers and general cover providers—optical, dental et cetera—as well as a contracted arrangement for running the clinics on base.

I do not have the specifics, but we are saving the ADF money by having a national, consistent system with contested supply. Our CAT team, which is our central team of processing the referrals into the provider network, is operating efficiently. We have a 24-hour health advice line for our ADF staff, and that has been well used. And we continue to have conversations with the ADF around new services or better ways of treating, including the video consultation platform I have just talked about—Anywhere Healthcare—in helping our treatment response rate improve by not letting distance or access to specialists get in the way of treating our ADF staff immediately when they need those services.

Senator CORMANN: So summing up what you just said: the recruitment of healthcare professionals and doctors is now on track and the remuneration arrangements and all the issues with the AMA have been resolved.

Mr Savvides : Even in our private health insurance space, all the issues of the AMA are not resolved.

Senator CORMANN: They are never entirely resolved—is that what you are saying?

Mr Savvides : We have an operating environment that is meeting the needs and the commercial expectations of our client.

Senator MOORE: You noted that the process now has been bedded down with that defence contract. We talked about it at previous estimates. How long has it been running for now?

Mr Savvides : On the ADF contract, I will get some specifics so I have the dates right. The contract started in November in an operational sense. We started the contract implementation phase in July-August.

Senator MOORE: 2012?

Mr Savvides : Yes. Now we are up and running—250,000 on-base appointments have been consumed already; 100,000 pathology tests and 28,000 imaging tests. It is an operational environment and the response rate is meeting the response rate requirements. But for the first time we are talking about a nationally contracted network of providers. The size of the provider network is: nearly 4,000 medical specialists, nearly 9,000 allied health professionals. The ratio of health workforce to individual—that is, the ADF staff—is one in 20. For every 20 ADF staff we have one specialist. In the Australian population, it is one in 700. So it is a very strong, very responsive, high-quality health system for the ADF. It differs from the Australian marketplace in one key way: you must be referred. It is through the referral that the savings occur and the quality consistency is delivered. So we are learning things about healthcare cost management through this exercise of running a defined population. If we can show proof that we can improve the health status of the people we cover at a lower cost through this kind of arrangement then that has obviously very interesting consequences around how we could promote reform in the broader health system to get similar benefits for funders but also benefits for consumers of health care.

Senator MOORE: How does the referral process operate? I think we talked about that two estimates ago, about exactly what the linkage was going to be and that referral point was critical. How exactly is it working?

Mr Savvides : The central CAT team is in Richmond in Melbourne. They received the request from the on-base clinics, which are run by the doctors who are employed there.

Senator MOORE: They are already contracted through defence?

Mr Savvides : Yes. The referral process is really a quality check to ensure that the provider you are referred to through the clinicians is the right provider contract but not only that; the relationship will be paid. The individual is not paying. They used to pay with a credit card in the past. That is no longer required because we now have a contract system and an ADF employee will go to the provider and the payment is behind-the-scenes, as it is in health insurance.

Senator MOORE: There is no out-of-pocket expense for anything? Concerns were raised at the time.

Mr Savvides : No. I think the ADF have the best health cover in Australia.

Senator MOORE: The clinics are now on all the major bases?

Mr Savvides : I think they are. Some bases are close to other bases and they may share. If you want a specific on that, I could take that on notice.

Senator MOORE: That would be great. Also what about overseas placements?

Mr Savvides : We are domestic. We run the system on the Australian continent.

Senator MOORE: What if those personnel who are having treatment going through the system are posted overseas? Would that operate overseas?

Mr Savvides : No, the overseas assignments are covered with their own medical service provision. If someone returns and they need treatment then they fall into our environment here.

Senator MOORE: On the mental health information, was there any linkage there with the military contract? Does information through the military contract get fed into that research?

Mr Savvides : I do not know if that is the case. I can take that on notice. I know we work with organisations like beyondblue, Black Dog in Sydney and others. There is a flow-on effect in our work on mental health that will be applied in terms of the knowledge, the know-how, into the ADF environment. We will have consultations with our client service contacts there. We already do have counselling services, but we may improve the quality and the depth of the sophistication of those services as we learn more from our research with the Nous Group and beyondblue.

Senator MOORE: Is there a review process in place for the Defence contract, because it has only been in place for about eight months?

Mr Savvides : It is quite a robust contract.

Senator MOORE: I would expect so.

Mr Savvides : It has lots of checks and balances. Part of my conversation later today is part of that, to be in dialogue with the senior office to make sure that they are getting the services they require. I am accountable to respond if they are not.

Senator MOORE: Thank you.

Senator CORMANN: Has Medibank Health Solutions been engaged by the department of immigration to provide services to people accommodated on Nauru or Manus Island?

Mr Savvides : No, we have not.

Senator CORMANN: Thank you.

CHAIR: In relation to your opening comments on launching the new program dealing with video conferencing coincidently in Tasmania, firstly, can you tell me why Tasmania was chosen as the launch site and, secondly, can you talk the committee through how that is going to work and what sorts of services are actually provided?

Mr Savvides : I am not sure why our team chose Tasmania other than their relationship with the local GP networks there. They probably had a significant amount of enthusiasm for the technology and also the reach to specialists had a higher need. So they facilitated the launch there because they had the real players engaged with the real service and hence it was a credible launch, not a show-and-tell exercise. It is a national service we have rolled out. We have contacted all of the GP networks around Australia and independent GPs. Any general practitioner can install the technology in their practice. It is not just the conversation technology; is also a payment system embedded in the conversation. It identifies the payer and the reimbursement cycle occurs behind the telco conversation, so administratively it is more efficient. It also has the ability to bring the health record into the conversation so that the clinician has the history and file of the patient in the conversation.

The sort of power play in this technology is having the GP and the patient together speaking to the specialist. That is really effective. It rarely happens. You normally get the GP referral and you do a one-on-one touch point. That is suboptimal in the health system. We are passionate at Medibank about integrating health care more because through integration we get better decisions, better outcomes and less waste by having repeat visits that would have been unnecessary if we only had got the care providers together in a team based conversation. Video technology can do that at unit costs much lower than the physical system can.

CHAIR: Certainly it goes hand-in-hand with the desire of the Tasmanian community to have greater access to specialists. Also Tasmanians see the rollout of the NBN as a real advantage in terms of healthcare generally.

Mr Savvides : It can only help, yes.

CHAIR: It will be great. You also touched on that you have some growth areas. Can you break down the demographics of the increases that Medibank are actually enjoying at the moment? In terms of new members coming in, what age groups are they in?

Mr Savvides : I do not have that information on me. There are segments that grow faster than others. There is no doubt about that. Our marketing teams are often wondering why we are not getting growth in some categories compared to others. They are constantly looking at ways to reach people. Part of the reason we refreshed and energised our second brand was to be able to reach into segments that maybe just one brand cannot reach into because we are trying to cover too many bases in the proposition.

In terms of the general conversation around growth, our Medibank Health Solutions teams are finding more and more funders of health care, like state governments, are, say, providing services for high-claiming older Australians who have multiple situations in terms of disease status—I think it is something like two per cent claim 35 per cent of the state budget in health care, in the normal population ratio of costs. Our conversations there are that the Health Solutions group can come along and provide a care coordination service: take the funding that is already being spent on that population and give back a proportion in savings, coordinate the care of those people with high-touch case management and seven-by-24-hour contact with telco, arrange their appointments, and keep the file updated in terms of health records. That activity can be done at a positive margin for Health Solutions and a saving for the funder, and with improved health outcomes for that category of patient.

So we are exploring more and more the health management of segments of the population—and the ADF is a segment—as a new line of business. Even in the conversations around the NDIS, where disability is a category of population, there are interesting conversations occurring with some of the funders at state level about getting our approach to healthcare coordination happening in their particular funding area to save funding dollars but improve healthcare outcomes through coordination and the deployment of our virtual technologies.

CHAIR: You also mentioned in your opening points the increased traffic, for lack of a better word, on your nurse helpline. Can you step us through what that process is and where the areas of growth are and where you see the benefits to the community as well as to Medibank?

Mr Savvides : Generically, overall, we are saying that health insurance, as a financial service, is not sustainable. It has to become a health service, a health relationship, because the costs will continue to grow, and if there is no value in those costs—that is, relational value—with the customer and the member, we are going to stress out. So we have taken that view—that transformation is important—into health care.

One aspect of that was to acquire the McKesson Asia-Pacific business, which we did three years ago—the strongest seven-by-24-hour nurse network in the region; 800 Australian nurses seven-by-24, and 200 in New Zealand; and long-term contracts with state governments and the federal government. That business came on board. We then took a segment of that workforce and applied it to our four million lives in Medibank Private, and opened up the seven-by-24-hour nurse advice line for our members, free of charge. Anyone with a hospital plan with Medibank gets a fridge magnet, the number, and a personal conversation at any time. Most of the calls are weekends and evenings. They are skewed two-thirds to women and one-third to men. The age profile of the callers tends to be younger. So younger people, women, are accessing it seven-by-24, mainly evenings and weekends, and getting direct conversations with health professionals. We avoid unnecessary hospitalisations, in terms of appearance at A&E. But do not get me wrong—we also say, in many of those conversations: 'You need to go to the hospital, now.' It depends on the triage and the protocol and the outcomes out of that triage.

So we will probably introduce other health professionals into the virtual conversation and relationship with our members. And, as Australia ages, I think that conversation will become more regular. People who are tied to home, for whom transport is difficult, or who may be in a care environment, still having their ability to relate to their health professionals at any time we think is a future requirement to keep the costs in the health system down but also keep access up.

So we are excited about the Health Solutions future outlook. It will overlap our health insurance work because, as the two overlap, we actually transform the experience of health insurance over time to become, if you like, health assurance, not just the payment.

CHAIR: Excellent; thank you. Are there any further questions?

Senator MOORE: Mr Savvides, I am following up on questions I asked a while back where you talked about the range of servicing. I am following up on access in terms of online, phone, and office visit. I am just wondering whether you have any information. I know you keep that stuff, in terms of what mechanisms your customers use to access your services. There have been various letters that have gone out—and I have them; I am a Medibank Private customer—

Mr Savvides : Yes, so you see the traffic.

Senator MOORE: Yes. They talk about encouraging people to use different methodologies. Do you have any data on exactly which ways the clients use your service?

Mr Savvides : I certainly have the trends. I could bring the data, on notice.

Senator MOORE: That would be great.

Mr Savvides : So the trends are that there is more and more conversation online, and we now have the 'click to call' capability. So you are online, you are looking at our services, you have a question, you click and you get the call going straight through to the call centre, or you can register a request for the call centre to call you, with a time, if you like, as well. So there is more increased traffic online. We are still very much weighted towards service in health insurance conversations rather than health conversations. What I have just talked about with the help advice line with nurses is probably about 15 per cent—I do not have the absolute numbers—of our call traffic. I would like to see it be 50 per cent so that the relational conversations can be about health itself rather than about the administration of health payments, premiums or technicalities. So that is pressure on ourselves because we need to work hard to make our product simple so that the administrative side becomes compressed and we can work harder in the investment around health outcomes in the health relationship.

Senator MOORE: How many call centres do you have now?

Mr Savvides : We have two. One is in Wollongong—the ahm call centre—and the major one is in Melbourne. We have a subservice membership services group in Brisbane, but the principal hub is in the Melbourne Docklands call centre.

Senator MOORE: Can I get on notice the data on how many staff there are in each of those call centres?

Mr Savvides : I think we have about 250 people in call centres. Most of them would be in Melbourne. We have about 500 staff in retail. We still have around 100 locations in retail. We remain committed to the physical as well. We do not want to withdraw our presence from physical locations.

Senator MOORE: And the publicity signage in having the name up in the streets and shopping centres.

Mr Savvides : Yes.

Senator MOORE: On the general government services—and I know you are not a government agency—looking at that online aspect of people using them, do you have any way of knowing if people access you by iPad or iPhone? There has been a lot of push recently for people to get that kind of equipment and that people are more likely to access services in a mobile way.

Mr Savvides : I am pretty sure our IT people have the ability to discern the nature of the contract. I do not have that information, but I can take that on notice.

Senator MOORE: It is more of a general interest I have. There has been a general promotion about people interacting with government services—be it yourselves, Human Services or other areas. I am interested in this iPad-iPhone thing, which I do not use but I know is being promoted. On the process you had a couple of years ago for promoting the Travel Doctor service and getting, again, information about what is going on overseas so that people who are looking at it will use your service to find out hotspots and what they should have, do you have any data on how that was accessed?

Mr Savvides : I do not on me, but I can bring back to you on notice the volumes of traffic in terms of inquiries.

Senator MOORE: That would be good.

Mr Savvides : It is so, if I am travelling to Vietnam, I can find out what vaccination or protection I need.

Senator MOORE: Exactly.

Mr Savvides : We run a service registering the vaccinations. It is age tested for records and we can prompt you for repeats et cetera. That is the nature of that service. We are working on getting more of that Travel Doctor service into a virtual space because it is physically constrained to actually have the injection—

Senator MOORE: You cannot do that online!

Mr Savvides : Not at the moment; it will probably happen one day!

Senator MOORE: Do you know how much of the market you have with the Travel Doctor service?

Mr Savvides : No, I do not. We are probably the largest branded travel vaccination company in Australia, but it is still a relatively small organisation.

Senator MOORE: Do you have links from your service with Foreign Affairs in terms of information sharing? One of the issues that we raised in another context was the still low level of Australians travelling overseas who will through the Smartraveller service actually advise DFAT that they are going to go to a place. They only tend to contact DFAT when they are in trouble, and it can be quite serious trouble. Is there anything in your service with the Travel Doctor that people can click on to link through to that site so that—

Mr Savvides : There probably is in the customer information that we provide. We provide booklets of information about health and sickness when you are travelling et cetera. We run the visa health checks for the Department of Immigration and Citizenship for people inbound. That has been a long-term contract that Health Services Australia had before we acquired them.

Senator MOORE: That goes back many years.

Mr Savvides : So there is a very strong relationship with DFAT.

Senator MOORE: I just have one other area, and that is to do with the Special Purpose Fund. Can you give us information on the Special Purpose Fund?

Mr Savvides : It has run out of money. It was a part of the handover in the AHM acquisition. We committed to deliver the intent of the fund, which was to ensure that those monies gathered and collected would go to the community organisations that were doing research on health. We made those commitments to those organisations and we ran the dollars through until we completed the fund and then we closed the fund down.

Senator MOORE: So it is no longer there?

Mr Savvides : That is right.

Senator MOORE: It was part of the transition, wasn't it?

Mr Savvides : It was. It was an obligation that we had in the acquisition of AHM.

Senator MOORE: You run within your organisation a volunteering program that encourages staff members to volunteer. There is another special area you mentioned, a number of particular organisations that you prefer as sponsored areas. Can you tell me how people get in there and do they drop off? In a lot of areas now people are talking about how difficult it is to attract organisations like yours with a big network to become a sponsoring organisation. How are the decisions made about which organisations your volunteering support is provided to and how is that worked through your staff? What does it do? You have spoken before about what a very popular scheme it is within your organisation, and I would like to know how many people are working in it now.

