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Finance and Public Administration Legislation Committee
22/05/2018
Estimates
PRIME MINISTER AND CABINET PORTFOLIO

PRIME MINISTER AND CABINET PORTFOLIO

In attendance

Senator Cormann, Minister for Finance, Special Minister of State

Department of the Prime Minister and Cabinet—Outcome 1

Ms Stephanie Foster, Deputy Secretary, Governance Group

Dr David Gruen, Deputy Secretary, Economic Group

Mr Simon Duggan, First Assistant Secretary, Economic Division

Mr Jason McDonald, Assistant Secretary, Economic Policy Branch

Mr Wayne Poels, Executive Director, Office of Best Practice Regulation

Ms Tara Oliver, Acting First Assistant Secretary, Policy Innovation and Projects Division

Ms Ali Jenkins, Assistant Secretary, Policy Innovation and Projects Division

Mr Ryan Black, Acting Assistant Secretary, Policy Innovation and Projects Division

Ms Naomi Perdomo, Acting Assistant Secretary, Policy Innovation and Projects Division

Ms Lin Hatfield Dodds, Deputy Secretary, Social Policy

Mr Nathan Williamson, First Assistant Secretary, Social Policy

Ms Susan Fitzgerald, Assistant Secretary, Health and Sport

Ms Ailsa Borwick, Assistant Secretary, Disability and Aged Care

Mr Matthew Roper, Assistant Secretary, Education and Immigration

Mr Cain Beckett, Assistant Secretary, Social Services, Human Services and Veterans

Mr Cameron Brown, Senior Adviser, Ageing Taskforce

Mr Barry Sterland, Deputy Secretary, Innovation and Transformation

Ms Julia Pickworth, Acting First Assistant Secretary

Mr Neil Williams, Assistant Secretary, Industry, Innovation, Science and Communications Branch;

Ms Clare Firth, Acting Assistant Secretary, Infrastructure, Population, Agriculture and Regional Development Branch

Ms Paula Stagg, Assistant Secretary, Environment, Energy and Climate Change Branch

Ms Paula Ganly, First Assistant Secretary, Ministerial Support Division

Mr Andrew Walter, First Assistant Secretary, Religious Freedom Review

Mr Gerard Martin, Acting First Assistant Secretary, Government Division

Mr Peter Rush, Assistant Secretary, Parliamentary & Government Branch, Government Division

Ms Celeste Moran, Assistant Secretary, Legal Policy Branch, Government Division

Mr Brendan MacDowell, Assistant Secretary, Government Division

Ms Charlotte Tressler, Chief Finance Officer, Corporate Division

Ms Yael Cass, First Assistant Secretary, Cabinet Division

Ms Lee Steel, Assistant Secretary, Cabinet Division

Ms Trish Bergin, First Assistant Secretary, Office for Women

Ms Rachel Livingston Acting Assistant Secretary, Office for Women

Mr Allan McKinnon, Deputy Secretary National Security

Mr Justin Hayhurst, First Assistant Secretary, International Division

Ms Kylie Bryant, First Assistant Secretary, National Security Division

Mr Lee Goddard, Head APEC (PNG) 2018 Taskforce

Ms Alexandra Ellis, Acting Head, Home Affairs and Intelligence Review Implementation Taskforce

Mr David Williamson, Deputy Secretary

Committee met at 09:00

CHAIR ( Senator Paterson ): I delcare open this meeting of the Senate Finance and Public Administration Legislation Committee. Today the committee will recommence its examination of the budget estimates for 2018-19 for the Prime Minister and Cabinet portfolio. The committee's proceedings will begin today with outcome 1 of the Department of the Prime Minister and Cabinet. Outcome 2 of the department will be examined on Friday at the cross-portfolio hearing, and the Finance portfolio will be examined on Wednesday and Thursday. The committee May also examine the annual reports of the departments and agencies appearing before it. The committee is due to report to the Senate on 26 June 2018 and has fixed 6 July 2018 as the date for return on of answers to questions taken on notice. Under standing order 26, the committee must take all evidence in public session. This includes answers to questions on notice.

I remind all witnesses that in giving evidence to the committee they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee, and such action may be treated by the Senate as a contempt. It is also a contempt to give false or misleading evidence to the committee. The Senate, by resolution in 1999, endorsed the following test of relevance of questions at estimates hearings: any questions going to the operations or financial positions of the departments and agencies which are seeking funds in the estimates are relevant questions for the purpose of estimates hearings. I remind officers that the Senate has resolved that there are no areas in connection with the expenditure of public funds where any person has the discretion to withhold details or explanations from the parliament or its committees, unless the parliament has expressly provided otherwise. The Senate has resolved, also, that an officer of a department of the Commonwealth shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted.

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. This order will be incorporated in the Hansard.

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)

CHAIR: Witnesses are specifically reminded that a statement that information or a document is confidential or consists of advice to government is not a statement that meets the requirements of the 2009 order. Instead, witnesses are required to provide some specific indication of the harm to the public interest that could result from the disclosure of the information or the document. Officers are requested to keep opening statements brief or to seek to incorporate longer statements into the Hansard. I now welcome the Minister representing the Prime Minister, Senator the Hon. Mathias Cormann, Ms Stephanie Foster, Deputy Secretary, Governance Group and officers of the Department of the Prime Minister and Cabinet examining outcome 1.

Minister, do you wish to make an opening statement?

Senator Cormann: No, thank you.

CHAIR: Ms Foster, do you wish to make an opening statement?

Ms Foster : Yes. The members of the executive in attendance for this session to answer your questions are Dr David Gruen, Deputy Secretary, Economic Group; Ms Lin Hatfield Dodds, Deputy Secretary, Social Policy; Mr Barry Sterland, Deputy Secretary, Innovation and Transformation; and Mr Allan McKinnon, Deputy Secretary National Security. Other senior officers will be available to assist as required. Mr Andrew Tongue, Associate Secretary of Indigenous Affairs, and Professor Ian Anderson, Deputy Secretary, Indigenous Affairs, will attend with senior members of the Indigenous Affairs group on Friday, 25 May 2018.

There have been a number of executive changes since the last hearing. On 27 February 2018, Mr David Williamson, Deputy Secretary, joined the department to lead the APS Review Secretariat. On 28 February 2018, Mr Allan McKinnon resumed his responsibility as Deputy Secretary National Security. On 13 April 2018, Mr Simon Merrifield returned to the Department of Foreign Affairs and Trade, after heading the ASEAN-Australia Special Summit.

On 10 May 2018, changes were made to the Administrative Arrangements Order. As a result, the following functions and offices have moved from the PM&C portfolio to the Attorney-General's portfolio. They are the Office of the Inspector-General of Intelligence and Security, the Office of the Independent National Security Legislation Monitor, the Office of the Commonwealth Ombudsman and responsibility for the Public Interest Disclosure Act and the Lobbying Code of Conduct. Given the proximity to budget estimates hearings, those representatives appeared yesterday at this committee, but, in future, they'll appear with the Attorney-General's Department.

The organisation chart, as at 17 May, has just been provided to the committee. I would also like to inform the committee that a number of SES Band 2 appointments have recently been finalised. Ms Mary Wiley-Smith will commence as First Assistant Secretary APS Review on 23 May; Ms Helen Wilson will commence as First Assistant Secretary, Industry, Infrastructure and Environment Division on 29 May; Mr John Reid will commence as First Assistant Secretary, Government Division, in early July; and Ros Baxter will commence as First Assistant Secretary, Social Policy Division, also in July.

Senator WONG: Thank you for the opening statement, Ms Foster. I'm going to come back later today on a particular issue, and I just want to give you the opportunity to maybe get officials to look at the questions on notice that I want to explore. Senator Farrell asked questions, PM&C 207, and the answer is a reasonably narrow response. I want to flag with you that an analogous, virtually identical question was asked by Senator Bernardi, the then government backbencher, in February 2014, PM&C question 43 for the 2013-14 additional estimates, and the department was exceedingly helpful to Senator Bernardi and provided him with information spanning 2008, 2010, 2012 and 2013. I do want to understand why it is that that helpfulness disappeared or was somewhat limited when it came to the analogous question asked by Senator Farrell. I would like the same information provided and I would like an explanation as to why the department chose to provide different information to the opposition than it provided to Senator Bernardi. If we can come back to that later, I thought I would give you the opportunity to look at that.

I want to start with some questions about the involvement of the Prime Minister and Prime Minister and Cabinet in the company tax agreement that has been reported in the paper today. I will call it the 'One Nation agreement' for the purposes of shorthand. In relation to this One Nation agreement—or once was agreement—I assume, Senator Cormann, you were negotiating with Senator Hanson on behalf of the government?

Senator Cormann: It's a matter of public record that the government has been engaging with all crossbench senators for some time in order to secure the necessary support in the Senate for what is a very important reform to strengthen our economy and create more jobs. Given Labor had turned its back on its longstanding position in favour of reducing the business tax rate even though Labor knows that it leads to more investment, stronger growth, more jobs and higher wages, that was the only option that was left to the government in the circumstances. I can confirm that, on behalf of the government, I have been pursuing those discussions with all crossbenchers, including One Nation senators.

Senator WONG: I assume you had the Prime Minister's authority to negotiate on behalf of the government?

Senator Cormann: Indeed.

Senator WONG: Can I ask how many meetings you think you had in relation to this One Nation company tax agreement?

Senator Cormann: I'll have to take that on notice, but there were quite a few meetings over an extended period of time.

Senator WONG: At any of those meetings were officers of Prime Minister and Cabinet present?

Senator Cormann: No.

Senator WONG: Dr Gruen, you never attended any meeting?

Dr Gruen : Certainly not.

Senator WONG: At any of those meetings with Senator Hanson, were any departmental officials present?

Senator Cormann: I'll have to take that on notice.

Senator WONG: I will ask you again in Treasury.

Senator Cormann: Sure. There have been a whole series of meetings. Whether it's the Labor opposition, the Greens or other crossbenchers, if there are other requests for briefings in relation to specific technical aspects, obviously that is facilitated in the usual way. But I'll have to take on notice the specifics in terms of our engagement with One Nation.

Senator WONG: Sure. In relation to the company tax agreement, on how many occasions did the Prime Minister meet with Senator Hanson?

Senator Cormann: I'll have to take that on notice.

Senator WONG: Were you present at meetings where the Prime Minister did meet with Senator Hanson?

Senator Cormann: I'll have to take that on notice. I've had a very long series of meetings directly with Senator Hanson and other One Nation senators and other members of the One Nation team. As you would expect, there have been other meetings with other members of the government. In terms of who was at what meeting, I'd rather be precise and accurate, so I will take that on notice.

Senator WONG: You've taken on notice how many, but the question I just asked, which I would have assumed you could answer, Senator Cormann, was: were you present at any meetings between Senator Hanson and the Prime Minister?

Senator Cormann: To be perfectly honest, I can't specifically remember because there have been a whole series of meetings. I have been involved in meetings with the Prime Minister, as you'd expect. I've been involved in meetings with crossbenchers. Indeed, I've been involved in meetings with other non-government senators across the Senate. As to who was at what meeting, I'd rather make sure I get that detail correct and give you that on notice.

Senator WONG: How about this: to your knowledge has the Prime Minister met with Senator Hanson on any occasion in relation to this company tax agreement?

Senator Cormann: I certainly can confirm that the Prime Minister has meetings from time to time with non-government senators, including the leader of the One Nation party.

Senator WONG: On notice, perhaps later today, can I have the dates on which the Prime Minister has met with Senator Hanson this year?

Senator Cormann: I'll take it on notice, and we'll answer it in the usual way when we're in a position to answer it.

Senator WONG: Well, I'm requesting it for later today. I wouldn't have thought it would be particularly difficult to check the Prime Minister's diary. I've asked for a very limited period; it's only five months.

Senator Cormann: I've taken it on notice, and, when we're in a position to answer it, at the earliest opportunity, we will.

Senator WONG: Okay. You said earlier you were given the authority of the Prime Minister to negotiate on behalf of the government with One Nation—and other crossbench senators, but relevantly with One Nation—in relation to the company tax agreement. Can you tell me when you obtained that authority and when negotiations commenced?

Senator Cormann: At the appropriate time. In terms of the specific dates when it commenced, I'll have to take that on notice.

Senator WONG: Just remind us of the time frame and the sequence, which you probably have in your head more clearly than I, Senator Cormann, because you lived and breathed this. The government announced its position on company tax in 2016—in the budget or in August?

Senator Cormann: In the 2016-17 budget.

Senator WONG: Did you commence negotiations with One Nation after that?

Senator Cormann: You might remember that after—

Senator WONG: And you got $50 million—

Senator Cormann: If I may: after the 2016-17 budget in May 2016, we had an election on 2 July. After the election, I engaged with a series of non-government senators and non-government members in the House of Representatives on a range of government priorities which we had taken to the election, including some of our savings measures, which is a matter of public record. I negotiated with the Labor opposition, including in relation to our commitment, in the lead-up to the last election, to ensure the interests of Australian workers are protected by making sure that businesses in Australia employing them are not disadvantaged inappropriately in comparison with businesses in other parts of the world who pay less tax.

It's a matter of public record that, in the lead up to March 2017, we were able to secure the necessary support to pass, in full, the first three years of our Ten Year Enterprise Tax Plan. From memory that passed through the Senate by the end of March. From memory it was a Friday. You might recall that there were some intensive discussions right towards the end involving the Nick Xenophon Team and the then senator Nick Xenophon. The Senate stayed back I believe until Friday afternoon, and ultimately that was passed. Subsequent to that, the conversations have continued, in a general sense, about the fact that in the government's view it was desirable for the Ten Year Enterprise Tax Plan to be passed in full. There were conversations over a period that were intermittent but then started to become more frequent and more focused as the legislation passed the House of Representatives and came to the Senate. I think it came to the Senate earlier this year.

Senator WONG: Which is when the $50 million threshold was—

Senator Cormann: The $50 million threshold was legislated in March 2017, and that is a reflection of the third year of our Ten Year Enterprise Tax Plan. In the first year, we were lifting the threshold to $10 million turnover, then to $25 million turnover and then to $50 million turnover, which takes us to the 30 June 2019. But, of course, the reason we believe it's important for our Ten Year Enterprise Tax Plan to be passed in full—

Senator WONG: It's going to be a long day!

Senator Cormann: is that it provides certainty to business considering investments now, given that they make decisions today based on their expectations of future profitability after tax. It's very important for all businesses in Australia to be the beneficiaries of a globally competitive business tax rate so they can be more successful and more profitable into the future, hire more Australians and pay them better wages over time.

Senator WONG: Thank you. I was just a little unclear—I might have misheard—about what you said came to the Senate earlier this year, given that the $50 million—

Senator Cormann: It's a matter of public record. After the budget last year—I think that same week but certainly by the end of June last year; I think it was in budget week—the Treasurer introduced the enterprise tax bill No. 2, which has the objective of legislating the second phase of our Ten Year Enterprise Tax Plan, the unlegislated component of our Ten Year Enterprise Tax Plan. From memory, that was passed by the House of Representatives earlier this year and moved to the Senate earlier this year. But, whatever the timetable, it is entirely a matter of public record, so people will be able to verify precisely when that occurred.

Senator WONG: Bill No. 2, did you say?

Senator Cormann: It's the enterprise tax bill No. 2.

Senator WONG: Would it be accurate to say that the intensive period of negotiation with One Nation in relation to the company tax plan commenced from around the time the bill was passed by the House and came to the Senate? Would that be fair?

Senator Cormann: That would be fair. There were some intermittent conversations at various times in passing, but, obviously, once the bill came to the Senate, February-March would have been the most intensive period of engagement with all non-government crossbench senators so far. Again, I don't think there's anything surprising in that. That is the way this would usually work.

Senator WONG: I'll come to the detail shortly, but I do want to check: was there a negotiating mandate agreed, either by cabinet, or as between you, the Prime Minister and the Treasurer or senior ministers?

Senator Cormann: The way this process works—whether it is with Labor in relation to some of the savings measures on which we reached agreement, or whether it is engaging with non-government senators on the crossbench in relation to company tax cuts—is that obviously the first point is to understand clearly what the views of non-government senators are, what is motivating them, and what their reason is for not spontaneously supporting what the government has put forward as very important economic reform, and then to form a judgement on how best to engage with it. These sorts of discussions take place over an extended period, appropriate feedback is provided through the relevant processes of government in the appropriate and usual fashion and appropriate authority is obtained at all times to go to next steps.

Senator WONG: I understand all that. Thank you for explaining it to me. But what I'm actually trying to understand is whether there's a negotiating mandate agreed up-front, or whether there is a less formal process at the front end of the negotiations, and then the process of getting formal government and cabinet agreement to particular aspects of the agreement come later.

Senator Cormann: The opening position is what is reflected in the budget. The opening position is that we want to get 100 per cent of what we've put forward in the budget legislated. Obviously, that is the start of our conversation with all non-government senators. As you know, we have 30 coalition senators in the Senate. If Labor and the Greens are opposed to sensible economic reforms like this one, we need to persuade nine out of the 11 non-government senators on the crossbench to support our proposals, and in that circumstance our first objective is always to secure support for 100 per cent of what we've put on the table.

If that is not successful, and in the course of that initial conversation it becomes apparent as to what the areas of concern might be, and there might even be some potential indications of where consensus may be able to be reached—and as you have appropriately scoped what the position of relevant non-government senators is, and what might be able to persuade them to support very important economic reforms—you provide feedback to the Prime Minister and relevant bodies in government, and relevant decisions are made at the appropriate time. What I can assure you of is that at all times I was acting with the appropriate authority when engaging in these conversations with crossbench senators.

Senator WONG: Would it be correct to say that, in terms of timing, you understood and the government understood this agreement to be broadly finalised prior to the budget?

Senator Cormann: No. The government had a firm commitment from One Nation senators to support our plan for a globally competitive business tax rate for all businesses in Australia. We discussed a whole range of issues that were important One Nation, and we indicated that, subject passage of the legislation, we would be prepared to pursue various initiatives. But by the time of the budget the legislation had not been passed in full, and, as such, a condition precedent had not been fulfilled, and that was always the basis of our engagement. It was always well understood and it was always accepted, as I've indicated in an interview earlier today, by the One Nation team.

Senator McALLISTER: What was always well understood? What was the condition precedent?

Senator Cormann: I've just indicated this. I'm happy to say it again.

Senator McALLISTER: My apologies. I'm just trying to understand.

Senator Cormann: I will be sending you a transcript of my interview, because you are on the distribution list—

Senator WONG: I will read the paragraph and check that this is what you're referencing, 'We reached agreement on a whole series of things, and One Nation gave us firm private and public commitment that they would support our legislation to provide for globally more competitive business tax rates in full, and based on that agreement, subject to the passage of legislation—

Senator Cormann: Subject to the passage of legislation.

Senator WONG: the government remains committed to all the things we agreed we would do.'

Senator Cormann: Somewhere in there it makes very clear that this was always conditional. It was always understood and accepted by Senator Hanson and One Nation that various things that were discussed and agreed were agreed subject to the passage of the legislation. By the time we finalised the budget it's a matter of public record that the legislation hadn't passed. It would have been the government's preference, as you might recall, for the legislation to be passed by the end of March. In fact, we gave it a red-hot go to have the legislation passed through the Senate by the end of March, because that would have made it that much easier, in the context of finalising the budget for 2018-19, to deal with these matters but that was not to be. We are where we are. We didn't reach a position by the end of March where we could secure passage of this important economic reform and hence we continue to work to reach the necessary consensus across the Senate. If and when that consensus is reached, the government will make relevant formal decisions at that point, which will then be reflected in the budget in the appropriate way.

Senator WONG: Dr Gruen or Ms Foster, I want to understand the involvement of PM&C officers in this process. I think you told me earlier that you personally didn't attend any meetings, Dr Gruen. Is the evidence that no PM&C officials attended any meeting with Senator Hanson?

Dr Gruen : I think that's the evidence that the minister gave.

Senator WONG: Yes. No-one's jumped up and come forward to say that's not correct.

Dr Gruen : Yes.

Senator WONG: I'm assuming they would do so.

Senator Cormann: If any officer of PM&C had a meeting with Senator Hanson, it would not have been with me, nor at my behest.

Senator WONG: Except that you were—

Senator Cormann: But I can't rule out that in the meantime—

Senator WONG: Except you were negotiating with the Prime Minister's authority and so you were essentially his representative.

Senator Cormann: I'm pretty confident that there has been no such meeting, but I can only tell you what I know.

Senator WONG: Sure.

Senator Cormann: I don't want to get myself into a position where people say I'm misleading.

Senator WONG: That's fine. I'm not—

Senator Cormann: No meeting that I have attended with Senator Hanson had any PM&C officials present.

Senator WONG: I'm sure that people will correct—

Senator Cormann: There has been no engagement of PM&C officials at my behest in these negotiations.

Senator WONG: Dr Gruen, have any briefs been sought and/or prepared and/or provided to the Prime Minister or his office in respect of any aspect of the One Nation company tax agreement?

Dr Gruen : As you would expect, there have been briefs prepared by Prime Minister and Cabinet to the Prime Minister about the company tax cuts. To my knowledge, none of those briefs have gone to the specifics of the discussions between the government and One Nation. I'm happy to take on notice whether that is the case, but that's my understanding.

Senator WONG: I'm going to go to some details here. We're here all day, till 11. I'm always happy for people to come back. Obviously, this is a matter of some public interest. In relation to the aspect of the One Nation deal, which was an apprenticeship program with a thousand places, did PM&C prepare or provide any brief to the Prime Minister or his office in respect of that aspect of the One Nation agreement?

Dr Gruen : We'll take that on notice and do what we can.

Senator WONG: You have a lot of very impressive, talented officers here, including I'm sure the person in charge of that particular division or group. Are you called groups—the other boxes underneath?

Dr Gruen : Division.

Senator WONG: No, the divisions are the larger ones, right?

Dr Gruen : No, divisions are—well, it depends.

Senator WONG: Are they the little boxes?

Dr Gruen : I'm not sure which boxes you're looking at.

Senator WONG: I'm reading your org chart, Dr Gruen, so it's hardly a secret!

Dr Gruen : We have divisions, and under divisions are branches.

Senator WONG: Branches! Surely you have somebody who might've been the relevant branch head responsible for preparing briefs in relation to apprenticeships for the Prime Minister.

Senator Cormann: You're making an assumption that PM&C takes responsibility for areas that are in the purview of an individual portfolio minister.

Senator WONG: I'm not making that assumption; I'm exploring whether or not officers were involved.

Senator Cormann: Again, my previous answer stands: to the best of my knowledge—and I'm pretty certain that this is the accurate, factual reality—the officers of PM&C were not directly involved in any aspect of the negotiations on company tax cuts with One Nation or any other non-government senators for that matter.

Senator WONG: This is an element of the One Nation deal, isn't it, Senator Cormann—the apprenticeship program?

Senator Cormann: There's been public speculation on this, but, again, as I've said at various times in the past, until such time as the government can secure a majority for these business tax cuts in the Senate, while there is speculation and while Senator Hanson has said various things about this, it only becomes a formal decision on the passage of legislation.

Senator WONG: No, it only becomes enacted—well, active. I'm asking about the process prior to that. You'll take on notice whether or not there are briefs, Dr Gruen. Nobody can assist me with that today. Did that aspect of the proposed agreement, the proposed deal, go to cabinet for agreement, including obviously subcommittees of cabinet?

Senator Cormann: It went through the appropriate processes and had the appropriate authority in the usual way, consistent with the way these sorts of things would have been handled by the previous Labor government and with the way these matters are handled when we negotiate on these things with the Labor opposition.

Senator WONG: What are appropriate processes?

Senator Cormann: The appropriate authority is provided in the usual way.

Senator WONG: What does that mean?

