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Environment and Communications Legislation Committee
Great Barrier Reef Marine Park Authority

Great Barrier Reef Marine Park Authority


CHAIR: Welcome, officers from the Great Barrier Reef Marine Park Authority. Mr Elliot, welcome. Do you have an opening statement you wish to make?

Mr Elliot : Yes, Senator, I do; thank you. Thank you for the opportunity to update you on the state of the Great Barrier Reef and the management activities of the Marine Park Authority. First, I would like to acknowledge the traditional owners of the Great Barrier Reef and their continuing connections to their land and sea countries, and pay respect to the traditional owners of the land on which we meet today, the Ngunnawal people. I would also like to recognise the significant weather event which has occurred in Townsville recently and the wider North Queensland region and the catastrophic implications this has had for many people. Our thoughts are with those who have been impacted and we wish them all the best through the recovery process. I would also like to thank those involved in the rescue and recovery and the community spirit and commitment, which was truly admirable.

This event has not been without its ramifications for the Great Barrier Reef. There has been major to moderate flooding of the rivers from the Daintree to the Mackay regions. Flooding and resultant discharge of large amounts of fresh water into the marine park can result in freshwater bleaching to inshore corals and we do expect impacts on seagrass meadows. At this stage it's too early to determine the impact from the flood waters. However, we will continue to monitor the situation.

Species that are reliant on seagrass as their primary food source, particularly green turtles and dugong, are also likely to be affected. Following previous significant flood events such as those associated with Tropical Cyclone Yasi in February 2011, there was a dramatic increase in recorded mortality rates for these species. There is likely to be a time lag of weeks to many months before we will know exactly what the impacts of this event are.

Forecast models still predict above average sea surface temperatures through the remainder of February and March for the entire reef. However, the cooler regional weather in January and earlier in February has seen the threat of mass coral bleaching reduced markedly for most of the reef compared to earlier predictions. Regional and local weather conditions will continue to be critical in determining the outcome for the reef this summer.

The authority has been providing weekly reef health updates to our key partners and on our website since December last year, and we will continue to monitor and inform on any potential impacts on the reef this summer. We continue to reinforce that strong global action on climate change is essential for the long-term health of the reef. Our focus continues to be on building the resilience of the reef by managing the local and regional stressors to the Great Barrier Reef World Heritage area. Delivery of actions in the reef 2050 plan and the authority's blueprint remain critical and we are both directing our work to these actions and partnering with other stakeholders in these efforts.

As a result of the Australian government's increased ongoing investment in the Reef Joint Field Management Program, which has been matched by Queensland, the program expansion is rolling out. The expanded program will significantly increase our on-water presence and delivery of field management activities, essentially for the resilience of the reef, and, in particular, management of the stressors on the reef. The establishment of a dedicated southern compliance team and the expected launch of the program's new 24-metre vessel in June this year will expand the program's capacity to deliver on-water activities, especially in the Southern Great Barrier Reef.

Our focus, as the legislated manager of the marine park, is on management and protection. We deliver policies and programs, management strategies and regulation to ensure the long-term protection and the sustainable use of the Great Barrier Reef. This includes the full suite of existing work from ensuring compliance with marine park zoning and issuing permits to working with communities and industries who rely on a healthy reef. Our partnership with the reef tourism industry and the science community to conduct the crown-of-thorns starfish control program is just one example. We are currently operating an expanded program with six vessels on the water across the marine park conducting targeted control, which is a critical activity to help protect corals.

We continue to work with the Department of the Environment and Energy to implement the recommendations of the 2017 governance review. I am pleased to announce that since the last estimates session, Dr Ian Poiner was appointed as the authority's part-time chairperson. This was in October 2018. Dr Poiner brings a wealth of expertise to the role and will provide strong leadership and guidance to the authority board. As the acting CEO, I have been working closely with Dr Poiner while the process to recruit a permanent CEO is under way. Thank you.

CHAIR: Thank you very much, Mr Elliot. Senator Waters.

Senator WATERS: Thanks very much, Chair. Thanks for coming along today. And, Mr Elliot, congratulations on your, albeit temporary, promotion to acting CEO. Can you just tell me quickly when the finalisation of the permanent CEO will take place?

Mr Elliot : I will probably need to refer you to the department for that, Senator. They are managing that process. Dr Poiner was on the selection panel for that appointment, but it is being managed by the department.

Senator WATERS: Who is doing your old job while you're acting up?

Mr Elliot : Dr Kirstin Dobbs.

Senator WATERS: You mentioned the impacts of the floods in your opening statement. Can you talk us through the freshwater bleaching that you have referred to in a bit more detail?

Mr Elliot : Freshwater bleaching is something that has occurred with some previous flooding events. It's not on the scale of, say, thermally-induced mass bleaching, but it can be quite rapid depending on the areas and what the drop in salinity is. It is essentially something that creates a stress event for corals and, as with thermal stress, freshwater stress can also create a bleaching response by the corals. I would probably have to refer you to Dr Wachenfeld to see if he can provide any more detail on that.

Dr Wachenfeld : Essentially corals, like most marine animals, are adapted to living in a fully saline environment, which means 35 parts per thousand of salt. That's the typical average salinity of the ocean. Obviously, the water that comes out of the river is pure fresh water, and that mixes over time. We believe, from data from the Australian Institute of Marine Science, we have seen already water out on the marine park as low as 20 parts per thousand of salinity, so getting close to half. Obviously, those really low salinities happen closest to the river mouths and the further away you get the more mixing there is and slowly the salinity increases again until it gets back to background. But essentially any marine organism exposed to lowered salinity will experience some kind of stress. Corals are particularly sensitive.

Senator WATERS: How does this new freshwater bleaching interact with the thermal bleaching that we saw in the last two seasons?

Dr Wachenfeld : In terms of spatial extent, probably it's limited because the thermal stress was essentially very widespread through the park, although obviously not so much in the south. There probably will be reefs that were both affected by thermal stress in 2016 and/or 2017 that may now be affected by one of the various impacts that might come from this flooding. We have teams out under the Marine Monitoring Program that the Great Barrier Reef Marine Park Authority manages, and scientists both from James Cook University and the Australian Institute of Marine Science are out monitoring both the spatial extent of these flood plumes and also their chemical content, including their salinity and other things. The question will be exactly how much do the reefs that were affected in the past by the heat stress now get affected by floods. Obviously, at the moment, it is too early to tell. Certainly, these are very extensive flood plumes—large volumes of water and, to some extent, unusual wind conditions which are allowing those flood plumes to carry further east and offshore than they might normally go. We will have to carefully investigate the spatial extent of this event when that information is available.

Senator WATERS: Okay. Do we have a rough estimate of the proportion of the reef affected, given that we know we lost 50 per cent from the thermal bleaching with those back-to-back seasons? You have said some of those reefs might now be re-affected by this freshwater plume. Do you have a sense of the scale of the problem in terms of proportion? Is there an interaction between the ability to recover from thermal bleaching if those same systems are then hit with this freshwater bleaching? How much does it set back the recovery process?

Senator WHISH-WILSON: And have we ever seen an example of this happening before?

Dr Wachenfeld : I think there are three questions in there. Certainly, regarding the reefs that were in the process of recovering from the thermal bleaching, if they now get hit by freshwater stress or pollution, including pesticides, nutrients and fine sediment, it can only delay the recovery process from those past events. I'm certainly not able to put any kind of a figure on the spatial extent of the park that is affected by the flood plumes, but I think I can safely say that they are extensive because there are rivers flooding all the way from the Whitsundays in the Central Great Barrier Reef right up to Cape Tribulation in the Northern Great Barrier Reef. So a substantial part of the Central Great Barrier Reef is being affected by these plumes now. Senator Whish-Wilson, I'm sorry, the third part of the question?

Senator WHISH-WILSON: Is there any historical precedent for this scale of flooding on the back of severely bleached, thermal-bleached, reefs? Have we ever seen anything like this before?

Dr Wachenfeld : Starting with what happened in the catchment, certainly there are places that have broken rainfall records, one-day records or five or 10-day accumulation records. There are places in the catchment, particularly around Townsville, where the rainfall was unprecedented. At this stage, obviously, we continue to monitor the discharge from the rivers, but at this point I'm not aware of any rivers that have broken past records. The Burdekin, for example, is certainly in a major flood at the moment, but that flood is not as big as it was, for example, post Cyclone Yasi.

Mr Elliot : If the question was, 'Have we ever had the circumstance where we have had a flooding event occur immediately after a heat stress event?', we would have to go back and see if there was any flooding after the previous heat stress events—those in the late 1990s and the early 2000s. So we would have to take that question on notice. The other thing I would say is that we refer to bleaching, but just to reinforce that, bleached corals are not dead corals; corals can and do recover from bleaching. It all depends, in the case of thermal stress, on how long the thermal stress lasts for post bleaching. In the case of freshwater impacts there will be different factors at play, but bleached corals do and can recover.

Senator WATERS: You said you were monitoring the impacts of the flood plumes and those rivers at source, basically. I'm interested in the Yabulu nickel refinery, given that they've got some holding ponds there that, as of about a week ago, were close to overtopping. Does GBRMPA have any role there? Are you tracking that situation and where is it at? Have those holding dams overtopped and has there been any impact on the reef as yet?

Mr Elliot : We remain engaged with the Queensland authorities that are responsible for managing that. Dr Banks will probably be able to answer your question.

Dr Banks : During the events we were liaising with the Queensland Department of Environment and Science who have the regulatory responsibility for the volumes in the available airspace, I suppose, in those dams. They were using modelling and were advising that there was plenty of airspace in them, so there was no sort of discharge from them.

Senator WATERS: So is that in reality or just in modelling?

Dr Banks : They inspected the sites and were able to advise that there was available airspace.

Senator WATERS: So that was on 4 February, was it not, that investigation? What's happened since then? Has anything overtopped?

Dr Banks : We were advised that they inspected the site on 11 February and observed available freeboard within the tailing system.

Senator WATERS: So there was no overtopping at any time?

Dr Banks : No.

Senator WATERS: That's good to know.

Dr Banks : That's what we've been advised.

Senator WATERS: A similar question now with the Abbot Point contamination. I understand that the Caley Valley Wetlands—which I know is outside your jurisdiction, but still, it's on the border of your jurisdiction—received some coal-laden water which had about twice the amount that it was meant to have in it under their Queensland licence. Are you tracking that situation, and can you give me an update on that?

Dr Banks : Again, we were liaising with the Queensland Department of Environment and Science about the situation there. We understand that they have an investigation going on into that discharge into the wetlands.

Senator WATERS: They do indeed, and I will be asking the department about that later today. Are you tracking the impact on the reef? Is there any need for that? Has it gone that far yet?

Mr Elliot : We have been advised that there was no discharge directly into the marine park, which is obviously the first thing we would check for. In terms of whether the discharge into the wetlands would have a flow-on effect to the marine park we wouldn't be able to advise at this time.

Senator WATERS: Are you looking, though?

Mr Elliot : We remain engaged with the relevant Queensland authorities so we would find out if they've come to an assessment that that's the case.

Senator WATERS: When you said your 'advice', was that by the proponent or was that by the Queensland department?

Mr Elliot : At that point, the relevant Queensland department.

Senator WATERS: So they don't think it has reached the reef's waters yet, but they will keep an eye on it and they will let you know if it does—is that right?

Mr Elliot : We engage closely with the relevant department, so we would expect to know—

Senator WATERS: But the point is you will wait to hear from them—is that right?

Mr Elliot : Generally speaking that would be the case, because we would only do monitoring ourselves with something that was within the marine park. We are aware that there was no discharge directly to the marine park.

Senator WATERS: Based on the information from the Queensland department as opposed to the proponent?

Mr Elliot : And any other sources we have. We haven't been advised by anybody of any discharge directly into the marine park.

Senator WATERS: Last clarification: who advised you that there hadn't been any leaching?

Mr Elliot : The Queensland department has advised us specifically that there was no discharge into the marine park. But we have, likewise, not been advised by any of our other stakeholders that there has been.

Senator WATERS: Thank you.

Mr Knudson : Senator, the head of our office of compliance has been in touch also with the Queensland officials and she can walk you through where that's gotten to.

Senator WATERS: At about 10 to 11 tonight.

Mr Knudson : Some ungodly hour, yes.

Senator WATERS: Thank you. I will wait up for it.

Senator WHISH-WILSON: Mr Elliot, can I ask that question you took on notice from me about whether there had been an historical precedent? I'm sure that would be easy for you guys to do over lunch, because I'm guessing you would probably know about it if there were a major flooding event after a major heat stress event. Could you check that over lunch and let us know when we resume, if that's possible?

Mr Elliot : That we could probably do, Senator.

CHAIR: We will break now for one hour, returning with the Authority.

Proceedings suspended from 12 : 18 to 13 : 20

CHAIR: Welcome back. The minister will join us shortly. Is there any business to take care of before we kick back-off? No? Excellent.

Senator KENEALLY: Thank you for being here today. Mr Elliot, I appreciate your time today especially. Thank you. Could you tell me the total budgets for reef investments over the forward estimates? That includes all programs relating to the reef administered by the Great Barrier Reef Marine Park Authority, including the funding you received at the time the GBRF grant was announced?

Mr Elliot : Senator, I might ask a question. Before I answer your question, Senator Keneally, did the committee wish me to answer the question that Senator Whish-Wilson asked me to follow up on over lunch first?

Senator WHISH-WILSON: Yes. Thank you.

Senator KENEALLY: I'm happy to do that.

Mr Elliot : Dr Wachenfeld will answer that question.

Dr Wachenfeld : Certainly, there have been some similar events in the past of a flood following a heat stress event. Given that the footprints of flood plumes are generally close to the coast, it's not surprising that the two specific examples I'll give you are from coastal islands. In 1998 and 2002, the Palm islands experienced severe bleaching and mortality. They then had a flood in 2009, so that is a seven-year gap. Similarly, the Keppel islands had a severe bleaching and mortality event in 2006, followed by flooding and mortality in 2011, so that is a five-year gap.

The first thing to notice is that the gap this time is significantly shorter than the past examples that we have. I think what this really emphasises is that what is concerning is the cumulative impacts to the reef. It's not so much one bleaching event or cyclone or flood. It is the addition of all of these things that are coming. In particular, the concern is that irrespective of what the sequence is—whether it's a cyclone and then a flood or a bleaching and then a cyclone—the time for reefs to recover is diminishing. That's why we're concerned about their resilience. That's why our efforts to manage that resilience are very important.

In particular, some of these things can have longer timeframes to play out. So corals that might survive a flood or a bleaching can often succumb to disease at any time over the year or two after that event. So now as corals are seeing events happen more quickly—say, a bleaching and, two years later, a flood—they're that much more stressed. Even if they survive the events, they are more likely to succumb to disease. So overall this is really just for us reinforcing the need to manage the resilience of the park and everything that that means.

Senator WHISH-WILSON: Thank you.

Mr Elliot : I will move to Senator Keneally's question. I'll hand that over to Ms Leo.

Ms Leo : Over the forward estimates period, GBRMPA's total operational budget is $67.9 million in 2019-20, $63.4 million in 2020-21 and $66.1 million in 2021-22.

Senator KENEALLY: That includes the funding received when the Great Barrier Reef Foundation and grant was announced? Didn't GBRMPA receive some funding as well?

Ms Leo : Yes, it does.

Senator KENEALLY: Within those funding flows, is that all going towards reef investment, or are there administration costs in there? Can you break out any more specifically what flow of funding will go directly to the reef?

Ms Leo : Well, that is total budget to the agency.

Senator KENEALLY: Yes.

Ms Leo : In terms of what proportion of that might be administrative costs, that would depend on particular programs.

Senator KENEALLY: I may come back and put some questions on notice to you on that in the interests of time. Do you have a figure, in terms of those forward flows, for what is going to research?

Ms Leo : It's not specifically structured in that way, Senator. I would need to take that on notice.

Senator KENEALLY: I imagine I'll get the same answer when I ask what funding within that is going to specific programs as opposed to research.

Ms Leo : We could talk to the joint field management program, where it is clear how much is directed to that part of our operations. But for other programs, we would need to take it on notice.

Senator KENEALLY: Could you tell me about the joint field program, then?

Ms Leo : For the joint field management program, the Commonwealth contribution is $8.372 million over the forward estimates period. There is also matched funding received for that program through the Queensland government.

Senator KENEALLY: Thank you, Ms Leo. Mr Elliot, has GBRMPA been asked to report to the World Heritage Committee on the health of the reef, or are you planning to do that?

Mr Elliot : My staff will correct me if I am wrong. Generally, my understanding is that we would normally report through the Department of the Environment and Energy when we report to the World Heritage Committee. As the representative of the state party, they would be reporting to the World Heritage Committee.

Senator KENEALLY: Mr Pratt, are you able to advise if the department has been asked to report to the World Heritage Committee on the health of the reef, or are you planning to do so, Mr Knudson?

Mr Knudson : We are planning to provide a state party report on the reef. That's due in December this year. In addition, we'll have GBRMPA's outlook report on the monitoring results on the reef that will feed directly into that report to the World Heritage Committee.

Senator KENEALLY: So the monitoring report will feed into that report to that state party report in December this year?

Mr Knudson : That's correct.

Senator KENEALLY: When was the last time you did that? Was it recently in December? Is it annual?

Mr Knudson : It's not annual. It's on the request of the committee. I'm trying to recall the exact date. We can absolutely walk through what the whole process has been and what it will be going forward.

Senator KENEALLY: We might put that on notice rather than take time today on that.

Mr Knudson : That's fine.

Mr Elliot : Of course, the outlook report is produced every five years. The 2019 outlook report is due to be tabled in around September this year.

Senator KENEALLY: September this year. With that report, Mr Elliot, my understanding—and correct me if I'm wrong—is that you report about management and funding. Do you also report about the actual health and resilience of the reef?

Mr Elliot : Yes, we do. The outlook report is mostly about the current state of the reef from an ecological perspective. We also look at the uses of the reef and how they impact on the health of the reef. We do a chapter on management effectiveness—not just our management actions but management actions across the board as they relate to the Great Barrier Reef. That particular chapter is supported by an independent assessment of management effectiveness, which is done by independent consultants. We then have a chapter on resilience, a chapter on the risks to the Great Barrier Reef and we finish off with the outlook chapter, which gives us an assessment of what the future holds for the Great Barrier Reef based on the current state and the predicted future state.

Senator KENEALLY: This may be to you, Mr Knudson. Has the World Heritage committee asked for any specific information in the upcoming report?

Mr Knudson : I don't believe so. It's a fairly standard thing that when they do ask, they'll provide us a sense of what they're looking for. But I don't believe that's happened to date.

Senator KENEALLY: Do they usually ask for some specific information?

Mr Knudson : There's usually a fair amount of back and forth with the World Heritage Centre to make sure that the questions they are receiving that they want to feel they can answer are well addressed by the state party. So that's a fairly typical thing. They'll have certain areas of concern that they'll want us to canvass.