Mr Savvides : The Medibank community fund draws one per cent of our pre-tax profits every year to fund the community grants that we undertake. The mission of the community fund is aligned with our purpose for better health so it has two or three categories. It identifies community groups that promote better health.

Senator MOORE: How is that done?

Mr Savvides : We get submissions asking us to fund a particular activity. It has another theme about community connectedness because social connectedness is a health determinant. We do not have to look for them; we get plenty of applications. So the money is divided three ways. The Smith Family identify families within community that have economic challenge, and their job is to get the children through school. We work with them and we have volunteers working with them as well. That is the connectedness piece.

The Stephanie Alexander Kitchen Garden program goes to primary schools around Australia. We sponsor that group. Their footprint is growing. As a sponsor we are helping in that growth. They have other sponsors as well. That gives us great relationships at the local school level to fly our flag. But it is not a heavy promotion activity. It is more a community commitment.

In the third piece we send out more than 100 grants every year in $5,000 nominations. We might get 300, 400 or 500 applications. We have an independent panel from our community fund that screens them and then we make a determination as to which organisations get the grants. We issue them and put that on our website. That gives us a much broader group with lower dollars but it keeps us connected and we are investing in community. Again, the theme is better health, focusing on the young and also the financially disadvantaged young as well with the Smith Family component.

Senator STEPHENS: On that point, does Medibank Private have a workplace giving program?

Mr Savvides : Yes it does. Employees can make a tax effective contribution to a panel of our charities and groups we are associated with. We match it dollar for dollar.

Senator STEPHENS: Could you give us an idea of the quantum of contributions?

Mr Savvides : I can bring that on notice.

Senator MOORE: Is that out of the same bucket?

Mr Savvides : No, that is a separate bucket.

Senator MOORE: The matching program has been working for a long time within various branches. I just happen to know people who are involved. There is an incentive for individuals in the local branches or your administration to donate and then Medibank Private matches up to $500?

Mr Savvides : I think you are more up-to-date than I am on the detail but it sounds right. Yes, there was a cap on it. It may change year-on-year but it sounds correct.

Senator MOORE: Is that a separate allocation to the community fund?

Mr Savvides : Yes that is right.

Senator MOORE: I am interested in the panel operation. Is it an internal panel that you determine through your organisation?

Mr Savvides : It is internal, but we make sure that they are not associated with any of the groups making the bid. But it is certainly not me sitting there stamping or whatever. We try to get people from health solutions, health insurance, state representation and some board members so it is a mixed group, and they assess and adjudicate. They have a fixed framework of evaluation, so it is consistent, and out of that comes a scoring system, and then the top tier get allocated the funds. We always say to those who did not achieve it, 'Please come back next year,' and give them some advice around how the positioning of the request might fit our criteria more strongly than the original submission.

Senator MOORE: The people who are successful—are they all on your website?

Mr Savvides : Yes, I think we do put them up there. It only happened just recently for the latest round, so it is quite fresh.

Senator MOORE: Okay.

Mr Savvides : And there is an annual report for our community fund as well.

Senator MOORE: Is there information on this in your own annual report?

Mr Savvides : No, it is quite light, because we go to the trouble of producing the separate report. But, the last time I spoke to our staff, I think they were going to bring the two together.

Senator MOORE: Right, because it makes sense.

Mr Savvides : Yes.

Senator MOORE: The other thing is about your geographic spread, because of your network. Is charitable involvement also looked at from a geographical perspective so it is spread across—

Mr Savvides : Yes, it is. We are a national organisation. In fact, part of our community fund contribution goes into New Zealand. We have 200 staff in New Zealand and a business there—we run the Healthline for the Ministry of Health in New Zealand—and some of their charities are recipients as well.

Senator MOORE: I was just wondering about that, how that crossed the areas. I will follow up if I have any other questions. Thank you.

CHAIR: I just have one question. You are getting very much into the digital movement. Do you have an app for iPhones and such?

Mr Savvides : We do, yes. We have a calorie balancer and a symptom checker. So we play in that space online.

Senator Wong: What does it cost?

Mr Savvides : It is free.

CHAIR: It is free?

Senator Wong: It is free. The whole committee can get the free calorie-counting app!

CHAIR: Counting the calories is not the issue, Minister! Counting them is not the issue.

Senator Wong: I try not to count. It is too scary!

CHAIR: That is right! Any further questions?

Senator MOORE: Yes. The research on mental health that you mentioned in your opening statement—is that available on your website?

Mr Savvides : We have a report which I can make available to you.

Senator MOORE: That would be great. I would really like to have a look at that.

Mr Savvides : Yes. We are happy to do that.

CHAIR: There are no further questions. Minister Wong, you wanted to say something.

Senator Wong: Yes, I did want to close this session of the estimates by putting a couple of things on the record that have taken place since the last estimates. On 15 March, I announced the appointment of Ms Elizabeth Alexander AM as the Chairman of Medibank Private Limited. Ms Alexander replaces Mr Paul McClintock AO, who has served on the board since 2007. I want to place on record the government's thanks to Mr McClintock both as a director and as chair during that six-year period, and for the professionalism he showed in steering Medibank through a period of great change. I also want to welcome Ms Alexander, who is obviously an Australian with very extensive business and non-business experience, having been, for example, Chairman of CSL Limited and Chair of APRA's Risk and Audit Committee, amongst other things. She has also been on the board since October 2008 and so brings a wealth of experience within the company as well. There is a current vacancy on the board, so I am consulting with Ms Alexander, as is appropriate and expected.

I did also want the committee to note that, at the time I became finance minister, of the portfolio Government Business Enterprises there were none headed by a woman. Medibank, NBN Co. and Moorebank, out of the eight, now have a woman as chair.

CHAIR: Thank you very much. Mr Savvides, we look forward to getting an update at the next estimates. Thank you.

Mr Savvides : Thank you.

[10:10]

CHAIR: We will now bring back the department of finance. Welcome back, Mr Tune. We are now with outcome 2. I give the call to Senator Ryan.

Senator RYAN: Mr Tune, I have a question which may belong in outcome 1, but your technical expertise might be able to answer it. If not, I understand that you cannot and I will put it on notice. It could even be for Treasury.

Senator Wong: We are going back to budget, are we?

Senator RYAN: I have one question I forgot to ask. I will try to ask this technical question. As I said, if you cannot—

Senator Wong: I have sent the budget people home.

Senator RYAN: I realise that. That is why I prefaced what I said. I am calling on Mr Tune's expertise. He may be able to help with this. In Budget Paper No. 1, on sheet 9-7, I am interested in the question of a component of the government's balance sheet. Listed under 'Assets' is a category called 'Investments, loans and placements', which is estimated to be $103.278 billion in 2012-13. I am interested in the composition—not right to the dollar—of this category. Note 14 on page 9-26 of Budget Paper No. 1 indicates that part of this amount is deposits, which makes sense. Are those government deposits held at the RBA?

Mr Tune : I think that is correct, but Dr Helgeby might be able to add more to that.

Dr Helgeby : Could we take that on notice?

Senator RYAN: Sure.

Senator Wong: I just want to make sure we are on the same page. It is the line item in table 2 on 9-7?

Senator RYAN: I have got a brief in front of me; I do not have the sheet.

Senator Wong: So it is 9-7?

Senator RYAN: Yes.

Senator Wong: So there would be a line item in 'Assets' of 'Investments, loans and placements', and then note 14 at the bottom of 9-26?

Senator RYAN: Yes. The same note says that another part of the funds is the funds Australia has lent to the IMF, which makes sense. But then it lists a large 'Other' category covering other items, which is around $70 billion, I understand. Is it possible to understand what that other $70 billion consists of?

Mr Tune : We will take that on notice. We might be able to get back to you before lunch. If we can, we will do so, but, if not, we will answer on notice.

Senator RYAN: I will just give you a heads-up of a couple of the subquestions I was going to follow up with. I assume part of it could be cash in the Future Fund. I am not sure if that is counted.

Senator Wong: No.

Senator RYAN: That is not counted?

Mr Tune : No. That is separate.

Senator RYAN: Is another part of it the cash balances of the other nation-building funds that we heard about last night? We got the numbers given to us last night.

Mr Tune : I do not think so.

Senator RYAN: If not, what else is in there in that $70 billion? I appreciate you do not have the information handy. Thank you for your understanding. In outcome 2—or would you prefer to deal in outcome 3 with questions about the relocation of the Sydney CPO? I am never sure if it is procurement or MaPS, but I am happy to go in either place.

Mr Tune : It is actually in MaPS.

Senator RYAN: I know that the running of the facility is under MaPS. I was not sure if the procurement of the facility was under MaPS.

Mr Tune : Yes. Deal with it in outcome 3, please.

Senator RYAN: Sure. I am happy to.

Senator Wong: Sorry; we will take it on notice, but there may be some Future Fund in that 'Other'.

Senator RYAN: Yes, I thought the cash component for the Future Fund might have been in there.

Senator Wong: This is the GGS. Anyway, we will take that on notice and come back to you.

Mr Tune : It sits within the GGS.

Senator RYAN: If I could now turn to other outcome 2, I want to talk about some ICT issues. We are getting to the point now where there are many new government websites. This is an ongoing issue for many governments, both state and federal. What strategies and steps are taken to maintain legacy websites? For example, a program might have changed. Another example is that there was a Nation Building plan, which we have discussed in this committee at great length—that would now be a legacy website. What steps are taken to maintain legacy websites? I have noticed on one website—when I was looking up local government recognition today—a little badge that says that this website is no longer maintained; it is kept for archival purposes. Is there a strategy in place around this? I imagine it is getting to be a bigger and bigger issue.

Mr Tune : Yes, you are probably right. Agencies are largely responsible for their own websites and the content, but perhaps Mr Archer has something further.

Mr Archer : Essentially Mr Tune is correct. It is very much a matter of responsibility for agencies to maintain legacy websites where there are issues of policy that continue to be relevant to them, or to eventually archive those if they are no longer current.

Senator RYAN: I know, for example, you have policies on accessibility, and we will move to policies on mobile websites in a minute. Do you have a policy to which government agencies are bound with respect to archiving websites so the information is accessible? For example, let us say I wanted to go back and look at the information the government had, and it had a Google maps feature on the Nation Building website with the school halls. Is there a policy requiring agencies to maintain those or to—

Mr Archer : We are not trying to oblige agencies to go back in time and to add accessibility to a broad range of websites. With some agencies, where the data continues to be relevant, there is effort being put into that. Certainly, following the machinery-of-government changes, departments will often undertake significant effort to bring up to date past websites and to make them accessible.

Senator RYAN: I am sorry; maybe I was not clear enough. I am not suggesting that you make past websites more accessible with the modern standards. I am more thinking about websites that were relevant at one time and that might not be relevant anymore to current policy, but that are relevant for research purposes, or someone doing an assignment, or to compare current policy, but that might be an expired program. Is there a policy around maintaining websites being live, I suppose?

Mr Archer : Access.

Mr Sheridan : Might I help my colleague?

Senator RYAN: Sure.

Mr Sheridan : The National Archives has a policy about archiving websites which is explained on their website. It talks about doing so at particular trigger points and how to do it. So there is a policy that exists.

Senator RYAN: So agencies live by the National Archives policy?

Mr Sheridan : Yes, that is correct.

Senator RYAN: That is different to the National Library's PANDORA program, isn't it?

Mr Sheridan : Yes, it may well be.

Senator RYAN: Just making sure I do not get confused.

Mr Archer : I will just make a comment on the National Library's program. They also run a program which I think is called Trove which stores information from past websites.

Senator RYAN: Turning to mobile websites, we have had a discussion before about mobile websites, and a number of larger government agencies were working on them and a policy that AGIMO was coming up with to try and get the government online—particularly with the increase in use of tablets now, as well as iPhones and things. We had issues with the ATO not being particularly accessible on the mobile thing about a year ago. Can you provide an update as to where AGIMO is on a policy with government mobile websites?

Mr Archer : Yes, we did discuss this at the last estimates and I indicated then that the strategy was going forward for consideration by the secretaries' governance board. That process has been completed; the strategy has been finished and the release of it is imminent.

Senator RYAN: When it is released, is it released publicly?

Mr Archer : It will be released publicly, absolutely. I touched previously on the core components of that strategy, the fact that we are looking to ensure that government websites or appropriate websites are mobile enabled—that is, that they support access from mobile devices and they do so in a more effective way, and in relation to the use of mobile technologies by public servants in improving the way in which they are able to do their jobs and deliver better services. That continues to be the core of the strategy.

Senator RYAN: Does this policy have particular benchmarks? As you are slowly rolling out a mobile website strategy—there is some incoherence across government: some agencies are very good, some are not so flash—are there particular trigger points for traffic or for when websites are redesigned? I ask this because the National Mental Health Commission until June last year had a contract out for website design for over $30,000. This is not a particularly surprising amount for a large agency, but it does not have a mobile capacity although it is quite recent. Do you have trigger points on traffic—it is hard to guess before you have built it, I suppose—or when something is rebuilt?

Mr Archer : Using the word 'policy' is probably overstating the document. It is essentially a road map that outlines a two-year action plan for agencies to assist them in the adoption of mobile technologies for both the customer-facing service delivery component and to support workplace productivity.

Senator RYAN: The policy is not just for users, it is going to be for the agency itself to roll out mobile devices for its own use?

Mr Archer : It is going to give guidance to agencies around how to make good use of mobile technologies in the workplace.

Senator RYAN: In our previous discussions we have been talking about this. My concern is for the user end. I still go to various government websites on my iPad and they do not work properly, and on an iPhone they do not work properly—let alone on a BlackBerry, but not much seems to work well on a BlackBerry. I would be concerned if the action plan, to use your words, was more focussed on rolling out mobile devices inside an agency than making the websites accessible for those seeking a service.

Mr Archer : No, not for a moment. There is a balance, because we see opportunities on both sides. It does not place a greater emphasis on that. It is not as though the fact we have not yet released the road map is holding back agencies. Many agencies have already released quite powerful and effective mobile applications. Just yesterday we gave an award to Department of Human Services for its Centrelink Express applications because they have been so successful and have had enormous take-up and interest from customers.

Senator RYAN: Are there particular agencies that are doing very well and others that, without condemning them, are a touch behind the curve or could learn from some of the better agencies?

Mr Archer : Indeed, you are touching on a point we looked at within the road map, and that is the degree to which some agencies could learn from others. Three agencies I can think of that have demonstrated strong capability in this area are DHS, the Bureau of Statistics and Department of Foreign Affairs and Trade with its Smartraveller mobile app. Other agencies which are more challenged are those agencies that have a large number of programs and they need to consider how to address mobile across those program ranges. They also may not have the same volume of users.

Senator RYAN: When it is released publicly, could you provide a copy to the committee so it can be circulated.

Mr Archer : Absolutely.

Mr Tune : It is due to be released very shortly.

Senator RYAN: Yes. I am not saying take it on notice, just when it goes out.

CHAIR: We saw Mr Conroy release the National Cloud Computing Strategy yesterday, which I understand Finance had a role in developing. This is a new concept for most people. Could you outline the key elements of this strategy in some detail, as well as the concept behind clouding and what that is actually going to mean for departments?