Senator Cormann: It depends on the circumstances, but there are processes through cabinet, processes where the Prime Minister can give policy authority and processes through the leadership group. They are processes that are consistent with the processes in the Labor Party and with the processes that took place when you were in government.

Senator WONG: Was the apprenticeship program agreement, which involves the expenditure of public money, agreed by the cabinet or a subcommittee of the cabinet?

Senator Cormann: All aspects of our engagement with crossbench senators, including One Nation senators, went through the appropriate processes at all times and had the appropriate authority at all times.

Senator WONG: Senator Cormann, it is not a difficult question. I'm not asserting there's not an appropriate process; I'm asking whether or not it went to cabinet. That is a legitimate question to ask and ought be answered.

Senator Cormann: I'll take that on notice to make sure I give you the appropriate answer. However, what I can say to you is that, at all times, anything that was put on the table, so to speak, in the course of the discussions with One Nation senators or other senators had the appropriate policy authority to be put forward in that fashion.

Dr Gruen : I can confirm that PM&C did not provide any briefs on apprenticeships.

Senator WONG: We're going to go to floating LNG plants with a 15 per cent domestic reservation, the 'use it or lose it' policy off the WA coast and the tightening of tax deductions under the PRRT for exploration costs. I'm going to go through the same process in respect of those, so perhaps people could explore that. I'm just going to go to Senator Cormann now, but the same questions arise in relation to all of those.

Senator Cormann, did the aspect of the One Nation deal that required floating LNG plants to be forced to supply 15 per cent of their gas to the state under a domestic reservation policy or pay the equivalent to the state as a form of royalty go to cabinet?

Senator Cormann: You're making a wrong assumption here. The premise of your question is false, because your question implies that somehow there was such an agreement. That is pure speculation on your part, and there is no basis for you to make that assertion.

Senator WONG: Senator Hanson has clearly told the media that was part of it. So, I'm not the one vouching for her; the government vouches for her.

Senator Cormann: I'm not sure what you are referencing. I'm telling you that the premise of your question is false.

Senator WONG: If that's the case, can we just be clear. The front page of The Australian, which I'm sure you are well aware of and you've done a number of interviews on, says:

The Australian can reveal the full details of the now-defunct secret deal One Nation struck with the government in March to support the company tax cuts, which went well beyond the introduction of the 1000-place apprenticeship pilot scheme.

We've talked about that.

It goes on:

In a bid to address the GST shortfall for Western Australia, "floating LNG plants" would be forced to supply 15 per cent of their gas to the state under its domestic gas reservation policy or pay the equivalent to the state as a form of royalty.

I'm asking you: was that one of the terms of the One Nation deal that you negotiated?

Senator Cormann: You're making a false assertion.

Senator WONG: I'm asking.

Senator Cormann: I'm just telling you.

Senator WONG: No. Senator Cormann, I have quoted from the paper and I've asked you a direct question as to whether this is an aspect of the deal. There's no false assertion. I'm giving you the opportunity to refute. I've said this is what is reported—direct question: is this part of the deal?

Senator Cormann: There is no deal, because One Nation—

Senator WONG: Well, was this part of the—

Senator Cormann: Hang on. You can't have it both ways. One Nation are on the public record as saying that they do not support any longer what they previously indicated they would support. I'm not going to speculate about private conversations that may or may not have taken place, in the same way as I'm not speculating about private conversations that I'm having with senior shadow ministers in the Labor Party in relation to things that, from time to time, get discussed between government and opposition. I'm not going to get involved in speculative conversation about things that are not on the table, that are not government policy and that haven't been decided by government, and there is absolutely no basis for you to make the assertion that you're making.

Senator WONG: Actually, I'm not making the assertion; Senator Hanson and The Australian are.

Senator Cormann: I'm not convinced that Senator Hanson has made the assertion. I don't accept that.

Senator WONG: Okay. Let's try it this way: did you explore, as the Prime Minister's representative in the negotiations with One Nation, the proposition that floating LNG plants would be forced to supply 15 per cent of their gas to the state under the reservation policy or pay an equivalent royalty payment?

Senator Cormann: Again, people raise all sorts of things from time to time, and I don't have a habit of talking about cabinet deliberations or about things that are raised with us in the course of private conversations. What I can say to you is that the government has not made any such decision at any one point in time.

Senator WONG: Well—

Senator Cormann: If the government were to get to a position on various policy matters, if the government were to come into a position where certain policy matters were settled in a particular way, relevant announcements would be made at that point in time.

Senator WONG: I'm trying to understand at which point any aspect of this One Nation deal progresses from private conversations to something that is actively considered by government. At any point did the issue, or the proposition, of addressing the GST shortfall for WA via this policy, of the payment of a royalty equivalent to the domestic reservation policy, go to cabinet?

Senator Cormann: You can ask me that question whatever way you want, because it's based on a false premise. I don't accept the premise of your question. You are asserting that somehow this is a—

Senator WONG: No.

Senator Cormann: policy position adopted by the government, and I am telling you it is not.

Senator WONG: Senator Cormann, we're here all day and I'm just going to keep asking questions about this.

Senator Cormann: Sure. That's fine.

Senator WONG: You keep creating a straw man—or woman. There is no premise. I haven't actually—

Senator Cormann: Well, yes, you're asking whether it's gone to cabinet.

Senator WONG: I am. It may have gone to cabinet and been rejected. There is no premise that it is government policy in my question. I'm asking a straight process question: did this proposition ever go to the cabinet?

Senator Cormann: I'm not going to go to the deliberative processes of cabinet. What I'm telling you is that there's no such policy position of the government.

Senator WONG: What about the 'use it or lose it' policy? The other aspect of the report says:

Under the defunct agreement, the government had also agreed to apply a "use it or lose it" policy off the WA coast in a shakeup to the retention lease system, which allows LNG companies to sit on reserves that could be developed sooner by rival companies.

Did you explore with Senator Hanson, or her negotiators, a use it or lose it policy?

Senator Cormann: Again, it's a matter of public record, because we made that announcement, in the back of the initial phase of company tax cuts, that we were exploring policy issues in this space. But, again, no decisions or policy positions have been adopted. If you look at what we said on the public record in the Senate in the course of the debate on the first three years of the company tax cuts, you'll find that we had some things to say in relation to this particular area of policy. That is, of course, an area that we continue to think about in how we can ensure that Australia can draw economic benefit from the resources we have.

Senator WONG: So is the answer you did explore it or you didn't?

Senator Cormann: The answer is that it is on the public record and has been on the public record for more than a year.

Senator WONG: Okay. So this proposition of the 'use it or lose it' policy has gone to the cabinet. Is that right?

Senator Cormann: It's a matter that is on the public record as something that the government has endorsed as something to look at. That is not new; that is something that we announced on the public record in March last year.

Senator WONG: Yes. So it has gone to the cabinet.

Senator Cormann: It's gone through the proper processes of government—in March last year.

Senator WONG: The tightening of tax deductions under the PRRT for exploration costs, which major companies can bring forward to offset against future income, which is also explored—was that an aspect of your discussions with Senator Hanson?

Senator Cormann: Again, it's a matter of public record that the government commissioned the Callaghan review, and I can certainly confirm that, in the course of discussions on company tax—and this is a matter of public record—this was one of the issues that were raised with the government. The government has been going through a policy process in relation to this, but no final landing has yet been reached.

Senator WONG: Sorry? You're exploring it, but a policy decision hasn't been reached?

Senator Cormann: What I've indicated to you is that the government have been going through the Callaghan review, and this is an area that we have of course explored as to how the existing system can be improved, and it is an issue that has been raised with us—it's a matter of public record—in the course of discussions on company tax. Pending the final outcomes of the company tax legislation, this is something that is yet to be finalised.

Senator WONG: Okay. So it's possible the government could give Senator Hanson what she's asked for, subsequent to the Callaghan review?

Senator Cormann: In the course of the Callaghan review, certain aspects in relation to PRRT arrangements were explored. That's a matter of public record. It's a matter of public record that this is one of the areas that Senator Hanson has indicated publicly that she was—and others have indicated, for that matter, which is also on the public record, that they were—keen to talk to government about. Obviously, if it facilitates reaching a consensus, then that is something that could quite sensibly be explored.

Senator WONG: When did Prime Minister Turnbull decide that Senator Pauline Hanson could write his tax policy?

Senator Cormann: That is a ridiculous proposition.

Senator WONG: It's actually just what you've outlined, Senator Cormann.

Senator Cormann: No. No, that's not right.

Senator WONG: You're basically saying—

Senator Cormann: No, no, no. Senator Wong, that is hysterical.

Senator WONG: 'We've got a review; we'll give her what she wants after it.'

Senator Cormann: No, that's wrong. We had engaged in a process in relation to PRRT arrangements through the Callaghan review. Everybody knows that in the Senate the government haven't got a majority. To get majority support for contested legislation in relation to important economic reform—and we consider ensuring Australian companies have access to a globally competitive business tax rate to be important economic reform—although we don't have the numbers in the Senate, if we need to engage with others in order to achieve a consensus, then that is the usual process in which a government gets outcomes through the Senate. Now, we could say, 'Unless you give us 100 per cent of what we want, there will be nothing.' That is not the approach that the Turnbull government have taken. We have taken an approach of wanting to make progress in delivering a stronger economy and more jobs, and to put the budget on a stronger foundation and trajectory again for the future.

That is why, if we can make progress by engaging constructively, in good faith and positively with a sufficient number of senators on the crossbench, of course we will do so. And, if there is an opportunity to find common ground across a whole range of related policy areas which facilitates securing the passage of important economic reform, then of course the government will engage in relation to this. The Australian people expect us to engage on that basis. The Australian people do not expect us to, essentially, fail to get important economic reform through because we were not prepared to compromise and reach a consensus.

Senator WONG: Which aspects of the One Nation company tax agreement were given policy authority by the Prime Minister, rather than going to the cabinet?

Senator Cormann: I'll have to take process questions on notice. At the moment, you are making an assumption, in relation to things that don't get triggered unless and until there is majority support in the Senate for the passage of the company tax cut legislation. If and when we reach that point, as the government always does and as we did in March last year, incidentally, when we reached consensus with Senator Xenophon and three NXT senators. We provided a full explanation to the Senate as to the basis on which that support had been secured. We would anticipate doing the same in this context, but we haven't reached that point. Looking at the front page of The Australian today, it looks like we might not ever get to that point. I hope we do, because working families around Australia—whose job security and job opportunities and career prospects and wage increases depend on the future success and profitability of businesses in Australia—need us to pass this legislation.

If we continue to put business in Australia under competitive disadvantage with business in other parts of the world, which are subject to lower business taxes, we continue to put Australian workers at a disadvantage. Higher taxes on business in Australia than overseas means higher taxes on workers in Australia than overseas. That is the reality. The Labor Party has sold out the interests of Australian workers. Bill Shorten doesn't care about Australian workers. If you look at the succinct and crisp way in which he has made the argument—

Senator WONG: We've been very patient. Really, I think, it's just like—

Senator Cormann: I was asked a question and I'm answering it. If you look at the succinct and crisp way in which Bill Shorten made the case for lower business taxes, saying that they were a boost for investment—

Senator WONG: A bit of succinct and crisp would be pretty good, I reckon. We'd quite enjoy that.

Senator Cormann: and would create more jobs and higher wages. That is what Bill Shorten used to say. Bill Shorten still knows this to be the truth. But, of course, Bill Shorten doesn't care about Australian workers. He's quite happy to put Australian workers at a competitive disadvantage with workers in other parts of the world, because he believes it serves his selfish political interests.

CHAIR: Thank you, Minister.

Senator WONG: Have you finished? No amount of distracting is going to prevent me from asking a question, Senator Cormann. I go back to my question. I'm not making any assumption about what is in the deal. I have asked you which aspects of the One Nation agreement were approved by the Prime Minister under prime ministerial authority and which aspects went to cabinet.

Senator Cormann: I'll take that on notice.

Senator WONG: In relation to the apprenticeship program, is there provision in the budget for the 1,000 places that have been floated in the media today and that you've referenced today?

Senator Cormann: The government has made no such announcements in the budget, as you know.

Senator WONG: That wasn't my question.

Senator Cormann: You get to ask the question and, while I'm sitting here, I get to answer the question. Senator Hanson has put it into the public domain, of her own volition, that this is one of the areas she has raised with us. I can confirm that she has. Any agreements that we may or may not have reached with One Nation, in relation to all of these matters, are contingent on the successful passage of this legislation through the senate. That is why it was always understood by Senator Hanson and One Nation and always accepted by Senator Hanson and One Nation that, unless we could get ourselves into a position where this important package of economic reform could be passed, the condition precedent of those sorts of agreements was not reached. That is the position we're in, and looking at the front page of The Australian today, it might well be that we won't ever get there.

Senator WONG: I think everyone's very clear about the notion of the condition precedent, which is about the implementation. That wasn't my question. My question was: is there provision in the budget for the 1,000 apprenticeship places?

Senator Cormann: What I say to you is what ministers in previous governments have said to you. We have not announced this measure in the budget because we haven't reached a position where the necessary condition has been reached—namely, we're not in a position where we have the necessary support to secure passage of this important economic reform through the senate.

Senator WONG: I want to know if any of these four propositions have been discussed with the party room, whether the Prime Minister has discussed any of the four propositions that we've been discussing this morning with—I don't know what your backbench committee process is, but your policy process?

The apprenticeship program, the LNG reservation or royalty equivalent payment policy, the use it or lose it policy or the tightening of tax deductions under the PRRT—have any of those propositions being discussed by the Prime Minister or by you as his representative with members of the coalition party room other than the cabinet?

Senator Cormann: We are not in a position where they are adopted government policy, so you are getting ahead of yourself. At this stage, we are in the position where we continue to engage with crossbench senators. We have not reached a final landing with a sufficient number of crossbench senators and, as such, we haven't reached that stage yet.

Senator WONG: So Pauline Hanson gets to help write government policy but not coalition backbenchers?

Senator Cormann: That is a ridiculous proposition. Are you suggesting that when we reach consensus with Labor it is Labor writing government policy? The government has put forward a clear plan for stronger economy and more jobs. We want to get 100 per cent of it through but we recognise the fact that in the Senate we don't have majority support in our own right. So, sensibly and pragmatically, we engaged with the necessary number of non-government senators in order to secure the passage of as much of our program is possible. Now, if Labor comes on board, that's great, that makes it quite efficient, because you easily get past the necessary nine non-government senators that we need. If you are opposed and the Greens are opposed—it's a matter of public record that we need to secure the support of nine non-government senators on the crossbench. We would not be doing our job, we would not be doing the best we can to deliver for working families across Australia, if we didn't engage with all those crossbenchers with a view of securing the passage of as much of our economic agenda as possible, and that is precisely what we are doing.

Senator WONG: The reality is, though, you, as Prime Minister Turnbull's representative, have explored substantial policy changes and agreed them, in principle, subject to passage of legislation, with One Nation, that you have not discussed with the coalition party room? So I again ask: when did Malcolm Turnbull let Pauline Hanson write government policy?

Senator Cormann: I know that you're trying to get yourself a little quote onto the evening news. What you are suggesting is not right. We engaged with Senator Leyonhjelm, Senator Bernardi, Senator Anning, Senator Patrick, Senator Griff, the three senators in One Nation—namely senators Burston, Georgiou and Hanson—and Senator Steve Martin from Tasmania. If the Labor Party continued to focus on the national economic interests instead of on the short-term political interests of Bill Shorten, we would not be in this position. If Bill Shorten was still focused on what was in our national economic interests instead of on selling out the interests of workers, we would long since have passed this legislation in full.

We know that Chris Bowen used to advocate for business tax cuts down to 25 per cent, until he was pulled into line by the left of the Labor Party. In fact, he came out recently and said, if the budget is back into surplus—which it is predicted to be by 2019-20—the Labor Party would reconsider its support for business tax cuts to 25 per cent. It didn't take long for Pat Conroy—who I'd never heard of, who apparently is the convener of the left faction—to say there's no fiscal circumstances in which Labor would support business tax cuts. The truth is the Labor Party today under Bill Shorten is an anti-business, anti-jobs, anti-aspiration party, which would make Australia poorer if it ever got into government. It would put jobs at risk, which would hurt Australian families, who would end up with fewer jobs and lower wages.

Our focus is on implementing our plan for a stronger economy, more jobs and higher wages. Our proposal to ensure Australian businesses—employing nine out of 10 working Australians—have access to a globally competitive business tax rate is an important part of that. I understand that the Labor Party has taken a reckless, irresponsible, politics-of-envy-driven position to oppose it. Bill Shorten continues to be dishonest about what it means, by saying that it's somehow an $80-billion tax giveaway to the big end of town—multinationals and the banks—which he knows to be untrue, because he knows that a substantial part of that fiscal cost he refers to relates to small and medium-sized business. But he keeps repeating the same line because he thinks that 'Mediscare' worked, and he thinks that misleading people with a repetitive, dishonest line will somehow work for him politically. I think the Australian people are figuring Bill Shorten out. They can figure out that he is quite shifty in the way he uses his language, with constant repetition—

Senator WONG: Chair, please. I have been extremely patient. I know that Senator Cormann is under pressure. I know that the way he is dealing with it is to give us lengthy lectures and monologues from the table, and I have not responded. He is now personally attacking someone. You should ask him to withdraw that.

CHAIR: Minister, that would assist, if you would withdraw that.

Senator Cormann: I withdraw.

Senator WONG: Thank you. Tell me, Senator Cormann, are there any other aspects of the One Nation deal that haven't been made public?

Senator Cormann: There is nothing to be made public unless we can reach a consensus with a sufficient number of non-government senators.

Senator WONG: Is there anything else you've agreed to with One Nation?

Senator Cormann: Again, I've already answered this. The conversations with the Senate crossbench are continuing. Up until today, as a matter of public record, we had the support of 37 out of the 39 senators we needed to secure the passage of this important economic reform. Senator Hanson clearly has put the support of three crossbench senators under a serious cloud, so it might well be that as of today we have the support of 34 crossbench senators. We need 39, so the conversations are continuing and, until such time as we've reached a consensus with a sufficient number of senators, there is nothing really to report.

Senator WONG: Sure. But there's a distinction between what you agree with Senator Hanson, and the delivery of that. You have spent a lot of time discussing how that won't be delivered unless she votes for the tax cuts. I think we are all perfectly clear about that. But I'm asking about what was agreed. Let's try it this way: were the terms of your agreement with One Nation in relation to the company tax deal put into writing and, if so, where?

Senator Cormann: At various times: of course. Things are put into writing in relation to aspects, and that is the usual process. And at the right time, if the government secures the necessary support of a sufficient number of senators, relevant public announcements will be made in the same way as they were made in March 2017.

Senator WONG: In what form were they put into writing? Were they done by letter from you—no, I'm not asking about calligraphy. I'm asking, was it a letter from you to Senator Hanson, a letter from Mr Turnbull to Senator Hanson?

Senator Cormann: Again, I've done a number of these processes now, going quite a way back—you might remember the agreement we reached some time ago with the then Palmer United Party in relation to the mining tax repeal. I think you'll find that I tabled relevant correspondence at the appropriate time; similarly with then Senator Xenophon. Various things are put in writing at various times, and you would be safe to assume that the engagement with crossbench senators is consistent.

Senator WONG: On how many occasions did you write to Senator Hanson outlining the agreement?

Senator Cormann: I sent a letter to all crossbench senators, which I think was actually published in The Australian. I sent the letter—from memory, that was sometime in February—to all crossbench senators.

Senator WONG: But I'm asking in relation to the terms of the One Nation—

Senator Cormann: This is the thing; there is a series of correspondence in relation to the merits of key and central economic reform proposals that go forward. There is a series of letters, and I will take on notice precisely what letter was sent when by whom.

Senator WONG: Well, I'm asking for a copy of correspondence between the government and Senator Hanson in relation to the terms of a proposed agreement for support for the company tax policy.

Senator Cormann: I'll take that on notice.

Senator WONG: You are entitled to do that, but I would ask that you table it today, Minister.

Senator Cormann: I've taken it on notice.

Senator WONG: This is a matter of public record. You had a deal with Pauline Hanson. I think the public—

Senator Cormann: It's also a matter of public record that these things are part of the deliberative processes of government, and you know that, under governments—

Senator WONG: There was no deliberation.

Senator Cormann: That is your assertion.

Senator WONG: No, no, no.

Senator Cormann: That is completely your assertion. That is completely and utterly your assertion. I have not conceded that point in any way, shape or form. Just you repeating that assertion doesn't make it true.

Senator WONG: So there wasn't a deal?

Senator Cormann: No, no. I've just indicated to you that matters that are discussed in this space, and the exchange of correspondence in relation to aspects of this, may be part of deliberative processes of government, and that has to be properly reviewed in order to ensure that documents are treated in the appropriate way, and that is what I'll do on this occasion.

Senator WONG: Senator Cormann, on a number of occasions today, you have told us why you believe this company tax cut is so important. Am I correct to assume that you and the government remain committed to continuing this company tax cut policy?

Senator Cormann: Yes, and I can explain why—because it is even more important now than it was when we took it to the 2016 election. Since we took this proposal to the 2016 election, the US have reduced their business tax rate to 21 per cent. Even France decided to reduce their business tax rate, from 33 per cent down to 25 per cent. That is since we took our Ten Year Enterprise Tax Plan to the election. I would invite you to have a look at the situation in Sweden, where the corporate tax rate is at 22 per cent. The Prime Minister of Sweden is the leader of the Social Democratic Party over there. Sweden is not known to be a low-tax jurisdiction. The current Prime Minister of Sweden is the former leader of the equivalent of the ACTU in Sweden. The business tax rate in Sweden is 22 per cent, because in Sweden they understand that, as an open, trading economy, they compete for investment around the world, that their businesses would be at a competitive disadvantage with businesses in other parts of the world if they didn't have a 22 per cent business tax rate and that that would hurt workers in Sweden. For some reason, the Labor Party in Australia doesn't understand this anymore, because Bill Shorten has decided to pursue an antibusiness, anti-opportunity, antigrowth, anti-aspiration, politics-of-envy agenda which would make Australia poorer and leave every Australian worse off.

Senator WONG: Does the government remain committed to taking this policy to the next election?

Senator Cormann: I've already said yes. I've answered that twice now.

Senator WONG: Thank you. I'll cede to Senator McAllister.

CHAIR: We might go to Senator Siewert, who's been waiting, and then we'll come back to her.

Senator SIEWERT: I want to ask about the aged-care task force. I understand that last year there was a task force set up within PM&C to examine ageing—correct?

Ms Hatfield Dodds : That is correct.

Senator SIEWERT: Could you outline when it was set up and if it had formal terms of reference or what the things were that it was covering—or is covering, because that is the other question: is it ongoing?

Ms Hatfield Dodds : A task force was set up in the Department of Prime Minister and Cabinet in the second half of last year.

Mr Brown : The task force was set up on 21 August 2017 and ran until 15 May 2018.

Senator SIEWERT: In other words, it no longer exists.

Mr Brown : No, it's finished.

Senator SIEWERT: Could you tell me whether it had formal terms of reference? And if so, what were they?

Ms Hatfield Dodds : Its terms of reference were subject to cabinet confidentiality, because the task force was set up under cabinet to advise cabinet on the development of the ageing package for the budget.

Senator SIEWERT: Why can't the terms of reference for a task force be made publicly available? Surely there's nothing secret in the terms of reference?

Ms Hatfield Dodds : I think that's the convention around cabinet confidentiality. But what we can tell you, Senator, is that the task force reported to a ministerial group chaired by the Treasurer, and that group had oversight of the work of the task force.

