DEFENCE PORTFOLIO

In Attendance

Senator David Johnston, Minister for Defence

Department of Defence

Mr Dennis Richardson AO, Secretary

General David Hurley AC, DSC, Chief of the Defence Force

Outcome 1—The protection and advancement of Australia’s national interests through the provision of military capabilities and promotion of security and stability.

Program 1.1—Office of the Secretary and Chief of the Defence Force

Mr Brendan Sargeant, Chief Operating Officer

Mr Peter Baxter, Deputy Secretary Strategy

Mr Mark Cunliffe PSM, Head Defence Legal

Group Captain Chris Hanna, Acting Director General Australian Defence Force Legal Services

Mr Adrian D’Amico, Defence General Counsel

Mr Michael Lysewycz, Assistant Secretary Legal Services

Program 1.2—Navy Capabilities

Vice Admiral Ray Griggs AO CSC, RAN, Chief of Navy

Mr David Gould, CB, General Manager Submarines

Program 1.3—Army Capabilities

Lieutenant General David Morrison AO, Chief of Army

Major General Paul McLachlan, AM, CSC, Head Land Systems

Program 1.4—Air Force Capabilities

Air Marshall Geoff Brown AO, Chief of Air Force

Air Vice Marshall Kym Osley AM, CSC, Head Capability Transition

Air Vice Marshal Leigh Gordon, CSM, Head Aerospace Systems

Air Commodore Cath Roberts, Acting Program Manager New Air Combat Capability

Program 1.5—Intelligence Capabilities

Mr Steve Meekin, Deputy Secretary Intelligence and Security

Mr Frank Colley AM, CSC, Chief Security Officer, Defence Security Authority

Program 1.6—Chief Operating Officer—Defence Support and Reform

Mr Steve Grzeskowiak, Deputy Secretary Defence Support and Reform

Ms Roxanne Kelley, Head of Reform and Corporate Services

Mr Mark Jenkin, Head Defence Support Operations

Mr Michael Healy, Acting Head Infrastructure Division

Program 1.7—Chief Operating Officer—Chief Information Officer

Dr Peter Lawrence, Chief Information Officer

Ms Elizabeth Milne, Acting First Assistant Secretary ICT Development

Program 1.8—Chief Operating Officer—Defence People

Ms Carmel McGregor, Deputy Secretary Defence People

Ms Philippa Crome, First Assistant Secretary People Reform

Mr Richard Oliver, Head People Policy and Culture

Air Vice Marshal Tony Needham, Head People Capability

Mr Neville Tomkins, First Assistant Secretary, Defence People Solutions

Air Commodore Henrik Ehlers, Director General Cultural Reviews Response

Program 1.9—Defence Science and Technology (DSTO)

Dr Alex Zelinsky, Chief Defence Scientist

Mr Peter Lambert, Deputy Chief Defence Scientist Corporate

Program 1.10—Vice-Chief of the Defence Force

Air Commodore Andrew Elfverson, Director General Strategic Communications

Rear Admiral Trevor Jones AO, CSC, RAN, Acting Vice Chief of the Defence Force/Head Military Strategic Commitments

Rear Admiral Clint Thomas AM, CSC, RAN, Commander Joint Logistics

Rear Admiral Robyn Walker AM, RAN, Commander Joint Health Command

Major General Iain Spence CSC, RFD, Head Cadet, Reserve and Employer Support Division

Major General Fergus McLachlan AM, Head Joint Capability Coordination

Major General Simone Wilkie AM Commander Australian Defence College

Air Commodore John McGarry CSC, Director General Military Strategic Commitments

Air Commodore Alan Clements, Commandant Australian Defence Force Academy

Dr Alan Ryan, Executive Director Australian Civil-Military Centre

Captain Bryan Parker, RAN, Provost Marshal Australian Defence Force

Program 1.11—Joint Operations Command

Rear Admiral Trevor Jones AO, CSC, RAN, Acting Vice Chief of the Defence Force/Head Military Strategic Commitments

Program 1.12—Capability Development

Vice Admiral Peter Jones AO, DSC, RAN, Chief Capability Development Group

Program 1.13—Chief Finance Officer

Mr Phillip Prior, Chief Finance Officer

Mr Mike Gibson, First Assistant Secretary Resource and Assurance

Mr David Spouse, First Assistant Secretary Financial Services

Mr Patrick Hetherington, Assistant Secretary Financial Coordination

Program 1.14—Defence Force Superannuation Benefits

Ms Carmel McGregor, Deputy Secretary Defence People

Mr Phillip Prior, Chief Finance Officer

Ms Philippa Crome, First Assistant Secretary People Reform

Mr Richard Oliver, Head People Policy and Culture

Air Vice Marshal Tony Needham, Head People Capability

Mr Neville Tomkins, First Assistant Secretary, Defence People Solutions

Air Commodore Henrik Ehlers, Director General Cultural Reviews Response

Mr Phillip Prior, Chief Finance Officer

Mr Mike Gibson, First Assistant Secretary Resource and Assurance

Mr David Spouse, First Assistant Secretary Financial Services

Mr Patrick Hetherington, Assistant Secretary Financial Coordination

Program 1.15—Defence Force Superannuation Nominal Interest

Ms Carmel McGregor, Deputy Secretary Defence People

Mr Phillip Prior, Chief Finance Officer

Ms Philippa Crome, First Assistant Secretary People Reform

Mr Richard Oliver, Head People Policy and Culture

Air Vice Marshal Tony Needham, Head People Capability

Mr Neville Tomkins, First Assistant Secretary, Defence People Solutions

Air Commodore Henrik Ehlers, Director General Cultural Reviews Response

Mr Mike Gibson, First Assistant Secretary Resource and Assurance

Mr David Spouse, First Assistant Secretary Financial Services

Mr Patrick Hetherington, Assistant Secretary Financial Coordination

Program 1.16—Housing Assistance

Mr Steve Grzeskowiak, Deputy Secretary Defence Support and Reform

Mr Mark Jenkin, Head Defence Support Operations

Program 1.17—Other Administered

Outcome 2—The advancement of Australia’s strategic interests through the conduct of military operations and other tasks as directed by Government.

Program 2.1—Operations contributing to the Security of the immediate neighbourhood

General David Hurley AC, DSC, Chief of the Defence Force

Vice Admiral Ray Griggs AO CSC, RAN, Chief of Navy

Lieutenant General David Morrison AO, Chief of Army

Air Marshal Geoff Brown AO, Chief of Air Force

Rear Admiral Trevor Jones AO, CSC, RAN, Acting Vice Chief of the Defence Force/Head Military Strategic Commitments

Program 2.2—Operations supporting wider interests

General David Hurley AC, DSC, Chief of the Defence Force

Vice Admiral Ray Griggs AO CSC, RAN, Chief of Navy

Lieutenant General David Morrison AO, Chief of Army

Air Marshal Geoff Brown AO, Chief of Air Force

Rear Admiral Trevor Jones AO, CSC, RAN, Acting Vice Chief of the Defence Force/Head Military Strategic Commitments

Outcome 3—Support to the Australian community and civilian authorities as requested by Government.

Program 3.1—Contribution to National Support Tasks in Australia

General David Hurley AC, DSC, Chief of the Defence Force

Vice Admiral Ray Griggs AO CSC, RAN, Chief of Navy

Lieutenant General David Morrison AO, Chief of Army

Air Marshal Geoff Brown AO, Chief of Air Force

Rear Admiral Trevor Jones AO, CSC, RAN, Acting Vice Chief of the Defence Force/Head Military Strategic Commitments

Department of Defence—Defence Materiel Organisation

Mr Warren King, Chief Executive Officer, Defence Materiel Organisation

Mr Harry Dunstall, Deputy Chief Executive Officer/General Manager Commercial

Ms Shireane McKinnie PSM, General Manager Joint, Systems and Air

Air Vice Marshal Colin Thorne, AM, General Manager Land and Maritime

Mr David Gould, CB, General Manager Submarines

Air Commodore Cath Roberts, Acting Program Manager New Air Combat Capability

Rear Admiral Greg Sammut, CSC, RAN, Head Future Submarine Program

Air Vice Marshal Leigh Gordon, CSM, Head Aerospace Systems

Mr Michael Aylward, Head Electronic Systems

Rear Admiral Tony Dalton, RAN, Head Helicopter Systems

Rear Admiral Mark Purcell, RAN, Head Maritime Systems

Major General Paul McLachlan, AM, CSC, Head Land Systems

Mr Steve Wearn, Chief Finance Officer, Defence Materiel Organisation

Outcome 1—Contributing to the preparedness of the Australian Defence Organisation through acquisition and through-life support of military equipment and supplies.

Program 1.1—Management of Capability Acquisition

Mr Warren King, Chief Executive Officer, Defence Materiel Organisation

Vice Admiral Peter Jones AO, DSC, RAN, Chief Capability Development Group

Program 1.2—Management of Capability Sustainment

Mr Warren King, Chief Executive Officer, Defence Materiel Organisation

Vice Admiral Peter Jones AO, DSC, RAN, Chief Capability Development Group

Program 1.3—Provision of Policy Advice and Management Services

Mr Warren King, Chief Executive Officer, Defence Materiel Organisation

Vice Admiral Peter Jones AO, DSC, RAN, Chief Capability Development Group

Department of Veterans' Affairs

Mr Simon Lewis, PSM, Secretary

Mr Shane Carmody, Deputy President

Corporate and general matters

Mr Simon Lewis, PSM, Secretary

Mr Shane Carmody, Deputy President

Dr Graeme Killer, AO, Principal Medical Adviser

Mr Wayne Penniall, National Manager, Veterans and Veterans Families Counselling Service

Ms Carolyn Spiers, Assistant Secretary/Principal Legal Adviser, Legal Services, Assurance and Deregulation Branch

Ms Lisa Foreman, First Assistant Secretary, Rehabilitation and Support Division

Mr Neil Bayles, Assistant Secretary Case Escalation and MRCA Review

Mr Mark Harrigan, Assistant Secretary, Rehabilitation and Entitlements Policy Branch

Mr Richard Magor, Assistant Secretary, Income Support and Grants Branch

Mr John Sadeik, Assistant Secretary, Detemination Support and Reviews Branch

Ms Judy Daniel, First Assistant Secretary, Health and Community Services Division

Major General Dave Chalmers, AO, CSC, First Assistant Secretary, Client and Commemorations Division

Ms Joy Russo, Acting Assistant Secretary, Client Strategy & Defence Relations Branch

Ms Leonie Mack, Assistant Secretary, Anzac Centenary and Communications Branch

Mr Tim Evans, Assistant Secretary, Commemorations Branch

Brigadier Chris Appleton, CSC (Rtd), Director, Office of Australian War Graves

Ms Narelle Dotta, First Assistant Secretary, Corporate Division

Mr Graeme Rochow, Assistant Secretary/Chief Finance Officer, Resources Branch

Mr Roger Winzenberg, Assistant Secretary, People Services Branch

Mr Alex Gerrick, Assistant Secretary, Parliamentary and Governance Branch

Outcome 1—Maintain and enhance the financial wellbeing and self-sufficiency of eligible persons and their dependants through access to income support, compensation, and other support services, including advice and information about entitlements

Program 1.1—Veterans' income support and allowances

Program 1.2: Veterans' disability support.

Program 1.3: Assistance to Defence widow/ers and dependants.

Program 1.4: Assistance and other compensation for veterans and dependants.

Program 1.5: Veterans' children education scheme.

Program 1.6: Military rehabilitation and compensation acts—income support and compensation

Program 1.7: Adjustments to the military rehabilitation and compensation acts liability provisions—income support and compensation.

Mr Simon Lewis, PSM, Secretary

Mr Shane Carmody, Deputy President

Ms Lisa Foreman, First Assistant Secretary, Rehabilitation and Support Division

Mr Mark Harrigan, Assistant Secretary, Rehabilitation and Entitlements Policy Branch

Mr Richard Magor, Assistant Secretary, Income Support and Grants Branch

Mr Neil Bayles, Assistant Secretary Case Escalation and MRCA Review

Mr John Sadeik, Assistant Secretary, Detemination Support and Reviews Branch

Ms Judy Daniel, First Assistant Secretary, Health and Community Services Division

Mr John Fely, Assistant Secretary, Hospitals and Defence Home Services Branch

Major General Dave Chalmers, AO, CSC, First Assistant Secretary, Client and Commemorations Division

Ms Gayle Anderson, Assistant Secretary, Client Strategy and Defence Relations Branch

Ms Carolyn Spiers, Assistant Secretary/Principal Legal Adviser, Legal Services, Assurance and Deregulation Branch

Outcome 2—Maintain and enhance the physical wellbeing and quality of life of eligible persons and their dependents through health and other care services that promote early intervention, prevention and treatment, including advice and information about health service entitlements

Program 2.1—General medical consultations and services

Program 2.2: Veterans' hospital services.

Program 2.3: Veterans' pharmaceutical benefits.

Program 2.4: Veterans' community care and support.

Program 2.5: Veterans' counselling and other health services.

Program 2.6: Military rehabilitation and compensation acts—health and other care services.

Program 2.7: Adjustment to the military rehabilitation and compensation acts liability provisions—health other care services

Mr Simon Lewis, PSM, Secretary

Mr Shane Carmody, Deputy President

Dr Graeme Killer, AO, Principal Medical Adviser

Mr Wayne Penniall, National Manager, Veterans and Veterans Families Counselling Service

Ms Judy Daniel, First Assistant Secretary, Health and Community Services Division

Dr Stephanie Hodson, Psychology Adviser

Ms Veronica Hancock, Assistant Secretary, Mental and Social Health

Dr Christine McPaul, Assistant Secretary, Community and Aged Care Branch

Mr Will Hanham, Acting Assistant Secretary, Primary Health Care Branch

Mr John Fely, Assistant Secretary, Hospitals and Defence Home Services Branch

Ms Sandy Bell, Assistant Secretary, Transport, Research and Development Branch

Ms Lisa Foreman, First Assistant Secretary, Rehabilitation and Support Division

Mr Richard Magor, Assistant Secretary, Income Support and Grants Branch

Mr Neil Bayles, Case Escalation and MRCA Review Branch

Ms Carolyn Spiers, Assistant Secretary/Principal Legal Adviser, Legal Services, Assurance and Deregulation Branch

Outcome 3—Acknowledgement and commemoration of those who served Australia and its allies in wars, conflicts and peace operations though promoting recognition of service and sacrifice, preservation of Australia's wartime heritage, and official commemorations

Program Branch 3.1—War graves and commemorations

Program 3.2: Gallipoli related activities

Mr Simon Lewis, PSM, Secretary

Mr Shane Carmody, Deputy President

Major General Dave Chalmers, AO, CSC, First Assistant Secretary, Client and Commemorations Division

Mr Tim Evans, Assistant Secretary, Commemorations Branch

Ms Leonie Mack, Assistanct Secretary, Anzac Centenary and Communications Branch

Brigadier Chris Appleton, CSC (Rtd), Director, Office of Australian War Graves

Ms Carolyn Spiers, Assistant Secretary/Principal Legal Adviser, Legal Services, Assurance and Deregulation Branch

Australian War Memorial

Outcome 1—Australians remembering, interpreting and understanding the Australian experience of war and its enduring impact through maintaining and developing the national memorial, its collection and exhibition of historical material, commemorative ceremonies and research

Program 1.1: Commemorative ceremonies.

Program 1.2: National memorial and grounds.

Program 1.3: National collection.

Program 1.4: Exhibitions.

Program 1.5: Interpretive services.

Program 1.6: Promotion and community services.

Program 1.7: Research and information dissemination.

Program 1.8: Visitor services

Dr Brendan Nelson, Director

Ms Rhonda Adler, Assistant Director, Corporate Services

Ms Linda Ferguson, Assistant Director, Public Programs

Mr Tim Sullivan, Assistant Director, National Collection

Ms Leanne Patterson, Chief Finance Officer

Major General, Brian Dawson (Ret'd), Executive Manager, ANZAC Centenary Touring Exhibition

Committee met at 0 9 :04 .

CHAIR ( Senator Eggleston ): I declare open this meeting of the Senate Foreign Affairs, Defence and Trade Legislation Committee, I welcome Senator the Hon David Johnston, the Minister for Defence, General David Hurley AC, DSC, Chief of the Defence Force, Mr Dennis Richardson, the Departmental Secretary and Defence officers.

The committee has been advised that the Vice Chief of the Defence Force, Air Marshal Mark Binskin, is unable to appear at estimates due to unavoidable commitments overseas. He will be represented today by Rear Admiral Trevor Jones, as acting VCDF.

Today the committee will examine the additional estimates for the Defence portfolio in the following order. Firstly the Department of Defence and the Defence Materiel Organisation, followed this evening by the Department of Veterans' Affairs and the Australian War Memorial.

The committee has set Thursday, 24 April as the date by which answers to questions on notice are to be returned. The committee has also decided that senators should provide their written questions on notice to the secretariat by the close of business on 6 March 2014.

Under standing order 26, the committee must take all evidence in public session. This includes answers to questions on notice. Officers and senators are familiar with the rules of the Senate governing estimates hearings. If you need assistance the secretariat has copies of the rules.

I particularly draw the attention of witnesses to an order of the Senate of 13 May 2009, specifying the process by which a claim of public interest immunity should be raised, and which I now incorporate into Hansard. Copies of the document are available on witness' tables.

The extract read as follows—

Public interest immunity claims

That the Senate—

(a) notes that ministers and officers have continued to refuse to provide information to Senate committees without properly raising claims of public interest immunity as required by past resolutions of the Senate;

(b) reaffirms the principles of past resolutions of the Senate by this order, to provide ministers and officers with guidance as to the proper process for raising public interest immunity claims and to consolidate those past resolutions of the Senate;

(c) orders that the following operate as an order of continuing effect:

(1) If:

   (a) a Senate committee, or a senator in the course of proceedings of a committee, requests information or a document from a Commonwealth department or agency; and

   (b) an officer of the department or agency to whom the request is directed believes that it may not be in the public interest to disclose the information or document to the committee, the officer shall state to the committee the ground on which the officer believes that it may not be in the public interest to disclose the information or document to the committee, and specify the harm to the public interest that could result from the disclosure of the information or document.

(2) If, after receiving the officer’s statement under paragraph (1), the committee or the senator requests the officer to refer the question of the disclosure of the information or document to a responsible minister, the officer shall refer that question to the minister.

(3) If a minister, on a reference by an officer under paragraph (2), concludes that it would not be in the public interest to disclose the information or document to the committee, the minister shall provide to the committee a statement of the ground for that conclusion, specifying the harm to the public interest that could result from the disclosure of the information or document.

(4) A minister, in a statement under paragraph (3), shall indicate whether the harm to the public interest that could result from the disclosure of the information or document to the committee could result only from the publication of the information or document by the committee, or could result, equally or in part, from the disclosure of the information or document to the committee as in camera evidence.

(5) If, after considering a statement by a minister provided under paragraph (3), the committee concludes that the statement does not sufficiently justify the withholding of the information or document from the committee, the committee shall report the matter to the Senate.

(6) A decision by a committee not to report a matter to the Senate under paragraph (5) does not prevent a senator from raising the matter in the Senate in accordance with other procedures of the Senate.

(7) A statement that information or a document is not published, or is confidential, or consists of advice to, or internal deliberations of, government, in the absence of specification of the harm to the public interest that could result from the disclosure of the information or document, is not a statement that meets the requirements of paragraph (1) or (4).

(8) If a minister concludes that a statement under paragraph (3) should more appropriately be made by the head of an agency, by reason of the independence of that agency from ministerial direction or control, the minister shall inform the committee of that conclusion and the reason for that conclusion, and shall refer the matter to the head of the agency, who shall then be required to provide a statement in accordance with paragraph (3).

(d) requires the Procedure Committee to review the operation of this order and report to the Senate by 20 August 2009.

(13 May 2009 J.1941)

(Extract, Senate Standing Orders, pp 124-125)

I remind senators and witnesses that microphone remain live, unless I instruct otherwise—for example, at suspension or adjournment. The implication of that is to be careful about careless comments as they may appear in Hansard.

Minister, do you wish to make an opening statement?

Senator Johnston: I don't thank you Chair.

CHAIR: I now invite the Chief of the Defence Force to make an opening statement.

Gen. Hurley : Before I begin, I have been informed that Rear Admiral Clint Thomas, Commander Joint Logistics, will need to depart at about 12 o'clock today as he has an international commitment with visitors from overseas that was booked a few months back. Is it possible that if anyone has any questions on logistics related issues, for example, the defence logistics reform program, they could be done beforehand?

CHAIR: I am sure that will be noted by everyone.

Gen. Hurley : Last week Australia honoured one of our nation's finest soldiers, when the Governor-General awarded Corporal Cameron Baird the Victoria Cross for Australia, posthumously. Corporal Baird, from the 2nd Commando Regiment based at Sydney's Holsworthy Barracks, was killed by small-arms fire during an engagement with insurgents in the Khod Valley in southern Afghanistan on Saturday, 22 June 2013.

We mourned with Corporal Baird's family last year, and it was an honour to salute Corporal Cameron Baird VC, MG, and his family, on behalf of all those who serve and have served in the Australian Defence Force. His courage and extreme devotion to duty that day was of the highest order, and in keeping with the finest traditions of the Australian Army and the Australian Defence Force. Corporal Baird died with honour and valour, taking the fight to the enemy with an extraordinary brand of tenacious courage that inspired his men and continues to inspire members of the 2nd Commando Regiment today.

As a final tribute to Corporal Baird, the Australian facilities at Al Minhad Air Base, in the United Arab Emirates, will now be known as Camp Baird. Approximately 400 Australian personnel are based at Al Minhad supporting our commitments into the Middle East area of operation. Their role is to support the ADF's commitment in Afghanistan following the conclusion of Australia's mission in Uruzgan province, at the end of 2013.

In Uruzgan the Australian Defence Force achieved its objective to train the Afghan National Army, or the ANA. Working in partnership with the Afghans we helped degrade the insurgency, while our training and mentoring allowed the ANA 4th brigade and the Afghan national security forces to develop into a competent force that is capable of securing the province into the future. Together with our civilian partners, we have made a lasting contribution to the province and tangible improvements that have significantly enhanced the quality of life for those who live in Uruzgan.

Australia welcomed home about 1,000 personnel in time for Christmas in what was the first major draw-down of ADF personnel. In parallel, we also completed an enormous year-long redeployment effort to return to Australia the infrastructure and equipment accumulated over eight years in Uruzgan, and to remediate the bases previously occupied by Australian forces, including Multinational Base Tarin Kot. To give you some idea of the scale of the task, that meant transporting 630 tonnes of general cargo, including 1,300 shipping containers filled with almost 7,000 items of information technology and communications equipment alone. In addition, more than 6,000 pieces of infrastructure, fixed plant and equipment were removed from Uruzgan and either returned to Australia, gifted to the Afghan National Security Forces or disposed of in accordance with agreed guidelines.

The team responsible for Australia's redeployment did an outstanding job. The task was completed by the time the last Australian personnel left Uruzgan, on 15 December. Other nations are now looking to us to provide advice on how to get the job done efficiently and effectively.

The conclusion of our mission in Uruzgan does not mark the end of the ADF's contribution in Afghanistan. In support of our secondary objective, to develop a long-term relationship with the Afghan government and its armed forces, our focus has shifted from operations in Uruzgan towards a nationally oriented mission, in 2014. Up to 400 personnel will continue to provide training and support to the Afghan National Security Forces in Kabul and Kandahar. We will also continue to train, advise and assist our Afghan partners throughout the year as part of the broader NATO mission.

The largest contingent of ADF personnel is assigned to the combined United States/Australian 205 Coalition Advisory Team, where 74 officers and senior non-commissioned army officers are providing specialist training and advice in key areas. The focus on command, logistics, training, artillery, engineering, operational planning and information operations is designed to establish enduring capabilities the Afghan security forces can maintain into the future. Under the Coalition Advisory Team's guidance, the 205 Corp is showing continued improvement. The corp recently led the successful security operation across its entire area of responsibility in a deliberate effort to place pressure on insurgent networks in the lead-up to the presidential elections.

Concurrently, the Afghan National Army is increasing its indigenous training courses, reducing the reliance on coalition trainers. The 205 Corp is now delivering its own explosives hazard reduction course, with around 30 trainees undertaking the course each month.

Despite the Afghan National Security Forces marked improvement, and our change in posture, we should not underestimate the threat. Our advisors continue to operate in a high-threat environment and we must not be complacent about the risks they face.

The ADF's other major operational commitment is to Australia's border protection mission, Operation Resolute, and, through it, Operation Sovereign Borders. Last week, Mr Mike Pezzullo, the chief executive officer of Australian Customs and Border Protection, and I released the findings from the joint review into Australian vessels that entered Indonesian waters. The review found that Australian vessels inadvertently entered Indonesian waters on six occasions, between December 2013 and January 2014. The breaches were inadvertent in that each arose from incorrect calculation of the boundaries of Indonesian waters, rather than as a deliberate action or navigational error.

Furthermore, there was nothing in the strategic guidance provided for the operation that required, implied or suggested that a breach of Indonesian sovereignty would be acceptable. Mr Pezzullo and I have accepted the findings and have directed implementation of the recommendations. I have also directed the Chief of Joint Operations and the Chief of Navy to consider any individual lapses in professional conduct. Notwithstanding the error that occurred, the safety of life at sea is the Australian Navy's highest priority. Our Navy personnel have consistently demonstrated great compassion and courage, often at great risk to their own safety, and they are achieving their mission objectives.

In addition to our operational commitments, next month marks two years since the start of our cultural reform program known as Pathway to Change. And this time we have introduced a number of significant programs and reforms. In my view, standing up the Sexual Misconduct Prevention and Response Office, or SeMPRO, and introducing restricted reporting for incidences of sexual misconduct are two of the most important steps we have taken in our move towards a more victim oriented approach to managing sexual misconduct incidents. The Chief of Service Committee has taken responsibility for driving and monitoring progress on reform. We have set targets to improve the gender balance represented in courses at the Australian Defence College and we are also seeing increased diversity on our promotion boards. Combined, these factors give the services a greater pool of candidates to consider for promotion and provide more opportunities for women in our organisation. These efforts will be further strengthened by the measurable progress we have made in recruiting more women and our decisions to formalise flexible work arrangements.

As we move into the third year of cultural reform, the challenge will be to maintain the positive momentum. The senior Defence leaders and I have taken a strong and visible stance to set the boundaries and expectations that are necessary to effect change. While we acknowledge that deep, enduring reform takes time, we will not accept or excuse illegal, offensive or discriminatory behaviour in the ADF. As an organisation we must continue to work on reform initiatives that reinforce the values and behaviours we want for our Defence force.

Senators, this committee has historically shown great empathy and interest for the health and wellbeing of our defence personnel, particularly with regard to mental health care. Like you, I am committed to ensuring the welfare of our people. And, where mental health is concerned, that means engaging in a frank and open discussion about the issue. The ADF Theatre Project is one way we are having that conversation, not only with our own people but with the Australian public. The play The Long Way Home tells the story of the impact of operational service on Australian service men and women, the challenges they face and the sacrifices they and their families make. It is a very human story, and it is an important story to tell. I have the greatest admiration for the impressive men and women who have volunteered to take part in the production, and I urge you to encourage your constituents to support them and to see the show. I guarantee that they will leave with a greater understanding of the challenges their Defence force personnel face.

I would also like to take this opportunity to thank our Commander-in-Chief, Her Excellency the Honourable Quentin Bryce, for her unwavering support for the men and women who serve in the Australian Defence Force. The Governor-General has always shown genuine compassion for our military personnel and their families. I have witnessed this in her interactions with wounded personnel and the families of the fallen. On behalf of the ADF I wish Her Excellency well as she steps down from office, and I look forward to working with General Cosgrove in the future.

Finally, I would like to remark on yesterday's proceedings. I was surprised at the accusations made against Lieutenant General Angus Campbell. I am pleased that these accusations were withdrawn. But, unfortunately, once they are said, the shadow will linger. Lieutenant General Campbell has a reputation—in Canberra, more widely in Australia, and overseas—of integrity, intellect and studied impartiality. He is widely respected across Australia's political divide. Thank you.

Senator CONROY: Perhaps I could just respond to your opening statement. I just want to make it absolutely clear: I have no criticism whatsoever of service personnel carrying out government orders. But this government is ordering Australian soldiers into dangerous situations in a civilian operation. There are continued reports in the media that captains are complaining that they are being placed too close to the border. Captains' heads are now on the line. This is a civilian operation, and this government is allowing a stain to hang over service personnel by refusing to allow a full accounting and rebuttal of accusations that are being made against service personnel.

The majority of Australians do not support the secrecy with which this operation is being ordered to be conducted by the government. Most importantly of all, no Australian wants to see the politicisation of our armed services. And this government is continuing to run this operation and hide behind the military. It should give a full accounting to this Senate committee and to other Senate committees and the Parliament of Australia and the Australian public. With the tragic circumstances arising on Manus Island as a result of the government's actions, there needs to be a full account.

So, I just want to repeat: I have no criticism whatsoever of service personnel carrying out the government's orders. But the Australian public are entitled to ask questions. They are entitled to answers about what is going on. And while the government continues to refuse to allow service personnel to defend themselves, we are going to continue to have a very difficult set of circumstances. Having said that, I would like to ask some questions about our Afghanistan transition. Could you provide an update—and I know you referred to it in your opening statement—on the successful transition to draw down troops from Afghanistan?

Gen. Hurley : If we just step back into the history of it, in concert with the commander of ISAF and his planning for the transition from a NATO led force to the Afghan government taking responsibility for its own security in Afghanistan, a four-year plan was put into place, part of which was the planned closure of Tarin Kot base at the end of last year. The implications for us were then that we could obviously no longer conduct operations in Uruzgan province without a base there. That was well understood when that plan was put into place. So we commenced a process of staged and well managed reduction of our presence and footprint, equipment holdings and so forth over the last year, with the intention of having closed the base down at Karin Tot and handed it over to the Afghan National Security Forces by about mid-December, and we achieved that.

I gave some indication of the statistics, of the nature of that move. It was I think one of the largest logistics operations we in the ADF have conducted since our extraction from Vietnam, an enormous task moving equipment, containers, vehicles and so forth from Afghanistan by both road and air back via ports through Karachi and Dubai and eventually back to Australia. The clean-up and restoration of all that sort of kit back in Australia is by no means complete, but it is underway.

In parallel to that, as we drew down the force we needed to change our footprint and the way we were conducting operations in Uruzgan province with the 4th Brigade, and that saw us evolve over a number of years from leading operations to partnering operations to mentoring command teams and doing train, advise assist—changing the footprint and changing the nature of the interaction over that period, to the point, really by the middle of last year, that the 4th Brigade on many levels could conduct operations independently, and we would be there to coordinate support for them. And then they have successfully taken over the operation. As we closed down bases we were very mindful of the footprint we would leave behind, both environmentally and militarily. Looking after the ANA was one aspect of that. I think we have done quite well in terms of remediation of campsites, closing down ranges and meeting our commitments under international agreements in terms of remnants of war and explosive ordinance and so forth. So we have been quite detailed in the way we have gone through that process.

As we pulled out of Uruzgan we were repositioning ourselves for 2014. I gave one example of what we are doing in terms of training, advising and assisting the 205th Corps, which is based in Kandahar and responsible for Uruzgan, Kandahar and Zabul and Helmand provinces. We continue to work with them. A senior colonel leads that force, and we work with some allies. The other major task that we took up late last year, and we will continue into this year, is to provide instructors and force protection teams at the ANA officer academy, which is located on the western side of Kabul, which is really one of the keys to the future success of the Afghan National Army in particular to breed leaders who have the appropriate modern professional understanding and can lead their men and women effectively. We are also continuing to provide some Heron UAVs out of Kandahar to provide assistance to Regional Command South during the presidential election. We will extract those in the middle of the year. And we continue to provide personnel who assist at headquarters ISAF, headquarters IJC and headquarters RC South. That is our footprint at the present time—around about 400 people. And, depending on when a BSA is signed—the bilateral security agreement between the US and Afghanistan and then the SOFA—the status-of-forces agreement between NATO and the Afghan government—and the final plan for what happens past December 2014 is settled, we can then determine a recommendation to government for what might proceed following December this year.