Mr Archer : I might take that from two perspectives. First of all, in relation to the strategy released by Senator Conroy yesterday, this is very much a broad view of the degree to which cloud can deliver benefits to the nation and the nation's productivity through high-speed broadband being broadly available through the NBN to deliver new services, certainly for government but also for small- and medium-sized businesses and community organisations.

The National Cloud Computing Strategy has three primary roles: maximising the value that cloud can provide to government—and when I say 'to government' I mean also in terms of how government uses cloud to provide services to citizens; to promote the use of cloud to small businesses, not-for-profit organisations and consumers; and to look to see where we can support a vibrant cloud services sector, looking at Australia's place in the world as a trusted cloud provider and making sure that there is appropriate competition and investment in cloud. Those are the three primary aims of the National Cloud Computing Strategy.

Yes, we worked quite closely with broadband in the development of the strategy, recognising that there was a significant component of it that dealt with government, and that AGIMO would ultimately have to provide guidance and support to agencies in the implementation of that component. The government component looks at how we can increase the use and adoption of cloud technology within government, and do so in a way that addresses the usual risks that exist in cloud—the one that is almost always raised is the issue of security and privacy. It does so by looking at where there are opportunities to use public cloud for data that is not typically subject to that sort of concern. For instance, we are going to oblige agencies to move their public-facing websites to have them hosted in public clouds. We can do that because public-facing websites contain, by their very natures, data that you want the general public to be able to access. Cloud has, by its very nature, much better support for variations in demand; the spike in access that may be needed to support, in particular, information needs for citizens.

Secondly, we will be looking to have agencies move their testing and development IT infrastructure into the cloud environment. Again, this is an area in which, at the moment, agencies have to invest in their own testing and development infrastructure—that might include storage, servers and processing capacity. In the context of developing some new system and in testing it, cloud is a perfectly sensible way to go because you want to have access to that capacity only for a short period. Also, testing in the cloud is quite valuable in the sense that you can stress-test it, whereas to do that within an agency you often need to buy a lot of equipment to undertake that sort of testing.

CHAIR: Can you explain to the committee what cloud is? I understand and appreciate what you have told us about the strategy—

Senator Wong: It is a very good question. I have to see if Mr Archer can do it in one sentence.

CHAIR: I know what cloud is; I have a concept of what it is, and I am sure other committee members would be most interested. It is one thing to put it up in cloud, but it is also about how you achieve it. Could you put on the record what cloud is? That would be most helpful.

Mr Archer : I would probably set a record; trying to define cloud in one sentence has been something that many marketing folks have tried for many years. I will give it a go.

CHAIR: I am suggesting, if it is okay with the committee, that we conclude this segment and go to our break. Is that all right?

Senator CORMANN: What do you mean this segment?

CHAIR: Just on the IT stuff.

Senator CORMANN: I have still got stuff on IT.

CHAIR: All right. We will have a break now. Mr Archer, you can think about your explanation. It is very timely.

Proceedings suspended from 10:30 to 10:48

CHAIR: Before we commence with this education on clouding, can I just advise that we have changed the agenda. We will be taking the lunch break today between 1 pm and 2 pm. We will keep going through until 1.00, just so that officers are aware of that. Mr Archer, you have the call.

Mr Archer : During the break, I had a go at trying to draft what I think is a simple explanation of what cloud is. I have a couple of options. Fundamentally, cloud provides services to users, over the internet, where the IT infrastructure—in terms of storage and computing capacity—is shared. That is one definition. It is often more easily understood, when trying to describe cloud, by pointing to examples of cloud. Some well-known examples of cloud would include things like Google Maps, Apple's iTunes service, Microsoft's Hotmail service and Amazon's services—these sorts of things, which many of us now use day to day. They are classic examples of cloud services.

CHAIR: Thank you for that. I am sure that would be helpful for all committee members. There are risks in terms of using cloud storage, are there not? I was just wondering how that is being managed and what the processes will be. It is still something that is fairly new.

Mr Archer : I think we have quite mature legislation and regulation that protects government information and the interests of citizens in terms of their own privacy: the Privacy Act, the protective security policy framework, the Australian government's information security manual. These provide significant guidance around the use of cloud from the perspective of understanding what are the risks that may be associated with the information. Agencies are required to comply with that legislation and registered framework and to protect the interests of government and of Australian citizens and business. The current policy in place is that we do not store sensitive or personal information in a public cloud environment inside or outside of Australia. The Defence Signals Directorate advice to agency recommends against outsourcing information technology services and functions outside of Australia unless agencies are dealing with data that is all in the public domain. That is the current state of play. I should say that we are currently examining these issues and looking to ensure that we protect government information and citizens' information when using the cloud and we are working towards being able to provide agencies with some further clarity and guidance in this area.

CHAIR: In relation to this new technology, was there any consultation with any other governments internationally with their experience in this area?

Mr Archer : Senator, we have certainly spoken to other governments about cloud generally and the benefits associated with it. Obviously we have discussed issues about different privacy regimes in different countries. So there have been some discussions.

CHAIR: So is this becoming more common in terms of how other governments around the world are using technology?

Mr Archer : Certainly cloud adoption by government is becoming quite common in certainly most of the OECD countries for instance. And the same issues that concern us also concern those countries.

CHAIR: So would it be fair to say that that rollout of the NBN is fairly critical, in terms of the speed, to assist with cloud servicing?

Mr Archer : Certainly the rollout of the NBN—access to high-speed broadband is fundamental to cloud services. It is just a requirement that, if you are going to be able to access a cloud service and you are in a city that is remote from where that is physically located, or in a rural or country location, having access to high-speed broadband will be the difference between the service actually functioning well, functioning poorly or not functioning at all.

CHAIR: Thank you. Senator Cormann.

Senator CORMANN: Thank you. One of your responsibilities—and you have touched on it to a degree—on the outcomes too is to provide secure communication networks for ministers, senior executives and agencies. So in light of recent reports about attempted penetration of government departments and agencies' secure communications, can you talk us through what you are doing to deal with increasing threat levels in relation to security of communications between agencies, ministers and so on.

Mr Sheridan : The whole-of-government networks that we provide are secured in the way directed by the Defence Signals Directorate, so we meet the requirements of the information security manual. Those networks are ordered, certified and accredited regularly as required by those arrangements. And that is how we make sure they meet the requirements.

Senator CORMANN: So they set the standards, but ICT protection measures are provided by your department? Or are you contracting them out or is this on an individual by individual department basis? How does it work in practice?

Mr Sheridan : Finance provides some whole-of-government services. There is ICON, the fibre optic network that runs around Canberra. We provide the ministerial communications network that runs around the country. We provide the TelePresence Network that sits on top of the ministerial communications network. Those are secure services and other departments have other services.

Senator CORMANN: What do you not provide? Can you list what you do not provide?

Mr Sheridan : I think it is probably easier to list what I provide.

Senator CORMANN: Actually, there is a lot that is excluded.

Mr Sheridan : Agencies provide their own communications, their own networks. Indeed, the department itself, my colleague the CIO in the department provides the networks within Finance. My division provides whole-of-government networks.

Mr Tune : There is a link between the minister's office and his or her department is provided by the agency concerned, and John's area is providing the other things that sit over the top of that.

Senator CORMANN: Do you have any role at all in making sure that protocols set by the Defence Signals Directorate are set up and are properly complied with?

Mr Sheridan : My personal role is, as the delegate of the secretary, the accrediting authority for the whole-of-government networks and systems my division provides.

Senator CORMANN: So you do not play a role in terms of individual departments securing communications?

Mr Sheridan : No, I do not, Senator.

Senator CORMANN: You have told us what the protocols are and so on, but of your actual activities in recent years can you just talk us through what have practically done in terms of increasing the level of security of government communications that you are responsible for?

Mr Sheridan : We do what DSD tells us to do.

Senator CORMANN: So what you have done?

Mr Sheridan : So there are a range of controls that DSD puts in place and either recommends or probably, more strongly, determines that they should be in place. We make sure those controls are in place. They can talk about things as prosaic as access to buildings, but they can also talk about the structure of firewalls and gateways—those sorts of thing.

Senator CORMANN: Is it fair to say this is an area in which there has been increased effort in recent years, given the increased threat levels?

Mr Sheridan : I think it would be fair to say that agencies, including our own, review the threat level with information provided by DSD and react accordingly.

Senator CORMANN: Has there been increased effort?

Mr Tune : I think that is a fair comment; yes, there has been.

Senator CORMANN: Is there an estimate around the cost involved in terms of quantifying the increased effort involved?

Mr Sheridan : We do not have such figures.

Senator CORMANN: Who manages the budget for increased security efforts?

Mr Sheridan : We do not get allocated a budget with that particular thing in mind. We get operating budgets for the various networks we provide.

Senator CORMANN: So to the extent that there was increased effort, you have essentially absorbed that within existing resources?

Mr Tune : That is correct.

Senator CORMANN: You are looking at whole-of-government. You are looking at, to a degree, communication between your department and the minister's office. Is there anyone who coordinates across all of the Commonwealth Public Service the arrangements to ensure that security of communications is at the appropriate standard? Who actually coordinates it across all the departments of the Public Service?

Mr Sheridan : The Attorney-General's Department sets the protective security policy framework. The Defence Signals Directorate provides the information security manual directions and guidelines that sit under the PSPF and agency chief executives and their delegates, accreditation authorities, ensure that those things are put in place.

Senator CORMANN: Who monitors compliance? That is the responsibility of individual secretaries of departments, is it?

Mr Sheridan : Indeed.

Senator CORMANN: So there is no central coordination as such; it is an agency by agency proposition?

Mr Tune : No, there is a central—

Senator CORMANN: As a policy?

Mr Tune : That is right.

Senator CORMANN: And there is no central coordination—

Mr Tune : To ensure that that happens?

Senator CORMANN: Yes.

Mr Tune : No. To the extent that A-GD have overriding coordination responsibility, it rests with them. I have a responsibility under the Public Service Act and these other requirements to comply with these things.

Mr Archer : Senator, I want to add one element to that. I manage the coordination and advice to government on new investments in ICT. We explicitly look to examine that issues around cyber security are considered in those proposals as they are put forward, and we provide guidance to agency where we think there is additional effort required before those proposals should go forward for further consideration.

Senator CORMANN: In relation to the Canberra fibre network, which services the public sector, you mentioned the ICON, Intra Government Communications Network. Presumably, there are incursions and vulnerabilities. I gather that Finance is doing work to reduce the number of gateways into government networks. Can you just talk us through that to the extent that you can?

Mr Sheridan : Yes, I can. One of the policies that my division is responsible for is the reduction of internet gateways. That is a policy to reduce the number of gateways from over 100 to some eight gateways across government by consolidating the gateway arrangements, and thus reducing the vulnerability.

Senator CORMANN: That is it. Nice and concise.

Mr Sheridan : That is what the policy is, yes, indeed.

Mr Tune : That is what we are doing.

Senator CORMANN: That is good. In terms of point-to-point data transmission, presumably encryption technology has been deployed to protect information from interception.

Mr Dale : Point-to-point encryption is a matter for the agency using the ICON network specifically. ICON itself, as an entity, is rated at a protected level for communications from point to point, so no additional encryption would be required to achieve protective level end-to-end communications. Should an agency require an additional level of national security across that point-to-point link, they may take the option of encrypting data.

Senator CORMANN: So there is no encryption technology deployed across the entire public network?

Mr Dale : Limited to the ICON network, no there is not. It is a passive network.

Senator CORMANN: Is that something that should occur? Is that something that has been looked at?

Mr Dale : Again, we have taken the decision to rate it to protected. We secure it through non-encryption methods and physical protection methods. The hand-off is a business decision for the agency at hand as to whether they need something further than that.

Senator CORMANN: But does the agency at hand have the expertise to make those judgements?

Mr Tune : They know when they can use the ICON network. When they have got something with a higher security level, they have to go outside that. There is always a trade-off with these things. You can build a thing to a very high standard for common usage, or you can have a separate arrangement. The separate arrangement is usually for top secret material. It is not worth the candle to upgrade your basic level system to do that.

Mr Sheridan : Just to be clear on the ICON network, as my colleague was explaining, we provide the connections for agencies but they can use that network for higher classifications by putting in encryption devices at either end of the cable—the connection we provide them—and that has the effect of encrypting that channel.

Senator CORMANN: Moving on from IT, unless somebody else has some questions.

CHAIR: I think there are some more questions.

Senator MOORE: I am not quite sure, Mr Tune, to whom I should address the questions. It is about the TelePresence Network.

Mr Tune : Mr Sheridan can help you.

Senator MOORE: We have had answers before about the rollout of this facility. Most of us, I think, have used it at some time. I would like to get some updates about where the actual rollout is at. Is it fully implemented? Also, can you give us data about the savings that it has caused, because it is something that we talk about all the time.

Mr Dale : Certainly, Senator. Since 2009, the National TelePresence System has hosted 2,805 meetings. This is to March this year. We have got a calculated deferment of travel savings of more than $5 million and 10,000 tonnes of carbon has not been attributed to government travel. The system itself is consists of in what we call 'immersive rooms', which, as you pointed out, you have used yourself. They are function-specific facilities, where you enter a room, a meeting room. You book them online and take part in that meeting. To date, that covers 38 sites. Announced in the budget recently was $19.3 million of additional funding. This is to take the footprint or the reach of the national telepresence network up to 150 sites from 38. That work is scheduled over the next 12 months. The funding exists over the four years to operate the network, as well. The 150 additional sites use the ministerial communications network that exists, and the intent is to replace voice communication handsets that currently exist and are rated at the national security level 'secret' for communications, with video facilities that will not only interoperate with the existing 38 sites but also will allow ad hoc and point-to-point connections.

Senator MOORE: So what is the geographical spread of those sites?

Mr Dale : All of Australia.

Senator MOORE: Including TI?

Mr Dale : Yes.

Senator MOORE: What about places like Christmas Island and Manus Island?

Mr Dale : There has not been a call, at this point, for the system on those islands.

Senator MOORE: But it could, physically, with this process?

Mr Dale : It could physically be extended.

Senator MOORE: What about the operating costs in terms of how that compares with other processes—how much the system costs to operate?

Mr Dale : The existing operating costs were round $1.4 million a year. That was out of the initial MYEFO estimates for the first system. In the new version we are operating at just under $3 million a year. The necessity of extending the geographical reach to 150 sites has put the effort required to operate this system, and we are actually expecting quite a bit more interaction because we are adding the ad hoc function.

Senator MOORE: Are there limits to the number of people that can be involved in each meeting?

Mr Dale : There are limits based on physical room setup; in fact, some of our meetings have extended to up to 18 people in particular rooms, but it is getting crowded at that point. The 150 are effectively personal desktop units. They look like personal computer monitors.

Senator MOORE: Like the one I have here?

Mr Dale : Slightly larger. But you could certainly gather a few people around them, and you can actually bring multiple versions of them in, say for a meeting.

Senator MOORE: That was going to be my question in terms of just how it operates. The technology and the ability of teleconferencing has changed a lot. I have to admit I am still focusing on how it was a while ago, and it was not great. Would a link go to the room or to the handset?