Senator SIEWERT: Who was on the task force? I'm not asking about the cabinet, I'm asking about—

Ms Hatfield Dodds : The task force was led from October to February by Dr Margot McCarthy, a deputy secretary from the health department who was seconded to Prime Minister and Cabinet for that period, and me. Then from February through to May, it was led by me. In February, Dr McCarthy commenced personal leave. I can give you a profile of the task force staff, if that's what you're after.

Senator SIEWERT: Yes, that's what I'm after next.

Ms Hatfield Dodds : The task force leads were supported by a band 2 first assistant secretary, Dr Alison Morehead, who was seconded from the Department of Jobs and Small Business. The task force reported to the Treasurer as chair of the ministerial taskforce. In terms of headcount, we had two deputy secretaries, or one deputy secretary from February, from PM&C and Health; one SES band 2, a first assistant secretary from Jobs and Small Business; one SES band 1, from Social Services; four EL2s, from the Department of Prime Minister and Cabinet, Health, Jobs and Small Business, and Human Services; three EL1s, from Finance and Health, and one contractor; one APS6—

Senator SIEWERT: What does 'one contractor' mean?

Ms Hatfield Dodds : Most staff were ongoing APS employees. The task force required some particular analytical skills, and the contractor is an ex-Treasury official who was between jobs.

Senator SIEWERT: To provide that analytical skill?

Ms Hatfield Dodds : Correct. And one APS6 officer from the Treasury; and one APS5 officer from the Department of Health. That gives you a total of 13 people. But the headcount fluctuated a little over months, so I've got that breakdown as well if—

Senator SIEWERT: I don't need that level of detail. Is that something you could table?

Ms Hatfield Dodds : Yes.

Senator SIEWERT: Thank you. So it was set up on the 15th. You say you can't tell me what the terms of reference are because they are cabinet-in-confidence. Can you tell me the breadth, then, of the work? I presume, given the date it finished, it was about the budget package. But there's a number of things that it covers and, obviously, the make-up of the committee that you just articulated talks about the Department of Jobs and Small Business, which I presume covers some of the elements of the budget that relate to those areas in ageing.

Mr Brown : Senator Siewert, the terms of reference covered the ministerial committee. The ageing task force worked off those terms of reference.

Senator SIEWERT: Could you say that again, sorry?

Mr Brown : The terms of reference pertained to the ministerial committee.

Senator SIEWERT: Which was set up within cabinet, is that right?

Mr Brown : Which was set up. And that's why the terms of reference themselves are cabinet-in-confidence. The task force worked off those terms of reference. The terms of reference really just provided a broad remit to look at many issues to do with ageing.

Senator SIEWERT: Obviously that's what I'm interested in finding out.

Mr Brown : I understand.

Senator SIEWERT: Do I take it that they then reflect the nature of the elements that were in the budget relating to aged care and older Australians?

Mr Brown : That's correct, yes.

Senator SIEWERT: Thank you; that's what I was trying to establish. There was a joint media release on 14 September that said the Tune reviews and findings were basically in the context of the work being undertaken by the task force in the Department of Prime Minister and Cabinet, engaging ageing more broadly. Am I correct in the assumption that therefore you were looking at the Tune recommendations?

Mr Brown : That's right.

Senator SIEWERT: Were you also looking at the ACFI review—the name of the report I always forget—which was the review of the Aged Care Funding Instrument report, which I understand is part of some of the work that's been taken on the funding instrument? Was that included?

Mr Brown : It was. The reviews which we looked at related to the Tune review—the aged-care legislated review by Mr David Tune. We looked at the review of national aged-care quality regulatory processes—

Senator SIEWERT: The Carnell report?

Mr Brown : Yes, the Carnell review. We also looked at the Australian Law Reform Commission's report into elder abuse and, to a degree, at the Australian Human Rights Commission's Willing to work report from a couple of years ago.

Senator SIEWERT: But you didn't look at the report the minister released on 19 October, which was the ACFI review?

Mr Brown : I think you should probably direct that question to the Department of Health. We liaised closely with the Department of Health.

Senator SIEWERT: I will obviously be asking Health a lot of questions about the package next week, but given that you were looking at Tune, which had some recommendations relating to ACFI, did you look at that review?

Ms Hatfield Dodds : Not in any detail. The ACFI review, as you are aware, really went to a lot of calculus detail around health funding, and the task force was not at that level of detail.

Senator SIEWERT: In terms of the scope of the Tune reviews and recommendations, the budget measures don't address all of the recommendations. Does Prime Minister and Cabinet have any ongoing involvement in further review or consideration of the Tune review, or is that now back to Health?

Ms Hatfield Dodds : That's back to Health.

Senator SIEWERT: All the recommendations that have not been picked up in the various—

Ms Hatfield Dodds : In the package.

Senator SIEWERT: in the package—are now back to Health; is that correct?

Ms Hatfield Dodds : That's correct.

Senator SIEWERT: And I presume you are going to tell me that, if I want to talk about individual measures, I should go and talk to Health. Is that correct?

Ms Hatfield Dodds : In detail, yes. We're happy to talk in an overview sense about what was in the package, but the detail of the policy in the package is a matter for those portfolio agencies.

Senator SIEWERT: I'd like to know why certain recommendations were chosen and why others weren't. What was the rationale for the choice of some and not others?

Ms Hatfield Dodds : The shape of the package was really a decision for government, and we're shaping a package. So the package is shaped to enable Australians to make the choices they want to make in midlife and as they get older. So it was shaped around preparing to age and shaped around being prepared financially, physically and in a connected sense as you get older. The recommendations that were pulled out of those reviews and the elements of the package that go beyond those reviews are serving that framework.

Senator SIEWERT: Okay. I knew I'd get the answer that it's about what cabinet decided, but I always ask anyway. There are a few specific ones that I'd like to follow up here—and I will follow up with Health. In terms of the measure where the government will provide $14.8 million for two years to support the preparatory work for the new national assessment framework for people seeking aged care: I presume that's for the preparatory work or start of the review of the funding instrument and funding for people as they go into aged care? It's in the 'better access to care' element of the budget.

Mr Brown : I believe so, but I'll have to refer you to the Department of Health for that answer.

Senator SIEWERT: I just wanted to make sure I was on the right page with that particular area. There is one area that I do want to cover specifically. There's no mention in here that I can see around homelessness and, in particular, access to aged care—both home care and residential care but particularly residential care. You may or may not be aware that there is considerable concern about the shortfall in funding for residential care for the homeless. Was that brought up by anybody during your deliberations, in terms of the issue around ageing homeless Australians?

Ms Hatfield Dodds : The task force, as you'd expect, looked at a huge array of policy settings and policy options in terms of the package. In terms of looking at vulnerable Australians and access to aged-care services, both in the home and residential, there is in the package $40 million over the forward estimates over four years for aged-care facilities in regional, rural and remote Australia. All the evidence tells us that at least the rural and remote Australian services are likely to pick up people in precarious housing situations.

Senator SIEWERT: But that's only for rural, regional or remote areas. I know it's ironic that I've mentioned home care and homeless people; nevertheless, they need care outside residential care, so I just wanted to make sure I'd covered that. But that funding, as I understand it, is just for regional and remote areas.

Ms Hatfield Dodds : That's correct. While the package doesn't have homeless-specific services named in it, issues affecting all Australians across SES levels framed task force advice and thinking around the big investment into home care packages to allow people to stay in the community and at home. That's where the thinking was around assisting people to live how they want to live. I know that doesn't help people who are street homeless, but those high-level home care packages will potentially provide support for people who are in a precarious situation. But there are no specific homeless initiatives in this package.

Senator SIEWERT: Was the matter even raised with you by any of the people representing the various departments?

Mr Brown : Yes, it was raised. Housing and homelessness was an issue which we discussed.

Senator SIEWERT: Why wasn't it addressed?

Mr Brown : I think that goes towards—that there was a certain set of measures which were picked up and that it was a matter for government.

Senator SIEWERT: Government didn't think they needed to address homelessness?

Ms Hatfield Dodds : I think those questions in that detail are best directed to the portfolio agencies.

Senator SIEWERT: Okay. Are you aware that homeless people are being told to go and apply for NDIS before they get access to other funding sources?

Ms Hatfield Dodds : I'm not aware of that.

Senator SIEWERT: Is that something you could take on notice?

Ms Hatfield Dodds : Yes, absolutely.

Senator SIEWERT: Could you take on it notice to see if it is widespread—I've just been told of a few—or if it is just that there are a few particular people who have been told to go and apply for NDIS before accessing any home care or residential aged-care services?

Ms Hatfield Dodds : We'll take that on notice.

Senator SIEWERT: Thank you very much.

CHAIR: Senator McAllister—just noting that we're due to go to a break in about 10 minutes.

Senator McALLISTER: Minister, you spoke on a number of occasions in your earlier evidence about the Callaghan review and the fact that the government had been involved in that process for some time. Can we confirm some of the details around that, particularly in relation to the timeline?

Senator Cormann: That is probably more appropriately addressed to the Treasury portfolio, because that is not something that's a matter for the Prime Minister and Cabinet portfolio. I think Treasury is meeting with the economics committee next week.

Senator McALLISTER: Thank you, Minister, but you're representing the Prime Minister and you've made reference to the fact that that review was on foot in the context of your discussions with the crossbench. I'm trying to understand how the workings of that review fed into the activity you undertook on behalf of the Prime Minister in consulting with Senator Hanson about her support for the government's corporate tax package?

Senator Cormann: In an abundance of helpfulness I've referenced a review which is on public record, but any specific questions in relation to the Callaghan review should be addressed to the Treasury portfolio, which has got the subject matter expertise in relation to these matters. That is the appropriate place for those questions to be pursued.

Senator WONG: Why don't you tell us what reference to the Callaghan review you made, either verbally or in writing, in the context of your discussions with Senator Hanson as the Prime Minister's representative?

Senator Cormann: It's a matter of public record that the Callaghan review was commissioned by the government. I don't want to speak for other senators, but I believe that other senators, including senators on the crossbench, were very well aware of the Callaghan review being conducted. That is really all there is to it. It's clearly a matter of public record.

Senator McALLISTER: The government hasn't responded publicly to the Callaghan review yet, have you?

Senator Cormann: That's right.

Senator McALLISTER: There was an indication that Treasury would undertake further work when the review was released and report back to the government in September 2017.

Senator Cormann: Again, you are asking questions that go directly to the Treasury portfolio, and they are appropriately addressed to the Treasury portfolio.

Senator McALLISTER: It's a matter of public record that that was the process outlined by the Treasurer in relation to the Callaghan review.

Senator Cormann: You can ask all the questions that you would like to ask in relation to these matters when Treasury appears before Senate estimates in the usual way.

Senator McALLISTER: Did Dr Gruen or any of the officials in Prime Minister and Cabinet provide advice to you about the Callaghan review to support your discussions with the crossbench in relation to the corporate tax package?

Senator Cormann: That is just another way of asking the same question that we've dealt with earlier. I've already answered the question, that I did not engage myself with officers of PM&C in relation to any aspect of the discussions with crossbench senators. That is a matter that I've already comprehensively answered. You are just asking the same question in a different way.

Senator McALLISTER: Dr Gruen, have you been asked by the Prime Minister to provide any briefings around the PRRT and changes to the PRRT?

D r Gruen : Senator, we brief the Prime Minister on all the relevant things that come before him, and on tax we brief the Prime Minister on things that go before the government. So the answer to your question is that we have briefed the Prime Minister on all things to do with tax, including the PRRT.

Senator McALLISTER: Have you been involved in any discussions with industry, or has PM&C been involved in convening discussions with industry, around changes to the PRRT?

D r Gruen : The answer to that is the answer that the minister gave you before, which is that these are areas of responsibility for the Treasury, and they are the right people to ask about this.

Senator WONG: Dr Gruen—

D r Gruen : Have we commissioned things with industry?

Senator WONG: The senator is entitled to ask—there are matters about advice being provided or prepared by you in relation to a tax matter. So don't fob her off to Treasury.

Senator Cormann: He didn't fob her off. He answered that question directly, and in relation to the aspect of engagement with industry, Dr Gruen quite appropriately referred to the fact that the responsibility for these processes is a Treasury responsibility.

Senator WONG: Sure, but if he's involved—

Senator Cormann: Which is why these questions are appropriately pursued—

Senator WONG: I know you're desperate to hand everything off, Mathias!

Senator Cormann: I'm pretty relaxed, Penny.

Senator McALLISTER: You look relaxed!

Senator WONG: Yes, we've seen that this morning. But we are entitled—

Senator Cormann: We are a government that is trying to do the right thing by the Australian people. We are being frustrated every step of the way—

Senator WONG: Here we go.

Senator Cormann: by a reckless and irresponsible opposition that is selling out the interests of working families around Australia. That is why we're doing what the Australian people expect us to do—that is, to engage with those non-government senators that are prepared to engage with us constructively and positively to achieve outcomes, to secure outcomes in the national interest. That is what the Australian people expect their Senate to do, and that is what this government will continue to seek to achieve.

Senator WONG: All I'm saying is Senator McAllister is entitled to ask Dr Gruen about the involvement of PM&C in such outreach.

Senator McALLISTER: And he is perfectly entitled to tell me that you were not involved. But you did say earlier, Dr Gruen, that you briefed the Prime Minister on all the things that come before him, including taxation from time to time. So I'm interested to understand whether you were involved in providing briefings to the Prime Minister around the PRRT, or in supporting engagement between the government—any part of the government—and industry in relation to the PRRT.

Senator Cormann: Just to make sure that we are very clear—because there's a certain attempt to verbal what Dr Gruen said—what Dr Gruen said is that on all matters that come before the Prime Minister through the normal processes of government, of course Prime Minister and Cabinet provides advice to the Prime Minister. You then asked a separate question—which you're now trying to rephrase—which went directly to a core responsibility of the Treasury portfolio, and that was about the engagement by government with industry in relation to PRRT-related matters. You now—

Senator McALLISTER: You're perfectly entitled to tell me no.

Senator Cormann: You're now suggesting that you're asking the same question, but you're actually asking a different question.

Senator McALLISTER: You may tell me no.

Senator Cormann: Just to make the point very clearly again: there's nothing unusual about PM&C officers providing advice to the Prime Minister on matters coming before government, in the same way as Finance department officials provide advice to me about matters that come before government from time to time, and Treasury officials give advice to the Treasurer about matters that come before government from time to time. That is just routine, government process 101.

Senator McALLISTER: So it is. Dr Gruen, have you been involved in providing any advice in support of engagement between government and industry on questions around the PRRT?

Dr Gruen : Sorry, what was the question?

Senator McALLISTER: Have you prepared advice or been involved in supporting government engagement with industry around reforms to the PRRT?

Dr Gruen : Engagement with industry? As the minister said, if there was engagement with industry—and I don't know whether there was or not—it would have been a responsibility of Treasury, not us.

Senator McALLISTER: So the answer is no?

Dr Gruen : Yes.

Senator McALLISTER: Thank you.

Senator Cormann: Yes, the answer is no—just to be clear!

Senator McALLISTER: I understand.

Dr Gruen : That's correct; the answer is no.

Senator Cormann: So that there is no misunderstanding.

Dr Gruen : Can I answer a question that Senator Wong asked earlier, which was—

Senator WONG: In relation to all of them.

Dr Gruen : Pardon?

Senator WONG: The process in relation to the three other aspects of the supporter deal.

Dr Gruen : Without being aware of whether or not they were aspects of the government's negotiations with Senator Hanson, PM&C did not provide any briefing on any of the things you brought up, Senator. And I'm not in a position to confirm or otherwise whether they were part of the—

Senator WONG: Sure.

Dr Gruen : I'm just saying we didn't.

Senator WONG: Can you tell me, then, how it is that those things gained policy approval? If Senator Cormann starts the day by saying, 'For all of these aspects of the deal with One Nation, we've got policy approval,' are you saying to me that Prime Minister Turnbull agreed to these propositions without getting any briefing from his department as to whether they were good for the Australian people?

Senator Cormann: Again, you're making assumptions. What I said to you—

Senator WONG: I'm using what you said.

Senator Cormann: What I said to you is that I had at all times the necessary policy authority to pursue my engagement on behalf of the government with relevant crossbench senators in the usual way. If you want me to, I can take you through the various ways that Mr Shorten explained these processes when he was in government. Bill Shorten made the point: 'We work with the Greens, with the crossbenchers and, you know, even sometimes we work with the Liberals.' That was Bill Shorten in an interview on Sky on 15 November 2011.

In 2009, Chris Bowen said the following:

We are focused on getting the budget through, and that will mean that as in the last budget and with most major legislative matters, very intense negotiations with the cross benchers in particular, when the Liberal Party takes—

and he says outrageously:

an opportunistic and obstructive approach. That means we then go into discussions of a very intense nature with the minor parties and there is often brinkmanship to the last minute, but we have found Senators Xenophon and Fielding and the Greens—

that's a blast from the past: Senator Fielding—

accommodative to good policy in the past.

So we will just be focused on that, but as the Treasurer said, the last thing the nation needs is an election, we need certainty and the best way you can provide certainty—

this is Mr Bowen speaking—

is to pass the budget.

Well, that is precisely the way we would describe what we're doing.

CHAIR: Thank you, Minister. On that note, we are right on time for our morning tea break.

Senator WONG: Usually, Chair, your efforts are less clumsy than that. You're cutting us off. Can I just finish this point?

CHAIR: If it's very quick.

Senator WONG: Senator Cormann, I'm actually asking how it is that you had policy approval from the Prime Minister for key aspects of this deal with One Nation about important issues, which he was never briefed on. That's the evidence of Dr Gruen: he was never briefed.

Senator Cormann: That is actually not what Dr Gruen said. Dr Gruen said he was not briefed by PM&C in relation to certain matters that you raised with him which you wrongly assert may or may not be part of something that I've said to you consistently all the way through. The premise of your question is inaccurate to start off with. You're making assumptions on certain things and then you sort of ask: was he briefed on all these things that I'm assuming? And, because he wasn't briefed by PM&C in relation to things that you're assuming, you're saying, 'Oh well. He was never briefed.'

Firstly, the advisers of the Prime Minister include, yes, Prime Minister and Cabinet. It also includes his cabinet, and the public service at large, including the various public service departments advising relevant portfolio ministers. So what I can say to you again is that, at all times, I had the full policy authority of the Prime Minister to engage in the process. I engaged with Senate crossbenchers with a view to securing as much of our economic growth agenda as possible, which Labor decided to frustrate.

Senator WONG: We have a lot more, so would you like your break? That's a good idea.

CHAIR: I think that's wise, thank you. The committee will break and resume in around 15 minutes time.

Proceedings suspended from 10:32 to 10:50

CHAIR: The committee will now resume.

Senator McALLISTER: Dr Gruen, we were talking about whether you or PM&C had had any contact with industry around the PRRT. More specifically, have you been involved in any discussions or had anyone contact you about reforms to the PRRT in the period leading up to the budget?

Dr Gruen : I hesitate because it is certainly possible that a peak body may have come to talk to me about their views, but that would have been initiated by a peak body, rather than by me. Peak bodies often come simply to inform PM&C of their position on a range of public policy issues. They were aware that this was something the government was considering because of the context of the Callaghan review.

Senator McALLISTER: Do you recall which peak body it was?

Dr Gruen : I can take that on notice and get back to you on it.

Senator McALLISTER: This was a face-to-face meeting?

Dr Gruen : If I have the timing right, it was definitely a face-to-face meeting. I have met with them; the question is whether the timing fits with the question you've asked.

Senator McALLISTER: I asked about before the budget, which is a fairly general time frame.

Dr Gruen : I guess that's an infinite amount of time.

Senator McALLISTER: Do you think the meeting took place this year?

Dr Gruen : I doubt it; I think not.

Senator McALLISTER: It is a complex area of policy.

Dr Gruen : Yes.

Senator McALLISTER: The tax arrangements interact with company project arrangements in complex ways.

Dr Gruen : Yes.

Senator McALLISTER: Did anyone from industry contact you to discuss expectations for PRRT reform?

Dr Gruen : After the budget earlier this month?

Senator McALLISTER: Correct.

Dr Gruen : No. I would take the opportunity to clarify something that I think needs clarifying. I was asked whether we had provided any advice to the Prime Minister on purported elements of any arrangement between Senator Hanson and the government, and the answer I gave to that was that we had not. But it is worth clarifying that, since I did not have visibility of the nature of negotiations between the government and Senator Hanson, and as we get requests for advice about a whole wide range of things that come before the government, we may have given advice on things that were part of the negotiations without knowing that's what they were.

Senator WONG: I appreciate that. I asked you that general question, but I asked you specifically in relation to the four policy propositions publicised in the paper today which Senator Hanson asserts to be part of the agreement with the government. Whether or not that is true is not what I was inquiring about; I was asking whether or not you had provided advice specifically in relation to those four policy propositions. I am assuming from what you have just said—you provided a catch-all answer with an abundance of caution: there might have been other things—that you are not derogating from your earlier answer that PM&C did not provide advice to the Prime Minister in respect of those four policy propositions.

Dr Gruen : That's correct.

Senator McALLISTER: The Callaghan review put a general proposition forward about tightening deductions within the PRRT arrangements for future projects. It was in the context of a recommendation that an intensive consultation process be undertaken to develop a new approach to the PRRT for future projects, not retrospective. The Australian today reports a very specific proposition about tightening deductibility arrangements. It reports that it would have netted the budget $6 billion over the forward estimates. Have you seen any analysis—

Senator Cormann: I think you are now well and truly going into the very specific realm of Treasury. That is 100 per cent a question that needs to be directed to the relevant expert officials in the Treasury portfolio. There is no way you can reasonably expect Dr Gruen to answer a question of that nature.

Senator McALLISTER: I haven't asked my question yet.

Senator Cormann: Yes you have; you asked him about forecasting of revenue projections—

Senator McALLISTER: No, I haven't.

Senator Cormann: in the context of a review that was commissioned by the Treasury portfolio and has been handled by the Treasury portfolio at all material times.

Senator McALLISTER: Can I ask my question?

CHAIR: You may ask as many questions as you like.

Senator McALLISTER: Dr Gruen, have you seen any analysis undertaken by Treasury or anyone else of a proposal to reform deductibility arrangements for the PRRT that would return $6 billion to the government's coffers over the forward estimates?

Dr Gruen : I am not saying whether I have or haven't, but, had I seen it, it would have been in the context of cabinet deliberations, and I don't discuss cabinet deliberations.

Senator McALLISTER: It may have been or it may not have been. The evidence thus far isn't—

Senator Cormann: Honestly, any questions on forecasting or projections of—

Senator WONG: She's entitled to ask about his involvement, Mathias. Stop trying to pivot.

Senator Cormann: Let me finish.

CHAIR: Order! The minister is part way through an answer.

Senator Cormann: This is 100 per cent consistent—

Senator WONG: No. She is entitled to ask about PM&C and this official's involvement.

CHAIR: No-one is seeking to prevent Senator McAllister or anyone else from asking questions.

Senator Cormann: Let me be very clear: I will take on notice any question about forecasting and projection of revenue.

Senator WONG: It's a little desperate.

Senator Cormann: That is ridiculous. This is entirely appropriate and consistent with usual practice under governments of both persuasions that questions in relation to revenue forecasting and projections be directed to the relevant officers in the Treasury portfolio—in particular given this review was directly commissioned in and is a direct responsibility of the Treasury portfolio.

Senator WONG: It is perfectly appropriate for Senator McAllister or any senator to ask about PM&C's involvement in particular activities, even if they include costings.

Senator Cormann: And you can keep—

Senator WONG: No, you're right; we'll ask the lead agency. I'm sure you will enjoy all of that process, but—

Senator Cormann: I get all the fun.

Senator WONG: I hadn't finished, actually.

Senator Cormann: I'm just sharing.

Senator WONG: You've had a wonderful morning. I know you've had a great day.