Senator KENEALLY: Perhaps you could give me a sense of what that iterative or dialogic process is. Is it a constant stream of communication back and forth, or at a particular time do they say, 'Hey, you're due in December. We would like you to consider answering the following issues?'

Mr Knudson : It is iterative. I can go back in history. I can't remember the exact dates of when we did our last report. It has different degrees of intensity. So while our report is due in December, it won't actually be considered by the committee until mid-2020, so we have a number of months in which they receive the report, they consider it and they ask follow-up questions et cetera. Obviously, as it's a World Heritage Committee, they'll have questions raised by other member countries that we'll endeavour to try to make sure that we answer as well. But the fundamentals of it are underpinned by the outlook report done by GBRMPA, which is the science that then feeds into our state party report.

Senator KENEALLY: Mr Elliot, I want to go back to your opening statement. Thank you for providing it in written form. You said:

We continue to reinforce that strong level action on climate change is essential for the long-term health of the reef.

How does GBRMPA continue to reinforce that?

Mr Elliot : One way in particular is through the outlook report. We identified climate change as the greatest long-term threat to the Great Barrier Reef outlook in the 2009 outlook report. That was also reinforced in the 2014 outlook report. Another example which we've provided in Senate estimates hearings before is the submission we made to the policy review on climate change. So I think that we are showing that we have been very particular in articulating what all the major threats are to the Great Barrier Reef, including climate change.

Senator KENEALLY: That's very helpful. I would like to ask some questions about the crown of thorns program. I don't know if there are particular additional people who need to come to the table. Briefly—I appreciate that this is a rather open-ended question—can you talk us through the range of crown of thorns programs that GBRMPA is currently administering?

Dr Dobbs : The authority's goal for the crown-of-thorns starfish program is to protect coral from COTS predation by culling starfish to maintain numbers below certain levels. This will assist growth to outpace the impact of starfish feeding on high value reefs in the marine park. The authority has significantly increased the capacity of its COTS control program. As of November 2018, there are six vessels equipped with trained crews now delivering an expanded program to protect coral cover and enhance the capacity of the reef to recover from impacts. During the expansion process, the authority has provided training in pest management methodology and data management, building the capacity of more than 70 new vessel crew members across the fleet. The expansion of the program has enabled the COTS control vessels to be deployed in the far north and in the far south of the marine park for the very first time.

Senator KENEALLY: Would you characterise any of those activities as blitz type activities? We've heard reports of proposals to undertake what some people refer to as blitz type activities during the crown-of-thorns starfish breeding cycle.

Dr Dobbs : Yes. Certainly we were very keen to have this expanded program in place prior to the traditional COTS spawning season, which is December to February. So we now have six vessels in place as of the end of November. They are working very effectively.

Senator KENEALLY: What about the triton? It's a natural predator to the crown of thorns starfish. I understand some research has been done on returning natural predators.

Mr Elliot : The Australian Institute of Marine Science has been doing some research to breed tritons so that they can increase numbers naturally. Tritons are one of the predators of COTS. They are one of the very few predators to adult crown of thorns starfish. In addition to the fact that they eat the crown of thorns, they also have a chemical cue which affects crown of thorns as well. I will say that there are predators for juvenile crown of thorns and larval stage crown of thorns as well, including some of the fish predators like some of the emperor fish. So the Australian Institute of Marine Science is actually doing research on a whole range of different predators and how we might be able to control crown of thorns starfish outbreaks better in the future using natural cycles like predators et cetera as well. Another thing I have been asked to mention is that tritons have been a protected species in the marine park since the 1950s. I don't think we even know what their natural numbers would be, but we would suspect that we aren't anywhere near them at the moment.

Senator KENEALLY: Dr Dobbs, you spoke about the six ships and that they've been deployed. When will we have a sense of the effectiveness of the work that you are currently undertaking?

Dr Dobbs : We receive regular performance reports after each voyage from each of the vessel fleet. Interestingly enough, a CSIRO report released in November 2018 evaluated the effectiveness of the COTS control program to date and found that manual culling is effective at significantly reducing starfish numbers and improving coral cover at high value sites. Regular revisitation is important to maximise the benefits to coral cover. High value sites that have received the most frequent revisitation by cull vessels have had the largest positive changes in hard coral cover. It also noted that greater levels of protection through zoning also provide management benefits, with no-take zones having fewer COTS than those open to fishing.

Senator KENEALLY: So that's in a November 2018 report from CSIRO. What other evaluation processes are in place? Do you have future reporting dates we can anticipate?

Dr Dobbs : I have two responses to that question. In rolling out our expanded program, we've been working closely with scientists in the integrated pest management work under the National Environmental Science Program to implement improvements to all mode of operations. This is an adaptive management approach that is constantly occurring with each of the vessels as they come back in and provide more data on what is happening at the individual sites where they are undertaking the culling program. The marine park authority also has received moneys from the Department of the Environment and Energy for the COTS control program. We have regular reporting requirements under that MOU to the department.

Senator KENEALLY: Perhaps this is to you or perhaps to the department: will those reports be made public? Is there a timeframe for when these evaluations are being done? The question I'm trying to get to is how do we know or when will we have a sense of knowing if the efforts that are being undertaken now are effective?

Mr Elliot : I think the CSIRO studies done through the integrated pest management framework have already demonstrated that the manual culling of crown of thorns starfish is effective at the reef level. So it will protect coral at the reef level. With the right revisitation, we'll get the outcomes that the crown of thorns starfish program is designed to give us. The program itself is not designed to be the single solution to the crown of thorns starfish problem, though.

Senator KENEALLY: Hence the other research you spoke about that aims—

Mr Elliot : The other research. The water quality programs have their place in terms of nutrient control. So there's a range of different things. Our own control program at the moment is very much focused on protecting coral because we're in the middle of an outbreak. As the outbreak that is currently underway completes and finishes, the focus of the program for the manual control will be then trying to suppress the next outbreak by concentrating on the areas where we know outbreaks tend to occur.

Senator KENEALLY: Thank you. This may be better to the department. Last estimates I asked about a report submitted to the department by the Reef and Rainforest Research Centre relating to the crown of thorns starfish. It was a report that had been altered by the RRRC. Can either the GBRMPA or the department update the committee on what has happened since we learned about the RRRC altering the report? Is it still on the website, or has a review of that report been done?

Mr Pratt : I think that's probably going to be something we're better to cover under 1.1 later today.

Senator KENEALLY: Thank you, Mr Pratt.

Mr Elliot : What I can say is that we were provided with a copy of that report in 2018. I can't remember the exact date, but we did mention it and gave the date at the last estimates. Our staff have reviewed the report. The recommendations and findings in that report are consistent with the integrated pest management approach that we have been following for the last several years.

Senator KENEALLY: Did you provide that advice to the department?

Mr Elliot : From memory, we provided that advice to the department, to the RRRC and back to the author of the report.

Senator KENEALLY: I have a few questions on the Great Barrier Reef Foundation grant. How many meetings has GBRMPA had with the foundation since the announcement of the grant?

Mr Elliot : I would probably have to take on notice the exact number of meetings. We have been meeting with the foundation regularly. We have a bilateral forum with the foundation. We have had an MOU with the foundation for a number of years predating this grant. We also have a member of the marine park authority on the partnership management committee of the foundation. We have GBRMPA staff on a number of the working groups. So it would be a significant number of meetings that we would be involved in.

Senator KENEALLY: You have a member of the marine park authority on what?

Mr Elliot : The partnership management committee. It is our general manager of reef strategy.

Senator KENEALLY: Who is that person?

Mr Elliot : That is Margaret Johnson, our general manager of reef strategy. She is a representative of the partnership management committee.

Senator KENEALLY: Can you characterise for us, Mr Elliot, what kind of assistance is being provided to the foundation from GBRMPA?

Mr Elliot : Our focus is very much on bringing to bear our understanding of the marine park, how to manage it and our technical expertise to get the best outcomes for the reef as they are going through the process of identifying what the best investments are.

Senator KENEALLY: Do you have any staff allocated to the foundation?

Mr Elliot : No. We have no staff seconded to the foundation.

Senator KENEALLY: We have previously discussed in estimates that the former chair of GBRMPA, Dr Russell Reichelt, was on the Great Barrier Reef Foundation board. Is your new chair, Dr Poiner, not on the board of the foundation?

Mr Elliot : He's not on the board of the foundation, and we aren't contemplating membership of the foundation board at this time.

Senator KENEALLY: You are not? Thank you. I want to return to the RRRC—

Senator Birmingham: Senator Keneally, sorry to interrupt. It might be worth noting for the record that I understand that Dr Reichelt is still a member of the foundation board.

Senator KENEALLY: Thank you, Minister. I want to stay on that point for a moment. My recollection of testimony given at evidence by GBRMPA previously is that Dr Reichelt was on the foundation board not in an ex officio capacity—that is, not because he was the chair of GBRMPA—but for his own personal and professional qualifications?

Senator Birmingham: Which would be consistent with why he is still a member of the foundation.

Senator KENEALLY: And would be consistent, I presume, as to why there is no anticipation that Dr Poiner will joining the board of the Great Barrier Reef Foundation?

Mr Elliot : I would not be able to answer the question for Dr Poiner, but, as I said, we're not contemplating it at this time.

Senator KENEALLY: Thank you. I will briefly return to the Reef and Rainforest Centre report that had been altered. It was on the department website. Mr Elliot, forgive me if I paraphrase you incorrectly, or correct me please. I think you provided advice back to the department that, even with the alteration, you felt the report was consistent with the findings you would have expected?

Mr Elliot : What I said is that the recommendations and the findings of the report—and I believe this is consistent with the original version of the report as well—are consistent with the integrated pest management approach that we have been taking. The report predates some of the changes that have been made in recent years. As a result, I think some of the concerns that the author had at the time have been addressed by the changes we've made as a part of adopting an integrated pest management approach.

Senator KENEALLY: When did GBRMPA do that review?

Mr Elliot : We were given the report fairly early, in 2018. But we adopted the integrated pest management approach from around 2015. So we have been involved in the program since then.

Senator KENEALLY: I'm trying to understand whether that review was done before Dr Poiner took on his role as chair.

Mr Elliot : Yes to both. Dr Poiner wasn't appointed until 29 October 2018.

Senator KENEALLY: So that review was done prior to him joining?

Mr Elliot : Yes.

Senator KENEALLY: He is the former chair, is he not?

Mr Elliot : Of the RRRC, yes.

Senator KENEALLY: Of the RRRC?

Mr Elliot : We have had one board meeting since Dr Poiner was appointed. We didn't have any items on the crown of thorns starfish control program at that meeting. I suspect that Dr Poiner hasn't even had yet a detailed briefing on the current starfish control program or had an opportunity to have an one yet. He understands the program, obviously, because we've given him briefings on most of our programs, but he has in no way had any influence on our views or the way we've engaged or contracted that program.

Mr Pratt : I think it's also important to point out that he left the RRRC assuming the chairmanship of GBRMPA.

Senator KENEALLY: Thank you.

Senator WHISH-WILSON: I understand it was reported by Karen Middleton in The Saturday Paper that a meeting was hosted by the Great Barrier Reef Foundation last year for Prince Charles, the Prince of Wales. I understand Dr Reichelt was at that meeting. Was he there representing the Great Barrier Reef Marine Park Authority or was he there in his private capacity for the foundation?

Mr Elliot : I would probably have to take that question on notice. I would be guessing. My memory isn't good enough to know exactly the reasons he was there. Yes, he was there, but I would have to check. So I would have to take that question on notice.

Senator WHISH-WILSON: Was the Great Barrier Reef Marine Park Authority aware of that get-together on the Barrier Reef?

Mr Elliot : I believe we were aware of the meeting, yes.

Senator WHISH-WILSON: What was the purpose of it?

Mr Elliot : Again, I would probably have to take on notice the exact purpose of the meeting.

Senator WHISH-WILSON: Mr Elliot, meeting the Prince of Wales to discuss the reef; it is pretty obvious. Are you or anyone else in the organisation aware of what the expected outcome of the meeting was?

Mr Elliot : I am certainly—the same would probably be consistent for our other senior executives—aware that the meeting was taking place. I suspect I was actually aware of the full purpose of why the Prince of Wales was wanting to meet with the foundation and the outcomes they were seeking to achieve ahead of the meeting. I just can't remember exactly what they were at the moment, so I would have to take the question on notice.

Senator WHISH-WILSON: Minister Birmingham, were you aware of that get-together on the Barrier Reef and what its purpose was?

Senator Birmingham: I'm afraid Karen Middleton's report in The Saturday Paper on Prince Charles's activities escaped me, Senator Whish-Wilson.

Senator WHISH-WILSON: So you weren't aware that there was a significant-get-together of stakeholders with the Prince of Wales to discuss the reef?

Senator Birmingham: I did not follow His Royal Highness's program or schedule particularly closely at the time.

Senator WHISH-WILSON: Could you take on notice whether anyone in the department was aware of the meeting and what its purpose was?

Mr Pratt : I can answer that straightaway. Yes, certainly I was aware that Dr Reichelt was attending that meeting. My understanding—and I will defer to Mr Elliot's advice in terms of the status of Dr Reichelt at that time—and my assumption is that he was attending that in his capacity as chair of GBRMPA and that he was providing support and briefing to His Highness on describing the issues the reef faced and what was being done in that area. I occasionally joke with Dr Reichelt that quite often when I turn up at places he's with royalty from one country or another, internationally as well.

Mr Elliot : I can certainly now confirm—I just got a text in—that Dr Reichelt was there in his capacity as the head of GBRMPA. From memory, one of the reasons was to do with the Prince of Wales's own charities and the things that he supports. Again, on notice, I could give you more details.

Senator WHISH-WILSON: Were you aware, Mr Elliot, Mr Pratt, or even you, Minister, that in the same 24 hours that that meeting occurred, Mr Turnbull contacted the foundation to set up the meeting for the now famous grant of $444 million? Was it a coincidence that happened at the same time that the Prince of Wales was here to talk about the future of the Great Barrier Reef?

Mr Elliot : I can certainly say that I was not aware that that contact happened at that time.

Senator WHISH-WILSON: Were you aware of that?

Mr Pratt : I have no knowledge of that.

Senator WHISH-WILSON: Minister?

Senator Birmingham: Senator Whish-Wilson, given I was not aware of Prince Charles's engagements, I think that already—

Senator WHISH-WILSON: Of all people, I thought you would have been aware of that, Minister.

Senator Birmingham: Then you need to get to know me a little better.

Senator WHISH-WILSON: Good. I'm glad to hear that. Mr Pratt, did Dr Reichelt report back to you or to anyone else in the department about the outcome of that meeting and what was discussed?

Mr Pratt : Certainly I'll take that on notice, Senator. I'm sure that Dr Reichelt did actually report back. My very frank recollection is that it was a generally positive get-together. There were a number of distinguished people at the get-together with His Royal Highness, as you might expect on something of that sort. I was unaware of the connection with the foundation. If I did know it, I'd certainly forgotten it.

Senator WHISH-WILSON: If you could check.

Mr Pratt : Certainly. I have no knowledge of the former Prime Minister and the timing of his contact with the foundation in relation to Prince Charles.

Senator WHISH-WILSON: I would also be interested to know whether Prince Charles, in his own fundraising or his general advocacy for climate change and nature, expressed international concern for the future of the Barrier Reef? Was that something that was discussed? I understand that he is also quite close to David Attenborough, who had been running Blue Planet leading up to that, of course, and talking about the future of the reef. Was that the key reason for the meeting—to discuss the crisis on the Barrier Reef?

Mr Pratt : We'll check Dr Reichelt's report back and provide that advice.

Senator WHISH-WILSON: This is the last question on that point about the World Heritage in danger listing. I think Senator Keneally has already raised the issue with you. Mr Knudson, I know you provided some feedback as well. Rather than putting out regular reports, which you've outlined today, have there been any internal meetings generating advice to the minister or other departments about preparing for the next stage of the World Heritage in danger listing? Rather than a regular report, have you had any internal meetings to discuss this issue?

Mr Knudson : The process for developing our entire approach on the reef has fundamentally been underpinned by the work around the reef 2050 plan. That goes back a number of years now. As you would know, we updated that plan relatively recently. That remains the foundation of the policy collaboration with Queensland in terms of trying to deliver results for the reef. I'll turn to Ms Callister to see if she would like to walk through anything else beyond that.

Ms Callister : The process that you're talking about is the state of conservation reporting. We have a report due on 1 December this year. That was requested by the World Heritage Centre. In terms of your specific question about what we've provided to ministers, it is our intention to brief the Great Barrier Reef ministerial council, which is both Australian and Queensland government ministers, giving them an information update on the proposed process and the timing for preparing that report. That hasn't happened yet, though.

Senator WHISH-WILSON: I understand that you have had one internal meeting on the Great Barrier Reef and a potential World Heritage in danger listing. In particular, this committee went through some very specific timetables around the grant process for the Great Barrier Reef Foundation. Did the department provide any advice to either Minister Birmingham's department, other departments or the Prime Minister's office about a potential World Heritage in danger listing—for example, what it may mean and what the implications would be? Did you even provide the reef 2050 strategy and outline what that would mean?

Ms Callister : At this stage, since I've been in this role, which is around 12 months, we've been focusing on looking at the state of conservation process, not anything around in danger. So I'm not aware of what may have happened historically. Certainly in the process that we're currently in, which started with the World Heritage Committee decision in 2017, the discussions have been around the state of conservation approach.

Mr Knudson : The only thing I would add is if you go back in time to when Ms Callister was talking about 2017, in 2016—

Senator WHISH-WILSON: In 2016-17.

Mr Knudson : Yes. That was obviously a point of some deliberation by the centre. Obviously, in terms of preparing our advice to government, it was putting that as part of the context of what was playing out for the reef as a whole. So it is not only the biological but also the geopolitical.

Senator WHISH-WILSON: Fair point. You said part of the context. Would it be a reasonable assumption that it was a significant concern for you guys when you provided that advice?

Mr Knudson : It was very publicly known that that was one of the possible outcomes. We certainly spoke to government about that. That was the basis for the reef 2050 plan, which was fundamentally a response to the two governments to the World Heritage concerns. It covered the committee's concerns but also, quite frankly, made sure that we as a country were addressing the issues as adequately as possible.

Senator WHISH-WILSON: Is it possible for me to tie that kind of advice in 2016-17 to the awarding of the $440 million to the Great Barrier Reef Foundation?

Mr Knudson : It is fair to say that we have been aware for quite a period of time now that the challenges for the reef were increasing and that the level of effort required was going to need to increase. That has played out for government through a number of budget processes, including on the foundation grant prior to that and including, as was laid out earlier, the investments in GBRMPA over the last several years.

Senator WHISH-WILSON: Thank you. I want to ask some questions about hammerhead sharks. I am not sure who the right person would be.