Mr Dale : It would go—

Senator MOORE: Not the handset, to the things.

Mr Dale : The handsets as they stand now will be replaced with a new monitor.

Senator MOORE: But the linkage would count from wherever it was going, to this, rather than to the whole room?

Mr Dale : Yes.

Senator MOORE: So if a number of people wanted to have the machine, there would be more than one link?

Mr Dale : We would deploy the desktop units probably into secure offices, so they would be on people's desks, and/or small facilities outside of offices.

Mr Tune : And, if we have multiple units in the one location, we continue to use the existing system.

Mr Dale : Yes. We do not intend changing the existing system.

Mr Sheridan : Or connect more of these desktop devices to a conference call.

Senator MOORE: It is difficult when you only have one monitor when you have a number of people wanting to be involved. Recently there was one where there was the one monitor and people had to keep shuffling around. Is that going to be able to not happen?

Mr Tune : You could have it located in the conference room, for example, rather than an individual office, as long as you have got a clear connection to the MCN network. That will give you multiple users inside that room.

Senator MOORE: Good. So at the moment the budget is covering the extension of the linkages to 150 sites, and the budget is fully funded for the four years coming up for the full operation of however that goes.

Mr Dale : That is right.

CHAIR: Can we get a copy of those sites?

Mr Dale : I beg your pardon?

CHAIR: Would you be able to provide that information—

Mr Dale : We can provide that, yes.

Ms Mason: I would like to mention that, although there is an investment in the budget in the expansion of the telepresence network, it is an investment that is expected to be repaid over a short period of time through reduced travel expenditure.

Senator MOORE: In the figures that we have, that you gave us, about what the savings have been up to date, have there been presumptions of what the savings will be into the future?

Mr Dale : We have done some predictions. We are changing our calculation model because we are changing from room based to personal based, but we would estimate around $20 million in additional travel savings in the first 12 months.

Senator PRATT: Are you staying in touch with the Smart Services CRC and their activity around some of the innovation in this kind of telepresence conferencing? This would include things like spatial voice, which allows groups to break away from each other and conduct conversations. You can do that in a virtual way. I assume that, once this becomes viable, government is going to have to rethink its meeting culture again in terms of how business is conducted. It is not just the technological change; it is actually the cultural change at a 'how we do business' level that also needs to happen.

Mr Dale : Certainly. I will talk in the context of the national telepresence system first. More than one video system exists across government, and departments have started their own initiatives. The point about the national telepresence system is that it meets a business need and it has a national security rating to secret, which mandates that, today, it cannot have a connection to the outside world. We cannot do government-to-business relations that you might see in some of the more commercial aspects. However, the technologies that you mention are certainly part of our consideration for the next generation of conferencing. With the $19.3 million in this budget we will be looking at bringing our technology set up to date. As I said, there are some limitations around the physical room you can use. You can have a conversation up to secrect; there are restrictions around that. That mobility and some of the technologies around spatial awareness of voice are a bit of a challenge in the secret space. However, I believe the other departments will be pursuing that. We are not intending in this iteration to extend it to mobile or wireless devices at this stage. There will still be fixed and wired.

Senator PRATT: I can appreciate the security need to do that but at some point, in terms of the fact that we meet with the public and we have stakeholder engagements, to get true efficiencies out of that we need to innovate around how we bridge that gap. Can you address that for me?

Mr Dale : Within the context of the national system we are physically addressing that by bringing people into our suites and allowing access. Further than that we do not have a technical solution to date. We are working on one.

Senator MOORE: Is there a link with other state governments in this area? If you are in Queensland and get called up, state governments have many more outlets across the state than we have. What is the interrelationship with our network and what is happening in the various states?

Mr Dale : We have our posts in all state offices, so the states can access the national telepresence system. The initial business case around the national telepresence system in 2009 was centred around COAG requirements, and it is probably one of the primary uses today. They are available in offices inside the remit of the national telepresence network.

Senator RYAN: I want to turn to the web based Australian government grant system. Is that in IT?

Mr Tune : It is going to be IT based.

Senator Wong: We had some questions on this yesterday, Senator, because it was a budget measure. The questions might have been asked by Senator Moore.

Senator RYAN: If it has been answered just say, 'Answered', and I will check. Does this web based system that is going to centralise the grants allow for improved consolidated reporting as well? Can it capture the information? We have previously talked about grant systems going through different mechanisms.

Mr Tune : We can probably add to what we said yesterday.

Mr Sheridan : The system is based on the AusTender system that we use at the moment, so it does improve reporting.

Senator RYAN: That answers the question I had.

Senator MOORE: One of the biggest issues we have with tenders is people who claim they have put something in and it has not been received. With this system, when you actually put your claim in, do you get a receipt of some kind, something physical, to say that your process has been received? Is there something to confirm that so there is no confusion about whether you got it in on time or not?

Mr Tune : Can I just clarify? We have not built the system yet—

Senator MOORE: No, but the plan—

Mr Tune : We have just received the money in the budget to do so, so it will be a couple of years.

Senator MOORE: I know but the plan about—

Mr Tune : I think your thought is a very good one. Depending on how we build the thing, it could provide that capability. It is a good idea.

Senator MOORE: Just that confidence element in the whole process.

Mr Tune : We will take that on board. I think it is a good idea.

Senator MOORE: I knew it was not there yet; I was just hoping it was in the plan.

Senator CORMANN: My question is not related to IT but may be related to the broader issue around project expenses. Can you provide an update on the cost incurred to date on finalising the ASIO central office project?

Mr Whalen : I might be able to help with that one. In terms of the costings for the ASIO project, something I should make very clear upfront because it has been misrepresented in the press for a while now is that back in August 2006 there was a proposal for the ASIO project that was approved by government with an appropriation of $460 million. That was based on some preliminary estimates and it allowed us to actually then engage industry professionals to work through a planning phase and develop a concept design that was fully costed and to go back to government before any detailed design and construction was undertaken on the project. That proposal went back to government in August 2008. It was approved at that point in time that to provide the full functionality that was originally intended for the project it would require $606 million.

At that point in time, as I have said, there was no detailed design and there was no construction undertaken. It was a point in time when the government could have made a decision not to proceed with the project and have minimal costs incurred. So that was the key decision point for this project in terms of budget. $606 million was approved. Shortly after that ONA decided to depart from the project as a subtenant and the budget was adjusted to $588.7 million. That adjustment occurred in May 2009. For the purposes of what I am about to explain about the cost increase going forward, that is the basis by which the project is currently being benchmarked.

In terms of the increases in costs since then, the current cost of the project is $633 million and so there has been a $44.3 million cost increase from the key decision point for the project. In percentage terms, that is 7.5 per cent. So in terms of media speculation about large cost blow-outs, we have a 7.5 per cent increase in the approved budget cost for the project. I will just clarify: the approved amount was $588.7 million and the current cost of the project is $633 million.

Senator CORMANN: Is that the anticipated cost of completion or is that the cost to date?

Mr Whalen : That is the anticipated cost of completion. We are very close to completing the project at the moment and it is very tight but, at this stage, that is what we are expecting to deliver it at.

Senator CORMANN: Do you have a specific component in terms of the budget for works in 2013-2014?

Mr Whalen : I do not think that it actually appears. Are you referring to a particular document or how much we have actually spent this year?

Senator CORMANN: No. I am asking how much you are proposing to spend this year.

Mr Whalen : I will take the question on notice if that is all right. I do not have that in front of me.

Mr Tune : But it is not very much. We are going to finish the thing by the end of June, I think, and then we have a commissioning process. We will hand it over to ASIO, who will then do their thing with it.

Senator CORMANN: Just out of interest, in light of issues that have recently arisen publicly, what security checks are required for contractors working on the site?

Mr Whalen : Security for the site is a responsibility of ASIO. They provide the standard and the oversight. So questions about how security is managed for the site are best addressed to ASIO. Going back to your question about how much is forecast to be expended on the project for 2013-14, it is $17 million.

Senator CORMANN: And 2012-13? It is nearly finished. That is okay. You can take it on notice. Moving on to another project, could you provide a costing of the work completed and underway for the construction of the airport pavement on Cocos Island?

Mr Tune : We might have to take that on notice.

Mr Whalen : We can get back to you about that one.

Senator CORMANN: Okay. Finally, can you provide us with an update on the costs incurred to date on refurbishing The Lodge?

Mr Tune : We can. It is not very large. We are about to go out to tender. There is provision made for that in our budget, but I would prefer not to talk about it because it might harm commercial negotiations.

Senator CORMANN: I thought the work was already well underway.

Mr Tune : No. There has been an agreement across the parliament.

Senator CORMANN: What is the expected time frame?

Mr Tune : It will start just after the election, I think.

Mr Whalen : As per the Special Minister of State's media release in December last year, a start on the construction and refurbishment works was deferred until late this year. We have started a tender process and we will have a look at the programs that come forward from that. We are also working closely with the Department of the Prime Minister and Cabinet as the responsible entity for the management of accommodation for the Prime Minister and staff at The Lodge to arrive at an appropriate time to fit in with the preferred tenderer as to the start of the works. At this stage, the intention is to begin those works later this year.

Senator CORMANN: At the moment, everything is business as usual at The Lodge?

Mr Tune : Yes. Just to clarify that, there is maintenance work going on at the Lodge, which is being done on a business-as-usual basis. That is always there. There have been a few extra things we have had to do in readiness for the big refurbishment which will start later in the year.

Senator CORMANN: You are responsible for running the maintenance project as well?

Mr Whalen : That is correct.

Senator CORMANN: What sort of maintenance is being done?

Mr Whalen : Normal maintenance for the operation of the building. But because of the heritage implications for this particular building, and the age of the building, maintenance is at a higher level. For example, the roof is in a pretty bad condition, which is one of the major reasons for the refurbishment. So there been some work done to inspect the roof and continually prepare slates as they become dislodged and so on. There is work going on to keep the internals of the building working as well, as it is very old and requires a fair bit of maintenance.

Senator CORMANN: Do you have as a matter of course a regular maintenance budget for The Lodge, or is this something you deal with as it occurs?

Mr Whalen : It is a bit of both. Finance only took on responsibility for The Lodge a couple of years ago. That responsibility was transferred. With all new properties, we establish an initial budget. But because of the age and condition of the building, we are still coming to terms with what is the right level of expenditure the building. It is fair to say that, once the refurbishment works are done, we will be resetting that forecast level of expenditure.

Senator CORMANN: I appreciate your point about commercial considerations in terms of the forward expenditure on the refurbishment, but what was the maintenance budget for 2012-13?

Mr Whalen : In terms of what was spent there, I can give you that figure.

Senator MOORE: You can just tell us whether it was roofing, electricity or whatever.

Mr Whalen : For the financial year to date, up until 30 April there was $215,392 spent on maintenance at The Lodge.

Senator CORMANN: How does that compare with previous years?

Mr Whalen : As I said, Finance has only been managing this for a couple of years. The figure for 2011-12 was $62,109.

Senator CORMANN: When did you start looking after maintenance at The Lodge?

Mr Whalen : The property management and ownership responsibilities for the Prime Minister's official establishments, including The Lodge, transferred to Finance on 14 October 2010.

Senator CORMANN: That was after the most recent election. Does that mean you can provide us with the maintenance costs for 2010-11?

Mr Whalen : I do not have that in front of me but I can take it on notice.

Ms Mason : Senator, if I could just return to the Cocos (Keeling) Islands runway resurfacing project, that work is complete. You were after some information about the expenditure, which we will provide to you on notice, but that work has been completed on time and under budget.

Senator CORMANN: Very good. That is what we like to hear.

CHAIR: Can we go to government business enterprises and get an update. In particular, I was looking at Australia Post.

Mr Whalen : Chair, Senator Cormann asked some questions yesterday about property matters—in particular, the 14 square metres. We took a couple of those questions on notice. Would it be appropriate for me to respond to those now?

CHAIR: Yes, that would be helpful.

Mr Whalen : The first question, if I have captured it correctly, was: how many leases are involved in the calculation of the property savings around the 14 square metre density target? All of the FMA Act agencies are subject to this saving process, with some exceptions. As each lease comes to expiry, it will be subject to this savings process. All of the leases of FMA Act agencies that are subject to this process will be picked up. That will occur right through till 2030-31. About 400 leases are involved in the process. Senator Cormann, you also asked: what portion of the leases subject to this savings process are in Canberra? Fairly consistent with what I said yesterday, in the order of 50 per cent of the leases are in Canberra.

Senator CORMANN: So 50 per cent are across the remainder of Australia?

Mr Whalen : That is right.

Senator CORMANN: If you take the total property space across Australia, what the proportion? Is it fifty-fifty?

Mr Whalen : I would have to check on that. We are talking about a number of leases and, depending on the size of each of those leases, it may not work out exactly. But that would be a fair starting point.

Ms Mason : We can check. Intuitively, I would suspect that if you are going by square metres it would be a larger proportion in Canberra. The head offices tend to be based in Canberra, so I think the answer would be that it would be a larger proportion by floor space.

Senator CORMANN: Which would mean a proportionately larger level of effort would be required across Australia than in Canberra in terms of reducing the used floor space? Let us say for argument's sake, it is 70-30 and the impact of the change is going to be fifty-fifty between Canberra and the rest of Australia, the effort in the rest of Australia from using less space is going to be more significant than the Canberra based effort.

Ms Mason : No.

Mr Tune : I think the fifty-fifty applies to the square meterage as well.

Mr Whalen : We can provide more specific details and so on. But, as a rule of thumb, it is fifty-fifty.

Ms Mason : The figure for the Cocos-Keeling island runway refurbishment and resurfacing project is $21.8 million.

Senator CORMANN: Thank you.

Mr Tune : It may be worth just adding something else that we have been doing in the property space that is not directly related to the 14 square metres per work point but is around better management of property, particularly in the ACT with the Public Service. As a result of sales of government property over a number of years, back in history, a lot of agencies now lease through the private sector. We have been collecting data on the expiry of those leases over a period of time and we now have a very good database, particularly around the Canberra commercial property scene and what agencies are doing and where they are doing it and when leases expire.

We are working on a process whereby we are working with agencies to try to improve the allocation of property amongst agencies. So, whilst they have the responsibility themselves and the chief executives have responsibility for determining their property needs, we are trying to see if we can assist them and, overall—not just within the individual agency but across the whole of the APS—get more efficient use of the stock. I have some capacity to intervene, if necessary, to try to achieve that. I think the minister just referred to it as being a tsar.

Senator Wong: That was a private joke.

Mr Tune : I do not see it quite that way, but I do have some power in that area that I can utilise if necessary to force efficiencies.

Senator CORMANN: Canberra property tsar is not entirely—

Senator Wong: It is trying to have a process which encourages accountability with government policy objectives around efficient use of the property base.

Senator CORMANN: We are all in favour of more efficient use of property space, Minister.

Senator MOORE: Property management has always been the purview of the CEO at each agency. How are you actually bringing them together? I would have through there would have been involvement perhaps in the Public Service Commission or something like that in terms of bringing this stuff together.