Senator Cormann: I'll be here for the Prime Minister's portfolio, the Treasury portfolio, the Finance portfolio.

Senator McALLISTER: So will I.

Senator Cormann: It'll be a fortnight of great fun.

Senator WONG: You're a lucky man, aren't you.

Senator Cormann: I am very much looking forward to it. I love Senate estimates; it is an important part of the democratic process.

CHAIR: As do we all.

Senator Cormann: But as part of the rules of the game, I will insist that questions be directed at the right agency. I know that Labor is quite desperate to get themselves into the media cycle today, given the top story on the front page of The Australian.

Senator WONG: I think the media cycle is off on its own trajectory now. I don't think much needs to be done.

Senator Cormann: I know Labor are keen to get themselves into relevance, given they've taken such a destructive and irresponsible approach—

CHAIR: Thank you, Minister; I'm not sure the commentary assists on either part.

Senator McALLISTER: Excellent.

CHAIR: How about we stick to questions and answers about policy issues.

Senator WONG: I suggest that Senator McAllister should ask a question. I understand Senator Cormann's point, but Senator McAllister is entitled to ask questions about the work of PM&C officials.

Senator Cormann: And Dr Gruen has answered those questions.

Senator WONG: I'm sure she'll ask a few more.

Senator Cormann: I will take any questions—

CHAIR: I'm sure she's able to, if—

Senator Cormann: If you insist on asking questions in the Prime Minister's portfolio, in relation to forecasting and projections of revenue in the budget or in relation to potential policy measures that may or may not be adopted in the future, I will refer you to the relevant agency. That is because there is no announcement in the budget in relation to any change in this space. There was a review, which is a matter of public record, and that review is very much the purview of the Treasury portfolio.

Senator McALLISTER: Dr Gruen, is Prime Minister and Cabinet involved, in any way, in the preparation of the government's response to the Callaghan review?

Senator Cormann: The reason I will take this question is that Dr Gruen has answered this question before.

Senator WONG: Chair?

Senator Cormann: You asked the question. I'm answering it on behalf of the government, which is my absolute prerogative. It is in the same way that Senator Wong used to use that prerogative when she was the minister for finance. Dr Gruen has accurately informed the committee and confirmed for the committee, in relation to all the matters that go before cabinet at any one point in time, that, of course, Prime Minister and Cabinet provides advice to the Prime Minister through that process into the Expenditure Review Committee, which is a subcommittee of cabinet. If and when policy proposals are considered by any of the committees of cabinet, of course, PM&C will provide advice, in relation to those matters, to the Prime Minister. But, as you know, the deliberative processes of cabinet are confidential, and this is not a matter that governments of either political persuasion have ever shared the content of in the course of these sorts of hearings.

Senator McALLISTER: Is there any sort of multiagency process around the response?

Senator WONG: Were you or any of your division involved, Dr Gruen, in—

Senator Cormann: Do we get the opportunity to answer Senator McAllister's question before we get the next question?

Senator McALLISTER: Maybe just with a yes or no answer.

CHAIR: Dr Gruen?

Senator WONG: Not if we're going to get another lecture about—

CHAIR: Order, Senator Wong. Dr Gruen was just about to answer the question. We were so close! Let's go to Dr Gruen.

Dr Gruen : Could you repeat the question, please—

CHAIR: That's a very dangerous request!

Dr Gruen : to make sure I'm answering the right question?

Senator McALLISTER: I am trying to understand whether there is any sort of interdepartmental process associated with the government's response to the Callaghan review, noting the minister's earlier remarks around the deliberative processes of cabinet. On occasion, there is a precursor to the cabinet process where departments engage—

Dr Gruen : Not to my knowledge.

Senator McALLISTER: Senator Wong?

Senator WONG: That's fine, I'll come back to it.

Senator McALLISTER: Has the Prime Minister met with any stakeholders from the oil and gas sector in relation to the PRRT?

Dr Gruen : Are you asking me this question?

Senator McALLISTER: I am, Dr Gruen.

Dr Gruen : I can take it on notice. I don't have access to the Prime Minister's diary but I'm happy to take it on notice.

Senator McALLISTER: Minister, are you aware of whether or not the Prime Minister has met with any stakeholders in the oil and gas sector?

Senator Cormann: I am not aware, but I can take it on notice. As a general response, from time to time, stakeholders in different areas of the economy and the community seek to meet the Prime Minister, and the Prime Minister meets many people. I'm not aware, myself, of any meetings but I will provide that information on notice.

Senator McALLISTER: Have any of them contacted you, Minister, about the PRRT and any changes to the PRRT since the budget?

Senator Cormann: I'm a senator for Western Australia. Industry in Western Australia has talked to me about the PRRT, ever since I've come into parliament, on a regular basis—in particular, when the Rudd government and then the Gillard government introduced the mining tax and related changes to PRRT, including in the context of the North West Shelf Gas project. I had lots of conversations with relevant industry stakeholders then and, indeed, the industry continues to maintain an open line of communication with me as a senator for Western Australia and given I'm also one of the ministers with an economic portfolio.

Senator McALLISTER: It appears that industry representatives told The Australian Financial Review that they expected that there would be changes to the PRRT in the budget but they failed to appear because they might be needed to salve One Nation. Have they contacted you about that disappointment?

Senator Cormann: Well, no.

Senator McALLISTER: No-one's spoken to you about that?

Senator Cormann: No, they haven't. I've seen that speculative piece. It is not a piece that I had any involvement in, and I'm not aware—obviously if somebody's quoted anonymously it's very difficult for me to make an informed comment.

Senator McALLISTER: Right. So, when the Woodside Petroleum chief executive, Peter Coleman, says, 'We're pretty much in a waiting game' but that he's confident that the industry will have certainty by the end of the year, is he correct?

Senator Cormann: Again, I won't speak for Mr Coleman, who I do know well and who is a distinguished chief executive officer of a great Western Australian company. But obviously Mr Coleman, like every other leader in the oil and gas sector, is very well aware of the Callaghan review that has taken place and would be very well aware of the fact that this is an area of policy that the government has been thinking about.

Senator McALLISTER: Were they correct to—well, how did they form the expectation?

Senator Cormann: But hang on: you're now mixing, you're now fudging, the anonymous comment with the comment attributed to Mr Coleman. There's nothing surprising about what Mr Coleman has indicated. He clearly was aware of the Callaghan review. I suspect that he would have been actively engaged in that process.

Senator WONG: Yes, but is there any truth to the assertion reported by Mr Coorey—

Senator Cormann: By Mr who?

Senator WONG: Coorey—Phil Coorey; I'm sure you chat to him a lot. He has this quote:

A government source agreed this was part of the reasoning behind the decision to leave the announcement out of the budget.

I want to ask you, first: are you the source?

Senator Cormann: No, I'm not.

Senator WONG: Second, can you tell me whether there is any truth to that assertion?

Senator Cormann: Well, I refer you to my earlier evidence. I've actually touched on this earlier today. It's a matter of public record that the government initiated the Callaghan review to assess what improvements, if any, would be able to be made to the PRRT arrangements. Obviously the government has been considering the policy response to this review for a period. And in the context of the ongoing discussions in relation to company tax, the PRRT issue is an issue that has also been raised with us by a number of crossbenchers—and I've already said on the public record that it has been raised with us by Senator Hanson, and she has indicated that publicly, and it has been raised with us by others, and that is a matter of public record. The Centre Alliance senators have raised this issue in Senate committee meetings on the public record and have indeed raised it with the government.

I think you made some flippant remarks earlier, actually, when I made that comment about who supposedly was writing government tax policy. It's actually something I've dealt with in answers to previous questions. But the bottom line is that the government is pursuing a central part of its economic reform agenda to ensure that Australian workers are not disadvantaged compared with workers in other parts of the world because businesses in Australia are forced to pay higher tax than the businesses they compete with. That is an agenda that we continue to pursue. Of course, in that context we've also continued to explore what the appropriate policy response would be to the Callaghan review. And given where the process in relation to company tax is at, the judgement was made that it was sensible to hold off finalising relevant decisions and announcements in relation to this.

Senator WONG: Well, I'm not sure that that monologue got any more interesting the fourth time around, but none of it related to my question.

Senator Cormann: But you asked me a question. It was a direct answer to your question.

Senator WONG: I'm asking a direct question, which you did not go to: is there any truth—

Senator Cormann: Right—

Senator WONG: I haven't finished. I just listened you for one of multiple—

CHAIR: Order! Let's just ask the question, Senator Wong.

Senator WONG: Well, excuse me: Chair, you've just given him a very lengthy period of time—in fact, ad nauseam—to continue trying to divert. Have some semblance of balance, please.

CHAIR: Senator Wong, as you know our role is to ask questions—

Senator WONG: I am seeking to ask a question—

CHAIR: —and it is the minister's role to provide answers.

Senator WONG: He is not answering. He's delivering a lecture, because he is desperate to try to avoid the embarrassment. I am asking another question.

CHAIR: My observation this morning in other interchanges between you is that commentary on both sides—

Senator Cormann: Bill Shorten is getting—

Senator WONG: Here we go.

CHAIR: Order!

Senator WONG: When you start rocking in your chair and rabbiting, 'Bill Shorten', Mathias, we always know there's a problem!

CHAIR: Order!

Senator Cormann: Come on, Penny!

CHAIR: I think you know that commentary doesn't assist.

Senator WONG: Can I ask a question?

CHAIR: Yes—please.

Senator WONG: None of that went to my question. I am asking if there is any truth in the assertion contained in that article that the government deliberately left that announcement out of the budget for the reasons that Senator McAllister has put to you—that is, it was needed as a back pocket—

Senator Cormann: Well—

Senator WONG: I haven't finished—a back pocket to 'salve One Nation'. Is there any truth to that assertion?

Senator Cormann: I don't agree with that characterisation at all. What I have put to you is the accurate characterisation that this is an issue that Pauline Hanson has raised on the public record and has raised with the government. It is an issue that other crossbench senators have raised with us and on the public record. It is a matter of public record that the government has been conducting a review into the PRRT arrangements, the Callaghan review, and, in all of the circumstances, the government's judgement was that it is sensible to hold off making a final decision and announcements in relation to this until such time as we have reached a consensus in relation to the government's company tax cuts package.

Senator McALLISTER: When the government spokesman says that the delay is about getting the policy right, that's not correct, is it? It's about getting the politics right.

Senator Cormann: No, well that is precisely right.

Senator McALLISTER: You have just given evidence—

Senator Cormann: That is precisely right.

Senator WONG: Let her finish.

Senator McALLISTER: —that it is about the politics of the corporate tax cut; it is not about the policy.

Senator Cormann: She has finished the question. I reject that completely.

Senator WONG: You didn't let her finish.

Senator Cormann: It is always about getting the policy right, but as I have indicated—

Senator WONG: Yes, it looks like it!

Senator Cormann: As I've indicated on several occasions now—

Senator McALLISTER: It's about the politics of the speech.

Senator Cormann: No, it's about making sure that the government can get as much of its economic growth agenda through the parliament as possible in an environment where Labor has made a reckless and irresponsible decision to sell out the interests of Australian workers. Are we working to find a compromise with Senator Hanson and the One Nation team, with the Centre Alliance senators and with all of the other crossbench senators—Senators Lejonhjelm, Bernardi, Anning, Martin and Hinch—in order to secure the necessary nine non-government senators we need in order to secure the passage of an important piece of economic reform legislation? Yes, we are. Is that about managing politics? No, it's about reaching a sensible public consensus that can secure a majority in the Senate, given the cards we were dealt with. That is what the Australian people would expect us to do: to act in the public interest at all times, which is what we are doing.

Senator WONG: Just a few questions to confirm. Senator Cormann, I am asking you to release the full details of the agreement you reached with One Nation, so that Australians can understand and scrutinise what you were prepared to do, across a range of policy areas, to get their votes.

Senator Cormann: I have taken that on notice.

Senator WONG: There are a number of other things Senator Hanson has put into the public arena that she is putting on the government, in terms of additional asks. I want to clarify if the government is intending to engage on any of these propositions or is intending to deliver on them. The first is immigration—that the government should pull back on immigration numbers.

Senator Cormann: The government's position is on the record. We are not proposing to make any changes to the current arrangements.

Senator WONG: Pensioners need a helping hand—I don't think they've done that.

Senator Cormann: Our budget is a very good budget for pensioners, I would put to you.

Senator WONG: I am putting Senator Hanson's asks. I am just trying to clarify—

Senator Cormann: I know you always like channelling Senator Hanson.

Senator WONG: Actually, that's a little offensive. She thinks people like me were swamping Australia, actually.

Senator Cormann: You're speaking her words—

Senator WONG: We don't channel Pauline Hanson. You're the ones who cosy up to her and let her write tax policy and government policy, in order to get the votes.

Senator Cormann: I reject that. We are—

Senator WONG: Don't tell me I channel Pauline Hanson. I find that personally offensive. I can tell you what happened to me and my family and people like us when she stood up in the parliament, possibly before you were here, saying Australia was in danger of being swamped by Asians.

CHAIR: Order!

Senator Cormann: We take our responsibilities seriously—

Senator WONG: I will never do anything other than fight—

Senator Cormann: —to seek to achieve a consensus—

Senator WONG: Yeah, well, bad form, Mathias—

Senator Cormann: —for the economic growth agenda that we took to the last election—

Senator WONG: Wrong person to make that—

CHAIR: Order!

Senator Cormann: —in the context of the Labor Party—

Senator WONG: Well, I'm offended—

Senator Cormann: —taking a reckless and irresponsible—

Senator WONG: You should withdraw it.

Senator Cormann: I did not want to cause offence. You know that.

Senator WONG: Well, you should withdraw it—saying to someone Asian 'You're channelling Pauline Hanson'—

Senator Cormann: Hang on—

CHAIR: Order!

Senator Cormann: That is confected outrage—

Senator WONG: How dare—it is not confected!

CHAIR: Order!

Senator Cormann: Hang on. You, by your own admission, were channelling Senator Hanson. You were reading her comments.

Senator WONG: I am asking you about your response to her position on policy. You're the ones who are in bed with her.

CHAIR: Order!

Senator WONG: I withdraw that.

Senator Cormann: You were treating her position as if it was your position.

Senator WONG: You're the ones negotiating with her.

Senator Cormann: And that is something we as a responsible government have a responsibility to do.

Senator WONG: How about rather than telling me I am channelling her, tell me what you're prepared to deal with. Are you prepared to consider her proposition for a coal-fired power station being funded in the budget?

Senator Cormann: Again, I've been on the public record on that this morning. We are not proposing to compulsorily acquire a coal-fired power station. That is a matter of public record and it is a matter of public record as to what the government's approach is in terms of bringing down the cost of energy, moving forward, in order to make sure that energy supplies can be more affordable and more reliable, in a way that helps us to meet our emissions reduction targets, and that is through the National Energy Guarantee, which is effectively being pursued by my good friend and colleague Minister Frydenberg.

Senator WONG: Her proposition is that the banks should pay for the royal commission. Are you prepared to consider that?

Senator Cormann: Again, we are on the public record. We have commissioned the banking royal commission and we have provided funding for it. We believe that the findings and recommendations coming out of the banking royal commission have to be dealt with on their own merits. We believe in the appropriate tax policy settings to ensure that our economy can grow as strongly as possible so that as many jobs as possible can be created, and that funding for all of the essential services that Australians rely on can be guaranteed within the budget. These are matters that are separate and should be dealt with separately. To the extent that wrongdoing and various issues are identified by the royal commission in relation to banks, and recommendations are made on how these matters should be dealt with, these clearly are things the government will consider on their own merits. We believe the parliament should also consider on its own merits the appropriate tax policy settings to ensure our economy can continue to be strong into the future, that jobs can continue to be created and that families around Australia continue to have the best possible opportunity to get ahead today and into the future.

Senator WONG: Is the government considering a gas pipeline from the west to east coasts? Another one of their—

Senator Cormann: I am not going to go through your shopping list—

Senator WONG: It is not my shopping list; it's your mate's. It's your negotiating partner. It's not my shopping list. It's your negotiating comrade's.

Senator Cormann: Of course, you are suggesting that whenever the Labor Party and the Greens are opposed to important economic reform we should just roll over and say, 'Okay, we can't do this, because the Labor Party and the Greens have taken a reckless and irresponsible economic policy position.' We don't do that. We engage with crossbench senators, but let me tell you that we don't engage with them either through the media or through senate estimates. I will continue to engage with them, in the same way that I engage with the Labor Party, incidentally. I don't believe the Labor Party would like me to have these conversations in public that I have with Labor shadow ministers in private. If One Nation or Greens senators were asking me questions about conversations we have from time to time with opposition shadows, I would give them the same answer. I conduct these conversations in good faith in private until such time as we have reached a position where there is agreement about the way forward and the relevant announcements are made. You want me to treat my engagement on behalf of the government with crossbench senators in a different way to that in which you would expect me to treat my engagement with opposition shadow ministers and senators, and I am not prepared to do it. I treat people professionally, with courtesy and respect, and it would be incredibly disrespectful of me to engage with crossbench senators in the way you are suggesting I should.

Senator WONG: The difficulty with that answer is that I'm not actually asking you anything that isn't on the front page of The Australian. I am simply asking—and it is interesting that you balked at answering the question about constructing the pipeline, but you have in fact answered everything else—whether or not the government has any intention of proceeding with this proposition. If you don't want to answer that—

Senator Cormann: Let me tell you why I make the differentiation—

Senator WONG: If you don't want to answer that—

Senator Cormann: Let me explain the differentiation—

CHAIR: In a moment, Minister. Just let Senator Wong finish her question, and then you can.

Senator Cormann: Which she has.

CHAIR: Have you finished your question, Senator Wong?

Senator WONG: No.

Senator Cormann: She asked the question.

CHAIR: Minister.

Senator Cormann: So the differentiation is this.

Senator WONG: I haven't finished.

CHAIR: Sorry. I thought you had.

Senator WONG: No. He kept interrupting me so I was waiting until he finished interrupting me before I could finish my question.

CHAIR: All right. Senator Wong, please finish your question.

Senator WONG: I am simply asking about government policy. I am asking whether or not the government is contemplating a gas pipeline from the west coast to the east coast, as has been publicly demanded by your negotiating colleague.

Senator Cormann: What I do in relation to all of these questions, where there is an official government policy appointed to that policy, I am not going to speculate about what may or may not be discussed. I make that point very clear. In relation to the approach to immigration, I have pointed you to the public policy position of the government. In relation to other matters you've asked me, I have pointed you to the public policy position of the government. When it comes to a potential gas pipeline from the west to the east, I refer you to the 2017-18 budget released in May 2017, which provided funding for a feasibility study in relation to a potential pipeline. The position of the government is that we have commissioned the relevant feasibility studies in relation to this pipeline and another potential pipeline. That is a matter of public record. Beyond that, I can't help you, because I'm not going to speculate. Senator Hanson and other senators are free to speak for themselves, but when I speak for the government I can only assist you to the extent that there are settled government policy positions, and I can only refer you to the settled government policy positions. That is the distinction.

Senator WONG: What about this proposition where Senator Hanson has publicly praised President Trump for pushing through immediate company tax relief. And then she says:

This government is talking about it six or eight years down the track, well that’s not good enough.

Is the government contemplating providing the company tax cut earlier?

Senator Cormann: Again, I can assist you here, because it is a matter of public debate that the government has addressed in other areas. The government is pursuing two objectives at the same time. We want to implement our plan for stronger growth and more jobs and higher wages over time, which is why we are pursuing a globally more competitive business tax rate. But we're also proposing to do it in a way that doesn't prevent us from getting the budget back into surplus as soon as possible and paying off the government debt as fast as possible.

There is a clear benefit for working Australians today and in the short term from legislating the business tax cuts to 2026-27 for all businesses today. That is because businesses today will make investment decisions based on their expectations of future after-tax profitability. If the parliament were to give certainty to businesses about what the tax policy settings would be in the future, it would have a signalling effect, if you like, in the short and medium term. I will ask Dr Gruen to talk some more about that in a moment. Essentially, we wanted to achieve both objectives: pursuing important economic reform that helps to strengthen our economy, create more jobs and drive stronger wages growth into the future at the same as returning the budget back to a sustainable surplus. We have taken the phased approach because that was affordable within the budget in all of the circumstances.

President Trump has done it a different way. In the US, they have decided to deficit finance and debt finance their business tax cuts. That is not a decision we have made here in Australia. We have decided to ensure that the business tax cuts did not put at risk a return of the budget to surplus. If you look at the US, they have come down from a certain level to 19 per cent, and they're on track to come down to 17 per cent business tax rate. In France, they are proposing to reduce the business tax rate to 25 per cent by 2022. The phased approach is not unusual, and it is actually a beneficial way to manage these things. Dr Gruen might be able to assist some more on that.

Dr Gruen : It is worth being aware that, in the United States, the business tax cuts are being funded in the context of government net debt of about 80 per cent of GDP and budget deficits with the tax cuts in the order of five per cent of GDP for the next decade. That will see the US net debt to GDP ratio approach 100 per cent. The distinction with Australia is that the tax cuts have been brought in, as the minister said, gradually in order to be consistent with the budget returning to surplus. That is a stark difference between the way that the tax cuts are being funded in the two countries.

Senator WONG: Okay, we'll come back to tax cuts. Ms Foster, can we go back to the question I gave you some notice of at the start, please? Could you explain to me why Senator Bernardi gets such helpfulness when he is a government senator from PM&C and why Senator Farrell is not treated with the same courtesy?

Ms Foster : Senator, we weren't looking back at the 2014 response when we did the 2018 response. The reason for giving the most recent date was that we don't actually hold the data on the dates that Senator Farrell asked for.

Senator WONG: How did you hold it for 2008, 2010, 2012 and 2013, but not for 2014, 2015, 2016 and 2017?

Ms Foster : We didn't have those exact dates either in 2014.

Senator WONG: You went and found them from other people?

Ms Foster : We gave slightly different dates. So we can do that for Senator Farrell, and I have staff trying to pull that together now.

Senator WONG: Okay, let's not have a fight about this if we can avoid it. Can we just get the information? If you can give something analogous to the answers given to Senator Bernardi, I won't have to redo this or take an order for production in the Senate. I would appreciate it.

Ms Foster : We can do that and we can give you some information today and then give you a full set shortly after.

Senator WONG: I might go to Senator Kitching, if that is all right.

CHAIR: Sure. Senator Kitching.

Senator KITCHING: Thank you, Chair. I would like to ask some questions about the banking royal commission, but before we get to that, I wanted to check whether anyone in the department was tasked with keeping the Prime Minister up-to-date about misconduct in the financial and banking sector?

Dr Gruen : Sorry, Senator, as the royal commission has progressed, is that what you are asking?

Senator KITCHING: No, I am not at the establishment of the royal commission yet. Prior to that was anyone tasked with keeping the Prime Minister up-to-date about misconduct in the financial and banking sectors?

Dr Gruen : Well as a general proposition we keep the Prime Minister up-to-date with all the things that are going on in the economy and in the community that we think are relevant. There was no specific tasking. In general, when there are developments, we would brief the Prime Minister about them.

Senator KITCHING: Obviously there was discussion within political circles and also in the media around whether there should be a banking royal commission.

Dr Gruen : Yes, there was.

Senator KITCHING: So nobody thought that we should keep a bit of an eye on that?

Dr Gruen : We keep an eye on it. To the extent that we are able to do it, we keep an eye on all things that are material, and that was certainly material.

Senator KITCHING: Did the Prime Minister ask for any briefs to be prepared for him specifically about misconduct in the banking and financial sectors?

Dr Gruen : I would have to take that on notice.

Senator KITCHING: If you also take on notice: if or how many briefs did the Prime Minister specifically request from July 2016 to December 2016, from January 2017 to June 2017, from July 2017 to December 2017, and from January 2018 until the present day.