Mr Elliot : Before you ask that question, we have a response on the joint field management program in the outer years. It relates to Senator Keneally's question that we answered. We quoted some incorrect figures. We will correct them now.

Ms Leo : The figures I gave for the agency for the out years are correct at the global level. Breaking down the joint field management program funding, those correct figures through Commonwealth funding are $12.3 million in 2019-20; $16.13 million in 2020-21; and $18.98 million in 2021-22. Importantly, the Queensland government has undertaken to match those funding levels.

Senator WHISH-WILSON: In relation to hammerhead sharks, it was reported only a week or so ago that the Commonwealth was acting to improve transparency for Australia's fish around the Great Barrier Reef. Are you directly responsible for that process and the east coast net fishery?

Mr Elliot : The fisheries in the Great Barrier Reef are Queensland fisheries and managed by the state of Queensland through their department of—

Senator WHISH-WILSON: Did you do the accreditation process for that through the Commonwealth lens, or is that some other department?

Mr Elliot : No. We don't accredit their fisheries, but we do work through our joint field management program very closely with Fisheries Queensland, in particular in the compliance realm.

Senator WHISH-WILSON: So you do mostly compliance? You don't necessarily set the conditions which define timeframes and outcomes?

Mr Elliot : For fisheries management, no. Of course, our zoning plan of the Great Barrier Reef also imposes limitations on both commercial and recreational fishers—where they can use certain types of gear, where they can fish et cetera. We do compliance on the zoning plan. The fisheries management regulations, though, are Queensland's.

Senator WHISH-WILSON: The state of Queensland. I will ask some general questions about the state of the fishery, then. Obviously, the east coast net fisheries is a particular concern. A number of environment groups have been very vocal about this. The Humane Society and the Australian Marine Conservation Society have labelled the Great Barrier Reef fishery as Australia's highest risk fishery due to the reef's ecosystems and its endangered wildlife and the use of nets. Would you agree with that assessment?

Mr Elliot : I'm not sure I would be able to use the same words without knowing what the other jurisdictions are. Certainly in the outlook report we've identified a number of high risks and very high risks related to extractive use. Some of those do relate to fisheries. Probably our greatest concerns with fisheries impacts include things such as interactions with species conservation interests. The net fishery is one of the fisheries where that does occur.

Senator WHISH-WILSON: Would you have any say, for example, in a management option such as the removal of this kind of fishing activity using nets?

Mr Elliot : The reason I say Queensland legislation is that the Great Barrier Reef Marine Park doesn't include all the waterways where net fishing occurs. So our jurisdiction doesn't include, say, even the Queensland Great Barrier Reef Coast Marine Park, given that ours only goes to the low water mark and certainly doesn't include river mouths et cetera. But certainly if the state of Queensland were to contemplate such changes, we would not have any concerns with it.

Senator WHISH-WILSON: Okay. I want to ask about the Commonwealth's assessment process. I understand that an independent data collection program has to be in place within 12 months of the beginning of this program. Are you managing that, or is that the state of Queensland as well?

Mr Elliot : The changes in regulation that have been made recently are with the Queensland regulations. So it is the reporting requirements. We have been working with Queensland on the implementation of the vessel monitoring system as part of a compliance measure.

Senator WHISH-WILSON: Would it be fair to say that the Commonwealth, in an environmental assessment, highlighted a complete lack of information, for example, on the catch of hammerheads in the reef?

Mr Elliot : I would be stretching my memory, but I do remember that there were some issues with data on hammerhead catch rates. There was some data, though. I remember actually having a conversation with the threatened species scientific committee on the data that did exist. Some of that came from when there was a monitoring program in place some years ago within the state of Queensland. Certainly the committee, in the conversations they had with me, felt that there was sufficient information to make a recommendation to government on what the listing of the hammerhead sharks should be.

Senator WHISH-WILSON: One of the recommendations was that the Queensland fisheries must ensure that all shark species can be readily identified. Was it considered that all sharks should be landed with their fins naturally so that the identification process could be efficient and occur?

Mr Elliot : That would be a matter for Queensland, probably in discussion with the committee in terms of whether the committee thought that that was a reasonable measure to implement as part of its consideration of their recommendation to government.

Senator WHISH-WILSON: Just to be clear, to finish my questioning on this, the Commonwealth has this accreditation process. Obviously, it can potentially, for example, take away or revoke licenses to export shark fins. You are not directly involved in that process. Who would I ask those questions to?

Mr Elliot : It relates to wildlife trade operations. They are in the department. Depending on how much of an overlap with a particular fishery in the Great Barrier Reef Marine Park they have, they will often seek our input, advice or comment. But it is the department that manages that program.

Senator WHISH-WILSON: I will ask about that a bit later. I want to check one thing. There is no requirement in Queensland to bring back sharks to port with fins attached to the body of the shark until 75 per cent of the quota has been caught?

Mr Elliot : I would have to take that on notice. I don't think I would be able to answer that definitively right here.

Senator WHISH-WILSON: Thank you.

CHAIR: I think that means we are done with the Great Barrier Reef Marine Park Authority. Thank you very much, Mr Elliot, and colleagues. We'll now move to program 2.1, reducing Australia's greenhouse gas emissions.   


Senator URQUHART: The minimum emissions reduction target under the Paris Agreement is 26 per cent below 2005 levels. That is correct, is it? This amounts to reaching 450 million tonnes of carbon dioxide equivalent in 2030. That is correct, is it not?

Ms Evans : Yes, that is correct.

Senator URQUHART: The most recent projections by the department on our current trajectory were released on, I think, 21 December 2018.

Ms Evans : That's right.

Senator URQUHART: What level, by million tonnes of carbon dioxide equivalent, do these projections predict we will have in 2030?

Ms Tilley : The projections indicate that, based on current expectations, emissions in 2030 are expected to be 563 million tonnes.

Senator URQUHART: What level were they at in 2018?

Ms Tilley : The projection showed that, in 2018, they were expected to be 540 million tonnes.

Senator URQUHART: That is decreasing our emissions, is it not? I thought we were set to increase emissions by 29 million tonnes of carbon dioxide between now and 2030. Is that correct?

Ms Tilley : I just said that 563 are the projected emissions in 2030. In 2018, it was expected to be 540. So it is 23.

Ms Evans : It's just a very minor correction. The 540 figure is our projected estimate for 2020 that we made in 2018. The actual figure we have for 2018 is 534 million tonnes.

Senator URQUHART: So rather than decreasing, we are in fact set to increase our emissions by 29. That is correct? That is between now and 2030 based on those figures?

Ms Evans : Yes. That is the result you see in the document that we produce as a projections document. So it's always important for us to clarify that this is a projection. It's not a forecast of what is the potential to happen. I guess what I'm saying is that while it is a projection, it's usually very conservative. We know, for example, in the past—and in some of the figures Ms Tilley referred to—you can see over time that our estimates of the gap between our target at 2020 and where we would be now have considerably reduced over time. That's happening again for 2030. So it is just a projection. It is very conservative. We know, for example, that renewables continue to be taken up in the electricity sector at rates that are faster than we tend to predict each time and so on. There are a number of measures that aren't included in those projections because they haven't reached the point at which we would technically judge them to have been implemented. Therefore, we don't put them in. A great example is the work we've been doing on phasing out HFCs in Australia. We've incorporated some of the abatement that we'll get from that into the projections, but there's still quite a lot of work that is yet to be done that we also expect to deliver quite significant abatement.

Senator URQUHART: Based on those figures that you've just confirmed—

Ms Evans : In this report. I was just making sure everyone understands what the projection is.

Senator URQUHART: I understand. So from 2005 levels, what percentage decrease would 560 in 2030 represent?

Ms Tilley : I'll get the exact figure. It is minus seven per cent. It is seven per cent below 2005 levels.

Senator KENEALLY: Just so we can be clear, I want to make sure I understood Ms Evans's answer. We are, in fact—the projection is in—set to increase our emissions by 29 million tonnes of carbon dioxide equivalent between now and 2030. That's what the current report projects?

Ms Evans : What is the current report says.

Senator URQUHART: So, on current projections, Australia would then fail to reach the minimum Paris target by 19 per cent. That would be correct, wouldn't it?

Ms Evans : The only way that would be a true statement is that if nothing else happened between now and then and a range of things—

Senator URQUHART: On the range of projections that we've just gone through, we would fail to reach—

Ms Evans : They are predicated on nothing further happening either in unexpected ways or in changes or amendments to the current policy suite, building on that. You would be aware that when we reviewed the set of policies for the government in 2017, the conclusion was that the broad set is there with some adjustments. It's the correct set.

Senator URQUHART: Sorry to cut you off, Ms Evans, but the question is about current projections. We've just confirmed that they are 25 million less. On current projections, we would fail to reach that 19 per cent target. It's a simple answer.

Ms Evans : Based on a series of assumptions. It's not a simple answer because it assumes a lot that will happen in the next 12 years. So if nothing changed at all between now and the future, and everything turned out exactly as we had predicted, even though our record on this has shown that, in fact, things are quite different over time, your interpretation could be correct.

Senator KENEALLY: It's not her interpretation, with the greatest of respect. She's actually trying to understand the projections that you've currently made.

Senator Birmingham: Ms Evans has responded to that, highlighting the range of assumptions that underpins those projections.

Senator KENEALLY: Senator Urquhart didn't come up with these figures.

Senator Birmingham: No.

Senator KENEALLY: The department. So we're trying to understand them. Ms Evans just tried to suggest that Senator Urquhart's projections—

Senator Birmingham: And the question has been answered with the appropriate qualifiers.

Ms Evans : My apologies. I wasn't trying to suggest anything. The conclusion in this report and the 2017 review together is that the current set of policies have us on track to meet the target, which is a different conclusion to the one Senator Urquhart was putting to me.

Senator URQUHART: So what is the current policy on emissions?

Ms Evans : The government has a comprehensive set of policies that covers all sectors of the economy. That includes the Emissions Reduction Fund, which I'm sure you're familiar with. The government has a renewable energy target, which is driving the renewable energy increase that you're seeing in the national electricity market and other places. There's work on the national energy productivity plan. There's quite a comprehensive set of activities under that, including through the COAG Energy Council. As a department, we administer the carbon offsets scheme. I will check if I've missed any of the big ones.

Ms Tilley : The safeguard mechanism, which places legislated emissions—

Senator URQUHART: Sorry?

Ms Tilley : The safeguard mechanism, which places legislative emissions limits on Australia's largest industrial facilities.

Senator URQUHART: So those policies aim to decrease emissions or do the same to increase them?

Ms Evans : They aim to reduce emissions.

Ms Tilley : Compared to what they otherwise would have been.

Senator URQUHART: So is the policy working?

Ms Evans : Yes.

Senator URQUHART: Can you clarify in what sense you deem the policy to work, given that we're set to increase emissions over the coming years, not decrease them?

Senator Birmingham: I think the first couple of examples the witness may build on. The extent to which Australia will overachieve in relation to our 2020 targets is a demonstration that policy settings applied and adapted over recent years have ensured that Australia does meet and exceed those targets. Equally, of course, the downward revision in terms of the tasks to meet the 2030 target again shows, as Ms Evans has outlined already, that the conservative future projections the department makes continue to be exceeded as a range of factors, some of them policy driven and some of them driven by technology, innovation and other external factors, assist in this task.

Senator KENEALLY: I want to recap. We have department projections released on 21 December 2018 that show that we are, in fact, set to increase our emissions by 29 million tonnes of carbon dioxide equivalent by 2030. That would see a seven per cent decrease from 2005 levels, meaning on current projections that Australia will fail to reach the minimum Paris target by 19 per cent. So what Senator Urquhart is asking is: in that what sense can we say that the policy is working based on the projections that the department has released?

Senator Birmingham: The current policy settings have steered Australia successfully to overachieve in relation to our 2020 target.

Senator KENEALLY: So there's hope?

Senator Birmingham: There will, of course, be further developments in policy. It's not going to be something that remains static between now and 2030, Senator Keneally.

Senator KENEALLY: So when you assert that we are going to meet our targets, is it based on policies you've already announced or policies you intend to announce in the future?

Senator Birmingham: Our confidence is based on the fact that successive Australian governments have shown capacity to meet and exceed our targets. We did so for Kyoto 1 commitments. We are going to do so for the Kyoto 2 2020 commitments. We indeed are continually working, as the Prime Minister has publicly acknowledged within government, on further policy settings that will help to ensure we meet the same trajectory in relation to our 2030 commitments.

Senator KENEALLY: I will summarise. You are hoping that past performance is an indicator of future success and that future success will be predicated not on policies you've already announced but some things you've yet to announce?

Senator Birmingham: It will be predicated on some of the policies that already exist and, indeed, further policy developments into the future.

Senator KENEALLY: But you accept that we need to take further steps to meet those targets?

Senator Birmingham: The minister has indicated publicly that there will be further steps in this space.

Senator KENEALLY: Because on the current projections released by the department, we are not going to meet our Paris commitments?

Senator Birmingham: Senator Keneally, the Prime Minister has indicated that there will be further policy developments in this space.

Senator KENEALLY: So when the government asserts we are meeting our Paris targets, it's based on things that haven't been announced?

Senator Birmingham: I sat at these hearings some time ago to be told that without, for example, the carbon tax that was in place under the previous Labor government, Australia wouldn't meet its 2020 targets. It turns out we're going to meet and exceed the 2020 targets. I hear your arguments right now. The government is confident that, with the policy settings currently in place and further work that the PM has already acknowledged is being undertaken, Australia will once again do with Kyoto 2 as we did with Kyoto 1, and that is meet and exceed 2030 targets.

Senator URQUHART: The UN emissions gap report 2018 specifically cited that Australia is not in line to meet its target. Would you agree with that statement?

Ms Evans : That is the conclusion of that report, yes.

Senator URQUHART: You do agree with that?

Ms Evans : No. I do not agree with the statement. I agree that that is what the report said.

Senator URQUHART: On what basis do you disagree with the report's findings?

Ms Evans : The government completed its own review of climate change policies in 2017. The result of that review was that the current set of policies is appropriate to meet the 2030 target, and, with some adjustment in places, the government in a position to do that.

Senator URQUHART: But the current policies show that it is actually not. So what Senator Birmingham was just reaffirming is that it is further policy. Is that correct?

Senator Birmingham: Indeed, Senator Urquhart. I would refer you to my previous answer.

Senator URQUHART: So further policy, not the current policy?

Senator Birmingham: Current policy settings, of which work has been undertaken and demonstrates that they are adaptable and that there is clearly work that the PM has publicly acknowledged already being undertaken to build upon those current policy settings.

Senator URQUHART: So what steps is the government taking to put Australia in line with its targets? What are those steps?

Senator Birmingham: Well, some of those are steps that are part of budget and other policy consideration through cabinet. You'll learn about those in due course, Senator Urquhart. Of course, there are a range of other initiatives and policy, some of which Ms Evans outlined before, which are identified in that public report.

Senator URQUHART: So in addition to the UN report, Australia was ranked as the least Paris compatible nation in the Allianz climate & energy monitor in 2008. Do you agree with that characterisation?

Ms Evans : Again, if you're asking me whether that's what that report found, I—

Senator URQUHART: No. I'm asking whether you agree with the characterisation.

Ms Evans : No. I don't agree with that characterisation. As I responded before, the conclusion from the government's review of the climate change set of policies says that it is an appropriate set of policies and it does put the government in a good position to meet the target. The conclusion was that those policies are flexible, scalable and appropriate for meeting the task.

Senator URQUHART: So the testimony of the department the last time you appeared before this committee was that the department had sufficient time to put in place mechanisms to meet the Paris Agreement. Senator Birmingham has gone through the fact that there will be budgetary announcements et cetera to hopefully put some of those things in place. Can you tell me what the government's timeline for putting them in place is, Minister or Ms Evans?

Senator Birmingham: Senator, there will be, as the PM has publicly indicated, further policy announcements. Of course, the government will also—and it is part of the type of projections work that the department does—continually monitor progress against settings. There are, as Ms Evans has outlined, a range of factors outside of direct government policy influence, such as the rate and scale of innovation. For example, the dramatic decrease in prices of solar PV over recent years that has led to their increased uptake and a range of different things that occur in a global context means it's only fit and proper to keep updating and to keep assessing progress against the target. The target is, of course, one that has been certainly negotiated in the last couple of years. During that time, eyes have been firmly fixed on achieving the 2020 target. Now that we can be confident that that will be achieved, of course, eyes move towards ensuring that we do as we've always done, and that's meet and achieve the targets that we set and commit to.

Senator URQUHART: Can you outline to me by sector what those mechanisms will be to get the intended emissions reduction?

Senator Birmingham: I think we are probably best to refer to the report in terms of the sectoral analysis.

Senator URQUHART: For example, transport emissions, industrial process emissions, electricity sector emissions and agricultural emissions. What emissions reductions have they achieved?

Ms Evans : I'm just waiting to see if Ms Tilley can provide some detail. Certainly the 2017 review went through them. I think there's a table at the back of that report that lays out the different policy mechanisms as they affect each of the individual sectors. We do have some information about where the emissions reductions have come from by sector, which we'll get to in a moment. On the growth side of the equation, I guess, is the growth in the export of liquid natural gas. We've also had some growth in the manufacturing of steel and so on, which has also been putting pressure on the emissions in an upwards direction. We will get the detail. It will take a bit of time.

Ms Tilley : I want to clarify. Was the question about what policies target particular sectors or what have been the emissions changes?

Senator URQUHART: Can you outline them by sector? What are the mechanisms for each sector?

Ms Tilley : The Emissions Reduction Fund is for the whole of the economy, so it has a range of project opportunities across the economy. Traditionally, it has supported projects in the land and vegetation sector.

Senator URQUHART: Sorry. The question is: what emission reductions have those sectors achieved?

Ms Tilley : Over what period of time? Are we talking about projections?

Senator URQUHART: Up to 2020.

Ms Tilley : I don't know that we can right here and now talk about each individual policy and what it might have achieved. I will give you the reasons for that. The government has made major investments through ARENA and the Clean Energy Finance Corporation to invest in early stage R&D for a range of renewable and clean energy technologies right through to implementation. So because a lot of them are that early stage investment, you don't see the direct correlation in a space of time as to what an emissions outcome might be. That might drive transformation over a much longer period of time. On the other side of the equation, the Emissions Reduction Fund has, through its eight auctions to date, contracted over 190 million tonnes of abatement that will be delivered and contribute to the 2030 target. So there's a proportion that is pre-2020 and there's a proportion that is post-2020. I don't have the specific breakdowns in front of me, but we can certainly give them.