Senator CONROY: That seems very thorough. Are you happy with the planning and preparation that has been put into this part of the operation?

Gen. Hurley : I think we have positioned ourselves to be able to provide sound advice to government as to what steps they might consider beyond the end of this year, bearing in mind that 31 December this year marks the end of the current ISAF or NATO operation. So, a brand-new operation starts from 1 January next year, should that be the eventual operation. So in terms of completing our mission in Uruzgan province and positioning ourselves to continue to support the development of the Afghan National Army and some of its broader capabilities this year—which is very important, because there is still work to be done until the end of the year, and having just created a menu of tasks we can complete, and government can decide what level of commitment it wants to make in the future—I think we are in a reasonably balanced position running towards the end of the year.

Senator CONROY: What lessons have we learned from this draw-down operation? I think you have indicated some, but what are we sharing with our coalition partners?

Gen. Hurley : One is to start planning early, which is always a key to do these things. We put a team in very early to do a very thorough stocktake of what we had. Importantly, that team stood outside of the normal chain of command. So, it was not involved in day-to-day operations; it was able to stand aside and do that specific task without the stresses and strains that come with trying to operate an operation of that size. I think we did a very thorough review of the economics of the move—the balance between efficiency and effectiveness: how to get stuff out in a timely way but also to reduce cost as much as we possibly could. Examples of that were our negotiations with the Afghan government about handing over facilities. We were quite particular about what we thought would be the right quality to hand over and what would not be. But in doing that we managed to reduce the cost, for example—the distraction—by about $20-odd million by leaving buildings and so forth for them. I think the level of interaction we put in with all of the headquarters, and all the stakeholders investing into that heavily, was very important to make sure that they understood exactly what we were trying to do, so that we could leverage off other people's capabilities or take opportunities that existed.

Without beating our chests on this, I think it is a good exemplar for how to conduct an extraction. The US Chief of Staff of the Army, General Odierno, has asked for ADF assistance—for example—to extract the 10th Mountain Division out of Afghanistan. So we have some high-level and lower-level lessons that we can pass on.

Senator CONROY: I want to just make sure that anyone listening, watching or reading the transcript in the future is absolutely clear on this. Do Australian service personnel continue to participate in military offensive activities?

Gen. Hurley : No, we do not.

Senator CONROY: So, no, absolutely not?

Gen. Hurley : Absolutely not.

Senator CONROY: Regarding the opium industry in Afghanistan, are Australians participating to counter illegal narcotics activities?

Gen. Hurley : No, not now.

Senator CONROY: Regarding Afghanistan regional politics and influence, are Australians participating in anti-corruption activities?

Gen. Hurley : Not ADF personnel. It could be in the wider community.

Senator CONROY: It has been reported that during the Afghanistan transition, there is danger of great violence and instability in that country. Given that the minister has pledged that Australia will contribute to the post-2014 ISAF-led train, advise and assist mission, what measures are being taken to ensure that Australian forces are not put at additional risk during this transition period?

Gen. Hurley : I alluded to it in my opening comment. I want to be quite sure that Australian people recognise and understand that although we are not out on the frontline any more, there are risks—for example—still from insider attack that could occur in the institutions we are working with. In terms of the risk mitigation of that, we have provided quite robust force protection elements—such as infantry personnel and so forth that work around and with our people to provide oversight and security. So within the immediate environment we are operating in, we have taken steps to mitigate the risks as far as we possibly can for the protection of our personnel there.

In the broader sense, one would expect this year—particularly with the prospects of maybe two presidential elections, with the first one being inconclusive and a run-off by the middle of the year, and then a transition of government—that the Taliban will step up its operations to try to disrupt that process. There is no doubt that there will be and continue to be significant attacks by the Taliban this year. We have seen evidence of that over the last couple of days, even in Tarinkot. That, however, does not mean the imminent collapse of the Afghan government, nor the collapse of the Afghan National Security Forces.

I think in a survey that was put out, which I saw in the news this morning, said that 80 per cent of the Afghan population believe that their government has control and have confidence in the capacity of their army and their policy. There will continue to be a struggle. It will continue to be dangerous. We will continue to be very watchful about the risk to our people and take the appropriate measures.

Could I just clarify, you did ask about combat operations. I responded by saying that none of our people are in direct combat operations, however our Heron detachment—the UAVs, with their sensor pack—does support the conduct of operations in southern Afghanistan.

Senator CONROY: I think you alluded to it earlier, but are you confident that a status of forces agreement will be in place soon to provide adequate cover for our personnel?

Gen. Hurley : We are all working with NATO to have that status of forces agreement signed. It is, however, dependent on the bilateral security agreement being signed between the US and Afghanistan, so there is a sequence to flow through there. When the Afghanistan President decides that it is time to sign the BSA, we will then be able to flow on. I think, however, that the commander has positioned and planned the outflow of ISAF forces this year to reduce as much as possible the pressure on political leadership from the military side of the house, saying, 'You must make a decision by such and such a time.' He is working hard to take that pressure off the decision makers and signers on this.

Senator CONROY: What physical security measures will be in place for personnel remaining in Afghanistan?

Gen. Hurley : I will take that on notice give you more detail, but suffice it to say that we will apply the force protection measures that ISAF will have dictated. We will have looked at those ourselves and with colleagues from other countries—for example, at the Afghan national academy we work with the Brits, Kiwis, Danes and Norwegians. We will separate ourselves physically in terms of our domestic arrangements. When our instructors go out to do activities, they will be supported by armed combat troops from Australia or Great Britain. There will be protected vehicle movement and all those norms you would expect to see in a physical sense. Then obviously around that there will be an intelligence effort to be as alert as possible to any threats that might emerge.

Senator CONROY: I think you mentioned this earlier. In relation to participation in the officer training academy in Kabul, are topics like the laws of armed conflicts, human rights, ethics and the place for a military in a democracy in the curriculum?

Gen. Hurley : One of the particular emphases of our training is exactly those sorts of fields to make sure that we have a competent and professional army that is out doing business on behalf of the government.

Senator CONROY: Are you able to tell us what support we are providing to the upcoming elections in April? Are we confident they will be successful? That is probably a bigger question than you are solely responsible for. But, in your judgement—

Gen. Hurley : In terms of support, as you can see by the nature of the physical presence we have, it would have little influence on the direct conduct of elections. The Heron UAVs will provide support for ground troops and so forth who are working to secure the elections. All the indicators at the moment are that the political process—this is comment rather than expertise, I dare say—of refining down to likely candidates and so forth seems to be going well. The outflow of election material to the polling process and stations appears to be going well. There will be some contested space. Whether they get 100 per cent is a moot point. The development of the physical security plan under the ANA seems to be rolling out well. So there are indicators that they will get through it, and it will be a judgement of the international community whether or not it is a successful election.

Senator McEWEN: When we were talking about transition from Afghanistan at the last Senate estimates, I asked some questions about resettlement of Afghani at-risk locally engaged employees. Is anybody able to tell me whether the number of those people applying for resettlement in Australia or elsewhere have increased or are likely to increase because of the forthcoming election? How many has Australia assisted to resettle?

Mr Baxter : As you know, in December 2012 the then government announced a visa policy to offer resettlement to Australia for eligible locally engaged Afghan employees. The policy is aimed at employees assessed by their employment with the Australian government as being at significant risk of harm due to the support they have provided. There have been a number of applications. We do not provide details of the number and type of those applications or the work that the Afghan employees are undertaking, or have undertaken, for the Australian government, due to security reasons.

Senator McEWEN: I understand that. Is it likely that the numbers applying for resettlement assistance will increase?

Mr Baxter : Applications are continuing to be made. Every application is considered on a case-by-case basis. Once the responsible minister—whether it be the Minister for Defence, the Minister for Foreign Affairs or other ministers—has made a determination that the locally engaged employee is eligible under the provisions of the scheme, they then apply for a normal refugee and humanitarian visa. Those applications are then assessed by the Department of Immigration and Border Protection in accordance with their normal procedures. That work is ongoing, so once they pass through the first element of the process, which is ministerial agreement that they are eligible, they go through the normal immigration processes. While we do not, as I said earlier, give out numbers for security reasons, the total number of locally engaged Afghan employees and their families resettled to Australia under the policy is likely to be in the hundreds.

Senator McEWEN: Do they only get resettled to Australia, or do we assist people to resettle elsewhere, if that is their choice?

Mr Baxter : My understanding is only to Australia. It is under the Australian visa policy that is administered by the department of immigration.

Senator McEWEN: There has to be an agreement of those two ministers, Defence and Immigration?

Mr Baxter : No, employees who apply for the scheme are assessed by the relevant department or agency and recommendation is made to the minister as to whether their employment was such that they may be at risk of harm as a result of that employment. Once the minister has certified that the minister agrees with that assessment or not, if they are considered eligible then they go forward through the normal visa application process.

Senator McEWEN: Have any applications been refused, either at the ministerial level or subsequently?

Mr Baxter : Yes. There have been. As I said, every application is considered on a case-by-case basis. Some people have been found to be eligible as a result of their employment with the Australian government in Afghanistan, and some have not. Then, once they apply for a visa, they are subject to the same range of health, character and security checks as any other person applying under that classification of visa.

Senator McEWEN: Do you know what percentage of the number of applications have been refused?

Mr Baxter : Again, we do not put out detailed information on those, but I can confirm that there have been some refusals. Some applications have been found not to be eligible.

Senator McEWEN: Are there more accepted than refused?

Mr Baxter : Yes.

CHAIR: I have a question on the budget. I just wonder: what is the impact of cuts to the defence budget under the previous government over the current forward estimates? Is this going to have a strong or a weak impact? Perhaps you could provide us with some details of its effect on operations.

Mr Richardson : There was lots of moving around in the budget over the last few years, but we have made adjustments to that going forward. We have juggled around different programs and the like, but we are managing.

CHAIR: What does 'managing' imply? Does that mean you are band-aiding or operating on a much-reduced capacity?

Mr Richardson : Our job as a department is to manage within the decision-making framework provided by government.

CHAIR: Does it affect your operational efficiency and capacity?

Mr Richardson : Not our operational efficiency. We have taken great care to ensure that the operational effectiveness of the ADF has not been affected by the budgetary measures.

CHAIR: It said that the GDP spend on defence now is down to its lowest level since 1938. I wonder if the constant and repeated cuts to Defence under the previous government have left Defence in a fairly weak state.

Mr Richardson : We, like all departments in Canberra, would like more, but that is the nature of departments—they always want more. It is the prerogative of government to make the decisions about what we get, and we are paid to manage within the framework of what we get. Defence spending as a percentage of GDP is lower than what we would like, but those decisions have been taken by a democratically elected government, and our job is to get on with the work.

CHAIR: It is said that under Labor there were significant budget cuts that did not come with commensurate decisions to reduce capacity and, as a result, we have an unaffordable DCP. It has been said that if Defence were a private organisation it would be trading insolvently. Would you care to comment on that remark?

Mr Richardson : I am not an expert on the question of insolvency and private companies, so I cannot comment on that side of it. It is simply a statement of fact and on the public record that the decisions taken in 2009 were predicated on the defence budget growing by three per cent real out to 2018-19, and then subsequently 2.3 per cent real out to 2028-29. It is a matter for the public record that, within 18 months of that decision being taken, the defence budget was subsequently reduced. Since then moneys have been moved to the right and also further reduced. In that sense the DCP and the capability assumptions embedded in the 2009 white paper are not currently affordable within the budget framework that we currently have.

CHAIR: It has been said that cuts and uncertainties around the defence budget and frequent delays have led to the Australian defence industry slashing more than 10 per cent from its workforce, with a significant risk of future cuts as a result of troughs in the flow-through of work. That is a significant reduction in the defence workforce available to support the Defence forces in this country. Do you feel that should be a matter of great concern?

Mr Richardson : That is a matter for others to express their views on; that is not a matter for me.

Senator FAWCETT: Mr Richardson, I wanted to follow up on a couple of those questions around the moving budgetary guidelines and the impact. You have spoken to the chair about its impact on the DCP. My understanding though is that it will have had a significant impact on your internal administration, sustainment, training, personnel, procedures et cetera. You made the comment in your speech to ASPI last year that the goalposts had not only been moved; they had been cut down and used for firewood. You mentioned the impact that had on the defence reform program. I think at last estimates your department identified some $16 billion worth of deferred measures. Could you tell the committee the costs associated with the changes in contracts and in in personnel posting plans and the costs associated with deferring maintenance?

Mr Richardson : In precise details, I cannot say. What I can say is as follows: I did make those comments about the goalposts not only being moved but being chopped down and used for firewood.

Senator FAWCETT: Very good and graphic comments they were, too.

Mr Richardson : And that was a statement of fact, as far as I was concerned. That referred to the assumptions underpinning the 2009 white paper and the assumptions underpinning the Defence reform program, which was announced at the same time. That reform program was predicated on an assumption of the Defence budget, as said, growing by three per cent real out to 2018-19, then growing by 2.2 per cent real out to 2028-29. Subsequently, in fact, I think it was more than $16 million; it was somewhere between $17 million and $20 million, depending upon how you calculate it, of moneys that were either taken from the Defence budget or moved to the right.

Senator FAWCETT: Can you just confirm that that was 'billion' not 'million'?

Mr Richardson : Billion, sorry—billion, yes. We have sought to minimise the impact of that on the ADF's operational capability; however, it has meant that maintenance at certain bases has been deferred significantly. That does put pressure on the framework within which the ADF works at those bases. It has put pressure on our ICT resources—I think that is important because ICT in Defence is not in great shape, and it is something that I have been concerned about since I took up the job—and the capacity to invest in those resources as we ought to be doing, because ICT resources are an important enabler across the enterprise both for the ADF and for the rest of the defence organisation that supports the ADF. Without that investment, we are going to pay for that down the track. So maintenance and ICT have been two areas that have been affected.

We have sought where possible to reduce staffing costs. We have pressed down hard on the civilian side. However, to put that in context, about 75 per cent of total personnel costs are ADF; about 25 per cent of personnel costs are Defence civilian. When you take out those civilians working in the intelligence space—who I think should be seen as more than simply enablers; they are part of the front end of the Defence enterprise—and when you take out others working in critical capability areas, it has meant that that downward pressure has been felt in limited areas. Again it impacts in the maintenance space, it impacts in the ICT space, and it impacts in other groups such as the Defence People Group.

That is the way we have tried to manage it, and it is against that backdrop that we have very much welcomed the decision to have a review of the department. I think that is a good thing. Where we can take out unnecessary costs within the Defence enterprise, I think we should. Where we can move expenditure towards the ADF operational capability, then that is a good thing. And I very much hope that the review that we will have over the next 12 months will help us move further in that direction.

Senator FAWCETT: Thank you for your very comprehensive answer. That is probably the first time over a number of estimates that we have had a clear indication from Defence that your enabling elements are, indeed, under stress because of funding limitations. As you say, the department quite correctly responds to the decisions of an elected government. But it is important for this committee to have an insight into what those stresses are, because it is very easy, in the political and media space, to focus on operations, capital equipment and deferred procurements. But that is a bit like focusing on the Olympic team while you strip the AIS of funding. We will not have a future Olympic team if we do not keep the enablers funded.

This committee, in its oversight role, needs to have a clear understanding of where the hurt is so that we can understand where we need to be working—with whichever government is elected—to make sure adequate funding is going to those enabling elements. So thank you for those clear comments. Can I encourage you to continue providing the committee, in future estimates, with clear understanding of where those pressure points are within the department on the enabling elements. Could you talk about the importance to Defence of stable strategic planning. How many strategic guidance documents have you had, in terms of white papers, reform initiatives et cetera, in the past five to six years, given that a normal guidance period is around five years?

Mr Richardson : I am not sure in total, but we had a Defence white paper launched by Minister Stephen Smith in May last year. The previous white paper had been in 2009, I think. The government is committed to another white paper by March next year. There will, no doubt, be a range of other documents sitting below that.

Mr Sargeant : We have built quite a strong strategic management framework within Defence. It starts with white papers, which establish broad policy settings and strategic direction. Out of white papers come a range of subsidiary plans and sets of guidance, including capability plans, the Defence corporate plan and the Defence annual plan. In a sense, what they seek to do is harmonise the relationship between strategic direction, as established by policy, how the department and the ADF implements that direction, and then, within that, a process of continuous performance management and review. We have a corporate plan which is built against policy frameworks established by white paper. That is a five-year plan. We update it annually, but out of that corporate plan we establish an annual planning process.

Senator FAWCETT: The point of my question is that I am trying to get an understanding of the dollar cost in terms of full-time equivalent manpower effort every time there is a strategic direction change from the executive that flows down through all those plans. What benefit would the department reap if there were more stability from the government in terms of its strategic planning?

Mr Richardson : There is no question that stability, up to a certain point, is a good thing in being able to carry through implementation and maintain a steady and deliberate direction. Sometimes I think Defence has suffered from regular changes of direction, to the point where the enterprise has not been quite sure of the way it is going around the circle, and it has sometimes wobbled along the corridors a bit like a drunken sailor—or, I should say, a drunken civilian. In principle stability would be a good thing but, if you leave things 'stable' for too long, an enterprise can also become complacent and self-satisfied. Getting the balance right between steadiness and a little bit of a burr under the saddle is the trick.

Senator FAWCETT: Can I just clarify that from the department's perspective an absorbed measure, where you have to take out of funding that you have already allocated to maintenance, training or some other activity, a new decision by government, is as bad as if not worse than a budget cut in terms of disruption to the cascading set of plans that you already have in place.

Mr Richardson : It can become tricky. I doubt that there would have been a Defence budget in the last 10 years in which some measure has not had to be absorbed which we were not aware of six months before. The enterprise is pretty good; Phillip Prior and his team have become world leaders in juggling the different savings measures to be 'absorbed'.

Senator CONROY: I want to follow up on some of the answers you gave earlier. You may have seen a recent presentation from Dr Mark Thomson from ASPI. It revealed that there were cuts in defence spending over the forward estimates. I just want to confirm the net change to defence spending over the next four years as a result of the rephasing of the defence budget. Could you tell me what that is?

Mr Prior : I am not entirely sure of what you are referring to, but I have the portfolio additional estimates document in front of me. Page 15 of that document does detail the budget measures and other budget adjustments. If that table is the one that you are referring to, I am happy to take you through that.

Senator CONROY: Mr Thomson was referring to the portfolio additional estimate placements, thank you.

Mr Prior : That is correct. It would be on page 15.

Senator CONROY: He pointed out that $1.1 billion had been rephased from 2015-16 and 2016-17.

Mr Prior : Correct.

Senator CONROY: It had been allocated in the following way: in 2013-14 the budget increased by $360 million.

Mr Prior : Correct.

Senator CONROY: In 2014-15 the budget increased by $304 million.

Mr Prior : Correct.

Senator CONROY: In 2015-16, the budget decreased by $89 million.

Mr Prior : Correct.

Senator CONROY: In 2016-17, the budget decreased by $1 billion.

Mr Prior : Correct.

Senator CONROY: That gave a total reduction of $425 million across the forward estimates. Do those numbers add up?

Mr Prior : Those numbers are correct and they are displayed in the table.

Senator CONROY: They are across the forward estimates for the next four years.

Mr Prior : From 2013-14 to 2016-17. That is correct.

Senator CONROY: There was a $425 million reduction?

Mr Prior : That is correct. However, just to be clear in relation to that table, that was the adjustment done in the August economic update. That has been displayed in this document because this is the first document that has been published. The normal course of budget disclosure is that any adjustments which have been made between the publication of the PBS and the additional estimates document are displayed. So that refers back to an August time frame.

Senator CONROY: An earlier decision?

Mr Prior : Correct.

Senator CONROY: I just wanted to clarify that that was my accurate reading of the document.

Mr Prior : Yes, that was right.

Senator CONROY: I want to talk about some recent publicity around the work of HMAS Melbourne. I think it was reported as intercepting $1 billion, in drugs, in a 48-hour period. The story states that HMAS Melbourne used its embarked S70B2 Seahawk helicopter to locate the suspicious vessel operating off Zanzibar, Tanzania. There were also photos of the Navy boarding party approaching the suspect ship, for the media to use on the website. The story was published on 10 February which is, I believe, three days after the bust was made. I also note a story in News Limited papers on the weekend gone by.

The story provides a huge amount of operational detail about Navy personnel on HMAS Melbourne in antidrug-smuggling and antipiracy operations. The story includes quotes from chief petty officer Kieran Davis, and he describes in detail the processes followed by Australian personnel. He says:

The key indicator is whether or not the boat smells of fish. If it doesn’t smell and its nets are unused then it is suspect …

And further:

If there is fish in the hold and the crew are obviously fishermen then it is usually okay.

The story also mentions that the crew of the boats who are found to be carrying narcotics are not arrested and are allowed to go on their way once the drugs are removed.

I just want to congratulate those involved. I wonder whether there is any more information that you could share with us?

Gen. Hurley : It is a bit of an open question. What information are you seeking?

Senator CONROY: I think that is probably fair. I think that is a fair answer. There is an amazing amount of operational information about how we conducted our operation. It should be noted that HMAS Melbourne and her crew have been carrying out their mission incredibly effectively. I just wonder about the policy that the Navy have in terms of publicising their successes.

Gen. Hurley : The Navy has been operating in those waters for 21 years. I think the combination of frigates, helicopters, RHIBs and how we go about searching vessels is well and truly known in the waters of the Middle East.

Senator CONROY: As I said, I was surprised by the detail involved in this story. I thought it was great to read. It was very frank. I just want to make sure you are completely comfortable providing the public with that sort of detailed operational information about HMAS Melbourne.

Gen. Hurley : Yes, I am.

Senator CONROY: You are not worried that providing that level of detail would perhaps tip off or give advantage to drug smugglers and pirates in the Gulf of Aden?

Gen. Hurley : We have been there for 21 years doing this. They know us. And they know how the vessels in that region operate.

Senator CONROY: I want to follow up on some questions that were asked at the last estimates. Senator Ludwig asked question No. 57 on notice. It seems from the answer that Defence has ceased publishing hot issues briefs without seeking approval from the minister to do so. Is it common practice for Defence to change standing policies without ministerial approval?

Mr Richardson : First of all, quite clearly, high-level policy is not changed without reference to a minister. Indeed, it is the minister in government who makes 'policy' decisions. I think this would be considered more of an administrative matter, but I would need to take on notice precisely who was or was not consulted in making that decision.

Senator CONROY: Why was the production of the hot issues brief stopped?

Mr Richardson : I would need to take that on notice.

Senator CONROY: I think you indicated you will take on notice who made the decision to cease the publication of the Hot Issues briefs.

Mr Richardson : Will do.

Senator CONROY: I understand the production of Hot Issues briefs ceased on 7 September last year, over five months ago.

Mr Richardson : I am talking in theory here—I need to take it on notice—but I would simply note that 7 September last year was the date of the last election, from memory, which means the previous government still would have been the decision maker.

Senator CONROY: In caretaker mode.

Mr Richardson : In caretaker mode. But, as said, I would need to take it on notice.

Senator CONROY: As I was saying, it has been nearly five months. Has the minister been briefed about this issue yet?

Mr Richardson : I am advised no.

Senator CONROY: Minister, are you comfortable for the Hot Issues briefs to return to the website?

Senator Johnston: I have not discussed it with the senior officials. It is not a matter that has caused me any concern to this point.

Senator CONROY: I am sure you read them in the past. Did you think it was a useful piece of information?

Senator Johnston: I have not missed them because my contact with senior officials has been on such a regular basis.

Senator CONROY: It was an important transparency measure. Do you support increased transparency? Will you move to reinstate the Hot Issues briefs?

Senator Johnston: I very much support transparency. The Hot Issues briefs has not been a matter at the forefront of my mind. Trying to find money to keep the show going has been the principal concern that I have had.

Senator CONROY: Is that a yes or a no?

Senator Johnston: It has not worried me. It is not a matter that has occupied any of my time because it is a peripheral issue to the main game.

Senator CONROY: I appreciate it has not occupied any of your time. You have many issues to get across as a new minister; I fully understand that. I am simply asking: would you be comfortable if the Hot Issues briefs resumed?

Senator Johnston: I have not formed an opinion. I have not missed them. They probably cost money and, if they cost money and I have not missed them, I probably do not want them.

Senator CONROY: I will take that as a no, then.

Senator Johnston: Take it as a no.

Senator CONROY: I would like to draw your attention to the conclusions made by Colonel Jason Logue in his paper Herding cats, a paper on the ADF's media embedding program in Afghanistan. It finds:

The program has done much to humanise what was increasingly regarded by elements of the public as a clinical and sometimes detached way of waging war. Media embedding, correctly implemented, offers an opportunity for the ADF to appropriately manage the principles of communication by building both credibility and trust with the Australian public.

The paper also concludes:

Key to further enhancing the program is the philosophical shift required to ensure that the program supports 'facilitated access' rather than focusing on increasingly difficult to sustain 'control' measures.

Do you think that the philosophical shift which Colonel Logue recommends in this paper is taking place within defence with its general approach to media engagement? I am happy for anybody at the table to respond.

Mr Richardson : I would not be that bold.

Senator CONROY: You want someone else to answer or you would not be that bold to—

Mr Richardson : No, I would not be that bold to say that that is reflected in the totality of defence's relationship with the media. It will vary depending upon issue. It will vary depending upon a whole variety of circumstances. In one set of circumstances, you may give the media access to more information than in another area, depending upon the operational environment and depending upon the framework within which you are working. There are a lot of variables there. I think it would be difficult to apply a single principle consistently and in precisely the same way in all operational circumstances.

Gen. Hurley : I would add that there will always be tension between the level of transparency the media would like to achieve on their interaction with the military while on operations and our need to protect information.

Senator CONROY: In circumstances where you are engaged in operations and you are arguing very strongly that information should be withheld, does it cause frustration when information turns up in newspapers—allegations or claims? I am talking about a broad parameter of your operations. Is that something that causes you frustration?

Gen. Hurley : The frustration varies. If it is about operational information that is protecting my troops and the people on operations, I would be livid. If it is people's particular views about issues which come from a perspective, then we have to deal with it.

Senator CONROY: Is it a difficult situation when you make it clear that you cannot comment and detailed information about activities appears in the media? Does that place you in a difficult position?

Gen. Hurley : It depends what that information is.

Senator CONROY: If it is about the very information you said publicly you cannot reveal and then operational descriptions and various claims turn up in newspapers, does that make it difficult?

Gen. Hurley : Again, if it places the successful completion of the operation at risk or the people performing the operation, I would be very frustrated.

Senator CONROY: I am sure you would. What are you able to do in that circumstance? I know governments order leak inquiries, but what options have you got in those circumstances?

Gen. Hurley : Very limited. Unless I can find the document or the source, I doubt that I have many options.

Senator CONROY: Are you able to call in the AFP as governments occasionally do?

Gen. Hurley : Yes, we do.

Mr Richardson : Could I add that this is not an issue unique to Defence. This is not an issue unique to the ADF.

Senator CONROY: No, I was not suggesting it was.

Mr Richardson : I was previously head of ASIO and all these elements come into play in the intelligence community. It is not uncommon, as you know, to be in situations where you have information in the media that you prefer not to be there but you do not have control over it. Sometimes you will have claims that you know to be wrong, but for a whole variety of reasons it is best not to say anything. At other times you can correct. It depends upon a whole set of variables.

Senator CONROY: I absolutely understand. It happens in more than just Defence circles. You and I lived through some circumstances not that long ago, Mr Richardson. Just to clarify, have you in recent memory called in the police over any matter?

Gen. Hurley : I will take it on notice. I think there was one in the last couple of months, but I cannot remember all the detail, frankly.

Senator CONROY: At a recent—possibly your first—press conference, on 7 February, Minister, you stated repeatedly that you are not responsible for Navy personnel involved in Operation Sovereign Borders. Could you confirm that position?

Senator Johnston: Navy personnel in Sovereign Borders are under the direct command of the commander of border protection, and operations are dictated by that commander.

Senator CONROY: I refer to question on notice No. 124 in which I asked about the health and safety of Navy personnel involved in these operations—the risks, the management of those risks, mental health concerns and whether or not there have been any incidents. The response I received said that these questions should be referred to the Joint Agency Task Force. Minister, is it your position that you have no responsibility for the health and safety of ADF personnel?

Senator Johnston: No. I certainly have responsibilities more broadly, but the direct responsibility is with Border Protection Command in terms of their health and safety and wellbeing in the operations relevant to Border Protection Command.

Senator CONROY: Are you seriously stating that you cannot tell the Senate and the Australian public whether Navy personnel have been injured in the line of duty?

Senator Johnston: No, I am certainly not saying that. If Navy personnel are injured in the line of duty, I will be made aware of it and I will be concerned about it. But in terms of operational matters arising from on-water duties, that is the responsibility of Border Protection Command insofar as those operations are under the command of Border Protection Command.

Senator CONROY: But the legislation is quite specific. You cannot delegate away that authority.

Senator Johnston: And I do not seek to.

Senator CONROY: So you have responsibility in this area and it is reasonable to ask you questions about the circumstances of our Navy personnel.

Senator Johnston: The circumstances of the overall wellbeing of Navy personnel, certainly.

Senator CONROY: So that does not include the specific?

Senator Johnston: Not insofar as they relate to the on-the-spot wellbeing of personnel whilst under the direct command of Border Protection Command.

Senator CONROY: So the answer is that you are not taking responsibility for the welfare of the personnel involved in Operation Sovereign borders—is that your position?

Senator Johnston: No.

Senator CONROY: Given that you accept that you have responsibility is it reasonable for you to be asked questions about the welfare of the Navy personnel involved in that operation?

Senator Johnston: In the overall context of the wellbeing of Navy personnel generally, yes; in the specific context of the day-to-day operations of Navy personnel under the umbrella of Sovereign Borders, no.

Senator CONROY: This is a civilian operation—we have agreed on that, haven't we?

Senator Johnston: It is a law enforcement operation, yes.

Senator CONROY: It is civilian. I am being very distinct.

Senator Johnston: Yes, it is a law enforcement operation. Often the law enforcement officers do not consider themselves to be civilians, but it is a law enforcement operation.

Senator CONROY: I am drawing a distinction between military and civilian. I think you have stated that on a number of occasions, so I wanted to again double-check. I also asked on notice about what Navy personnel are being asked to do as part of Operation Sovereign Borders and you again referred my questions to another department. You are aware of the activities of Navy personnel?

Senator Johnston: I am aware of the activities of Navy personnel.

Senator CONROY: You have accepted that you have an overall responsibility for all Navy personnel?

Senator Johnston: Broadly, yes.

Senator CONROY: You cannot say you are broadly in charge and then define yourself out of it.

Senator Johnston: I have already indicated to you that, insofar as Border Protection Command operations are concerned, they are under the direct control of the commanding officer of Border Protection.

Senator CONROY: No-one is questioning the direct line of command. I was yesterday chasing the documents setting that out. I think it was indicated that that is a public document. General Hurley, is that a public document as far as you're aware?

Gen. Hurley : I think the question I recall yesterday was for a copy of my directive to General Campbell, which we had already provided to an earlier committee that was looking at the public decisions. We provided it.

Senator CONROY: I just wanted to confirm whether you are confident that it is public as well.

Gen. Hurley : Yes.

Senator CONROY: General Hurley, you are responsible for the health and safety of Navy personnel force-assigned to Operation Sovereign Borders?

Gen. Hurley : That is correct?

Senator CONROY: And you cannot delegate that away either?

Gen. Hurley : No.

Senator CONROY: Have you been made aware of what Navy personnel are being asked to do as part of Operation Sovereign Borders?

Gen. Hurley : Yes, I have been made aware.

Senator CONROY: Do you receive reports on the progress of Operation Sovereign Borders or Operation Resolute?

Gen. Hurley : I do.

Senator CONROY: How frequent are these reports?