Dr Gruen : Happy to take that on notice.

Senator KITCHING: Thanks, Dr Gruen. The Treasurer indicated in an article in the Financial Review on 4 April that the government was aware of everything the royal commission would uncover, and I will give you the exact quote. He said:

Other agencies certainly have addressed many issues being raised. I think that will more directly impact on the public consciousness of these things, but they are not things that the government was not aware of.

What did the government know and when? We have established there was no-one specifically tasked to keep an eye on misconduct in the banking and financial sectors.

Dr Gruen : Sorry, the answer I gave was that there was no-one specifically tasked in Prime Minister and Cabinet, but there are significant parts of the Treasury that monitor the financial system. In relation to the idea of someone being specifically tasked, there is a whole division within Treasury that is specifically tasked with monitoring the financial system. To the extent that there are issues to do with misconduct in the financial system, those people would be well and truly on top of it. If you are going into these sorts of specifics, I think it would be better to ask Treasury.

Senator KITCHING: But no-one in the Prime Minister's own department was tasked?

Senator Cormann: There is a specialist department for this that has direct responsibility for financial markets and the financial sector.

Senator KITCHING: I would say that Prime Minister and Cabinet has specific responsibility for the Prime Minister. Dr Gruen, didn't you say before that you keep the Prime Minister up-to-date?

Dr Gruen : Yes, we do.

Senator Cormann: Yes, on things that go before cabinet and on relevant current issues, of course. But that is not the question you asked. In terms of specific responsibility for this area of public policy, that is self-evidently the Treasury portfolio and, more specifically, the markets group.

Senator KITCHING: When the Treasurer said on 4 April 2018, which is a month and a half ago approximately, 'These are not things the government was not aware of,' about the banking royal commission, any awareness was derived not from Prime Minister and Cabinet.

Dr Gruen : When you say 'any awareness', the Treasury is the agency which has primary responsibility for this. We have close relations with the Treasury so, to the extent that there are specific material things going on in the financial sector, we will both brief the Prime Minister ourselves and we will have discussions with the Treasury. When you asked me initially whether anyone was specifically tasked with telling the Prime Minister, someone is specifically tasked with keeping the Prime Minister abreast of developments in the financial sector. If you like, I can say that that person is specifically tasked, but they have a broader role than simply informing the Prime Minister about particular things that go on in the financial sector. We see our remit as rather broader than that.

Senator KITCHING: I will go back and ask: do you recall the Prime Minister or his office asking for any briefs in the last few months on the banking and financial sectors?

Senator Cormann: We will have to take that on notice.

Senator KITCHING: Dr Gruen has already agreed to take it on notice. I'm just hoping to jig his memory.

Senator Cormann: It's taken on notice, so it's taken on notice.

Senator KITCHING: I'm going to go through some specific examples and perhaps, Dr Gruen or Senator Cormann, you can comment on them. Evidence in the royal commission revealed that the Commonwealth Bank financial advisers have been charging commissions to dead customers, in one case for up to a decade. Did the Prime Minister know about this?

Senator Cormann: You can go through the whole list, but the prime responsibility is with the Treasury portfolio, namely the market groups in Treasury, and obviously there are responsibilities for us and other relevant agencies which are relevant to this.

Senator KITCHING: I'm asking the Prime Minister's department—

Senator Cormann: Sure, and I understand why you are doing it, for political effect.

Senator KITCHING: Senator, are you suggesting it's a political effect that a dead customer was charged?

Senator Cormann: Instead of asking questions of the relevant agency, you are asking it here with a political purpose.

Senator KITCHING: This could be very bad for you.

Senator Cormann: If I may finish. I am saying right up front that in relation to all questions of that nature that I take them on notice because they come under the umbrella of the initial answer that Dr Gruen provided and that is that he has taken the question on notice in relation to what advice may or may not have been sought and provided. I'm not going to change that just because you now try, in a way that is effective from a media point of view, to go through these things item by item. The position is that I will check on notice to make sure that the answer to that question is appropriately accurate.

Senator KITCHING: In relation to the Commonwealth Bank financial advisers charging commissions to dead customers, including in the instance where one customer was charged for up to a decade, did the Prime Minister know about this? If he did, can you please let us know the date of the first brief in which the Prime Minister was told about this.

Senator Cormann: The royal commission of course, appropriately, is independent from government. It was set up by government. The government set the terms of reference. We chose the royal commissioner, and the royal commission appropriately does its work independently from government, as it should. The Prime Minister in the same way as anybody else becomes aware of what is raised in the royal commission, in the ordinary course of events. There is an agency in government that has got direct policy responsibility for this area of public policy—that is, the Treasury, which specifically has a group within it, which is the Markets Group, which is responsible for financial system and financial market regulatory and policy matters. If you want to get specific answers in relation to these sorts of questions, I will take all of these questions on notice—

Senator KITCHING: Thank you.

Senator Cormann: because it's not a matter that the Prime Minister's portfolio, of course, has got prime responsibility for.

Senator KITCHING: Thank you for that. Obviously, there are a lot of things that are going to Treasury when we get to Treasury, Chair. So we may have to have an estimates spillover period for Treasury because so many things are being referred to Treasury.

Senator Cormann: Well, if you keep asking about Treasury matters—

Senator KITCHING: I am asking Prime Minister and Cabinet when the Prime Minister knew, because, remember, the Treasurer, about six weeks ago, said these are 'not things that the government was not aware of'. So if I could go back to my—

Senator Cormann: So you are referencing the Treasurer and you're asking PM&C?

Senator KITCHING: He says 'the government', Senator Cormann, not—

Senator Cormann: If you want to ask questions—

Senator KITCHING: But I'm going to ask them and then—

Senator Cormann: of the Prime Minister, the Prime Minister is in question time in the House of Representatives every day at two o'clock.

Senator KITCHING: I'm going to keep asking, and perhaps Dr Gruen can take these on notice.

Senator McALLISTER: May we just pause for a moment? I'm sorry to interrupt you, Senator Kitching. This is not a reasonable position to take. The Prime Minister's department does play a coordinating role and, as we have discussed this morning, provides briefings on a range of questions to the Prime Minister. Senator Kitching is entitled to ask whether the Prime Minister has been briefed on specific issues. The answer may well be no, but the fact that there is another part of government that takes an interest in this issue is not a basis to refuse to answer the question.

Senator Cormann: We're not refusing.

Senator McALLISTER: You may choose, Minister, to take every question on notice, but I don't think that that is a politically acceptable response to the estimates process.

Senator Cormann: We're not refusing to answer the question at all. What we're saying is there's an agency that has got prime responsibility for financial system related matters, for financial market regulation and policy matters. That is the Markets Group in Treasury. Of course Prime Minister and Cabinet provides advice on a range of matters to the Prime Minister from time to time, as required and as appropriate, but, if you want to go to this level of detail in relation to specifics briefed to the Prime Minister, what I've indicated to you is not that I was refusing to answer the question but that I would take them on notice to ensure that answers in relation to matters for which the Prime Minister's portfolio does not have prime responsibility are answered in the appropriately accurate way.

Senator KITCHING: Thank you. So is it true that the Prime Minister knew that the CBA was charging dead customers fees while he was refusing to start a royal commission into the banks?

Senator Cormann: I reject the premise of the question. You're now trying— That's just—

Senator KITCHING: Chair, could I clarify something—

Senator Cormann: I reject the premise. The way you're framing the question is completely and utterly disingenuous.

CHAIR: Senator Kitching, after the minister has concluded his answer you are well within your rights to ask as many follow-up questions as you like, but please allow the minister to finish his answer.

Senator KITCHING: I do want to clarify, because we're going to keep going through this—

Senator Cormann: That's fine.

Senator KITCHING: and, quite frankly, it's boring.

Senator Cormann: You're responsible for the questions.

Senator KITCHING: Can I just go back to the basis of the question—

Senator Cormann: I'm finishing the answer to the question. I haven't finished, Chair. I have not finished.

Senator KITCHING: and why I'm asking this question.

CHAIR: Senator Kitching, please allow the minister to finish answering the question that you asked.

Senator KITCHING: And then I will give the basis, again—

CHAIR: You're very welcome to, once the minister has concluded his answer.

Senator KITCHING: for the third or the fourth time—of why I am asking these questions of the Prime Minister.

CHAIR: Minister, you have the call.

Senator Cormann: I reject the premise of the question. The way the question is framed is disingenuous and not accurate. And I've already taken on notice—and Senator Kitching well knows that I have—questions about what briefings the Prime Minister may or may not have received over the relevant period in relation to matters that have arisen in the royal commission into the banks.

Senator KITCHING: Just again, Chair—

CHAIR: Please, Senator Kitching.

Senator KITCHING: so that we're clear about the basis of this: on 4 April, the Treasurer said:

I think that will more directly impact on the public consciousness of these things, but they are not things that the government was not aware of.

He does not say, 'I was not aware of;' he says, 'the government.' Now, I am taking from that and from previous responses given to other questions this morning in relation to advisers to the Prime Minister—in fact, I think it was Senator Cormann who said, 'There are many people who advise the Prime Minister. You know there's obviously the department, but there's also his fellow cabinet ministers, et cetera. They advise the government.' So there's a bit of collective knowledge.

Senator Cormann: No, Senator Kitching—

Senator KITCHING: Let me finish. When the Treasurer says, 'They are not things that the government was not aware of,' what I am putting particularly to the Department of the Prime Minister and Cabinet is: did the Prime Minister know? I'm not talking about what the Treasurer or the Treasury knew—we are in Prime Minister and Cabinet estimates. What I am asking is: what did the Prime Minister know and when? Dr Gruen has agreed to take on notice whether there were briefs, and I've given him what I hope is neat six-month packages, so they can go back. Chair, just so you are aware, I would like those responses as promptly as possible, because, on another matter, I am still waiting for responses to questions on notice from 5 February this year, and that is not acceptable. So I would like these responses to be as expeditious as they can possibly organise, but I am going to ask what the Prime Minister knew and when.

Senator Cormann: No, sorry. No, that was—

Senator KITCHING: That is what I am asking.

Senator Cormann: I've got to respond to this.

CHAIR: In a moment you will, Minister.

Senator Cormann: Because the question, as you know, was framed—

CHAIR: Order, minister. Just one moment—order, Senator Kitching.

Senator KITCHING: I am asking what the Prime Minister and the Prime Minister's department knew, and did they brief him? Did the Prime Minister ask for particular briefs?

CHAIR: Thank you, Senator Kitching.

Senator KITCHING: That's what I'm asking.

CHAIR: Before I go the minister, you made your question very clear.

Senator KITCHING: Thank you.

CHAIR: And, as I heard it, while I've been sitting here, that question has been taken on notice already.

Senator KITCHING: And it is unhelpful for Senator Cormann to obfuscate.

Senator Cormann: No, I reject that characterisation.

CHAIR: Senator Kitching, that point is not necessary.

Senator Cormann: You actually just reframed the question.

Senator KITCHING: No, I didn't.

Senator Cormann: Well, you have. The record will show you previously asked: is it true that the Prime Minister knew certain things? That is a very different question from—

Senator KITCHING: The Treasurer himself said it.

Senator Cormann: what did the Prime Minister know or what did he ask advice on? I have taken on notice what the Prime Minister may or may not have sought advice on. But let me also just make the point that Senator Kitching also said, 'Charging fees to dead customers for up to a decade.'

Senator KITCHING: Yes.

Senator Cormann: I just draw to your attention the fact that that covers the period that Mr Shorten was the Assistant Treasurer, Minister for Financial Services and Superannuation.

Senator KITCHING: Senator Cormann, you used to have such a good opinion—

Senator Cormann: And I assume that you're asking him the same question about what he was aware of at the time.

Senator KITCHING: and you said, I think, at one point, that the Leader of the Opposition was a caring and very good person. Can I just go back to my questions, Chair.

CHAIR: If you wish.

Senator KITCHING: And they can all be taken on notice.

CHAIR: I think you've asked them very clearly, and they've been taken on notice.

Senator KITCHING: And I think that we will agree that waiting for a few months for responses is not really tenable. So if they could be done as quickly as possible—maybe even Dr Gruen, at some point during the day, could go and see what briefs have been given for the last couple of six-month periods. Maybe that's not an unreasonable request.

CHAIR: Your request is noted, Senator, and I'm sure they'll answer as quickly as they can.

Senator Cormann: Let me answer that observation. I pride myself on answering as many questions as possible in a very timely manner. And I think you'll find that my record of answering questions in a timely manner compares favourably with that of my predecessors. I actually do take this process very seriously.

Senator WONG: I did represent Mr Swan.

Senator Cormann: Well, I do take this process seriously. From time to time, there are proper reasons why matters take a bit longer. But I can assure the committee that I always make the utmost effort to provide answers on a timely basis, and I think senators well know that.

Senator KITCHING: So if I could continue, Chair. Senator, can I get an indication of how many more questions you have in this area, because I promised I would give the call to Senator Stoker.

Senator KITCHING: It won't take that long if I can just read them out without having interference run about who should be answering. I feel that asking Prime Minister and Cabinet questions about whether the Prime Minister was briefed on said matters is entirely reasonable.

CHAIR: It would be even quicker if it didn't come with this commentary, Senator Kitching. How about just asking the questions?

Senator WONG: With respect, Chair, the bulk of the commentary this morning—as the Hansard will show, and as the public have certainly observed, from what I can see—has not been from this side of the table. So if you are going to start to chide people about commentary, I trust that that will be even-handed.

CHAIR: Senator Wong, I think if you check the Hansard as well there will be three or four occasions when I've asked the minister to—

Senator WONG: True—even you got to that point.

CHAIR: Thank you, Senator Wong.

Senator KITCHING: Is it true that the Prime Minister knew that the Commonwealth Bank was charging dead people fees at the same time as he was refusing to have a royal commission into the banks?

Senator Cormann: You are just asking the same question again. I've already—

Senator KITCHING: I'm repeating it because I'm not sure whether Dr Gruen—

Senator Cormann: I have taken it on notice—

Senator KITCHING: You've taken it on notice; that's good.

Senator Cormann: about ten times.

Senator KITCHING: Not ten times; don't exaggerate.

CHAIR: It's been multiple times, I think, Senator Kitching. Let's not—

Senator KITCHING: No, once, I think. Evidence to the royal commission also revealed that the National Australia Bank's Introducer Program involved the forgery of pay slips to settle loans and white envelopes being stuffed with cash bribes. Did the Prime Minister know about this? Can you let us know the date of the first brief in which the Prime Minister was told about this? Is it true that the Prime Minister refused to start a royal commission despite knowing that AMP was charging clients for services never provided?

Senator Cormann: I reject the premise of the final question, and the other parts of the question I take on notice.

Senator KITCHING: Evidence to the royal commission revealed that AMP misled ASIC in relation to an allegedly independent report by Clayton Utz. Did the Prime Minister know about this?

Senator Cormann: Again, as I've said to you, I will take all of these questions on notice. Let me just make a general—

Senator KITCHING: I will need to read them out, Senator Cormann, in order for you to take them on notice.

CHAIR: Senator Kitching, you will—

Senator Cormann: Let me make the general observation that, in my view, it is quite disrespectful to the important work that is being done by the royal commission to try to run a separate kangaroo court process through the senate estimates, pursuing issues that are quite properly pursued by the royal commission—

Senator KITCHING: I am asking if the Prime Minister and his department—

CHAIR: Order!

Senator Cormann: which has been given the job to get the bottom of all the facts, to make findings and to make recommendations. They should be allowed to do their job independently, and the parliament as much as the government should respect the job that the royal commission is doing in relation to this.

Senator WONG: If I may, perhaps I can assist?

CHAIR: Yes, Senator Wong.

Senator WONG: Senator Cormann, the Treasurer made the statement that Senator Kitching has referenced. He said:

Other agencies certainly have addressed many issues being raised. I think that will more directly impact on the public consciousness of these things, but they are not things that the government was not aware of.

Senator Kitching has put a range of concerns and events to you, which have been aired at the commission. I actually want to understand what the Prime Minister says the Treasurer was referencing when he said, essentially, 'These are things we were aware of.' What does the Prime Minister understand the Treasurer to be referencing about the behaviour of the banks?

Senator Cormann: I'm not going to comment on what the Treasurer might think, because—

Senator WONG: No, I didn't ask you that.

CHAIR: Order, Senator Wong.

Senator WONG: I didn't ask him that. I asked him what the Prime Minister thinks.

Senator Cormann: What I have done and what I will continue to do is take on notice, in relation to all the instances that Senator Kitching is listing, as to what advice may or may not have been sought and what advice may or may not have been provided. That is what I have undertaken, and that is what we will provide.

Senator WONG: I didn't ask you what the Treasurer thought; you are here representing the Prime Minister. I will try to put the question this way: what wrongdoing by the banks was the Prime Minister aware of as at April 2018, prior to the decision to agree to the royal commission?

Senator Cormann: I have taken that on notice.

Senator KITCHING: I might just go back. I think I have asked you to take this on notice. AMP misled ASIC in relation to an allegedly independent report by Clayton Utz. Did the Prime Minister know about this? Can you please let us know the date of the first brief in which the Prime Minister was told about this? Is it true that the Prime Minister refused to start a royal commission, despite knowing that AMP was lying to regulators?

Senator Cormann: I reject the premise of that last question, as I have before. I'll take the remaining questions on notice.

Senator KITCHING: Minister, was the Treasurer correct that the royal commission was just going to turn up issues that the government was already aware of?

Senator Cormann: The government's position in relation to the royal commission is very well known and it's a matter of public record. The government took the view that there have been enough inquiries and that it was time for action. Of course, the government have taken action to help customers resolve disputes with the banks more swiftly, through things like the one-stop shop initiative, and we've provided additional resources and powers to ASIC, which is all a matter of public record. But, in all of the circumstances, towards the end of last year the government changed its position and decided to call the royal commission. We drafted the terms of reference and we selected the royal commissioner, who is, by all accounts, doing an outstanding job. It is our view that the royal commission should be allowed to do its job independently, as is appropriate. At the end of the process there will be findings and recommendations. The government, of course, will consider those in the appropriate and unusual way.

Senator KITCHING: Do you think that the royal commission has been useful?

Senator Cormann: Of course, it's been useful. The government called it and the government set the terms of reference. It has clearly led to a whole series of revelations. No doubt the findings and recommendations of the royal commissioner will be valuable and will be considered at the appropriate time in the appropriate way by the government.

Senator KITCHING: Do you think the public deserve to know the revelations that have come out so far?

Senator Cormann: This is now a matter of public record. The government decided to call a royal commission. We set the terms of reference. We chose the royal commissioner. The royal commissioner is doing his job. In the course of doing his job, as is the case in relation to royal commissions on any topic, issues come into the public domain. Some of these things are contested. Not every revelation coming out of the royal commission turns out, on scrutiny, to withstand the scrutiny of the royal commission process. I think it would be premature for us to make judgements on all of the issues that are raised in the course of the royal commission as a matter of course. I think the various allegations, revelations and issues that are raised are appropriately tested through the appropriate process. The appropriate person to preside over that process independently is the royal commissioner, and that's the way we will approach it.

Senator KITCHING: Has the government learnt anything new from the royal commission?

Senator Cormann: The government will reserve judgement until the royal commissioner Justice Hayne has presented his findings and his recommendations. In the course of any royal commission a whole series of issues are raised. Allegations are raised which are going through the appropriate process in the course of the royal commission. I think it would be sensible for all of us to await the ultimate findings and the ultimate recommendations before jumping to conclusions.

Senator KITCHING: Senator Cormann, you resisted the idea of the royal commission for some time. How do you feel about it now? Are you glad that it was established?

Senator Cormann: It's a matter of public record. With the benefit of hindsight, we should have done this earlier. I don't shy away from that. I'm also on the public record as saying that the government was motivated by the right reasons. There had been a whole series of inquiries—the Financial System Inquiry and various Senate inquiries into the banking sector and into ASIC. There had been a whole range of inquiries across a whole range of areas. Our view was that the policy challenges were well understood, that the ways to deal with them were well understood and that it was time to take action to resolve problems, rather than have another inquiry. That was the reason we believed that acting in the public interest meant taking action rather than having another inquiry. With the benefit of hindsight, if we had known then what we know now, we would have made this decision earlier. I've said that on the public record on a number of occasions. That is nothing new.

Senator KITCHING: So it was a good idea to establish it?

Senator Cormann: I've answered that question.

Senator KITCHING: The government finally decided to establish the royal commission, despite there being some hostility towards the proposal, and, at the press conference announcing the royal commission, the Prime Minister gave the following answer:

Obviously, there's been a lot of changes in the political environment here. We've got two by-elections underway, our numbers are down in the House of Representatives. You all understand the political circumstances and our job is to manage these issues and lead on these issues in a way that protects the national economic interest of Australia and all Australians.

Isn't it the case that, prior to the establishment of the royal commission, revelations that the banks had engaged in behaviour that was detrimental to Australian customers had not been sufficient motivation for the government to establish the royal commission, and the government's internal political turmoil was the actual reason for its eventual capitulation?

Senator Cormann: I reject that characterisation entirely. In our period in government, we always make judgements based on our consideration of what is in the public interest. Our consideration was that it was in the public interest to provide additional powers and resources to relevant regulators—regulators whom we wanted to do the best possible job. We pursued other initiatives to strengthen the opportunity for customers to resolve grievances with the banks in a more efficient and effective way.

In the end, when all is said and done, the thing that none of us should forget is that the banks continue to be a central part of our economic architecture. Our future economic prosperity and success depends on strong, stable, well-regulated banks into the future.

So, yes, we did think, in the circumstances that emerged towards the end of last year, that it was very important to ensure that the banks did not continue to be a political football, and it was important for us to provide certainty and a framework around the processes that were about to emerge. How this came about it is a matter of public record. The government made a judgement that, in the circumstances, it was appropriate to commission the royal commission. We determined the terms of reference and we selected the royal commissioner, Justice Hayne, who I think everybody would agree is doing an outstanding job.

Now, I understand why Labor continues to pursue this in this forum, but I think the public interest is best served by allowing the royal commission do their job independently, identifying all the facts and forming their view independently on what the appropriate findings ought to be and what the appropriate recommendations ought to be. At the end of that process, the government will carefully consider the royal commission's findings and their recommendations, and respond to them in the appropriate way.

Senator KITCHING: Can I just refer you to a letter dated 30 November 2017, addressed to the Treasurer. It's from the banks. I'm happy to read out the senders of the letter; they are the bank chairs and chief executive officers. I think you probably know the letter to which I am referring. Were you aware of the letter prior to the announcement regarding the royal commission?

Senator Cormann: Sorry, I can't assist you with that. In estimates for the portfolio of Prime Minister and Cabinet, you're asking about a letter in relation to the Treasurer. You won't be surprised to hear me say—

Senator KITCHING: I'm asking: were you—and you're here representing the Prime Minister—or the Prime Minister's department aware of the letter prior to the announcement?

Senator Cormann: Sorry, which letter are you talking about?

Senator KITCHING: I'm talking about the letter from the banks to the Treasurer, dated 30 November. It's a letter from the banks—

Senator Cormann: You're saying 2017?

Senator KITCHING: Sorry, yes, 2017—30 November last year.

Senator Cormann: That is now nearly six months ago. I would have to take on notice what letter the Prime Minister and I were aware of at what time.

Senator KITCHING: Chair, if you don't mind, we might have a physical copy of it.

CHAIR: Other senators are waiting. I might come back to you—

Senator KITCHING: I'm actually nearly finished, but if you do that and we get—

CHAIR: Okay.

Senator STOKER: Dr Gruen, one element of the budget that I haven't seen covered an awful lot in the press is the issue of the integrity of the tax system. What was there in the most recent budget in the way of tax integrity measures?