I guess another thing to note of that 190 megatonnes is that once a project finishes under the ERF, abatement can continue to be delivered, for example, as that activity is continued even after the life of the project. So there actually is a greater amount of abatement that the ERF is expected to deliver above and beyond the amount of abatement that the government pays for and contracts through auctions. The renewable energy target has some specific information about the abatement that is being delivered to date and is projected to deliver going forward. I don't have the exact specifics in front of me. In terms of projections, I know that even while the renewable energy target is designed to deliver around 23.5 per cent—

Senator URQUHART: Sorry, 23—

Ms Tilley : Sorry. It is 23.5 per cent renewables in the electricity market by 2020. It is actually expected to deliver more renewables than that. We are seeing greater emissions reductions than expected going forward as a result of that policy.

Senator URQUHART: So based on the current and planned policies, is it the department's view that Australia will meet our Paris reduction targets?

Ms Evans : The conclusion of the 2017 review is that yes, based on the current set of policies, which are scalable and flexible, they can be used to meet the 2030 target.

Senator URQUHART: The current set plus whatever is going to be announced?

Ms Evans : The current policy set, which is flexible and scalable. That implies that consideration is being given to whether or not some of them need to be enhanced.

Senator URQUHART: So does the department remain confident in Australia's ability to meet the Paris commitment, given three consecutive years of emissions growth?

Ms Evans : We do remain confident that it's possible to meet the 2030 target.

Senator URQUHART: Despite that growth that is projected in future years?

Ms Evans : Despite the growth that is projected in the current projections. Our experience has been that we are typically overly conservative in the way that we project the emissions growth. Particularly the renewable energy sector has, as I said before, really far outstripped our expectations year on year, as has demand growth in the electricity sector. That was one of the largest adjustments we had to make to projections a couple of years ago—the rate of take-up in something like electric vehicles. I think we have been really quite conservative in the way that we have put that information into the projections. Look at other sources who look at these things in the market and who are more willing to put an optimistic view in the world, such as Bloomberg New Energy Finance or even ClimateWorks. They would tell you that the uptake of electric vehicles will be much more rapid than what we have assumed in our projections. So knowing that they are already very conservative, we stay confident.

Senator URQUHART: The important point of the Paris Agreement was the just transition clause for workers and communities affected as emissions reductions policies are implemented. Has the government done any work on just transition policies?

Ms Evans : I might ask Ms Munro if she wants to elaborate on what I'm about to say. The government doesn't necessarily put that label on the work that it does. But it certainly has looked at making sure that the transition from heavy fossil fuel using areas to new economies is being considered. An example of that was when the Hazelwood electricity generator was closing. There was a lot of work done by the federal government in collaboration with the state and territory governments as well—Victoria in particular—to look at what support mechanisms needed to be put in place to help the workers in that area to transition. So while it might not be labelled with those words, I think the policy work is still being done.

Ms Munro : One point on the just transition is that it's in the preamble to the Paris Agreements, not actually part of the operation, so there's no sort of legal binding. It does make the point that it's up to each country to determine what changes it will do in this area in its nationally determined policies.

Senator URQUHART: Can you detail the current just transition policy and mechanisms that are in place?

Ms Munro : Referring to what Ms Evans talked about, that's not actually the language or necessarily the approach of this government. There are a range of considerations both from the department of industry—

Senator URQUHART: I'm not calling it just transitions.

Ms Munro : Just transitions isn't necessarily the language. There are a number of things where you look at industry development or structural adjustment that may be necessary. They are things under—

Senator URQUHART: Aren't they the same thing, though?

Ms Munro : 'Just transition' is a particular term. I guess a lot of European countries use that language not necessarily in the language of what is happening at the national policy at this stage.

Senator URQUHART: So what are the current or planned policies that are in place to deal with that?

Ms Evans : The government has a framework for looking at things like, again, the Hazelwood example, where there's a big disruption in the way that a local economy is working. The government is already scanning for where those hotspots might occur and then putting the right policies in place to deal with it. This department—

Senator URQUHART: So there's no current policy?

Ms Evans : No. This department is not the lead on that.

Senator URQUHART: There is no policy on that?

Senator Birmingham: Senator Urquhart, if you're asking—

Senator URQUHART: I'm asking about current policy.

Senator Birmingham: This is the singular policy to deal with such an issue. No, there's a range of responses across the industry portfolio, across the regional development portfolio and across the social services portfolio, all of which are brought together by government to assist in any type of significant and challenging change that a community may face. So, in that sense, our policy settings as a government are well geared for the types of challenges that you point to, but they don't exist exclusive to those challenges that might relate to adaptations caused by climate. They are policy settings that are also applicable to adaptations caused by a whole range of other economic disruptors that occur.

Senator URQUHART: So I take it from that answer that there is no one single policy?

Senator Birmingham: The response is more holistic and complicated. I just took you through the fact—

Senator URQUHART: Specifically, is there a current policy?

Senator Birmingham: I encourage you to go and ask the industry portfolio and ask the regional development portfolio.

Senator URQUHART: I am actually asking here if there is a current policy. You are saying there is a set of them.

Senator Birmingham: Yes. There is a current policy. It has many different facets to it.

Senator URQUHART: I think that's all I've got for that. Senator Keneally has some more questions.

CHAIR: Senator Hanson-Young, do you have some questions?

Senator HANSON-YOUNG: I do. Thank you, Chair. Before I kick off on questions, I have legal advice from Fiona McLeod that I referred to earlier this morning. I'm happy to table that.

Senator Birmingham: Hot off the Australia Institute presses.

Senator HANSON-YOUNG: I did refer to it this morning. There was a suggestion that people hadn't seen it so I'm happy to table it.

Senator Birmingham: Thank you.

CHAIR: Are all of your questions based on this?

Senator HANSON-YOUNG: They do relate to it.

CHAIR: Just one copy?

Senator HANSON-YOUNG: Yes.

CHAIR: We might get a couple of copies.

Ms Evans : Is this legal advice relating to underwriting the regeneration initiative?

Senator HANSON-YOUNG: Yes.

Ms Evans : Unfortunately, we're not the right area of the department to ask those questions of. It's the next session on energy.

Senator HANSON-YOUNG: That's good timing, then. We can table it and we can get copies circulated.

CHAIR: We'll do that. Excellent.

Senator HANSON-YOUNG: That's good.

CHAIR: Do you have questions on this area?

Senator HANSON-YOUNG: Yes, I do. Go to Senator Keneally and then come back to me.

Senator KENEALLY: Thank you very much. My questions relate to the Ambassador for the Environment's participation in the Katowice conference. I don't know if we need additional people.

Ms Evans : That part of the environment is actually part of the Department of Foreign Affairs and Trade. We can attempt to answer questions if we know them factually. He actually isn't in our portfolio.

Senator KENEALLY: Well, perhaps I can ask a few questions and see where we get to. I appreciate that advice, Ms Evans. Did the Ambassador for the Environment, Mr Suckling, inform the Minister for the Environment that he was participating in the official United States side event at the Katowice conference in December 2018?

Ms Evans : I would have to take it on notice to confirm. We certainly were aware that he was participating in it, so I imagine he did.

Senator KENEALLY: You were aware he was participating in it?

Ms Evans : Yes.

Senator KENEALLY: But you can't advise if the minister was aware?

Ms Evans : I'm confident she would have been aware because we would have talked about it. But I don't know. You asked whether he had directly briefed her. I would have to check if that was the case or not.

Senator KENEALLY: Okay. So we don't know if he advised, but you understand she would have been aware that he was participating in that?

Ms Evans : Yes.

Senator KENEALLY: Minister Birmingham, does the Minister for the Environment think Australia's reputation is well served as being the only foreign country represented on the Trump administration's promotion of fossil fuels at that conference?

Senator Birmingham: Senator Keneally, I'll take the question on notice because I would be particularly cautious about accepting the framing of your question in that way.

Senator KENEALLY: Thank you, Minister. I understand that the Ambassador for the Environment's nameplate at that event had a foreign flag on it—that is, the United States—as was the case with the US flag on his name on the dais. Is that a usual practice for the Australian Ambassador for the Environment to be adorned with a foreign country's flag?

Senator Birmingham: Senator, again, without confirming the facts or otherwise of your allegation, I would say broadly no. However, it is probably not uncommon if individuals are speaking at events hosted by other governments that the flag of those other governments is variously displayed at those events.

Senator KENEALLY: On their name tag? The Prime Minister has given you all Australian flags so you can remember whose side you're on.

Senator Birmingham: Senator, I'm not sure you have a question there.

Senator KENEALLY: I wonder if Mr Suckling was on Australia's side or America's side at this conference.

Senator Birmingham: I think that's an offensive question.

Senator KENEALLY: It is a serious question. You might be right. I have phrased it somewhat entertainingly, but it is a serious question. Why was Australia's Ambassador for the Environment wearing a nameplate that had his name and an American flag on it?

Ms Evans : I think we'll take it on notice to find out if it was an administrative approach that the host had used, if it is true. I am afraid I don't know. I wasn't there.

Mr Pratt : I suggest that we might take it on notice to get the Department of Foreign Affairs to answer.

Senator Birmingham: They will be available on Thursday.

Senator KENEALLY: Thank you, Mr Pratt. Did Australia take a decision not to host any side events at the Katowice conference?

Ms Evans : No. On the contrary, we co-hosted with New Zealand a reception for the Pacific islander leaders. So it's not quite accurate to say we had no side events.

Ms Munro : No. We also participated—again—

Senator KENEALLY: I'm asking if that was hosted too.

Senator Birmingham: It was actually about the framing of your question, which is why my decision to take your previous questions not necessarily at face value—

Senator KENEALLY: I ask the questions to seek information.

Senator Birmingham: was a reasonable one.

Senator KENEALLY: I actually asked it to confirm if that was the case. Now you've co-hosted a side event with New Zealand.

Ms Evans : As I say, it was a reception for the Pacific islander leaders.

Senator KENEALLY: A reception. Were there any speeches or panel discussions?

Ms Evans : Yes. There were speeches by both the minister and the minister from New Zealand. They both spoke at the event. I'm sorry, but I'm struggling to remember exactly what they all were. We can take on notice to give you a list of them, if you like. We were quite active participants as Australia and with the minister in particular in a number of side events.

Senator KENEALLY: I was specifically asking if Australia hosted any side events, not whether the minister participated in any.

Ms Munro : On that one, Ms Evans is correct; we co-hosted the event with New Zealand with the Pacific. There were also a number of events. There were official side events but also a number of, I guess, meetings and gatherings that occur in the margins of the conference of the parties. For example, the minister met with the Pacific women's negotiators following through on the work that the Department of Foreign Affairs and Trade has done over a number of years to provide training and skills to Pacific women. There was also an Australian stakeholders reception. The minister also spoke at the action agriculture high-level segment with New Zealand and the oceans action day high-level segment. So they were the things that the minister participated in as well as the officials participating in a number of events over the conference.

Senator KENEALLY: Thank you, Ms Munro. Did the Minister for the Environment take her media officer along with her to Katowice?

Ms Evans : Yes.

Senator KENEALLY: Did the minister give any interviews to the media while she was at Katowice?

Senator Birmingham: We took that on notice this morning, Senator.

Senator KENEALLY: I'm asking, amongst the questions you took on notice, specifically if she gave any media interviews at Katowice? Eye AO e

Senator Birmingham: We've already taken that on notice.

Senator KENEALLY: Well, you can't find any record of any, so if you can, that would be useful.

Senator Birmingham: I believe there were, Senator, but we'll make sure you get a comprehensive answer.

Senator KENEALLY: You believe your work and you do know what you're basing that belief on.

Senator Birmingham: The fact is that I understand there were. We'll get you a comprehensive answer.

Senator KENEALLY: Can you think of where you might have seen that? You are making a statement here at Senate estimates.

CHAIR: He has answered the question.

Senator KENEALLY: He is volunteering that he is.

Senator Birmingham: Well, if I'm wrong, the answer on notice will show that I'm wrong.

Senator KENEALLY: Excellent. Thank you. What was the cost of the media adviser's attendance to the Australian taxpayer?

Ms Evans : I think that will be a question for the Department of Finance, but we can endeavour to take it on notice.

Senator KENEALLY: Minister, was the minister instructed not to speak to the media by the Prime Minister?

Senator Birmingham: I wouldn't have thought so.

Senator KENEALLY: You wouldn't have thought so, but you don't know?

Senator Birmingham: I will take it on notice. I would not have thought so, but I will take it on notice.

Senator KENEALLY: Thank you, Minister. Thank you, Chair.

Senator HANSON-YOUNG: I'd like to follow on from some questions in relation to reducing emissions. Of course, we know that the fastest sector for growth of emissions is obviously from coal and gas. What is the department doing in terms of policy work going forward to stop this growth? I want to know what those plans are, not just that you aim to reduce emissions and that you think you're going to meet the target. I want to know what the plans are to actually reduce emissions, particularly fugitive emissions.

Ms Tilley : Well, the safeguard mechanism would be the primary mechanism which covers the oil and gas sector.

Senator HANSON-YOUNG: And coal?

Ms Tilley : And covers coal mining as well, yes. So fugitive emissions from those sectors.

Senator HANSON-YOUNG: The safeguard mechanism. But what is your actual plan to reduce it, not just something that kicks in? What are you going to do? you What are the plans to reduce? At the moment, it's runaway growth, effectively?

Ms Tilley : I think you would be aware that the Paris targets that we're seeking to meet doesn't have sector specific targets. You can have growth in one area and still meet the target as long as that is more than offset across the economy. So it's not such that we're trying to hit a particular number in individual sectors.

Senator HANSON-YOUNG: So you don't have any plans specifically to reduce fugitive emissions?

Ms Tilley : Well, the safeguard mechanism is designed to limit the growth in emissions.

Senator HANSON-YOUNG: How will that effectively do that?

Ms Tilley : It sets legislated limits on the overall amount of emissions that each covered facility can release.

Senator HANSON-YOUNG: Yes. But how are you going to meet those targets? What is the plan to reduce emissions beyond just having a number that you say you're going to make sure you meet? What is the plan to get there?

Ms Tilley : We addressed the specifics of the suite of climate policies in an earlier question to Senator Urquhart.

Senator HANSON-YOUNG: I'm asking you to outline the plans. What are you actually going to do? It is not just continuing to say you'll meet them, even though all evidence at this point shows you won't. Let's for the sake of debate accept that you think you're going to get there. What are the steps you're going to take?

Ms Evans : Under the safeguard mechanism, which is the policy that is in place that covers the sector you are asking about, the options that would be available to an LNG producer or other fugitive sources to make sure they stay within their legislated cap would be to either reduce their emissions themselves—you see some of those sectors starting to invest even in carbon capture and storage; you see that in Gulgong, although it's delayed but it is still coming on stream—or energy efficiency improvements and all those kinds of things. They can employ that. Then they have the option of purchasing offsets. So they can use the infrastructure that has been built by the Emissions Reductions Fund to enable credible projects that genuinely reduce emissions in a range of sectors to be registered with the Australian government. We are the major purchaser of those abatement credits at the moment, but it is an option for the safeguard facilities to purchase offsets. So they are reducing emissions through another sector, but in a net sense they are contributing to the target. So that's the current plan.

Senator HANSON-YOUNG: What indications do you have that that will actually happen?

Ms Evans : We're already seeing good signs that will happen. I don't know whether Joe Pryor wants to join us at the table, if he is here. We might have some statistics on how many Australian carbon credit units were purchased in the first compliance year. We are obviously only speculating about the second year. If you give us the information about the first year, you'll start to see that there are quite large numbers of units being purchased by those facilities already.

Mr Pryor : The first year of operation was 2016-17. It is the only year for which we have data from the safeguard mechanism. There were 16 facilities that had to surrender a total of 448,097 Australian carbon credit units. That is from across the safeguard mechanism.

Senator HANSON-YOUNG: That was 2016-17?

Mr Pryor : That's right.

Ms Evans : That was the first compliance year. There is a lag period between the reporting and the—

Senator HANSON-YOUNG: So we don't actually have any evidence that anything beyond that is improving?

Ms Evans : Well, we're confident that it's improving. If we gave you our estimates of what we think will happen in the next compliance year, it's still speculation. We don't know exactly what they'll be doing, but we think it will be—

Senator HANSON-YOUNG: And we don't have any figures for 2017-18?

Ms Evans : Not yet.

Senator HANSON-YOUNG: And when we would expect them?

Mr Pryor : So in the 2017-18 compliance period, companies are required to report by October 2018. The regulator then goes through its due process of validation. They are required under legislation to be published by the Clean Energy Regulator. That is due to take place in March 2019.

Senator HANSON-YOUNG: So we're not that far away. We should know in the next couple of weeks, should we? Is there a date specific in March?

Mr Pryor : I think the act or the rule talks about as soon as practicable. Last year, I think it was early March, but I don't think there's a specific date that's planned.

Senator HANSON-YOUNG: And you believe, Ms Evans, that there's not going to be a lag time on that—that we will have those figures by the end of March?

Ms Evans : I expect so. The Clean Energy Regulator is on later in the program, if you'd like to ask them specifically.

Senator HANSON-YOUNG: They haven't asked for an extension or flagged with you that they need an extension?

Ms Evans : No.

Senator HANSON-YOUNG: Are you aware of any policies being put forward by the alternative government to curtail pollution from coal and gas mines?

Mr Pratt : We, of course, would read the newspapers like anyone else. Our focus is on advising the government of the day after delivering their policies.

Senator HANSON-YOUNG: You are not preparing anything for the little red book?

Mr Pratt : Not at this stage. We will do that once we enter into caretaker period.

Senator HANSON-YOUNG: Are you aware at all of any policies that would curtail the pollution from coal and gas mining?

Mr Pratt : I'm aware of press articles which have covered things of that sort.

Senator HANSON-YOUNG: I suggest there's not much.

Senator Birmingham: Is there anything in particular that you're seeking to elicit a response from, Senator Hanson-Young?

Senator HANSON-YOUNG: Well, I'm just wondering what the policies are. It seems like nothing.

Senator Birmingham: Indeed, is the answer like before: no?

Senator HANSON-YOUNG: I can't really point to what specific plans the alternative government has either. This is the concern I've got: we're not going to reach these targets.

Senator Birmingham: I'll separate those comments. Obviously, as to the first half of your comments, you can work out with the other people at the table you're at the lack of policy or otherwise of the opposition in some of these areas. Clearly, we believe, based on the 2017 review, that current policy settings are scalable and flexible. As we've outlined before, there is a pathway to be able to achieve current commitments.

Senator HANSON-YOUNG: I want to ask some other questions in relation to the export issues. Is Australia responsible for the carbon that we export?

Ms Evans : The way that the agreed international accounting framework works is that we are responsible for the emissions that occur within the geographic boundary of Australia. So for liquid natural gas—and the export of liquid natural gas is particularly driving our domestic emissions—we account for the emissions associated with its production, including the compression of the gas, which is quite intensive, but we're not responsible for the carbon embodied in the gas we export. That said, with that example, if you assume that liquid natural gas is actually displacing coal in other countries, the net result of our export of that particular product is reducing global emissions, not adding to it.