Gen. Hurley : Daily.

Senator CONROY: I note, from media coverage, that you have previously spoken with your Indonesian counterpart about Operation Sovereign Borders. Is that something you would typically do for a civilian operation?

Gen. Hurley : There are two parts to your question. I do frequently talk to General Moeldoko, and his predecessor as Panglima, on issues that relate to ADF and TNI interaction and/or operations that we are conducting, to keep each other up to date. I did discuss with him not so much the detail of Operation Sovereign Borders but the government's policy in relation to protecting Australia's sovereignty. That was the tenor of the conversation.

Senator CONROY: Did you make the contents of this conversation public?

Gen. Hurley : No.

Senator CONROY: I did not think so. I just wanted to give you the opportunity to say that it was not you. I also understand, from media reporting, that Vice Admiral Griggs contacted his Indonesian counterpart to discuss the Indonesian incursion incident. Is that typically something that would be done for a civilian operation?

Gen. Hurley : Again, there are two parts to your question. Yes, we contacted the Chief of the TNI Navy, Admiral Marsetio, and alerted him to the incursions. I gave him a more detailed explanation later on.

Senator CONROY: I was referring to Vice Admiral Griggs. I understand again that there was media reporting—

Gen. Hurley : I am answering on his behalf—seeing as I am in charge of him.

Senator CONROY: That is good to know. Vice Admiral Griggs, were you responsible for the media reporting of that conversation?

Vice Adm. Griggs : No.

Senator CONROY: I just wanted to give you the opportunity to make it clear that you did not put it into the media. Given that General Campbell was in charge of the operation, I would have expected that he would have made those phone calls. Is there a reason he did not make those phone calls?

Gen. Hurley : He has other conduits into Indonesia when issues like these—in particular, incursions—occur. I think it is worthwhile on our behalf to use any avenue we might have to ensure that information reaches the many, many parts of the Indonesian bureaucracy and military.

Vice Adm. Griggs : Particularly when it is of a technical nature, it makes more sense for me to talk to Admiral Marsetio—mariner to mariner, naval officer to naval officer.

Mr Richardson : Senator Conroy, I might add—and I am sure you are aware of this—that, down through the years, successive governments have consistently used a variety of channels into other governments when they are dealing with different situations.

Senator CONROY: I appreciate that very much. I was just interested as to whether General Campbell made the calls. Did he ask either of you to make those calls given your regular contact with your counterparts?

Gen. Hurley : I do not think he asked us to make the call. I think this evolved out of the relevant agency heads looking at the issue and determining a way ahead to address the issue, part of which would be: how do we engage with Indonesia and who should speak to them?

Senator CONROY: Given the statements provided by the minister, I hope you are not too surprised that there are questions being asked about who is actually the real Defence Minister at the moment. I would like to draw your attention to a story in TheDaily Telegraph on 15 February. The story suggests that there was significant confusion and annoyance within parts of Navy that the Immigration Minister was behaving like he was the Defence Minister, citing visits to ADF bases and the improper use of Defence personnel and equipment for photo opportunities. Did the visits referred to in TheDaily Telegraph story take place?

Vice Adm. Griggs : I am well aware that Minister Morrison did visit HMAS Coonawarra and patrol boats in Darwin. I am not aware of any messaging from Navy people back up the chain of any discontent about Minister Morrison making those visits and talking to our people who are involved in border protection operations.

Senator CONROY: Are you comfortable with the minister for immigration parading around on Navy boats?

Mr Richardson : Lots of people do that!

Gen. Hurley : I have no problem with a minister of the government wishing to visit Defence facilities. In Minister Morrison's particular occasion, where there are significant Defence assets allocated to Operation Sovereign Borders, I do not have any problem with a minister going to thank my people for the work they do. And if he wants to go out and thank my people for the work they do, then please go and do it, because not many people do.

Senator CONROY: I am happy to break there.

CHAIR: We will now break for morning tea.

Pr oceedings suspended from 10:31 to 10:47

Senator CONROY: I refer you to some comments by retired Navy Captain John Ingram. He was quoted in a story on ABC online on 27 January saying that RAN sailors are being used for political purposes when it comes to turning back the boats. Are you aware of those comments?

Vice Adm. Griggs : Yes.

Senator CONROY: Do you share the concerns of the other senior Navy personnel quoted in the story and of the retired Navy captain? Are you familiar with the entire article?

Vice Adm. Griggs : I am familiar with retired Captain Ingram's comments.

Senator CONROY: But there are other sources referred to in the story, I believe.

Vice Adm. Griggs : It has been a while since I looked at it. There has been a fair bit to look at recently.

Senator CONROY: I am sure there has been. You note his concerns?

Vice Adm. Griggs : I note his concerns.

Senator CONROY: You do not share his concerns?

Vice Adm. Griggs : I do not share his concerns.

Senator CONROY: Have you taken any steps to ensure that there is no appearance that ADF personnel and equipment are being used for political purposes, specifically in relation to Operation Sovereign Borders?

Vice Adm. Griggs : Our job is to safely execute the lawful direction of government—as it always has been and as it always will be.

Senator CONROY: I was asking whether you had taken any specific steps, given these concerns that have been publicly raised, to ensure that you are not able to be portrayed in that way and that Navy personnel are not able to be portrayed in that way.

Vice Adm. Griggs : I cannot control how we are portrayed. We do our job in accordance with the operational guidance we are given. We do it with compassion, dignity and professionalism—as we have done and as we will continue to do. But I cannot control how people portray our role. I reject the assertion that we are being politicised. We are doing the job we did for the last government, for the government before that, for the government before that and so on back to 1901.

Senator CONROY: I sense that you are frustrated at the commentary from retired Navy Captain Ingram.

Vice Adm. Griggs : No, I am not. I am not frustrated with his perspective. He is allowed to have his perspective. I would note that he is talking about a very different set of circumstances in the 1970s and he has been out of the Navy for, I think, over 30 years. He can comment in relation to his own experience, which is his absolute right. I have no problem with him having that view, but I do then have a problem with that being translated by others into how we are portrayed.

Senator CONROY: I want to talk about the report on the Indonesian incursion. Again, I am confused about the command and control structures. I am hoping you can walk me through it, so that there are no misunderstandings. The Indonesian incursion report states that any possible disciplinary action against Navy personnel will be undertaken by the Navy.

Vice Adm. Griggs : That is correct.

Senator CONROY: I am trying to, in my mind, settle how it is possible that the Chief of Navy is responsible for disciplining Navy personnel in Operation Sovereign Borders, but any questions in relation to the conduct of Navy personnel involved in Operation Sovereign Borders cannot be answered by yourself.

Vice Adm. Griggs : Because, Senator, what we are talking about in terms of the incursion and the joint review is an issue of professional standards and professional conduct. I am the keeper of those standards in government. No-one else is. That is why it falls to me to maintain those standards—to look at each of these instances, understand what happened, decide whether someone has fallen short of the standards that we expect of our people, particularly in command positions, and then to hold them to account if that is warranted.

Senator CONROY: I could ask you, then, about these circumstances?

Vice Adm. Griggs : I will not be able to comment on the particular circumstances because I am the decision maker in this and I am still going through that process. I think, from a procedural fairness perspective, it would be inappropriate.

Senator CONROY: That is perfectly reasonable. I am not sure it necessarily frees General Hurley from answering questions.

Gen. Hurley : All questions about on-water activities for Operation Sovereign Borders, as you would be aware, should be directed to the Minister for Immigration and Border Protection or his officers.

Senator CONROY: My understanding is the CDF and the CEO of Customs signed off on the report.

Gen. Hurley : We did.

Senator CONROY: You signed off on the report and I am confused why, given you are the signer of the report, it is your report, I cannot ask you questions about a report you have signed.

Gen. Hurley : Because what we have provided to the Australian public and the government is an executive summary of findings and recommendations of the report. The detail in the report obviously would have information of on-water activities that were conducted and it is not in my purview to discuss or release that.

Senator CONROY: But you were prepared to go on radio to discuss the report and answer questions in radio interviews, so I hope you can understand the frustration that the Senate and senators have in trying to establish the facts in this circumstance.

Gen. Hurley : Senator, I appreciate your question, but I went onto one radio interview. One only. I responded about what was publicly released in the report—no more, no less.

Senator CONROY: Are we able to get a copy of the complete unredacted report?

Gen. Hurley : No, not from me. Again, it is not in my purview to do it, because it is a shared document and it goes to on-water operations which sit under the Department of Immigration and Border Protection.

Senator CONROY: In the interview, you refer to a 'go slow' from Indonesia at the moment. What do you think has caused the 'go slow'?

CHAIR: Are we expecting the general to —

Gen. Hurley : Sorry, go slow in respect of what? It is a while back since I did that.

Senator CONROY: I apologise; I am just trying to find the transcript.

Gen. Hurley : I think you are talking in relation to our relationship with Indonesia.

Senator CONROY: Yes.

Gen. Hurley : I released late last year the information—following allegations, through the Snowden leaks, of Australian activities in Indonesian—that there had been a reduction in the level of some of our interaction with Indonesians. I referred to those as a 'go-slow' in a more colloquial way.

Senator CONROY: I would just take your exact quote so that we I will make sure that we are all talking at the same thing. You said:

I think we're just in a bit of a go slow point at the moment. We still talk to each other. We still have certain levels of activity that are going on and I don't think we've reduced activities to such a point that it's not recoverable and in fact I think both sides just want to get on business as usual.

How did you become aware of the go-slow?

Gen. Hurley : By our normal interactions with the TNI and being advised from them through our defence attache staff in Jakarta on what activities they would continue with and what they would not.

Mr Richardson : I might add that the Indonesian government made a statement about the relationship and what activities might be suspended. That is on the public record following the Snowden leaks. Then, sitting below that, as the CDF said, different agencies and departments in Indonesia provided more detail. It is on the public record that the Indonesian stated it and they said why.

Senator CONROY: I am just asking the general about what impact—if you could be more specific if it is possible—of our broader engagement with Indonesian military is on the go slow.

Gen. Hurley : If you look at the range of activities that we have from senior-officer engagement dialogues between myself and my counterpart, senior officer visits, exercises where we bring our resources—Army, Navy, Air Force—into play, training courses and so forth, we still conduct interaction with our senior counterparts but we are not doing this is at the moment. That may change in the not too distant future, one hopes. We have stopped about three exercises where we would have put troops, aircraft, or ships into the field with Indonesians. But below that we continue with training activities and individual exchanges. I still have TNI students out at the Defence College and so forth. It is not a black-and-white approach; it is quite graduated in the way it has been applied.

Senator CONROY: Are you familiar with the columnist Greg Sheridan?

Gen. Hurley : Yes I am.

Senator CONROY: He is a very close friend, self-described, to the Prime Minister. Some would, at times, even call him the informal spokesperson for the Prime Minister.

Senator EDWARDS: You did.

Senator CONROY: I said 'some would'. I would be far more pointed.

Senator EDWARDS: But, you just did.

Senator CONROY: This is his commentary about the role of the head of Operation Sovereign Borders:

The involvement of the Australian military has been central to this operation's success.

Senator IAN MACDONALD: Chair, can I raise a point of order?

CHAIR: Yes.

Senator IAN MACDONALD: We have no been going two hours, there is one senator who has asked all the questions. I have questions I want to ask—not reading into the record actual bits of a newspaper column. Can I get your ruling on when other senators are going to be given the opportunity to ask questions, as estimates is all about.

CHAIR: We have had other senators asking questions but Senator Conroy is pursuing this specific topic and will move on to another senator following this segment.

Senator CONROY: I am happy to pass over in a moment. He said:

The involvement of the Australian military has been central to this operation's success. This is not only because the navy has to carry out the most difficult elements of it, but also because the appearance of an Australian general running the operation, standing by the minister at the early weekly briefings, has conveyed a powerful subtext of resolve.

Do you have any concerns about the way that the military are being described by newspaper columnists—that you are being used for the 'appearance'?

Gen. Hurley : Operation Sovereign Borders was stood up to coordinate a whole-of-government effort to protect Australia's borders, and in doing so it is a hybrid operation. We have brought in military commanders and military planners to assist in the coordination of quite a wide range of agency and departmental assets and resources. I think that has brought a synchronisation and a coordination effect to a whole series of functions that were being performed reasonably well in the past but not wholly coordinated. The military brings that to the operation, but it is a hybrid operation. It has military characteristics. It has whole-of-government agency characteristics. It has military assets and resources applied to it, but by far the predominant amount of assets applied to it are not military. So it is a hybrid operation. If a military commander is desired by government to help coordinate and to produce output, then so be it. We will do that job for them, and we will do it effectively.

Senator CONROY: I appreciate all of those points. What I wanted to draw your attention to was that a journalist who is considered to be extremely close to the Prime Minister, extremely close to the government, refers to your role as an 'appearance'.

Gen. Hurley : I think the effect on the ground is more than an appearance.

Senator CONROY: You may have already provided this information previously, but does the Department of Defence have a memorandum of understanding or a similar instrument with each of the other agencies involved in Operation Sovereign Borders?

Gen. Hurley : No, we do not have formal instruments in place. I have given the directive to which you refer to General Campbell. Minister Morrison has been appointed by government as the coordinating minister for Operation Sovereign Borders. His responsibility therefore, with the various departmental heads and so forth, is to put in the coordination processes that allow the operation to proceed. From our perspective, there are direct lines of military command that run through the operation. In other areas it is collegiality, cooperation and a desire to get the job done.

Senator CONROY: I am just surprised. My understanding was that MOUs or other similar types of instruments were the more common practice. But you do not have any with any other agency about your involvement in Operation Sovereign Borders?

Gen. Hurley : Not that I can recall, but I will take it on notice.

Senator IAN MACDONALD: I have another committee to go to, and I am sorry to impose upon your time. I am not talking about the opening statement but the portfolio overview questions. I only make comment on the opening statement in that it did not mention what I was going to, which I am disappointed about. Perhaps Vice Admiral Griggs might not want to leave. Minister or CDF, I wonder if you could indicate what is being done in relation to the positioning of the Navy. In spite of calls from Sydney authorities and others, I understand that a lot of expensive work is happening at Garden Island in relation to the basing of the LHDs. I am wondering, Minister, if you could indicate if there is a process looking at the positioning of the Navy into the future, or where the process is? I raise this now as it is, I think, a more general portfolio overview.

CHAIR: Minister, would you like to comment?

Senator Johnston: As you know, we have constructed and contributed $70 million, I think, to the construction of Berth 10 in Townsville. Now, the vessels are undergoing sea trials at the moment. Let us see how that plays out before we start making any plans to rearrange what plans exist. They would be based at Garden Island at the moment. Bear in mind, there are some financial considerations. Yes, 2RAR will provide the troops for those vessels ostensibly into the future—but let us just see what plays out without getting to a point where we commit, at this early stage, to where the boats would be based. At this stage they are based in Sydney.

Senator IAN MACDONALD: I am not asking you to commit, Minister; I think you have answered my question. I am just wanting to make sure it is in the front of your mind and that it is being thought about. But it also relates to part of my question; I said that I understand very substantial amounts of taxpayers' money is being spent at Garden Island at the moment when an uninformed observer might think that was, perhaps, a short-term allocation of rare, scarce money.

Senator Johnston: A lot of the money that is being spent now has been budgeted for, for some long time, in terms of capability and planning. Most of the Defence budget is anticipated many, many years previously, so these are budget expenditures that were probably committed before even the last government, back in 2006-07, and beyond. The plans are the plans as they roll out. The stabilisation of the capital development of Defence's capital portfolio is very important. Operational deployment of these 28,000-tonne LHDs is a matter that I will certainly be taking a lot of advice on. But at this stage, it is Garden Island.

Senator IAN MACDONALD: I will leave it there, thank you, Chair; but I just indicate to Admiral Griggs that I will be asking, in the Navy capability area, for a bit more detail about what is happening.

Senator FURNER: General Hurley, I have some questions around your opening statement—thank you for that, and I apologise for not being here at the time of your delivery. In the statement, on the second page, you refer to 400 personnel that will continue providing training and support to the ANA and security forces in Kabul and Kandahar. I am just wondering whether there is any possibility of giving us some breakdown in regards to where they may be stationed in Kabul or Kandahar?

Gen. Hurley : I will take that on notice and give you a more detailed description but, in shorthand, in Kandahar they are located just outside the Kandahar airfield—the base there with the 205 Hero Corps headquarters. It is only a very short vehicle trip to there. In Kabul, they are primarily inside the Kabul airport precinct and the ISAF Command headquarters precinct, and the ANA officer academy is in a district known as Kargha which is to the western limit of Kabul city. They are Kabul-centric, in a sense.

Senator FURNER: The personnel that are in Kandahar, are they at Camp Baker?

Gen. Hurley : No.

Senator FURNER: They are not.

Gen. Hurley : They have separate facilities. They would use Camp Baker. There are accommodation facilities they can use there. That is their logistics and support base for the work they do, but their worksite is out at the corps headquarters.

Senator FURNER: I did note your commentary in respect to the situation in the country still being dangerous. From my own experience in 2011, as chair of the Defence subcommittee, I led a delegation to Afghanistan and we stayed at Camp Baker. Prior to our arrival there was an occasion—I do not recall how long ago, but there was a rocket fired into the upstairs accommodation area of Camp Baker. Fortunately the personnel were not there at the time and the warhead did not explode—it just spun around inside the accommodation and trashed the room, essentially. I imagine when we refer to situations of insurgent attacks in the country, they are still live and real in regards to those types of circumstances being possible.

Gen. Hurley : Certainly, indirect fire attacks are possible; the other threat we would more realistically face is insider attacks—working in the corps headquarters or its environs.

Senator FURNER: Though it is not necessarily covered to any extent in the opening statement, how many IED explosions are still occurring in the country?

General Hurley : Again, I could get you some more-detailed data, but they are certainly still the weapon of choice for the Taliban across the board. I think at times the ANA, ANSF and the police in particular bear the brunt of that, not so much the ISAF forces, though they are still exposed to that danger. But they are still the prominent weapon that the Taliban are using.

Senator FURNER: Lastly, we were very fortunate to go out to a forward operating base in Afghanistan when we were there. From memory, there were 16 FOBs before the summer of 2011, which expanded to 32 leading up to our arrival. How many FOBs are still established?

General Hurley : None. When we withdrew from Uruzgan last year, we either handed bases over to the Afghans or pulled those bases down. So we do not operate our forward operating bases anymore.

Senator FURNER: Thank you.

Senator EDWARDS: I am new to this committee and I have been sitting here listening to the commentary this morning. I take you to Operation Sovereign Borders. I note that there were a number of senior frontbenchers in the previous government who were often quoted as saying that the policy of sovereign borders would not work. In actual fact, I can quote them:

You know that Tony Abbott's policy of turning the boats back won't work.

That was said in 2010 by Minister Bowen. In 2012 he also said:

…the big problem with Tony Abbott's plan is it just doesn't work.

Just recently, the now opposition leader in November 2013 said:

They said before the election they would turn back the boats…Now we are seeing that not only are they not turning back the boats, but they are hiding behind Australia's military when they do press conferences, they're not answering questions about what is really happening.

Minister, have we indeed stopped the boats?

Senator Johnston: I think we have gone a long way towards stemming the flow, but there are some seasonal elements present. I do not think there is any hubris in cabinet or from the immigration minister, because it will be time that tells. The signs are reasonably positive, but I think we have many, many months of operations before we know whether there is some stability and permanency to the current state of affairs, which, as I said, is quite positive.

Senator EDWARDS: I want try and clear up with you a matter to do with the Work Health and Safety Act. Do you take your responsibility for your duties under the Work Health and Safety Act?

Senator Johnston: That is a very good question. Pursuant to the Work Health and Safety Act, I am not the owner of ADF personnel for the purposes of the act. That responsibility rests with the CDF and others pursuant to defence legislation. But I must say that I do take responsibility more broadly—not necessarily directly from the legislation—for the wellbeing of all ADF personnel.

Senator EDWARDS: And also in exchanges this morning, there has been an attempt to blur the lines between the minister of immigration and yourself, and so I just put it to you—we will get it out there—do you consider the sharing of ADF resources under the policy control of the minister for immigration an abandonment of your legal responsibility?

Senator Johnston: I quite certainly do not. When you are more than 1,000 nautical miles from the Australian mainland there are very few agencies that have the capacity to provide the sort of skills that the ADF does. The operation is a law enforcement operation on our border, in our neighbourhood, and it should remain at all times and be perceived as precisely that. It is not a military operation.

There are military skills involved, as you have heard, and to that extent we provide platforms and assistance to Border Protection Command.

Senator EDWARDS: Thank you for the clarification on all of those, Minister. General, will you tell me if I am out of sequence here, as I am only new. I am looking at the budget commitment, and because I have been following the commentary, has the government made any progress towards its commitment to the Defence budget being two per cent of Australia's GDP, and I think in the time frame within the next decade, Minister.

Senator Johnston: Is that question to me?

Senator EDWARDS: Yes, or perhaps the CDF or secretary.

Mr Richardson : The government's commitment was to move Defence spending to two per cent of GDP over the next 10 years; that is, out to 2023-24. The government has not yet brought down a budget, so quite obviously it is a bit premature to be looking in that direction at the moment. And of course the government does not necessarily have to start that process in this budget. The government has a range of options within which it could start the path towards two per cent of GDP, but it does not have to be in the first budget.

Senator EDWARDS: Has there been any movement within the department to make any appointments to review this, and to make a recommendation to government?

Mr Richardson : There are usual processes within government in respect to the budget; that's the first thing. Let's go back a bit—there is the audit commission, which may or may not have implications for Defence. Secondly, there are the normal budget processes; thirdly, the government has announced a review of the department that will commence soon; and finally, the government has announced that it will bring down a white paper by March of next year. Also, within the framework of the white paper there will be a full structure review. All of those processes and elements will in fact go into the mix and influence ultimate government decision-making in respect of its commitment to take Defence spending to two per cent of GDP over the decade.

Senator Johnston: Can I add to that answer by just taking you to the fact that currently in the 2012-13 budget we lost 10.5 per cent of our resourcing. Over the last four years, somewhere between $16 and $18 billion has been removed from Defence resourcing, so currently we are engaged in a very difficult and complex equation to live within our means and yet try and stay abreast of current technological and manning requirements for the platforms that we operate.

Bear in mind that, in talking about Operation Sovereign Borders, we have had about 50,000 people on 800 boats in the last four years. We have just come out of Afghanistan and, as you heard in General Hurley's report, removed a very large amount of gear. So, notwithstanding the reduction in our resourcing taking us back to about 1938 levels as a share of GDP, we have had operational tempo increasing. Currently, we are all paddling under the water as fast as we possibly can to deal with what is virtually a crisis in resourcing for Defence. No other portfolio has had to deal with such a constriction in its consistent budget resourcing. The first task for me, the secretary and the CDF is to stabilise the ship, and we have done that—and thankfully the Prime Minister has seen the problem—by saying: no further cuts to Defence. What you ask is a very relevant matter that we are dealing with on an hour-by-hour, day-by-day, month-by-month basis. I say that to give you some perspective of the issues that are confronting Defence. If we have a humanitarian disaster of significance onshore, if we have any other emergency, whatever form it might take, there are considerable financial issues for us to confront.

Senator EDWARDS: And I wish you well, Minister. As you are probably aware, I am a South Australian and I was very pleased, General Hurley, to see you and the minister over there recently at the keel-laying ceremony. Indeed, I was very proud of the hundreds if not thousands of people who had gathered there to celebrate what I think is an absolutely wonderful initiative and a great thing for this country. But I use the budget and your answer there as a segue to my next inquiry: what is the government doing about shipbuilding and the defence industry broadly in this country? Given your comments about the budget constraints and the pressure that you are under, the hourly management of resources, could you make some comment, because it is very important for people in my home state.

Senator Johnston: That question would not be necessary if, during the last six years, anything at all had been done by the way of a plan or by way of resourcing in terms of the employment of shipbuilding workers in either Victoria or your home state of South Australia. The inheritance that we are confronting is a whole host of programs in shipbuilding that are starting to reach a peak and then begin to wind down, with no plan to do anything after that. In broad terms, it has been a hospital handball. The change of government has yielded the fact that there are virtually no plans with respect to creating a shipbuilding enterprise.

An enterprise is such that naval shipbuilding can continue in an orderly, planned and resourced way into the future, such that Navy's requirements for ships can be met 15, 20 or 30 years out. We are currently promising a new Defence white paper, with a DCP accompanying it and an industry policy accompanying it, 18 months out from the election. The consideration of how we go about creating a cost-effective, productivity-laden shipbuilding enterprise in Australia is precisely what we are dealing with right now. I must say to you that I saw 1,100 workers at ASC at the keel laying; the fact that they all have a good job and are working hard to produce those three vessels does not sit lightly upon my shoulders. We are working as hard as we can to come up with a feasible plan. But, may I say, under the last government we were on a trajectory of some $670 billion worth of debt, with accumulated deficits of $123 billion. There is no money for these things. We have to rob Peter to pay Paul to come up with a plan that keeps people in work, and that is precisely what we are seeking to do.

Senator EDWARDS: So the 'valley of death' was a real prospect under the previous government regime?

Senator Johnston: It was a real prospect for many years under the previous government—and they talked about it. There was talk about new patrol boats and there was talk about new replenishment ships—but there was no funding, there was no plan and nothing was done. We have, effectively, a clean sheet of paper to try and resource any of those programs to keep BAE, Forgacs and ASC workers in place.

Senator EDWARDS: Given that there was a white paper in 2009 and another in 2013—and you speak of the dysfunction that prevailed in the administrative government budget allowances for this department—

Senator Johnston: It was worse than that. It was not deficient administration; it was cuts. On the one hand, promises were being made. On the other hand, the reality was that the resourcing was being reduced.

Senator EDWARDS: So the rhetoric we heard about 'Cut, cut, cut' was actually a very real environment in which the operators of the Defence Force in this country had to work.

Senator Johnston: Absolutely.

Senator EDWARDS: Given that, you probably have to say that, if you ran that out in private enterprise—which is an area I am more used to—the minister was probably operating a business that was trading while insolvent.

Senator Johnston: It was a business that was not resourced properly.

Senator EDWARDS: That is the same thing, is it not? If you do not know where your revenue is going to come from to pay your bills, that is insolvency.

Senator Johnston: The reporting was that everything was running smoothly and that there was a bright future. We had $275 billion worth of expenditure promised in the 2009 white paper. Not for a fortnight was that money ever forthcoming to resource Defence. The opposite happened. Money was taken from the portfolio.

Senator EDWARDS: General Hurley, I commend you for maintaining morale in such an environment.

Senator Johnston: So do I.

Senator EDWARDS: What is the government now doing to ensure that the ADF has all the tools it requires to operate?

Senator Johnston: We have to trim our sails to meet the conditions we are sailing in. We have had to put a lot of projects to the right and we have had to manage within our means in the immediate term, which has been very difficult. The fact is that the government has said—and I am very pleased to say this—that we will get to the NATO average of two per cent of GDP in 10 years. That gives us some semblance of hope and a funding envelope out into the future.

But bear in mind that Defence is no orphan here. There are a whole host of other portfolios where the financial base has been eroded or where expenditure far exceeds the capacity of government to resource them. We are stabilising the ship across a whole host of fronts. Defence is no orphan. I have enormous sympathy for the Treasurer. I roll with the punches. We have had to do some things in Defence, like putting things to the right, to accommodate the current difficult financial circumstances. This is what we have inherited. When the AMWU says to me, 'What about the valley of death?', I say, 'You would not be asking me that question if there had been any semblance of coherent financial management or policy from the previous government.' This whole disaster is because Defence was treated like some sort of cash cow or ATM by the previous government.

Senator EDWARDS: I think that the Australian public that I greet and meet when I am out there would want to know that our Defence is not only well run but well funded.

Senator Johnston: I can assure you it is well run. The funding is an issue I am working on.

Senator EDWARDS: It is very hard for management to run an operation when one side of that equation is in, obviously, a parlous state. All credit to those people involved.

Senator CONROY: I just wanted to respond to some of the minister's commentary. The Rudd government went to the last election with a commitment to construct two replacement supply ships here in Australia and to bring that forward.

Senator Edwards interjecting—

Senator CONROY: That is well known. It was on the public record—

Senator Johnston interjecting—

Senator CONROY: and Senator Johnston is well aware of that.

Senator Johnston: It was not in any budget, Senator.

Senator CONROY: That was an absolute election commitment and—

Senator Johnston: It was not in any budget.

Senator CONROY: when it comes to—

Senator Johnston: and, indeed, there was no Defence policy from the then government.

Senator Edwards interjecting—

Senator CONROY: and when it comes to—

Senator Johnston: at all.

Senator CONROY: Having just released a white paper. But, when it comes to—

Senator Johnston: That had absolutely no money in it.

Senator CONROY: the commitments to go forward, Senator Johnston is well aware that the now government—

Senator Johnston: How can you defend the indefensible?

Senator CONROY: went to the election with exactly the same funding policy as the then Rudd government. But I just want to ask a specific question, which Senator Johnston raised in his response to the other senator. You mentioned you had moved projects to the right. Which projects have you moved to the right?

Senator Johnston: I would have to take that on notice because there are so many I could not enumerate all of them. I will give you that answer on notice—

Senator CONROY: Could you give us a flavour?

Senator Johnston: I will give you that answer on notice.

Senator CONROY: Well, you just boasted about it and described it in an answer to a Liberal senator. I am now asking you to specify.

Senator Johnston: I have got a draft DCP with 300 programs in it. We have had to move a whole lot of those to the right. I will give you a definitive answer on notice as to which projects have been delayed, because off the top of my head I do not have that information in front of me.

CHAIR: That is quite reasonable. Thank you, Minister.

Senator CONROY: I only raised it because you actually raised the issue in your previous answer!

Mr Richardson : Senator, it is a matter of public record that the JSF was moved to the right.

Senator CONROY: I just asked Senator Johnston to answer—

Mr Richardson : I simply mention that.

Senator Johnston: AWD was re-baselined twice.

Senator CONROY: You indicated you had made decisions to move things to the right, so I was just asking—

Senator Johnston: There are decisions made every day about programs that we have to move to the right.

Senator CONROY: I am just asking you to outline them—

Senator Johnston: I will. I will.

Senator CONROY: which you have indicated you will, so—

Senator Johnston: Absolutely—on notice.

Senator CONROY: thank you.

CHAIR: Senator Conroy, the minister has said he will provide the information.

Senator CONROY: Thank you for that. I want to come back to some of the questions I was asking before, around the report. I got a sense, General, that you were watching the discussions at the estimates yesterday, so you would be familiar with the questions that I asked which Mr Pezzullo was answering.

Gen. Hurley : I do not think so, Senator. I was watching on and off. I saw bits and pieces of it, yes.

Senator CONROY: Yes. I was not sure. Mr Pezzullo did answer a range of questions around the report. So, given you are the co-author of the report, I thought I would ask you some questions. I think you have indicated you will not release the report in full. You have indicated that?

Gen. Hurley : Yes.

Senator CONROY: Could you advise the Senate how far inside Indonesian territorial waters the Customs and naval vessels were during their incursion into Indonesian territorial waters?

Gen. Hurley : The report covers the fact that we entered, I think, six times. The public report does not indicate how far, and that detail is contained in the consideration in the report of the operations that were being conducted. Again, that is on-water operations and I cannot talk about that. That would have to go back to the relevant agency.

Senator CONROY: But you are aware of it?

Gen. Hurley : I am.

Senator CONROY: Is it a matter of national security?

Gen. Hurley : In terms of it being an on-water activity and in terms of the management of the information about those activities and the approach that is being taken to that, which you are well aware of, Senator, I could not do that, no.

Senator CONROY: Could you cite which of the five—I think it is five—reasons cited by General Campbell would be breached by informing the Senate how far inside Indonesian territorial waters we were? Which of those five criteria that I think he outlined would that breach?

Gen. Hurley : I do not have the five criteria to hand, but I think, in a general sense, it would quite specifically indicate the nature of operations being conducted.