Dr Gruen : If you want to know about the detail of that, then I think it's probably best to talk to the Treasury. But I'm happy to give you a list of the tax integrity measures.

Senator STOKER: Thank you.

Dr Gruen : The government has announced a package of tax integrity measures which are estimated to improve the budget by $1.1 billion in fiscal terms over the forward estimates. The integrity measures include: taxation of income for an individual's fame or image; denying deductions for vacant land; ensuring individuals meet their tax obligations; a firm stance on tax and superannuation debts; clarifying the operation of the division 7A integrity rule—and if you want to know detail about what that is, I suggest you ask the Treasury because they will be able to help you; enhancing the integrity of the small business capital gains tax concessions in relation to partnerships; extending anti-avoidance rules for circular trust distributions; improving the taxation of testamentary trusts; tightening the rules on stapled structures; improving the integrity of the tax treatment of concessional loans between tax-exempt entities; improving the integrity of the thin capitalisation rules; removing the capital gains discount at the trust level for managed investment trusts and attribution managed investment trusts; strengthening the definition of a large multinational; and levelling the playing field in the tax treatment of online hotel bookings. That is the list of the tax integrity measures in the budget.

Senator STOKER: Thank you. The figure that you gave for its impact on the budget overall—

Dr Gruen : Yes.

Senator STOKER: Is that a figure that is taking into account the costs of these additional enforcement measures?

Dr Gruen : I don't have detail on that, but the number that I have in front of me is, as I said, $1.1 billion over the forward estimates. That's in fiscal terms, which are not quite the same as underlying cash. But, nevertheless, for these measures that's the relevant measure.

Senator STOKER: Thank you.

Senator KITCHING: I do have a copy of this letter, Chair, and I'm happy to table it, or to give it to Senator Cormann.

CHAIR: Which letter?

Senator KITCHING: This is a letter from the banks to the Treasurer, dated 30 November last—

CHAIR: I think it's a public document, so it's probably not necessary to table it. But it certainly might help to give a copy to the minister if you wish to ask questions about it.

Senator Cormann: I'd like to see it.

Senator KITCHING: Thank you.

Senator Cormann: So that's an article, that's not a letter that was sent.

Senator KITCHING: No—

Senator WONG: No, sorry. It's actually a text that was printed. We can print out the actual letter. This is all on the public record. The article printed the full text of the letter, if you want a copy—

Senator Cormann: No, look, sorry. Obviously, at the time there were a lot of conversations, as you would expect, between relevant ministers and within government. So I would have been aware, and the Prime Minister would have been aware, of the letter at the time. In terms of precise timing, I've got to take that on notice.

Senator KITCHING: Okay. Maybe I could ask some questions about it, though? Was there any discussion between members of the government, or government staff, and the major banks about their producing that letter in time for the announcement?

Senator Cormann: I'm not aware.

Senator KITCHING: Would you be able to take that on notice?

Senator Cormann: I will take that on notice, yes.

Senator KITCHING: Thank you. Is the timing of the announcement with the date of the letter from the bank CEOs and chairs a coincidence?

Senator Cormann: Obviously, that was evolving at the time. I'm speculating here, which I probably shouldn't, but I suspect the banks would have been engaged with the government in the context of what was emerging in parliament at the time to assess how best to protect Australia's national interests moving forward, which of course includes our national interest to have strong, profitable, stable, effective and well regulated banks at the heart of our economic infrastructure.

Senator KITCHING: Ann Sudmalis has said that her four pages of research was a catalyst for the government starting the royal commission. Is that correct?

Senator Cormann: Ann Sudmalis is an outstanding local member of parliament, and her views in relation to the need of the banking royal commission are well known. The government made a decision that, in all the circumstances as they emerged in that period, the appropriate way forward was to call a royal commission. We determined the terms of reference and we chose the royal commissioner, Justice Hayne, who I think everyone can agree is doing an outstanding job. I think it is now appropriate to let the royal commission do its job independently, assess all the claims that are made, form its views and deliver its findings and recommendations, which the government will consider in the appropriate way at the appropriate time.

Senator KITCHING: At the press conference announcing the royal commission, Mr Morrison, the Treasurer, said, 'The nature of political events means the national economic interest is now served by taking what I describe as a regrettable but necessary action.' Do you stand by those comments? Would the Prime Minister stand by those comments?

Senator Cormann: I've already explained that very candidly. The government's position over time is a matter of public record. We took the view that the public interest was best served by taking action to address issues in the banking system through regulators and through a whole series of measures that we pursued, including additional resources and powers for ASIC and other initiatives to help consumers more efficiently resolve grievances with their banks. Now, with the benefit of hindsight, we should have made the decision to call the royal commission earlier. That is a matter that we've publicly acknowledged. I don't know what benefit there is to go over that point again and again, other than that you are pursuing a political strategy.

Senator KITCHING: I think you have been candid, Senator Cormann. You have said that it should have started earlier. From the comments that you've given today I'm going to assume that you don't think it was regrettable. Do you think it was regrettable that the nature of political events meant it was necessary to initiate the royal commission?

Senator Cormann: It is very important for Australia into the future to have strong, profitable and stable banks which underpin our future economic prosperity and success and the prosperity and success of all Australians. I think that's very important. It's also important that when there's wrongdoing, as there self-evidently has been, by various banks and other financial institutions, any such wrongdoing has to be addressed in the appropriate way. Our preference would have been for that to have been able to be addressed in the ordinary course, through the normal regulatory and compliance processes in the financial system. That used to be the view of none other than the then Treasurer, Wayne Swan, too. When Joe Hockey in opposition said he proposed a comprehensive financial systems inquiry, what he said was, 'I think the last thing the system needs is another inquiry.' That was Wayne Swan at a time when you, Senator Kitching, are saying various bad events were happening in the banking system. The then Treasurer, Wayne Swan, was saying, 'The last thing the system needs is another inquiry.' Acting in good faith and focused on what we considered at the time to be in the public interest, we took a similar view. We took a view that it was time for action, not for more inquiries. It was time to pursue sensible reforms, not to have more inquiries. With what has emerged since then, the government has candidly acknowledged that, with the benefit of hindsight, it would have been beneficial to call this inquiry earlier, but I'm not sure what benefit there is in you going over that same ground again and again, other than perhaps pursuing a political purpose.

Senator KITCHING: Could I put something else to you that the Treasurer said in August 2016? He described the push for a royal commission as a 'populist whinge'. He said:

I think there is the great risk that if the opposition continues to engage in this recklessness that the only product of that approach could be to undermine confidence in the banking and financial system.

If the Treasurer is correct, and it was just a populist whinge to establish a royal commission, why did the government give in to it?

Senator Cormann: I've addressed this issue comprehensively and candidly. I think the Australian people understand what the government's attitude was in recent years and why. I think the public understands what it is that we're trying to do, and the public understands the circumstances in which we decided to call the royal commission, determining the terms of reference and choosing Justice Hayne as the royal commissioner. I think the Australian people would expect the government and the parliament to let the royal commission do its job independently, to take all of the evidence, review all of the claims, form a view about what the appropriate findings should be and make recommendations to government. Once these recommendations are received by government, what the government will do is consider them in the appropriate way and make judgements in the appropriate way at the appropriate time.

Senator KITCHING: I think that's good. I'm not sure the families of those who were being charged even though their family member had been dead for 10 years or Ms Flanagan, the blind pensioner, would consider themselves populist whingers.

Senator Cormann: I would say again, the last 10 years covers a period when Mr Shorten was the Assistant Treasurer and Minister for Financial Services and Superannuation, so all of the questions you are addressing to me should be addressed to him and to Mr Swan, who, as Treasurer, said that the last thing the system needed was yet another inquiry.

Senator KITCHING: Do you continue to believe that the royal commission would undermine confidence in the banking and finance system?

Senator Cormann: Again, I've addressed that point. What I would say again is that, into the future, as has been the case in the past, strong, profitable and stable banks are a key feature of a successful, prosperous economy, and it is manifestly in our national interest and its manifestly in our public interest that we continue to have strong, profitable, stable and competitive banks into the future—

Senator KITCHING: And well-regulated and law-abiding banks.

Senator Cormann: and that, of course, where there is wrongdoing, that needs to be addressed as efficiently and effectively as possible through the appropriate regulatory mechanisms. To the extent that there is opportunity for improvement in current regulatory settings, as I've already indicated on several occasions now, the government will consider all of the findings and recommendations that come out of the royal commission process. We'll make appropriate judgements at the appropriate time in relation to those findings and recommendations.

Senator KITCHING: So you don't believe it's the commission's conduct that has undermined confidence? Rather, it's the banking sector's?

Senator Cormann: Again, I've answered these questions several times now. I understand the political purpose for you to continue to ask questions in a different way in relation to precisely the same issue. I can go through all of the answers again if you want, but I think the government's view is well and truly on the record.

Senator WONG: Before the lunch break, I'll try and deal with issues in relation to Mr Lloyd. I'm sure people were aware of some of the questions. This relates to FOI 2018/15, a decision made by the Department of the Prime Minister and Cabinet. You might have been otherwise occupied yesterday, but there was a fair extent of questioning in relation to this decision, and in particular in relation to a ground of the decision—that is, a refusal to disclose on the basis that documents might reasonably be expected to prejudice the conduct of an investigation of a breach or possible breach of the law in a particular instance. I'd like to ask some questions about that. I would prefer, if I'm able, Minister, not to have to traverse all of the ground we traversed yesterday.

Senator Cormann: I've not traversed anything.

Senator WONG: I'm going to start on the basis that there is some knowledge of what has occurred.

Senator Cormann: Let me say—in an abundance of hopefulness—that I will be as cooperative and constructive—as I always am—as the great finance ministers past who have sat at this table.

Senator WONG: Why don't I give you the decision? Anyway, this is a freedom of information request that relates to all documents held by the secretary relating to allegations that the Public Service Commissioner, Mr Lloyd, 'acted corruptly, unlawfully and/or otherwise improperly'. The Department's refused to release two documents on the grounds that disclosure of the documents could be reasonably expected 'to prejudice the conduct of an investigation of a breach, or possible breach, of the law in a particular instance'. In the context of estimates, can I please have a copy of these two documents? Do I have an answer to that?

Ms Foster : I think for the same reasons that were given as the grounds for refusal in the FOI case, would be our response to that question.

Senator WONG: It's, I assume, a public interest immunity claim on the same basis as Mr Rush's decision.

Ms Foster : That's correct.

Senator WONG: I'm assisting you, here, Ms Foster. The claim should be referred to the minister. He should make that claim and should specify the grounds on which public interest would be harmed by the provision of those documents. Senator Cormann, can you deal with that over lunch?

Senator Cormann: What's that?

Senator WONG: You need to make the PII claim that Ms Foster's just made. Could you consider the grounds—of the public interest that would be harmed—over lunch and come back to us?

Senator Cormann: I will consider it over lunch.

Senator WONG: Thank you.

Senator PATRICK: I've noticed that, of the claims that were made, both of them are not aligned with public interest immunity claims.

Senator WONG: Exactly. I just would prefer to try and get—I'm happy to have that argument after lunch. Senator Patrick, you're correct. I think the minister should produce it in writing if possible. I would just prefer to proceed—a claim's been made. I wonder if we could deal with that subsequently and I can continue with other questions?

Senator Cormann: On this, I'm happy to be quite helpful. If you frame some questions in a different way you might get better answers.

Senator WONG: Sure, which is why I want to go on.

Senator Cormann: The FOI process, as you know, is independent from—

Senator WONG: Which is why I want—

Senator Cormann: If I may, I want to make a point. The FOI process is independent of the political level of government, I think, as you would appreciate, and they operate under the act and make relevant judgements independently. The advice that I have, for the basis of the public interest immunity claim, relates to privacy of the relevant people involved and not prejudicing an ongoing investigation. I am helping you now, before going to lunch. That is the basis on which we are making the claim, and it is broadly consistent with the reason for the claim that was made by the decision-maker in the context of the FOI decision.

CHAIR: Just to clarify—

Senator WONG: We've covered all of that ground.

CHAIR: Just one moment, Senator Wong. Just to clarify, Minister, you are making a public interest immunity claim about this question?

Senator Cormann: Yes.

CHAIR: Thank you.

Senator WONG: I think there is the expectation—I can't recall what the order says—that you'll provide that in writing, Minister.

Senator Cormann: Well—

Senator WONG: Can I make a request, please?

CHAIR: Yes.

Senator WONG: I would really like to deal with the claim after lunch. I would like to proceed with some other questions. I have given the minister the courtesy of the lunchbreak for him to consider advice and the relevant order. Can we deal with the claim after lunch and can I proceed with questions now? I will move off this document.

CHAIR: Yes, you may.

Senator Cormann: But I have confirmed the claim. There's not much more that I can help you with after lunch.

Senator WONG: The committee needs to deal with it. The fact that you make the claim isn't the end of the matter. The committee then needs to consider it. I just don't want to divert into that process; I'd like to continue with questions.

CHAIR: We can revisit the—

Senator WONG: Thank you.

Senator Cormann: I am not sure that I'm going to be in a position to write to the committee in relation to these matters over lunch. I am just flagging that.

Senator WONG: Can I ask—

CHAIR: Sorry, but just to clarify—

Senator WONG: Far out!

CHAIR: Senator Wong, I am trying to help here. Just for the purposes of your request that the public interest immunity claim be made in writing, can we take it that the minister has taken that question on notice.

Senator WONG: Fine. Can we—

Senator Cormann: But there are other things you can ask that we can help you with—

Senator WONG: Oh, my gosh!

CHAIR: Senator Wong—

Senator WONG: All right—forget it! I will come back to it after lunch. Don't worry. Let's move on to something else. I will throw to someone else. I have run out of time; we will come back to Mr Lloyd after lunch.

CHAIR: You have 10 minutes.

Senator WONG: No, we have run out of time. I have a lot of questions on this. I was trying to be helpful. We have now spent nearly spent 10 minutes on something I said that we could deal with after lunch. You and the minister have dealt with that. Throw to another senator and I will come back to this after lunch and we can spend longer on it.

Senator Cormann: We can go to lunch now.

Senator WONG: Fine. I'm happy to do that.

CHAIR: Are there other senators who have questions before we go to lunch?

Senator PATRICK: Yes. In relation to some of the national security legislation that is coming before the parliament and, in particular, one piece of legislation that directly relates to your office—the creation of ONI—can someone assist me on that. I would be grateful if you could describe PM&C's role within the broad national security arrangements across government as a consequence of the establishment of the Home Affairs portfolio and the anticipated establishment of ONI.

Mr McKinnon : We will obviously still have an overall coordinating role as a central agency. The Office of National Intelligence will also be a portfolio cousin within the broad Prime Minister and Cabinet portfolio. Separately and on any issue we will brief the Prime Minister as required and do whatever he asks us to do.

Senator PATRICK: Will you still carry out the traditional ONA role?

Mr McKinnon : ONA as an organisation is being significantly changed and will be subsumed by ONI. It is the core of ONI. If my memory serves me correctly, it has about 110 people, heading up towards 200, taking on additional roles above and beyond its traditional role as a source of analysis for the Prime Minister. It will also take on a much bigger role in coordinating at a broad strategic level the whole national intelligence community of 10 agencies, including itself, and also coordinating the development of capability through a joint capability fund and also through an integrated capability investment plan, which will bring together intelligence related capabilities from across that whole community. It also will have a role in the assessment process for all of the intelligence agencies. So ONA is still there but will become ONI once the legislation is ready. ONA is already taking on some of those roles to some extent. We are organising how it is going to be done.

Senator PATRICK: Is that part of the work you still are doing as part of the Independent Intelligence Review Taskforce? What is left remaining in that work?

Mr McKinnon : There are still some of the recommendations of the report to be finally considered and announced by government. The predominant focus of the work we are doing is the development of the legislation which will be the ONI bill.

Senator PATRICK: You are principally responsible for the drafting of that bill. I note that that's one of the few bills that hasn't made it to the parliament yet. Is that just a function of resources or is it to do with complexity?

Mr McKinnon : It's to do with complexity. We're not actually drafting the rules; the Office of Parliamentary Counsel's drafters do it. So, if you think about it as a cascading thing, you had independent reviewers, Michael L'Estrange and Stephen Merchant, who gave a range of, if you like, policy related prescriptions or recommendations to the government. Then if you cascade down one level, if the government decides to accept those or not, we have to determine how they can be made into policy recommendations that are amenable to being turned into legislation.

Senator PATRICK: Sorry: I should have said that you're effectively instructing the drafters.

Mr McKinnon : Exactly. We're working very closely with the drafters. And on the other side, we're working with the whole community to make sure that arrangements are sensible and workable within the way the community has to operate.

Senator PATRICK: And what role will ONI have in relation to assessment of domestic security issues—so, focusing on your assessment there—and how will they relate to the statutory responsibilities of ASIO?

Mr McKinnon : I'd like to take that one on notice.

Senator PATRICK: Okay.

Mr McKinnon : It may well be a matter that it's still in development. Obviously they'll talk about coordinated capability development and broad strategic guidance of intelligence. That's going to pick up ASIO and agencies within Home Affairs, as it is agencies within Defence—the defence department and the broader defence portfolio. But at this stage it may be simply that we don't have the exact detail, not leastwise because we haven't settled the legislation that will govern their activities.

Senator PATRICK: The independent intelligence review canvassed issues relating to parliamentary scrutiny of the intelligence community and specifically of the role of the PJCIS. What consideration, if any, was given to expanding the oversight role of the PJCIS? Were there any specific obstacles involved in enhancing PJCIS oversight, particularly in relation to operational matters, as distinct from the current limitations to just administrative and financial matters.

Mr McKinnon : That goes to matters that are still either under consideration or to be announced by the government, so I'd rather not comment. But I can say that when the Prime Minister announced the release of the public version of the independent intelligence review he made it very clear that he saw it as the basis for the reform of the intelligence community, and I have in earlier evidence to the committee reflected his positive appraisal, in the broad. We had to work through all the issues. As I said, Mr L'Estrange and Mr Merchant were not legal drafters and they had to go through normal government processes. I think that's probably as much as I would like to say about that.

Senator PATRICK: Has operational oversight been ruled out? You're saying that the report is just that: it's a report to be considered by government. Has operational oversight of the intelligence community by the PJCIS been ruled out?

Mr McKinnon : No, I'm not saying that at all—nor ruled in. I'm saying that I don't think it's appropriate for me to comment on it at this stage. I will say, though, that when the Prime Minister did the launch he did clearly articulate that he saw the enhancement of oversight and integrity bodies' ability to oversight as being a fundamental core of all those reforms, and that was reflected in some of the things that have already been made public, such as a significant boost to the resources of the Inspector-General of Intelligence and Security to take their resources, I think from in the order of about 17 people to about 50. As much as I'd like to say anything about that, I see that it's very much within his own positive aspirations for the community that the intelligence and the oversight and integrity measures be strengthened.

Senator PATRICK: Okay. I presume that somewhere in your department you would have at least considered that oversight. I'm just trying to obtain from somewhere some consideration by government as to the pros and cons of operational oversight by the PJCIS, without regard to any decision that might flow from those pros and cons. Is it possible to table on notice to the committee perhaps a summary of the pros and cons that might have been considered?

Senator Cormann: We'll take that on notice.

Senator PATRICK: I appreciate that. Have I still got some more time, Chair?

CHAIR: One minute.

Senator PATRICK: How many meetings have there been of the National Security Committee of cabinet over the past year?

Senator Cormann: We would have to take that on notice.

Senator PATRICK: I presume all of those were held in Canberra?

Senator Cormann: It depends, not necessarily. Most would be held in Canberra, but from time to time cabinet and cabinet subcommittees meet in other parts of Australia. But mostly they would be held in Canberra.

Senator PATRICK: Just as a last question, as my time is up: does the Cabinet Secretary attend all NSC meetings? If not, who would substitute for the Cabinet Secretary?

Senator Cormann: The Cabinet Secretary attends all of the National Security Committee's meetings.

Senator PATRICK: Right, unless there is some illness or something like that.

Senator Cormann: Sure. If somebody is away ill, then they don't attend the relevant meetings. That's true.

Senator McALLISTER: Mr McKinnon, I do hope to talk to you further this afternoon. I think in your evidence to Senator Patrick, you said that the overarching view from the government is oversight ought to be strengthened; is that correct?

Mr McKinnon : Yes, oversight and integrity measures. That has been reflected in the budget allocation they have made—for example, for the office of the Inspector-General of Intelligence and Security.

CHAIR: The committee will now suspend for lunch and return at 1:30 pm.

Proceedings suspended from 12 : 31 to 13 : 32

CHAIR: The committee will now resume. Minister, I think you were going to investigate the public interest immunity claim over lunch. Is there anything you want to report back to the committee?

Senator Cormann: I have a letter to you, Chair, in relation to that matter, and I table it.

CHAIR: Thank you very much.

Senator WONG: I appreciate that, Minister. To expedite things, can I return, as I indicated I would, to the issue of Mr Lloyd. In the FOI determination that I referenced earlier, one of the grounds of refusal was:

… that disclosure of the documents could reasonably be expected to prejudice the conduct of an investigation of a breach, or possible breach, of the law in a particular instance.

Leaving aside the public interest immunity claim in relation to the provision of the documents, can I separately ask the minister: can you cast any light as to which investigation was being referred to by the decision-maker?

Senator Cormann: I think Ms Foster is probably best placed to shed light on that question.

Ms Foster : The document that that ground referred to contained an allegation of a breach. The decision-maker had a reasonable expectation that the allegation could lead to an inquiry but would not necessarily lead to an inquiry, and so, on those grounds, he exempted the document.

Senator WONG: Does the allegation of the breach relate to conduct by the commissioner?

Ms Foster : Yes, it does.

Senator WONG: Are you able to tell me which laws are alleged to have been broken?

Ms Foster : Senator, we would not be comfortable providing any more details around the specific allegations, for the same reasons that we have been reluctant to release the document.

Senator WONG: Okay. Can I go to timing and process, given your answer as to content? Is there an investigation underway?

Ms Foster : Not to my knowledge, but I would have to caveat that by saying that PM&C's role was completed by referring the allegation and that we have no ongoing role in any inquiry.

Senator WONG: Sorry? Your role was completed by—

Ms Foster : Referring the allegation.

Senator WONG: So the allegation came to PM&C?

Ms Foster : To Dr Parkinson, yes.

Senator WONG: When did that come to Dr Parkinson?

Ms Foster : On 13 December 2017.

Senator WONG: 2017—like just gone?

Ms Foster : Just gone.

Senator WONG: Are you able to tell me by whom the allegation was made?

Ms Foster : No. Again, I think that would be an unreasonable—

Senator WONG: I'm not pressing. I might later, but I'm not now. And to whom did Dr Parkinson refer the allegation?

Ms Foster : To the Merit Protection Commissioner.

Senator WONG: And when was that referral undertaken? How long between the 13th and the referral?

Ms Foster : It was 11 January 2018.

Senator WONG: To your knowledge, has there been any connection between the Merit Protection Commissioner and Dr Parkinson since that time?

Ms Foster : No, I don't believe so.

Senator WONG: I'm a little confused, because we asked some questions, some quite detailed questions actually, of the President. Senator McAllister is much more across the act in this area than I am, but as I understand it the—how shall I put it?—individual to whom the Merit Protection Commissioner is relevantly responsible in respect of these investigations into the APSC wasn't aware of any such investigation. In fact, the evidence to this committee was that the President's office had not been advised of any investigation.

Senator Cormann: It's consistent with what Ms Foster said. Ms Foster said that she was not aware of whether there was an investigation. All she said was that an allegation had been referred, and the question as to whether or not an investigation is taking place is a matter for the Merit Protection Commissioner.

