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Economics Legislation Committee
03/06/2015
Estimates
INDUSTRY PORTFOLIO
Commonwealth Scientific and Industrial Research Organisation

Commonwealth Scientific and Industrial Research Organisation

CHAIR: Thank you. I now call on the officers of the Commonwealth Scientific and Industrial Research Organisation—affectionately known as the CSIRO. Welcome back. Would you like to make an opening statement?

Dr Marshall : Not today, thank you.

CHAIR: We will go straight to questions.

Senator KETTER: Dr Marshall, my first topic is the potential NICTA merger. What is happening in respect of that? Can you provide us with an update on the negotiations?

Dr Marshall : Yes, we are very close, but as they say, the fat lady has not sung yet. But we are very close.

Senator KETTER: What is the likely outcome? Where do you want to end up with this? Is it a merger or an acquisition?

Dr Marshall : We think of it as a potential merger. It is a huge opportunity to bring the two groups—our digital productivity flagship and the great team at NICTA. It is a wonderful opportunity to bring the two groups together and have one powerhouse, if you like, of ICT capability in the country. I think it is a unique opportunity and I am personally very passionate about trying to make it happen.

Senator KETTER: How would the remnants of NICTA fit with the CSIRO structure?

Dr Marshall : The proposal currently on the table, which as I mentioned, is very close to being approved, is to join the digital productivity team with the NICTA team and appoint a new chief executive who would then—recruiting through an external process in collaboration with the NICTA board—and have it essentially run as a part of CSIRO but as a separate company for a term. Therefore, it would have a CEO and a board but it would be, in a sense, part of CSIRO. Then at some point in the future we might, and probably would—but not for a year or possibly more—actually merge it into CSIRO once we get an understanding of how to operate.

Senator KETTER: On the last occasion, Senator Carr asked about the fate of about 300 PhD students who are posted within NICTA. You indicated then it was too early to answer in any detail about that. Are you able now to shed any light on what may happen there?

Dr Marshall : Yes, it is one of the wonderful things about the NICTA model. They have really rich culture of students. For example, there are roughly 310 NICTA employees and there are roughly 307 students in NICTA. So it is a really interesting balance, a really interesting mix. I think it is one of the unique attributes of NICTA. Part of the deal that is currently on the table is that we will undertake to not change any of the relationships that the students currently have so that they can complete their studies and not be disrupted.

Senator KETTER: So they will be able to continue.

Dr Marshall : Yes.

Senator KETTER: Will any merger result in further job losses at either CSIRO or NICTA, particularly when the NICTA funding expires in June next year?

Dr Marshall : If the merger goes ahead, obviously there will be way, way fewer job losses than if it does not. As you point out, the company will run out of money in the middle of next year. We have had a team working with the NICTA team quite closely to establish where areas of overlap are. As you might imagine, there are a lot of areas of overlap in the support functions—HR, finance, marketing and so on. We have been working closely over the last several months with the HR team at NICTA so that any time there is an opening at CSIRO we have an opportunity to recruit a NICTA person into that position in order to minimise the impact. But it is inevitable, going forward, that some of those people in support functions will lose their jobs.

Senator KETTER: Are you able to provide any figures in respect of that?

Dr Marshall : Dr Williams is responsible for the deal, and he would be happy to answer any level of detail you would like to go to. I can stress though that we are doing everything we can to find places for those people, and we have been working with them on that for several months already.

Dr Williams : We are at a very delicate stage in the discussions, because the merger is not complete and NICTA is not part of CSIRO at the moment, so it is a little difficult to talk about specifics. The situation is that over the next 12 months they will lose about 25 per cent of the total budget for the two entities, and that could translate in the worst case to over 200 people. We are working on areas of saving costs and we are working on areas of extra revenue to try and reduce that to the lowest possible total. Unless you really push, I am a little loathe to give it to you today. It would be better to give that at the next session when the merger has gone through and we have talked to staff and we understand the real detail of the picture.

Senator Ronaldson: I think that is a reasonable approach.

Senator KETTER: You are talking to the staff about the potential impact of the merger?

Dr Williams : Once the merger is announced we will have consultations with staff on the potential models, the impact of those models and how we will manage it. We have been talking with the senior staff of both parties about how we are going to do the modelling and what opportunities there are for new business.

Senator KETTER: Are you aware of concerns from within industry, or any of NICTA's partner organisations, that NICTA's agility as a smaller organisation might be lost within CSIRO?

Dr Marshall : I am. I have spoken at length to a very large number of both NICTA's customers and CSIRO's customers. There are occasions where we have been slow, and agility has not traditionally been one of our strengths. I would like to commit that it will become one as part of our new strategy. Long discussions with the NICTA board and the NICTA members, which includes a group of the universities that collaborate with NICTA, gave us pause to want to learn from their operating model. I think it is a great opportunity to experiment with that model, which is a good reason to keep it as a separate entity so that it is able to be a little bit more nimble. As you know, of all the areas of technology, ICT is the most rapidly changing, so it is very important to have agility in that space.

Senator KETTER: Will NICTA retain its separate brand if any merger or formal relationship is established?

Dr Marshall : It is interesting. There are two camps. I should point out that, as part of our strategic planning process for the whole of CSIRO, we engaged the whole of NICTA staff to be part of that through a crowdsource platform. It is a unique way that every team member at NICTA and every team member at CSIRO can actively communicate and share their ideas. There are a lot of feelings in both directions. Some people feel the NICTA brand is very valuable; others feel digital needs a new brand, a new name. There has been some very interesting suggestions of ways to really sharpen the focus there. We have made no decision as yet, but anything we do we will do in consultation with everyone involved.

Senator KETTER: I would like to move on to consideration of the board of CSIRO. I understand there are two vacancies on the board at the moment; is that correct?

Dr Marshall : Yes. We currently have two vacancies on the board.

Senator KETTER: How long have those positions been vacant?

Dr Marshall : I would have to refer to Mr Roy to give you the details on that. While he is doing that, I will point out that we currently have eight members serving on the board. The two vacancies are there. Our chairman will also end his term at the end of June. I will hand over to Mr Roy.

Mr Roy : Of the two vacancies, one was Professor Peter Hoj, who stepped down on 6 December last year. Mary Boydell was the other member who stepped down—I think it was earlier this year, but we can take that on notice. Just pre-empting, if I may, some of the questions that I heard from the previous testimony: we have had a quorum at each of the meetings over the course of the last 12 months, and our annual report points out who attends and who does not. I cannot recall any of the board members not being available for any of those meetings over that period of time. There may be one or two instances where they have, but we have always had a quorum for those meetings.

Senator KETTER: How many board members are due to expire this month?

Mr Roy : Their positions are due to expire, Senator. We have three at the end of June.

Senator KETTER: And how many before the end of the year?

Mr Roy : We have another one before the end of the year.

Dr Marshall : That would be one in October.

Mr Roy : I took that as the end of the calendar year.

Senator KETTER: Yes. How many attendees are required for a quorum at the meeting?

Dr Marshall : As embarrassing as it is, we will have to take that one on notice. We would be guessing.

Senator KETTER: Similar to the question I asked previously: can you tell us how many members have attended each meeting this financial year?

Mr Roy : We will do that on notice, Senator.

Senator KETTER: Thank you.

Mr Roy : Can I just update. I did not provide a date before for Ms Mary Boydell. It was 25 September 2014.

Senator KETTER: What is the process for filling the current and imminent vacancies?