Mr Tune : That is true. As I said, each individual agency is responsible for their own property requirements.

Senator MOORE: And some can be quite competitive with each other, from what I have heard.

Mr Tune : They can be, and that can be an issue. Without trying to undermine that, what we are trying to do is take a whole-of-government perspective on this as well as just an individual agency perspective. In essence we are saying that if an individual CEO looks at their own property needs in isolation, they might be making quite rational decisions about the allocation of their resources and their property management but, if you look at it from a whole-of-government perspective, there may be inefficiencies there.

Our role is to try to bring that whole-of-government perspective to bear. To do that you need a very good database, because you need to know who is doing what when leases expire and what their plans are and what their likely staffing needs are. So you need to take quite a detailed look at this. We are not doing that in a way of forcing things; we are trying to do it in a facilitative way, working with agencies and saying, 'Do you realise that these people down here at Woden are going to be leaving this building and in turn that is vacant. Your lease is coming up. Does this suit you?' We are trying to pull the pieces of the jigsaw together in a more coherent and efficient way.

Senator MOORE: I can understand that in a place like Canberra where you have so many agencies together there would be processes. But there does seem to me to be some positive aspects of taking this outside Canberra as well. I would think that in regional centres where you have a number of government departments working in the same region that could be a very useful thing. My own experience is that there does not seem to be a lot of cooperation at the local level. Is this something that could be extended in terms of best practice?

Mr Tune : We are focusing on Canberra because a lot of the expense is there—

Senator MOORE: On the sites, yes.

Mr Tune : But the point is valid: yes, it can apply elsewhere as well—a big regional centre. I do not know of an example—Tamworth?

Senator MOORE: Townsville?

Mr Tune : Or Townsville—something like that, yes.

Ms Mason : We do facilitate agencies working together. My colleague Mr Whalen can speak further about that. The department does provide advice to agencies, and we also facilitate agencies talking to one another.

Mr Whalen : Your point is very valid in terms of those opportunities that exist in regions as well. There is a body of work going on at the moment. Finance is not leading it but Finance is facilitating and assisting in some capacity, working with a range of agencies which do have property requirements in rural and remote areas to try and identify ways in which they can work together to actually get efficiencies, particularly with leases and the development of properties and so on. But that is a piece of work that is in play at the moment.

Senator MOORE: Who is leading that?

Mr Whalen : Regional Australia, I believe. There is a range of agencies that are involved in. It is more of a working group than anything else.

Senator MOORE: Sure. And again in this area: is there any discussion with the state governments? It seems to me that there is a lot of potential, particularly in regional centres where you have three levels—but mainly talking about state—or two levels of government that are in this business of accommodation and property. There could well be some co-operation there. Is there any intent or possibility of widening that to cross-government cooperation?

Mr Whalen : There possibly is. I do not have the details on whether that is occurring at the moment. But, for example, in Finance we actually do work with some of the state governments, who have similar interests in property, to actually share information and also have an opportunity to get across what some of their property and accommodation pressures are, what ours are and to identify if there are opportunities to work together to do that.

Senator MOORE: If there is any information on that, can the committee get it? It would be very useful in how those interdepartmental liaisons are going.

Ms Mason : Whilst we are closing off questions that have been asked previously, may I also deal with one from Senator Boswell from yesterday, where he was asking about funding to Animals Australia and the RSPCA? Funding to the RSPCA is a grant, and aid was first provided in 1986-87 for various purposes. And funding to Animals Australia or, more correctly, to its predecessor organisation, the Australia New Zealand Federation of Animal Societies, was first provided in 1990-1991.

CHAIR: Could I now get an update on Australia Post? I was wondering if you could give us a summary of how Australia Post is going, and what the challenges that they are facing are?

Mr Edge : Certainly. Australia Post is a government business enterprise. The finance minister and the Minister for Broadband, Communications and the Digital Economy are joint shareholders in Australia Post. As such, we work regularly with Australia Post in terms of the performance of the business—how it is performing. Each year our ministers consider the Australia Post corporate plan. As part of that process there are discussions about the performance of various areas of the business and how the business is performing. Australia Post is a business that encompasses mail delivery, but also has a significant parcels business, and other aspects of the business are also taken into account. But it is primarily a parcels and letter delivery business.

The challenges that Australia Post faces are the challenges really that similar entities all around the world are facing. There is an obvious decline in letter volumes occurring in postal services around the world. That is a challenge that Australia Post and comparable organisations are dealing with.

CHAIR: Can you outline their strategy for dealing with the change in the market?

Mr Edge : The details around the strategy are questions that I would imagine would be best directed to Australia Post itself. But clearly there are a range of things that a business in that position can consider doing to address mail volume declines. It can invest in technology and other initiatives to take costs out of the business to a reasonable extent—whatever extent means that it still delivers in accordance with its community service obligations. It can also look at investing in alternative means of effectively delivering information—so digital mailbox type services, where information that would have been sent via a postal service is delivered electronically. Australia Post has undertaken some initiatives in that area, but that is, I think it is fair to say, an emerging part of the business and one which requires certain changes in the way consumers and businesses operate and how they communicate. I imagine that Australia Post, as part of looking at strategies in this area, is looking at how it can maintain its existing bulk mailing business with various businesses and so on. It carries a significant amount of mail for business and would be talking to business about that. So there are a range of things that the business is doing to address these trends, but, in terms of more detail about that how that is occurring, as I said, they are questions best directed to the business itself.

CHAIR: I think it would be a fair summation to say that, in the public arena, there is a lot of talk about the increase in purchases by the internet, so one would assume that there would be an increase in parcels going through Australia Post. Can you update the committee as to what sort of strategy is being put in place there and if there has in fact been an increase in their parcel post business side?

Mr Edge : Australia Post has clearly been a significant participant in the parcels business, and there was the recent acquisition of the Star Track Express business. So clearly Australia Post sees parcels and the growth in parcels volume—driven by a range of things but certainly by people buying things on the internet, either in Australia or from overseas—as a growth area for the business. That area of the business for Australia Post—and I think for comparable organisations overseas—has shown significant growth in terms of parcel volumes. That parcel volume has been a significant contributor to Australia Post's revenue over the last couple of years.

CHAIR: But they are seen as more than just a post office now, with their shops and the types of products that they sell.

Mr Edge : Yes, they are. They certainly have a very established retail network of post offices, which are also in themselves small retail businesses, so they sell a lot of products in the post offices. They also offer collection points for parcels and other things that are being delivered through the parcel network. So it is a diverse business in that sense, yes.

Mr Tune : One of the things they have done in recent times—and Mr Edge mentioned it—is to have these collection points. They are trying to link up their physical network—where historically they have been very strong and they continue to be—and trying to recognise changing working patterns of people, which means, particularly with parcels, not leaving parcels on the front doorstep when nobody is home. So they are using their physical network to provide these collection points where you can go in and collect a parcel that has arrived that you have purchased over the internet. So there is a bit of integration going on, which I think is a very sensible way to move.

CHAIR: Absolutely. You would be aware, no doubt, of the concerns that were raised in my local community, in Launceston, where the business community had concerns about some lapse in the express post return. It was good to see that overcome, but certainly in rural and regional areas having access to those sorts of drop-off points and collection points is going to be an advantage. Thank you very much for that.

If we could just move on to another area, could we get an update on Moorebank? My understanding is that Moorebank was a project that was being built and operated by the private sector. Is that correct?

Ms Mason : That is correct.

CHAIR: The claims by some that it is an example of the government entering into commercial sector are untrue?

Ms Mason : That is right. A government business enterprise has been established and will be or is in the process of calling for expressions of interest for private sector involvement in the project. The board that has been established is a board that has good commercial skills to oversee that.

CHAIR: There is nothing else you can add to that?

Mr Edge : The Moorebank intermodal company recently advertised for expressions of interest to potential private sector operators of the Moorebank terminal. That process is currently open for businesses to register their interest in participating in the project.

CHAIR: What is the timeline for that?

Mr Edge : I think that the initial phase, the registration of interest period, closes in mid-June, possibly the fourteenth, or sometime around then.

Ms Mason : I should mention that the approach that has been adopted in relation to the Moorebank project has been commended by the Business Council of Australia as a suitable mechanism for the establishment of this important piece of infrastructure. There was a letter written to Minister Wong—I believe it was copied to Minister Albanese—which commended the approach that has been taken to the project.

CHAIR: Moving onto defence housing, an area we have not touched on in estimates in recent times, that I can recall, but which is a very important element, can you give the committee an update as to how that is travelling in terms of the forward planning? Would you outline the nature of the investments in that area?

Ms Hall : As you are aware, the Defence Housing Authority is one of our GBEs. The finance minister is joint shareholder with the defence minister. Defence Housing Authority as an organisation is travelling very well. It is delivering by and large on the Defence requirement for housing for serving personnel. I would comment that the key challenge facing that organisation in relation to meeting the standard relates to the lack of available land within an appropriate proximity of defence bases. Defence and DHA are working together to develop solutions to address that in terms of looking forward with respect to the expectation around the level and standard of housing that will be required to be provided for defence personnel.

CHAIR: Can you outline how the sale and lease back process works?

Ms Hall : Yes, at a high level. Defence Housing Authority constructs a range of properties and then offers those to private investors with a long-term lease arrangement for up to 15 years. The investors have a secure, guaranteed rental stream and fairly high quality tenants, by and large, and fairly structured arrangements in terms of the repairs and maintenance process around managing the upkeep of the properties to maintain them to the appropriate standard. DHA has recently extended that program by establishing a unit trust to enable investors who may not want to put in the level of capital required to buy a whole property to be able to access the program by putting a level of investment into a trust that holds a number of properties built by DHA, and get access to capital to fund the provisioning requirements through that mechanism as well.

CHAIR: Thank you very much. As there are no further questions in outcome 2, we will move on to outcome 3. We may have some questions that we will put on notice, in relation to women on boards.

[11:49]

CHAIR: We will go to Senator Abetz for general questions in outcome 3.

Senator ABETZ: I will get started and when Senator Ronaldson comes in I will pull the plug and defer, if that is agreeable.

CHAIR: That is fine, Senator Abetz. You have the call. We are very cooperative here, as you well know.

Senator ABETZ: If I may ask a general question, what is the time line for responding to letters sent out by the Special Minister of State in relation to potential breaches or misuse of entitlements?

Mr Tune : I do not think there is a specific time line. It would depend very much on the situation at hand to make sure that there is a proper investigation and that it is done thoroughly.

Senator ABETZ: All right. If somebody doesn't respond to you do you have a monthly update to send out a reminder?

Mr Tune : We do have a periodic one. I don't know if it is monthly.

Senator ABETZ: So periodic. What's the period?

Mr Taylor : Perhaps I could assist. There is no specific period.

Senator ABETZ: What I want to find out is about the letter written by the former Special Minister of State, Mr Gray, to Senator Carr about his electorate office. It is Senator Bob Carr.

Senator KIM CARR: I'm pleased to hear that, very pleased to hear that.

Senator ABETZ: It took, Minister, Bob Carr—

Senator FAULKNER: Senator, don't you know about the one that was written to Senator Kim Carr!

Senator ABETZ: Oh! How about I refer to him as Minister Carr, although I hope that doesn't hurt you, Senator Carr.

Senator KIM CARR: No. How pleasant you are, or unpleasant?

Senator ABETZ: All right, Senator Bob Carr then. It took Senator Bob Carr four months in which to respond and I am just wondering whether during that time any reminders were issued to Senator Bob Carr about the issue at hand.

Mr Taylor : Perhaps I could answer that in a slightly different way. If the Special Minister of State, as you would well know, writes to a senator or a member and does not receive a reply it is routine that there will be a follow-up of some kind.

Senator ABETZ: Well, I hope previous special ministers of state did that.

Mr Taylor : Certainly a range of special ministers of state have followed that same process on the advice of the department.

Senator ABETZ: All right, so that is the general aspect. Did it occur on this specific occasion?

Mr Tune : Can we take that on notice and check for you?

Senator ABETZ: Mr Taylor might have the information.

Mr Taylor : My recollection is that there were probably a couple of letters that were directed to Minister Carr, although my recollection is also that Minister Carr responded on more than one occasion.

Senator ABETZ: It seems that Senator Bob Carr was written to on 6 June and deigned to respond on 5 October, one day shy of four months, which seems, on the face of it, an arrogant disregard for transparency. But if you say that he did respond in that four-month period, saying that he needed extra time or whatever, so be it. But the documentation I have in front of me would not suggest that that was the case.

Mr Taylor : I think you are correct. I am just looking at the document that was released under the Freedom of Information Act and I think you are correct.

Senator ABETZ: We did, as you would be aware, do an FOI on this and they were not disclosed—hence my questions. If Senator Bob Carr had not deigned, four months after, to respond, could this still be an ongoing issue where Senator Bob Carr would not have responded and the department and the minister would have just let it sail by?

Mr Taylor : I do recollect that there were certain statements made in the media. That is a little different from many allegations which do not have that kind of attention.

Senator ABETZ: But this was an allegation of the misuse of an electorate office for his business—something which was raised by the excellent deputy chair of this committee, Senator Ryan, on 24 May. It is interesting—call it serendipitous; call it coincidence—that the change to company details of the registered office of Senator Carr's business was signed on 24 May 2012. One cannot help but think that the signing of this document may have been related to Senator Ryan's raising of the issue.

Senator Wong: Senator, I have not intervened, because I understand you have a particular obsession with this topic, but I think—

Senator ABETZ: With transparency? Yes, you are right. I do have an obsession with that.

Senator Wong: I think you have asked this question at a number of estimates and the matter has been dealt with.

Senator ABETZ: No, it has not.

Senator Wong: You have a right to ask questions, but I think—

Senator ABETZ: That is gracious.

Senator Wong: Can I finish?

Senator ABETZ: I am expecting a homily from you and I think I am right.

Senator Wong: I am waiting. Do you want me to start again? I do not think you have the right to impute motive in your questions in that way. If you want to ask questions of officers and elicit an answer, that is obviously your right as a senator. If you are going to impute motive and make political statements in your questions, I am going to intervene. It is not an appropriate use of the estimates process.

Senator ABETZ: All right. I said 'serendipitous' and 'coincidental'. If that is imputing motive, do you want me to say—

Senator Wong: You said more than that.

Senator ABETZ: it was done as a result of Senate Ryan's questioning embarrassing the foreign minister?

Senator Wong: There you go again. If you have a political statement to make, go outside and hold a press conference. If you want to ask questions of officers, do that.

Senator ABETZ: If you stop intervening with your homilies, I will do exactly that.

Senator Wong: I do not think it is a homily; it is reminding you that perhaps this is not the place for you to make unsubstantiated—

Senator ABETZ: All right, then: politburo speech.

Senator Wong: I beg your pardon?

Senator ABETZ: If it is not a homily, it can be a politburo speech. I do not know how you want to describe it.

Senator Wong: This just shows how ridiculous you are. Are you seriously suggesting I am making a politburo speech? Why don't you look under the chair and see if there is a red there as well? Really, you are being ridiculous.

CHAIR: Senator Abetz, do you have a question?