Senator WONG: I'll defer to Senator McAllister soon, who might ask some questions about the process in a bit more detail, but how do we find out whether an investigation has occurred or is underway? The President doesn't know. You don't know. Who does?

Senator Cormann: Presumably the Merit Protection Commissioner would know.

Senator WONG: Can we get them here?

Senator Cormann: As I understand it they have already appeared.

Senator WONG: And the evidence that was given to the estimates committee by the President, who is the responsible in loco minister in place of the minister, was that they didn't know.

Senator Cormann: I guess the president that you are referring to is the subject of the allegation—

Senator WONG: No, sorry; the President of the Senate.

Senator Cormann: Oh, sorry. Okay.

Senator WONG: We'll come back to that. Let me just finish these questions. So the allegation comes into Dr Parkinson. There is an allegation of a breach of the law—correct?

Ms Foster : Yes.

Senator WONG: Dr Parkinson, appropriately, refers it to the Merit Protection Commission on 11 January 2018.

Ms Foster : Yes.

Senator WONG: The allegation relates to conduct by Mr John Lloyd.

Ms Foster : Yes.

Senator WONG: As yet, we do not know whether the investigation into this alleged breach of the law has been commenced.

Ms Foster : That's correct.

Senator WONG: I'll just flag with the chair that we'll be wanting to call the Merit Protection Commissioner, and we'll possibly also ask the President to provide some information. It's not consistent, the evidence today and the evidence yesterday.

CHAIR: Thank you. Obviously the committee might have to have a private meeting to discuss that.

Senator WONG: I'm relaxed about that. I assume you can't tell me when it was finished or when it's likely to finish.

Ms Foster : Or indeed if it has started or if it will start, because obviously not every allegation leads to an inquiry under the act.IfI might help: section 50(1)(b) of the Public Service Act—

Senator WONG: Yes. I read that to them yesterday.

Ms Foster : actually says that the Merit Protection Commissioner can:

… inquire into alleged breaches of the Code of Conduct by the Commissioner and report to the Presiding Officers on the results of such enquiries …

Senator WONG: Yes. That was the section I actually referred the President to, and he inquired of his office and was told they had no knowledge of any investigation.

Ms Foster : The requirement on the Merit Protection Commissioner is to advise of the results of any inquiry.

Senator WONG: So what you're trying to helpfully flag to me is—who is the Merit Protection Commissioner? Isn't it an acting Merit Protection Commissioner—

Ms Foster : It is at the moment.

Senator WONG: who is a person who still works with the APSC?

Ms Foster : It's a separate statutory office.

Senator WONG: I know, but the point I'm making is: is the position currently filled by somebody whose substantive position is at the APSC?

Ms Foster : The person who is acting in the position normally is part of the office of the Merit Protection Commissioner. Those staff are provided to the Merit Protection Commissioner by the APSC.

Senator WONG: Is there any potential conflict or—I'm trying to think of a lower, qualitatively perhaps lesser word—concern as a consequence of the entity that is there to safeguard the integrity of the Public Service Commissioner being staffed by people who, ultimately, are subordinate to the Public Service Commissioner?

Ms Foster : It's the scheme that was envisaged by the Public Service Act, and I think the protection is that the Merit Protection Commissioner is an independent statutory officer who reports directly to the minister.

Senator WONG: Except this person is only acting.

Ms Foster : That's correct, and that's while the position is being filled substantively.

Senator WONG: And the minister in this case is the Minister Assisting the Prime Minister for the Public Service?

Ms Foster : That's correct.

Senator WONG: So it would be Minister O'Dwyer.

Ms Foster : That's correct.

Senator WONG: Can I put on notice a question to Ms O'Dwyer: whether or not she has received any report in relation to Mr Lloyd from their Merit Protection Commissioner?

Ms Foster : Of course that can be put on notice. I'd just refer back to section 50 of the Public Service Act, which says that a report of the results of any inquiry goes to the Presiding Officers.

Senator WONG: Well, I've already asked that, and he didn't know anything about it. The requirement of public servants, in the Public Service Act and the APS code, is to be apolitical—correct?

Ms Foster : Yes. There is a set of values, the fifth one of which is 'Impartial', and it requires that the APS:

… is apolitical and provides the Government with advice that is frank, honest, timely and based on the best available evidence.

Senator WONG: Does the government believe that the emails that Mr Lloyd has conceded writing on his work email meet the test of being apolitical?

Ms Foster : I can't speak on behalf of the government.

Senator Cormann: I'm not actually aware of the emails. I obviously followed what happened yesterday. I'm not—

Senator WONG: Perhaps you could take that on notice.

Senator Cormann: Sure, happy to.

Senator WONG: What about this: yesterday, Minister, I asked similar questions of Mr Lloyd—whether or not there was an investigation, whether there'd been any allegations of a breach—a range of those sorts of questions. He refused to answer—do you want me to start again?

Senator Cormann: No, I was listening.

Senator WONG: It's okay. I asked a range of questions yesterday of Mr Lloyd over quite a number of hours about whether or not there'd been an alleged breach of any act, whether or not it related to his conduct, whether or not there was an investigation, and he refused to comment. So what I do want to ask you, as the minister at the table: do you think it's acceptable for the Public Service Commissioner to refuse in that way to give any substantive answers to questions from senators?

Senator Cormann: I've just been advised that the Public Service Commissioner is about to come back to the committee with a letter to provide further information. I would just point out that it is an independent statutory position. In the end, these are matters for him to explain and to provide appropriate responses to the questions that are asked. In terms of your question just now about refusing to provide answers about an investigation, the evidence that I heard Ms Foster give is that she and the Department weren't aware as to whether there was an investigation on foot. So, from that point of view—I'm surmising here—I suspect that Mr Lloyd might be in the same position. But I'm advised that he will be providing some further information to the committee.

Senator WONG: Look, I understand that answer; I'm actually asking the Prime Minister's opinion: does he think it's acceptable for a statutory officer who has the sorts of obligations upon him that Mr Lloyd does to turn up to an estimates committee and be asked about an investigation into his behaviour and to simply say 'no comment'?

Senator Cormann: All of us appearing in front of this committee should at all times try to answer questions to the best of our ability. I suspect though, in the circumstances, he might be somewhat limited. I'm speculating because I don't know all the facts and I think it would be prudent to await the further advice that I understand he's providing to the committee soon. But it's probably difficult for him to provide answers in relation to an inquiry when he doesn't know whether there is one in the first place and which—

Senator WONG: That wasn't his evidence.

Senator Cormann: I understand that you asked questions for an extended period, as you've indicated. And he's had the opportunity to review the questions that were asked, and I'm advised that he will provide some further information to the committee.

Senator WONG: Senator Cormann, I think Mr Lloyd has openly conceded writing emails from his work account to Mr Roskam from the IPA, which included reference, I think in a reasonably—I can't remember the wording, actually—negative way of me taking a swipe and then subsequently—

Senator Cormann: Sorry, who taking a swipe?

Senator WONG: me—and subsequently then writing a further email to Mr Roskam about Labor senators asking questions at Senate estimates about his earlier communications with the IPA, which he conceded he did because he was annoyed with us, or annoyed as a result of—I'm interested in the Prime Minister's opinion as to whether this is conduct befitting a statutory officer in his position.

Senator Cormann: I will take that on notice.

Senator WONG: Okay. I have a couple of questions of Mr Rush, if I may, the decision-maker, in relation to the detail of the decision. I can ask you, Ms Foster, if you'd prefer, but I'm going to ask him—

Ms Foster : That's fine.

Senator WONG: I promise not to be too hard—well, to try. In the decision, you cite comments received in relation to a courtesy consultation with an agency. I can't recall where, but you probably remember where.

Mr Rush : The top of page 3, Senator.

Senator WONG: You are excellent, thank you. I am asking you which agency.

Mr Rush : We made courtesy consultations with the Merit Protection Commissioner. That's the agency referred to.

Senator WONG: Is there also reference in the document on the decision about consultations from the department's communications branch?

Mr Rush : That's correct.

Senator WONG: Is that PM&C?

Mr Rush : Yes.

Senator WONG: Can you tell me why you would consult with a communications branch?

Ms Foster : It's a fairly standard practice because we sometimes get media enquiries and FOI enquiries on similar subject matter. It's just important to make sure that we don't have two different parts of the department at cross-purposes.

Senator WONG: Mr Rush, is that general explanation applicable in this situation?

Mr Rush : Yes. Further to that, the four documents that were identified included two media summaries and the enquiries of the communications branch included whether there were any issues associated with the proposed release of those media summaries to the FOI applicant.

Ms Foster : In fact, also as part of the process, we consulted with the company that provides those summaries as a third party.

Senator McALLISTER: Did you consult Mr Lloyd in relation to the release of the documents?

Mr Rush : No.

Senator WONG: When was he aware of the release of the documents, to your knowledge?

Mr Rush : I don't know.

Senator WONG: Has Mr Lloyd communicated with an officer of PM&C in relation to the FOI decision since the decision became public?

Mr Rush : Not with me or anybody who I'm aware of.

Ms Foster : No. Mr Lloyd and I—or it might have been the deputy commissioner and I; I can't remember which—had some conversation when we both had media queries last week.

Senator WONG: Finally, there is also reference in the decision to comments from a third party.

Mr Rush : And the third party, as Ms Foster explained, was the company that puts together our media summaries.

Senator WONG: Was the any consultation with Mr Lloyd in relation to your decision?

Mr Rush : No.

Senator WONG: Thank you, Mr Rush.

Senator McALLISTER: Just to assist the committee, Ms Foster, could you just explain to us the governance arrangements around Merit Protection Commissioner? As mentioned, we did seek to explore this with the President of the Senate yesterday.

Senator Cormann: Just up-front, I will say the arrangements that Mr Rush will go through are consistent with what the arrangements were under the previous government. When you say 'under this government', it's under any government.

Senator McALLISTER: Of course. I'm simply trying to establish what they are, because it's a part of the act that is little used.

Ms Foster : I'm not trying to be unhelpful, but the arrangements are really a matter for the APSC. It is they who put the arrangements in place.

Senator McALLISTER: Sorry, I will be more specific. The Merit Protection Commissioner is a statutory appointment.

Ms Foster : That's correct.

Senator McALLISTER: They have a range of functions, one of which is to inquire into any allegations of breaches of the code of conduct by the Australian Public Service Commissioner.

Ms Foster : That's correct.

Senator McALLISTER: That's a reasonably tightly defined investigative role. It is exclusively in relation to breaches of the code of conduct.

Ms Foster : That's correct.

Senator McALLISTER: And they sit within the portfolio of Prime Minister and Cabinet—is that correct?

Ms Foster : Both statutory officers sit within the PM's portfolio.

Senator McALLISTER: The relevant minister, Minister O'Dwyer, is the minister assisting on the public service?

Ms Foster : That's correct.

Senator McALLISTER: We talked a little about the process by which—I sought to establish with the President of the Senate yesterday how a matter might be referred. But, in this instance, a complaint was received by a senior member of the public service, Mr Parkinson. He referred that complaint to the Merit Protection Commissioner. What's your understanding of the commissioner's obligations, having received that complaint?

Ms Foster : The Merit Protection Commissioner?

Senator McALLISTER: Yes.

Ms Foster : Again, I'm not trying to be unhelpful, but that's really a question for the Merit Protection Commissioner. Within PM&C, we don't establish or monitor the arrangements by which the Merit Protection Commissioner operates.

Senator McALLISTER: As far as you're aware, is there any other legislation that's relevant to the matter at hand? We've talked about section 51B. Is there any other clause or piece of legislation that guides how the Merit Protection Commissioner might perform their function?

Ms Foster : To my knowledge, any legislative arrangements that affect the Merit Protection Commissioner are contained within the Public Service Act or the related guidelines directions. I think there are also regulations and directions that hang off the Public Service Act except, of course, all of the general legislation that relates to any employing authority, so work health and safety, et cetera. But, in relation to an inquiry function, my understanding is that it should be contained within the Public Service Act.

Senator McALLISTER: Are there any pieces of subordinate legislation that are relevant to this inquiry function in 51B?

Ms Foster : I don't believe so, but I'll just ask my folks to check quickly for me and let me know.

Senator McALLISTER: That would be great. As you observe, the legislation is very clear about the obligation to report to the presiding officers but it's rather thin on other detail, and I'm trying to understand how the Merit Protection Commissioner might go about his or her work. I don't have any further questions from me. Thanks very much, Ms Foster.

CHAIR: Senator Wong?

Senator WONG: No, I'm done on this for the moment. We have an issue of the PII claims. I just wonder if subsequently, maybe over the break, we could consider that. I don't want to delay things too much right now, but I do think, in light of that evidence, I'd like to explore the committee agreeing to call the Merit Protection Commissioner and also give the President the opportunity to reappear to clarify his evidence. There may be an explanation, but it doesn't seem consistent with what the committee was told yesterday. But I'm happy for us to perhaps have a discussion in the break as a committee, rather than—

CHAIR: Yes, we'll discuss that in the break. I have a section of questions now, which I'll do, and then I'll see if other senators are seeking the call. Is Mr Williamson here, conducting the APS review?

Ms Foster : Yes, he is.

CHAIR: Welcome. Mr Williamson, I'm interested in asking about the APS review. How did the review come into being?

Mr D Williamson : The review was a recommendation of the department to the Prime Minister, particularly Dr Parkinson, the secretary, supported and has talked about it for some time. The other genesis of the review, if you like, was one of the recommendations in the report to government from late last year from the Innovations and Science Australia board, which is a road map to 2030. I think recommendation 38 was that a comprehensive review of the Public Service was in order.

CHAIR: When was the last APS review?

Mr D Williamson : The last review that's most analogous to what the government has announced a couple of weeks ago was probably a royal commission in the 1970s, known as the Coombs royal commission. I guess that was last time there was a first principles examination of the APS. In many respects that locked in the architecture that we are operating under today. Since then there have been a number of other reviews and inquiries over the years, but they have tended to be a little more incremental than that royal commission.

CHAIR: Take me through who the panel members are.

Mr D Williamson : The chair is David Thodey and the other five panel members are Belinda Hutchinson, Alison Watkins, Glyn Davis, Maile Carnegie and Gordon de Brouwer.

CHAIR: What were the criteria in selecting those panel members?

Mr D Williamson : The overall criteria were to get a mix of experience, skills and background, covering both public and private sector, academia, some domestic and international experience—a combination of skills that collectively would position the panel to have that comprehensive look at the public service.

CHAIR: What is the purpose of the review? What does it hope to achieve?

Mr D Williamson : The overall objective set out in the terms of reference is to ensure that the public service is fit for purpose for the coming decades. It certainly has a long-term perspective. It's not so much about incremental or immediate changes but about looking out to 2030 and beyond, in view of what's happening globally, technologically, geopolitically and so on, assessing where the APS stands in relation to that and assessing any necessary changes.

CHAIR: What kind of impact or potential impact do you expect it to have on service delivery for citizens?

Mr D Williamson : I wouldn't want to pre-empt where the panel goes, but certainly service delivery is highlighted in the terms of reference as an area of interest that the government has asked the panel to look at. Again, it is that kind of comprehensive examination of what's happening globally—current trends, technological developments—that you would expect to play into an analysis of where service delivery might be heading over the next decade or two.

CHAIR: You mentioned technology. What role in the review will digital technology play and how that affects government service delivery?

Mr D Williamson : That's one of the five or six key issues that are highlighted in terms of reference. Obviously the government has both a digital and data agenda, and a lot has been happening over recent years. One of the issues the panel has been asked to look at is to take stock of where all that's up to and what that might mean extrapolated across the APS. The other angle is looking not just at what's happening domestically, but at comparable countries and public services globally, to see how they grapple with the changes around data and digital transformation.

CHAIR: Obviously with government services the ultimate customer, for want of a better term, is citizens. What opportunity will they have to participate in the review? Can they make submissions? Will there be hearings? What is the process?

Mr D Williamson : We've had one meeting of the panel, which was a high-level discussion on the posture the panel wants to adopt for the reviews. I can reflect that with the caveat that they're bedding down exactly how they want go about consultation. Certainly there is an intention to consult widely both within the APS and more broadly including with citizens, academia and with civil society more broadly. The panel will go out with an open call for submissions in the not too distant future. Beyond that, they're looking at a range of engagement and consultation tools. So it's not just one hit, but potentially workshops, face-to-face meetings, online engagement platforms—we're looking at some of those as well. So there are a range of tools to get those views to the panel's attention.

CHAIR: So obviously they're hoping to access the civil society interested players and their expertise, and academia, I assume, the kind of people who normally make submissions to enquiries; but also to make sure that ordinary citizens, for want of a better term, who interact with government on a day-to-day basis will have their voices heard in some way.

Mr D Williamson : Absolutely. That is one of the things that the panel has discussed already, and they have asked us in the department to look at the best ways to make those connections. The terms of reference also asked them to look at the citizen focus side of the public service's business.

CHAIR: Refresh my memory on the timelines.

Mr D Williamson : It was announced on 4 May, and the government has asked the panel to report in the first half of 2019. There is not a specific date, but that is the broad timeframe, I guess to allow the panel some discretion to get on and do its job and report within that parameter when they are ready.

CHAIR: Will there be updates along the way or are we just expecting one final report?

Mr D Williamson : The sense I have got from the initial discussions with the panel is that they want this to be quite an iterative process. There will be an initial broad call for submissions, but I think they're quite interested in testing ideas, reflecting what they've heard through consultation back out to the stakeholder groups that we mentioned earlier, so that the APS and the broader community are brought along during the process rather than just having something at the end.

CHAIR: So we will be able to get updates from you at future rounds of estimates about how that process is going—how many submissions have been received and that kind of stuff.

Mr D Williamson : Absolutely.

CHAIR: Thank you, Mr Williamson. Does anyone else have questions in this area?

Senator McALLISTER: Thanks very much for your explanations so far, Mr Williamson. You mentioned some of the tools that the panel may use to conduct the enquiry. Are there any expectations from the government's perspective in terms of internal milestones for this process?

Mr D Williamson : No, not specifically. The government has settled the terms of reference, which as you can see are quite broad. Other than that landing point of a report in the first half of next year, they've asked the chair and the panel to map out within the terms of reference the best way to go about it. The terms of reference specify consultation and particular issues to be examined, but beyond that the panel are working out how they want to proceed. There will be regular updates, both in the estimates context and also in government, as to how the review is progressing, but not specifically milestone by milestone.

Senator McALLISTER: Is there an expectation that once the panel has formed a view about how it wishes to proceed, which I imagine will include discussion papers, face-to-face, a range of the tools as you have already mentioned—is there an expectation that there will be some published timeline or indication about the points at which the public may engage with this process?

Mr D Williamson : Yes, absolutely.

Senator McALLISTER: At risk of getting caught up in a circular argument, do we have a timetable for establishing a timeline of this kind?

Mr D Williamson : No, not yet. We have had one initial meeting of the panel two weeks ago, and the next meeting is in another 10 days. I would expect of the back of that that the panel will bed down more specifically what it is doing and then will make various announcements. We have an initial website up, but it does not have a lot of detail on it other than the terms of reference and biographies and so on. We will use that as a tool and also look to communicate more broadly throughout the review.

Senator McALLISTER: What do you anticipate is the relationship between the panel and the secretary of PM&C?

Mr D Williamson : A close relationship. The terms of reference specify that the panel will report to the Prime Minister through the secretary of PM&C at the end of the process. As I said earlier, Dr Parkinson is extremely interested and involved in issues around APS reform and he will have an ongoing interaction with the panel throughout the process.

Senator McALLISTER: So a process of dialogue and conversation with the panel members. Is any other role anticipated for PM&C more generally through the process?

Mr D Williamson : No, just that we're housing the secretariat that is supporting the review. That is the supporting role you would expect. But nothing more broadly.

Senator McALLISTER: When you say a supporting role, do you mean policy support or support with logistics, accommodation et cetera?

Mr D Williamson : Both. The secretariat that's supporting the review panel is based in PM&C, and our job is to support the panel in every way. There is logistics and administration but also, as you mentioned, research and analysis, providing papers et cetera, organising the engagement, consultation, analysing submissions, those sorts of jobs.

Senator McALLISTER: Are you part of that secretariat?

Mr D Williamson : Yes, I'm heading it up.

Senator McALLISTER: So you're leading the process?

Mr D Williamson : Yes, I am.

Senator McALLISTER: What consultation was undertaken in developing the terms of reference?

Mr D Williamson : There was consultation within government. The Prime Minister's department developed the draft terms of reference for the Prime Minister's consideration. There was consultation with other departmental secretaries. There were discussions with the Prime Minister's office. I think that's probably all, but I guess some of the key—the Public Service Commission and the Department of Finance have been quite central to APS issues. I think they were involved as well.

Senator McALLISTER: Was there any consultation with external stakeholders?

Mr D Williamson : Not that I'm aware of, other than the point that the genesis of the review came out of a report to government from Innovation and Science Australia. They did their own very comprehensive consultation that went outside government. So that recommendation, as I understand it, reflected the sentiments that they were hearing from a range of stakeholders.

Senator McALLISTER: Was the CPSU consulted?

Mr D Williamson : The CPSU was advised that the review was going to be announced a few days before the announcement.

Mr D Williamson : But there was no direct staff input in terms of defining the terms of reference? This was at secretary level, essentially?

Mr D Williamson : The policy area in Prime Minister and Cabinet responsible for APS issues, as you would expect, was involved in drafting and supporting Dr Parkinson in putting forward those recommendations to the Prime Minister.

Senator McALLISTER: What was the process by which the panel was selected?

Mr D Williamson : The department prepared a short list of potential candidates. That was considered within PM&C and then discussed with the Prime Minister and his office before the final complement was settled.

Senator McALLISTER: So a short list was prepared and then discussed with the Prime Minister. Was it the Prime Minister who made the ultimate decision or provided some feedback?

Mr D Williamson : Yes, the Prime Minister has announced the review, so he had signed off on the panel. That was in close consultation with Dr Parkinson in particular.

Senator McALLISTER: Were there any names added during that part of the process that were not originally on the list provided by Prime Minister and Cabinet?

Mr D Williamson : The entire process was iterative. There were names in the mix progressively throughout.

Senator McALLISTER: On what basis are the panel serving? Have you engaged them as consultants or what?

Mr D Williamson : Yes. We are in the process of finalising contracts at the moment. Administratively they will be consultants to PM&C, that's right.

Senator McALLISTER: Are you able to provide details of the remuneration arrangements of the panel?

Mr D Williamson : I can. We're settling the contracts now, so can I take that on notice. Once we have that locked in I am happy to provide it.

Senator McALLISTER: You mentioned of the role of the secretariat in undertaking policy work and support for the panel. Have you engaged any private sector support at this point?

Mr D Williamson : No, not as yet.

Senator McALLISTER: Is it the intention to do so?

Mr D Williamson : The option is there. It comes back to decisions the panel will take on how it wants to proceed with the review. That is open to the panel.

Senator McALLISTER: My understanding from the budget papers is that $9.8 million has been allocated for this task. Is that correct?

Mr D Williamson : Yes, that's right.

Senator McALLISTER: The papers indicate that this will come from within the existing resources of PM&C.

Mr D Williamson : That's correct.

Senator McALLISTER: What does that $9.8 million represent? Does it represent the staff costs, for example?

Mr D Williamson : It is largely staff costs, but it's also potentially money set aside to commission work for the research; costs of various engagement mechanisms that we talked about before; the panel's remuneration. It's those sorts of things.

Senator McALLISTER: Is an internal budget being developed for the allocation of that $9.8 million?

Mr D Williamson : Yes, a high-level budget. I guess it was prepared with the caveat that the panel itself will drive a lot of the specific decisions around the spend; but, yes, there was a budget that produced that number.

Senator McALLISTER: Is it possible for that to be provided?