Senator CONROY: Could you describe to us where these incursions into Indonesian waters occurred? Were they near the Ashmore Islands or Christmas Island, for example?

Gen. Hurley : They are Australian waters, so it would be a bit further north.

Senator CONROY: That is why I am asking you to help me out.

Senator EDWARDS: Near Indonesia?

Senator CONROY: Obviously we are inside their 12-mile territorial waters, as that is the basis of the report.

Gen. Hurley : Again, if I were to indicate that it would indicate the nature of the operations and, again, it falls under that on-water constraint.

Senator CONROY: I noted in a speech by Minister Morrison that he stated that when vessels came inside Australia's territorial limits we felt that we were perfectly entitled to intercept them, and when vessels came inside Australia's contiguous zone we were perfectly entitled to intercept them. Are you familiar with that commentary or that general principle?

Gen. Hurley : I am not aware of the speech, but I have a general sense of what you are talking about.

Senator CONROY: Does Indonesia have a contiguous zone that the Navy normally respects, just in a general sense?

Gen. Hurley : That we acknowledge, yes. We are aware of it.

Senator CONROY: So we acknowledge their contiguous zone? I need to clarify. If we acknowledge their contiguous zone, does the report indicate how many times that our operations have taken us inside their contiguous zone?

Gen. Hurley : We would operate in that area every day of the week.

Senator CONROY: I appreciate there is a particular law around innocent passage that we would be engaged in. What I am trying to ascertain is whether or not the report differentiates between entering in the circumstances that are outlined and entering their contiguous zone and forfeiting innocent passage.

Gen. Hurley : I think they are two separate issues. To have entered their territorial waters, we would have had to transit across their contiguous zone—you cannot do one without the other.

Senator CONROY: By definition?

Gen. Hurley : By definition.

Senator CONROY: Even I, a non-sailor, can understand that.

Gen. Hurley : I am a non-sailor too, so you have two non-sailors talking about the issue.

Vice Adm. Griggs : Can I just make the point that there is no notion of innocent passage in the contiguous zone. Innocent passage only applies in territorial waters.

Senator CONROY: But our minister has said that we are advancing a proposition that we are entitled to address boats within our contiguous zone, so I am just trying to understand: do Indonesia or the Navy—

Vice Adm. Griggs : Because those boats breach our national law, which applies in our contiguous zone—that is what Minister Morrison was referring to.

Senator CONROY: I am literally trying to understand. We say our laws apply in our contiguous zone. Do Indonesia say their laws apply in their contiguous zone?

Vice Adm. Griggs : But there is nothing in their laws about foreign naval warships conducting activities, and there is nothing in international law along those lines either.

Senator CONROY: I am glad you raised that. I was not going to jump to that just yet, but I might go to the section of questions I was going to ask on that issue. I think you said that there is no international law in contiguous zones.

Vice Adm. Griggs : The notion of innocent passage is relevant only in territorial waters.

Senator CONROY: Are you familiar with concerns raised by Professor Donald Rothwell? He has given a few speeches and published recently on this issue. Are you aware of his—

Vice Adm. Griggs : I have read a couple of things from Professor Rothwell, yes.

Senator CONROY: I want to refer you to an article from him that was published on the ABC's website on Monday last week. In the article he states that any tow-back operation being conducted by Australia within the Indonesian exclusive economic zone, or EEZ, as it is often referred to, is not consistent with the freedom of navigation being exercised within those waters and that by towing back boats Australia is bringing another vessel into the Indonesian EEZ without consent. He is a reasonable expert in this area. He is a professor of international law, I think.

Vice Adm. Griggs : Yes, he is.

Senator CONROY: He seems to disagree very clearly with your interpretation that you put to the Senate just then.

Vice Adm. Griggs : I was not talking in terms of any particular operation, and I am clearly not going to comment on his particular reference to turn-back operations.

Senator CONROY: I know that the Prime Minister has stated publicly in Indonesia in a press conference—I am sure that you are familiar with it—that we are not engaged in tow-back. Are you familiar with that press conference?

Vice Adm. Griggs : When he was in Indonesia—yes.

Senator CONROY: He stated that quite clearly: that was Australian government policy.

Vice Adm. Griggs : Yes, Senator.

Senator CONROY: There is footage, and I can show it to you. I am happy to. I am not sure if you were watching.

Vice Adm. Griggs : I have seen the footage.

Senator CONROY: You have seen the footage of what appears to be an Australian boat towing an orange boat. I am confused. If the Prime Minister of Australia says we do not have a policy of towing boats, and there is footage of an Australian boat towing a boat, I am confused. Has the Prime Minister got a new position? Minister, I am just trying to clarify what Australia's position is. There is evidence, and you have seen it yourself, of Australia towing boats—I will be general; I will not say into Indonesian territorial waters—towards Indonesia. That is probably the easiest way to describe it. But the Prime Minister has indicated that we do not have a policy of towing boats. Could I just get some clarity, because that is germane to the discussion about whether or not international law has been breached.

Vice Adm. Griggs : I cannot comment on on-water operations.

Mr Richardson : I might just add that, firstly, we certainly have nothing to add to that which is already on the public record, and, secondly, in respect of our conduct under Operation Sovereign Borders, I believe government is confident that what is done is consistent with international law. I do not know what different professors say or do not say, but the government has been very careful in its approach to this matter, particularly in respect of the law.

Senator CONROY: My apologies; I appreciate that you cannot see this very well, but this is that footage I was talking about. This is clearly an Australian boat towing another boat which is identifiable as one of the orange vessels that we recently purchased.

Mr Richardson : We have no intention of commenting on a video that you are showing.

Senator CONROY: It is on YouTube.

Mr Richardson : I do not care what it is on. We are not commenting on it.

Senator CONROY: But what I am confused about is that the Prime Minister has stated publicly that we do not have a tow-backs policy, so I am trying to understand what the Navy are doing there.

Mr Richardson : What is on the public record is on the public record. We have nothing to add. Secondly, we are not going to comment on a video that you are showing.

Senator CONROY: Do you deny that is happening? Is that not an Australian boat?

Mr Richardson : I would not have a clue. I am not going to comment on what is on YouTube. We are not going to get involved.

Senator CONROY: Vice Admiral Griggs said that he has seen the footage. Is that an Australian boat in the footage?

Vice Adm. Griggs : I am not commenting on it.

Senator CONROY: You cannot confirm whether that is one of your own assets?

Vice Adm. Griggs : It is not one of mine.

Senator CONROY: That would suggest to me that it is a Customs vessel that has engaged in that towing operation. I come back to the general question. There is YouTube footage showing an Australian vessel towing a boat, but the Prime Minister has stated that we do not have a tow-back policy. Minister, can you help clarify the situation?

Senator Johnston : No, I cannot. These are questions you should direct to Immigration and, as you well know, because you have been told about five times this week, that is the repository for on-water operations at a Border Protection Command.

Senator CONROY: The Prime Minister has said that we are not towing boats back, so I should be able to ask a question about something it has been stated we are not doing. Would a tow-back involve breaching international law? Given that we are not doing it, you can answer the question.

Mr Richardson : We are confident that what we do and do not do is consistent with international law and that what we do and do not do is done and not done in accordance with legal advice. That is a matter for another portfolio, but I have been involved in enough of it to know that great care has been taken in respect of that particular matter.

Senator CONROY: Mr Morrison is quoted in a story as saying:

… it is the policy and practice of this government to intercept any such vessel and, where safe to do so, remove it outside Australia's territorial waters and beyond our contiguous zone.

So we are back to: 'We are entitled to clear our contiguous zone.' If you are wondering why it is relevant, I am seeking information on a report that the CDF has and is the co-author of. He is entitled to say that he will not answer the questions, but I am also entitled to ask questions of a report in his hands. Professor Rothwell claims that both Australia and Indonesia have the same right to prevent the authorised entry of vessels into their territorial and contiguous waters. I come back to this question of whether we recognise Indonesia's contiguous waters. I think you said that we do. Are we recognising it from the same perspective—that is, of our Operation Sovereign Borders? In commentary and publicly it has been stated that our position is not to enter territorial waters. Is it our position to not enter contiguous waters, as well? I seek clarification on that.

General Hurley : We have been entering contiguous zones around Indonesia for the last 10 years or more.

Senator CONROY: As I said, the right of innocent passage is—

General Hurley : The right of innocent passage does not apply in the contiguous zone; it only applies in territorial waters. For all operations over the last 10 years when we have needed to—to rescue boats to intercept boats and so forth—we have entered into contiguous zones so we can operate.

Senator CONROY: Absolutely. The right of innocent passage would apply even if you went into Indonesian territorial, 12-mile-limit waters if you were saving lives. That is my understanding.

General Hurley : That is correct.

Senator CONROY: That is not in dispute. What I am trying to understand is whether or not in the report it is identified that the operations are taking place inside the contiguous zone.

General Hurley : Again, you are going back to specific on-water operations and, again, I cannot comment on them. It is not my portfolio responsibility to do so.

Senator CONROY: I am only asking you because you have a report in front of you and you are the person under all law with responsibility for the conduct of our armed forces. I am putting those questions to you in that role.

General Hurley : In line with the secretary's answer, I would not be carrying out actions if they were considered to be unlawful. As you would expect me to do, I have taken legal advice on the nature of the operations the ADF conducts here, in Afghanistan and elsewhere.

Senator CONROY: I would think you derelict if you had not, so I have no doubt that you have been taking legal advice. Who have you taken that legal advice from?

General Hurley : From Attorney-General's and Solicitor-General.

Senator CONROY: The Attorney-General or the Department of the Attorney-General?

Gen. Hurley : The department.

Senator CONROY: I do not want to tread on any deliberative issues, but has anyone been charged yet as a result of the report? Has anyone who is involved in any way, who is under the jurisdiction of yourselves—I am not talking about Customs or others that clearly are not your jurisdiction—and who is operating within Operation Sovereign Borders been charged? You may have to take that on notice.

Gen. Hurley : No, they have not.

Senator CONROY: I am not just talking about the report that you have—certainly as part of the report—but is anyone on any charges across the entire—

Gen. Hurley : For how long?

Senator CONROY: Since Operation Sovereign Borders began.

Gen. Hurley : Has anyone been charged for an offence of—

Senator CONROY: Is on a charge. I am not sure what the formal description is in this circumstance.

Gen. Hurley : That could mean that they were late for work, or are you talking about the nature of the operation?

Senator CONROY: The nature of the operation.

Gen. Hurley : Then I—

Senator CONROY: I did not think you charged someone for being late for work. It seems a fairly harsh thing to do.

Gen. Hurley : It depends how frequently. I think I can say no. We will do a check on notice.

Senator CONROY: Thank you. What is the process if a charge is laid? Does Vice Admiral Griggs—

Gen. Hurley : Admiral Griggs can talk about discipline in Navy.

Senator CONROY: I was asking about what the process was after you have made a decision, if a decision is made. Do you recommend a charge? Could you take me through what that processes is?

Vice Adm. Griggs : Are you talking about in relation to what I am considering at the moment?

Senator CONROY: Yes. I am asking about what the process is, not anything deliberative at all.

Vice Adm. Griggs : There are three different approaches that I could take. One would be to follow the Defence Force Discipline Act if it was considered to be warranted. In this particular case, that is not my intention. The other is through our recognised administrative inquiry process, and I will be conducting an inquiry into certain aspects of the professional standards issue. For those in command positions, I have the command power vested in me under the Defence Act, and I will be dealing with those in command positions under a command power. What I will do is consider each situation. I will give individuals the opportunity to put their perspective and their case, having told them what my concerns are and what potential actions I may take, and then they would be able to respond to that from a procedural fairness perspective, and then I will make the decision.

Senator CONROY: I want to make sure that there can be no-one suggesting that we are trying to put you in a prejudicial position just by asking about the process. I am assuming a range of penalties can apply under the command powers. What are the sorts of penalties that apply under the command powers?

Vice Adm. Griggs : At one extreme it would be removal from command and then, through the normal range from an administrative censure, there would be formal warning or formal counselling, or at the other end a letter of reflection on the issue.

Senator CONROY: I want to go to your legal advice. I am not asking you to confirm that this has happened, and in fact the Prime Minister says this is not happening, notwithstanding the evidence before our own eyes on YouTube. Do you agree with Professor Rothwell's statement that towing lifeboats is not consistent with the right of innocent passage? Would that be consistent with your legal advice?

Mr Richardson : Everything we do is consistent with legal advice. I will not go into the detail of the legal advice because I am not a lawyer. Questions about the detail of international law and other matters of illegal kind should be directed to the Attorney-General's Department.

Senator CONROY: You are acting on the legal advice. I am not sure that you can absolve yourself from it. You are conducting your activities from the basis of the legal advice. I am happy to take your suggestion in other forums, but I do not know that that means you do not have to answer any questions about the legal advice that you have received by saying, 'Go and ask the author. Do not ask the person who commissioned it.'

Mr Richardson : I can say we act on the basis of the legal advice. That does not mean that I carry in my head details of that legal advice, and I would prefer not to get involved in it.

Senator CONROY: I have been involved in many discussions when people ask for legal advice. I am not asking you to table it. I am just wanting to get an indication of whether or not you think the legal opinion of an eminent professor in this area is right or wrong.

Mr Richardson : I have dealt with the law enough in government to know that you can get differing views between equally eminent people.

Senator CONROY: Fortunately we have an eminent lawyer with us at the table so we might absolve you of having any legal questions. Senator Johnston, I am referring to you.

Mr Richardson : Equally I am confident that everything we do is consistent with our legal advice.

Senator CONROY: Applying your legal expertise, Senator Johnston?

Senator Johnston: I think you have your answer, Senator, because I will endorse and abide by, as the secretary has just said to you, the legal advice. It is something we always abide by.

Senator CONROY: I just wanted to return to the report.

Gen. Hurley : Could I just clarify that, when you ask about the Attorney-General, I did say Solicitor-General and I should have said the Australian Government Solicitor.

Senator CONROY: Okay. I have made that mistake plenty of times myself. From the conversations we have had this morning I am assuming that there is an instruction to not enter Indonesian territorial waters otherwise, by definition, there would not be reporting of the entering of territorial waters. Is it correct that the instructions are to remain outside of Indonesian territorial waters?

Gen. Hurley : In the report that we released to the public, in the narrative at the second or third paragraph, it describes two of the constraints that were put on planning the operation. One was about safety and the other explicitly stated that vessels were not to enter the 12 nautical miles of Indonesian territorial waters.

Senator CONROY: There is no such order about entering, within the operational matters of Operation Sovereign Borders, the contiguous zones? The order only applies to the 12-mile territorial limit?

Gen. Hurley : No requirement to make such a statement.

Senator CONROY: Could I ask why, given you acknowledged earlier we recognised Indonesia's contiguous zone?

Gen. Hurley : Because it has no operational effect on what we do.

Senator CONROY: I might return to that a little bit later. When the Navy takes possession of those orange inflatable boats—I accept Admiral Griggs's point that it was a Customs boat, but it was acknowledged that the government has purchased and the Navy has in its possession these boats—is that a matter of contention? Can I confirm that you have received possession of these boats?

Gen. Hurley : Again, Senator, that is an on-water issue on which we cannot comment.

Senator CONROY: Could I ask the legal status in terms of the flag that the orange boats travel under once we have purchased them and they are in the possession of the Navy? Do they become Australian flagged for the purposes of international law? Could I seek clarification on that?

Mr Richardson : Firstly, Senator, we cannot comment on on-water matters, as you know. Secondly, in relation to any theoretical question about the law in that context, you would need to address to either Border Protection or the Attorney-General's Department.

Senator CONROY: I would have thought the Vice Admiral of the Navy and the CDF would be able to identify whether or not the Navy has taken possession, for whatever purposes, of a boat—and apologies if I am using the wrong description—and it has been admitted that the government and Operation Sovereign Borders has purchased them. There was a question on notice and I think Mr Pezzullo answered a question yesterday about it. What I am seeking to understand is the flag. My assumption, naturally, is that they become Australian flag vessels. Senator Johnston, are you able to help? As I said, you are the lawyer. I appreciate you are not a maritime lawyer, but I am sure Vice Admiral Griggs could answer that question for us.

Senator Johnston: I am certainly not able to help because they are under the jurisdiction of another minister.

Senator CONROY: But they are Navy assets, aren't they?

Senator Johnston: They are under the jurisdiction of—

Senator CONROY: They become Navy assets? You are prepared to identify that these assets are working for OSB, so I am now asking: are they Navy assets that are working in Operation Sovereign Borders?

Gen. Hurley : We have not said that they were working for OSB. Our response has been quite consistent that they are on-water issues. If advice exists about the legal status that those boats have over them, that is related to on-water operations for Operation Sovereign Borders. Again, it is an area we cannot enter into.

Senator CONROY: Are they Navy assets?

Gen. Hurley : I think I have just answered that question.

Senator CONROY: I assume this has already been asked for and provided. Now I am asking you to update it. But if you have not provided it, is it possible to get a list of the assets that have been provided to Operation Sovereign Borders? I just naturally assumed it had already been provided.

Gen. Hurley : We can provide you with a list of the assets that have been assigned to work on the operation.

Senator CONROY: Will it include the inflatables? Are they Navy assets now?

Gen. Hurley : I have already provided an answer to your question.

Senator CONROY: If they are not, it is easy enough to say, 'No, they are not the Navy's.'

Gen. Hurley : I have already provided an answer.

CHAIR: Senator, the commander has given his answer, so I suggest you respect it.

Senator EDWARDS: Give the dog a bone, I think!

Senator CONROY: Professor Rothwell concludes his article with a very grim assessment of the responsibility held by the Australian government should any harm come to the occupants of the lifeboats that asylum seekers are being forced to use if the original vessel is not able to be returned to Indonesia. Minister, could you tell the Senate: what is the legal liability of the Australian government if an incident were to occur involving the lifeboats?

Senator Johnston: That is a matter for the minister with responsibility for these matters. I am not that minister.

Senator CONROY: Have you, Minister, undertaken any risk assessment about this activity?

Senator Johnston: That is all a matter for the minister that I have indicated you should raise these matters with.

Senator CONROY: I would have thought that the safety and welfare of our serving personnel, and if there is a legal risk, would be something that you would have to be aware of, Minister.

Senator Johnston: They are all matters, as I have indicated to you on many occasions today, that are within Border Protection Command and Operation Sovereign Borders. They are not matters that you can put to me, because they are not matters for me.

Senator CONROY: I thought I could put to you any question revolving around the health and safety of the Navy personnel?

Senator Johnston: You can, but I am telling you that I am not the responsible minister.

Senator CONROY: Can I clarify, General: the report identifies that we made an incursion into Indonesian waters six times. We do not have an agreement with the Indonesian government for us to enter those Indonesian waters, do we? You didn't find that? You didn't discover that it was okay for them to go across the line because we have an agreement allowing those Navy vessels to do that? Or is it that they were told not to and that they have gone across the line that is the problem? Can you clarify that we do not have an agreement with the Indonesian government about the incursions?

Gen. Hurley : As the report says, the intention was to not breach Indonesian territorial waters. It is not a matter of having an agreement or not; it is our intention not to, and we did.

Senator CONROY: But you are not aware if there is an agreement? You have those informal chats. You are not aware if there is an agreement?

Mr Richardson : The Australian government specifically apologised to the Indonesian government for the breaches; so, by definition, the question of an agreement does not arise.

Senator CONROY: That seems fair: if we apologise then we do not have an agreement. It seems to make reasonable sense.

CHAIR: Are there more questions in this line?

Senator CONROY: I am happy for another senator to ask questions, but I am also happy to keep going.

CHAIR: We will go to Senator Fawcett.

Senator FAWCETT: Can I take you back to issues of budget. Mr Richardson, I do not think you were here at the time but I have previously talked to the department about the Pappas review and the issue of cost-growth pressures and specifically as that applies to sustainment funding. In the context of our earlier discussion around pressures that have been brought to bear on Defence, can I take you to table 10 on page 18 of the additional estimates statements. It indicates that, in net terms, just under $100 million additional was approved for the combination of Navy, Army and Air Force sustainment. If you take 2009 as a baseline, that leaves sustainment nearly $5 billion short according to the cost-growth figures that Pappas included.

As we look to essentially re-baseline as a function of the current work that the government is doing around budget, the audit and the white paper deliberation, can you give the committee an assurance that we will be looking to provide suitable growth in those sustainment funds so that we can actually maintain the 'forces in being' that we have.

Mr Richardson : Those questions really go to matters of government decision making in the context of budget and in the context of white paper and the like. Clearly, within that framework, sustainment has a very high priority. Clearly, we have sought to take on board Pappas. We have sought to take on board other reports in that area. In terms of giving you precise assurances of a detailed kind, I do not think we are in a position to do that; but in terms of a general commitment, yes.

Senator FAWCETT: I completely accept your word about the assurance. Obviously, that is not something you can do.

Mr Richardson : Yes.

Senator FAWCETT: But in light of providing this committee with an oversight of those areas where pressure is coming on the department, is it possible that where you, for an appropriate response to the executive's direction, have to provide less than you would like into areas of sustainment, you can start flagging those so that the parliament does have an awareness of where the pressure points are within Defence that are having to 'hurt' a little—I think you used that word before—in order to allow other things to occur within the constraints that you are given? At the moment, there is no visibility. We have asked numerous times through this process and there has been no visibility of those areas. I think that is an important thing for the parliament to understand.

Mr Richardson : I will take that on notice.

Senator FAWCETT: Can I take you to section 1.5, People, which is looking at the APS workforce. I notice that, from the actual workforce in July this year, the forecast outcome is a decrease to around 20,300 and by 2016-17 it is decreasing to around 19,155. Does that indicate that a range of decisions has already been made that look at a decline in the number of APS personnel within Defence?

Mr Richardson : Yes. You will see that between June 2012 and now the civilian workforce in Defence has declined by around 1,600. We have been taking those decisions firstly to ensure that funding pressures, as far as possible, do not impact directly on the ADF and, secondly, those decisions have also been taken simply in terms of managing the broader budgetary pressures.

Senator FAWCETT: I notice in the statements that as part of these reductions in personnel costs there was a figure of 65 ADF positions that had been backfilled into the DMO. There was also a statement around consultants and contractors—I think the total was less than one per cent of the entire workforce. Can you give the committee an assurance that as well as managing the cost of personnel you are taking due cognisance of the qualifications and experience of people who are going into jobs—particularly in technical fields, whether that be within the DMO or in financial areas—so that we are not actually seeing inefficiencies in the overall operation of the department that will exceed the cost savings we may have made by getting rid of a consultant or a contractor, or indeed a person in the APS with the appropriate skills who could run that element of their work effectively?

Mr Richardson : I can give you an assurance that we do take those factors into account. We are very conscious of the fact that the Defence workforce is, first, integrated and, second, consists of both generalists and specialists, and, particularly in the technical areas, where you do have gaps they cannot easily be filled by people without those technical skills.

Senator FAWCETT: We have had evidence before the committee in previous estimates that there have been occasions where people are filling jobs without due consideration of the competence and skill sets. Is it possible that, where Defence feels constrained to fill a position because they have somebody on the books who does not meet a job description, it can be tallied up so that we have an understanding of how cost pressures are affecting the ability of Defence to fill its positions with appropriately qualified and experienced persons?

Mr Richardson : I can take that on notice, bearing in mind that the government has announced a review of the department, including the relationship between DMO and the department. I think a lot of those issues that you go to are going to be picked up in that review. But I will take your question on notice.

Senator FAWCETT: I appreciate that, but my question is broader than just the DMO. It also impacts on Defence.

Mr Richardson : Sure.

Senator FAWCETT: Although this is listed under Army capabilities, under 1.3, it applies to all of the budget reporting. I notice in table 21 you have some specific details here about flying rate of effort in terms of revised budgets. There are no similar tables for Navy or Air Force. Can I take it that there has been no revision for those other services? Also, could you explain why the revision for Army and where you are at in terms of achieving the revised targets? Also, where are we at in terms of achieving the forecast targets for the other services?

Mr Richardson : I will refer it to General Morrison.

Lt Gen. Morrison : Are you referring specifically to MRH and ARH?

Senator FAWCETT: In the table you have CH-47 Delta and Foxtrot, S-70A-9 Black Hawk, Kiowas, ARH and MRH, and there appear to be revised figures for all. I am seeking to understand why the revision? Also, does the absence of that table for the other two services mean there has been no revision for them?

Lt Gen. Morrison : I am going to take the question on notice, because I think there are specific matters you want to look at and have addressed. I would just make the general comment that the estimates are put forward based on a projected rate of effort, which of course is reliant on the availability of spare parts or qualified staff, and during the course of a budget year all of those become variables. I would think, certainly in the case of ARH and MRH, where there have been some ongoing challenges with regard to maintaining what we see as an acceptable rate of effort, that that has led to the variance. But I will give you a more specific answer on notice.

Senator FAWCETT: I am happy with that. It is not a criticism, but it does help the committee to understand that if for a whole fleet or number of fleets within a service there are adjustments required—

Lt Gen. Morrison : That is right—

Senator FAWCETT: then we have to start asking questions: is it an issue with recruiting; or the range of personnel; or is it a contracting issue. What is it that is causing this effect? An answer on notice would be good.

Senator CONROY: I want to return to the question of orders not to go within Indonesian territorial waters. Article 33(1)(a) of the Convention on the Laws of the Sea, which talk about the contiguous zone, states:

… the coastal State may exercise the control necessary to:

(a) prevent infringement of its customs, fiscal, immigration or sanitary laws and regulations within its territory or territorial sea;

Have we taken legal advice on whether or not any aspect of Operation Sovereign Borders is in breach of article 33(1)(a)? It has been indicated that we are entering their contiguous zone and we are conducting Operation Sovereign Borders, whatever that may be—YouTube evidence suggests that it is towing boats, but you cannot confirm that. Have we taken legal advice as to whether we are potentially in breach of Indonesia's immigration laws?

Gen. Hurley : As I take it, that is specifically from its territory or territorial sea. Our explicit instructions were not to enter territorial waters.

Senator CONROY: So you do not accept that that covers their contiguous zone?

Gen. Hurley : In my mind I think it is quite clear what it covers. But I am a layman.

CHAIR: It is really a legal question.

Senator CONROY: I will probably return to that.

Gen. Hurley : Could I just add that we, the ADF, talk about a contiguous zone for Indonesia, because when we deal with their navy they talk about it. But to our knowledge Indonesia has not claimed a contiguous zone under the UNCLOS arrangements.

Senator CONROY: I was drawn to it because our minister stated that we were operating with a contiguous zone for the purposes of Operation Sovereign Borders. I was trying to find out whether Indonesia had one and we recognised it. You indicated that you did recognise it for the purposes of some operations. I will return to that one.

I want to talk about the occupational health and safety issues again, and the declaration that has been made, which is before parliament. Who did you consult prior to your decision to make a declaration under the Work Health and Safety Act removing safety duties from Australian personnel working as part of Operation Sovereign Borders?

Gen. Hurley : Obviously we consulted internally with the appropriate legal authorities within the department, and we also consulted with Comcare and the Department of Employment and received approval from the Minister for Employment.

Senator CONROY: When did you begin the development of this declaration? When did that consultation start?

Gen. Hurley : It would have been in November or so last year.

Senator CONROY: Prior to that declaration, had anyone raised concerns with you about the orders that Australian personnel were being required to issue or that they had been given? I am very specifically talking about prior to the declaration being put in place.

Gen. Hurley : We have had concerns about workplace health and safety over the last couple of years and sought to address that either in terms of the act or with mitigations that we could take.

Senator CONROY: Did you say you started that process in November?

Gen. Hurley : The declaration was, I think, on 19 December, so it would have been back into that period, yes.

Senator CONROY: Did any of the captains of the Australian vessels involved in Operation Sovereign Borders raise concerns with you about the safety of their crew in relation to the new activities that they were being asked to carry out?

Gen. Hurley : Not to my knowledge.

Senator CONROY: Vice Admiral Griggs?

Vice Adm. Griggs : Some of the COs were keen to understand that there had been legal advice. Not unreasonably given their responsibilities under the new act, they had made inquiries with us about whether there had been legal advice, and we advised that there had been.

Senator CONROY: Did you obtain legal advice for them?

Vice Adm. Griggs : Legal advice was sought as part of the declaration process.

Senator CONROY: No, I guess I was asking it in two steps. I am happy to come back to that in a moment. What prompted the decision to begin the consultations? I was trying to understand if any of the captains said, 'Look, we've been asked to do these new things, we're concerned based on our current understanding and we'd like you to go down this path of seeking an exemption.' So I am trying to understand what triggered the decision in and around November to begin the process that culminated on 19 December.

Vice Adm. Griggs : It was not triggered at the tactical level; it was triggered at the strategic level.

Senator CONROY: So there was no feedback from captains on board ships, or officers, or any personnel at that level.

Vice Adm. Griggs : Not in terms of initiating the thinking around a declaration.

Senator CONROY: But there were then questions that logically and naturally flowed from it.

Vice Adm. Griggs : Subsequently.

Senator CONROY: 'Hey, look, we're consulting.'

Vice Adm. Griggs : Correct.

Senator CONROY: Thank you. At the strategic level, as opposed to the other level you mentioned, who thought, 'Okay, we've got these new orders; we should seek advice or we should seek a change'? Was that you, Vice Admiral Griggs?

Gen. Hurley : No, it was me. You will recall that on 7 September we had a change of government and a change of policy. Therefore it would be my responsibility to ensure the review of the conduct of operations and any changes we might need to make in the direction for those operations.

Senator CONROY: So it flowed through pretty much from then. You started that process. I thought you indicated it was around November-ish that you started it.

Gen. Hurley : By my recollection. It would have become obvious, I think, when Operation Sovereign Borders was set up in late November. As we became aware of the requirement to make policy changes and therefore operational changes to set up OSB—what might OSB imply?—there would be a whole raft of issues we would look at in terms of what this operation meant for us.

Senator CONROY: So, in about late November, OSB was set up, and that triggered you to begin investigating, as you have described, and begin consultations about the need to seek an exemption—I am just making sure I have the time line—then there were questions flying backwards and forwards, as you would expect there to be, from ships' command saying: 'Can we just clarify this?'

Vice Adm. Griggs : That is correct.

Gen. Hurley : In November; I cannot give a precise date.

Senator CONROY: I will not hold you to an exact date. I am happy to take 'mid to late November'. But I just wanted to confirm it was directly as a result of the new mandate—the new government policy, the new instruction—that you wanted to review that?

Gen. Hurley : As part of a whole raft of things we would review—

Senator CONROY: Sure. There would have been a whole range of things—you would have had to implement change; kick into gear. Thank you for that. The declaration states that it only covers activities relating to the relocation of people and vessels to locations outside Australia but not the transfer of people to offshore processing facilities. Can you confirm that the activities that are covered by this declaration are new activities that were not carried out under the previous government's border protection policies?

Gen. Hurley : Only in part, because there would have been activities we were conducting prior to the change of policy that required some of these activities to occur.

Senator CONROY: In the explanatory statement it says:

… this Declaration is to ensure that Commonwealth officials and agents of the Commonwealth do not face individual criminal sanctions under the Act for giving effect to Government policy.

Could you identify what activities you were concerned about—activities that the Australian Navy and Customs personnel would be asked to do in order to give effect to the government's policies—that may have resulted in their facing individual criminal sanctions, and that led you to decide that you should recommend that this declaration be made?

Gen. Hurley : The government policy under Operation Sovereign Borders would have required personnel to operate in a hazardous, uncertain and high-tempo operational environment hazardous operational environments, which brings increased risk both to them and to people on the water. Beyond that, I really cannot comment on the nature of the operations, because it goes back to on-water operations.

Senator CONROY: You understand it is very difficult for us to form a view on something like this when you are unable to describe it to the committee, to describe to the public of Australia, or to anyone else who is listening or watching anywhere. It is a very difficult set of circumstances for us. You are asking the Senate to ratify this, but you are not able to detail how you intend to implement it.

Gen. Hurley : I have identified the nature of the environment in which personnel are going to operate, and the protections I thought necessary to put in place.