Dr Marshall : I believe we have to defer to the department secretary for that.

Ms Beauchamp : Those vacancies that you refer to, in terms of ones that are expiring, are currently under consideration by the government.

Senator KETTER: Can we expect a response at some time—

Senator Ronaldson: If they are under consideration, Senator, we cannot give you more than that.

Senator KETTER: Can we expect a new chair to be announced?

Ms Beauchamp : In due course, yes.

Senator KETTER: Is there an expectation that any of the existing board members whose terms are expiring will be reappointed?

Senator Ronaldson: This matter is all under consideration.

Ms Beauchamp : Those are all under consideration.

Senator KETTER: Has a set of selection criteria been used to assess potential candidates for the CSIRO board? If so, can you please provide a copy of those?

Ms Beauchamp : Sorry, Senator. The government does consider the mix and match of skills required in terms of a governance board of the importance of CSIRO's. It also considers things like gender, geographic location and the like. There are a number of considerations that the government takes into account in considering board members, but also the government considers the mix and match of skills across a range of boards and committees too. That is the other element that the ministers and the government go through.

Senator KETTER: Is it possible to have a copy of the selection criteria?

Senator Ronaldson: I have been a long time in politics. I do not think I have ever seen a pro forma put out by departments in relation to these requirements. The secretary has said to you that the government will be looking at a range of skills, gender, geographic location and people who can best add value to the organisation.

Senator KETTER: Okay. I would like to move on to—

Mr Roy : Just to fill in the gap that we could not answer before—where the board has nine or 10 members, a quorum is five members. At any other time it is a four members, if there are eight members or less.

Senator KETTER: Okay. Moving on to the quadrennial agreement, on the last occasion Dr Marshall responded to a question on notice from Senator Carr saying that the agreement is due to expire at the end of June—can you please provide us with an update on the status of the negotiations.

Dr Marshall : As we are in the process of delivering our new five-year strategy by the end of the financial year, we have requested that the QFA be postponed until the strategy is completed and then we would discuss the QFA for the following year.

Senator KETTER: Have the negotiations been suspended for the time being?

Dr Marshall : We thought it was very important to get the strategy in place and finalised so that the strategy would then drive the QFA discussion in the next year.

Senator KETTER: My next subject is the RV Investigator, at the last Senate Estimates Senator Carr asked about the funding of the Investigator and I understand that somebody from the CSIRO advised that they are seeking another source of funding to enable the Investigator to operate 300 days a year as opposed to the current 180 days—have you had any luck in finding that alternate source of funding?

Dr Marshall : A number of us have engaged a number of corporates, private companies, that are interested in availing themselves of the use of the vessel. One of the great opportunities with the new ship is that we are able to carry 40 scientists instead of 13—I believe they are the correct numbers—which means we would in principle be able to accommodate a commercial voyage and then ask the commercial partner to let us put some more scientists in those extra berths, essentially to go along for the ride. We could then do science and let the commercial partner do their work as well. We have had some fairly positive reception to that notion. We have not granted anything yet but there are some things that are quite close.

Senator Ronaldson: Senator Ketter, I think it is interesting that you are asking questions and reflecting on 180 days when everyone in this room knows that there was no provisions in the forward estimates under the Australian Labor Party's last budget to actually operate this vehicle. We had to step in last year and put some $65.7 million in because the former government had not put one red cent in for maintenance. With the greatest respect to you, I think 180 days is 180 more than zero—that is where we were heading unless that money was put into last year's budget.

Senator KETTER: Thank you for that Minister. Is the arrangement you have talked about the only likely outcome that will occur in terms of alternative funding or are you still looking for other alternatives?

Dr Marshall : We are actively looking and we are trying to think, if you will pardon the expression, out-of-the-box about how we can fill the additional days. Unfortunately, the university partners that avail themselves of the use of the ship usually do not have the funding to pay for it—so we need to be looking for other sources.

Senator KETTER: Could you elaborate at this stage on what those creative ideas are?

Dr Marshall : It is pretty much going to commercial companies who we believe would be interested in using the vessel for exploration or other functions.

Senator KETTER: You mentioned the restructure that is ongoing and first I want to talk about the closure of the Griffith research lab from 2016. The article I am referring to noted that it was the Minister for Science that had signed off on the closure of the Griffith research lab. Are you able to provide a rationale for the closure?

Dr Marshall : I am going to hand that one over to my chief financial officer, who is responsible for our property strategy. Before I do I would just say: as with any business, we are continually in the process of looking at our resources, our expenses including property and trying to utilise all of those assets in the most effective way possible. These types of changes from the business side generally happen because an asset is being under-utilised or it can be used more efficiently in a different way—

Senator Ronaldson: The answer to the question is no. No, the minister did not direct. It was a management decision of CSIRO. There was no direction, so the answer to your question is no.

Senator KETTER: Was it a CSIRO decision to—

Senator Ronaldson: A management decision, yes. There was no direction from the minister whatsoever.

Senator KETTER: I think Ms Bennett was going to shed some light on the matter.

Ms Bennett : Yes, Senator, it was a decision of management in our 2014 annual directions statement. We indicated that there were eight sites where we were contemplating closure. Appropriate consultations were had with science. There were a few sites where we were unsure of timing at that point. Subsequently in the case of Griffith we did work through that with science and our senior science leaders determined how this could be achieved. We are now working towards exiting the site in 2016. We are, importantly, not exiting the science, so some of the staff will move to relocation with the New South Wales Department of Primary Industries and there may, unfortunately, be a couple of staff made redundant but we are looking for redeployment opportunities in the same areas of science within CSIRO.

Senator KETTER: You indicated that there were a number of other sites you were looking at as well?

Ms Bennett : In our 2014 annual directions statement, yes; we did indicate that there were eight sites under consideration of closure.

Senator KETTER: So it is part of a broader CSIRO restructure.

Ms Bennett : Yes. We have a rolling property strategy that is aimed to try to ensure that we consolidate into international centres where appropriate, that we co-locate where appropriate and that we make the most efficient use of our property so that our dollars can go towards science and not towards the cost of property. It is a program we have been embarking on for the last two or three years and we continue to do so.

Senator KETTER: In terms of the completion of the restructuring, is that far off?

Mr Roy : Senator, are you referring to the changes we made in what was called the Integrated Reform Program at the start of 2014? Just for clarification.

Senator KETTER: Yes.

Mr Roy : At that stage we said that there were two key changes that we would make and one was effectively reorganising the organisation into a line of business model. So we are very clear about the differentiation that CSIRO had in the system and one was the work we do in running national facilities on behalf of the nation. The second one was merging our flagships and divisions, delivering the work to our industry partners and commercial partners through the flagships and setting up a line of business particularly focused on SMEs called the services line. That work, if that is what you are referring to, is by and large complete now.

Senator KETTER: Thank you. At the last estimates, Senator Carr asked about morale within CSIRO and what you were doing to try to improve the situation. Can you give us an update as to how staff morale is faring?

Dr Marshall : I certainly can. It has been a big priority for me since I began in mid-January. As you may be aware, we conducted the last traditional morale survey in August of 2014 but it is interesting in that the platform that we stood up, the visual platform that enabled us to essentially crowdsource the strategy across the entire organisation, gave us a new and unique way to get a very clear sense of the mood in the organisation.