Senator ABETZ: Yes, absolutely. When the minister has taken a chill pill, I will continue the questioning. Did the department, when they were finally provided with this information, do any checking to ensure the verification of that which Senator Carr asserted in his correspondence?

Mr Taylor : The normal process in relation to these matters is to consider any records that are publicly available or available in the department and that process was followed in this as in any other allegation of this sort.

Senator ABETZ: What we had last time—and I am sure the minister will recall this—is that we were not told the result of the investigation. As a result, we had the FOI which has revealed a lot more. So one wonders why we are not provided with answers that are then available under FOI. I am just wondering if this is part of the—

Mr Taylor : To clarify: at the last estimates, I think Senator Ryan asked where this particular matter was up to. I indicated to Senator Ryan that it was finalised.

Senator ABETZ: Was Senator Carr asked to provide any proof that he had requested his accountant to change the principal place of business?

Mr Taylor : No.

Senator ABETZ: So when Minister Gray wrote to Senator Bob Carr accepting his assurances it was simply on the strength of Senator Carr's letter?

Mr Taylor : On the strength of Senator Carr's letter and on the basis of material that was available to the department—publicly available material or material that was held within Finance.

Senator ABETZ: In the official public document, that just happens to have been signed on the same day as Senator Ryan raised the issue, it then backdates it to 19 March. Were you aware of that? Was the department ever provided with the documentation?

Mr Taylor : I could only repeat what I have said, that in terms of consideration of these particular matters the process that was followed in relation to this matter is the same process that is followed in relation to any allegation of misuse, as has probably been clarified a number of times before the committee in the past. The attention that these matters get, the department is not an investigator. It considers the material that is available to it and it makes judgements and decisions based on that, and in this case, in the case of a less serious allegation, it briefs the Special Minister of State accordingly.

Senator ABETZ: What we have here is a letter by Senator Carr to Minister Gary Gray, and this is four months after the letter is written. It is a two-paragraph letter, so one wonders why it took so long, but that is for Senator Bob Carr to answer. But he says:

Immediately after my announced appointment, I requested my accountant to advise ASIC to amend the address for RJ Carr Pty Ltd and to remove me as a company director. This subsequently occurred.

One wonders whether the 'subsequently occurred' was after his appointment to the Senate or subsequent to Senator Ryan's probing questioning on 24 May. The department did not look into that at all?

Senator Wong: That is a question 'one wonders'. By definition, you are asking the officer to hypothesise about a senator's intention and motive. You cannot ask that.

Senator ABETZ: That is why I am asking whether it was investigated, because to blithely say, 'This subsequently occurred,' if I might say with respect, are weasel words suggesting that all this occurred after 24 May—but I might be wrong. I am just wondering what the department did to verify, or the minister for that matter. One wonders why it would have taken the foreign minister four months to respond if everything had been put in place immediately upon his appointment in March. He gets a letter on 6 June. Surely the response could have been pretty quick and easy for the minister. You cannot comment on that aspect. But given the four-month delay and the words, which are obfuscating at best, did that excite any interest in the department to further investigate that which Senator Bob Carr had asserted?

Senator Wong: There was a lot of commentary in that question. Chair, the officer is obviously not required to respond to any of the commentary. I think the one aspect the officer could potentially address or, if he wishes, take on notice is whether or not any further action was taken.

Mr Taylor : Certainly documents were considered. A company extract from the Australian Securities and Investments Commission was considered, and that is referred to in the brief that has been released under freedom of information, so that was certainly considered in this process of advising the Special Minister of State.

Senator ABETZ: So the fact there was a four-month delay to say that everything occurred immediately did not excite any interest for further investigation by the department. If it was all that simple, one wonders why the minister took four months. It was either a highly arrogant disregard for transparency and his obligations, or a lot of things occurred during those four months which he could finally respond to by saying, 'This subsequently occurred.' I would have thought that the department might have had their interest aroused by such wording, which indicated that events may not necessarily have taken place in the order they should have. But, from what I understand, the department did not follow up any further.

Mr Taylor : As I previously stated, where there are instances where letters that have come from the Special Minister of State to the relevant sender or member have not been responded to they are pursued. But that is not an unusual event. It happens. If a response has not been received a follow-up will be requested. It is not something that is exceptional.

Senator ABETZ: Yes, but this was a four-month delay without any follow-up, with a foreign minister. And then he gives this very bland response—very unreasoning, highly unconvincing—saying, 'This subsequently occurred, but we do not know on what date, other than it was Senator Ryan's questioning', which happens to be on the same date that certain changes were made. But the department did not look into it and that is on the record now, and I think that is a matter of some regret. I will leave it at that.

Mr Tune : Can I just say that it is not unusual for this sort of occurrence, this delay, to occur. I would say it was probably the more normal situation for there to be reasonably long delays after a request for a response. I do not want to go through every single situation that is outstanding, but there are a number, and the follow-up is made as appropriate. We are not dealing with an exceptional circumstance here. It is probably more close to the norm than the exception.

Senator ABETZ: So, four months of nonresponse and the file just moulders away in a filing cabinet and everybody is a happy camper.

Mr Tune : No. Mr Taylor has explained that some follow-up occurs, but whether that elicits a response is another matter.

Senator ABETZ: No. We were just told that no follow-up occurred.

Mr Tune : There is a regular process.

Senator ABETZ: The FOI has disclosed that.

CHAIR: Senator Abetz, can you allow Mr Tune to plead his answer.

Mr Tune : There is a regular process, which we talked about, that happens periodically. That happens and we list them and seek further information.

Senator ABETZ: In that case, tell me about the periodic follow-up on this particular matter.

Mr Tune : I think it fell within the periods, did it not?

Mr Taylor : Senator, you have stated that the first response from Senator Carr was that letter you have obtained through FOI. That is correct. I do not know whether any efforts were made within the office of the Special Minister of State to raise that matter. The department is aware only of the matters that it has responsibility for and the briefing that it provides to the Special Minster of State, so I could not say categorically that other efforts were not made within the office itself to raise the matter with Minister Carr to seek a response.

Senator ABETZ: I understand that, but one would imagine that, with the Special Minister of State, correspondence or any messages might have been disclosed in the FOI as well. My concern is that the department thinks that a four-month delay in response to an allegation of misuse of an electorate office is acceptable and did not warrant a follow-up letter or a follow-up brief to the minister suggesting that he should write again to remind this cabinet minister of his obligations under the Parliamentary Entitlements Act. I find that astounding.

Mr Tune : Well, I am saying that it is not exceptional. There are a number of cases—

Senator ABETZ: But, Mr Tune, you are in charge of this show and you are saying to us that it is acceptable to you that a letter alleging misuse of parliamentary entitlements can be sent out and no response provided for four months without the department seeking to send out any reminders. I just find that—

Mr Tune : It depends on the circumstances.

Senator ABETZ: All right. In what circumstance does an allegation of misuse of a publicly funded office for private purposes warrant not being followed up for a period of four months? What is the special circumstance here, Mr Tune—other than that it is a senior cabinet minister, Senator Bob Carr?

Mr Tune : As I said, periodically—and it depends—we would put a brief up to the Special Minister of State saying, 'Here are the outstanding cases, here's what we recommend you might do with them.' In some cases, there is further follow-up required.

Senator ABETZ: Excuse me; where was that disclosed in the FOI?

Mr Tune : No, it did not occur on this occasion, because the period had not occurred. We might do that every six months or so—

Senator ABETZ: The period had not occurred? So, what is the period?

Mr Tune : The period can vary. It is—

Senator ABETZ: So, if you are Senator Bob Carr, foreign minister, the period is when he deigns to respond! That is the only measure we have, isn't it?

Mr Tune : We generally put this brief up, covering all the cases that are before us at a particular point—

Senator ABETZ: 'Generally'. So why did the case of Senator Bob Carr drop-off the 'general' list?

Mr Tune : It was on the list. It is just that the periodic—

Senator ABETZ: Excuse me.

Mr Tune : The periodic brief had not been provided—

Senator ABETZ: Excuse me. If it was on the list, it should have been disclosed on the FOI and it was not.

Mr Tune : No, no; I am not saying that—

Senator ABETZ: Can you explain that to me?

Mr Tune : Yes. I am not trying to say that that general brief went up to the minister in that four-month period. I am not trying to say that. What I am trying to say is that that does happen periodically. Now, it may have happened subsequently—

Senator ABETZ: Yes, but what period?

Mr Tune : We do not have a—

Senator ABETZ: Twelve months?

CHAIR: Senator Abetz!

Mr Tune : We do not have a fixed period.

CHAIR: Senator Abetz, if you could just allow Mr Tune to complete his answer.

Mr Tune : Generally, it is done every six months.

Senator ABETZ: Generally every six months? Since when has that been the practice?

Mr Tune : I do not know—for a while.

Senator ABETZ: Mr Taylor and I know each other from previous days, when these things were done on a much more regular basis—and, might I add, not driven by me but by officials in the department. So I invite the department to have a reconsideration of their time lines and their 'periodic' times, whatever that might mean, to ensure that some of these things are followed up more expeditiously.

Mr Tune : I am happy to do that, Senator.

Senator ABETZ: All right. Thank you, Mr Tune.

CHAIR: Senator Ronaldson

Senator RONALDSON: Thank you. I need someone at the table who has an intimate knowledge of the printing and communications allowance and the requirements in accessing that.

Ms Pitson : I can certainly try to help you in the first instance, Senator.

Senator RONALDSON: Terrific. Thank you very much. In relation to the use of the communications allowance, particularly when there is direct mail to a member's constituents, by way of a DL or something else, what requirements does the department enforce to ensure that the information given is accurate if taxpayers' funds are being used?

Ms Pitson : There is checking regime, a pre- and post-payment checking regime. I might invite Ms Moy to the table to discuss the pre- and post-payment checking that is done in relation to the printing and communications entitlement.

Ms Moy : Sorry, Senator, could I ask you to restate the question?

Senator RONALDSON: I think your colleague said that there was some checking pre and post material being sent out by members and senators, presumably, and I asked what requirements there are in relation to that material.

Ms Moy : That is correct. For pre- and post-printing, when we receive the article or the item that is to be printed, our concern is whether or not that item is in line with the regulations for printing and communications, which goes to the type of format of the document that is bring printed—for example, the weight of the paper and whether or not it is official parliamentary electorate official business. The actual content of the item is not part of the regulations.

Senator RONALDSON: None whatsoever? So you do not check any of the material that is provided?

Ms Moy : Do you have a specific example?

Senator RONALDSON: I was just about to give you a very specific example, but I am asking some questions first. I take it that the material is submitted, you look at it and then you tick it off.

Ms Moy : We look at the type of item that would be printed, whether or not that meets the regulations. So it is about the content of the actual text, what the message is. For example, we will look at whether it says 'Vote 1' for a particular member. That would come outside of the regulations. We will not approve something to be paid for, either pre-printing or post-printing, if that was the case. There are some items of content, such as that. That is probably one of the only items of content that we determine as coming outside of the regulations. In terms of other items, content, commentaries or policies, we have no role in that area.

Senator RONALDSON: So, potentially, taxpayer funds can be used to distributed blatant lies and there is no provision within the department to check that?

Ms Moy : There is no role within the department, in terms of the use of entitlements, to determine whether or not a statement is factual or incorrect.

CHAIR: Sorry; we missed that because of the noise outside.

Ms Moy : There is no role for the department to determine whether or not the content of a statement is incorrect or correct.

Senator RONALDSON: If a member were to tell a blatant lie in taxpayer-funded material and you received a complaint in relation to that, is there any action that you can take?

Ms Moy : We would ensure that our approval process was correct. We would talk or write to the constituent and explain the role of the department. In terms of printing and communications, each time a printing and communications item is sent for approval, either pre- or post-checking, there is a certification by the parliamentarian to say that the printing is within the parliamentary or electorate entitlement and is correct and proper use. So the parliamentarian is responsible for the content. Our requirement is to ensure that they do not go outside of the entitlement in terms of either the number they might print for some issues, or the size or type of item they might print.

Senator RONALDSON: So there is no certification for the accuracy of material that is put in there? When the member signs this document, are they required to attest to the accuracy of the information that is in the document?

Ms Moy : Not to my knowledge, no. They are saying that their use is within entitlement.

Senator RONALDSON: Within entitlement, is there a requirement for blatant and misleading information not to be provided?

Ms Moy : No.

Senator RONALDSON: I have a DL that was sent out by the member for Corangamite, which landed at people's doors yesterday or the day before. That document—and I am happy to provide you with a copy of it—

Ms Moy : Thank you.

Senator RONALDSON: says: 'after September, with Tony Abbott', '$18,200 tax-free threshold', and then, in a box, there is the word 'gone'. So, on the 28th, this material arrived. Are you aware that the Leader of the Opposition, in his budget reply speech on 16 May, made it quite clear that the coalition would be retaining the tax-free threshold of $18,200?

Senator Wong: Before the officer has to answer that, can we please get a copy of the document?

CHAIR: We are just getting some copies now.

Senator Wong: Thank you. I think it is only fair if someone is going to be asked something about it that they have a copy of it.

Senator RONALDSON: I am very, very happy to. When you see it, you will understand why.

CHAIR: Are you seeking to table this, Senator?

Senator RONALDSON: Yes, I am.

CHAIR: Okay. We need to just have a look at it. It is a bit hard to read down the bottom—

Senator RONALDSON: No, the bottom is the authorisation, so that is not the issue. It is the bit up on the top right-hand side, Chair.

CHAIR: Can we resolve as a committee to receive it? So resolved.

Senator RONALDSON: Thank you. You see, that statement is a bald-faced lie. If you go under that, it says '$1,000 for kids dental, gone'. Now, that was actually in some legislation, in my understanding, that went through the parliament earlier this year that was not opposed by the coalition. But I will stick to the $18,200. Now that it has been brought to your attention that this material has been distributed, now it has been drawn to your attention that this is a blatant lie and a deliberate attempt by the member involved to influence the outcome of a vote at the next election, are you in a position to go back to that member and indicate that it has been brought to your attention that it is an outright lie and, indeed, a deliberate lie, as it was material put out some 10 or 12 days after the Leader of the Opposition had actually reinforced the fact that that would not be occurring?

Senator PRATT: This is a great pamphlet!

Senator Wong: Before the officer answers, just looking at the leaflet, it says: 'What will wall-to-wall Liberal leaders do to local families'—

Senator RONALDSON: Read it all. It does not worry me.

Senator Wong: Senator, I have let you speak for some time without interrupting. Under 'the state government', it says 'local TAFE funding cut', true; 'support for CFA cut'—true; 'help for apprentices cut'—true; 'Westlink road project dumped'—true; 'local schools upgrades'—true; 'after September with Tony Abbott, schoolkids bonus gone'—true—

Senator RONALDSON: Yes.

Senator Wong: The 'support for local jobs', I assume is your policy to discontinue support for the auto industry, so I think—

Senator RONALDSON: While a few—

Senator Wong: But you have a policy of discontinuing support beyond 2015.

Senator RONALDSON: How can you assume—

Senator Wong: No, no—just hang on—

CHAIR: Senator Ronaldson, please allow the minister to answer.