Senator CONROY: I appreciate that you have identified the nature of the environment, but I am talking about the actual activities to be undertaken in the environment. I am just indicating, and hope you can understand, that we are sort of scratching our heads, because you are not actually being allowed to tell us.

Mr Cunliffe : It is probably useful to bring the committee's focus back to the actual declaration. One of the matters, for instance, which is particularly identified within the exemption is section 39, which requires the preservation of a site. I do not think you need to be a member of the Navy or a maritime traveller to recognise that that is not practicable in the environment of ocean matters—that is by way of example. It is important not to overstate the exemption. The exemption does not take away responsibility. It leaves the responsibility with those people at a more senior level in Defence. However, it means that in the issue of the moment—the incident, however that might play out—things which the individual is under orders to do, they are able to do without the fear of criminal or civil sanction and, potentially, going to jail.

Senator CONROY: I note that a previous declaration was made by the CDF in December 2012 that excludes part of the act for all Defence members, and extra sections that are removed for warlike and for non-warlike operations. Under the previous declaration, are there any ADF personnel operating anywhere in the world, other than those involved in Operation Sovereign Borders, to whom sections 28 and 29 of the Work Health and Safety Act do not apply?

Gen. Hurley : No.

Mr Richardson : No.

Gen. Hurley : They do not, but that does not exclude the fact that we might have desired them to.

Senator CONROY: I am just asking about what is in place at the moment. So that includes SAS officers, soldiers operating in war zones, and ships looking for terrorists in the Gulf of Aden. They have to comply with section 28 and 29?

Gen. Hurley : That is correct.

Senator CONROY: When the Navy intercepts pirates or drug smugglers, as HMAS Melbourne has been doing so conspicuously in the Gulf of Aden, the crew who board those vessels are entering a potentially dangerous environment. Are there certain actions which are permitted in order to subdue a potentially uncooperative person in that circumstance?

Gen. Hurley : I think you will find that the two circumstances we might be comparing are quite different in terms of the measures that we would take on both.

Senator CONROY: That is why I am asking. What are the actions that would be undertaken in boarding a pirate vessel? We have a fairly detailed description and the captain on the record; I am sure that you said you were comfortable about the amount of information that has been provided. You have been there for 20 years. What sort of activities are permitted in order to subdue a potentially uncooperative person?

Gen. Hurley : There are rules of engagement that apply in that situation. In terms of use of force and so forth, I will not go into those; we never do. But they certainly do have certain discretions that they can use in those circumstances in the gulf.

Senator CONROY: But there is a clause about reasonable and unreasonable, and what is deemed reasonable in boarding a pirate ship with armed pirates and drugs involved is probably different to other circumstances. Is that fair?

Gen. Hurley : Again, it is an open question. Different to what? Under what circumstances? They are provided with appropriate intelligence, they have rules of engagement, they have the right equipment to deal with the issues that they face in the gulf, and that is quite distinct from some other circumstances.

Senator CONROY: So if Navy personnel, like those on HMAS Melbourne, were boarding a vessel in a war zone that potentially harboured enemy combatants, would the list of actions be longer and more lethal, given that the people on the vessel may be armed?

Gen. Hurley : They would have rules of engagement which would allow them to respond to the situation that they found.

Senator CONROY: So in both of the circumstances that we have been talking about—SAS soldiers operating in war zones and ships in the gulf—the additional risk to the health and safety of Australia Navy personnel and the risk of injury to the people on the boat that they are boarding, would be justified by the inherently dangerous situation. So the use of pepper spray or restraints or even discharging weapons might be justified under such dangerous conditions?

Gen. Hurley : Again, Senator, that would be covered in the rules of engagement for the particular operation. You would be aware from past practice, we do not talk about rules of engagement.

Senator CONROY: Let me make it very clear, everybody accepts that Navy personnel do a dangerous job and are required to make quick decisions under significant pressure. However, most of our discussions and the focus this morning have been on peacetime civilian operation, when the amount of danger that a captain can reasonably expose one of our sailors to is obviously much less. Would you equate boarding a refugee boat with boarding a pirate ship with drug smugglers on it?

Gen. Hurley : I do not think there is an issue of equating them to each other, at all. It is a matter of what is the nature of the particular task that you are going to undertake, understanding the risk in that task, being appropriately prepared with the appropriate rules of engagement to allow you to respond to the issue. So it is not an equation—

Senator CONROY: I will rephrase the question. I am assuming the rules of operation will be different in those two circumstances.

Gen. Hurley : The rules of engagement may differ, yes.

Senator CONROY: Are you concerned that the captains of Australian ships may be required to give orders which may be reasonable in a war or when dealing with armed drug smugglers or pirates but which would not be reasonable as part of Operation Sovereign Borders in order to carry out the government's policy? I am using 'reasonable' in the legal sense of the word contained in the act, not in the more generic sense.

Gen. Hurley : I would be more concerned that they are not giving illegal orders, that I am not giving illegal orders and that they are legally tasked to do the job.

CHAIR: I think Senator Fawcett has some questions.

Senator CONROY: I am happy to defer and come back.

Senator FAWCETT: I will change the tone and tack a little. We talked a little about the draw-down in Afghanistan earlier, and there has been some media about changes of allowances for people who are serving overseas. Could you outline to the committee the background to those changes?

Gen. Hurley : As we began the draw-down process in Afghanistan last year, as I think you would appreciate, the nature of the operation then began to change where our weight was. We reviewed whether we had the appropriate operational constructs in place to manage the operations and whether the operation boundaries and the nature of service in each of those operational areas were appropriate. I took the decision that we would move from one large Middle East area of operation—which, frankly, had management difficulties—to three operations: one in Afghanistan, one covering the maritime operation in the Gulf and adjacent waters and one covering our base and personnel operating in Gulf states in the area. In doing so, rather than having warlike conditions applied to a massive area of operations, we kept warlike operations in Operation Slipper, reviewed the other two operation areas and changed their nature of service.

Senator FAWCETT: To clarify: this is a process that Defence would work through regardless of any budgetary constraints. You would review on an ongoing basis the warlike nature of operations and change allowances accordingly.

Gen. Hurley : We do that quite frequently with our operations, and it has nothing to do with budget. It is about how to efficiently and effectively manage the ADF on operations.

Senator FAWCETT: Thank you. I go to a completely different topic that I believe belongs in this overview section. I would like to look at Woomera, Defence's management of the Woomera range and opening it up to mining. It is very important to us, coming from South Australia, to get our economy back on track, so we are keen to see that progress. Having run the organisation in Defence that was one of the primary users of the Woomera range, I understand completely its importance to Defence and defence capability, so I am interested in getting an update of where we are at in that process of giving miners access while still retaining the capability for Defence and our allies.

Mr Baxter : As you are no doubt aware, Senator Farrell introduced a private members' bill in December of last year to amend the legislation that governs the operation of Woomera. That legislation was debated on 13 February, and during that debate the minister indicated the government's intention to introduce its own bill which would also amend the previous legislation. The process we are going through at the moment is consultation with stakeholders, including the mining industry. Most recently that was done on 18 February, when the Woomera protected area advisory board met with a range of stakeholders, two of which were representatives of the Chamber of Minerals and Energy of South Australia. We discussed the results of a survey that the chamber had sent to its members who were operating in the Woomera area to get some feedback on how they viewed the prospect of changes which, as you know, are aimed at opening the range on a more frequent basis to multi users, be they miners, pastoralists or Indigenous occupants of the land. The feedback we got back from the Chamber of Minerals and Energy was very positive about their interactions with Defence and with the general intention of the legislation to provide more certainty around the periods in which the range might be closed for testing purposes. The government intends to use the outcomes of those stakeholder engagements to inform the amended legislation it would introduce.

Senator FAWCETT: The issue of the transition periods at the end of those periods of availability—I am conscious that we have three broad areas—is something that has been raised as a concern. Has there been any particular discussion around the compensation Defence would face should it choose to exercise its option to exclude miners for a period. That is a concern expressed to me. If they have invested in infrastructure and then have been excluded for a period, what compensation options are available? The other side for Defence, also, is, if Defence is invested in a large trial which perhaps has been held up by weather or things going wrong—which occurs—and they need one or two days more to avoid wasting all that taxpayer money, what mechanisms are being discussed to manage both parties' legitimate interests in those transitions?

Mr Baxter : We are seeking to negotiate working-level agreements—practical arrangements for notification and the like—with all of the existing users. Those discussions are ongoing as part of the stakeholder consultation. I think there is a general view that resource companies are happy with the coexistence they have with the Department of Defence. There are arrangements that mining companies can put in place in terms of the way in which they carry out their operations that would take account of the fact that there may be periods of exclusion, although we would expect those to be relatively short. Those discussions are ongoing.

Senator FAWCETT: Can you talk to the committee about the importance of the regulatory impact statement?

Mr Baxter : One of the concerns the government had with the private senators' bill that was introduced was the lack of a regulatory impact statement, and that is something the government has indicated will be included and is included in the legislation currently being drafted.

Senator FAWCETT: Thank you. That is it for this section.

Gen. Hurley : Could I read a response?

CHAIR: Please do.

Gen. Hurley : There is one from Senator Conroy. You asked: does Defence have any MOUs with any other agencies involved in OSB? Defence has an administrative agreement with the joint agency task force. This cooperative arrangement or agreement addresses the personnel management of Defence personnel working within the joint agency task force, and Defence does not have any MOUs or other agreements with other agencies within the joint agency task force.

There was a question about whether the police have been called in to investigate leaking of information in recent months. Where appropriate, allegations of unauthorised disclosure of Defence information are referred to the AFP and other relevant agencies for investigation or appropriate action. The Defence Security Authority has referred one allegation of unauthorised disclosure of Defence information to the AFP since December 2013. It would not be appropriate for us to comment on the current investigation. Obviously we treat the unauthorised disclosure of information as a serious matter, and we have a comprehensive security framework in place to address risk of compromise of official information.

Senator CONROY: Thank you. I have two follow-ups on that. Is it possible to get the admin agreement tabled or provided to the committee?

Gen. Hurley : I will take it on notice. I do not see why not, but I simply do not know.

Senator CONROY: Yes. I would not have thought it was controversial.

Gen. Hurley : How we manage people, who is responsible, the discipline, reporting and so forth.

Senator CONROY: Yes. Thank you very much for that.

You have been politely not wanting to answer any questions about the full report other than the public one, but quite a range of the information that is contained in your report was leaked to The Australian newspaper. I read some weeks before the report was finalised that there were five incursions, which turns out to be incorrect. But it was still a fairly detailed—

Gen. Hurley : Never trust media reporting, Senator.

Senator CONROY: I have long not trusted the Australian—I am sure you can find me on the record on that one! But my point is that there was clearly a substantive breach of information that was being collated for the purpose of producing your report. I trust you are familiar with that report. I think it was on the front page; you could hardly miss it. Have you called in the police to see who leaked the information that was being prepared for your report?

Gen. Hurley : I am not aware, frankly, of that particular article being weeks and weeks ahead of when the review was released, because the review took only about two weeks to do. I think the only article I am aware of came out the night of our formal release, and I think any journalist sitting down and trying to work through what had happened might have been able to put it together. So no, I am not aware of that report, and therefore I have not taken any action.

Senator CONROY: I will happily chase up the date, but did it concern you that the night before you were reporting there were online reports of what was in the report?

Gen. Hurley : Well, it was speculation; it was not accurate. It was people having their best guess. That is what the media does.

Senator CONROY: I am absolutely aware of that! Returning to the health and safety issues we were discussing before, are you concerned that there are actions like using pepper spray or restraints that Navy personnel could reasonably use in situations in which there is a clear danger to their safety, like in a war or when dealing with drug smugglers or pirates, that would not be seen as reasonable when dealing with asylum seekers?

Gen. Hurley : Again, we provide rules of engagement for our personnel who conduct operations. Those rules of engagement are not discussed, for obvious reasons.

Senator CONROY: What I am getting to is: if there were different rules of engagement, and you have indicated that there are some different rules of engagement in different circumstances, the question of what is reasonable or unreasonable—and I mean in the legal sense, not what you and I might have a conversation about—is different in those different circumstances, such as boarding a pirate ship with armed drug runners and boarding a refugee boat with nobody armed, and no-one has suggested that anyone is armed. Are you concerned not that someone would breach the orders but that you could not carry out the orders within the existing section 28 and 29?

Gen. Hurley : I think you would go back to the constraints imposed on the planning operation—I do not have the words right in front of me—in terms of the paramount importance we put on safety in relation to the operation. And, again, within rules of engagement the test of reasonable application of force and minimum force exist. All those rules are quite well understood in those processes and contained in the ROE.

Senator CONROY: As someone who is familiar with these new activities being carried out—and I am not referring to myself; I am referring to the officers at the table, or behind the table—is it your belief that this declaration is required because these new activities that you have been asked to undertake by the government are more potentially dangerous to the health and safety of Australian personnel than the previous policy?

Gen. Hurley : I think as stated in the exemption the operating environment is a hazardous environment. When I looked at a hazardous environment of that nature I sought to have an exemption put in place. In previous iterations of Operation Resolute and so forth we have worked very diligently to try to address workplace health and safety issues. We would at times have liked to have gone further than we could. But there are in place, for example, seaworthiness constraints on the number of people we could carry on our particular vessels, so we worked across a range of solutions.

Senator CONROY: Section 28(a) and 28(b) and section 29(a) and 29(b) of the Work Health and Safety Act that were suspended by the declaration both emphasise that a worker or person in a workplace must take reasonable care of their health or the health of others in their workplace. The emphasis on reasonableness allows for actions to be considered in their context and is a key part of our health and safety laws. Given the importance of context and reasonableness, would you agree that the declaration is only required if these new activities being undertaken are not only dangerous to health and safety but unreasonably dangerous to health and safety, given the context?

Gen. Hurley : The declaration is in relation to incidents or activities that could occur at sea. Some of them have occurred in the past, and this is seeking to ensure that my sailors and other personnel have appropriate protections while they do their work. To go further into the nature of the activities, again, goes into the on-water activities in Operation Sovereign Borders, which is not my purview.

Senator CONROY: I sympathise with you, General, that you are not allowed to provide information to the Senate to allow the Senate to deliberate fully on this.

Gen. Hurley : It is not that I am not allowed to. There are other authorities who are responsible for answering the question.

Senator CONROY: You are seeking it, so it is unreasonable for me to want to ask you questions about it, and you are not imposing the constraint on yourself to not answer the questions? Are defence personnel legally bound to follow all lawful commands that they are given? The explanatory statement of the CDF's declaration says that its purpose is 'to ensure that Commonwealth officials and agents of the Commonwealth do not face individual criminal sanctions under the act for giving effect to government policy'. Is a command lawful if it asks someone to do something that may place that person in breach of Australian law and at risk of individual criminal sanction?

Gen. Hurley : That goes back to the answer I gave to a previous question. I would not expect my subordinates to give unlawful orders. You would not expect me to give unlawful orders. I do not give unlawful orders. I am obviously very careful of that; I have not done it for 42 years and I am not about to start. So, in relation to this I seek legal advice, I ensure that the orders are lawful and ask them to carry them out lawfully.

Senator CONROY: Your statement expresses a concern that some of the actions being undertaken as part of Operation Sovereign Borders may be in breach of Australian law. I hope I am not verballing you when I say that, but please tell me if you think I am. Your declaration removes the risk of individual criminal prosecution from some Navy personnel involved. But my understanding is that it does not apply to those in operational command.

Gen. Hurley : Again, you have asked two questions in one there. Could you point out where I am telling people that they are in breach of the law?

Senator CONROY: As I said, I did not want to verbal you. I will get the reference. But my general reading of it—and, as I said, if you think that is an unfair representation—

Gen. Hurley : I think what the exemption does is say that there may be occasions when you cannot observe the law as it applies to you individually. But you are correct in your second point to say that it really only talks about the workers at the workplace; it does not absolve me or any other relevant member of the department from their responsibilities under the act.

Senator CONROY: I do not want to split legal or definitional hairs, but you indicate that they—and I will try to exactly remember your words—cannot always observe the law. Is that what you said? Or there might be a circumstance when they cannot observe the law.

Gen. Hurley : Correct.

Senator XENOPHON: I want to ask questions of the department and of Defence generally in relation to fraud prevention. In response to a reply to question 60 in the questions on notice at Senate budget estimates on 3 or 4 June last year, I think the department advised that Defence does not currently intend to propose the release of the Busuttil report. My question is in respect of that. Can you provide the official name of the naval board of inquiry that it refers to? Secondly, can you provide the terms of reference that was given to it? Further, can you provide the date that the completed report was presented to the then Chief of Navy. And, finally, can you provide the distribution list of who received the report? I think that report related to allegations of fraud within a particular facility.

Mr Richardson : I think it would be best if we took the detail of that question on notice.

Senator XENOPHON: Yes. There were four particular details of that.

Mr Richardson : Understood.

Senator XENOPHON: This is an issue I have had and constituents have had. Last November, in relation to question 44 on notice in respect of the Defence implementation of audit recommendations, the response was that therefore the ANAO had acknowledged that Defence does have systems to centrally monitor the progress of both ANAO and internal audit recommendations, and Defence had agreed to the ANAO's recommendation of implementing a system for monitoring recommendations or reforms for major reviews. Given that the management of major reviews and major projects has been a significant issue for successive defence and finance ministers over the years, I am just trying to establish why it appears that the ANAO's recommendations have not yet been implemented in respect of dealing with these issues of managing projects. In other words, is there an appropriate monitoring system to deal with the matters raised by the ANAO in terms of monitoring major projects and having a system in place to do—

Mr Richardson : We certainly have a monitoring process, and Warren King, I think, can go into that in more detail.

Senator XENOPHON: Before Mr King does that: as I understand it, other Australian government departments may have monitoring systems that are suitable to the ANAO's recommendation that could be used in the meantime to build up the system. As I understand it, there were questions raised about whether the monitoring system is as robust as it is for the other agencies. I may be wrong on that, but that was my understanding.

Mr Richardson : I do not think any other department in the Commonwealth has projects that even come close to the complexity of the Defence projects.

Senator XENOPHON: But also it is whether the monitoring systems in place are as adequate as I think the ANAO was alluding that they should be.

Mr Richardson : Right.

Mr King : To the broader question of monitoring audits, we do, across the whole department. One of the challenges you have in monitoring audit recommendations, particularly in my area—the major projects area—is that not only do you have to monitor your work but you have to be able to demonstrate satisfactorily that you have implemented the recommendation just by process and by evidence. For example, the ANAO might say that in tendering for a project we should take account of a certain matter. We then put in place the process inside our tendering processes that reflects the ANAO report. But then we also have to demonstrate by evidence that we are implementing that. That can take some time, because you might need to assemble objective evidence that you have implemented that for a range of projects and therefore it has become business. So, I believe the answer to the question is, yes, we do have a robust method of managing our audit reports, and we do follow up, and in fact we at the senior committees review it regularly to make sure that we are implementing those actions.

Senator XENOPHON: I am sorry to interrupt. If you could provide more details about the methodology and systems in place without in any way compromising the integrity of what you are doing, I think that would be useful. In question on notice No. 46 last November in respect of fraud investigators, the response was that no ADFIS investigators had had a rotation with the Fraud Control and Investigations Branch. I am just trying to establish— again, I am happy to do that on notice—how you are satisfied that Defence has in place appropriate fraud prevention, detection, investigation, reporting, data collection, procedures and processes that meet the specific needs of Defence in terms of the level of training of those officers. Again, I am not in any way reflecting on their integrity. It is a question of: do they have the support, the training and the resources to combat appropriately any fraud that may occur within Defence?

Mr Richardson : I will take that on notice, but I will give a general answer to your question. We do get regular reporting in respect of allegations or concerns regarding fraud and the like. We do train people properly. And we—

Senator XENOPHON: Could I get details of what that level of training is? Again, this is not a reflection on the investigators. It has been put to me that there may be scope for improvement in the level of training they have and that compared to other fraud investigators they may not have the same level of training. That may or may not be the case.

Mr Richardson : There could be scope for improvement, and we will certainly provide you with the details.

CHAIR: The committee will adjourn for lunch.

Proceedings suspended from 13 : 01 to 14 : 05

CHAIR: The committee will resume.

Gen. Hurley : Before we begin, could I correct some evidence I gave earlier to Senator Conroy?

CHAIR: By all means.

Gen. Hurley : We discussed earlier about when I first considered the OH&S exemption or declaration. I kept going back to November, but, frankly, my mind was not clear on that. I thought it was not quite right and I have had that checked during the lunch break. I received the first brief on a proposal to seek a declaration on 9 September, and I signed the submission to the minister on 19 September last year. So it was earlier than I thought and, not wanting to mislead the committee, I thought I would clarify that.

Senator CONROY: No, I appreciate that. So almost immediately that the government advised of their new policy you started the preparations on that and a whole range of other things?

Gen. Hurley : Yes, and Sovereign Borders was set up on or about 19 September. I just wanted to clarify that.

Senator CONROY: Thank you for clarifying. Pursuant to the discussion we were having before lunch and the update you just gave me, has there been any change to the equipment and training that Australian Navy personnel receive since the change of government? Has anything been added to or removed from the equipment?

Gen. Hurley : I do not believe anything has been removed. As you would expect with a new operation, there has been training relevant to that operation conducted, yes.

Senator CONROY: There has been?

Gen. Hurley : Yes.

Senator CONROY: So the training has changed, but there has been no new equipment, did you say?

Gen. Hurley : Not that I am aware of, no. I think the Chief of Navy is saying no.

Senator CONROY: What new training has been added to the training roster?

Vice Adm. Griggs : Training that now reflects the scope of the operation.

Senator CONROY: It cannot be a matter of national security what training is being provided to our service personnel. It is by definition not actually in Operation Sovereign Borders.

Vice Adm. Griggs : Yes, but if I talk about the type of training I will be going to on-water matters and the techniques and procedures that may be used on water.

Senator CONROY: It is reaching a slightly silly stage when we cannot even ask you and receive an answer about the training that our military personnel are receiving as standard training—it is augmented, but it is now part of the standard training package. It just beggars belief and seems a little silly that you are unable to provide the simplest of answers about the officers and personnel under your command.

Gen. Hurley : It really goes back to the question you asked about what information is releasable and so forth. One of the things a military does when it starts military planning is apply its doctrine. I will read out one of the things we do.

When we are planning for operations, we look at the information requirements across the battle space. In that process, in the intelligence work we do, we have an element of knowledge which we call 'essential elements of friendly information'. Doctrinally, I will just read out the definition of that:

Essential elements of friendly information are elements of friendly information which, if known by an adversary, would compromise friendly plans or operations through indicators of dispositions, capabilities and intentions.

Essential elements of friendly information are likely to be sought by adversary intelligence elements.

Identified and managed by the Op staff, these elements of information are protected by the operational security plan and the counterintelligence plan.

That is our doctrine. When I bring those planning skills to bear in Operation Sovereign Borders, as we did, by providing General Campbell and military staff to the planning process, that is the doctrinal basis by which he starts weaning out which information should be released and not and which information needs to be protected, because if it falls into the hands of an adversary—and in this case we are not talking about people on boats; we are talking about people trafficking in human lives, the people smugglers—they have information on how we do business, how we train to do that business and the conduct of operations on water and we give them an advantage we do not want to give them. That is pure military doctrine responding to the way we do business.

Senator CONROY: That is exactly the conversation we had about HMAS Melbourne this morning. You have been prepared to reveal extensive operational details, including things like: 'If it does not smell of fish, then it is probably doing something other than fishing'—which would suggest to me that, if I were a drug smuggler, I would make sure that there were some fish in the nets the next time an Australian boat came sailing up to me and there was a fish smell on the boat.

Gen. Hurley : I go back to the comment I made earlier. We have been operating there for 21 years. People know us. People know how we do business. They know how the allied forces do business. The essential elements of friendly information that that force commander wants to protect are different to what I might want to protect or General Campbell might want to protect in an operation that has been running for four months. There are quite distinct differences.

Senator CONROY: Whether or not an Australian purchased lifeboat is flagged Australian can hardly fall into that category. More importantly, it is a civilian operation. I appreciate it is requiring military expertise, military assets and military application but, to cast the net so wide that a majority of Australians in any survey that has been published on this issue do not agree with you—I do not mean you personally; I mean the government—is an extraordinarily broad way to try to define, as I think you described it, the 'battle space'. I repeat: this is a civilian operation. I guess we are going to agree to disagree. That is one of the reasons that was put forward. Another one that was put forward was that we cannot afford to or we do not want to offend our neighbours. I take that as a reference to Indonesia in general. In Operations Sovereign Borders that could be broader than that. I do not agree and the majority of Australians do not agree that Australians cannot be told what is going on because we might offend Indonesia. A large number of Australians say they find it offensive that they cannot be told what is going on and are offended by the government's unwillingness to provide basic information. It has led to a tragedy and people want to be confident that it will not lead to further tragedies—which will be entirely at the door of the government and nobody else.

Gen. Hurley : I hear what you say but it is also the gift of the commander responsible for running the operation to determine what he sees as essential to allow him to successfully conduct the operation and what information he needs to protect.

Senator CONROY: We are going to agree to disagree about whether or not offending Australians is more important than offending Indonesians, because that is clearly what is really going on. We are in a situation where the government stated that we cannot afford to release information because it might offend some of our neighbours/Indonesia. For the government to treat Australians that way is just unacceptable. There will be an increasing outcry. As I think I said earlier today, it is a difficult circumstance. The military is being dragged to this position that no-one wants them to be in. There will continue to be increased disquiet because the Australian government will not come clean with the Australian public.

Mr Richardson : I might add that I think it is fair to say that polling is more a matter for political parties and governments and oppositions. The ADF does not conduct polling. It has other responsibilities, as General Hurley said.

Senator CONROY: I am not suggesting it should pay any attention. My comments are largely directed at the minister at the table. I am responding to General Hurley but my comments are more pointed at the minister. Only the government can change the position and so it is the government that is able to change the position. It could easily say to the individuals involved, 'Just hold a press conference, clear it up and let officers on the boats stand up and say: "We did not burn anyone's hands. This is an outrageous slur on the military and we want to forcefully reject it."'

Mr Richardson : Senator, I—

Senator CONROY: All of that is in the gift of the minister, not anywhere else.

Mr Richardson : Firstly, I would have thought what the Chief of Navy has said on that matter is unambiguous and clear. Secondly, were the government to ignore the advice of the ADF in terms of operational security—you referred to one tragedy—you could have many more tragedies.

Senator CONROY: I have long had a position of wanting every single boat to be stopped. If you talk to anyone who knows me, my position has been well known by the previous cabinet, my party colleagues and any journalist or anyone who has ever asked me what my position is. I am for the toughest possible approach to stop boats and to stop anyone getting on a boat. But we are in different circumstances now. I appreciate that you are trying to help, Mr Richardson. My comments, as I said, are mainly directed towards the minister and the cabinet who have taken the decisions to order Australian soldiers into a civil operation, into very dangerous situations, and then to put a clampdown on basic information which you can readily look at on YouTube. It does come to a point when you have YouTube video of which the minister says, 'I am not going to comment on it,' and it is clearly an Australian boat towing a life raft of considerable size towards Indonesia. It is just an absurdity, when that information is publicly available, for you to pretend it is not there or pretend you cannot comment on it. It is just absurd.

Mr Richardson : I have to say that I may be wrong but from this distance I could not see on the YouTube video a sign saying 'Indonesia this way'. There appears to be an assumption of the direction in which the ship was going.

Senator CONROY: This is my case in point. I should be able to say to you, Mr Richardson: 'Where are they heading to? Are they towing them to Christmas Island? Are they towing them to Manus Island? Are they towing them to the mainland of Australia? Where are they towing them?' And you should be able to simply give me an answer. Simply admitting the video we see in front of us will not destroy the structural integrity of the mission. So that is actually my point. We should be able to elicit those simple pieces of information and it is entirely in the minister's gift to do so.

Senator Johnston: We will just have to agree to disagree, won't we!

Senator CONROY: We will continue to agree to disagree. But what you should understand is you are—

Senator Johnston: Do we have any questions?

Senator CONROY: I am just responding to the commentary from Mr Richardson. I am happy to go to questions.

Senator Johnston: I think he was answering your question.

CHAIR: I think we should go to questions. I do not think we are going come to any comment about this from the military or their reasons for policy.

Senator CONROY: It is entirely on the minister's head and the government's head that the Defence personnel are being placed in this situation.

Senator Johnston: That worries me! I look frightened, don't I!

CHAIR: Senator Conroy, let's go to questions now.

Senator CONROY: Could I ask when the new training was carried out? I understand from comments that the minister has made publicly that a high turnover takes place—I cannot remember the exact words that the minister used in his first press conference—and that there was a high rotation of the personnel. Perhaps you could clarify. I am sure you have a copy of the minister's press conference transcripts. When is that training taking place? How are you managing to fit the training in? How extensive is it? How long does it take? Is it an hour? Is it four hours? Is it a day's worth of training? How do you manage to do that, given the operational constraints that you have?

Vice Adm. Griggs : It depends where the ship is in the cycle.

Senator CONROY: It is not on board the ship, though.

Vice Adm. Griggs : Yes, it is.

Senator CONROY: It is on board the ship.

Vice Adm. Griggs : Some of the ships were already in the operation, and they did work while they were assigned. Then those that come in will be trained in the new techniques.

Senator CONROY: Have you had to bring somebody in to provide the new training?

Vice Adm. Griggs : Our sea training group has responsibility to do it.

Senator CONROY: Obviously, I was a bit too broad there. Have you had to bring personnel in from outside, including your own personnel, to conduct the training on board?

Vice Adm. Griggs : Yes.

Senator CONROY: Has everybody completed it?

Vice Adm. Griggs : It is an ongoing process. We have 21 Armidale crews, and as each new major fleet unit comes in they need to be brought up to speed for the operation.

Senator CONROY: How long does the training package take? Is it an hour? Is it four hours?

Vice Adm. Griggs : The standard package for the operation takes around a week.

Senator CONROY: One week of training.

Vice Adm. Griggs : Yes.

Senator CONROY: This is for the new training that I am talking about.

Vice Adm. Griggs : No, it is integrated in, so I cannot really extract it.

Senator CONROY: When was it integrated in? Was it after 19 December when the order was put out?

Vice Adm. Griggs : Yes, it was around that time.

Senator CONROY: It must have been fairly difficult, given the large number of personnel. How many personnel was it?

Vice Adm. Griggs : We have around 800 naval personnel assigned at any one time.

Senator CONROY: It must have been fairly difficult to get all of the 800 trained, given that the training is a week long, if you only started around the 19th.

Vice Adm. Griggs : This is collective training, not individual training, so it is teams that are trained.

Gen. Hurley : Much of it would have occurred concurrently on the same or similar platforms.

Senator CONROY: When you say 'similar platforms', what do you mean?

Gen. Hurley : On the same types of vessels.

Senator CONROY: Have there been any changes to the occupational health and safety briefings that Australian personnel receive since the change of government?

Gen. Hurley : The briefings would have been updated in relation to informing them of the nature of the declaration.

Senator CONROY: Are cameras usually part of the equipment that personnel carry in the Navy, in the general situation?

Vice Adm. Griggs : Are you asking whether we have cameras on board?

Senator CONROY: No. Are there cameras on each individual? I will work backwards.

Vice Adm. Griggs : No, there are not.

Senator CONROY: My recollection of discussions over the 5½ years that I was in cabinet and occasionally attended national security meetings and of earlier incidents is that the Navy started filming all incidents—for good reason—so that they could, if necessary, defend themselves from outrageous accusations. Are there cameras on each ship? Is it just one camera? Are there multiple cameras? Are cameras put in place if you have to have people travelling on board that are not part of the personnel? I am just looking to understand. There may be a gradation of questions where you say, 'Yes,' 'Yes,' and then, 'I can't answer,' but I am just interested in what the logistical situation is with cameras on board.

Vice Adm. Griggs : In general terms, we will use a combination of fixed equipment, like a thermal imaging camera or a TV camera that is fixed to part of a weapons system, for example. Depending on the activity—and I am not referring here to Sovereign Borders—we may have a camera as part of a boarding party or something like that.