Also, from me visiting the major sites, having fairly deep immersion, spending a day, two days or in some cases a week at the larger sites and having a lot of real-time open forum Q and A so that the employees of the company could get a better sense of who I was and to take away a little bit of the mystery and uncertainty about that, I would say that when I started that process there was a lot of uncertainty, a lot of concern about the future. The organisation had gone through a massive change in the restructure. From that experience, I would say the morale is definitely looking forward now, not backwards. Culturally I think as scientists we want to look forward. We want to look to the future. We believe we can make the future better. So that is a really profound and important shift in the morale.

We will likely do the next formal staff survey in August or September this year, but I expect that my very clever, smart scientists, especially the ones in digital, will figure out a way to measure the sentiment of the team using the crowd platform. I think that will be a wonderful piece of technology that they will likely use.

Senator RONALDSON: This budget has an additional $55 million, I think, from recollection, over the forward estimates. I am not accusing you of doing this, but I really think it is about time people stopped talking down CSIRO and started talking up CSIRO. This is a world-class scientific research agency which is kicking some really serious goals, both domestically and internationally. In my home state of Victoria I saw there was a 3D printed titanium heel bone implanted in a man from Rutherglen, which is in rural Victoria. This was a partnership between CSIRO, St Vincent's Hospital and, I think, a biotech company called Anatomics. It was world first surgery. There are lots of examples like this and I just think it would be good for the committee to hear briefly from Dr Marshall or someone at the table about some of these projects. I understand we talk about the politics, but I think we have probably talked CSIRO down for too long now and we—

Senator KETTER: Look, Minister—

Senator RONALDSON: I am not accusing you of doing this.

Senator KETTER: Thank you for that.

Senator RONALDSON: It is about time we started talking it up. So if we have some projects that might just be of interest to the committee, let's talk about them.

Senator KETTER: That is blowing my time out, but anyway.

Senator RONALDSON: How about you jump in and talk about some projects, Dr Marshall.

Dr Marshall : I am happy to—

Senator KETTER: Can I just say I have the utmost admiration for the CSIRO and I stand shoulder to shoulder with you, Minister, on that. That does not prevent us from having concerns about—

Senator RONALDSON: Of course not. That is not what I was saying. I was not pointing the figure at you. I might have been at others, but I certainly was not at you.

Senator KETTER: There are some metrics that I am trying to look at and I would like to get through those questions. I am more than happy for Dr Marshall to tell us about some of the positives, but I would also like to get through my questions as well.

CHAIR: Yes, push on.

Senator KETTER: At the last estimates I think it was Mr Roy who provided us with figures on voluntary turnover, which I think was about 4.3 per cent. Do you have an updated figure for this financial year?

Mr Roy : I can get that for you, but our turnover is fairly consistent. Voluntary turnover is approximately 4.5 per cent. If we look at the long run over, say, five years or so, it is around the same sort of number.

Senator KETTER: Are you also able to provide me on notice with staff attrition numbers per week for the last six months?

Mr Roy : Per week is going to be a real challenge for us there. We do not pull the numbers down per week. I can tell you where they were on 30 April and 1 January. I am happy to do that today or on notice, whatever works for you.

Senator KETTER: That would be fine. I am not seeking to create a whole lot of additional work for you.

Mr Roy : We will do the best we can there to pull those numbers down.

Senator KETTER: Thank you. And, if you are able to, could you break those down by resignation or retirement versus voluntary redundancy or forced redundancy?

Mr Roy : Just to clarify, we only have one form of redundancy.

Senator KETTER: That is the voluntary form?

Mr Roy : We only have a redundancy where someone leaves the organisation through a redundancy. We do not have a redundancy scheme where people can opt in and go for a redundancy.

Senator KETTER: Okay. I am going to ask about the status of the bargaining process that is underway at the moment with staff. How is that interacting with bedding down the structural changes within the organisation?

Mr Roy : It has been running in parallel with those changes. We have had a management team and a leadership team working with the various bargaining agents that we have. We have four unions and a number of individuals or groups representing themselves. We have had 20 days of negotiation to date, and those negotiations are ongoing and constructive. It is taking a little bit longer than all of us would have liked, but I have been involved in these before and they generally do take a little bit longer to settle them—more than you would like.

Senator KETTER: I am going to move now to the strategy for 2015-25 and the issues related to the management of IP. There was an answer to a question on notice from Senator Carr about the development of CSIRO's decadal strategy. The answer I am referring to is AI-61. I was wondering if you could provide an update on the consultation process. In the answer there was a reference to what were referred to as 'challenge questions' the staff were required to answer. Can you tell us what those were?

Dr Marshall : I will let Mr Roy go into the details of the answer on notice, but the notion of the challenge questions was that, with the crowd platform, you need to seed it with some questions or ideas to sort of start the conversation going. Once it is going, these ideas tend to coalescence into, if you like, a strategic pillar. That was the notion of how you extract the ideas from the platform. But I will let Mr Roy go into the detail of the questions.

Mr Roy : In my time at CSIRO I have been involved in the development of a number of strategies. I have not seen more consultation in strategy development than with this particular one. We held a range of external functions to get the views of key stakeholders, customers and people who are interested in CSIRO, to understand what differentiated values CSIRO brings to the nation. We got some excellent input from that. We have engaged quite heavily with our staff around the strategy.

Dr Marshall spoke about the crowdsourcing platform. That has been taken up in three phases we have had. We had 650 ideas posted by staff, 5,800 comments and approximately 40 per cent of staff engaged on that platform, who have entered in one way, shape or form. According to the provider who has assisted us with developing a platform, that is pretty much unprecedented in levels of engagement. Beyond that, we have also asked our leaders to be talking to their teams and to provide feedback, through the executive team and the executive management council; their thoughts on the strategy as well. We have had a cascading approach to those questions—big questions to start off with, such as where can CSIRO add value. That is not an absolute question but it is representative of the sorts of questions—starting to zoom into how we can make it happen. It was a bit of an experiment for us, Senator, but it has worked well and we will be using that sort of platform again to get the views of staff. Given you spoke about consultation, we have also met with the staff association, the key union that supports some of CSIRO's staff, through the strategy team.

Senator KETTER: Are there any other external stakeholders who have been consulted as part of the process?

Mr Roy : A wide range, from state and federal officials, to industry leaders, to leaders of peak bodies. It has been a broad range of individuals we have discussed options around the strategies with.

Senator KETTER: How have you conducted those consultations?

Mr Roy : Generally through a round table function there, so we can share ideas in groups of about 10, if you like.

Senator KETTER: And what is the timeframe for finalising this strategy?

Mr Roy : The board meeting for June, which is in the second half of June.

Senator KETTER: And the process from that point on?

Mr Roy : It will then evolve into implementation and communication of the final plan.

Senator KETTER: The last four-year strategy resulted in a major restructure. What is the relationship between this new strategy and the one we are just reaching the end of?

Dr Marshall : The organisation has been through a lot of change already so one of our guiding principles is to change as little as possible, at least structurally, going forward. But we must also be realistic: because of the profound change in structure, we want to be sure that the new structure really is working. Structure is a funny thing. If it is right, you do not notice it and it will almost become irrelevant; but if it is slightly wrong you keep tripping over it and it gets in your way, and suddenly it becomes the only thing you notice. I have been watching really carefully and testing to make sure we have got it right. You will probably see us make a few tweaks, but I do not expect you will see anything major from where we are at this point.