Senator HANSON-YOUNG: So when Australia is making decisions about exporting fossil fuels more or less and about different kinds of fuels, which is what you're suggesting there—a kind of sum game—you do accept that that has an impact on worldwide emissions?

Ms Evans : We are aware that the use of fossil fuels in general has an impact on global emissions.

Senator HANSON-YOUNG: And what about the decisions we make about which we export and which we don't and the amounts of which we do?

Senator Birmingham: Senator Hanson-Young, the government doesn't export. Businesses export. Other businesses or governments buy. As Ms Evans has outlined, those other nations, of course, make their commitments and are responsible for policy settings to meet their commitments.

Senator HANSON-YOUNG: And the government makes decisions about the approval of various different projects that will be feeding an export of fossil fuels. There is drilling in the Bight back in our home state, Minister.

Senator Birmingham: Well, government makes and gives approvals for certain licensed activities to occur. There are environmental approvals or the like in relation to those activities. There are very few products that government actually regulates the export or sale of, though.

Senator HANSON-YOUNG: My question is whether, as a matter of policy, the government, the department or you, Minister, when looking at our obligations, considers decisions about exporting more or less different kinds of fossil fuels? Ms Evans, do we believe that that has an impact on world emissions?

Senator Birmingham: The government's view is that global emissions are best counted through the types of global agreements. Countries are responsible for their own emissions. Look at some of the products that you speak of, such as coal. There are no shortage of other mining nations and competitor nations in that marketplace. Were Australia to go down the type of path that you suggest—in some way stepping in and limiting the capacity of Australian industry to export those commodities—it's highly probable that the nations or businesses that currently purchase them would simply purchase from other producers elsewhere around the world. That's why the policy settings essentially say that end users make their commitments in terms of what their nation's emissions profile looks like and then structure their domestic policy settings to achieve that. We think that is the right approach in terms of those policy settings.

Senator HANSON-YOUNG: So you are saying that it doesn't really matter what we decide we export because if we don't do it, someone else will?

Senator Birmingham: There's a fair degree of validity to that statement, Senator.

Senator HANSON-YOUNG: That is the same argument drug dealers make.

Senator Birmingham: Obviously, again, we have domestic laws that we apply to seek to try to contain actions of drug dealers just as we have domestic policy settings that have succeeded in achieving and overachieving our 2020 emissions target reductions, not that I think the two are exactly perfectly analogous. One group is taking a legal activity for which we regulate and apply policy settings to try to reduce the level of that activity. Others are simply undertaking an illegal activity.

Senator HANSON-YOUNG: In response to question on notice No. 140 from estimates last, the department says the following:

Globally Australia's LNG expansion is contributing to a reduction in global emissions. Displacement of coal in mainly Japan, China and Korea with Australian LNG exports would have reduced emissions in these countries in the order of 130 megatonnes of CO2 emissions in 2017-18.

How have you calculated that?

Ms Evans : I might ask Mr Sturgiss to help explain.

Mr Sturgiss : The carbon content of natural gas is significantly lower than the carbon content of coal. Those calculations potentially reflect those intrinsic properties of coal versus natural gas. That is essentially the difference between them.

Senator HANSON-YOUNG: Can you give us the calculations on notice that you've used to calculate that exact figure?

Mr Sturgiss : Yes, I can.

Senator HANSON-YOUNG: Thank you. You are saying that if we export less LNG, world emissions would be higher? Is that the assertion that you're making?

Mr Sturgiss : I'm sure it's much more complicated than that. If you displace coal with gas in other countries' combustion decisions, then, yes, if you combust less coal and more gas, there will be lower emissions, yes.

Senator HANSON-YOUNG: Exporting more LNG reduces emissions. You are saying that that would be a good thing?

Ms Evans : We're saying an emissions reduction would be a good thing, yes.

Senator HANSON-YOUNG: Is reducing emissions overseas a goal of the government?

Ms Evans : Well, the government is party to the Paris Agreement and, prior to that, has been party to the Kyoto protocol. Both of those architectures are about global emissions reductions. It is not just achieving emissions reductions in Australia but also overseas.

Senator HANSON-YOUNG: So the role that we have in reducing emissions world wide regardless of what happens in Australia is important?

Senator Birmingham: We negotiated through the Paris Agreement and, prior to that, the Kyoto protocol to achieve global reductions and limits in relation to emissions.

Ms Evans : It's certainly true that the government is working with a number of other countries through the aid program and so on, which is both on the adaptation side of things but also in mitigation. So we have had quite an active program on REDD+, reducing emissions from deforestation and for degradation. We've also worked a lot with Thailand, Indonesia and others to help them measure their emissions, which is the first step towards being able to manage them and lower them. So we're quite active in helping other countries in that regard as well.

Senator HANSON-YOUNG: Even though it's not specifically part of our Paris agreement?

Ms Evans : That's right. It's not specifically part of our nationally determined contribution.

Senator HANSON-YOUNG: But it's still an important thing to do—

Ms Evans : Yes.

Senator HANSON-YOUNG: this government policy to reduce emissions overseas?

Senator Birmingham: We cooperate particularly with our regional neighbours in a whole range of policy areas, but including in response to climate change and emissions issues.

Senator HANSON-YOUNG: Is there a policy document requiring Australia to reduce emissions in other countries?

Ms Evans : No. I think you're putting a twist on what I'm saying that is not quite what I am intending to say. Australia is part of a global agreement to reduce emissions. It is the responsibility of the other countries to make their contributions. The government has an active program of assisting other countries to reduce emissions where that's appropriate, particularly in the Pacific area.

Senator HANSON-YOUNG: So the amount of carbon we export does play a role in worldwide emissions and it should be part of the policies that Australia takes forward?

Senator Birmingham: That is a policy statement that you've just made, Senator Hanson-Young.

Senator HANSON-YOUNG: You've just given me a number of answers. The conclusion would be we should be reducing the amount of carbon we export?

Senator Birmingham: We would urge all countries to work with Australia in making genuine commitments to the Paris agreement and in meeting those genuine commitments.

Senator HANSON-YOUNG: Thank you, Chair.

Senator STORER: I want to ask questions about carryover carbon credits. Is it the government's intention to use carryover carbon credits from the Kyoto Protocol's two compliance periods to meet Australia's 2030 target under the Paris agreement?

Senator Birmingham: Senator Storer, as has been made clear previously and as is consistent with the way in which the Kyoto agreement has worked previously, the government would intend to use carryover if required.

Senator STORER: As I understand it, according to the department's 2018 projections, Australia has 367 megatonnes of carryover credits, an abatement task over the Paris agreement period of 695 megatonnes. Is that correct?

Ms Evans : That's correct.

Senator STORER: So the government, from those numbers, intends to meet over half its Paris agreement target through carryover credits?

Senator Birmingham: There are a few factors here. I am not sure you were here for all of the prior exchange, Senator Storer. Of course, the projections are projections based on a series of assumptions. They may, and indeed will almost certainly, vary over time. The policy responses to that will be numerous and adaptive over the period to 2030. I note in relation to the 2020 target, for example, that the latest projections show Australia is on track to beat that target by 367 million tonnes if we include carryover from the prior period or by 240 million tonnes without carryover from the prior period. So when we say that Australia meets and often exceeds, that is the case there. Obviously, in the period to 2030, we will see the rate of progress made in that time and adapt policy settings. We start from the premise that application of those rules as usual should be the case.

Senator STORER: Are there other parties to the Kyoto Protocol that also use carryover to meet their Paris agreement targets?

Ms Evans : I think it's too early to say on that front.

Senator Birmingham: To the Kyoto Protocol? I'm not sure about other countries. I guess we would (a) take that on notice and (b) say yes, there is the reconciliation that occurs to that 2020 target that will happen in the years following 2020. Australia is well placed at present, as we've outlined. But carryover is an existing feature of the Kyoto framework.

Senator STORER: Was Australia criticised at the most recent UN climate conference in Poland for its support of carryover credits?

Ms Evans : No. The issue really didn't come up in Poland, so there was no criticism.

Senator STORER: I understand that the New Zealand minister for climate change, James Shaw, has taken a position in 2018 against using Kyoto Protocol carryover credits. Would you agree with his statement that using these credits is not in the spirit of the Paris agreement? That is what his statement is. Do you agree with that?

Senator Birmingham: No. I would simply say that the Paris agreement is a successor agreement to the Kyoto Protocol.

Senator STORER: So you don't agree that using carryover carbon credits is not in the spirit of the Paris agreement? You don't agree with his statement?

Senator Birmingham: No, Senator Storer. As I indicated, the Paris agreement is a successor agreement to the Kyoto Protocol. It would appear to be a consistent application of some of the rules and definitions to see carryover provisions continue.

Senator STORER: I have a question which may possibly stray into the next session. I'm not sure. I'll see. It's really to do with carbon abatement being achieved by energy efficiency measures. I will have a go. What is the estimated percentage of carbon abatement being achieved by energy efficiency measures?

Ms Evans : We might have to take it on notice. It is actually something that we do estimate in my group. I know it's substantial. We don't have a number here. It is quite a significant contribution because it is such low cost and effective abatement. So we know it has contributed quite a bit.

Senator STORER: I'm interested to know what plans are in place to increase them? You said it is low cost. What plans are in place to increase the percentage of carbon abatement achieved through energy efficient measures?

Ms Evans : There's quite a lot of work underway under the national energy productivity plan, which is the umbrella framework for all the energy efficiency measures. So we have a regular program. The actual programs themselves here are represented in the next group in energy. If you want some more detail, they can give that to you there. There is an ongoing program of looking at minimum energy performance standards for appliances and so on, which they've generally expanded over time. We have information and campaigns about using more energy efficient products, including labelling requirements. There is a range of other work. Fairly recently there was an announcement of work done under the COAG Energy Council to have a trajectory for low emissions buildings. So these are all the kinds of things that are underway with energy efficiency improvements across the economy.

Senator STORER: The department provides briefings to the minister on the potential of energy efficiency to reduce carbon emissions?

Ms Evans : We do, yes.

Senator STORER: Can I turn to the trajectory on low energy buildings and ask a question?

Ms Evans : If you want some detail on that, that is best left for the energy group, which is coming after us.

Senator STORER: I will do so then. Thank you.

Senator LEYONHJELM: I will be pretty brief. I asked a question last estimates seeking—

Senator Birmingham: I thought we farewelled you, Senator Leyonhjelm. This is an unexpected surprise.

Senator LEYONHJELM: I almost thought you were going to say pleasure there. I don't want to go too far. It is 1 March. Following last estimates, I asked a question on notice seeking the department's estimates of 2020 projections of greenhouse gas emissions for a number of countries—Iran, Saudi Arabia, China, India and Brazil. I was told in response that there are no official estimates, even though I simply asked for estimates, official or otherwise. A Google search shows that there are a number of unofficial attempts to estimate emissions in these countries by 2030. My question did say estimates, not official estimates. Given the importance of emissions in these countries and how relevant they are likely to be to whatever efforts Australia makes to reduce its own emissions, I would have thought that having some understanding of the emissions of these countries might be worthwhile. Do you have any response to that musing on my part?

Ms Evans : I think from a global perspective, you are right; it is important to know all of the different countries' contributions. Indeed, under the Paris agreement and with the new rule book that has been negotiated as of December, there now are rules in place that will ensure that countries such as Iran, Saudi Arabia, China and Brazil, who have not had to report on their emissions to date, will in the future be required to report on a consistent basis with all of the other countries. So we agree with your view that we ought to have a picture of what they are also doing. Whether the Department of the Environment and Energy in Australia is able to provide an accurate estimate of what their emissions are in the absence of that information I think is a slightly different question. I wouldn't be game to have provided you with an actual estimate.

Mr Pratt : Frankly, if we are not able to have some confidence in the estimates, then we're not going to provide them. I know this is an absurdity. If we were to find nonsensical emissions estimates, we would not provide them.

Senator LEYONHJELM: It's somewhat relevant that we have a view of our own in this country as to what they are and as to whether or not those countries are changing them, I would have thought. Yes, I agree with you that you need to have confidence in whatever you believe them to be. But having a view as to what they are and whether they are going up or down would strike me as being extremely relevant in the context of Australia's relatively small contribution to emissions in global terms. Wouldn't you agree?

Mr Pratt : I understand your point, Senator. In our answer, we provided information on Indonesia's projection, Mexico's projection and Russia's projection, but we are not in a position to provide estimates on Iran, Saudi Arabia, China, India and Brazil.

Senator LEYONHJELM: Notwithstanding the fact that quite a lot of unofficial estimates are around. Some of those estimates would tend to suggest that China is increasing its emissions on a yearly basis many times more than Australia's total emissions. I would have thought some sort of feel for that might be rather relevant.

Ms Munro : I will clarify. There are two statements you made at the beginning about whether countries were on track to meet not only their 2020 targets but also the 2030 targets. I think that may have got a bit confused in the answers. In terms of the question on notice, that was out to 2030.

Senator LEYONHJELM: Yes.

Ms Munro : But on 2020, there is more information in terms of what countries have done, including China and India, in that timeframe. Another important feature of the Paris agreement is agreement to undertake a global stocktake. So, in 2023, there will be a global stocktake of how countries are actually tracking towards the commitments and what it means for the goals of the Paris agreement. It's actually before that that countries would consider what, if anything, they would do to increase their targets in 2025.

Senator LEYONHJELM: I see. So 2023?

Ms Munro : Yes. The global stocktake will occur in 2023.

Senator LEYONHJELM: So, ahead of that, will the department consider establishing its own estimates, not necessarily official estimates, from the countries in question of their greenhouse gas emissions for the period somewhere between 2020 and 2030?

Ms Munro : There's a difference between keeping track of, I think, the official estimates that countries provide to the UNFCCC, other estimates from international bodies and some of the statements or policies and projections that would appear on websites or statements. We don't have estimates, but we do track those things very closely as well. That does help us inform what Australia's position and targets should be.

Senator LEYONHJELM: So are you in a position, then, to provide this committee with your best estimates as to the situation in Iran, Saudi Arabia, China, India and Brazil in relation to their emissions?

Ms Evans : We can take that on notice as long as you are happy that we will add some caveats.

Senator LEYONHJELM: Some qualifications are fine, yes. No problem at all. Thank you, Chair.

CHAIR: I think that does conclude our consideration of outcome 2. We'll now move to outcome 4. We'll start with some questions from Senator Keneally.

Senator KENEALLY: My questions are regarding the government's so-called big stick divestment legislation. How long has the department been working on a divestment policy?

Mr Heferen : I'll get Mr O'Toole to go through the legislation in a bit of detail. Importantly, these are amendments largely to the Competition and Consumer Act. They are done out of the Treasury. There is a schedule that relates to the powers of the AER. Notwithstanding that being a Treasury body as well, that's one that we have had far more, I guess, responsibility in delivering. I might get Mr O'Toole to talk through some of those issues.

Mr O'Toole : I believe your question is when we were engaged in the process.

Senator KENEALLY: Yes. My question is: how long has the department been working on divestment policy in relation to energy companies?

Mr O'Toole : You would be aware that the Treasurer and the minister together made a press release on 20 August 2018 which announced a response to a number of the ACCC recommendations, including the misconduct bill.

Senator KENEALLY: That tells me when the media release went out.

Mr O'Toole : Obviously we were working with Treasury, who had main carriage with the bill. As Mr Heferen mentioned, our primary responsibility was in powers in a potential schedule 2 of the bill, which related, again, to the AER powers in a potential default offer.

Mr Heferen : It might be worth noting that the Prohibiting Energy Market Misconduct Bill—I know it is characterised as the divestment bill and focuses on the power of divestment—is certainly one of the remedies articulated. The bill essentially takes on three of the key recommendations from the ACCC report to prohibit certain conduct. The three obligations are: where there are reductions in underlying costs for generators or people in the wholesale market, they need to pass those through in retail prices; generators can't operate to reduce contract market liquidity; and, finally, at the moment they're not allowed to fraudulently, dishonestly or in bad faith bid into spot markets. This is also to prevent the manipulation or distortion of prices. So the bill spends quite a bit of time outlining those elements. There are derivations of those in the ACCC report. It then asks, 'If a company does that, what is the series of remedies that would be available?' It then goes lists a range of remedies.

Senator KENEALLY: Mr Heferen, I appreciate that you're about to take me through all of them, and I do have questions that relate to them, but this is going nowhere near answering the actual question that I asked, with the greatest of respect. First of all, I asked: how long has the department been working on a divestment policy in relation to energy? Mr O'Toole cited the 20 August media release. That release, as I understand it, didn't actually have much to do with divestment because the ACCC did not specifically recommend divestment powers. I will come back to my question. How long has the department been working on a divestment policy for energy companies?

Mr Heferen : Sorry, Senator. I may have inadvertently misled in what I was saying. The divestment power contained in the bill is something that the Treasury has been working on. So that's not something that the department has responsibility for. That's something the Treasury has responsibility for. So I think the question about how long has someone in the Commonwealth been working on this is probably best directed to our colleagues at the Treasury.

Senator KENEALLY: Right. I will phrase my question in another way. Was the department involved with Treasury in formulating their divestment policy prior to the government announcing it?

Mr O'Toole : We were consulted by Treasury on the bill. Again, as Mr Heferen said, Treasury have primary carriage of schedule 1.

Senator KENEALLY: Prior to the government making the announcement, you were consulted by Treasury?

Mr O'Toole : All these processes are subject to cabinet consideration.

Mr Pratt : Yes. They would consult us generally before the government makes an announcement as opposed to after the government has made an announcement. I think it's worthwhile putting this in the context of the ACCC—

Senator KENEALLY: Generally, Mr Pratt?

Mr Pratt : Quite often.

Senator KENEALLY: We've gone from generally to quite often now.

Mr Pratt : Often between departments when we have shared interests in things, we attempt to consult before the actual decision is announced. It is more popular if we do it that way.

Senator KENEALLY: This legislation has been incredibly popular.

Mr Pratt : I bet the operation of the department is more popularly received if we consult before an announcement is made.

Senator KENEALLY: Can you tell me if Treasury consulted with the department of energy before the announcement was made?

Mr Pratt : I'm going to go out on a limb here; my colleagues will correct me if I'm wrong. I believe they did. In general terms, we have, of course, been working closely with Treasury on the ACCC report since we got the first indications of what would be built into that report and ever since. Am I right?

Mr Heferen : The secretary is correct.

Senator KENEALLY: In his belief.

Mr Heferen : That's right; he's correct in his belief.

Senator KENEALLY: I believe in lots of things, but I can't sit here and say with great certainty that God exists, even though I might believe in God. Maybe we will try this again. Does Mr Pratt simply believe that Treasury consulted with the department of energy before the government announced its divestment policy, or did they?

Mr Heferen : In the process of working up the bill put out for select consultation, we were involved in those discussions, yes.