Senator CONROY: A boarding party, did you say?

Vice Adm. Griggs : It may do. It depends on the circumstances.

Senator CONROY: It is not mandatory.

Vice Adm. Griggs : No, I don't think it is mandatory.

Senator CONROY: Okay. I know that other senators had questions in 1.1. I was probably going to move on—

CHAIR: Before we move on, Senator Farrell has questions.

Senator FARRELL: General Hurley, I appreciate you were not here at the last estimates. We put some questions on notice that related to the memorial wall and you were kind enough to respond in some quite detail to the questions that we ask. Do you recall those answers?

Gen. Hurley : Not off the top of my head, Senator.

Senator FARRELL: It was question on notice No. 44. It related to the decision to not repatriate the memorial—

Gen. Hurley : Sure, I know the issue.

Senator FARRELL: In summarising what you said, I think there were basically three reasons you gave for not repatriating the wall. The first one was that it was an international memorial; it wasn't a purely Australian memorial. There were a number of other countries, including the United States and the Netherlands, whose soldiers were commemorated on the wall as well as the Australians. That was obviously an issue for consideration.

The second one was the issue that related to the attitude of the families. I think you made it clear in your responses that you believed it was the wish of the families that the memorial be decommissioned and left in Afghanistan. I think the third one was the practicalities of bringing a wall of the size that it was back to Australia. Would you agree they were essentially the three reasons?

Gen. Hurley : Yes.

Senator FARRELL: What I would like to ask you about is, in making those decisions, on the first issue—the attitude of the other countries—at any stage were there discussions with the government with a request to consult with the countries whose soldiers had also been commemorated on the memorial to see if they would be comfortable with that memorial coming back to Australia rather than being left in Afghanistan?

Gen. Hurley : Yes, we consulted with representatives of each of the nations represented on the wall about the future of the wall.

Senator FARRELL: The question I am asking is: were there discussions with the Australian government about whether they would like to raise those issues with the other countries—for instance, the United States or the Netherlands—about whether they might be comfortable with the memorial coming to Australia rather than being left in Afghanistan?

Gen. Hurley : No, we did not go back up through government; we went through government representatives from those other countries.

Senator FARRELL: So there was no discussion with the government about whether or not they would be prepared to raise the issue with the governments of those other countries?

Gen. Hurley : Not in a formal sense, but I think I would have discussed it the minister at the time.

Senator FARRELL: I see. Did he volunteer to have any discussions with those other countries?

Gen. Hurley : Not that I am aware of.

Senator FARRELL: All right. The second issue I mentioned before is the attitude of the families. As you indicated in your response, the families were comfortable with the memorial being left in Afghanistan. I suppose the question here is: what were the options that were given to the families. Obviously, if your son has died tragically in Afghanistan the choice is either leaving the memorial where it is, and potentially having it desecrated by the enemy, and decommissioning it—as was the case—and bringing those parts of it back to Australia that have some relevance to Australia. If those were the choices I do not think there would be many families who would choose the former choice. But, at any stage in the discussions, was the option given to the families to repatriate the memorials to Australia—and, in particular, were there any discussions with the government about seeing whether they would be prepared to assist or cooperate in the repatriation as a third alternative to the other two that you mentioned in your answer?

Gen. Hurley : I gave them every alternative, including bringing a piece of it back home—which I have done—that they can all have a piece of.

Senator FARRELL: Yes, I am aware you have brought a small piece back—

Gen. Hurley : So I gave them every alternative—if they wanted to bring it home, they could have told me that.

Senator FARRELL: No, I am asking whether you raised with the government those three alternatives and was there any indication from the government as to whether they would be comfortable with the memorial being returned to Australia?

Gen. Hurley : No, I did not raise it with the government. I approached the families and told them any of the options were open to them.

Senator FARRELL: Okay. The third reason, of course, was the size of the memorial. Again, was there any indication from the government that they would be prepared to assist financially in bringing that memorial back to Australia? Because, as you would be aware, the Director of the Australian War Memorial made it very clear that he was comfortable with the War Memorial taking over control of the memorial.

Gen. Hurley : Senator, I did not approach the government for funding to bring it back.

Senator FARRELL: Okay, thank you. That completes my questions.

Senator IAN MACDONALD: I have questions on 1.2 that I am happy to go on with, if everyone has finished with 1.1.

CHAIR: No, Senator Fawcett has some questions.

Senator FAWCETT: Thank you. You probably would be aware of my distinct interest in seeing defence industry becoming formally recognised as a fundamental input to capability for defence. So I am frequently exercised by the way Defence looks at defence industry as part of its first- and second-pass to government. I would like to understand: do you at the moment, or do you have any plans, when you come to government with the first- and second-pass, present not only the MOTS option, which Mortimer and Kinnaird have encouraged you to do, but also present an option that is manufactured or part-manufactured and supported in Australia so government can weigh up whether they do not just give picks and six and some money to train people but actually give industry the ability to produce the capability to support equipment through life?

Mr Richardson : I will answer in broad detail and Mr King will no doubt provide more. We certainly do not have a rule which says we must do that, because, with some bias such with as the joint strike fighter, self-evidently there is not an Australian alternative. However, we do, where we can, look at those options. We look at the differential in terms of cost; we look at the differential in terms of schedule; we look at the alternatives in terms of school sets available and the like. We certainly, even with major aircraft purchases, look at what spinoff there can be for Australian industry. That is often part of the negotiating process. For instance, there is an MOU, as you know, between ourselves and Lockheed Martin in respect of the JSF. It does not commit; nonetheless, it provides a framework. We look at the through-life cost and through-life sustainment. By and large, if you look at the acquisition cost, from memory about 40-odd per cent of acquisitions are within Australia, about 63 per cent of sustainment costs are totally within Australia, and the sustainment through-life costs often relate to industry. That is the broad, but Mr King has no doubt got more detail than that.

Senator FAWCETT: Specifically, before Mr King answers, the answer that is often given is that it is not economic—it is not value for money for a manufacturer to come to Australia and set up a production line. That option is often closed because people are not looking at the second order effects that might flow through over the next 10 years. I am aware of Treasury's objection to second order effects. You can look at the auto industry as an example, where you might support a car manufacturer to make cars but you cannot make people buy the cars, so you have no guaranteed return on your investment. Defence is a different situation, though. I have just had the Productivity Commission confirm that in estimates. They see Defence procurement as very different because you have one customer who not only is committed to buying but also is committed to sustain a capability through its life. So the whole input-output modelling would be quite different for Defence than it would be for any other industry sector. Have you tested that proposition with Treasury such that, when you are considering value for money, government can look at the range of options, which may include a manufactured in Australia option, which will then inform what it considers to be best value for money from the whole-of-government perspective, particularly creating that ability for industry to really be one of your fundamental—

Mr Richardson : I do not know whether we have at any point in the past looked at that as an option. I would say that I believe we have an obligation when we present options to government. We normally put a number of options to government. I can understand why some would not agree with it and may not be impressed, but we look at how far the government's defence dollars will go. So, if doing something in Australia is going to cost X millions more, then we believe we have an obligation to point that out. Quite clearly, it is the prerogative of the ministers to bring into play other considerations, such as industry policy and the like. Governments down through the years have often done that. I am not aware that we have pursued the sort of modelling that I think you are pointing to.

Mr King : I think the secretary summed it up pretty fulsomely. If there is a suggestion, Senator, in your question that we do not look at that, I do not think that is correct. We do look at that. There are clearly cases, such as C17s, where we look at in-country support, facilities and so on, but the notion of trying to have a viable alternative for that would be clearly just not there. In those sorts of cases one of the better things we have been doing is the global supply chain initiative, where we are engaging with the supplier of the core equipment to engage with our companies on a broader base for a supply across a range of their products. That is really generating some good business for Australia.

My experience has been, in my period in DMO, that governments are vitally interested in the industry. We can go back to approvals for the LHD, for example, where the options were considered about a completely offshore build, or a hybrid build, or an onshore build. We let industry make proposals to us and we did not cut off options. We asked industry for their proposals. We then took that information and how it contributed to Australian shipbuilding capability to government and government made decisions.

Senator FAWCETT: Thank you for that. There are two points that I would make and they are essentially questions. The government does sometimes cut off options because of Treasury's normal declared position to not consider second-order effects. I am aware that industry, at times—not for things like C17s but for things where it makes sense to look at an MSA option—have put forward options, but the value-for-money consideration includes second-order effects. My question is: if you have not worked with Treasury to find a way to consider that to date, will you consider it? With things like the C17 and other supply chains I completely agree that we are not going to manufacture those in Australia, but is there consideration of which parts of the support work we would seek to do onshore. My question is: is Defence looking at that strategically in terms of what elements of engineering or manufacturing capability do we need to sustain a capability, or is it predominantly being looked at in terms of where can we generate some jobs? They are very different equations and the second one is great for industry policy and employment but the first one is critical if we see Defence industry being one of our fixes.

Mr King : The answer is that we do look at it on the basis of capabilities, which is to the second part of your question. The first part is that I think we can engage with Treasury on that point you make. Of course, Treasury might have their own views about that.

Senator FAWCETT: I am sure they would.

Mr King : On the second one we do not just treat it globally. Certainly in my case, in terms of assembling evidence or material on which government can make informed decisions, it is not simply about jobs and the grossed-up number of jobs. Clearly that is important but what is more important is what are the spectrum of jobs, tasks, that allow us to have a capable industry to support our capabilities into the future. That is engineering, project management, that whole range of jobs. The Future Submarine Industry Skilling Plan, for example, which I produced after the last government, went into some detail about the various classes of jobs and skill levels you need to have shipbuilding in Australia and indeed the core capabilities beyond which if you fell beneath, for example, you may not have a viable industry base. We do look at all of those matters. There is not necessarily a prescriptive answer to everything. They have to be summed for a government to understand what its position is on that matter.

Senator FAWCETT: Could I go to the US Marine Corps pivot and the use of Darwin as a training area. This goes to the international engagement part of 1.1. In addition to the training in the Northern Territory has consideration been given to them using, in conjunction with Australian forces, the Cultana range and the rail link that connects Darwin, and looking at the potential for warehousing of US equipment in Australia when they are not actually using it. My discussions with US forces have indicated that their acquis costs are significant for them getting equipment in and out of country. I am interested to know whether we are looking at a bigger picture in terms of the kind of collaboration we can get between our forces, their forces in training and our industry with the ability to build its resilience by having a larger customer base to work with.

Mr Richardson : Certainly, looking at some warehousing in terms of consideration of use of specific training areas, I think Chief of Army may be in a better position to answer.

Senator IAN MACDONALD: Before you answer, General, can I add to Senator Fawcett's question the term Queensland and High Range as well as Cultana.

Lt Gen. Morrison : The discussions with the United States Marine Corps at a defence, and certainly Army to Marine Corps level, has focused on marines being able to do individual or small-team training in the training areas adjacent to Robertson Barracks in Darwin and then to use Bradshaw, the large training area about 600 kilometres south-west of Darwin, as their primary training area. At the moment Cultana does not afford opportunities for American use. It is pretty limited for Australian use at the moment and, until the expansion goes through, there is very genuine concern about the environmental impact that large training activities would have at Cultana. In terms of High Range—

Senator FAWCETT: Can I clarify those concerns? You premise that by saying 'before the expansion goes through'. Do those concerns remain after the expansion, or are they only there predominantly before?

Lt Gen Morrison : There will always be legitimate and considerable environmental concerns about Cultana, and that will weigh heavily on whatever use is made of it. The expansion will allow for significantly more troops to exercise there but, most importantly, it will allow for various parts of the training area to be rotated so that the environmental impact is lessened significantly. With regard to any other training areas, there has been no discussion with the United States Marine Corps. I would like to note that the 3rd Brigade and other parts of the Australian Army make very significant use of High Range training area at the moment. We would need to look at these matters with a view to the long term. As the current Chief of Army, I would have to be certain in providing advice through CDF to government that we could accommodate the US Marine Corps in large numbers in training areas which we are already using to a very great extent.

Gen. Hurley : Senator, be mindful that Shoalwater Bay at the moment has considerable use by the Singaporean armed forces for the back end of the year. We are in the business of trying to manage access to training areas.

Senator FAWCETT: So that we get it on the record, my understanding is that despite quite intense use by Australian forces and the Singaporeans, who I believe also warehouse equipment, Shoalwater Bay is regarded as an exemplar of environmental management. For people listening to this conversation who might have concerns, whether it be in the Northern Territory or South Australia, that Defence is somehow going to trash the environment, Shoalwater Bay provides a good example of the fact that we can, in fact, manage that land use very well.

Lt Gen. Morrison : I absolutely agree that the long-term management of Shoalwater Bay since the sixties has been an example of how military forces can operate in an area and pay very keen and due regard to the environment and, indeed, improve the environment because of the way the training area is managed. If I gave any imputation that my concerns around Cultana were that we would have an adverse environmental impact, I would like to correct that. As I said, the expansion of Cultana will enable us to rotate forces in training areas around Cultana in order to manage, in an exemplary way, that environment as well, as will be the case in Bradshaw.

Senator FAWCETT: And, coming back to Bradshaw, would you like to make any remarks to the committee about the benefits to date that you have seen from the presence of the US Marine Corps?

Mr Richardson : I will leave it up to others, but first of all we have had some tabletop exercises involving the Indonesians, I believe. That is beneficial in a regional context, particularly on humanitarian disaster relief. Of course, we have only had two rotations up till now; they have been at the smaller end of the spectrum. I think this year we move to the higher level rotations of about 1,100, but we will not build to the 2,500-odd that were announced in 2011 until sometime around 2017.

Senator FAWCETT: Turning to a different international relationship, given the media recently about the three Chinese vessels that sailed through the waters to our near north, could you comment on the state of Australia's relationship with China from a Defence perspective.

Mr Richardson : I think the Defence relationship with China is in pretty good shape. We take the relationship seriously. There have been CDF/secretary level discussions with the Chinese, now, for some 16 or 17 years. Normally when those meetings take place in Australia the Chinese are represented at deputy level; I should say that normally when those discussions take place in Australia they are conducted at deputy level. The last dialogue was in January of this year. I think there were quite a number of visits both ways between Australia and China last year, and we have more planned this year.

Senator FAWCETT: Bearing in mind some of the concerns reported in the media about a lack of transparency in terms of the Chinese build-up and intentions, does the government have a view on that that is informed by the dialogue you have had?

Mr Richardson : We continue to talk with the Chinese about increased transparency. That remains a matter which we continue to discuss. I would not think we are in the spot where we would like to be just yet.

Senator FAWCETT: In terms of the strategic competition between the United States and China, again, there has been a lot of debate and discussion about Australia's role in that. From a Defence perspective, does the government have any concerns?

Mr Richardson : We are aware of the commentary and debate. Quite obviously, we have a formal alliance with the United States going back decades; that is not up for grabs. We continue to conduct our relationship with the United States accordingly. We see no contradiction between that and developing our relationship with China. Indeed, I would note that the Americans themselves are increasing their own engagement with the Chinese at the defence level. Clearly, as Chinese capability develops, we and others would like to see some progress in establishing rules of the game. For instance, the Americans and the Soviets during the Cold War had protocols in terms of incidents at sea. Obviously, we are not in a cold war situation; the relationship between China and the United States is very different. Nonetheless, it would be good to see progress in such areas.

Senator FAWCETT: There have been some concerns raised about this government's relationship with Japan, with some people concerned that that will have an impact on our relationship with China. Does the department have a view on that?

Mr Richardson : So far, I believe our relationship with Japan and our relationship with China have both been able to progress in parallel. Clearly, our relationship with Japan is more sophisticated and more established than what it is with China in the defence arena. We have, for instance, for quite a number of years had a trilateral strategic dialogue between the US, Japan and Australia, and clearly the level of our defence engagement with Japan is considerably ahead of what it is with China. That is what you would expect. But I do not believe the former has adversely impacted on the latter so far.

Senator FAWCETT: Sure. In my view, there has been some fairly alarmist reporting about the passage of those three vessels in Australia's near northern waters. Does the department have any comment on whether Australian was aware of them, involved in the planning, had concerns about it?

Mr Richardson : The comments I would make on that—others may wish to offer more—would be, firstly, there was press reporting in China about the visits; secondly, we have known for years that China was developing a bluewater naval capability. It was only a matter of time before Chinese naval vessels sailed through the Sunda Strait, turned left instead of right and went back up through the Lombok Strait. That is a significant development in the sense that it is the first time it has happened. Nonetheless, it should not be a surprise and, as China develops its bluewater naval capability, which it has a right to do, we will see China engage in more exercising of that kind and probably further afield. That will impact, or has the potential to impact, on our strategic circumstances, but that is something that has been known to us as a development for some years.

Senator FAWCETT: This is my last question regarding China. Is there any intent to increase the level of cooperation in the antipiracy operations off the east coast of Africa? My understanding is they are currently there but largely do their own thing. Is there a plan to try and increase the coordination and cooperation?

Mr Richardson : I am not aware of any.

Gen. Hurley : I am not aware of any. We certainly do not have any plans to increase the activities. We would take it on an opportunity basis with them over there. They stand outside the normal command-and-control structures that exist there and come in as required. They make the right sorts of communications and connections and so forth, but they are not an integral member of many of the operations that are over there.

Vice Adm. Griggs : Senator, the process that the Chinese are involved in is a planning and synchronisation process called SHADE—I cannot remember the exact, full title of it. As you know, there is a NATO task force there, there is a combined maritime force task force, there is an EU task force and there are a number of independent deployers, of which China is one. The SHADE mechanism was put in place to try and synchronise the 30-odd navies that are inhabiting those waters. That is the process that they are involved in.

Senator FAWCETT: Thank you.

CHAIR: I also have a question about China and the Chinese navy and its activities to the west of the Lombok Strait. Is there a Chinese presence in the Indian Ocean in a general sense?

Mr Richardson : In terms of a permanent presence?

CHAIR: Yes.

Mr Richardson : I am not aware of a permanent presence except for their continual and constructive engagement in the antipiracy activity up in the north-west of the Indian Ocean. They do visit the Indian Ocean quite often, and that is understandable, given the sea lines of communication between the Middle East and China.

CHAIR: Obviously, a lot of energy travels that way—oil and gas.

Mr Richardson : Yes.

CHAIR: Is there a proposal to have a Chinese naval base somewhere along the coast there? It has been suggested to me there was.

Mr Richardson : There has often been speculation but I am not aware of any known specific plans.

CHAIR: So it is purely speculation? It is not, for example, in Pakistan?

Mr Richardson : I think that also gets mixed up with some Chinese financing of some port activity. Sometimes the two get conflated and it leads to speculation about what the financing of the port activity is really about.

Vice Adm. Griggs : That comes under the terminology 'string of pearls', which is a theory. As the secretary said, there is some financing in Sri Lanka and there is some financing in Pakistan of port facilities and that is where the issues get conflated.

CHAIR: As we have said, they do have very powerful interests in securing the energy supplies that come across the Indian Ocean.

Gen. Hurley : Could I clarify my last answer to Senator Farrell about the memorial wall? When he asked me if I approached government for funds, I said no. That is factually correct, but, just to be clearly understood: I did not need to because the funds already existed under the operation. It was not as though I needed to go and ask for extra money, I already had funding available if it was required.

Senator McEWEN: Can I just clarify on behalf of Senator Farrell: if you had wanted to bring the whole memorial back, you would have had the money under the existing—

Gen. Hurley : Yes, I would have had it.

Senator STEPHENS: I have questions for Mr Richardson and for the minister. It is actually an opportunity for the minister to elaborate a little on the speech he made yesterday. It is in relation to an update on the review and the intentions regarding DMO. At the last estimates you indicated that there would be a review of the DMO after the Commission of Audit, and perhaps you could advise us on what progress you have made in establishing a review team?

Senator Johnston: Sure. Government has resolved that the review team will not be established until after we have the Commission of Audit. I am not sure when that is to be handed down, but I believe it is relatively soon. Once that is known then we are going to proceed with the first principles review team.

Senator STEPHENS: That is in relation to the DMO. What about the review of the Department of Defence?

Senator Johnston: And generally the department also.

Senator STEPHENS: So you actually have not put any structure in place for that review yet?

Senator Johnston: Not formally, no. We have a pretty good idea of where we need to go and what terms of reference we need to employ, but we have not proceeded any further for the reasons that the secretary set out earlier this morning. We just want to see what the Commission of Audit is going to say more broadly about numbers and other matters.

Senator STEPHENS: In your mind, do you have a time frame that you are aspiring to?

Senator Johnston: I think we would want to move very quickly. I think that some time towards the end of this year we want to start to put recommendations in place.

Senator STEPHENS: If you were hoping to have the recommendations in place towards the end of the year, you would be hoping that the review would be completed mid year?

Senator Johnston: Yes, I think we would hope to be getting close to having it done by the third or fourth quarter of this year so as to inform the white paper on any of the reform matters inside the department we thought were pertinent also. That is the broad direction of where we want to go. Bear in mind, the review is really about streamlining processes. I want to try and emphasise that; that is the important thing.

Senator STEPHENS: You signalled your intention yesterday in your speech.

Just picking up where Mr King gave evidence at last Senate estimates: he was talking then about reforming the DMO. The three schools of thought that you suggested then, Mr King, were to retain a public service model; to look at what is called a government-owned, company-operated model, equivalent to what is happening in the UK; or a middle ground, being more able to manage its workforce but being somewhat as it is now.

Since the time you made those comments, Mr King, there was a report in the Financial Review quoting government sources saying that they believe that the DMO is over-staffed and that the minister is considering privatisation of the DMO. Minister, do you want to elaborate on what you are thinking is in this regard?

Senator Johnston: I think there are a number of options that the government would want to consider without removing any from the table. You mentioned the GOCO model in the UK which has been very informative to us. But what has happened with GOCO is that it has distilled down to a reform of the government agency—and probably for some good reasons. We have been on a bit of a watch-and-learn program as to how that has unfolded. But we are not—

Senator STEPHENS: 'Fell over' is actually a better description, isn't it?

Senator Johnston: Some may say that, and it might be legitimate to some extent. But the point is that we are not going to rule out options or rule in options. Let us get the team in place and let us see what the Commission of Audit has to say, and then let us go forward with terms of reference which everyone can see quite transparently and come up with the recommendations. It is not going to be done in a vacuum; the department is going to have a big input and then proceed from there.

I have been on the committee for a long time, and we have spent a lot of time on the DMO. I think there are many and varied views on the reform of and solutions to some of the issues in the DMO. Let us go forward on a basis by which everyone can see where we want to go and what we want to do and on which the committee will be fully informed to question the offices—and, indeed, me—as we go forward.

Senator STEPHENS: You are on the record as saying that that the government wants the DMO to be a more independent agency, so you must have some ideas in your head about what you envisage the DMO might look like in the future.

Senator Johnston: I think we are looking at the constraints inside the DMO, which we see as handling a commercial output but under a Public Service model. I think that is potentially an issue, but I do not want to pre-empt what we are going to look at. What we have been saying for a long time on both sides of the political divide is that DMO has a really distinct commercial output in running programs and making acquisitions and doing sustainment work. That is not necessarily well suited to the Public Service model that we have talked about.

Senator STEPHENS: I know you have not ruled out definitively the GOCO model, but do you have any concerns that that model might mean that, as the defence secretary Philip Hammond said of the UK, there will no longer be a competitive process? Can you envisage that there may be some issues with the ACCC around a GOCO model here in Australia?

Senator Johnston: I think the main issues with GOCO were that first of all there were three competitors and then it went down to two and that what happened then was that the point of risk was moved to the GOCO operator before the tender was resolved. This meant that, if you take shipbuilding is an example, the GOCO operator would be contracting with the shipbuilder to provide ships on time and on budget. The government was saying that the risk would reside with the GOCO corporation. That is a very difficult proposition for boards and balance sheets to accommodate given the contingent liabilities that would need to be put onto the record, particularly for public companies.

So I think the repository of risk in the GOCO model was ultimately what led to its demise. It is like saying that the architect in charge of a building program will be responsible and carry the risk for the performance of the building. That is not a commercial proposition from the architect's point of view, and that is rather where we ended up with GOCO.

Senator STEPHENS: Thank you for the clarification. The UK defence secretary said that they were keen to have a hard boundary between their procurement and the department. Are you looking at that?

Senator Johnston: We are watching them very closely. Indeed, Philip Hammond has been very forthcoming with me. I am meeting him next month, and I have had some discussions with him. He has been most helpful, as has Mr Bernard Gray, and I will continue those discussions with him to ascertain how successful he has been in bringing forward the model that he has. I think it is fair to say that the UK have had very similar issues to the ones we have had, so we are watching them very closely.

Senator STEPHENS: Yesterday's Adelaide Advertiser reported on your speech—so obviously Ian McPhedran had had an advance copy of it—focusing on a radical plan to streamline the $10 billion Defence Materiel Organisation. The suggestion was that DMO had produced its own blueprint which included a plan to cut staff by 2,000 and shave costs by more than $300 million but with an insistence by the government on greater savings. Is that—

Senator Johnston: I will be perfectly frank with you: I do not know where he got that story from. I think that people speculate and that suddenly the speculation becomes fact. I would be surprised if those senior officers in DMO did not have an idea of where they wanted to take the agency, but I certainly have not confirmed any of the matters that were set out in the media yesterday.

Senator STEPHENS: I noted, Mr King, that you spoke after the minister's speech yesterday and refuted some of the comments that the Ai group had made in its submission. I suppose the concern of those of us who have been involved in the DMO inquiries over many years is that there are various important core skills which need to remain with the DMO and which are closely linked to defence and that outsourcing and procurement carry big risks. So we will be watching this with great intent.

Senator Johnston: I think it is a journey we are all going to go on. If there is to be journey, I think everybody needs to undertake it with their eyes wide open and with the terms of reference well known to everybody so that we can all—and particularly this committee—benchmark as we go.

Senator STEPHENS: Following the last inquiry of the committee, one of the recommendations was much closer engagement between DMO and industry. Can you enlighten us on the progress in that regard and on whether or not you think that that is a successful pathway to the changes you are hoping to introduce?

Senator Johnston: I think that there is already a good, strong relationship among the department, the DMO and industry. But the problem has been that the DCP—the defence capability plan—has not been able to be a solidly founded document, so industry has not been out to plan to respond to what programs are coming forward.

I come back to the point that we have had to move things to the right, and we can hear further from Mr King about those sorts of matters. With the cuts that have occurred to the resource base for the portfolio, the deck of the programs that have been required to be undertaken has had to be reshuffled from time to time. That has caused industry to be rebalancing consistently and to be planning for tenders which are not coming forward when they were originally proposed to come forward, and that is potentially the main issue in terms of the interface between the department and industry.

Senator STEPHENS: As in so many other parts of the economy it is a real challenge, isn't it?

Senator Johnston: Yes, absolutely. But our capital account is the big one, you see? We are running a lot of big-ticket-item programs onshore and offshore, and that is what industry gear up for. They are in business to make a profit, and they want to see these programs come forward so that they can try to participate in them and win them. Our programs are usually much bigger than those of any other portfolio, so it has been amplified in the defence space.

Senator STEPHENS: I have a question for you, Mr King, about the cuts that you have identified—the staffing reductions that have occurred. Has the situation arisen that the DMO has lost some core capability and is relying on contractors to meet some of those core capabilities? If so, can you provide some—

Mr King : Senator, we do use contractors—

Senator STEPHENS: Yes, I know you do.

Mr King : but we have not lost core capability. I just want to make that clear. Just to re-cap a little on the last evidence: the business about what structure the organisation has was actually at the end of the discussion and was widely brushed over.

The important piece of work that I think this review will do is look at the core things that have to be done in acquisition and sustainment. It will presumably—and obviously I encourage this—look at how to streamline that to the maximum extent possible. Then I assume I will make some decisions or recommendations around what is best done in DMO and what is best done by industry. That is where the bulk of the work, I think, will actually be

Senator STEPHENS: You all seem to be on the same wavelength about what the review might be looking to achieve. Have the parameters of the review been set?

Mr Richardson : No. The terms of reference have not yet be been formally agreed.

Senator STEPHENS: I think that is all for now. Thank you very much.

Senator FAWCETT: While we are waiting for the call to go to someone else, I just want to highlight four reports which I would encourage the department to look at in terms of input and output modelling: the 2012 report by KPMG in Canada; a 2009 report in the UK from the University of Strathclyde; and an Ernst & Young report of this year; and ACIL Allen report of this year. They are all looking at that second-order effect in the defence industry.

Mr Richardson : Thank you.

[15:16]

CHAIR: We will now move to 1.2, Naval capabilities.

Senator IAN MACDONALD: Admiral Griggs, as I mentioned the earlier, I am interested in what has been spent on Garden Island. We did go through this at a previous estimates but I am wondering if you can update me on notice, if you do not have the figures in front of you. Can you confirm what is being done at Garden Island and what is proposed to be done at Garden Island over the planned future in relation to naval support infrastructure.

Vice Adm. Griggs : Under the LHD and AWD projects, there are obviously infrastructure elements. A total of $33.9 million was allocated. Mr Grzeskowiak might have the split between the two projects, but I think it is actually quite difficult to break out the LHD component of that.

Senator IAN MACDONALD: What is AWD?

Vice Adm. Griggs : It is the Air Warfare Destroyer. We are talking about the construction of a systems program office and through to a life support office, a platform monitoring system, a remote monitoring station and some improvements to the berthing infrastructure to berths 1 to 3.

Senator IAN MACDONALD: So most of this is electronics, is it?

Vice Adm. Griggs : Some of it is. There is also some actual physical infrastructure work to be done on the wharves, and that is where it is very difficult to split out between Air Warfare Destroyer and the LHD

Senator IAN MACDONALD: I am interested in both.

Vice Adm. Griggs : The total number is $33.9 million.

Senator IAN MACDONALD: And that is it, is it, for the foreseeable future?

Vice Adm. Griggs : That is my understanding.

Mr Grzeskowiak : The $33.9 million is the Landing Helicopter Dock proportion of spend, and it is exactly on the sorts of things that the Chief of Navy was describing. In addition to that, there is $39.8 million associated with the spend for Air Warfare Destroyer facilities. Again, they are similar types of facilities—a system project office, some refurbishment of existing store facilities, remote monitoring facilities and berthing infrastructure. I do not have any detail beneath that, but that could be provided on notice.

Senator IAN MACDONALD: So it is closer to the $80 million, which I had heard spoken about.

Mr Grzeskowiak : Yes: when you add those two projects together on the Garden Island precinct.

Senator FAULKNER: Does that include the removal of the hammerhead crane?

Mr Grzeskowiak : No. The hammerhead crane is a separate project, which is currently ongoing.

Senator FAULKNER: It is not included in that?

Mr Grzeskowiak : It is over and above.

Senator IAN MACDONALD: I will leave that to you, Senator Faulkner.

Senator FAULKNER: I just wondered whether your figure included that. We will come back to that. You might just give us the figure for that. Mind you, I do not want to raise a controversial issue like the removal of a crane. I was interested to know whether it was actually contained in those figures.

Senator IAN MACDONALD: I will leave that to you, Senator Faulkner. I do not get involved in those controversial issues. I will leave that to you.

Senator FAULKNER: That is something we have in common.

Senator IAN MACDONALD: There is nothing on the forward drawing boards for Garden Island in relation to maritime infrastructure?

Mr Grzeskowiak : We have no other approved projects at this stage. We are always planning forward work programs for base refurbishments around the estate, and Garden Island would be part of that process. There are no other approved projects at this stage.

Senator IAN MACDONALD: In relation to the work for the LHD—and I think you said that you might have to take this on notice—what component of the $33.9 million is on physical infrastructure that I can actually see? And can you explain in relatively simple terms for a simple person what that infrastructure is?

Mr Grzeskowiak : I would have to take it on notice in detail. We know it is around berthing infrastructure. It is around some office facilities for the system program office and it is around some facilities for the integrated platform monitoring facility, which would have some IT component. I would have to take it on notice for any more detail than that.