Senator KETTER: There was an article recently in which, Dr Marshall, you were interviewed. I think it was in the AFR of 28 April. It refers to creating a new technology investment fund within CSIRO to help commercialise some of the organisation's 3,900 patents. You referred to it as a Pandora's box, interestingly enough. Is this part of the decadal strategy process?

Dr Marshall : The official timeline of the current strategy is four years; we pushed it a little to five. As smart as we are, I am not sure we can see out a decade, but we will try. The current strategy period is four years with a possible addition of one. CSIRO really does have a Pandora's box of technology. I knew there was a lot inside, but I was frankly surprised as I kept finding more and more to this.

Senator KETTER: I am not sure Pandora's box is quite the appropriate way to refer to it.

Dr Marshall : Perhaps not.

CHAIR: A treasure trove for Dr Marshall.

Senator KETTER: Treasure trove I would agree with.

Dr Marshall : Or a national treasure. I should point out, I am learning more and more about the media because the discussion of the fund was in answer to a question on what was one of the most unusual ideas that came out of the crowd platform. I said, 'Oh, a fund to invest in the technologies.' But where I have been most amazed is with the actions between the SME community and ourselves, particularly when there is a university involved. I think the minister alluded to that with the titanium heel: it is a great example of a really innovative solution that comes when you combine the knowledge of three different parties. The other one that was fascinating to me was going through the textile group. That group was the group that solved the problems of wool—they literally made Australia's greatest industry so great. They made it manufacturable, stopped it from shrinking and so on. That group has completely reinvented itself and now, instead of figuring out how to weave wool, they are figuring out how to weave nanofiber and carbon fibre. They have actually created a three-dimensional structure which has been adopted by Kimberly Clark in a series of very major commercial products. Kimberly Clark had been working on that problem for a very long time; and yet CSIRO, in partnership with Textor, an SME in Victoria, was able to solve something in a very unique way that they were not able to. I could go on, and I will if you want.

Senator KETTER: No, that is okay. I was specifically referring to the technology investment fund that you were talking about.

Dr Marshall : The notion of the fund—we have spun out roughly 150 companies in the last 30 years but we have never had a formal process of investing in them. Often, they struggle because, as you may know, there is not much of a venture capital opportunity domestically in Australia. Part of the problem is often the technology, as great as it is, is not fully baked from the perspective of an investor or a commercial partner. It is definitely my belief that, if we could create such a fund to derisk those grey technologies a bit more and make them a little more investor ready, we would actually do a much better job of translating the wonderful science and invention into true innovation and really fulfil our mission of delivering profound impact to our nation.

Senator KETTER: So it is still on the drawing board—that is where it is up to at this stage?

Dr Marshall : It is still on the drawing board. I will say we had tremendous interest from large superannuation funds and large Australian companies when that article was published. I had already talked with probably four or five large companies about this idea, and they were very keen to help. I was very pleasantly surprised to see how much appetite there was in the Australian business community.

Senator KETTER: What lessons has CSIRO learnt about how to ensure it gets some return on its valuable intellectual property based on the experiences with wi-fi?

Dr Marshall : That is the remarkable thing. In the last nine years, we have probably generated roughly $50 million in returns from our spin-outs. The reason that is remarkable—in fact I think it is $53 million—is that we have not actually invested in any of those spin-outs. If you do not invest, every time the spin-out does an investment round you dilute your equity. A good rule of thumb is: you are going to more than halve your equity every time there is an investment round, so if you do that three times, you dilute close to 10x in your ownership. Look at it and say, 'Gee, if we had such a fund, it wouldn't be $53 million, it would be well over $500 million.' That may seem like a large number, but we are very close to that number for what you mentioned—just the wi-fi IP-which is purely patent royalties. I would ask the question: if we had been able to invest in wi-fi, there was a $3 billion company built in wi-fi that employed thousands of people and generated hundreds of millions in revenue every year—so a really profound impact. I am hoping that sometime in the strategy period we are going to find another one of those and that we will actually be able to bank it and build a transformative opportunity, a transformative company, for Australia.

Senator KETTER: That would be fantastic. Are there any barriers in the way that governments budget which create a disincentive for agencies such as CSIRO to get a return on their research?

Dr Marshall : I do not believe so but I would probably refer that to my chief financial officer who is well and truly across the budget.

Ms Bennett : The government quite prudently are looking for a balanced bottom line. As government approved long-term projects such as major capital, it is understood there is an upfront investment and, in some sense, you have to make sure you have the money first to then spend it. There is also latitude to ensure that that balanced bottom line can flex according to need. I think my answer would be: going into any project, you always need to be sure about what you are getting into on a whole of life, be it for an investment fund or a capital project. It certainly takes a lot of work, but I do not think there is any major impediment in the way in which this country, through the government, is running those accounts with agencies and portfolios.

Senator KETTER: But certainty is obviously something which is important.

Ms Bennett : Building a risk whether you are building a building, a vessel or getting into an equity fund is just one of the complicating factors to make sure that everybody is aware of the risk. As Dr Marshall has alluded to, in some sense getting a bigger return almost inherently means you are going to take a bigger risk. There will be some winners and some losers, so this is definitely somewhat of a new paradigm for CSIRO. We are very used to and comfortable with taking the scientific risk. As we move into something like contemplating the need for funding, we start to see that translated into financial risk but with extraordinary reward down the track.

Senator Ronaldson: This budget does build in that certainty because, over the forward estimates, some $3.1 billion will go into CSIRO. It is your money, our money and the people's who are listening here tonight—and I think it is a fantastic investment from a personal point of view. We have put an increase into that forward budget period and we are very confident that CSIRO has now got the certainty that it can go ahead and continue to do the things we know they have done and to do great things again in the future.

Senator KETTER: We wish them all the best in that endeavour.

Senator BUSHBY: I just have a couple of follow-up questions on the RV Investigator, which Senator Ketter asked some questions about. As you noted, the previous government—although they funded the construction of the vessel—had no funding in the forward estimates for actually operating it. How much have we actually put in to provide the operations for the days that it is now operational?

Senator Ronaldson: We have the extraordinary situation where the vessel was at dock, but there was no money to actually run it, which I found—

Senator WHISH-WILSON: You could not plug it in?

Senator Ronaldson: No, it was not a pluggable vessel. We had an extraordinary situation where we had a vessel that really is very, very important for this nation and no money to run it at all. As you would be acutely aware, the budget was very tight last year for obvious reasons, as we were trying to address a budgetary situation that we inherited. But this project was so important that we found that the $65 million.

Senator KETTER: Just for the sake of the record, I think it needs to be said that the previous government allocated funding for the first year of the ship's operation. However, as the minister is saying, there was not any ongoing funding for that.

Senator Ronaldson: I think Senator Carr actually conceded that they had $10 million in to get it back on or whatever it was. We were left with a diabolical mess and you are right to bring to the committee's attention that we addressed that situation.

Senator BUSHBY: I have a particular interest in it because its home port is Hobart, which where I live. I did have the opportunity to go on it and have a tour of it. I met Dr Marshall while he was down there. It is now operational. When did the operations of it actually start and how many days at sea has it actually had so far?

Senator Ronaldson: I will pass to the CSIRO officials to answer those questions.

Dr Marshall : It is a marvellous vehicle, to be sure. We did the first trial voyage to the Antarctic ice edge. Remarkably, it went beyond 60 degrees south, which is a long way, and went through some incredibly heavy seas to get there. That was well within sight of the icepack. We also did a trial voyage in April to test some of the scientific equipment around benthic creatures. This is where we take samples from the ocean floor. As you may remember, we are remarkably able to probe down 7,000 metres to the deepest parts of the ocean and then go 24 metres deep and pull out a core sample. That is a remarkable piece of technology as well.