Senator KENEALLY: You were involved in the discussions of working up the bill that was put out for direct consultation?

Mr Heferen : That's correct.

Senator KENEALLY: Consultation with whom?

Mr Heferen : So the process of the Prohibiting Energy Market Misconduct Bill. There was targeted consultation done on that. A number of people have made comment about their input into it. Treasury consulted us on the content of that legislation.

Senator KENEALLY: You were part of the targeted consultation of the bill after it was drafted?

Mr O'Toole : They consulted us on the bill, yes. Treasury undertook the targeted consultation.

Senator KENEALLY: You were one of the people that they consulted. I'm still trying to understand if you had any input prior to the bill being circulated for targeted consultation. That is, did the department of energy have any input into the drafting of this legislation before it was provided to others for consultation? We've established you were involved in targeted consultation. Was that before the government announced its divestment policy? Let's at least try to answer that question. Was the targeted consultation before the government announced its policy?

Mr O'Toole : No.

Senator KENEALLY: It was after?

Mr O'Toole : Yes. When the legislation was drafted.

Senator KENEALLY: So did the department of energy have any input into the formulation of the policy before it was announced?

Mr O'Toole : We were consulted, as is consistent with cabinet processes. We were one of the departments consulted on the development of the policy.

Senator KENEALLY: So you would have been consulted as part of cabinet processes?

Mr Pratt : This is, of course, where we get into difficult territory.

Senator KENEALLY: You've been in difficult territory for the past five minutes.

Mr Pratt : It is very difficult for us to talk about cabinet processes. Generally—and I accept this is a general statement—if a department is preparing policy which has impacts on other portfolios, and I'm speaking in general terms here, the process will involve early discussions with affected agencies and departments. It will potentially have drafts of cabinet submissions circulated which people input to. At a later point in the process, there will be an opportunity for the affected departments to put in coordination comments on them. Once the policy is decided, it may then go into the development of draft legislation. My colleagues have explained our involvement in that process on this specific issue. Without talking about what happened in this specific cabinet process, that is the general approach.

Senator KENEALLY: Let me ask the question this way, then. This was Treasury legislation, yes?

Mr Heferen : That's correct.

Senator KENEALLY: It also seems, from what I can gather around cabinet processes, that this was a Treasury-led process?

Mr Heferen : In respect of this bill, yes, that's correct.

Senator KENEALLY: To be clear, Treasury led the policy development of the divestment policy, not the department of energy?

Mr Heferen : Are you talking specifically about the divestment policy?

Senator KENEALLY: Yes. I'm talking about the government's position that it was going to introduce this big stick legislation.

Mr Heferen : They are two separate things. The big stick legislation is the name provided to the bill.

Senator KENEALLY: Yes.

Mr Heferen : There is the big stick legislation in its entirety and then there's the bit about the divestment, which is one of the specific remedies at the fifth or sixth stage. If the question is about the specific remedy of divestment, the answer is yes.

Senator KENEALLY: Yes, it was led by Treasury?

Mr Heferen : Yes.

Senator KENEALLY: Thank you. So if I had a question, for example, about whether this work began before or after the national energy guarantee was dropped by government, are you going to tell me that I should put that to Treasury?

Mr Heferen : That's correct.

Senator KENEALLY: Terrific. Thank you. We can generally say that the department would be consulted as part of cabinet processes, but we can't have a specific answer because of cabinet processes. We can also say that the Treasury did targeted consultation with the department before the legislation was finalised.

Mr Pratt : Yes.

Senator KENEALLY: Thank you. Has the department performed or contracted any modelling to confirm that the divestment policy will lower power prices?

Mr Heferen : No.

Senator KENEALLY: I suppose you would tell me, if I wanted to know whether Treasury has done that, that I should ask Treasury?

Mr Heferen : Yes.

Mr Pratt : Yes.

Senator KENEALLY: Is the department confident that the divestment policy will actually lower power prices?

Mr Heferen : I think it would be fair to say that when looking at the entirety of the bill, the operation of it, it would inevitably reduce power prices, or at least ensure that they didn't increase through those particular instances of the prohibited conduct. It's worth making the point that those instances of the prohibited conduct are rare. When the ACCC looked at these issues, they did make observations that the energy market in general is characterised by a lack of competition. When you have a lack of competition or there is a market with a lack of competition, issues around producers in the market being able to charge higher prices than they otherwise would and extract economic rent out of participants in the market is high. We've seen instances of that in the NEM. In South Australia, where there's one gentailer that dominates the generation, there is this concern about market liquidity. So moves to make sure that that is dealt with on balance would result in prices lower than they would otherwise be. Having said that, with the nature of these things they are talking about, it deals with market misconduct. There is suspicion that sometimes it occurs and there is a concern that with increasing concentration there may be a risk that it occurs in the future. Therefore, the operation of the legislation would ensure that that sort of behaviour doesn't occur. So that would suggest, logically, that if it's going to have an effect, it would bring prices down.

Senator KENEALLY: You noted that the ACCC observed that that market misconduct is rare. I believe that was the word you used?

Mr Heferen : In their report, yes.

Senator KENEALLY: So your statement that you've just given us about why you have some confidence that the divestment policy would lower power prices, because you say it would discourage this market—

Mr Heferen : Sorry, Senator, I never linked it to the divestment policy. I'm talking about the bill as a whole.

Senator KENEALLY: Sure.

Mr Heferen : When there's this graduated set of remedies, the final one being in certain circumstances when the ACCC forms a view that it is extraordinary enough, the Treasurer forms that view, it goes to the Federal Court and the Federal Court would provide that remedy. That is a very specific part of the legislation. Its application would be in extraordinary circumstances where that would arise.

Senator KENEALLY: Can you explain why organisations that represent energy users, such as BCA, AI Group and the Energy Users Association of Australia, who I presume would like nothing more but to lower power prices, oppose the divestment policy and claim that it will increase rather than lower power prices?

Mr Heferen : No. I can't explain that. My understanding is that Energy Consumers Australia, or ECA, the body there to represent the interests of consumers, considers that the bill would be a useful addition to the legislative armoury for the ACCC and the AER.

Senator KENEALLY: But they've actually claimed it would likely increase rather than lower power prices. If the largest users of energy fear that this will increase prices, has there been any modelling or briefing on the risk to business confidence? Is that a question I need to put to Treasury as well?

Mr Heferen : I think that would be a matter for the Treasury. Bear in mind that the sophistication a model would have to have—it more or less wouldn't be a model; it would turn into reality to try to guess what the behaviour of firms would be in those scenarios—would be extraordinarily difficult to estimate.

Mr O'Toole : I was just going to add that the regulation impact statement attached to Treasury's bill does go to the point of investor confidence. I think page 97 deals with that issue. It notes that there could be an ongoing cost in the short term. But the legislation itself has been designed to provide sufficient information. If you look at the rather extensive explanatory materials attached to it, it's designed to provide that additional confidence.

Senator KENEALLY: Well, my understanding is that energy users, such as the Energy Users Association, are concerned that we would have increased investment uncertainty in the context of an energy sector that is already suffering from heightened investment uncertainty and tight dispatchable supply. Is there a flaw in their reasoning?

Mr Heferen : Without having the document and going through it, it would be a bit presumptuous to say there's a flaw. It does remain the case that there's quite a bit of investment coming into the energy market. There's a lot of new construction going on. The market is characterised by difficulty with fuel prices. The price of coal is high. The price of gas is high. That will make business conditions challenging; there's no doubt about that. The bill does highlight those three key areas that I spoke about, where there are general concerns that, as a consequence of the market concentration, that could, or has in the past and possibly in the future, lead to bad outcomes for consumers. The ACCC made the point in their report that here are some risks and that governments ought to do something about them.

Senator KENEALLY: Was the Energy Security Board consulted on the bill, the legislation or on the divestment policy more broadly?

Mr Heferen : Not that I'm aware of. The ESB was created largely to oversee the implementation of the Finkel report—the report done on the security in the NEM following the South Australian blackout in 2016. Subsequently, the ESB is a creature of the Energy Council of the Council of Australian Governments. They have further work referred to by the Energy Council. It's not the case where in individual jurisdictions, if they had to pursue a particular issue, they would go to the ESB. So the ESB, as far as I'm aware, wasn't consulted. I think I've read a transcript of Dr Schott before the Senate legislation committee which made it clear that they weren't consulted. Nor would they expect to have been consulted given their particular role.

Senator KENEALLY: You've described their role in very narrow terms there, it would seem to me. My understanding is that the ESB was established for the express purpose of advising on energy policy to the government.

Mr Heferen : To the council.

Senator KENEALLY: To the council; you are correct. That is a misstatement there by me. You are correct.

Mr Heferen : So if there were an initiative from an individual government—for argument's sake, the Victorian renewable scheme, the Queensland renewable scheme, South Australia’s security schemes or the Commonwealth amendments to the Competition and Consumer Act—the ESB would not be involved. They are only involved where the council as a whole asks them to pursue work on a particular matter. It has gone beyond this. It has gone beyond the Finkel report. They have quite a role in the implementation of the Australian Energy Market Operator's integrated system plan for transmission. The ESB is playing a crucial role in that. So I didn't mean to say they had a narrow remit. It's just that their remit comes out of implementing the Finkel review and such other tasks as the council as a whole ask them to provide advice on.

Senator KENEALLY: Doesn't the ESB sit over all other energy market agencies?

Mr Heferen : No. Not really. If you spoke to the chairman of the AEMC or the CEO of AEMO or the chair of the AER, they would say they are alongside. Their idea is to implement the original manifestation of the Finkel report. They would assist in the coordination of activities between the three market bodies—that is, the Australian Energy Regulator, the Australian Energy Market Commission and the Australian Energy Market Operator—to ensure the seamless implementation of those recommendations.

Senator KENEALLY: If the ESB's remit is to implement Finkel or to oversee the implementation and advise the council on the implementation of the Finkel, why were they involved in the development of the national energy guarantee when Finkel actually didn't recommend it? He recommended a clean energy target.

Mr Heferen : I'm just trying to recall the sequence of events. I might have to take that on notice to get the sequence of events correct.

Senator KENEALLY: Well, we had the Finkel report. There was the clean energy target. The government didn't proceed with it. They adopted a national energy guarantee. They engaged the Energy Security Board, including Dr Kerry Schott, to be involved with that. The NEG was a direction of the Commonwealth. So I'm just trying to understand why was the Energy Security Board was involved with the NEG but hasn't been involved with the divestment policy.

Mr Heferen : It was certainly a resolution of the council—I can't recall specifically when—that ensured that work the ESB would do would come as requested from the council. I just can't recall the specific timeline, so I think it's best if we take that on notice so we provide the committee with the precise state of affairs.

Senator KENEALLY: Minister, Dr Kerry Schott, as the head of the ESB, has described the process of energy policy development under this government as anarchy. Do you agree with that assessment?

Senator Birmingham: No.

Senator KENEALLY: Why is Dr Schott wrong?

Senator Birmingham: The government is working to act and build upon the recommendations of the ACCC report, which was a very thorough and exhaustive process.

Senator KENEALLY: The ACCC describes the divestment policy as extreme and actually didn't recommend the big stick legislation.

Senator Birmingham: I see it to act and to build upon.

Senator KENEALLY: And to build upon? To make more extreme?

Senator Birmingham: Well, we have taken the view that in terms of the actions and levers that ought to be available to government in the event of non-compliance by energy companies, with the various issues that Mr Heferen went through before, that final power is one that is worth government having up its sleeve, if you like, to ensure compliance.

Mr O'Toole : You mentioned that the ACCC did not recommend what you referred to as the big stick bill. Just for the record, they did in fact recommend that the government introduce anti-market manipulation powers. So the bill, I think—

Senator KENEALLY: They've also described this particular proposal from the government as extreme.

Mr O'Toole : What I'm talking about is the bill as a whole. As Mr Heferen mentioned earlier, the ACCC certainly recognised some concerns in the market in relation to market concentration and the potential for manipulation, so they recommended that the government introduce anti-manipulation powers. You would be aware that the government subsequently announced the rolling six-month inquiry for the ACCC out to 2025 to monitor it. This bill fulfils that recommendation in terms of providing those anti-manipulation powers which the ACCC recommended.

Senator KENEALLY: Have the ACCC provided the department with a submission on the big stick legislation?

Mr Heferen : If they had provided something, it would have been to the Treasury.

Senator KENEALLY: To the Treasury?

Mr Heferen : Whether they have or haven't, I'm just not aware.

Senator KENEALLY: You've given me many questions to ask Treasury later in the week.

Mr Heferen : And they'll be very grateful.

Senator KENEALLY: Sure. I'm sure they are.

Senator Birmingham: It's a long time until Christmas. You might get back on the list by then.

Senator KENEALLY: Minister, will the government introduce the big stick legislation to the parliament before the election?

Senator Birmingham: The legislation has been introduced.

Senator KENEALLY: It has been withdrawn.

Senator Birmingham: No. The legislation remains on the Notice Paper.

Senator KENEALLY: You might want to check with Minister Littleproud.

Senator Birmingham: I don't need to check with the agriculture minister. I'm telling you that is why I paused during the framing of your question.

Senator KENEALLY: It has been introduced. You intend to proceed with it before the election. It has been withdrawn for consideration by the parliament.

Senator Birmingham: The legislation remains on the Notice Paper.

Senator KENEALLY: Okay. It's on the Notice Paper. Do you intend to have a vote on it before the election?

Senator Birmingham: Such matters as parliamentary scheduling will be decided by the government.

CHAIR: Excellent. We'll now move to Senator Leyonhjelm.

Senator KENEALLY: So it's a big, important reform that you're not going to put to a vote.

Senator LEYONHJELM: I will be very quick because people are looking for a cup of tea, I think. In response to my question on notice after the last estimates, the department advised that the costs and benefits of the government owning electricity generation assets does not differ depending on whether the assets are renewable or non-renewable electricity generation assets. I presume you're familiar with that answer?

Mr Heferen : I'm sure someone here is.

Senator LEYONHJELM: Someone will be. Good. Should I give you a minute or two to check that I haven't misquoted you?

Mr Pratt : Do you have a number for that question on notice?

Ms Parry : It's parliamentary question on notice No. 174.

Senator LEYONHJELM: I'm working off that question. There's a simple follow-up question to it, which is this: Can you confirm that the case for the government owning Snowy Hydro 2.0 is similar to the case for the government owning fossil fuel fired electricity generation assets? Is the case for the government owning Snowy Hydro 2.0 the same as the case for the government owning fossil fuelled electricity generation assets, given the answer that you've given on notice?

Mr Heferen : Would you like us to take that on notice?

Senator LEYONHJELM: No. I would love an answer today.

Senator KENEALLY: You're leaving soon.

CHAIR: He has a forwarding address, though.

Senator LEYONHJELM: I do have a forwarding address, yes. The emails will still arrive.

Mr Heferen : The question is the costs and benefits of owning—

Senator LEYONHJELM: Let me go over it again. I had a feeling this might be a bit difficult. Your answer to my question was to the effect that the costs and benefits of the government owning electricity generation assets does not differ depending on whether the assets are renewable or non-renewable. On that basis, does that mean that the case for the government owning Snowy Hydro 2.0 is the same as the case for the government owning fossil fuelled electricity generation assets?

Senator Birmingham: I think the first premise I would pick up on there is Snowy Hydro 2.0 is a project to expand Snowy Hydro. So it's not a case of a separate ownership structure that exists around that project. The government owns Snowy Hydro, which of course has essentially always been in public ownership.

Senator LEYONHJELM: I guess that invites another question, Minister. If the government owned a coal or gas fired electricity generator, would expansion of it be equivalent to the expansion of Snowy Hydro 2.0?

Mr Heferen : I think one point to bear in mind is that one of the genuine benefits of expanding Snowy to Snowy 2.0, to have the greater source of pumped hydro, is to assist with being able to firm the increasing amount of intermittent renewable generation coming into the system. Pumped hydro is ideal for that. When energy is not being delivered from wind or solar, pumped hydro can fill the gap. Coal-fired generation is not suitable for that. For a coal-fired generator to ramp up and ramp down, as I understand it, it takes quite a bit of effort. For the pumped hydro to do it, it's close to instantaneous. Certainly it's a very short period of time.

Senator Birmingham: Which, to reflect upon the answer to the first part of the question in terms of the benefits, it is ensuring the delivery of services at a standard the community expects. Reliability is one of those. There are community expectations built over time that have seen significant growth in renewables generation. Then it becomes a question of how it is that that reliability is built in consistent with that large growth in renewable generation.

Senator LEYONHJELM: There are two points around that. One is the question of government ownership. My question on notice was the costs and benefits of the government owning electricity generation assets. The response I got was no, it doesn't differ. The costs and benefits do not differ depending on whether the assets are renewable or non-renewable. So this government owns Snowy Hydro 2.0. Is the case for it the same as it would be if it were a coal- or gas-fired power station? I think you understand where I'm coming from. My priority is not so much whether it is renewable or non-renewable as to whether it is government owned or not government owned.

Senator Birmingham: I think in relation to Snowy Hydro 2.0, there is a case which Mr Heferen and I just stepped through, that, given the overall public policy aspects at play in terms of delivering reliable energy generation, there is an argument as to why that is a valuable investment in not just additional generation capability but stabilising a reliable generation capability. You can mount public policy arguments in favour of that project in particular. In relation to the ownership of Snowy Hydro overall in public hands, there's probably a range of factors that have impacted on government decisions over time to keep that asset in public hands. Some of those would relate to other environmental factors—land management and water management factors—that are distinct from its particular role as an electricity generation asset.

Senator LEYONHJELM: I will attempt to summarise this. Electricity generation assets are equal but some are more equal than others?

Senator Birmingham: Well, obviously Snowy Hydro uses a landmass that is a large area of land and has a number of other environmental assets and aspects to it. The nature of hydro operations, of course, is using another natural resource in terms of water that is then used for other purposes as well, be they environmental or productive purposes. So, in a sense, it has unique additionalities that are not existent, for example, in a coal-fired asset.

Senator LEYONHJELM: All right. I will let you off. I will point out that the question on notice did say costs and benefits. Perhaps some costs or benefits were left out.

Senator Birmingham: Senator Leyonhjelm, I think the question appears to have been answered in the very narrow prism of energy generation without perhaps consideration of the externalities.

Senator LEYONHJELM: I think I understand. Thank you, Chair.

CHAIR: What a wonderful note to break on for afternoon tea. We'll suspend and return to the same outcome at 4.10 pm.

Proceedings suspended from 15 : 56 to 16 : 10

CHAIR: We'll reconvene.