Senator IAN MACDONALD: Can anyone tell me if what is being spent for the 'LHD component' would be able to be used for other warships of the Australian Navy.

Mr Grzeskowiak : I couldn't answer that.

Mr Richardson : Some but not all.

Vice Adm. Griggs : Certainly the berthing infrastructure piece is about improving the overall capacity of the berths to carry the additional weight loading for the LHD—so that benefits the general health of the wharf, if you like. Those berths can be used by other ships.

Senator IAN MACDONALD: Admiral, again, this is very unscientific and very unmilitary, but when you compare Wharf 10 in Townsville with the proposal for the LHD new component at Garden Island, can you say to an uninformed person that it is the same sort of thing? Will Garden Island end up looking like Wharf 10, minus the civil accoutrements?

Vice Adm. Griggs : No, not really. Of course, you would be pleased to know that the spend in Townsville is higher than in Garden Island.

Senator IAN MACDONALD: I think it was $80 million, wasn't it?

Vice Adm. Griggs : For us, it was $35 million. Our contribution was $35 million.

Senator IAN MACDONALD: A million between friends is not much—but I am pleased!

Vice Adm. Griggs : The thing that is the same is that both berths will be able to accommodate a 231-metre landing helicopter dock. In terms of how they look: they will look different, of course. You have got the multi-purpose use of berth 10 in terms of the cruise facility and the stern ramp issue, which you do not have at Garden Island at berths 1 to 3.

Senator IAN MACDONALD: Will the big American warships—again, not a very precise description—find it easier to berth alongside the new facility at Garden Island or are they still likely to be out somewhere else?

Vice Adm. Griggs : It depends how big, Senator.

Senator IAN MACDONALD: How big could they be?

Vice Adm. Griggs : Ships up to a US navy amphib equivalent to the LHD could certainly berth at Garden Island.

Senator IAN MACDONALD: But none of the big aircraft carriers could come in on this dock?

Vice Adm. Griggs : No.

Senator IAN MACDONALD: They currently sit out in the middle of the harbour, do they?

Vice Adm. Griggs : The nuclear carriers do not come to Sydney. They go to Brisbane, Hobart or Fremantle.

Senator IAN MACDONALD: I did not think we knew which were nuclear carriers.

Vice Adm. Griggs : We certainly know. The US Navy does not have conventional carriers anymore.

Senator IAN MACDONALD: Even the environment movement. If they do not have conventional carriers, I guess everyone knows. I will not dare to ask about Cairns.

Senator FAULKNER: I will ask briefly for a status report. The last figures I have seen, and they are probably a little bit out of date, said that the removal of the hammerhead crane was around about $10 million—

Mr Grzeskowiak : That is right, around $10 million.

Senator FAULKNER: That was certainly announced before the change of government last year. I recall Senator Feeney making the announcement. So I wondered if you, perhaps, could provide us with a very brief status report of where that project is up to. That would be helpful.

Mr Grzeskowiak : Contracts have been placed. The deconstruction commenced on 28 January this year. The crane has not started to be taken down yet. We are building a small temporary crane next to it, so that we can start taking it down. The works are intended to—

Senator FAULKNER: You need a crane to take down a crane?

Mr Grzeskowiak : You do need a crane to take down a crane. The works are intended to—

Mr Richardson : I bet there will be protests against that crane being taken down. So there will be a need for a third crane. Eventually, we will get to a point where we can have a crane that high to remove the crane that has been left that high.

Senator FAULKNER: I would not have made that prediction, if I were you, Mr Richardson. You never know; it might come true.

Mr Richardson : I think it will.

Mr Grzeskowiak : The deconstruction of the crane will be completed by December of this year. We have a heritage management plan in place, as required, and we will be documenting the process and we will be preserving some elements of the crane for their heritage value.

Senator FAULKNER: Tell me a little bit more about the preservation. It is a good thing. I think it is a really positive thing for you to have informed us about, but can you provide us a little bit more information about that.

Mr Grzeskowiak : There is a range of clauses we have to meet, in conjunction with the environmental plan that was agreed by government. Extensive photographic documentation has been largely completed. We have had a heritage assessment of the crane, which tells us which parts of the crane are probably the most valuable to keep and may be put in some museums. The navy museum on the island will probably have some parts on show. We have to offer parts of the crane to bodies that may be interested in having a piece. That process is going on at the moment. It is fairly standard procedure for something of some heritage value.

Senator FAULKNER: Yes, I appreciate that, but it is hardly a standard object, is it? It is a unique object.

Mr Richardson : Absolutely. It is a unique object, and there has been a unique set of processes to go through to pull it down. I would imagine if it were being built today, you would have city-wide protests against it being built.

Senator FAULKNER: You have gone from predictions to imagination, Mr Richardson.

Mr Richardson : Absolutely.

Senator FAULKNER: I am very impressed. I think we had better stop there.

Senator FAWCETT: Last estimates, I asked about the Rizzo review and specifically put a question on notice about progress in restoring the engineering capability in the Navy. I was interested in particular trades and the rate of progress towards that. The answer I got back was fantastic in terms of an overview, but it did not actually answer the question in terms of the trade areas in which you are seeking to bring an enduring workforce back up to speed and how you are progressing against each of those areas. Could I put that on notice, again, and ask you to come back with it. I am interested to know whether we are providing the right environment in our Defence Force to enable you to actually grow that. I am aware that you are doing a lot of lateral recruiting. But, to be sustainable in the long term, we actually have to have the environment where we can grow the competence that you need.

Vice Adm. Griggs : Certainly.

Proceedings suspended from 15 : 30 to 15 : 49

CHAIR: I declare this meeting reopened.

Gen. Hurley : Could I have your indulgence to read two answers to questions.

CHAIR: Yes, of course.

Gen. Hurley : We received one question earlier this morning in relation to my opening statement about to what degree are IED occurrences still occurring in Afghanistan. In response, IED attacks continue in Afghanistan and still pose an enduring and unpredictable threat. IED attacks occur every day across Afghanistan and trends are consistent with previous years. However, as the coalition draw-down in Afghanistan continues, it is becoming increasingly difficult to obtain accurate figures on the exact number and nature of IED events—that is, seizures, devices cleared and explosions—through both official and media sources, as the information is not being reported to the extent it was previously. These attacks are increasingly focused on the Afghan National Security Forces, as ISAF operations decrease.

Secondly, our response to Senator Conroy's question of, 'Can you provide a list of Navy assets assigned Operation Sovereign Borders?' Our response is that the current Navy assets and equipment engaged in Operation Resolute to support Operation Sovereign Borders include two major fleet units, which are either frigates or Leeuwin-class hydrographic survey vessels, and seven Armidale-class patrol boats. During the cyclone season, there is an afloat support ship. The vessels carry standard naval equipment, supplemented by some mission specific additional spares, such as a spare sea boat in the frigates.

In addition, the vessels carry humanitarian assistance and disaster relief stores for supporting IMAs, such as food, blankets and nappies—et cetera. There are also stores to assist with mass rescues at sea, including additional inflatable life rafts and personal recovery systems. A transit security element of 145 Army, Navy and Air Force personnel provide security supplementation to the normal ship teams. These individuals carry personal protection equipment for their role. Ashore, primarily in Darwin, there are approximately 70 Navy personnel providing support in headquarters, training and logistics. They have no additional specialist equipment.

CHAIR: We will now go to the Defence Export Control Office.

Senator STEPHENS: Chair, thank you for your patience. Given the long history that we have all had with the Defence Export Control Office and the implementation of the Defence Trade Controls Bill, and the parliamentary oversight that this committee provides to that bill, can you just bring us up to speed with where things are at with the Defence Export Control Office? How many applications have been received since June last year?

Senator Johnston: I thank you for your interest in this, because it is important. What I have been doing is watching Professor Chubb, who has been chairing the steering group. I have been talking predominantly to the research and development side of the tertiary institutions, who—as you know—were an afterthought of consultation way back when. I think there is a second report to be made public from the steering committee, arising from December. There are further things happening in March.

Senator STEPHENS: Just for your information, the committee has received Professor Chubb's report from the December meeting.

Senator Johnston: Very good. I think there is a further consultation in March. What I will do is I will take on notice your question and give you a full run-down on where we are at and the timeframe. We are still on schedule for the timeframe, but the most recent advice I have as of yesterday is that those people who were concerned—that is, a number of professors, researchers and developers—are happy with the progress of the steering committee. I think the legislation is coming forward. Do not hold me to when an exposure draft might be produced, but I do not think it will be very long. When it is introduced, if it is soon, then obviously the committee will have the opportunity to review it and to take further submissions to satisfy yourselves that applied and basic researchers are happy with the direction that the legislation is going. So let us see how that goes. I will take your question on notice and give you a full rundown on the status of the steering group and the legislative process.

Senator STEPHENS: Thank you very much doing that. I can see from Professor Chubb's report that that issue about publications and intellectual property has been quite a focus of the working group to date.

Senator Johnston: Absolutely.

Senator STEPHENS: I want to go to some of the other issues, such as how the Wassenaar agreement is operating in terms of not just the intellectual property but potential dual-use goods, which was also one of the big issues raised in the inquiry. Perhaps you can take that on notice.

Senator Johnston: I certainly will, but that is one of the principal focuses of the steering committee vis-a-vis research going on in tertiary institutions. Leave that with me and I will come back to you on that. The munitions list, the commercial list and potential dual-use observations of various research is the principal focus, and then there is the licensing of such research and setting out clear parameters where researchers need to be aware that they will need to be licensed. The intangible applications of taking laptops overseas, talking in emails and all of that sort of stuff the steering group is putting a handle on, and I will come back to you in a detailed response.

Senator STEPHENS: Thank you very much, and could you also take on notice these questions in terms of reporting more fulsomely on the progress of the work of the office: issues around streamlining and simplifying the process for dealing with applications and what measures have been taken; the average length of time taken to deal with the applications; how many applications have been approved; how many have been denied; whether reasons are given for denials of approval; and how the department is looking to promote greater understanding of the regulatory environment. That would be helpful.

Senator Johnston: Sure. They are all very good questions. I can tell you that reasons are given. The satisfactory nature of those reasons is a bit contestable by the person who has had a restriction put upon their export, but I will come back to you with detailed answers.

Senator STEPHENS: Thank you.

Senator IAN MACDONALD: I have some questions on program 1.2. In the 2009 white paper, $14 million was set aside for the construction of two one-megalitre storage tanks for F44 fuel, which I understand is for the helicopters on the LHDs, near wharf 10 in Townsville. I read articles in the newspaper like one about having to rely on fuel imports with the shutting down of Australian refineries. That is perhaps a question for another day, but I am interested in the F44 fuel project and what decision has been made about construction of that. I understand it was intended to be built at wharf 10. There was built a pipeline to fuel the ship but not for the F44 fuel, which, as I say, I understand is for the helicopters on the LHD. I am told that in mid-2003 there was an EOI out for commercial fuel operators to supply F44 fuel. I am wondering what the present situation is for storage and supply of fuel for the helicopters which will be using the LHDs—and I might throw in the fuel for the LHD as well.

Vice Adm. Griggs : I might start and then pass to Mr Grzeskowiak, who has all the fine detail. The short answer is that it is still under development. There are issues around capacity of tanks in terms of land in the fuel facility at Townsville to put extra tanks. There is an issue around the cost of a dedicated F-44 pipeline, which I think it is fair to say was not factored into the original concept. That is still being worked largely by Joint Logistics Command. The best answer I can give you is that it is a work in progress. The planned start date is I think next financial year. There is money available next financial year, but we have not yet determined the exact way forward for this. We absolutely have to do it; we know that. It is a very important part of the LHD infrastructure in our principal mounting base in Townsville.

Senator IAN MACDONALD: We will hear from your colleague. There was $14 million mentioned in the 2009 defence white paper.

Vice Adm. Griggs : Yes, there was.

Senator IAN MACDONALD: I am assured, in casual conversation with the Townsville Port Authority, that what you will want you will get in relation to available land for tanks or anything else—be they tanks for fuel or tanks to fire ammunition.

Mr Grzeskowiak : We are working closely with the joint logistics team on options, and it is for the logistics people to decide what is the best option for them. When that is decided we will move to put in place what is required. Options are, obviously, building a bespoke tank, leasing a tank that might already exist or some other form of fuel being provided as a service. There is no decision at the moment. It is still being worked through in detail.

Senator IAN MACDONALD: Perhaps on notice or by telephone someone could tell me whether there is something special about storage of F-44 fuel.

Mr Grzeskowiak : Not that I am aware of.

Vice Adm. Griggs : It is a higher flashpoint than normal commercial aviation fuel, so that is why we use it on the ship. Its ignition point is higher and its life is relatively short compared to F-76—what we normally burn in our diesels or gas turbines. So there is an issue of shelf life and there is an issue of flashpoint.

Senator IAN MACDONALD: There is plenty of facility for refuelling the ship itself at wharf 10?

Vice Adm. Griggs : There is no problem with refuelling the ship with F-76 or marine diesel.

Senator IAN MACDONALD: Thank you.

Senator McEWEN: Admiral, back in 2012 there was discussion about use of biofuels in Navy, and there was some discussion, I believe, with the US Navy. Where are we up to with regard to that?

Vice Adm. Griggs : We signed a memorandum of understanding between the US Navy and the Royal Australian Navy around biofuel use. Our position on that is that interoperability with the US Navy is very important in terms of fuel. If one of our ships turns up in a US Navy task group and they are using biofuel blends, we must be able to take that fuel, because there is no other petrol station anywhere nearby. We have adopted a fast follower approach. We flew one of our helicopters on a biofuel blend during the RIMPAC exercise in 2012. We are in the process of certifying our frigates to take an F-76, which is ship fuel, biofuel blend, because one of the things that we are very keen to participate in is the 2016 Great Green Fleet initiative. We have to get certified to be able to do that. We are very much trying to stay in touch with the US Navy on this, because the interoperability piece is so critical to us.

Senator McEWEN: Do we know how much it will cost to convert the whole Navy fleet and its air capability to biofuels?

Vice Adm. Griggs : The whole point of it is that it is a drop-in fuel, so there is no conversion cost. We are still looking at some studies into the long-term effects of its use, to make sure there are no long-term effects which would therefore lead to increased maintenance or filter changes and all that sort of thing. From the US perspective, the whole premise is that it is a drop in fuel and has no impact on the rest of the system.

Senator McEWEN: Do we have a time line or a target date for when we will be fully compatible with the US fuel that may be required to be used?

Vice Adm. Griggs : The first large initiative is 2016. We want to have our certification process done. Where we have got engines like the LM2500 gas turbine, which the Americans use and we use, we will take their data and their certification process and do a very light touch over that. There is no point in us doing a year's work to validate what they have already done. But where we have systems that are unique to us we will have to do a fair bit of work and investigation to make sure that there is no issue.

Senator McEWEN: By 2016—

Vice Adm. Griggs : By 2016 we want to put a frigate into the Great Green Fleet with an aircraft.

Senator McEWEN: A frigate?

Vice Adm. Griggs : A frigate and an aircraft.

Senator McEWEN: Are we participating in RIMPAC 2014?

Vice Adm. Griggs : Yes, we are.

Senator McEWEN: What capability are we sending and how many personnel?

Vice Adm. Griggs : From a Navy perspective at present, HMAS Success, an oiler and one of our submarines will participate and, potentially, HMAS Choules. We have not made a firm decision on that. We are talking in the order of around 300-400 people from the Navy, but there are other elements of the ADF attending RIMPAC.

Senator McEWEN: Is that significantly less than what we have sent before?

Vice Adm. Griggs : It is a little bit down, but our attendance over the last 40 years has gone up and down. This is probably at the lower end.

Senator McEWEN: Why is that?

Vice Adm. Griggs : It is availability of ships. We have got a lot of frigates in upgrade this year for the Anti-Ship Missile Defence upgrade and there are their operational commitments.

Senator McEWEN: That would be including Operation Sovereign Borders?

Vice Adm. Griggs : All our operational commitments.

Senator McEWEN: I understand that China is participating in RIMPAC 2014 as a participant and not as an observer this year. Is that correct?

Vice Adm. Griggs : It is their first time as a participant.

Senator McEWEN: Do we have a view about that?

Vice Adm. Griggs : I think we think it is a very good thing.

Senator McEWEN: Will any of our personnel be serving on Chinese ships or vice versa?

Vice Adm. Griggs : I do not think there is any intention to do that at this point. I am not across the detailed planning on RIMPAC. Because it is such a large force you tend to get broken up into smaller task groups, some of whom interact with each other some of whom do not. I am not sure where the Chinese are positioned in that laydown.

Senator McEWEN: General Hurley, do you know what other parts of Defence we will be sending to RIMPAC? Would it be Army and Air Force?

Gen. Hurley : Air Force will have a contribution. I can get the Chief of Air Force to speak to that.

Air Marshal Brown : I am just checking, but I will get back with the exact contribution. We normally have our P-3 maritime patrol aircraft. They are a pretty consistent attendance at that particular exercise.

Senator McEWEN: Yes, I think there are usually two or three.

Air Marshal Brown : Yes.

Senator McEWEN: You do not know whether it will be less?

Air Marshal Brown : I am just checking exactly what our deployment will be at this stage.

Senator McEWEN: If you could let us know, that would be good.

Senator STEPHENS: I want to go to the issue of our offshore patrol vessels. Can you take us through the current thinking with regard to the development of a common platform to conduct patrol, mine-hunting and hydrographic activities?

Vice Adm. Griggs : Senator, are you talking about the offshore combatant vessel as it was described in the 2009 white paper?

Senator STEPHENS: Yes.

Vice Adm. Griggs : Yes. One of the key issues there was to make sure that—given it was a fairly developmental approach and there are other nations that have implemented, or are starting to implement, similar concepts for the same reasons—we do that in terms of reducing the number of different types of platform and the number of different types of platform systems, and therefore get reductions in training costs and all those sorts of things. You essentially have three mission modules you are dealing with: the hydrographic mission module, the mine countermeasures mission module and a patrol module. The hydrographic and patrol modules are reasonably well advanced, and components of the mine countermeasures module are well advanced; but what is lacking in the mine countermeasures module is a sufficiently developed module that would keep the risk of this project down. So a decision was taken during the last white paper that we would push the OCV about 15 years to the right so that we could allow proper development of that mine countermeasures module.

It is not just about putting in the same sort of equipment that we have in our current mine countermeasures ships because we are trying to fundamentally change the approach to dealing with mine countermeasures work. We do not want to put a ship in the minefield, which is what we currently do, and which is why we have the glass reinforced plastic fibreglass hulls to keep the magnetic signatures down. Of course, that drives the cost of that capability quite high. So it is not just a matter of taking current capability and putting it in a module; it is about developing a different approach to the way we do mine countermeasures work, with the ship outside the minefield. There is a bit of technical risk in that and that has really been the driver to push this a bit further back. We have plenty of scope in the current Minehunter Coastals because they are a fibreglass hull, effectively. The life of that hull can go for quite a few more years so we are now going to do a life extension on those to keep—

Senator STEPHENS: What is the current end-of-life estimate?

Vice Adm. Griggs : The early 2020s. We will take them through to about 2030 and that will allow us time to develop the offshore combatant vessel concept with a much lower-risk approach to that whole concept.

Senator STEPHENS: Can you advise the committee what the challenges are in sustaining the Armidale class patrol boats? How to those boats compared to the new ones that Customs have?

Vice Adm. Griggs : The Customs Cape class vessels—the new Customs vessels—are a derivative of the Armidale class design. It is fair to say that Austal have learnt a number of lessons from the Armidale design and have incorporated a large number of improvements into the Cape class hull. It is fair to say that there are probably three elements at play with the Armidales. One is the design; the second is the material, being aluminium; and the third is us, as a Navy, adjusting to using an aluminium hull. Most of us are steel-ship drivers and you drive a steel ship in a different way to how you drive an aluminium boat. There are three interlocking pieces to that. We have had a number of issues with the Armidales—in fact, we have a class-wide issue at the moment with some stern tube defects, cracking and corrosion. We are managing all of that but they are a challenge to maintain.

Senator STEPHENS: There might be a time line for the replacement of the Armidale class. Is there is a capability study under way at the moment with that?

Vice Adm. Griggs : The life of type for the Armidale is 15 years, and the current intention is to replace the Armidales at that period.

Vice Adm. Jones : So in fact that very issue was very alive in the thinking about SEA 1180, that multirole vessel. As the Admiral said, we looked at the maturity of the remote vehicles for mine countermeasures, and we believed that we could not be in a position to go to government in time to provide a mature solution to coincide with when the replacement of the Armidale was due, because that was the first of the three classes that needed to be replaced. So that was all part of that thinking that we needed to delay that ambitious program about 15 years, and so the replacement to the Armidale will be in fact a replacement patrol boat.

CHAIR: I would also like to ask a question about patrol boats, and I thought that was a very interesting answer. I believe that the patrol boats have suffered a little bit from overuse in the exercises in security against refugees. I just wondered how many boats are now operational and what the status of the entire patrol boat fleet is in terms of seaworthiness.

Vice Adm. Griggs : I would not mind just challenging you on the 'overuse' piece. The boats have worked hard—there is no doubt about it—but they have worked within their design parameters and within the operating cycle that we contracted to achieve. We have not always achieved the availability we want. As I said, at the moment we have some class-wide issues. One of them involves cracking around the engine room, which is something that we have known about, and at the moment we are in the process of implementing some interim repairs to a number of our vessels. Then we will have a fully engineered solution to that, which is in the process of being developed and will be rolled out over the next few months.

CHAIR: So what percentage of the patrol boat fleet is operational now? Can you answer that?

Vice Adm. Griggs : There is a part of the answer that goes to Sovereign Borders, and I prefer not to go into that detail.

CHAIR: I understand that.

Vice Adm. Griggs : But I do acknowledge that we have a class-wide issue that we are dealing with at the moment.

CHAIR: That is why I asked you for a percentage rather than numbers, but okay.

Vice Adm. Griggs : It is easier to divide by 14, though.

CHAIR: The other issue I am interested in is that when Robert Hill was the defence minister he talked about a patrol boat facility in the port of Dampier, and there is still a site in Dampier which was allocated to that. Are there any plans to have some sort of patrol boat facility along the north-west coast? Broome thinks it might be a possibility, but Dampier also does, as does Exmouth.

Vice Adm. Griggs : My understanding is we still have the building in Dampier, and in the mid- to late 2000s we had a couple of people posted there to provide support when our patrol boats came in. But, as the focus of operations has shifted further north and west, we removed those people because they were effectively underemployed because we were not getting the visits as frequently. This is one of the reasons why, as we have discussed in the past, we started in 2011 to route all our other ships that pass through the north-west to be far more visible and spend some time on the North West Shelf and let people know that we are there and patrolling. That was a supplementary activity to what was conducted under Operation Resolute.

Senator WHISH-WILSON: I have just a couple of quick questions. Vice Admiral Griggs, forgive me, because I am new to this committee: does the Navy ever act to intercept illegal fishing activities or other illegal activities in Australian territorial waters?

Vice Adm. Griggs : We provide a number of vessels every day to the Border Protection Commander, who runs several—I think it is eight—lines of operation, and one of those is illegal fishing, as are protection of offshore infrastructure, people smuggling, quarantine and all those sorts of issues.

Senator WHISH-WILSON: Do you have any idea where most of that illegal fishing activity occurs with those boats? Is it, presumably, in northern Australia?

Vice Adm. Griggs : Yes, most of it is.

Senator WHISH-WILSON: Does the Navy have any vessels with ice-breaking technology or ice-rated vessels that are capable of operating in the southern ocean?

Vice Adm. Griggs : The only vessel that is ice rated is the Australian Defence Vessel Ocean Shield, which is a later version of Ocean Protector, but her primary use is for humanitarian assistance and disaster relief.

Senator WHISH-WILSON: It could not be deployed? Is it under contract or lease to—

Vice Adm. Griggs : It is owned by the Commonwealth and it is operated by a civilian crew under a contract arrangement. It could be employed, but its primary use is humanitarian assistance and disaster relief after the issues around that in 2011 after Cyclone Yasi. That is why the vessel was purchased—to give us that redundancy and make sure we do not have a problem again in that area. We are a bit careful about what we want to use it for because of its primary use.

Senator WHISH-WILSON: For its contingency. Have you been contacted by the fisheries department, AFMA, the environment department or even customs about surveillance in the southern ocean? The reason I ask is that Interpol recently put out a purple notice for illegal fishing activity in our EEZ in the southern ocean. Has there been any contact between departments on upping our capability in that area?

Gen. Hurley : We consulted, I think, late last year about what we might be able to contribute. We pointed out, as we just did, the assets that we have available servicing the naval fleet. There is only the Ocean Shield, and it is part of our stand-by during the cyclone season for HADR response. Then we looked at the capacity of P-3's Orion, the surveillance aircraft, but again in terms of distance and endurance you do not get a lot of capacity out of those. We put that forward in saying that is what we had available.

Senator WHISH-WILSON: I was actually going to ask about the P-3Cs under section 1.4, but could I just ask now whether they would have better capacity than the current airbus that is being used by customs to monitor the Japanese whaling fleet and the illegal whaling activity in the southern ocean.

Gen. Hurley : I will get someone who knows more about planes than I do to address that.

Air Marshal Brown : If you are looking at the whaling fleet specifically as the surveillance task, one of the problems is that they are very far south, right off the coast of Antarctica, and a P3 cannot get there. The A319 is not suitable for that task. It is used for the Antarctic division to supply into Antarctica. The recent announcement of the P8 will certainly give us the capability to get down there because it is air-to-air refuelable, which the P3 is not.

Senator WHISH-WILSON: So they have not been purchased yet?

Air Marshal Brown : They were just announced last Friday.

Senator WHISH-WILSON: The reason I asked about the airbus is that it has been used this whaling season for surveillance of the Japanese fleet, but I understand there has only been one flyover at a fairly significant cost to the taxpayer. I was just wondering whether you had been consulted on the use of other aircraft, and clearly you have.

Air Marshal Brown : We have. We have had a look at C-17s and all of our fleet at the moment as to whether they are suitable. The word surveillance can mean many things—surveillance out of a passenger aeroplane is a pretty limited operation.

Senator WHISH-WILSON: I can imagine. Vice Admiral Griggs, can you tell me when the Tobruk is due to be scuttled and how I get my state first on the list for a dive wreck?

Vice Adm. Griggs : We try not to scuttle ships. We prefer the term 'decommission'. At the moment the plan is for Tobrukto be decommissioned at the end of this year. That date is dependent on the introduction of HMAS Canberra into service. I am just being a little coy because, with a new ship coming into service, you hope it is all going to be smooth. But sometimes the progress is not quite what you want and we want to keep the option open to keep Tobruk, if we need to, for a couple more months. But the plan is for it to be decommissioned at the end of this year.

Senator WHISH-WILSON: I understand it is a competitive process to get a dive wreck these days. How do you go about doing that?

Vice Adm. Griggs : You put a bid in to the DMO. Before Mr King says anything, I would just like to say that there are significant costs in these dive wreck ventures.

Senator WHISH-WILSON: They would be privately covered by whoever got the dive wreck?

Vice Adm. Griggs : Yes.

Senator WHISH-WILSON: Can you give us an update on how Carnegie Wave Energy's current project is proceeding?

Vice Adm. Griggs : It is proceeding extremely well. The Carnegie operation should be in service in the middle of the year. That will provide around 750 kilowatts of power to HMAS Stirling and about 30 per cent of our water needs at Stirlingthrough the desalination plant attached to the pilot site. It is only a pilot program, but it is proceeding according to plan. From our perspective, the important thing for Stirling is that all of our power and water comes across the causeway from the mainland, so anything that gives us any sort of redundancy is really important. From a Navy perspective, we are very excited about the whole project. I know the Defence support group, which has been running the nuts and bolts of the contract with Carnegie, are quite enthusiastic about it as well—because of the potential for it to be upscaled and provide a greater percentage of our power and give us greater redundancy at such a key site.

Senator McEWEN: Admiral Griggs, I think it is you who has stated publicly that a maritime school should be established. Is that right?

Vice Adm. Griggs : What I was talking about there was a maritime school of thought.

Senator McEWEN: What would be the purpose of that?

Vice Adm. Griggs : The premise of my argument is that we have traditionally been very much locked into either a continental outlook in our strategic thinking or an expeditionary outlook, both of which are reasonably land-centric and do not really take into account the maritime nature of our environment in the way we really need to think of it. There is a third way of looking at things. We need to get people talking about our maritime circumstance, the fact that we are an island continent with a heavy reliance on trade. Protecting our ability to trade as a nation is a crucial national interest and a crucial role for the Australian Defence Force.

Senator McEWEN: Has there been any progress in establishing such a school of thought?

Vice Adm. Griggs : It depends whose heads you look at. We have successfully got a debate going, which has been important. It will take some time. It is not about us dictating what the maritime school of thought is; it is about academia, industry, government more broadly and the rest of defence contributing to the development of a different way of thinking about strategic circumstances.

Senator McEWEN: In the absence of a maritime school at the moment, where is that joint doctrine and operational understanding of our amphibious capability being developed?

Vice Adm. Griggs : Internally within Defence we have a very strong understanding of our maritime circumstances. We have developed a maritime strategy, but this is just more broadly across the community to try and entrench a stronger view of our maritime circumstance. One of the lines that I use is that maybe our national anthem needs to be amended from 'girt by sea' to 'girt by beach', because that is about the limit of people's thinking about the sea.

Senator McEWEN: I am not sure anybody understands what 'girt' means! Is the current situation adequate to ensure that all the services can develop a proposed amphibious-ready group?

Vice Adm. Griggs : That is very much a work in progress for the entire department, not just the ADF. Our plans are very well laid out. The cooperation that is necessarily required for this sort of thing is very much in evidence. The next step is the arrival of HMAS Canberra in the middle of the year. We will start putting the pieces of the jigsaw together and, in a very deliberate process, will work through, first of all, the ship's introduction into service and then we will start adding the other elements from different parts of the ADF to make this capability work as a true joint capability.

Gen. Hurley : Just to build on that, we have a very integrated process at the present time looking at bringing the amphibious capability into play. As you would be well aware, it requires the efforts of all three services. The leadership sits with the three service chiefs and then there are a number of, as you would expect, sub-groups underneath that looking at different aspects and integrating the approach. Part of that is doctrine—how to employ these forces, how to build them, how to train them, how to sustain them and how to resupply them. All those issues are being considered.

Senator McEWEN: Are we talking about something like a force of Marines?

Gen. Hurley : It will have the characteristics of a Marine force—an amphibious ship, helicopters—

Senator McEWEN: Like the Americans have Marines—

Gen. Hurley : Yes—soldiers and sailors on board, and so forth.

Senator McEWEN: Is that currently a role that is played by 2RAR Battalion.

Gen. Hurley : 2nd Battalion is the battalion that will carry the introduction of the amphibious capability into the ADF. They have already started developing and learning and they will be the main platform.

Senator McEWEN: Is it proposed that other Army elements be trained in specialist amphibious skills?

Lt Gen. Morrison : At the moment 2RAR is what I would describe as the tip of the spear. It is a unit of about 650 soldiers who have the primary focus of developing with Navy a Marine-like capability within the ADF. In some respects, we are starting to ask ourselves the questions that we, until now, have not really had to ask because we have not had—as with the introduction of HMAS Canberra and Adelaide—the type of military-naval capability in our inventory at any stage. There are many other Army units that are involved in also looking at where we go in the ADF to develop a true amphibious capability. That includes a number of rotary-wing Army aviation units, some of our special forces—most particularly the Commando Regiment—and, indeed, a lot of our logistic units as well. The questions that we do not know to ask at the moment include: how do we sustain our stores at sea for protracted periods of time, because we have never had to do all that? So, indeed, the Army has, if you like, a total force focus on this. At this stage 2RAR is the primary unit that is carrying the load.

Senator McEWEN: But they are not conducting any military exercises in this form?