Senator Wong: But that is your policy, so I think there—

Senator Ronaldson interjecting

Senator Wong: is a more than arguable position that that is true. 'Your workplace rights'—well, we know that with the coalition, in terms of your DNA, Work Choices is right there. Your single proposition—

Senator Ronaldson interjecting

Senator Wong: Hang on—

CHAIR: Senator Ronaldson!

Senator Ronaldson interjecting

CHAIR: Senator Ronaldson!

Senator Wong: I know what your position is on penalty rates, and that is a workplace right you want to take away. In fact, Senator Ryan, I think, is on the record as arguing for penalty rates relief—

Senator RYAN: I am not.

Senator Wong: Perhaps it was not you, Senator. It might have been another senator from Victoria—

Senator Ryan interjecting

Senator Wong: about the removal of penalty rates for small business. So the one issue in the leaflet—in which I think there is quite a lot of accurate information about the cuts that Liberals would impose—is whether or not the tax-free threshold issue should have been included. I assume the department will have a look at it.

Senator PRATT: I would be pleased if Tony Abott was clearly on the record about that.

Senator RONALDSON: Minister, seeing you know so much about this, can you tell me how much TAFE funding was cut? You seem to know so much about it, how much—

CHAIR: It is not relevant to these estimates.

Senator RONALDSON: If you know so much about it, how much was HELP for—

Senator Wong: I am sure Senator Carr could probably have a chat about what the Victorian government has done to TAFE.

CHAIR: Senator Ronaldson, would you like to get back to questions that are relevant to the estimates?

Senator RONALDSON: Minister, can I ask?

Senator Wong: Yes, certainly.

Senator RONALDSON: Do you think it is appropriate for the member for Corangamite to use taxpayers' funds to peddle a deliberate lie that under Tony Abbott the $18,200 tax-free threshold is gone? Do you believe that is appropriate?

Senator Wong: I have had the frontbench of the Liberal Party peddling a deliberate lie about me which remains on the website.

Senator RONALDSON: I am asking you, Minister, does the government, and you as the responsible minister, think it is acceptable for someone to be using taxpayers' funds to peddle a deliberate lie? Yes or no.

Senator Wong: You cannot tell me how to answer a question. I make the point that the leaflet contains a number of factually correct, or politically arguable, propositions. I understand that your proposition is that the policy of the Liberal Party, which was to get rid of the changes to the tax-free threshold, was changed on budget-reply night and that this leaflet post-dates that. I will take that question on notice. But in terms of the department, I do not know if there is anything to add in terms of that process of consideration.

Senator RONALDSON: So, just to confirm with the department—

Senator Wong: I have just thrown to the department. Perhaps they could answer before you ask another question.

Ms Moy : The department has no role in censoring political material that is printed or communicated to constituents, neither by legislation nor process.

Senator PRATT: It is a shame because the Liberal Party puts a lot of crap in our letterboxes.

Senator RONALDSON: You know that your interventions are never terribly helpful, mainly for you, but certainly for the rest of us. Can I just get an overview? Can I be absolutely sure that the department has no ability to vet lies and misinformation? Is that right?

Ms Moy : The department has no role in censoring political information.

Senator RONALDSON: Minister can I confirm with you—because you refused to comment—that the government and you, as the responsible minister, believe it is acceptable for the member for Corangamite to distribute information which is deliberately a lie and deliberately misleading.

Senator Wong: No. I have said I would take the issue of the tax-free threshold component of this DL on notice.

Senator RONALDSON: Thank you.

Senator Wong: I would make the point, Senator—I think Senator Abetz has left—that if you are arguing for a different method of assessing this sort of material in terms of entitlements, a system that involved less scrutiny existed under your government. I suspect a number of your backbenchers would not like it if we brought material into this estimates committee about some of the things which are put out by Liberal Party members. If you want to go down this path, that is a matter for you. But I would say to you that I have received material in my letterbox, and others have, which would not pass the test you are now setting in terms of its assertions. I have taken that issue on notice which is the one issue of the tax-free threshold—

Senator RONALDSON: Perhaps you could send me material where there has been blatant misrepresentation and lies. I would be very pleased to get it. I am sure you would have sent it off to the Special Minister of State if you had it. Have you sent anything off?

Senator Wong: I have not. I have been doing the federal budget.

Senator RONALDSON: Oh! So this has occurred recently, has it?

Senator Wong: I am making the point that if you want to set this standard, I suspect that there would be people in your own party room who would be very concerned about the sort of standard that you appear to want to impose, and that you do not have the support of your party room. I am happy to take a notice issued. I accept that this references a Liberal policy which has been long-standing but has been recently changed and I will take the matter on notice.

Senator RONALDSON: Thank you chair.

CHAIR: Senator Carr.

Senator KIM CARR: I have recently had cause to examine the issue of the communications allowance and accessing it, Mr Tune. I am wondering how long it has been since the department updated its processes for the approvals for accessing the communications allowance, particularly with regard to digital subscriptions. I will give a bit of background. Many newspapers require credit card details for periodical subscriptions. They are often short-term subscriptions; they are not long-term subscriptions. It is different for a printed newspaper whereby you can have a direct relationship with the newsagent; you have a relationship with the publishers of a periodical. I am wondering what the department's processes are for the approval of access to the communications allowance for that matter. Can you advise me?

Ms Pitson : Senator, we can take that on notice and provide you with some clarity. There are differences between what can be paid for upfront and some items that cannot be paid for upfront. We will take that on notice and get back to you.

Mr Tune : You make a good point, though, Senator: that the modes by which people are accessing media, for example, are changing quite rapidly. I can see a need for us—if we have not already—to update ourselves and the way we approach it.

Senator KIM CARR: I have had recent cause to come across this problem. For a minister, the departments will undertake subscriptions which are done on the basis of credit card arrangements but for a member the processes are incredibly complicated. My understanding of your current requirement is that an independent receipt from iTunes or whatever is not satisfactory and that you require a copy of a bank statement. That is ludicrous proposition.

Senator Wong: You can continue to ask questions, if you wish, but I indicate that the department should take it on notice.

Ms Pitson : We will take that on notice.

Senator KIM CARR: My point is that we have got into the 21st century.

Ms Pitson : Senator, if I could just say that it does not sound consistent with our current practices if we have asked for a bank statement. Certainly a receipt would sound consistent but a bank statement is—

Senator PRATT: But there is no credit card receipt.

Senator KIM CARR: There is a receipt.

Ms Pitson : We can look into that.

Senator KIM CARR: iTunes will produce a receipt for you but the department has rejected that as validation for access to the communications allowance.

Ms Pitson : We will certainly look into that and get back to you.

Senator WRIGHT: It is the same with online subscriptions. A lot of us have replaced newspapers with iPad versions and it might just be that there is inconsistent practice around the country. One of my concerns has been security issues of handing statements. I have no idea whether they are subject to FOI. So we are blacking out everything but the one line.

Senator Wong: We will see all the flowers that you have bought the department.

Ms Pitson : We will certainly look at that, Senator.

Senator BUSHBY: Yesterday in this committee I asked questions of the Department of the Prime Minister and Cabinet about the use of planes. I am not sure whether you are the right people, because the information I have does not delineate whether the planes were private jets of VIPs. You might have a very quick answer for me and I might be out of here. I understand that on 16 April Minister Plibersek and Minister Butler both flew into the Wynyard Airport. Reports are that they came in on private charter planes. Are you able to confirm whether they were charter planes or whether they were VIPs?

Ms Pitson : We can confirm that those aircraft were Defence VIP aircraft.

Senator BUSHBY: I have no further questions then. Thank you.

Senator RYAN: We were going to have a chat about the CPO office in outcome 2. I just thought I would start that now here in outcome 3.

Ms Pitson : I will invite Mr Miles to the table.

Senator RYAN: Thanks. I thought I would give him a chance to outline some facts before I put some questions. Mr Miles, could you provide an update on the changes to the schedule?

I note there has been another change from last estimates, which is that the facility is now expected to open on 24 June.

Mr Miles : That is correct. I think I very confidently told you at last estimates that we would be moving this coming weekend and that the removalist was booked. That was the case until just under two weeks ago, when the site took delivery of some glass panels which, in the main, were broken. Those glass panels were central to providing the final security and fire system sign-offs on the building. As a result of that we have had to delay the opening—the practical completion of the facility—for three weeks.

Senator RYAN: Is that the only work that remains to be done other than moving people in?

Mr Miles : At the same time, or about a day later, a small leak was established—a water type leak—which was traced back to a proprietary plumbing product that was established under the tiled floor of an ensuite. On checking with the manufacturer we were told that they could not guarantee that there had not been a production problem in relation to that item. So given that we were going to need to delay the opening for three weeks we have taken the action of replacing that piece of plumbing equipment in each of the ensuites during this three-week period. On its own that would not have delayed—

Senator RYAN: In each of the ensuites?

Mr Miles : In each of the ensuites, because we cannot afford to have something happen.

Senator RYAN: When people have moved in.

Mr Miles : Yes.

Senator RYAN: When you say plumbing equipment, are we talking about pipe?

Mr Miles : It is connected to a pipe. It is like a manifold, where various bits run into. It is a plastic box, and it failed. It is an off-the-shelf product and it failed.

Senator RYAN: Has the department incurred any cost as a result of this?

Mr Miles : No.

Senator RYAN: I imagine that replacing them is not a small job for that many.

Mr Miles : We have to rip the tiles up and put them back in again, but there is no cost to the Commonwealth.

Senator RYAN: Does the CPO run on a wi-fi network or a cable network? If I bring my laptop in or am logging in—

Mr Miles : There will be wi-fi through the CPO.

Senator RYAN: Is it also wired for desktop computers?

Mr Miles : Yes, it is.

Senator RYAN: Was there a need for work to recable it to be done at any point, such as changing tables from part of offices to others, as a correction to cabling work?

Mr Miles : Not at all that I am aware of.

Senator RYAN: Do you envisage any delay past 24 June at this point?

Mr Miles : No. We have booked the removalist again.

Mr Tune : Can I say, 'Touch wood!'?

Senator RYAN: If you want. It is nice wood too: laminate. That is all I have on the CPO. Can I ask a couple of questions about Comcar? On AusTender there is a handful of contracts where taxi services, or what are described as Comcar service fees, transport services and Comcar hire are being provided. I can give you the notes if you like. They are provided to the Australian Crime Commission, the ATO, the APSC and the NHMRC. Three are for $10,000 and one is for $30,000. Does Comcar do tender work for others?

Mr Ford : No, Comcar does not tender for work.

Senator RYAN: Can I give you the contract notes? You might want to check up. The supplier is listed; I will go through the details: the ID is CN963711, the agency listed is the Australian Crime Commission, it is dated 12 October 2012 and the category is taxicab services for $30,000 from August last year until the end of June this year. The supplier name is Comcar.

Mr Ford : We do work for other agencies.

Senator RYAN: That is what I am asking.

Senator Wong: Sorry—I missed where you are reading from, Senator.

Senator RYAN: I am reading from AusTender documents, and my question—

Senator Wong: And COMCAR is listed as the successful tenderer—is that right?

Senator RYAN: It is listed as 'supplier'.

Senator Wong: Supplier, rather.

Mr Tune : It is a procurement—

Senator RYAN: Yes. So my question earlier was: do you supply services to other agencies? On a tender basis—maybe I should have clarified that.

Mr Ford : We do supply services to other agencies, but not on a tender basis.

Senator RYAN: They are just round numbers, that is all—like 30,000, 10,000. How do you supply services to other agencies, in that sense?

Mr Ford : We are asked to provide services—for example, for guests-of-government visits or for an event, typically for a car with driver services. I would imagine that, with the amounts that you are reporting, we have charged those agencies those amounts and, because they are beyond a threshold, the agencies are reporting that they have procured the services through COMCAR, but we certainly do not tender for any work.

Senator RYAN: I just need round numbers, that is all—three of them are round numbers, for an amount for services. For the APSC, for example, it is $10,772.30.

Mr Tune : I suspect they are anticipating that that is what they will spend over a period of time.

Senator RYAN: So it is done in advance rather than—

Mr Tune : Some might do it that way, yes. I have heard of those situations before, where they know from history that they are going to spend about that much over a period of time so they put it on. I guess there is a question about how appropriate it is to put it on AusTender, because I do not think it really is a tender; it is a procurement. But, normally, COMCAR would provide the service and send the bill, and they would pay the bill.

Senator RYAN: And this is for officers of the organisations that are eligible for COMCAR?

Mr Tune : I would imagine so; it sounds like it. Some people have got entitlements; some have not.

Senator RYAN: So with, for example, the ATO, a particular level of officer would have the entitlement to the Commonwealth car service?

Mr Tune : That is right.

Senator RYAN: Just for your information, three are described as 'limited tender' and one is described as a 'prequalified tender'.

Mr Tune : We will check it out, but I have questions about whether it is appropriate.

Senator RYAN: That is all I have for COMCAR, Mr Ford, thank you. I will turn now to the issue of the whole-of-government supplier arrangement for stationery and office supplies. Is there a specified saving from moving to a whole-of-government supplier arrangement?

Ms Baker : For the office and stationery supplies? Yes, there is.

Senator RYAN: Sorry—for the stationery and office supplies coming via OfficeMax?

Ms Baker : Yes, there is. We sent out a circular to senators and members announcing that we were moving to a whole-of-government arrangement, and in the circular we talked about more competitive pricing resulting in savings in the order of approximately 14 per cent annum on items purchased using the office requisites and stationery budget.

Senator RYAN: Because these are now on a capped budget amount, effectively, for members' and senators' offices, was there a saving assigned to it with respect to government? Was there a line item saving overall—so, because you had assigned that 14 per cent, we could get pens and things, on average, that much cheaper?

Senator Wong: You might know, Ms Baker, or we can take it on notice, but my recollection is that the better procurement price outcomes savings measure in the budget includes the savings from this measure.

Ms Baker : Yes.

Senator RYAN: It does?

Senator Wong: Yes, but I could not disaggregate that.

Senator RYAN: That is okay. If it contributes to that I can understand. Does that include, in net terms, the cost of extra transport and freight, where people might previously have been seeking reimbursement for things purchased locally?

Ms Baker : I am not certain. Could I take that on notice?

Senator RYAN: Yes. One of the reasons is that, when we have looked into printing issues before—not with respect to MaPS but to general government printing—we have found that one could often aggregate a contract and make it cheaper to print in one place, but then it would have to be trucked all around the country, so the saving would get eaten up substantially. And also aggregating contracts does limit the ability of MPs and senators to support businesses in their own communities. So I am always interested in the degree of real saving, as opposed to a headline saving that might be otherwise eaten up through other administrative measures or needs.

Ms Baker : I can check on that. Prior to moving to the whole-of-government arrangement, the provider was OfficeMax, and the procurement was centrally done through OfficeMax. With the whole-of-government arrangement, it is also done through OfficeMax, so really for senators and members there is no difference in the way that they access that entitlement.

Senator RYAN: Now I will turn to the Flight Centre travel contract. There was a circular that came out yesterday, or the day before, when we were in this room—and I have not had a chance to read it—about reporting issues and our need to comply. Could you provide an update on some of the implementation issues that you have had to address?