Senator HANSON-YOUNG: I want to go back to some of the questions I was asking this morning in relation to the underwriting of new generation investments. Mr Heferen, you said it depends on what the government decides to do. That was effectively referenced as well by Mr Pratt. So there's no single methodology. The government has not decided which one it will use. There was a reference to seeking legal advice but not wanting to release that if it's already been had; I understand that. Mr Heferen, I went back and looked at the transcript, or watched the interaction we had. You said that if the government chose to go down the path that would result in imposing obligations on people paying money, obviously there would need to be in relation to the money an appropriation for that to occur. As to the mechanics of what would occur in relation to both what the minister and Mr Pratt have said, this is still under the consideration of the minister. I want to confirm that that is what you meant to say?

Mr Heferen : Yes.

Senator HANSON-YOUNG: So you understand that if money is required to underwrite the new generation investments, there would need to be some appropriation?

Mr Heferen : Well, if the money is provided through a loan from the CEFC, obviously that wouldn't. With the benefit of hindsight, I could have probably chosen the words a bit more precisely. My intent was to say that if there were to be extra money that would require an appropriation, that would, by definition, require an appropriation.

Senator HANSON-YOUNG: Yes. So under the CEFC, that could fund renewable and clean energy projects but not coal thermal?

Mr Heferen : That's my understanding.

Senator HANSON-YOUNG: Are you of the understanding that coal thermal projects would require legislation?

Mr Heferen : Well, it does depend on the nature and scope of the decisions around implementation. As we went through this morning, they are still under consideration.

Senator HANSON-YOUNG: So you wouldn't say that you're confident? You couldn't say that you're confident that legislation would or wouldn't be required?

Mr Heferen : Well, if the program ended up being something that would need to have an appropriation, I would be confident there would have to be an appropriation. If it ended up being something where there didn't need to be one, it would then be what would be required. But until such time as the government has gone through its process to determine the method of implementing the program, I think it would be premature to speculate.

Senator HANSON-YOUNG: I guess the reason I'm interested is that we do know that the registrations are open. You have had 66 applications. There is a lot of work from third parties being put into this process, of course. Of course, taxpayers have the right to know what is being planned and what isn't and whether projects and spending for projects is lawful. If there is a question around the lawfulness, I see that examining it is precisely what as senators we're here to do during Senate estimates. Could you give me any other examples of what would require legislation for it to be legally able to be paid for?

Mr Heferen : Well, I'm sure there would be a number of examples. I think just off the top of my head, in this particular environment, it might be a little unwise to speculate on particular forms of assistance or incentives the government might provide. That could easily be taken out of context.

Senator HANSON-YOUNG: But suffice it to say that at least coal thermal would have to be legislated because it can't fit under the CEFC?

Mr Heferen : Again, I think it would depend upon the design of the program that the government settles on. As we discussed—

Senator HANSON-YOUNG: So you think there are ways that thermal coal could be paid for without legislation? Is that what you're suggesting?

Mr Heferen : No.

Senator HANSON-YOUNG: Without additional legislation?

Mr Pratt : I don't want to be unhelpful, but I'm not sure that we are in a position to speculate on things of this sort.

Senator HANSON-YOUNG: Mr Pratt, I will tell you why I am pressing on this. This morning, the energy minister, when he was asked about this issue, said very clearly that he was confident. I quote:

We believe we have the legislative authority to do this. We know we have the legislative authority to do this.

To do what?

Senator Birmingham: Well, that's indeed what I was about to ask you there, Senator Hanson-Young. To do this, as in to operate the new generation investment program?

Senator HANSON-YOUNG: To spend the money required.

Senator Birmingham: It may be that this program ultimately doesn't expend any money depending on the terms and structure applied to it. So there's a range of different scenarios. Obviously, as you heard this morning, there has been a registration of interest process. There have been 66 ROIs received. I've not seen them. Even if I had, it would be inappropriate to comment on their content. But I would imagine across those 66 that many would propose different means of potential support that they might require. All of that will inform the type of decisions that government makes about the structure of this, which will then lead to the further stages of the program. All of the legal issues, as we said this morning, are, as is standard practice, considered at point of program approval, policy approval, legislative approval and whatever is required.

Senator HANSON-YOUNG: I guess my question is that, on the one hand, the energy minister is saying that he knows he has the authority. But I'm hearing from the department that they are not even sure what the authority would be for. Is it that the department hasn't been told what the government's decision is?

Senator Birmingham: No. The department, until obviously the government takes a decision, is working on the process that is before the government at present. I haven't seen the full context of Mr Taylor's—

Senator HANSON-YOUNG: It was in relation to the legal advice that I've tabled.

Senator Birmingham: Sure. I haven't seen the full context of his remarks. He would be aware, obviously, of what type of proposals he is thinking of bringing forward.

Senator HANSON-YOUNG: Has the minister contacted the department today and sought advice before he made that statement, Mr Pratt?

Mr Pratt : As in today?

Senator HANSON-YOUNG: As of today?

Mr Pratt : Not to my knowledge.

Senator HANSON-YOUNG: Mr Heferen, are you aware whether the minister has—

Mr Pratt : Most of the relevant people have been here.

Mr Heferen : Not to my knowledge.

Senator HANSON-YOUNG: If anyone in your department knows otherwise, they could get that corrected at some point today.

Mr Heferen : They could send me a message and I'll respond.

Senator HANSON-YOUNG: Thank you. You've said that perhaps support could be offered under this Underwriting New Generation Investments program that would not require an appropriation of spending, because perhaps it doesn't require spending. In the consultation paper, you have a list of mechanisms for attracting investment—providing a floor price, contract for difference, cap and floor, collar contracts, government loans and capacity payments. Out of that list of options, which of these would not require legislation?

Mr Heferen : I think that is something we would need to take on notice. It would go to the content of having to talk to our people working on this who are expert in the law to provide some advice on that. So we would need to take that on notice.

Senator HANSON-YOUNG: But surely that's the type of work your department must be doing, because this is the consultation paper that you've put out and you've sought registrations over.

Mr Heferen : So the process would be people put in their nominations or register, if you like. It's up to ministers to come to the view on the program, the guidelines, what they want out of the program and how that's to be delivered. I think to go to the question of those particular financing mechanisms and how they would be delivered is another sophisticated step that, to be—

Senator HANSON-YOUNG: It's not long before you might be dealing with another government. Surely you've had to think about these things.

Mr Pratt : It would be premature of us to provide definitive advice on these things before the government has actually announced its intentions in this area. Ultimately, the legal advice we would get both internally and externally would be for the purpose of, first, advising the government on what it wants to do. We need to land that before we would then be able to, quite reasonably, explore with you the merits or otherwise of the legislative position.

Senator HANSON-YOUNG: I've just given you the options that your department has already set out. You've obviously thought about those options being mechanisms that you wish to explore. I don't think it's that unreasonable to ask the department what work you've done to work out what is legislative and what isn't.

Mr Pratt : I certainly wasn't attempting to suggest that it was unreasonable. I think it's perfectly reasonable for these questions to be asked. Our position is that essentially we will not pre-empt the announcements made by the government. That's all.

Senator HANSON-YOUNG: Okay. So out of these options of various different mechanisms, which of them require spending?

Senator Birmingham: Again, it's difficult for us to answer. It may even be that within those different options there are various permutations or variables.

Mr Pratt : Depending on what the people who have registered an interest are proposing.

Senator HANSON-YOUNG: Does providing a floor price require spending, though?

Mr O'Toole : That would depend.

Senator HANSON-YOUNG: Could you expand on that for me?

Mr O'Toole : I think this is what the minister and perhaps Mr Pratt and others are getting at. A large number of these actually would involve, consistent with the ACCC recommendations in this space, the government taking on some of the risk. That risk is the financial risk. Whether that actually crystallises or not in terms of some sort of financial liability to the government would depend on the market behaviour and where the various floors or cap and collars et cetera are set. So it may be that—and certainly where the ACCC was getting at in its recommendation—the government takes on some of the risk but not all of the risk so that the generation project can get up. Ideally, that contingent liability for the Commonwealth would never be triggered, but it would be sufficient to get the investment made.

Senator HANSON-YOUNG: So in that case you're suggesting that, even with things like providing a floor price or contract for difference, if it requires an element of the government taking a risk, there would have to be money put aside for it?

Mr O'Toole : I think—

Senator HANSON-YOUNG: I'm just asking you to confirm whether what I've heard from you is correct.

Mr O'Toole : I would probably need to speak to my budget colleagues, people who are more au fait with it than me. I'm happy to take it on notice.

Senator HANSON-YOUNG: Obviously government loans require some type of payment. How would capacity payments work?

Mr O'Toole : A number of markets around the world offer ongoing payments, if you like, for capacity to be made available to the market. So it differs from our current market structure, which focuses solely on payments for energy dispatched.

Mr Heferen : So a capacity payment, as Mr O'Toole says, is a payment to a generator to say, 'Here's money, irrespective of whether you're selling into a gross pool, to ensure that there is an amount of reserve.' Importantly, that capacity payment could come from the government. It could come from the market operator. In our system, the rules would have to be changed. Theoretically, a capacity payment could come from the market operator, who says, 'I need this to ensure the reliability of the market.' The market operator could recover that from the users. The way the AEMO works at the moment is that it recovers its costs from registered participants in the market. I'm not suggesting that a capacity payment could be introduced very quickly because it would have to be possibly subject to a change in the national electricity law and certainly the national electricity rules. But that is a case where a capacity payment might or might not involve expenditure by the Commonwealth. So it's a probably a good example why it's probably not wise for us to suggest that these would require legislation and these wouldn't require legislation, because it would depend on the nature of the program itself.

Senator HANSON-YOUNG: It all seems pretty unclear, then, as to exactly what would need to be passed by the parliament. Given we've got only five sitting days and you haven't done the work on the legislation, it doesn't look like it's going to happen, does it?

Senator Birmingham: There's a timing process as to the way in which each of the steps here is played out and, beyond the ROI, what occurs in terms of the receipt of further proposals during the first half of this year. It's not to say or assume that legislation, if it's required for the final model, would necessarily have to pass the parliament before the election or in the first half of this year. I do want to just add that I've received a bit more context, I think, to Mr Minister Taylor's response on legislation. My understanding is that he was responding to the reported element that you quoted earlier today that goes specifically to whether or not new legislation is required to address the Williams case aspects of that story or legal advice. I gather that in that regard he was making clearer that he doesn't believe new legislation is required on that issue. That does not mean, as you've heard from the officials, that it's dependent on the nature of the program and that it may be or may not be to give effect to other aspects of it.

Senator HANSON-YOUNG: Thank you for that clarification. I want to clarify, Mr Heferen. You haven't directed anyone in your department to start drafting legislation in anticipation of what decision the government will make?

Mr Heferen : That's correct.

Senator HANSON-YOUNG: Mr Pratt, you haven't had to bring on extra staff to do that or change people's roles in order to do that?

Mr Pratt : In relation to legislation, no.

Senator HANSON-YOUNG: Given that you are not aware of what mechanism will be used, you're not sure what legislation would be required, acknowledging that there might need to be—

Mr Pratt : We're not able to pre-empt any government announcements on this.

Senator HANSON-YOUNG: Clearly, there's no ability for any discussions with any of the 66 applicants in relation to draft contracts, then?

Mr Heferen : As I said before, the process of developing this is a process of many government programs. We provide advice to a minister. We work with the minister to fine-tune in this case what he is going to take to his colleagues. That is part of the budget process, which remains confidential. We have to take those questions on notice, like I said this morning, and see what the minister wants to provide.

Senator HANSON-YOUNG: I would really like to be very clear about this point so there's no misunderstanding on my behalf. Have there been, or are there, any draft contracts in the works?

Mr Heferen : I don't think I can add anything to my previous answer.

Senator HANSON-YOUNG: You can't say no to that?

Mr Heferen : I'll take that on notice.

Senator HANSON-YOUNG: Mr Pratt, have you had to seek any legal advice? I'm not asking for it. I'm asking whether you have had to seek any legal advice as to what would happen if a contract were being negotiated and drafted and then subsequently there was a change of policy?

Mr Pratt : In this area, I do not believe so.

Senator HANSON-YOUNG: You haven't sought advice in relation to that?

Mr Pratt : Well, right now we are focused on advising the minister on the policy that he wishes to introduce.

Senator HANSON-YOUNG: And the minister hasn't sought advice on the legal status of draft contracts?

Mr Pratt : Well, now we're straying into the nature and content of our discussions with the minister. But not to my knowledge.

Senator STORER: I have continuing questions in this same area. My apologies if I go over what may have been discussed even just now and then this morning. I want to understand the status of the list of the 66 submissions received. Can the department provide that list?

Mr Heferen : At the moment, they are still an input to the cabinet process, so at this stage we can't. But I agree to take that on notice to see what the minister would want to provide.

Senator STORER: Please do, yes. Can the department provide a high-level breakdown of the projects by technology, such as hydro, pumped hydro, battery, solar, wind, coal or gas?

Mr Heferen : We'll take it on notice.

Senator STORER: Thank you. What are the next steps? How would you characterise the next steps for the program and the status of it now, today?

Mr Heferen : Well, the minister has been clear in pursuing this issue, which is taking a recommendation from the ACCC report—I think it was recommendation 4—where the ACCC was concerned about competition, particularly in the wholesale market, or the generation market. The minister is also concerned about the reliability of supply. That is something that certainly our market operator is very concerned about as well. So in terms of trying to have a program which delivers on both those outcomes, we need processes to say, 'What would be the program design that would best meet those objectives?'

Senator STORER: Is there a timeline of expectation of when contracts will be signed?

Mr Heferen : That goes to the question of the deliberation in the budget context, which we took on notice to see what the minister would want to provide.

Senator STORER: Has the department provided the government with advice on whether enabling legislation will be required for the program to fund new or upgrade existing coal or gas power?

Mr Heferen : I think that goes to the issue of the ongoing deliberation, which we have taken on notice.

Senator STORER: Am I correct that the idea for this program was ACCC recommendation 4 and the retail electricity pricing inquiry report?

Mr Heferen : That was certainly the genesis of it. The ACCC, in its report, gave an example of quite a specific mechanism. The minister, in considering that, reflected the view that the point the ACCC wanted to get to—that is, greater competition in the wholesale market—is one that is unquestionably correct. He also wanted to make sure that concerns around reliability were also addressed as part of the program. He has taken the problem the ACCC identified and gone through this process to try to find, I guess, the most appropriate and cost effective solution to that problem.

Senator STORER: As I understand it, the ACCC recommended that this program be restricted to new generation and not involve any existing retail or wholesale market participation with a significant market share.

Mr Heferen : That's correct.

Senator STORER: But the program is open to existing generation and existing retail and wholesale market participants. Is that correct?

Mr Heferen : Well, the precise articulation of the program as has been discussed is still under consideration. But I think it's important to note that the minister has the concern both of competition, which goes to the question of making sure that the existing large incumbents don't access, and the issue of reliability. That is a slightly different tenor. But both those elements go to the question of what the appropriate response is going to be.

Senator STORER: Was that the department's advice to the government regarding that issue in terms of allowing existing—

Mr Pratt : We won't talk about our specific advice to the minister.

Senator STORER: Minister Birmingham, would you characterise the government as ignoring those elements of the ACCC recommendation in terms of not allowing existing market participants with a significant market share? The ACCC recommendation stipulated that, but the minister is not taking that advice; is that correct?

Senator Birmingham: Well, I think at this stage of the decision-making around this program, the government has received, as you've heard, 66 requests for proposal. They are helping to inform the design and implementation which will take the next step. It would be premature at this stage to be putting those types of guardrails around exactly what the decisions will or won't be.

Senator STORER: Okay. Has the department given the government any advice on indemnifying these projects from carbon risk?

Mr Pratt : Again, that would go to the nature and content of our advice.

Senator STORER: Specifically with regard to meetings held, has the department met with Trevor St Baker regarding this project and the 66 projects?

Mr Pratt : No.

Senator STORER: Has the minister met with Trevor St Baker regarding this opportunity? Are you aware, Minister?

Senator Birmingham: I suspect we'll have to take it on notice.

Senator STORER: If you could, thank you. I would like to turn to discuss another element, if I could, of energy efficiency. Would you like to continue in the same vein?

CHAIR: How long do you think you have, Senator Storer? We can knock yours over and then we'll go to Senator Urquhart, if you like.

Senator STORER: Not very long. I want to talk about the trajectory for low energy buildings. This is option 2. I'm pleased that the COAG Energy Council agreed in December last year on the trajectory for low energy buildings. Why is it that the trajectory has chosen to consider energy efficiency programs in late 2019 given that the COAG Energy Council agreed to December last year for the trajectory? Why is there a delay in the consideration of energy efficiency programs?

Ms Croker : The focus of the COAG Energy Council last year in 2018 was to develop the trajectory and to focus on measures for new builds for both residential and commercial building energy efficiency measures. That would then feed into the COAG Building Ministers' Forum process for changes to the National Construction Code for 2019. That was the focus so that we could make that timeframe of the COAG Building Ministers' Forum.

Senator STORER: What is the federal government doing to consolidate jurisdictional learnings, as noted in the trajectory? What is the process for this consolidation of jurisdictional learnings? That is the phraseology.

Ms Croker : I'm not quite sure what you're referring to. I'll have to take that on notice.

Senator STORER: A key benefit from energy efficiency in buildings, and particularly in housing, is to slash energy bills for families, workers and businesses. What elements of this trajectory are concerned about those who are not able to afford to improve the energy efficiency of their homes versus those who can?

Ms Croker : As you noted as part of the trajectory for low energy homes, the COAG Energy Council will consider policies to improve existing buildings. This could include policies such as energy ratings, information and training for industry and households. The trajectory did note, in terms of measures such as rental requirements and energy efficiency gains that could be made in this area, that that was an important area that would require further investigation. It will be considered in the advice that goes to energy ministers at the end of this year.

Senator STORER: So there will be a consideration of low socioeconomic households and their ability to generate initiatives that bring about energy efficiency in their homes?

Ms Croker : I don't think it's going to necessarily be on socioeconomic class because it will be on the types of buildings that those socioeconomic classes inhabit.

Senator STORER: Are you aware of the statistic regarding rental properties and, for example, solar panel installation in Australia as an initiative for energy efficiency? How many rental properties have solar panels installed? Are you aware of that?

Ms Croker : Sorry, but I don't know the answer to that question.

Senator STORER: Could you take that on notice?

Ms Croker : Yes.

Senator STORER: That's all I have regarding energy efficiency.

Senator URQUHART: Thanks very much. I have a number of questions. I know this has been addressed by Senators Hanson-Young and Storer. I have some specific questions that are similar but a little different, so I will plough through. I think we established that the process that led to the policy was the ACCC electricity price review. I think that is one of the questions Senator Storer asked. The ACCC recommendation states:

To qualify, a project proposal must:

have at least three customers who have committed to acquire energy from the project for at least the first five years of operation

not involve any existing retail or wholesale market participant with a significant market share (say a share of 10 per cent or more in any NEM region)

be of sufficient capacity to serve the needs of a number of large customers …

So does the underwriting program restrict eligible projects to those that have at least three customers who have committed to acquire energy from the project for at least the first five years of operation?