The first scientific voyage was in March. If redeployed some of IMOS's time series moorings. That is another remarkable thing about the team at Hobart: most research organisations tend to buy equipment from, for example, the United States, so I was stunned to learn is that our team in Hobart re-engineers most of those, because they do not last long enough in the ocean. Apparently, we make them last years longer in some cases than they would on their own. They find ways very cleverly to reuse them.

One of the things that came out of not the first trip but the second trip, which was longer, was figuring out a better IP strategy to capture those innovations through patents and so on. Really, I am very impressed with the team and their innovation ability there. I believe the second scientific voyage just happened in May. It was a departure off the coast of Sydney towards Brisbane to monitor the EAC—the East Australian Current.

Senator BUSHBY: So far those research trips have been entirely successful? Have we learned any lessons? Have there been any problems? How have they gone?

Dr Marshall : By and large, they have gone well. I am sure the tests of the scientific equipment would have had some hitches here and there, but by and large the performance was great. If you would like to go deeper, Dr Williams—who is responsible for the vessel—can give you more information.

Senator Ronaldson: Deeper than 7,000 metres!

Senator BUSHBY: If you have anything to add, Dr Williams, otherwise I am happy to leave it there.

Dr Williams : I think we have the usual set of incidents on board with equipment failing and being fixed quite quickly. We have got one or two warranty claims still in play because the ship has 12 months of warranty since the sign-up period—we are still discussing those with a contractor. But at the moment everybody is happy both from the crew perspective and from the scientific perspective on the way there vessel operates and works. It has been doing a great job so far.

Senator BUSHBY: That then leads into my last question, which flows on from Senator Ketter's questions—that is, how you are looking to partner with industry to make better use of the days when it is not already occupied? The vessel itself is one of the world's leading and most capable and modern research vessels of its type. It does have a commercial appeal to other industry partners; that is the case, is it not?

Dr Marshall : I believe so.

Senator BUSHBY: And is that what you are trying to do? Are you trying to leverage the fact that you have got an asset there that does have commercial interest for people who want to do research—and is capable of delivering—and partnering with them to make that happen?

Dr Marshall : It is in part, and definitely a large part, commercial. It has been interesting; there is a number of foundations that we have approached which is more of a charitable donation model, charitable contribution model to support science.

Senator BUSHBY: I might have been using the word 'commercial' in the wrong sense but it has a value.

Dr Marshall : Maybe I misunderstood the question but what I thought you meant was where a company would pay us to basically have access to the vessel to take it somewhere to do exploration or some form of work. The notion in that situation, because we have the extra berths, we try to negotiate that we are able to put scientists on board along with the commercial people so that we can still do science on those vessels. The other thing I mentioned, and the reason it is commercial in part, is I have also been surprised at the interest of some charitable foundations to fund research trips and that was not something I had expected in the beginning.

Senator BUSHBY: So there are realistic potential opportunities for the vessel to be out there sailing and conducting research that are not necessarily directly funded by the government?

Dr Marshall : There are some realistic ones, some not done yet but fairly close.

Senator WHISH-WILSON: You mentioned exploration. Are you talking potentially oil and gas exploration or seismic exploration?

Dr Marshall : There has been interest from some traditional oil and gas companies, some seismic service companies and also from some people that are interested in impact on climate around some of the oil and gas reserves.

Dr Williams : Twenty-five per cent of the land mass of Australia is actually underwater in the oceans around Australia. There is an enormous economic and scientific benefit going there so there are a lot of companies interested in going out there to do exploration for, as you said, oil, gas, minerals. We have organisations in Australia like GA that are interested as well. The intent there is to try and do things for a national good as well as research and science. I think Dr Marshall mentioned we have a number of things going on. It is an exciting period for the ship.

Senator WHISH-WILSON: I am glad the boat is out and working. I have also been on board and had a look around. I am glad Tom Troll has got nearly first berth on the boat. Have there been any changes made to the governance of the Marine National Facility in recent times and, if so, why those changes were made?

Dr Marshall : There has been a slight change in that the CSIRO board now is able to appoint the Marine National Facility steering committee. They have not appointed the board; the board is the same as it was beforehand. Before that change, the minister would appoint that board rather than the CSIRO board.

Senator WHISH-WILSON: Could you explain in layman's terms what that means or why that occurred? Is it because you are in a better position to judge the utilisation of, for example, the blue water subjects?

Dr Marshall : I think it is simply that because we operate the vessel for the benefit of the nation, perhaps we are a little closer to the science community that wants to use it, so we are more easily able to engage them. Generally the steering committee is chosen by distinguished scientists from that community.

Ms Beauchamp : It was part of the process to reduce red tape and streamline governance arrangements. As Dr Marshall said, it is an operational committee based on scientists and experts. Looking at an operational model, it should indeed be in the hands of the administrator, so we took out some of those burdensome processes around ministerial appointments and the like.

Senator WHISH-WILSON: On that point of administrators, how many requests have there been to make use of the RV Investigator and how many days do those requests amount to now? Can you give us a figure now or on notice of the booking schedule going forward, including those who have not been able to access the boat?

Dr Marshall : We have plenty of demand for the vessel, more than we can satisfy.

Senator WHISH-WILSON: I would just like to get ratios on that or some sort of matrix.

Dr Williams : It is four times oversubscribed. I will take it on notice to give you the exact figures but that is the magnitude of the oversubscription.

Senator WHISH-WILSON: That oversubscription, is that over a period rather than the forward estimates? Does the steering committee have a five-year planning horizon?

Dr Williams : The steering committee put forward a call for proposals and now the schedule for the next three years has been released. We have a three-year schedule in place for 180 days each year and that has now been fully allocated. As Dr Marshall said, there are still some berths available on the vessel on some of those voyages, because not all of the voyages take all 40 berths. We have then a secondary process to put subsidiary science on each voyage—that is, science that can take place that is not so geographically or time constrained as the primary mission.

Senator WHISH-WILSON: I have no doubt it would be a really difficult matrix to put together with all the different geographical regions, different scientists, different projects, different demands. I have full respect for that. How many days are scheduled? Are the 180 days for 2015-16 fully booked out on the calendar?

Dr Williams : Yes.

Senator WHISH-WILSON: What about for the following year? Is that the same? Is it all based on 180 days?

Dr Williams : It is all based on 180 days, so the next call for proposals will be for the period after those three years.

Senator WHISH-WILSON: Would that take us through to 2018-19?

Dr Williams : Yes and, as I pointed out, in the meantime as each voyage goes through, there are vacancies on some of them for berths so we try and achieve subsidiary science objectives through another call for a proposal.

Senator WHISH-WILSON: Would the extra capacity go to industry that is interested in using it on the days when it has not been booked? Do you stagger the 180 days over any particular scheduled period of time or is it back-to-back?

Dr Williams : With the primary missions that have been agreed, the voyages that have been agreed, the time schedule and the slot were part of the proposal. The matrix, as you said, of putting that together to come up with an average. We now have a number of blocks of days between those primary voyages which are available for other things to happen and we have talked about how that might be through industry, through other parts of government and perhaps through universities—but at this moment in time they have no provision for that sort of payment.