Lt Gen. Morrison : They certainly are conducting exercises with Navy, and both the Chief of Navy and I have responsibilities to the CDF and through him to the minister for the development of an amphibious capability in the ADF. There is a very well-worked-up program involving both naval and Army assets to develop the level of capability within the ADF.

Senator McEWEN: And the costs of those exercises are just within the normal budget?

Gen. Hurley : Within our normal programming of exercise activities and so forth, yes.

Senator McEWEN: So they have not been reprogrammed or moved to the right?

Gen. Hurley : No.

Senator McEWEN: Minister, do you have a position on the establishment of a maritime school of thought, as described by Admiral Griggs?

Senator Johnston: Given that we have these very large vessels that are going to create a new strategic capability for us, I am very open minded about these sorts of matters and I will be guided by the Chief of Navy and the Chief of Army as to what exactly we need to invest in in terms of training and skills acquisition. But I would have thought that you have heard from the Chief of Army particularly that this is a whole new aura and era, particularly for 2RAR, and I think we as a government would be very interested in listening to whatever they had to say about facilities and new training regimes.

Senator McEWEN: Is that something you are likely to address in the government's white paper?

Senator Johnston: Certainly it is. Just from a humanitarian and disaster relief perspective, I have been talking to the New Zealand Minister of Defence, Jonathan Coleman. Both New Zealand and Australia would then have a much greater output. Canterbury is a very capable vessel. Canberra orAdelaide working with Canterbury would add a whole new dimension to the south-west Pacific, and I think that the white paper would need to address the new capacity for us to strategically deploy medical facilities, water purification, food et cetera. I think that is a very important consideration across the archipelago.

Senator McEWEN: When are Canberra and Adelaide due in service?

Senator Johnston: I will defer to the experts on that.

Vice Adm. Griggs : Canberra is due to be delivered mid this year, and Adelaide is about 15 months after that. Adelaide has just arrived from Spain, and we are just starting the work at Williamstown now.

Senator McEWEN: Has there been any slippage in the timetable for those two ships?

Vice Adm. Griggs : There has been a slight delay in the sea trials, which should commence this week; we were hoping to get those done in December. The delivery date is still to be determined. Of course, the trouble when you are doing the sea trials with a first of class is that you do not know what you are going to find, frankly. That is why I am just being a bit coy, because we could have a major issue. We may not have a major issue; it all may go very well.

Senator McEWEN: Is the delay that you just mentioned—they should have been available for use in December—because unexpected things turned up in those ships or is it something else?

Vice Adm. Griggs : I will hand over to Mr King on that.

Mr King : It was more just the scope of work that had to be completed in Australia. These were a hybrid build, built in Spain and then completed in Australia. It was the amount of work that had to be done, pretty much. There is no specific problem, and sea trials should start this week, as the Chief of Navy said.

Senator McEWEN: Thank you for that.

Gen. Hurley : Chair, could I just read in a response in relation to Air Force's contribution to RIMPAC 14. There will be two P-3Cs and three crews, with 90 support staff and 12 personnel for duties at the maritime operations centre, and a Wedgetail with two crews and 50 support staff and approximately 20 personnel for the combined air operations centre.

Senator McEWEN: So that is one less P-3. Is that right? In 2012.

Gen. Hurley : But one Wedgetail.

Senator McEWEN: Is that because of the requirements of Operation Sovereign Borders?

Gen. Hurley : I would not think so, but I will come back to you on that. I do not believe it is.

Senator McEWEN: Just curious. Are we still in 1.2?

CHAIR: Yes.

Senator McEWEN: I would like to know the current status of the program to replace supply ships Success and Sirius. I know we had a little bit of a discussion about this earlier on today.

Vice Adm. Griggs : I think Admiral Jones is probably best placed to go through that.

Vice Adm. Jones : Yes, that is project SEA 1654, phase 3, the Maritime Operational Support Capability. We are preparing to go to government for a first-pass submission for both those ships. The notion is that the two ships, Sirius and Success, which are two different designs, are to be replaced by a ship class of the same design.

Senator McEWEN: Is it still the intention of the government to replace those ships by 2020-21?

Vice Adm. Jones : The planned withdrawal date for Success is 2017, but there is the opportunity to extend that further. So part of that will be what option is decided in terms of the build—where would the build be—and then what the potential in-service date would be. It may end up being close to about 2020, depending on what the outcome would be from the solicitation to industry.

Senator McEWEN: 2020 for both of them?

Vice Adm. Jones : That is for the first ship. That would be for the Success.

Senator McEWEN: And the Sirius?

Vice Adm. Jones : The Sirius has a longer life. It can in fact go out to about 2025.

Senator McEWEN: The previous government announced that the construction of the two new supply ships would be brought forward to commence in 2015-16, and also announced that the acquisition would cost $1.5 billion. Is the current government going to adhere to that timetable and cost?

Mr Richardson : That announcement might have been made, but the government is still in the process of making certain decisions about all of that. The button had in fact not been pressed by the previous government. It was simply an announcement.

Senator McEWEN: Is that a yes or a no.

Senator Johnston: I hope you understand what 'simply an announcement' means. It means there is no money in the budget for the program. So we have to fund it, and may I say that is a herculean task in the circumstances of having lost what we have from the portfolio.

Senator McEWEN: So you cannot say that you are going to adhere to that timetable?

Senator Johnston: We would like to, but we have to find the money. That is the issue we are grappling with right now.

Senator McEWEN: You are going to take the next 18 months to write the Defence white paper?

Senator Johnston: It is about 12 months away from here.

Senator McEWEN: Are you going to commence building these ships before the white paper is completed, or are we going to have to wait until the white paper is completed to get a decision about whether the ships are going to be built?

Mr Richardson : You could not start to build before the white paper.

Senator McEWEN: Before the white paper—

Mr Richardson : No, before the white paper is—

Senator McEWEN: Then they are not going to start in 2015-16—

Mr Richardson : Sorry Senator—no, you could not start the build before the white paper. However, the decision-making on the vessels can be made before the white paper is in fact completed. The first thing to do is make a decision about the replacement vessels—where they will be built, where they will not be, et cetera.

CHAIR: The design.

Mr Richardson : And the design of the, and from there you take it forward. So all of that can start before the white paper is completed and, indeed, that process has already started. The decision-making has not yet been done. That is still in process. But it is unlikely that you would actually have a start to the build before March next year. Theoretically you might be able to, but it would be unlikely.

Senator McEWEN: So what is the white paper likely to say about these two ships?

Mr Richardson : No. The white paper—

Senator McEWEN: It is going ahead, or it is not going ahead.

Mr Richardson : There is no question that replacements are needed. That is recognised; that is a done deal. But there is a big difference between making an announcement that you are going to do something and actually doing something about the announcement. The announcement was made; the substance needs to be added to that announcement and that is what is currently being done. We have no control over what announcements are made. We do have some control over the substance we can add to an announcement.

Senator McEWEN: Some in the Australian shipbuilding industry have, as we know, urged the government to bridge the so-called 'valley of death' by means of shortcutting the usual first-pass approval process—the tendering and market solicitation processes. That was presumably with an eye to constructing the Cantabria class ships. How has Defence responded to that suggestion from some people in the industry?

Vice Adm. Jones : Just going back to the earlier comment, in preparing a submission on first pass what Defence will do is articulate the range of options that are open to government. One of those could be to sole-source, but as part of that there will be some advantages and disadvantages—as there will be in more traditionally going to the market with an open request for tender. That request for tender could be quite broad in terms of looking at completely new designs as well as existing designs; or it may be more constrained in terms of just picking designs which are currently in service and which may have some advantages both in terms of retiring risk, in terms of capability of the design, and also some of the schedule risk as well. It is our job to provide government that full suite of options and some advice on what the advantages and disadvantages are. Certainly, as you have suggested, in terms of that sole-sourcing there may be some schedule advantage but there may be some disadvantages in terms of cost—in terms of commercial leverage. Also, there may be restrictions in terms of what is the optimum design that you are going to acquire; of course, you are acquiring a ship which is going to be in service for 25 years or so—or more—and that delay of one or two years at the beginning may be inconsequential in terms of its impact in through-life. The CEO may have some more to offer.

Mr King : The admiral summed it up, but critical to all of that will be an offer from industry that, whichever way government decides to go, constitutes performance, on a cost and schedule basis, of an international standard. In the work we did with industry on the Future Submarines Industry Skilling Plan, which really addressed the maritime sector, one of the things that was discussed was Defence scheduling of projects so that they did help fill out and keep a consistent workflow. The quid pro quo that has to be there is that industry offers in return a cost performance and a schedule performance that approaches international standards.

Senator McEWEN: Some people have described the cooperation between Australia and Spain that enabled the Cantabria to work with the Navy as a 'try before you buy' arrangement. Has Defence formed a view about the Spanish Navy replenishment ship that informs your deliberations with regard to Australia's replacement of our own replenishment capability?

Mr Richardson : We have formed a view but it would be inappropriate to share that publicly as it could relate to commercial-in-confidence matters.

Vice Adm. Griggs : I would say, though, Senator McEwen, that it was not a 'try before you buy' deployment. It was a mutually beneficial program based, from our perspective, on providing additional training opportunities for our sailors who are going to the LHD. There is a large degree of platform system commonality between Cantabria and the LHD. We had over 140 of our sailors go to sea through the nine months the ship was here. It also allowed us to do major maintenance on Successand not have a drop in afloat support capability. From the Spanish perspective, it was a very important deployment that enabled them to test the logistics support of the ship a long way from its home support base. There was a lot of mutual benefit in it. We got a lot of value out of the ship being here. A lot of replenishment operations were done. It meant that our training in the other ships did not drop away because Success was in a major refit.

Senator McEWEN: I know you have made similar comments before about the benefits of having the Cantabria here. But I note also that the minister, Senator David Johnston, while in opposition, said that it was a humiliation for Australia and the RAN to have to rely on a Spanish ship to support our fleet. Did you, Admiral, regard the presence of the Cantabria in Australia as an embarrassment for the Navy?

Vice Adm. Griggs : I have just described the benefits of the deployment.

Senator McEWEN: Have you changed your mind, Minister?

Senator Johnston: The file was on the previous minister's desk when I was in Ferrol in 2012. Nothing was done. You have heard what Admiral Jones has had to say about the work required to get the project going. Nothing was done. It was a clean slate. An announcement is not, in fact, the commencement of a program. That is what is confronting this government. What you have heard is what we are doing. We have had to have, in order to put Success into repair, some assistance. Thankfully it has been assistance from the Spanish, from the Armada Espanola, which was mutually beneficial. But the fact is that this should have been attended to in the six years Labor was in government. The fact you are raising this now is because nothing was done.

Senator McEWEN: What other designs for replacement supply ships are being considered by Navy and DMO?

Vice Adm. Jones : As part of the Cantabria deployment, Navy and the Australian Defence Test and Evaluation Office did an assessment of Cantabria—how well it would meet the SEA 1654 project requirement. At the same time we also did that with one of the Berlin-class replenishment ships—the German tanker. Those are two examples of proven designs. But there are other designs out there as well. I think a ship made by Fincantieri—a tanker for the Indian Navy—is an example in the same sort of realm. There are other designs which are not yet in the water, including some from Korea and elsewhere—these are less mature. We will be presenting those to government at first pass.

Senator McEWEN: Minister, has the government abandoned the objective of bridging the so-called 'valley of death'?

Senator Johnston: No, but I can tell you that we are grappling with that. Defence is not an industry assistance agency. But we do have a long-term requirement for naval shipbuilding. The task that is confronting the government—without much money—is to marry up the long-term requirement with the short-term needs of employment. That is an ongoing battle.

Senator McEWEN: The previous government put forward a solution, and that was to commence the building of those two replacement supply ships. We are not getting any indication from you that you can commit to doing that.

Mr Richardson : As a matter of fact, not opinion, it is not possible to eliminate entirely the so-called valley of death. Decisions were simply not made in time to avoid that. What we can do is minimise the impact, and that is what is being worked through at the moment. If the so-called valley of death were to be avoided entirely through the build of these two ships, then decisions should have been 18 months ago or more. Decisions were not made and therefore it is not possible to avoid the totality of the downward movement that is possible in 2015. However, we are working on seeking to minimise that.

[16:56]

CHAIR: We will now move to program 1.3.

Senator IAN MACDONALD: At the last estimates hearing in 2013 I was told that repairs to less complex equipment such as Haulmark lightweight and light capability trailers may be made available to civilian contractors in the local area. Can you tell me, on notice if you do not have it in front of you, whether those trailers, which I understand are used in conjunction with the G-Wagons, 70 per cent of which I understand will have their operational life in Townsville and Darwin, are going to be constructed and repaired near their main operational positioning in Townsville and Darwin.

While we are waiting for that, I have asked before about the LAND 400 close combat vehicles. I understand they are going to be delivered to Damascus Barracks in Brisbane rather than to ports that are approximate to their operational base, that is Townsville, Cairns and Darwin. I understand that part of the reasoning for this was that the vehicles were to be painted and retrofitted to Australian defence standards. Was any attempt made to get contractors in Townsville, Cairns and Darwin to do the painting and retrofitting rather than having it done some 1,500 kilometres away from where they will be running their operational life?

Lt Gen. Morrison : You said LAND 400 vehicles?

Senator IAN MACDONALD: I think I am talking about the Mercedes G-Wagon, under LAND 121—Project Overlander.

Mr King : Could we have the question again for General McLachlan.

Senator IAN MACDONALD: There are two questions—and I do not want to take too much of the committee's time on this. Last estimates I was told that repairs on less complex equipment, such as Haulmark lightweight and light trailers, may be made available to civilian subcontractors in the local area. I understand that they are for use with the G-Wagons, and I am told that 70 per cent of their life will be on operational duty in either Townsville or Darwin. So I am wondering if the trailers are going to be built and maintained in Townsville and Darwin by local contractors.

Major Gen. McLachlan : The trailers, as we responded to you, are going to be built by Haulmark. So the trailers themselves will be built at the Haulmark facility, which is in south-east Queensland.

Senator IAN MACDONALD: Which is in Brisbane.

Major Gen. McLachlan : Yes, it is.

Senator IAN MACDONALD: Why was I told last time—and this is a written answer—that 'repairs to less complex equipment, such as Haulmark lightweight and light trailers, may be made available to civilian subcontractors in the local area'?

Major Gen. McLachlan : Certainly the repairs to those will be made under the DLTP arrangements. They will still be manufactured by Haulmark in Brisbane.

Senator IAN MACDONALD: Okay; I note your language, and we will record it in Hansard very clearly: they will be repaired close to their operational area. Thank you. The other question is: the G-Wagons, as I understand it, had to be retrofitted and painted, so they were brought in to Brisbane, and I am wondering why they were not brought into Townsville, Cairns and Darwin, where they are going to be operational. Is it not possible to paint them and retrofit them by local contractors in those other cities?

Major Gen. McLachlan : I might take that one on specific notice and get back to you with the detail. My understanding is that we do have very specific painting requirements. We have to manage the spectrum issues. There are limited places where we can do that particular painting, but I will get back to you in detail with exactly why that happened.

Senator IAN MACDONALD: My understanding is that you have significant defence companies doing that, but those significant defence companies can easily establish in bases close to where the vehicles will be used. And I am really just interested in your comments on that. I ask these questions because, as you know from previous discussions, there was a time when there was quite a substantial local industry in Townsville repairing the old Land Rovers. The Mercedes, I understand, are going under warranty back to wherever Mercedes is going to decide. But it does mean a diminution in the availability of work for local contractors who have geared themselves up specifically to support the Army in various places around Australia, Townsville included, and that is the basis of my questions on these things.

Senator STEPHENS: I have some quick questions on 1.3. This is in relation to Plan Beersheba and interest in the role and support from the Army Reserve. Can you bring us up to speed on plans to extend the battle management system to the Army Reserve?

Lt Gen. Morrison : Plan Beersheba itself is engendering a number of very significant force structure changes in both the regular force and the reserve force. And we are seeing a number of benefits accrue, particularly with regard to the reserve, to them maintaining the high operational focus that has been a part of their experience for the last five to seven years—substantial commitment to the Solomon Islands and then to East Timor. That of course requires me as the capability manager to look at what equipment needs to be made available to the reserve—not just to keep an operational focus, but to be able to do something when they are on operations. And there are plans under the rollout for a battlefield management system that will see reserve units equipped with them as part of that force-generation cycle that we now have running across all of the Army.

Having said that, at the moment it is only regular units on a high level of readiness that are receiving the new battlefield management systems. And it will take some time, as the DMO and industry furnish us with additional capability, for them to be rolled out to units at a lower readiness level, which includes the reserve.

Senator STEPHENS: I take from that then that the Army reserve elements participating in Exercise Hamel will not have that capability.

Lt. Gen. Morrison : If they are required to participate using that suite of equipment, then they certainly will receive it, and that will of course include training on its use. But I have to make the point that at the moment there are a number of regular units that do not have access to the new battlefield management systems, because they are still being rolled out across the Army.

Senator STEPHENS: Are you able to provide the committee with milestones and a timetable for that rollout?

Lt. Gen. Morrison : I can, yes.

Senator STEPHENS: If you could take that on notice, that would be helpful.

Lt. Gen. Morrison : I will.

Senator STEPHENS: What about developing the protected mobility vehicle capability in 2nd Division?

Lt. Gen. Morrison : With regard to employment in reserve units? Yes, absolutely. There is a plan to roll them out to a number of reserve units now. You may be aware we have procured almost 1,000 of the Bushmaster vehicles; we are now in the process of completing the return of the majority of them from Afghanistan. Plans have been made available to the minister and to the previous Labor party minister as well that showed how they would roll into particular reserve units in all of the brigades. That is available on the public record, but again I can make that available to you if you would like to see it.

Senator STEPHENS: Thank you. And will they be equipped with BMS as well?

Lt. Gen. Morrison : They will be eventually, when we have a level of capability across the Army that allows it to exist within both regular and reserve units.

Senator STEPHENS: In terms of commitments to the Army reserve, have there been any changes in the budget allocation to the Army reserve?

Lt. Gen. Morrison : Yes, there has been an increase.

Senator STEPHENS: What is the quantum of the increase?

Lt. Gen. Morrison : There was a period of time in financial year 2012-13 where the Army's budget was more constrained than it had been. Decisions were made at that time that we would have to reduce in a number of areas, and one of those areas was in Army reserve training salaries. All of that reduction has now been rescinded, and so the funding levels for Army reserve training salaries have increased proportionately and are now at levels before 2012.

Senator STEPHENS: So that translates to additional training days?

Lt. Gen. Morrison : Absolutely.

Senator STEPHENS: Can you give us some indication of what that might be?

Lt. Gen. Morrison : I can. If you would just bear with me for a moment, I will actually be able to give you the total number.

Senator STEPHENS: Technology is a wonderful thing, isn't it?

Lt. Gen. Morrison : It is. There has been an increase in financial year 2013-14 to the reserve salaries of 17 per cent on financial year 2012-13.

Senator STEPHENS: And what does that translate to in dollar terms?

Lt. Gen. Morrison : That is currently an ARTS funding allocation of $126.452 million; and to date, we have consumed $64.388 million in this financial year.

Senator STEPHENS: So on track?

Lt. Gen. Morrison : Probably a little bit under, but most of the big training activities that consume Army reserve training salaries are yet to be undertaken in this financial year.

Senator STEPHENS: Can you advise—Minister, you perhaps might want to answer this—whether there has been a decision to bring the regional force surveillance units such as Norforce and others under the command of the second division?

Senator Johnston: I do not think I should answer that. I think I will defer to the Chief of Army.

Lt Gen. Morrison : I can confirm that that is what is taking place, yes.

Senator STEPHENS: My understanding is that there has been some angst about that in relation to their lineage as special forces. Can you explain to the committee how the RFSUs will be commanded? Will it be directly from 2nd Division headquarters in Sydney or will they be subject to brigade headquarters? How is that going to work?

Lt Gen. Morrison : The RFSUs have a lineage that extends back in their current guise a number of decades, but they, of course, have antecedents in some of the units that were formed, particularly in the Second World War, that looked after the northern coastline. All of that lineage has certainly been respected. There are no name changes taking place and, indeed, the role that the three RFSUs have undertaken is unchanged.

When Army went through its recent large force structure changes with the formation of Forces Command, it was decided that the RFSUs would be commanded under the 6th Brigade. Without going into too much detail, that brigade has its primary responsibility in the development of intelligence, surveillance, target acquisition and reconnaissance. But it was found over time that, with a fairly small brigade headquarters in Sydney, it was difficult to ensure that a proper focus was given to the three Regional Force Surveillance Units, with all of the other developments that were taking place in the brigade. So I made the decision that we would place them under the command of the 2nd Division, with a much larger headquarters used to dealing with both Reserve and regular forces. I have had extensive discussions with the Forces Commander, General Slater, and the Commander of the 2nd Division, General Smith, and I am very confident that this arrangement will actually mean a better use of the RFSUs and a better focus.

Senator STEPHENS: Thank you for that clarification. I want to ask about the progress of establishing cavalry forces elements, particularly in Queensland and WA.

Lt Gen. Morrison : Again, is that in relation to Reserve units?

Senator STEPHENS: Yes.

Lt Gen. Morrison : Those cavalry units already exist, but, because of the availability of cavalry-like vehicles in the last decade, they have actually had to operate with Land Rovers, effectively. There have been no armoured vehicles to give them. Most of our armoured vehicles have been focused on our operations particularly in Iraq and Afghanistan. In answer to an earlier question, where I said that we were rolling PMVs back into the Reserve, it is those cavalry units primarily that will receive those vehicles.

Senator STEPHENS: This is not a frivolous question. In 2013, the then opposition leader, Tony Abbott, spoke on several occasions promising the reintroduction of corps berets. Has any action being taken on that matter?

Lt Gen. Morrison : I made a decision towards the end of last year where I changed Army's dress rules to allow for units that had a stated affiliation with the wearing of berets as headdress to wear those berets again. That is most particularly our armoured corps units and our aviation corps, and that has been now enacted and the feedback has been very positive across the Army. It had, I must say, nothing to do with the Prime Minister's statements that were made regarding, inter alia, a visit I believe he had in Afghanistan.

Senator STEPHENS: Thank you very much.

Senator FAWCETT: I want to talk about security vetting. Probably 12 months ago we raised at estimates concerns by industry that security vetting was taking an inordinate amount of time. At the time we were promised that there were great initiatives in place, so I am looking for an update on where we are at and what are the waiting times for industry at the moment to get people cleared at the various levels.

Mr Meekin : Thank you for your question. I suppose the first way to approach it is by reminding that there are four types of security clearances. There is a baseline and the benchmark for that is one month. We are at 1½ months for that, so six weeks, over the benchmark. The second type is a negative vetting level 1, formerly known as a secret clearance. The benchmark for that is four months. They are being completed on average at 3.9 months. The third class is negative vetting 2, which was previously known as a top-secret negative vet. The benchmark for that is six months. They are being completed on average at five months. The last one is the fourth, positive vetting. The benchmark is six months and we are doing those at about 7½ months, so they are over.

Senator FAWCETT: Can you explain why for the simplest one you are over? Is that just volume or is there another issue that is causing that to be over your benchmark?

Mr Meekin : It is predominantly volume. We manage at the moment 340,000 security clearances for the Commonwealth, and that includes not only public servants and members of the ADF but also defence contractors. The largest number is in the baseline area and that is an area where we have relatively large changes in the numbers, particularly if contracts change and so on and new staff need to be engaged. That is a factor that is relevant there. I should say that we have just over 9,000 clearances under examination or going through the process at the moment, so it is quite a large business. There are about 250 Commonwealth employees doing this work and a panel of contractors from industry who also help assist us.

Senator FAWCETT: Given that the chair is pushing us on time, I am happy to put this on notice, but I would be interested in some explanation as to how you arrived at the benchmarks and particularly what engagement industry had to indicate whether particularly those six-month benchmarks were acceptable to them in terms of their ability to hire people and use them productively.

Mr Richardson : I might say that in relation to setting a benchmark of six months for a positive vet industry's views are not relevant. A positive vet is a very deep dive and we would not consult with industry. We understand their concerns but positive vetting is really a particular level—

Senator FAWCETT: I understand positive vetting and I guess I am talking more about the negative vets 1 and 2 because they are the ones that particularly affect industry who are seeking to bring people on either to bid or work with the Commonwealth. Quite often they have to employ them to secure their services but then cannot use them for earning revenue because they do not yet have the clearance. So I would be interested in some background about how those benchmarks were achieved.

Mr Meekin : Certainly we can provide an explanation. The benchmark is for 85 per cent of all cases. The other 15 per cent are those that require more serious investigation regardless of whether it is a baseline or a positive vet, bookending it, if you like. It would depend on factors such as the information that is available. Someone might have perhaps been an discharged bankrupt or something that would take a bit more time to investigate—

Senator FAWCETT: Sorry to cut you off; I am conscious that the chair will cut me off in a minute, so I am getting in first. In program 1.6, following on from my concerns about sustainment funding and the questions raised at previous estimates about fuel farms, and I think I used an example in WA at the time, I would be interested to know since that issue was raised a little more explanation about the state of fuel farms around the nation. . That is just one example. How many still require remedial work and what funding is being provided over what time frame to bring those back to a standard where we are not risk-managing as opposed to just normal operations of fuel farms.

Mr Grzeskowiak : Following an audit last year we have commenced a program of remediation of fuel farms around the estate. We have managed to inject $50 million into this financial year for that work and $100 million for next financial year. There is a program spanning both of those years that is now well underway and we are going to need all of that time—this financial year and next financial year—to get those fuel farms back into a state where they are fully compliant and we don't need to have workarounds in place. The work is going well. We have had expert analysis giving us guidance on how we should undertake that work, and we are monitoring it closely as it develops.

Senator FAWCETT: So you have identified the inputs, in terms of the money. My question also went to: are we talking about 10 per cent of our fuel farms needing remediation or 50, 100 per cent? And at the end of that period, and that $150 million, are you happy that 100 per cent of the fuel farms will be back online?

Mr Grzeskowiak : Yes. Of the 44 fuel farms we looked at we are doing work of some form or other on all of them. Some of it is very minor work, for example faded signage that needs replacing and that sort of thing. Some of it is a little bit more significant—replacing electrical equipment and the like—and we are prioritising that work on a safety-first basis, being cognisant of operational needs. We have not had to shut down any of those fuel farms to do this work. And we are managing the risk very carefully.

Senator FAWCETT: Can you inform the committee whether this remedial work is actually more expensive than if funding had been made available to do maintenance as it was required over the past however many years?

Mr Grzeskowiak : That is really a matter of judgment and conjecture. It is difficult for me to say either way. Clearly, in an ideal world you would have an ongoing maintenance program that would attend to issues as they arise. In part, to be able to do that you have to be aware of the issues that are arising to then take action on them. Generally, as a matter of building maintenance, if you like, it is more cost-effective to maintain buildings in good order rather than allow them to run down and then back-fit the maintenance.

Senator FAWCETT: Have there been other identified costs with the workarounds or the active risk-management that has accompanied those efficiencies?

Mr Grzeskowiak : Most of those costs are in terms of the way you need to employ your people who are operating the fuel farm.

Senator FAWCETT: Fuel farms is something I have used as one example. Are there other remediation programs that have been identified and prioritised to the point of having this kind of, if you like, emergency or catch-up funding applied to them?

Mr Grzeskowiak : Not to the same extent. But I think I have said in here before that in an ideal world we would have a bit more money for the broader estate maintenance program. So we are always prioritising from a list of estate maintenance requests that are in our system to address the capability and the safety related items first.

Senator FAWCETT: Could I just move to program 1.8, looking at Defence culture. This question is as a result of concerns raised by constituents. I want to put on the record that I make no judgment and no comment upon any people in the ADF who are promoted or rewarded. But I have has a specific request from a constituent to ask the question: for people who are given awards or promoted, in the light of the DLA Piper work is there essentially a vetting process whereby Defence assures itself that those people are not going to be implicated at some point down the track in an incident?

Gen. Hurley : Senator, we do not know the names that are under the DART process so it is difficult for us to do that.

Senator FAWCETT: Okay, thanks.

Senator WRIGHT: I have a few questions in relation to program 1.8 and retrospective medical discharge. Do I have the right people here to answer those questions? Shall I fire away?

Ms McGregor : Air Vice Marshal Needham will be able to help out.

Senator WRIGHT: Thank you. I will start then. I have a constituent who was discharged from the Royal Australian Navy on compassionate grounds in 1971. I understand the department is reviewing the circumstances of his discharge, including his medical assessment, at his request. He seeks a retrospective medical discharge in the light of new medical and other evidence regarding the nature and extent of his condition which came to light after his discharge. That is just the background to my questions. There are also concerns, from his point of view, about procedural fairness in relation to his case. I am interested to know how long the department would normally take to perform such a review. For instance, does the department have internal guidelines or KPIs relating to performing such views in a timely way?

Air Vice Marshal Needham : The review of the mode of discharge is largely a question that comes down to superannuation. In that regard, the question comes to how the member separated and how that impacts on their superannuation after they leave the Defence Force. The decision-maker in this regard is usually ComSuper and the role that defence plays is that of an information provider to ComSuper, which makes the decision regarding the member's superannuation payout.

Senator WRIGHT: If there is a query, though, about the reason for the discharge, whose role is it to look into that and review that?

Vice Adm. Griggs : It is the service chief who will investigate the particulars of the case and determine whether the mode of discharge needs to be changed.

Senator WRIGHT: So what are the KPIs? How long would the department normally take to perform such a review?

Vice Adm. Griggs : It is very hard to put a tight KPI around this sort of process because the case you are talking about was in 1971. Just getting access to documentation can take a variable amount of time depending on how easy it is to obtain. Then you have to go through the details of the case. Some of them are fairly straightforward; some of them are incredibly complex. Some can take weeks; some can take years.

Senator WRIGHT: Are there any internal guidelines about that—about the time to be taken?

Vice Adm. Griggs : I do not think there are hard internal time lines. You deal with it as quickly as you can with the resources available.

Senator WRIGHT: How many reviews of this nature are being performed by the department at present? I am interested to know how common these are.

Ms McGregor : We will take that on notice, Senator.

Senator WRIGHT: That is fine. What safeguards does the department have in place to ensure that such reviews are conducted in an independent and unbiased way?

Air Vice Marshal Needham : I understand that Defence collects information but then provides it to ComSuper which makes its decision. They have a forum called the Defence Force Case Assessment Panel which looks at the information provided and then makes an assessment and recommendation as to how the member's case will be treated.

Senator WRIGHT: Is it the case that members of the ADF who were discharged before 1 September 1973 with a class C pension or lower—that is, not a class A or B—have no formal way to appeal the grounds of the discharge?

Gen. Hurley : We will have to take that on notice, I think, Senator.

Ms McGregor : You are heading back a fair way.

Senator WRIGHT: It is quite detailed; I understand that. But I am interested to find that out. May I ask then, if not, can we have details of the means to appeal their cases, particularly in the case of those who seek a retrospective medical discharge? If yes—if that is the case—I would be interested to know how that situation is different for those veterans discharged after 1 September 1973 and why that is the case—what the rationale for that is.

My final two questions, rushing against the clock: what options are available for veterans who experienced improper assessment or improper recording at the time of their discharge? That is the concern that is raised in this particular case.

Ms McGregor : I would prefer that we come back to you with a comprehensive answer to each of those.

Senator WRIGHT: My last one, then, is: what options are available when new medical or other evidence has become available following the discharge? That is the comprehensive answer I would be seeking. Thank you.

Gen. Hurley : On the second question, I think you said 'members who experience improper'—is that members who allege they experienced improper treatment? There are different views. As we would see it, we went through the reviews. I am assuming the same people brought this—

Senator WRIGHT: I understand the distinction. I suppose I am asking this from the point of view of someone who perceives that they have had an improper assessment. In some cases, I imagine, there is then a finding that they have experienced an improper assessment. In that case, it is no longer an allegation. It is not really academic. You know what I am trying to find out.

Gen. Hurley : I understand where you are coming from. There will be different perspectives at times.

Senator WRIGHT: There will be until there is a finding, presumably. Then there will be a finding.