Mr Heferen : I think, as we went through before, the government is still in the process of determining the guidelines for the program.

Senator URQUHART: So you don't know?

Mr Heferen : It is premature.

Senator URQUHART: The ACCC recommendation sets out a very specific model for underwriting. It states that the government should operate a program:

… under which it will enter into low fixed-price (for example, $45-$50/MWh) energy offtake agreements for the later years (say 6-15) of appropriate new generation projects which meet certain criteria. In doing so, project developers will be able to secure debt finance for projects where they do not have sufficient offtake commitments from C&I customers for later years of projects.

Does this strictly reflect the design of the underwriting program?

Mr Heferen : Since the design hasn't been finalised—

Senator URQUHART: So no design has been finalised at all?

Mr Pratt : The government has yet to announce its design.

Senator URQUHART: Did the ACCC provide any further advice or submissions on this policy once the government gave an outline?

Mr Heferen : We have had discussions with officers from the ACCC.

Senator URQUHART: Can you tell me when and in what form they were?

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

Senator URQUHART: You can't tell me that?

Mr Heferen : No.

Senator URQUHART: Has that advice been made public?

Mr Heferen : What I was talking about are discussions and conversations that we would have had with officers from the ACCC. Certainly they would not be made public. There may have been something else they put on the public record. I'm just not aware, so I will take that on notice and provide you with a comprehensive answer.

Senator URQUHART: So you don't know whether they've provided advice or submissions on the policy?

Mr Heferen : They provided one on the consultation paper, I understand.

Senator URQUHART: Was that in the form of advice or a submission?

Mr Heferen : I think that was in the form of a submission.

Senator URQUHART: Can you provide a summary of the ACCC view of the underwriting program?

Mr Heferen : As we've discussed, the content of the program is still under consideration. So until such time as—

Senator URQUHART: I'm talking about the ACCC view.

Mr Heferen : Of the?

Senator URQUHART: Of the program.

Mr Heferen : When you say the program, you mean—

Senator URQUHART: The underwriting program.

Mr Heferen : The one the government is yet to finalise?

Senator URQUHART: So they haven't finalised it. The ACCC, I understand, made a submission.

Mr Heferen : Yes.

Senator URQUHART: Will that be made public?

Mr O'Toole : The consultation submissions haven't been made public yet. We are happy to take it on notice and check with the minister.

Senator URQUHART: Will it be made?

Mr O'Toole : My expectation is that they will be made public. It is a question of the timing.

Senator URQUHART: Is that you nodding, Mr Pratt?

Mr Pratt : No. I was looking at my colleagues.

Senator URQUHART: I thought you nodded and then you looked.

Mr Heferen : I was nodding.

Senator URQUHART: You were nodding?

Mr Heferen : I was nodding.

Senator URQUHART: So it will be made public?

Mr Heferen : It is our expectation that submissions to these sorts of processes, once the government decides what to do, as is the normal case where people have made an input, are put on the public record.

Mr O'Toole : I might just clarify that. In these cases, a number of submitters requested that they remain in confidence. That would be normally respected.

Senator URQUHART: So what was the ACCC view expressed in their submission?

Senator Birmingham: You are going to the content of the submission now.

Senator URQUHART: No. Their view.

Senator Birmingham: That would be the content of the submission, presumably.

Senator URQUHART: So what is the timeline for the information to be made public?

Mr Heferen : Well, that's really a matter for the minister or a matter for the government.

Senator Birmingham: Decisions around the publication of submissions, as you have heard, would ordinarily be made in the context of or following the final policy decision.

Senator URQUHART: Will the ACCC submission be made public before the government enters into any contracts under the program?

Mr Heferen : That's pretty hypothetical.

Senator URQUHART: It's not. Why is it hypothetical?

Mr Pratt : I don't think we would know whether that would be the case or not. Ultimately, it will be a matter determined by the government.

Senator URQUHART: As to when they release the ACCC submission? That's a matter for government; is that what you're saying?

Mr Pratt : Everything that was part of your question is a matter for government, yes.

Senator URQUHART: Mr St Baker has been reported as lodging several projects with the underwriting program, including $6 billion of new coal projects. Are you aware that Mr St Baker is a significant donor to the Liberal and National parties and once stood as a National Party candidate?

Mr Pratt : I was not aware of that, no.

Mr O'Toole : No.

Senator Birmingham: No.

Senator URQUHART: No?

Senator Birmingham: I don't think I am.

Senator URQUHART: So what processes are in place to ensure that the project expressions of interest Mr St Baker has lodged are not receiving a greater weight in determining project design than others? Are you absolutely confident that the underwriting project design process is being conducted with the highest standards of probity and will not lead to suboptimal outcomes?

Mr Heferen : Yes.

Senator URQUHART: Is it the department's intention that the underwriting of renewables based projects under the program will be provided through ARENA and the CEFC?

Mr Heferen : One of the requirements in the program was that greater weight would be given to generation projects that provide dispatchable energy—energy at call. For a renewable to be part of that, an intermittent renewable, would have to be done jointly with something that could firm it up at the times when its fuel source wasn't operating. So it would have to be done in the context of being joined up with probably pumped hydro or possibly a gas peaker. They would be the two standard ones. In the material that went out for the register—my colleagues will correct me if I'm wrong—it was pretty clear that it would cover all fuel types, provided it had the capacity to be dispatchable.

Senator URQUHART: Are there any barriers to such a model of delivery given that the ARENA Act and CEFC Act seem to be clear that their investments must pass internal processes and that, while he can request consideration, the minister can't direct these agencies to support specific projects selected based on some other criteria, such as the underwriting program?

Mr O'Toole : I think the question presupposes that ARENA or CEFC will provide that support. As Mr Heferen has outlined, the program design hasn't been finalised.

Senator URQUHART: Senator Hanson-Young did go into a bit of this space. Given that neither ARENA nor the CEFC can support coal based projects, what is the legislative basis that the government might intend to use to provide support to coal projects under the underwriting program? Does that mean new legislation or existing legislation?

Mr Heferen : I think we've already discussed that that goes to the design of the program, which the government hasn't yet finalised.

Senator Birmingham: I think we've dealt fairly exhaustively with legislative underpinnings in response to Senator Hanson-Young in particular.

Senator URQUHART: Has the department sought any legal advice on the legality of providing financial support to coal projects under the underwriting program?

Mr Pratt : I think we addressed this earlier in our testimony so I don't think we've got anything to add to that.

Mr Heferen : No.

Senator URQUHART: Is there currently any legislative basis for government support for coal powered projects of the type envisaged under the program?

Mr Pratt : Mr Heferen's standard answer—that we are yet to have the final design announced by the government—still stands.

Senator CHISHOLM: I have some questions on offshore wind. Is this the right program?

Mr Pratt : It is certainly under the energy outcome, yes.

Senator CHISHOLM: Are you aware of the proposal to develop Australia's first offshore wind farm in Commonwealth waters south of Victoria developed by Offshore Energy?

Mr Pratt : My apologies, that was under outcome 2, in fact, not outcome 4. The good news is that Ms Evans is here and will attempt to answer your question.

Ms Evans : Yes, we are aware of the proposal.

Senator CHISHOLM: Has the department been in contact with Offshore Energy about this project?

Ms Evans : Yes.

Senator CHISHOLM: Can you provide us with a brief summary of the project and a summary of where it is up to in terms of approvals?

Ms Evans : Maybe rather than a specific project, I will just describe the situation. Because there's no existing regulatory framework for developing offshore wind or providing a licence for offshore wind, we have been dealing with the proponent to talk through how we would do a bespoke licensing arrangement to allow them to do just the exploration work for what they have proposed. In the process of doing that, we included a public call for expressions of interest or comments on the proposal in December 2017, actually. We've been working through the various regulatory issues and requirements that would be necessary to support the government taking that kind of fairly bespoke approach to the project.

Senator CHISHOLM: When did Offshore Energy first talk to the department about the project?

Ms Evans : It would have been earlier in 2017. I would have to take on notice exactly when the date was. But the project has certainly been around for a long time. It is because the circumstances are so complicated without there being an existing regulatory framework to handle what they are proposing to do, which is offshore—so outside of state controlled waters in Commonwealth waters. It has taken a long time to work through all the various issues.

Senator CHISHOLM: When did you first receive the application for the licence in the form that is currently under review now?

Ms Evans : I will have to take that on notice. We have been working with the proponents around the actual form of the licence, so it has been quite an iterative process.

Senator CHISHOLM: Have any submissions been received by the department?

Ms Evans : In response to the public—

Senator CHISHOLM: Consultation?

Ms Evans : We just put a public notice that this was the proposal. There were a number of submissions in response to it. They have not yet been made public because the final decision is still pending consideration by the minister.

Senator CHISHOLM: The final decision?

Ms Evans : About whether or not to issue the licence as we've currently got it formulated.

Senator CHISHOLM: So it would be the normal process that they wouldn't be released until after the minister has made the decision?

Ms Evans : Consistent with what my energy colleagues have said, typically, the process would be that once a decision has been taken, submissions are released. But it's up to the government and the minister to finalise that approach.

Senator CHISHOLM: Is the licence expected to allow any seismic exploration?

Ms Evans : I'll have to take that one on notice.

Senator CHISHOLM: Would you be able to elaborate what kind of exploration is currently being contemplated under the licence?

Ms Evans : It is very much an exploration of what the nature of the wind resource is like in the area. But as to exactly what the proponent is proposing to do to make those, I'll have to take it on notice.

Senator CHISHOLM: And what about the potential environmental impacts of these forms of exploration?

Ms Evans : I'll take it on notice. My understanding is that those have all been considered. Again, while there is no regulatory framework for offshore wind, we are drawing from the existing frameworks for offshore oil and gas exploration and so on to make sure that all of the necessary projections are in place under this quite bespoke arrangement. Perhaps it is important to just comment that this is only a licence to explore the resource in the area. It doesn't provide any authority to proceed with any development. That will be a separate decision that will come later.

Senator CHISHOLM: Has the department issued a recommendation on this licence to the minister?

Mr Pratt : We are briefing the minister.

Senator CHISHOLM: Has the department issued a recommendation as part of that briefing?

Mr Pratt : Well, there would have been a recommendation for the minister.

Senator CHISHOLM: And when did it make this recommendation?

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

Senator CHISHOLM: If it was given approval, when do you expect that construction would start on the project?

Ms Evans : That is definitely a hypothetical question. The only thing we are considering at the moment under the licence is an exploration of the resource. So it is up to the proponent then. They haven't even decided whether or not they would proceed let alone put forward an actual project proposal.

Senator CHISHOLM: Does the department have an ongoing work program in relation to this licence?

Ms Evans : We have an ongoing work program to think about how we put in place an offshore regulatory framework rather than just the specific licence. So that work has begun.

Senator CHISHOLM: So that is basically the next steps?

Ms Evans : Yes.

Senator CHISHOLM: In general terms, does the department have an ongoing work program on any other aspects of offshore renewable energy?

Ms Evans : There are other elements in the new technology area. We look at other offshore options. There have been a few approaches through ARENA and the like for tidal energy and wave energy, if that's what you're getting at. So there is some exploration of those technologies as well.

Senator CHISHOLM: Is there any legislation or changes in regulations in preparation?

Ms Evans : I'm not aware. Those particular examples have all been much closer to shore. The offshore wind example is the first time we have had to really start thinking about how we manage the beyond three kilometres off water regulatory framework. I think the other options are closer to shore.

Senator CHISHOLM: Is there any intention to move the approvals process to another agency?

Ms Evans : I think we'll have to think through all of that as we develop the regulatory framework itself. Quite a number of agencies are involved. As we have been discussing the options for this licence, we have had to involve a really broad range of interests because of the different interests. So that will be something we think through. But from an environmental impact perspective, I think we would be the one ones involved in that.

Senator CHISHOLM: Has the department received any other inquiries or applications from other parties interested in renewable energy projects in Commonwealth waters?

Ms Evans : There was at least one other proponent that expressed some interest in also doing offshore wind. We are not proposing to proceed with their approach.

Senator CHISHOLM: Thanks for that.

Senator HANSON-YOUNG: Ms Evans, while you're at the table, I want to ask you a few follow-up questions. We had the conversation earlier on carbon exports. I just want to know what type of analysis the department does in relation to Australia's carbon exports. Do you analyse them at all?

Ms Evans : We haven't typically analysed them, no.

Senator HANSON-YOUNG: So you don't keep a track of what they are or what type of emitter is producing more than others?

Ms Evans : I'm not sure I followed that question. We haven't done analysis of our exports.

Senator HANSON-YOUNG: Do you know where we rank in comparison to other countries who perhaps export carbon or carbon emitting product?

Ms Evans : Again, I'm not quite sure where you're going with your question. It's well known that Australia is one of the largest exporters of energy, including coal and liquid natural gas.

Senator HANSON-YOUNG: But you don't know where we rank in terms of our carbon exports?

Ms Evans : My energy colleagues might be able to help on where we rank in terms of being an energy exporter. No, I don't have that information with me.

Senator HANSON-YOUNG: If somebody would be able to take it on notice, that would be sufficient. Thank you.

Mr Heferen : That is probably related to the export of resources. That is something our colleagues in the Department of Industry, Innovation and Science, I think, would—

Senator HANSON-YOUNG: I'm talking about carbon emissions.

Mr Heferen : As I understand it, you are talking about Australia's net exports of coal and LNG compared with, say, Qatar's LNG or compared with Saudi Arabia's of oil and so forth—that kind of comparison. Given that the emission element of those is reasonably stable, the department of industry, which has the resources function, is probably best placed to assist you.

Senator HANSON-YOUNG: Thank you. I will do that. Ms Evans, I bring your attention to the recent judgement by the Chief Justice in New South Wales. This relates to the Rocky Hill judgement, which I assume you are across and aware of. He rejected a coalmine in part on the grounds that, and I quote:

The potential for a hypothetical but uncertain alternative development to cause the same unacceptable environmental impact is not a reason to approve a definite development that will certainly cause the unacceptable environmental impacts.

You are aware of that judgement?

Ms Evans : I'm aware of the judgement. The best place to ask questions is probably with our environmental standards division.

Senator HANSON-YOUNG: I will press on. Where would I do that?

Mr Pratt : That is this area.

Senator HANSON-YOUNG: We can come back to that. While I have you here, Ms Evans, I'm interested in the climate elements of this. The judge found that the harm from a coalmine is not acceptable just because someone else might build one instead. Do you agree with that premise?

Ms Evans : Senator, it is not my position to offer an opinion on a judge's view.

Senator HANSON-YOUNG: Do you understand the point that he is making?

Ms Evans : Again, I think you are pressing me to try to express an opinion on the judge's judgement. It's not appropriate for me to do that.

Senator HANSON-YOUNG: Do you, Ms Evans, see the similarity to the evidence that you've given previously that exporting LNG produces fewer carbon emissions than exporting coal?

Ms Evans : I'm not sure that I see the connection between those two things.

Senator HANSON-YOUNG: Have you looked at this judgement at all from your climate expertise and considered its ramifications?

Ms Evans : We are aware of the judgement. We will consider it in the future.

Senator HANSON-YOUNG: But there hasn't been any briefing sought from you in relation to what this will mean in terms of other projects?

Ms Evans : So in terms of other projects, again, I would refer you to outcome 1.5. My area of the department is not involved in the approval of projects.

Senator HANSON-YOUNG: Okay. Mr Pratt, where should I be asking these questions?

Mr Pratt : On the schedule, after 9.25 pm.

Senator HANSON-YOUNG: If we ever get there.

Senator Birmingham: Indeed.

CHAIR: We are in your hands.

Senator Birmingham: We do appear to have covered a fair bit of ground relating to some other areas recently.

CHAIR: Yes. I am an optimist as well.

Senator HANSON-YOUNG: Just to be clear, Ms Evans, no-one in your department has been asked to provide briefings on the ramifications of the judgement in relation to this coalmine?

Ms Evans : I'm not sure that I'm in a position to answer that. You might have to ask again in 1.5.

Mr Pratt : I think we should ask that question at 9.25 pm.

Senator HANSON-YOUNG: Well, what I'm worried about, Mr Pratt, is that we won't get there. As the secretary of the department, are you aware whether there have been briefings prepared—

Senator Birmingham: Senator, I don't share your doomsday prognosis. I'm confident that we will get to 9.25 pm. What it is that we will be doing at 9.25 pm is, of course, in the hands of the committee.

Senator HANSON-YOUNG: Good point. Mr Pratt?

Mr Pratt : Senator, I would be surprised if we haven't provided some form of briefing on the outcome of that judgement, or it would be in train, I imagine. So I will take it on notice in the event that we don't get to 9.25 pm and do program 1.5.

Senator HANSON-YOUNG: Thank you. This is my final question in relation to the underwriting of the new generation investments. Mr Heferen, you spoke about needing to consider the risk of whatever mechanism is chosen and decided upon. Is one of the risks financial? If so, what other risks would we be considering?

Mr Heferen : I think Mr O'Toole was the one who referred to risk. I think it was in the context of who bears the risk for the investment. That is not risk as in something might go wrong but the financial context. Normally, in the private market it is the shareholders who will take the risk on investment. In a situation where a government might step in to provide some assistance, there is the question of the right balance of risk—how much the government takes on. I think it was in that context that Mr O'Toole mentioned risk. Of course, risk goes across a range of things. What can be delivered over what period of time, what sort of reliability would the particular generation provide and the location of the generation. If it is firming in an area that doesn't need any firming, as opposed to firming in an area that needs firming, the risk tolerance is different. So it was really in that context.

Senator HANSON-YOUNG: Of course, underwriting usually does mean taking it on board, doesn't it?

Mr Heferen : Indeed.

Senator HANSON-YOUNG: It's implicit.

Mr Heferen : The ACCC was very clear that they felt that this was a area of the market that wasn't delivering for consumers, particularly large consumers. They thought it was appropriate that some of that risk be borne by the taxpayer. They tried to give a suggestion for a mechanism which they thought was the appropriate sharing of risk. Obviously, that's something that the government takes into account.

Senator HANSON-YOUNG: I will clarify from what Mr O'Toole said earlier. That level of financial risk underwriting, depending on that level and the mechanism used, would require legislation?

Mr Heferen : I think it depends on the mechanism.

Senator HANSON-YOUNG: To underwrite a financial risk, there would need to be an appropriation of public money, wouldn't there?

Mr Heferen : If in the terms of underwriting the underwriting was such that the probability of calling upon the contingent liability was close to zero, it might not. But then the question goes to the same question about which we might not have been as helpful as you hoped. It goes to the design of the program which is still under consideration.

Senator HANSON-YOUNG: Thank you, Chair.

CHAIR: I think we will now move to our next item, which is Snowy Hydro Limited.

Mr Pratt : So I may send my energy colleagues away?

CHAIR: I'd send them now while you can.