Dr Marshall : I do not know if you saw the pods, but one of the unique features on the back of the vessel is we are able to load different experiments in these pods very quickly on and off. That gives us a whole other degree of freedom to do what Dave said.

Senator WHISH-WILSON: Do you mean pods as in shipping containers?

Dr Marshall : They are like a shipping container but are much more sophisticated and they kind of drop in. They are a self-contained lab that has the experiment that the particular scientist wants to do, so we are able to mix and match capability to do what Dave said. If we have not completely filled one trip, we are able to pop others in and then drop other pods in to support them.

Senator WHISH-WILSON: The 180 days that you have subscribed, are any of the participants helping fund the boat? Or is that all public good science?

Dr Marshall : My understanding is it is pretty much all public good.

Dr Williams : That is all out of the allocation that we have been given to run the vessel. The universities do not contribute to the cost of the vessel but when they want to bring specialist equipment on board, they have got to pay for that themselves and provide that to CSIRO so we can put it on the vessel for the trip.

Senator WHISH-WILSON: Dr Marshall, it was really just a philosophical question. I know you have got a very impressive background of science mixed with commercialisation of science. I was just wondering when you look at the flagship programs that CSIRO has got in place, whether you think they have got the mix right. Do you have a philosophical leaning to taking CSIRO in a different direction at all? In particular, I am interested in the public good versus private good component.

Senator Ronaldson: I think that is a difficult question.

Senator WHISH-WILSON: I agree it is a difficult question.

Senator Ronaldson: I just wonder whether that might be better done over a cup of coffee. I am sure Dr Marshall would be happy to do that. I just do not know if we can have these discussions. And I want to come along, by the way, but it is probably best done that way.

Senator WHISH-WILSON: Are you comfortable with the cup of coffee, Dr Marshall, or are you okay to speak?

Dr Marshall : I would love to have a cup of coffee with you.

Senator CANAVAN: I want to ask about the announcement last month on beef roads and CSIRO's involvement with the transit tool developed. I have said previously I compliment you greatly on the development of that tool. It seems to be a fantastic innovation. What are your plans from here to use the tool? Are you still developing it and its methodology? Are you widening it away from just the beef industry? Or is it ready to go off-the-shelf to be used to start looking at where we need to build roads?

Dr Marshall : It is not off-the-shelf; it is very advanced. It uses a lot of inputs that a traditional logistics and planning model probably would not use, including weather, environmental effects and so on. One of the interesting consequences of that tool, which, as you quite rightly pointed out, we use to figure out transport logistics for the cattle industry, is it has a much wider range of applications, surprisingly, we believe, including inside factories, for the transport and logistics of parts through the process of manufacturing a system. That was quite a surprise for us. It was an observation made by one of our commercial partners who was looking for just such a solution, so it was an unexpected benefit from that.

Senator CANAVAN: Back to my question, in terms of it being used to develop the government's spending of its $100 million for beef roads—and this tool was specifically mentioned in the announcement of that—how is that going to work? How is it going to plug into the decision-making process?

Dr Marshall : I cannot speak to the government's utilisation of that. But the notion from our side was to help provide some scientific input as to optimum routes. Because you have got this fundamental problem of getting the goods to market—keeping them healthy and refrigerated and so on—the shorter the distance can be, the better the quality of the product when it is delivered.

Mr Roy : On the specifics of your question, I think we will have to take part of that on notice and engage with the scientists. We would be expecting that we would assess—obviously, it is fit for purpose—but whether it needs any modification or optimisation to apply to that particular challenge where we have to take it forward. I think that we would need to ask the scientists who run it for that. It sounds like you are well and truly aware that it has had a lot of success in the past. There is no reason it will not be very helpful in this particular case too.

Senator CANAVAN: Is it a tool that—if a local government or an industry association wants to advocate for a particular road or investment under this $100 million program—they could come to you and say, 'We're going to work to get the information from this tool to help us build our case to government'?

Mr Roy : The importance here is that it provides an objective assessment as to the most optimal route to minimise the cost. We are open to approaches from any stakeholders in order to assist them with challenges that they have.

Senator CANAVAN: Would you charge them for that?

Mr Roy : We would have to understand what outcome they were trying to achieve and who was going to benefit from that outcome, and then we would have a discussion about where the value is created and who should share that value.

Senator CANAVAN: My understanding is that you used a lot of the NLIS data from the beef industry to build this model, and that was the intellectual property of the MLA or the data company of MLA. Have they got some equity in this? Do they have the ability to use this tool at no cost? How did that IP transfer—

Mr Roy : I do not have that information.

Senator CANAVAN: Could you take that on notice.

Dr Marshall : We will take it on notice.

Senator WATERS: I have some questions about phase 2 of your coal seam gas fugitive emissions research. I would like an update on how phase 2 is going, particularly in terms of the timing and the likely report date.

Prof. Barrett : Just to clarify that by 'phase 2 report' you are referring to the methane seeps report done under the GISERA Alliance?

Senator WATERS: Yes.

Prof. Barrett : We have completed that phase.

Senator WATERS: You have finished phase 2?

Prof. Barrett : We have finished phase 2, which was a prototyping of three methods for measuring fluxes and mapping sources of methane across the Surat Basin. The first of the three methods is a mobile survey method utilising an instrument in a vehicle along with meteorological measurements. The second approach was a remote-sensing approach using a helicopter tuneable lidar for mapping methane distributions across the landscape. The third approach was measuring concentrations in the atmosphere and using atmospheric transport models to understand the position and source of methane and the fluxes. Phase 2 is finished. We have reported on that, and we have made that report publicly available on the GISERA website.

Senator WATERS: What date was that one put up?

Prof. Barrett : That was put up, I believe, on Tuesday of last week.

Senator WATERS: Do you have a phase 3 planned? Can you tell me about the scope of that one?

Prof. Barrett : The phase 3 plan is to take the learnings from phase 2 and develop a tailored monitoring program for the region, to be able to understand the sources of methane—where they are coming from—so that we can attribute the fluxes that we are measuring to those sources. We plan on rolling out phase 3 over a period of three years to very well establish the baseline that we need before considering what we do with the long-term monitoring capability of that system that we have tailored and set up for this region.

Senator WATERS: When will the rollout begin, phase 3?

Prof. Barrett : Phase 3 will be underway pretty much straight away. There is a little bit of regrouping and logistical work that needs to be done but within the next few weeks we will certainly be moving rapidly on phase 3.

Senator WATERS: I think in my head I had assumed that phase 2 was more, in fact, what phase 3 is going to be undertaking. So I will ask you the questions—if it is not yet set in stone, so be it, but if you can help me to the best of your ability that would be great. There was not a sample size specified for phase 2, but that seems to be because it was about looking at methodology for measurement. Will there be a sample size for phase 3?

Prof. Barrett : In phase 2 the prototyping of the methods was done in a very comprehensive manner. For example, we covered more than 7000 kilometres of distance in terms of the mobile survey approach, we co-measured with the mobile survey and the airborne LIDAR, and we spent quite a bit of time working out where the best sites for the atmospheric towers are in the region. The footprint of those towers will be in the order of tens of square kilometres, so we will be covering quite a large area of the central part of the gas production fields in the Surat.

Senator WATERS: And that is phase 2 you are talking about, is it?

Prof. Barrett : That was prototyped in phase 2. We showed, as part of that, that the method is viable and that it will work going forward.

Senator WATERS: In terms of how many sites you intend to apply those various methods to in phase 3, have you chosen that number yet?