Ms Baker : We commenced using Flight Centre management, FCm, from 1 January this year for the parliamentary travel services provider contract. There is a Commonwealth requirement, a Finance requirement, that FCm provide to us the cost of individual flights undertaken by parliamentary travellers. Unfortunately, for the first five months of this year there has been a blind spot in getting that information consistently from Flight Centre management. There has been no detriment to senators, members and staff undertaking the travel. But we require that data in a particular way and, up until very recently, Flight Centre have had difficulty in providing that data to Finance. We are at a point now, though, touch wood, where we should be able to provide senators and members with an updated travel budget report in the next week or two.

Senator RYAN: So the information that was missing was the cost of individual trips?

Ms Baker : Flowing through to Finance, yes.

Senator RYAN: Did the transition to Flight Centre result in a saving for the Commonwealth?

Ms Baker : It was a tender process, yes.

Senator RYAN: There have been a number of other issues with Flight Centre, one of which was the publication of private information earlier this year, after the changeover, which I am not going to go into in great detail—I did alert the minister at the time, on the weekend—

Ms Baker : I am aware of that.

Senator RYAN: It did take a few days for Flight Centre to act, and obviously it was not publicised, so no-one thought to download it. What was their response to the fact that numbers that you would not want to make public, even in a closed, semipublic domain like this, were published and to the time it took to get rid of them?

Ms Baker : There were two issues in the transition arrangement from the previous travel services provider to Flight Centre management, and both of those transition issues, as you refer to, took place, I think, in the first week of January this year. As soon as Flight Centre were aware of the issue, they sought to resolve the issue. The managing director of Flight Centre Ltd provided a letter of apology to the then Special Minister of State. The issue—and it was a transition issue; there were two issues—arose from the fact that our contract is an unusual contract. The type of access that we want parliamentary travellers to have to an online booking tool is unique. There are multiple people within an office who can potentially book travel for others. But, of the two issues, of the 26 parliamentary travellers who were given logon access to book travel or amend travel, and profile details, only seven of those people actually accessed the traveller profile information, and none of that information was amended. There were no false bookings made. There was—

Senator RYAN: I will be honest: one of them was in my office, and they did it inadvertently. I asked that person to do it again every day to see how long it took to come down. The risk here was not of false bookings being made, with all due respect. The risk here was the personal contact details of some very sensitive people being published. With all due respect—and I am not blaming the department—it strikes me as an incredibly significant oversight on Flight Centre's part, and I cannot imagine a more serious breach, other than if addresses were published.

Mr Tune : We agree with that, Senator. I can recall discussions with the Minister Gray at the time. We spent a lot of time pushing and shoving Flight Centre to get this fixed quickly. We demanded an apology from the managing director rather than from someone lower down in the organisation, because we recognised it was a very serious breach as well.

Senator RYAN: Was there a reason that this was not communicated to members after the situation had been solved? As far as I know, there was no communication to members and senators or to other people on that list, and it was a big list, that there had been a breach, it had been attended to and there had been an apology. Was there? If there was, I missed it, I am sorry.

Ms Baker : No, there was not a broader communication. There was communication to those officers who made contact with the department. I agree with you that it is a serious issue, but of the 113 parliamentary travellers who were given login access and who were able to see that company tab that you refer to—

Senator RYAN: I have no idea how.

Ms Baker : Only three people actually accessed that tab and the information contained in it was the person's name and a contact number. In some instances, they were mobile numbers and in other instances they may have been the office number for the parliamentarian concerned.

Senator RYAN: True. But one of them was also for the Lodge. These were sensitive numbers.

Ms Baker : They were sensitive numbers, Senator, yes.

Senator RYAN: The reason I ask all these questions is that every few years we go to tender. I am not sure what the length of the contract is.

Ms Baker : It is three years plus one, plus one, at the discretion of the Commonwealth.

Senator RYAN: If we jump in between tenders now: you said it is a unique contract. I will be honest, I have worked in multinationals with global providers, and I do not think this contract is that unique other than in the wish for some discretion and probably security.

Senator Wong: Possibly for the public sector.

Senator RYAN: Someone like Flight Centre or HRG tender for contracts bigger than this all the time, with much more complex arrangements.

Ms Baker : I agree, Senator. The issue with the contract that we have is that there are multiple people traveling—and that happens everywhere—and they make multiple bookings for the same day for the same flight. Very rarely, for good reason, does a traveller make one booking, never change it and then travel. So they are unique in that instance:

Senator RYAN: There is a degree of intensity here. There are peaks and troughs, I would imagine, in the travel movements.

Ms Baker : Yes. But it is unique from that point of view. We have always worked very hard with whatever travel provider that comes in. I have to admit I was not around the last time we moved from, I think it might have been, CWT to HRG—

Senator RYAN: Before my time.

Ms Baker : and there were transition issues at that time as well.

Senator RYAN: I think everyone appreciates that the department did quite well in advising people of risks, of making their bookings before they left the state and that they will be transitioned over this date and providing transition phone numbers. So, if someone was unlucky enough to be working on New Year's Day, I think they were supported. What I am particularly interested in is that this tender is going to come up often. What has the department learnt to make sure that this does not happen again? I have just been reminded that there were also names of families published. People often go to some effort to protect the names of their family members. What are we going to do from this point forward to make sure the next time we have a transition that we have a really robust testing system? The person who found this found it by accident.

Ms Baker : In my area, we are involved in a number of large tenders for parliamentarians. I can categorically say that we have taken a number of learnings from this process. I am confident that FCM will be a good travel service provider. Yes, there have been a number of issues, but we will take serious learnings from the transition from one provider to the other.

Senator RYAN: I will just say that, from the user end, the transition was managed very well. It was seamless from my perspective, with the bookings being transferred over. So I do not want this to be taken as a particularly intense criticism at all.

Ms Baker : No.

Senator RYAN: As I said, over the transition period I think it was handled very well. I have been through them before in the corporate world and they were much, much messier. But there were just some unique aspects to this.

Mr Tune : One of the things that you can do—and this has a cost, so you need to be careful—is to have a trial period where we test the new system, even on dummy runs with some live people—senators and members—and say, 'Would you wish to participate in this, just to test run it and see if there are any bugs?' But you have got to run a dual system for a period of time for that to happen, so there is a downside there in terms of cost. But there is also a benefit in terms of checking it out.

Senator RYAN: I would respectfully suggest that. I am not sure how much it would cost, but there are probably people in electorate offices who have a greater awareness of how the system works than people in the department—because they have us on the phone at odd hours of the day and night, saying, 'I need to get home or get out.' But I think this particular thing was more grave than that other transition issue. If a plane is late, and you miss a taxi or whatever, it does not matter. It was people's privacy.

Mr Tune : We did use that approach with our online HR system, which we did internally, so it was not tendered out; it was slightly different. We did, through the SMOS's office, get a number of people to test run it, to make sure: 'Does it work? Is it usable?' and so forth. I think that was really beneficial, because we got the bugs out of it before we went live with it.

Senator Wong: Are you done?

Senator RYAN: I have one more question; I was going to ask for the document we normally get tabled, about the staff, to be tabled, please.

CHAIR: Before we go down that path, can I just go back—while Ms Baker is there—to ask a question in relation to the office provider, in terms of stationery? Are you aware of any concerns that have been raised in relation to the state in which items are being received in some electorate offices, in terms of broken boxes and paper that arrives that is not able to be used in printers or photocopiers because of the state in which it arrives?

Ms Baker : No. I manage the contract; my area manages the contract. We have not received that feedback, but we can take that on notice and speak with the provider.

CHAIR: I think that would be good because my understanding is that it has become a common problem—the state of the goods. Not only are they not arriving in a usable state, but quite often they come over a number of periods of time, so it makes it an increasing job for electorate staff to try and reconcile whether orders have actually been received or not. Would you be able to take that on notice?

Ms Baker : Certainly.

CHAIR: That would be great. Thank you very much.

Senator FAULKNER: Can I just ask you, Senator Ryan, through the chair: did you request the tabling of their personal classifications and the other documents?

Senator RYAN: Yes, I asked the standard—

Senator FAULKNER: I appreciate that. Even if a committee member does not request them, I think it is extremely good ongoing practice for these things to be tabled. As always, Mr Tune, I think it is appropriate for the committee to thank the department for preparing these documents. I have said this now for many years. It saves a tremendous amount of time and, I think, exasperation on both sides of the table. The work the department does to prepare this is appreciated. I did not hear Senator Ryan request them, but it is obviously good practice that they be provided anyway. So, if you could thank those responsible, we would appreciate it.

Mr Tune : Thanks, Senator; that is appreciated.

CHAIR: We will break for lunch, and to resolve the continuing of the agenda.

Proceedings suspended from 13:00 to 14:07

CHAIR: Welcome back. Minister, you have something for the record?

Senator Wong: Yes, on outcome 2. This is all on the public record, but I will just put on record the change in the chair of National Broadband Network. Mr Harrison Young was the inaugural chair. His term expired on 14 March and he decided not to stand for appointment. The government has appointed Ms Siobhan McKenna, who comes to that role with significant experience—including as a commissioner with the Productivity Commission, a director with Prime Media and a partner with McKinsey & Company. I want to place on record, again, the government's thanks to Mr Young for his considerable work in this role. I look forward to continuing to work with Ms McKenna.

CHAIR: Senator Pratt, you have the call.

Senator PRATT: Thank you very much. This afternoon, I have some questions about parliamentarians' travel entitlements. I would like to begin with clarifying the legislative structure underpinning entitlements, noting that parliament enacted the Remuneration Tribunal Act 1973 to establish the Remuneration Tribunal and authorise it to determine the allowances to be paid to parliamentarians, by reason of their membership of parliament. That is correct, isn't it?

Mr Tune : It is.

Senator PRATT: On 3 October 2012, the tribunal issued Determination 2012/04, which sets out various entitlements for members of parliament. Is that correct?

Ms Pitson : I believe that is correct. We would have to check the actual date, but there is a determination by that name.

Senator PRATT: Going back to those determinations and entitlements, they have the authority of the parliament under the powers of that act. I would like to ask about entitlements under 4.3 of the determination to use car transport at government expense in Canberra to access any reasonable personal services that are not available at Parliament House. The relevant section for the benefit of the committee is:

A senator or member may use the car transport in Canberra for the purposes of personal emergencies such as dental and medical treatment, funerals and other compassionate circumstances and reasonable personal services such as religious services and banking when these are not available at Parliament House.

That is correct, isn't it?

Ms Pitson : Yes.

Senator PRATT: That determination would be interpreted more broadly in terms of the full range of things that people might need when they are living away from home. Is that correct?

Ms Pitson : Are you able to give an example? In each circumstance, it would depend upon the particular circumstances.

Senator PRATT: If I need to pick up something from Kmart at the Woden centre on a Friday after a sitting week, because I was here for the weekend and I had no other transport, I assume I could do that under the entitlement?

Ms Pitson : It is not clear that you could in those circumstances, but then that does not necessarily say that subject to the particular circumstances you could not.

Senator PRATT: You could have a meal nearby there, if that is where you chose to eat that day, perhaps, but not for the explicit purpose of going to Kmart?

Ms Pitson : I do not think it is that clear-cut.

Senator PRATT: I am trying to work out how one tells what is clear-cut and what is not. I am trying to work out whether I have read the section correctly. Unlike other uses authorised by the determination, the use of cars in Canberra is clearly not limited to travel on parliamentary or electorate business and parliamentarians can use car transport for travel unrelated to their official duties. Is that right? We routinely do it.

Ms Pitson : Again, Senator, it would always depend upon the particular circumstances. If you have a particular circumstance that you would like explored then we would urge you to contact your relevant entitlements manager and they can give you advice on those particular circumstances. The car transport entitlement is incredibly complex. It is drawn from several sources. And you are right: there is the Remuneration Tribunal determination but there is also an entitlement in the Parliamentary Entitlements Act. They have always provided for broadly consistent but slightly different purposes. Usually the car transport is for parliamentary and electorate business, but as you have identified there are these other nuances out there. It is an incredibly complex entitlement. We will absolutely grant you that.

Senator PRATT: I do have some specific questions about that. It does leave me rather concerned when, essentially, people live in Canberra when they are not at home, when they are here for a sitting. When they do not have other transport, they are likely to have a full range of non-work related transport requirements, whether that is visiting people et cetera. Is that correct? Is it your understanding that that is the case?

Ms Pitson : I could go through in detail some of it. To give you an example of the complexity: you are able to undertake direct travel between the 'senator or member's home base, electorate office or place of business and the nearest airport or railway station'. That example is provided under clause 4(1)(a) and clause 4.11 of the Remuneration Tribunal determination, with reference to procedural rule.

There are other entitlements. Where services are not available from the airport or railway station near a senator or member's home base, the senator or member may be entitled to car transport for direct travel between his or her home base and the nearest airport or railway station which provides a reasonable service for that journey. That goes to clause 4.1 of the Remuneration Tribunal determination. There are a long list of different circumstances in which it may be within entitlement. It is probably one of the most complex entitlements that we have, so trying to give a simple yes or no answer about whether something is in or out can be difficult.

Senator PRATT: It can indeed be difficult and I can certainly tell you, given what you have said, that it is difficult for me to determine which of my activities would be inside or outside entitlement. I understand that the limitation is that it is for services that cannot be accessed at Parliament House, is that correct?

Ms Pitson: To clarify: is the car transport for services that cannot be accessed at Parliament House? Is that the question?

Senator PRATT: Yes.

Ms Pitson: The car transport entitlement is for parliamentary electorate business. Generally that is the what you need to be engaged in when you are accessing the entitlement.

Senator FAULKNER: This is an age-old question: I know the answer to the question I am going to ask, but, just for the record, can you tell us, Ms Pitson, what the definition is of parliamentary electorate business?

Ms Pitson: No, I cannot tell you what the definition of parliamentary electorate business is.

Senator FAULKNER: I am surprised to hear that! Can you explain why you cannot?

Ms Pitson: It is for each senator or member to determine what is parliamentary or electorate business. To use the senator's previous example: if there were a parliamentary or electorate purpose for you to go to K-Mart—I think you indicated that—you may be able to justify that. But if there were not a parliamentary or electorate purpose, then—

Senator FAULKNER: I am sorry, I only interrupted there, Senator Pratt, because I thought that might help. It does appear to be an element of the story that we are not addressing, so I apologise for asking a question I knew the answer to, but I just thought it might help this.

Senator PRATT: Thank you.

Mr Tune: In a sense, there has been a gap in the arrangements since day one, almost. We do not have dead clear definitions and therefore we are open to interpretation all the time.

Senator FAULKNER: Yes, I as am well aware of that, I can assure, as—I think you probably know, Mr Tune—as you are. I thought it might have been helpful to ask that question even though I knew the answer to it, given—

Senator PRATT: Well it was helpful to me, thank you.

Senator FAULKNER: the questions that Senator Pratt—

Mr Tune: Yes. In essence, it is the source of the uncertainty.

Senator PRATT: I do have further questions, but I understand you want to talk to the Australian Electoral Commission now.

CHAIR: Yes, we will be coming back to it.