Prof. Barrett : We only need two towers separated by about 75 kilometres to cover off that central region of the Surat Basin. That will cover many hundreds, if not thousands, of gas wells that are drilled in that area.

Senator WATERS: Can I just check, when you are talking about the towers are you talking about the remote sensing or the atmospheric transfer models?

Prof. Barrett : The atmospheric concentration measurements and transport model.

Senator WATERS: I am interested in the vehicular surveys. How many sites will there be for those?

Prof. Barrett : As I said, we covered 7,000 kilometres of distance as part of the prototype.

Senator WATERS: In phase 2.

Prof. Barrett : In phase 2, that is correct. In phase 3 we will continue to use that method to map the region along with further developments with the remote sensing methods. Our aim is to get a map of the sources of methane throughout the Surat Basin that will be useful for distinguishing those sources of methane that are coming from background fluxes and those sources that are coming from the industry.

Senator WATERS: So is phase three more focused on ambient levels as opposed to specific wells, then?

Prof. Barrett : It is about discerning or setting up that monitoring system that allows us to discern between that background and the emissions coming from industry.

Senator WATERS: In phase 1 obviously you just looked at the wells, and I think there were 40-odd sample sites, which the report itself acknowledged was a small sample size. I am just again trying to understand the difference of approach.

Prof. Barrett : Senator, there are two reports here. The first report that you are referring to was phase 2 of the GISERA methane seeps report. The report that you are referring to in terms of the 43 wells, that is a separate report done on fugitive emissions for the Department of the Environment.

Senator WATERS: That you helped them to undertake, as I understand.

Prof. Barrett : That is right, CSIRO undertook that work.

Senator WATERS: Is there a phase 2 of that report?

Prof. Barrett : There is more work happening in relation to the Department of the Environment contract, which could be regarded as phase 2 of that initial report. That is looking at well completions and hydraulic fracturing events associated with it.

Senator WATERS: Could we focus in on that report? Thank you for the background on the other. That is also interesting and I will come back to that. I refer to that as phase 2—I am sorry if I used confusing language before. What is the time frame on that phase 2 report?

Prof. Barrett : At the present time that work is due to report at the end of June this year.

Senator WATERS: And are you on track for that?

Prof. Barrett : Field work is underway. We are making progress. At this stage we are due to finish on time.

Senator WATERS: Okay—so, in just a few weeks?

Prof. Barrett : Yes.

Senator WATERS: It is June this year?

Prof. Barrett : June this year, yes.

Senator WATERS: Staying with that report: what is the sample size for that one?

Prof. Barrett : I cannot give you an exact number of the wells that are being considered as part of that work, the reason being that it is logistically difficult to be in the location at the exact time that hydraulic fracturing operations are under way and where well completions are occurring. We need to coordinate with the industry to be able to access wells at that time. There are health and safety issues that we need to consider as well there.

We will be doing as many as we can in the time period that we have allotted. I can give you an update as a question on notice as to how many wells we have visited thus far.

Senator WATERS: On notice? Yes—okay, thank you. That is indicative and helpful. You just mentioned well completion. I thought phase 1 of that fugitives report did not include well completion? Are you now looking at that in the second phase?

Prof. Barrett : Phase 2 is looking at well completions and hydraulic fracturing.

Senator WATERS: And you are looking at fugitive emissions in both of those processes?

Prof. Barrett : That is right. We regard the fugitive emissions as those emissions that are coming from part of the process of establishing wells and of gas production.

Senator WATERS: And when you say 'well completion', I have an understanding of what that means but I hope it is not different from yours. What are you calling 'well completion'?

Prof. Barrett : Well completion is where the drilling activity has been completed, the casing is in place, it is cemented in and the well is connected to the reticulation system—both the water and gas systems. That is the well completion.

Senator WATERS: So it is when the production is finished, or is it once the establishment of the well has been completed so that it can be used for production?

Prof. Barrett : That is right—the latter.

Senator WATERS: All right, okay. And with the measurement of the fracking: again, where are you measuring to determine the fugitives from fracking? Where, precisely?

Prof. Barrett : With the system that we use in the centre we are able to move around the well pad in relation to the prevailing wind. As I said before, due to health and safety we cannot enter the well pad but we can operate safely around it. By taking concentration measurements using the sensor as we traverse around the well pad and by understanding the flow of air across that well pad through meteorological measurements, we are able to understand the amount of methane that is coming off during that—

Senator WATERS: From the wellhead—

Prof. Barrett : From the well, during that—

Senator WATERS: But are you looking anywhere other than the wellhead?

Prof. Barrett : Not at that scale. We are close to the well and we operate just outside the well pad area.

Senator WATERS: So how are you calling that a fugitive emission, if you are just looking at wellhead emissions?

Prof. Barrett : Because the fugitive emissions are those emissions that are coming from the infrastructure—that is, wells—

Senator WATERS: Yes, but there is more than just the well—pardon me for interrupting. The concern about fugitives is that they are coming from everywhere; they are not just coming from the wellhead, it is the pipes. Basically, they are just coming up like a sieve, everywhere. Are you measuring that?

Prof. Barrett : The measurement of methane—

Senator Ronaldson: I think that is probably a comment, Senator, with the greatest respect—that it is just coming up from everywhere.

Senator WATERS: I am seeking his expert view.

Senator Ronaldson: We might just to seek some clarification from the officer.

Prof. Barrett : The measurement of methane around the well pad is across an area that is really no bigger than a tennis court. The methane emissions from, say, biogenic decomposition of organic matter are a very minor component at the time we are making those measurements. So while we are measuring all of the flux of methane, the majority of flux that we would see would be coming from the wellhead because the background emissions from the soil there are very low.

There are areas where higher background emissions occur, such as cracks, fissures and that sort of thing.

Senator WATERS: That is what I am trying to get to.

Prof. Barrett : But the industry would not associate—there are setback distances from—

Senator WATERS: Sorry; the industry would not?

Prof. Barrett : The industry would not locate a well close to a fracture or a fissure or a fault line, because that would defeat the purpose of drilling the well there. So they will have setback distances from those fissures and cracks.

Senator WATERS: What about the fissures and cracks that the fracking creates?

Prof. Barrett : The hydraulic fracturing in coal seams is designed using vertical wells so that the fractures are horizontal, and the fractures follow the natural cleats within the coal. So they separate fractures that are already there. The fracturing is designed so that it does not escape out of the coal seam.

Senator WATERS: It is designed that way, but that is why you are measuring it—to make sure that is the only way it is escaping. I am interested in whether you are looking at other sources where it is potentially escaping from.

Prof. Barrett : If there were any emissions associated with that, we would pick that up as part of the study.

Senator WATERS: From the wellhead, though?

Prof. Barrett : Yes.

Senator WATERS: Would you not have to look further afield?

Prof. Barrett : No, because those emissions will not be coming to the surface in the soil around that region; they will be following a line of least resistance back towards the wellhead.

Senator WATERS: Thank you for that explanation. Will you be looking at the pipelines as a source of fugitive emissions?

Prof. Barrett : The pipelines, and any infrastructure, are potentially a source of fugitive emissions. At this point, we are not looking at pipeline infrastructure.

Senator WATERS: Why is that?

Prof. Barrett : They are not in the scope for the present study.

Senator WATERS: Is anybody looking at that as a source of fugitive emissions?

Prof. Barrett : I am unaware of studies in Australia that are looking at pipeline associated emissions, but they are routinely done by companies to detect for leaks. It is in the company's interest to not have gas leaks from their infrastructure, and that type of measurement is done routinely around the world.

Senator WATERS: I might put some questions to you on notice about what those routine studies overseas show as the proportion of leaks coming from the pipeline so that we can get a sense of how big a potential problem it is in Australia, which might inform whether we should look at it more and independently, rather than just the companies looking at it. But thank you for all of that detail. There has recently been an update to the NGERS methodology applicable to fugitives from CSG. Are you expecting that that will affect your work or do you think, rather, that your work will then require them to further update their inputs to NGERS?

Senator Ronaldson: I think it is probably hypothetical until we know what the outcome of that is. With the greatest respect, I do not think we can pre-empt what might need to be done by the outcome of something that has not been finalised yet. I just wonder whether it might be a little bit premature.

Senator WATERS: All right. Well, to the extent of your confidence, can you respond to that?

Prof. Barrett : What I will say is that the information that is gained through the work that we are doing does feed into the establishment of emissions factors in the national greenhouse accounting system.

Senator WATERS: Are you able to form a conclusion as to whether it would warrant, as at today, a further update to those NGERS factors?

Prof. Barrett : I could not comment on that right now.

Senator WATERS: Not yet? Okay. We will come back to that one next time. Just quickly on the funding between those two phases: I do not have a figure here for how much you spent on phase 1; how much have you got for phase 2?

Prof. Barrett : Funding for phase 1 was $190,000, and I will need to take it on notice for phase 2. I think it is about the same quantum of funding.

Senator WATERS: I understand the New South Wales EPA have commissioned CSIRO to do a background study of naturally occurring methane emissions. Can you tell me firstly what the funding is for that study?

Prof. Barrett : The New South Wales EPA have undertaken to fund CSIRO to do measurement of methane emissions from coal seam gas wells and from coalmines.

Senator WATERS: So not to establish a natural background?

Prof. Barrett : I am not aware of any work that is funded to in New South Wales. In the phase 1 report of the Department of the Environment study, a number of the wells were located in New South Wales.

Senator WATERS: I will look into that. There is nothing that has been commissioned but perhaps has not yet begun?

Prof. Barrett : Not that I am aware of.

Senator WATERS: Thank you. We will check up on that again soon. There was an article recently that reported on a US study that was looking at the effectiveness of equipment used to measure methane emissions. There is something called the Bacharach Hi Flow Sampler. Are you familiar with that particular type of measurement technology?

Prof. Barrett : I am not familiar with that particular instrument but I am familiar with other instruments to measure concentrations of methane in the flow of sample gas through those instruments.

Senator WATERS: This one sounds like it performs a similar function. It is described as 'allowing scientists to take instantaneous measurements of methane emissions from pipelines, storage tanks and other natural gas facilities'. The report says that this study finds that it in fact underreports emissions. So I am interested in whether anybody is using this equipment which has clearly been found to be a bit unreliable.

Prof. Barrett : I am not aware of anybody using that equipment.

Senator WATERS: All right. Could you take it on notice to let us know if anybody—in particular, you—is using it?

Senator Ronaldson: That can be taken on notice to see whether we have any knowledge of its use.

Senator WATERS: I understand that there is a difference in measuring methodologies between top down and bottom up methane studies. Could you explain that in plain English for me?

Prof. Barrett : Bottom up studies use accounting methods for estimating fugitive emissions from infrastructure—such as NGERs. They use emissions factors to calculate multiplied by the unit emission and the number of units. In an accounting way, they add those up and generate an emissions amount. Top down methods use instruments of various types, just as we are doing in the Surat Basin. They might use tower concentration measurements of methane combined with atmospheric transport models. They may use sensors on light aircraft—both remote sensing and sensors that measure the concentration in an airflow while the aircraft is flying. Those methods give a complete picture of the methane emissions from a region. The fugitive emissions are a subset of the complete emissions from a region, and that is the reason why we are measuring the background seeps in the Surat Basin.

Senator WATERS: I understand that you used both methods in the phase 1 study of the Surat. Did you get different results?

Prof. Barrett : We are not at a point where we can make a definitive conclusion about that.

Senator WATERS: Are you looking at that?

Prof. Barrett : As we go forward the study will generate a comprehensive budget of methane emissions for the Surat Basin. That is what the study is designed to do. This is a world's best practice approach to bringing together different types of measurement to give a complete each of the methane emissions in the Surat Basin.

Senator WATERS: So there are different measurements that you achieve. Do you just take the average of the two? How do you come to a complete picture? What weighting do you give to the various different ones?

Prof. Barrett : The approach that we use there is to take the information from each of the types of measurements and consider the uncertainty associated with each of those methods, and then we use mathematical techniques to blend that information, weighted inversely by the uncertainties.

Senator WATERS: What are the relative uncertainties of those two different methods?

Prof. Barrett : Accuracy associated with the concentration measurements of the survey—

Senator WATERS: Which is bottom up, or is it top down?

Prof. Barrett : This is the field survey approach. It is a top-down approach, but it is on the surface of the earth. The accuracy of those measurements are parts per billion—extremely accurate measurements. The uncertainties there are around the use of the meteorology and the airflow to understand the fluxes. We have not quantified exactly or definitively what those uncertainties are at this stage, but that will be part of the ongoing work in the Surat Basin seep study.

Senator WATERS: I just want to make sure I understand you there. You have not quantified the uncertainties that surround the two methods of measurement that you are using to undertake the study. How much confidence can you have in results that you found?

Senator Ronaldson: That is not what the officer said. It will part of the ongoing study.

Senator WATERS: I am not trying to verbal him. I am genuinely trying to understand.

Senator Ronaldson: I know that AIMS is on the line—

Senator WATERS: This is my last question. It is an important one. It goes to how much stock we can place in the report.

Senator Ronaldson: The officer just said to you before that this is part of an ongoing study, and therefore it is impossible for him to answer that question until that is resolved.

Senator WATERS: Phase 1 has been completed, so it is really in relation to phase 1.

Prof. Barrett : What I can say is that the mathematical technique of combining the information from different types of measurements reduces the overall uncertainty.

Senator WATERS: Sure. I understood that.

Prof. Barrett : That gives us the best possible outcome in terms of understanding definitively how much methane is coming from what sources.

Senator WATERS: How much confidence can we have in the combined approach?

Prof. Barrett : I cannot give you a number right now on what that confidence will be, whether it will be five per cent, 10 per cent or 20 per cent, but it will be world's best practice in terms of what we can achieve.

Senator WATERS: Could you take on notice to answer the confidence level question when you have the capacity. Could you also, on notice, give me an update on the deep groundwater impacts of CSG chemicals. I understand that nobody has started to look at that yet. I would love to be wrong about that. Also, if there is anything you have on the work that you are doing on geogenics.

Prof. Barrett : I can give you a description of the work we are doing on geogenic chemicals—a description of the projects that are examining groundwater impacts.

Senator WATERS: I know about the shallow and surface one; I am interested in the deep groundwater.

Prof. Barrett : Are you interested in confined aquifers?

Senator Ronaldson: Take it on notice.

CHAIR: All done?

Senator WATERS: No, but yes, apparently.

CHAIR: Just pop them on notice. Everybody else is doing the same. Thank you, Dr Marshall, for coming in. We appreciate your time very much. Thank you very much to everybody from CSIRO.