Mr D Williamson : Yes. I don't have it with me, but I am happy to provide it to you.

Senator McALLISTER: If you could do that on notice; thank you. In terms of identifying $9.8 million of staff resources and cash within the PM&C budget, what will you need to stop doing to find $9.8 million to undertake this review?

Mr D Williamson : That might be a question for our CFO. They are in a better place to answer.

Ms Tressler : We had some surplus funds left over from the ASEAN Summit, and that has been repurposed for the APS review.

Senator McALLISTER: Does that mean the entire cost?

Ms Tressler : It does.

Senator McALLISTER: The entire $9.8 million?

Ms Tressler : Yes.

Senator McALLISTER: I understand the Secretaries Board wrote an open letter to the Public Service about the review.

Mr D Williamson : That's right.

Senator McALLISTER: Why did they do that?

Mr D Williamson : That came out of a discussion at the Secretaries Board. I think it reflected a desire to be clear right from the outset that the leaders of the Public Service are behind the review, are supportive of it and are wanting to encourage all staff across the APS to embrace the review and participate when the opportunities arise.

Senator McALLISTER: Is there a sense that public servants are worried about the review?

Mr D Williamson : Not that I have heard; no.

Senator McALLISTER: Should they be worried?

Mr D Williamson : I don't think so, Senator. No.

Ms Foster : I think this is a really exciting chance for all of us to contribute to what our future organisation will look like, and for that reason the panel will make as many opportunities available as possible for staff to contribute to that outcome.

Senator McALLISTER: Occasionally, I receive feedback from staff that they feel as though contributing to discussions about the future of their workplaces is unwelcome under the current government. Do you think they can feel confident that they can participate in this review, without fear of any kind of retribution from management?

Mr D Williamson : Yes, I do, Senator. Again, the letter that you referred to has a very specific encouragement for people to participate, and it is signed by all of the portfolio secretaries. I know that the strong view of the panel, particularly the chair, is that they want to get out and talk to people and get those views from across the APS.

Senator McALLISTER: Thank you. That is all on that issue.

Ms Foster : Senator McAllister, you asked before about external consultation. When Dr Parkinson was formulating his proposal for a review, he spoke very broadly with people inside and outside the Public Service about what the APS needed to do to position itself, as Mr Williamson said, for the future.

Senator McALLISTER: Thanks. I was hoping to speak again with Dr Gruen.

Senator WONG: Because we love Dr Gruen so much! I've ruined his reputation. Dr Gruen, Ms Foster is actually nodding to my comment that I have ruined your reputation. I'm just dobbing on your colleague here.

Senator McALLISTER: Dr Gruen, I wanted to ask you about the role that your team played in the process of bringing together the personal income tax package, just from a process perspective.

Dr Gruen : We played the usual role that PM&C plays, which is to work closely with the Treasury to provide advice to the government.

Senator Cormann: We captured this this morning. As Dr Gruen indicated to the committee this morning: on matters that go before cabinet or the deliberative processes of cabinet subcommittees like the Expenditure Review Committee, PM&C provides advice to the Prime Minister on those matters before cabinet and cabinet subcommittees as required and as appropriate.

Senator McALLISTER: Dr Gruen, you said you worked closely with the Treasury. What was the form of that collaboration? Was there a working group or some sort of task force?

Dr Gruen : There were certainly discussions. We have a close working relationship with the Treasury, so there were discussions. There was no formal task force.

Senator Cormann: This is essentially business as usual. You've got the cabinet and various cabinet subcommittees, and the Prime Minister provides policy authority to cabinet ministers to bring forward certain proposals. The Prime Minister's department would be providing the Prime Minister with advice in that context, I would have thought. Proposals come forward and, as proposals come forward and options are considered, the Prime Minister's department provides advice to the Prime Minister in the usual way, consistent with what we went through this morning.

Senator McALLISTER: Dr Gruen, you spoke about a series of discussions; not a formal task force or working group, but a collaborative process. Where did that commence, approximately?

Dr Gruen : I'd have to take that on notice, but several months before the budget.

Senator Cormann: Which is, again, entirely consistent with the usual budget processes.

Senator McALLISTER: Were you personally involved in that, Dr Gruen?

Dr Gruen : Yes.

Senator McALLISTER: And other members of your team?

Dr Gruen : Yes.

Senator McALLISTER: Many, or just you and one other?

Dr Gruen : We were involved because we have a branch within the economic group in Prime Minister and Cabinet who work on tax and financial markets. So they were involved.

Senator McALLISTER: That's the Taxation, Financial Sector and Employment Branch?

Dr Gruen : That's it.

Senator McALLISTER: So it's Mr Wong?

Dr Gruen : It is currently Mr Wong.

Senator WONG: No relation!

Dr Gruen : Not as far as I'm aware.

Senator WONG: No, I'm just letting you know!

Senator McALLISTER: I hadn't noticed the financial sector element previously, on the old chart. What's their area of expertise as a group?

Dr Gruen : I think it describes it in the title. They're largely economists. Often the people who work in that group would have had some experience in the Treasury, but not always.

Senator McALLISTER: What's the financial sector angle?

Dr Gruen : It's a small team, because PM&C has to be able to provide advice to the Prime Minister right across the range of things that the government is interested in. We have small teams that cover quite a broad range of topics, and this small team is responsible, as it says, for tax, financial services and employment. A lot of what we do is making sure we have good relationships with line departments; in this case, the Treasury. A lot of what we do is working with them in providing advice to the government.

Senator McALLISTER: Did you meet on many occasions in the months before the budget?

Dr Gruen : Do you mean—

Senator McALLISTER: Did members of your team meet on many occasions with members of the Treasury on the Personal Income Tax Plan in those months leading up to the budget?

Dr Gruen : There are regular meetings between people at officials level, partly to keep the relationship in a positive light. There would be frequent meetings at officer level. They would be engaged in whatever topics are current.

Senator McALLISTER: So in the months leading up to the budget, some of the initiatives that were to be included in the budget would have been on the agenda for those regular and frequent meetings?

Dr Gruen : Yes.

Senator McALLISTER: You don't have any modelling capacity in that group, I would imagine?

Dr Gruen : Not any sophisticated modelling capacity. We have people who are quantitatively literate and capable of doing simple modelling, but we would rely on the Treasury for anything like that.

Senator Cormann: Which is of course the appropriate agency for this. PM&C has got enough expertise to be able to provide high-quality advice in relation to the relevant work that is appropriately done in the Treasury. You wouldn't expect that the government would double up on the work that is done in the Treasury, to the same extent, at the level of PM&C. PM&C takes a helicopter view across the whole of the government and needs to be able to provide quality advice in relation to all relevant public policy matters, drawing on resources from across government as appropriate.

Senator McALLISTER: So Dr Gruen has informed consumers? He has people who can at least recognise the modelling that they're looking at and understand it when it's presented to them?

Dr Gruen : Yes.

Senator McALLISTER: Excellent; that sounds just about right. Did you see the modelling work that was done by the Treasury on the personal income tax package?

Dr Gruen : I think we were involved in the work that was done to develop the income tax package, yes.

Senator McALLISTER: Did that involve providing comment not just on the outcomes but the methodology that you might use in bringing together accurate models of how the tax package might work?

Dr Gruen : In principle, yes. But that detailed expertise resides in the Treasury and we have faith in that. I don't think there were significant methodological discussions.

Senator McALLISTER: Was there any work done by the Treasury that you saw to determine the cost of each of the three parts of the package?

Senator Cormann: All budget measures that go before the Expenditure Review Committee or before the cabinet, by definition, have been costed. The answer to that question is, self-evidently, of course. Everything that goes to the cabinet and the Expenditure Review Committee would go past the relevant area of the Prime Minister's department so that the Prime Minister's department can provide advice to the Prime Minister. No budget measure would go forward for a final decision without an appropriate costing. So the answer to that question is, self-evidently, yes.

Dr Gruen : I have been asked questions on similar things in the past and my answer is always: to the extent that I see these things, it's in the context of the budget or subcommittees of the budget, and, therefore, I'm not in a position to talk about them. But, as the minister says, it is standard procedure for budget items that come before the Expenditure Review Committee to have a costing associated with them—and yes, I do see them as they happen.

Senator McALLISTER: Did the costings break down each of the three stages of the tax plan individually?

Dr Gruen : I think this goes to advice to the cabinet. Given that we don't disclose the detail of information that goes before cabinet, that's not something I'm going to speculate on.

Senator McALLISTER: Was their work done to look at the year-by-year cost of the package?

Dr Gruen : Again, I think this goes to the detail of what went before the Expenditure Review Committee, and I don't think I'm at liberty to discuss that.

Senator McALLISTER: Minister, are you able to assist?

Senator Cormann: That is a question that goes squarely to the area of Treasury responsibility. Obviously, the government has published the relevant information in the budget. In an abundance of openness and transparency we provided public indication of the projected costs over the medium term, and that is all a matter of public record. If you want to take this into any further detail, that is very much a matter for the relevant group in Treasury.

Dr Gruen : Which is revenue group.

Senator McALLISTER: Thank you, Dr Gruen. I will ask in Treasury, Minister, but I am keen to understand. You say, 'Of course the costings have been done. Of course they went to ERC. It would be weird if that didn't take place.' Frankly I don't understand why you haven't released them before now, and I don't understand why you—

Senator Cormann: We have. We have released them. We have released them consistent with the requirements of the Charter of Budget Honesty Act. The costings information is published in the 2018 budget papers. Specifically, budget paper No. 2 will show you all of the relevant information in terms of the cost of that measure. That is the information that is published, consistent with the relevant requirements. If you want us to cost your policy, which is to increase taxes, then you have to get your own costing.

Senator McALLISTER: The purpose of estimates is to look at the budget, in part to assist the parliament in making its assessment about our response to the budget when it comes before us in the chamber.

Senator Cormann: That's right. And the numbers are as published in the budget papers.

Senator McALLISTER: The numbers don't provide very much insight about how we might distinguish between—

Senator Cormann: That is your view.

Senator McALLISTER: It is my view, and I'm putting it to you—that the numbers provide insufficient insight into the actual consequences of each of the three stages of the Personal Income Tax Plan, and that's why I'm asking the question now—

Senator Cormann: That is your view. Our view is that the Labor Party wants to impose higher and higher tax burdens on aspirational Australians and that, if we don't do anything to prevent bracket creep, as appears to be the position of the Labor Party, then aspirational Australians will go backwards. Right now, about 20 per cent of Australian income earners pay 60-plus per cent of income tax revenue generated in Australia nationally. If our seven-year plan is implemented in full, that will still be the proportion. If we go down Labor's path of letting bracket creep continuing to rip, then the proportion of tax burden that is imposed on hardworking, aspirational Australian families, will get higher and higher, which will provide a disincentive to work more and a disincentive for additional effort, which will be bad for the economy overall. And anything that is bad for the economy overall, ultimately, will hurt low- and middle-income earners the most.

But, again, this is the Prime Minister's department estimates committee. If you want go into this sort of detail, you will need to ask the experts in the revenue group of Treasury. But you're not asking them because you want answers; you're asking these questions here because you know these are not the right officers to answer them, so you put the government into a situation where officers are not actually in a position to give you the answers you want.

Senator McALLISTER: Minister, your answer, in an oblique sort of way, goes to why I am asking these questions. We do need to make a decision about our attitude towards phase 2 and phase 3 of the tax plan. It is quite difficult to do so when the impact of that plan on the budget on a year-by-year basis, and the distributional effects of those measures on different parts of the community are not understood. That is why I am asking whether, in coordinating this effort on behalf of the Prime Minister, the economics team in PM&C was aware of any costings that would assist with that problem, because these are problems the parliament will have to confront.

Senator Cormann: I take issue with your characterisation of PM&C 'coordinating this effort'. The lead agency and the lead portfolio when it comes to proposals to government in terms of tax reform, whether it is personal income tax reform or business tax reform, is the Treasury. The truth is that we all know that, with inflation, if we don't do anything, more and more middle-income earners will end up in the higher tax brackets. The announcement that Mr Shorten made on the evening of budget reply effectively suggested that he was not prepared to do anything in relation to—

Senator McALLISTER: That's a mischaracterisation.

Senator Cormann: Well, if he supports our long-term plan in full, then he should say so.

Senator McALLISTER: If you want support for it, you should provide information to allow people to assess it.

Senator Cormann: The information has been provided consistent with all of the requirements of the Charter of Budget Honesty. If you want more information, the best way to secure it is to ask questions of Treasury—namely, the revenue group in Treasury—which is best equipped to give you expert answers to the questions that you ask.

Senator McALLISTER: I look forward to you being incredibly helpful when we come to revenue group in Treasury next week.

Senator Cormann: I always try to be as helpful as I possibly can be—in the great tradition of finance ministers past.

Senator McALLISTER: I'm looking for very specific assistance next week in revenue group in Treasury, in relation to these questions, which I have written to you about.

CHAIR: Thank you, Senator McAllister. I will go to Senator Stoker.

Senator STOKER: I have a question for Mr Sterland. Is he available?

Senator Cormann: He has been patiently waiting all day for his turn.

Senator STOKER: I hope this lives up to expectations. Mr Sterland, I'm interested in the government's Open Government Partnership commitment. Can you tell the committee about the status of that project?

Mr Sterland : Yes. The government released its first national action plan a couple of years ago, and that's mostly on track. There were 15 commitments in that, and most of the commitment is on track. There have been a few delays, but in general it's having good progress. It's now considering the second national action plan. The first one concludes this year. There is now a process of negotiation with civil society members of the forum who develop this action plan, to develop a new set of commitments for another action plan.

Senator STOKER: What are the outcomes that have been achieved so far?

Mr Sterland : So far, there are 15 commitments under the first action plan that cover items like protecting whistleblowers, reforms on beneficial ownership transparency, combating corporate crime, data sharing and that sort of thing.

Senator STOKER: Practically, though, what does that mean? What does that translate into?

Mr Sterland : It translates into legislation to establish greater protection for whistleblowers, for example. In this portfolio, there are about three of those 15 commitments, mainly to do with data sharing, improved use of data and protections around using public sector data, for example.

Senator STOKER: Is that linked in to the data.gov.au aspect?

Mr Sterland : Some of the commitments relate to that, and Dr Gruen covers some of those areas within this department. My role is overseeing the whole action plan and co-chairing the Open Government Forum with civil society representatives. Two of PM&C's own commitments in that action plan actually go to the data agenda, and it's mainly about the use of public sector data sources and the integration of and protections around those data sources.

Senator STOKER: What is the time line for Australia's participation in the Open Government Partnership over the next 12 to 18 months?

Mr Sterland : We're a member of the international partnership. In the next 12 months we're developing the next action plan—and I'll just get the dates for you: the aim is to finalise the second action plan by 31 August this year. That will be a new set of commitments to cover the next two-year period.

Senator STOKER: Will there be a consultation process?

Mr Sterland : There's already been a consultation process. Earlier this year we had some face-to-face consultations in Canberra, Perth, Melbourne, Sydney and Brisbane—I think we talked about that last time—and people were able to contribute ideas. The forum, which I co-chair, is now processing those ideas for commitments for part of the next action plan. There will be another consultation loop when those commitments are much more refined than they are now.

Senator STOKER: I know your involvement in open government goes back a number of years. Could you please talk about how the work you're doing ties in with the other initiatives and forums that Australia participates in such as the G20.

Mr Sterland : That's harking back a few years. Dr Gruen's our current G2O Sherpa, but some of the commitments in that list in the actions related to our G20 presidency in 2014, and the beneficial ownership reforms come to mind particularly. I'm thinking that that's probably the main connection with the finance part of the G20, and that was a really important push internationally for transparency and the like. Treasury's responsible for that commitment, and it involves legislation under their control. That's been part of, in a sense, the response to the global financial crisis and the need to understand the ownership of companies. It's been related to clamping down on anti-money laundering and that sort of thing.

Senator STOKER: Thanks, Mr Sterland.

Senator McALLISTER: I'm quite interested in that particular initiative—how is it going?

Mr Sterland : The beneficial ownership?

Senator McALLISTER: Yes.

Mr Sterland : I think it would be better to direct those comments to Treasury.

Senator McALLISTER: Okay, but you've been talking about it for the last five minutes.

Mr Sterland : As I understand it, it's under government consideration now. There's been some public consultation, and the minister's considering it. It's a matter that would be with the government for decision.

Senator McALLISTER: It was supposed to be completed in August 2017?

Mr Sterland : Yes, and there've been some delays—it's one of the one's with some delays in the process.

Senator McALLISTER: What else has been delayed?

Mr Sterland : The Extractive Industries Transparency Initiative has been delayed—and that's again under consideration by government.

Senator McALLISTER: And who's leading on that initiative?

Mr Sterland : That's the Department of Industry, Innovation and Science.

Senator McALLISTER: I'm just looking at the website and, for example, some of the comments on the website where you're seeking consultation. One contributor writes—and she writes quite eloquently:

… there is … much to be done to demonstrate that it is and is intended to be a meaningful partnership between government and civil society. I say this because at the moment the engagement to date with civil society is primarily with what could be described as a small group of politically informed citizens and organisations. In other words with people and organisations that are already well-known to government. Regrettably, there has been very little attempt to communicate with civil society more broadly … very few people would know of the existence of the OGP or the website through which it conducts its outreach to the community. Meetings are held in Canberra and when they are not there seems to be no attempt to inform broader civil society about the scheduling of public forums, rather dates and times are proscribed by government and the distribution of such information is extremely limited. The website is not easy to navigate which means it is not user friendly. I do not wish to seem overly critical as I support the OGP and the ideas that form its framework but there is much to be done if the OGP is to be effective. The trust deficit between government and civil society … is very wide and there is no indication that things are improving.

Actually, the next contributor says—and this is a little bit funny:

There is a serious problem with the provision for online lodging of Responses, Comments and Submissions.

And he goes on to explain the technical problems with using the website. Do you think it's going well, this consultation process?

Mr Sterland : I've come into the role since rejoining PM&C late last year, and I took this responsibility on early this year. From my point of view, the discussions within the forum have been robust. The forum members themselves have fairly wide networks of their own. The consultations were advertised widely. We've talked a little bit about how we can generate wider interest, but if you're running substantial workshops in several cities you're open to taking submissions.

The technical issues with the website, as I understand it, were little more than the normal vetting that any public sector organisation has to do, before uploading a submission, to make sure that it is okay to upload and have on a government website. We had a workshop on Friday and it was a highly productive discussion with good debates but good understanding. So, as we narrow down to more concrete commitments and consult widely, we're trying to think about how we can broaden that consultation.

One of the issues you may find is that the group of people that's interested in the whole set is perhaps a smaller group, and there's a wider group that might be interested in particular elements. So there's a data community, if you like, and there's a transparency and integrity in government community, and they are being engaged as part of each of the commitments as well. I think it's fair to always ask how you can do it better. I just don't think there are any constraints in the process or any lack of effort or will among the secretariat staff that work for me that are promulgating this. It's a fair point just to try to make it a wider consultation if we can.

Senator McALLISTER: How are you going in terms of meeting the international commitments associated with participation in this partnership?

Mr Sterland : Our main commitment is our action plan. As I said, that's largely on track to being completed. We contribute financially to the Open Government Partnership.

Senator McALLISTER: There's an independent reporting mechanism. Have they assessed our plan or our implementation?

Mr Sterland : Yes. It was finalised and published online on the international OGP website on 24 April this year.

Senator McALLISTER: So it's recently been completed?

Mr Sterland : Yes.

Senator McALLISTER: Was that in the time frame you expected?

Mr Sterland : It took a bit longer, and I think that was to do with some of the vetting procedures within the international partnership.

Senator McALLISTER: What does that mean?

Mr Sterland : It was assessed by an Australian academic and submitted to the international forum, and I think their own vetting procedures meant that it took a little bit longer. For example, it was on the agenda for the first meeting I chaired, and we had to delay that because of those procedures. But it wasn't because the academic hadn't completed the work; it was just going through quality assurance and compliance with the requirements of the international group. We had a good discussion at the forum on it, and it was published recently.

Senator McALLISTER: I'm looking at the summary provided on the website. It suggests that the independent reporting mechanism found:

The Australian government made substantial progress in completing several commitments in areas such as combatting corporate crime and steps to improve the discoverability of government data.

It really speaks about increasing the ambition of commitments and makes some suggestions about what the government might do to increase the ambition around the plan. Is an increased ambition part of your instructions from the Prime Minister in developing the second plan?

Mr Sterland : The way I would say it is that increased ambition—or having ambition—is the intent of the Open Government Partnership Forum in putting together the action plan. We will develop that with our civil society representatives, and then there will be a government decision-making process about acceptance of those. But, the forum as a whole has an intent to make it as ambitious as possible.

Senator McALLISTER: Does the government participate or provide feedback about the work of the forum in any way? Government ministers? Who is the minister? Is it the Prime Minister?

Mr Sterland : It's the minister sitting next to me.

Senator McALLISTER: Oh, it's you, Senator Cormann.

Mr Sterland : In his role as Special Minister of State.

Senator McALLISTER: Have you attended any of the meetings convened by Mr Sterland?

Senator Cormann: No, I've not attended any meetings convened by Mr Sterland. Mr Sterland does a sterling job himself, without me looking over his shoulder. I did attend a meeting of the Open Government Partnership about a year and a half ago.

Senator McALLISTER: Are you satisfied with the delay in progressing the beneficial ownership commitment?

Senator Cormann: We progress all aspects of this as speedily as we can, given all of the constraints and all of the issues that Mr Sterland has spelled out. I am satisfied that Mr Sterland is doing a sterling job.

Senator McALLISTER: What are the constraints, as you see them, Minister, in terms of the beneficial ownership scheme?

Senator Cormann: I'm not going to get into the specifics at this point. There is a process underway. I'm comfortable that the process should continue to work its way through. At the right time and when we are in a position to make decisions we will make them, and we will make relevant announcements at the right time.

Senator McALLISTER: Can you explain the delay?

Senator Cormann: We are working through a process. Sometimes it will be—

Senator McALLISTER: Sometimes processes run to time, and sometimes they don't. Usually there is a reason.

Senator Cormann: On this occasion there have been some delays, and we will work as fast as we can to reach our destination.

Senator McALLISTER: But you're not able to tell me what the delays arise from?

Senator Cormann: I think it's best if we can go back go back to Mr Sterland. I obviously don't deal with this on a day-to-day basis.

Senator McALLISTER: But you are the responsible minister?

Senator Cormann: Sure.

Mr Sterland : The responsible minister for this commitment is, I think, Minister O'Dwyer. And the Treasury portfolio and the markets group next week. As I understand, there has been some public discussion and the matter is now with government. Treasury will be best placed to talk around any of the specific issues to do with the completion of that commitment.

Senator KITCHING: I have some questions about the Religious Freedom Review. Last Friday, the Prime Minister made a statement confirming that he had received the final report from the Religious Freedom Review Expert Panel. When did he receive it? Did he receive it on the Friday?

Mr Walter : That's right. He received it on Friday.

Senator KITCHING: Thank you. Has the department itself reviewed and provided advice to the Prime Minister or his office in relation to the final report?

Mr Walter : The secretariat, which I ran, was responsible for preparing the report in conjunction with the panel. We physically provided it to the Prime Minister, but there wasn't a briefing as such attached to it.

Senator KITCHING: It was just a report?

Mr Walter : Yes, just a report. You might have noticed from the Prime Minister's media release after he received it that he has asked the Attorney-General to take leadership of considering the report.

Senator KITCHING: Did you receive a copy of the final report on Friday as well?

Mr Walter : We drafted it with the panel. So we had it and then we handed it to the Prime Minister.

Senator KITCHING: Has the Attorney-General received a copy and, if so, when?

Mr Walter : Unfortunately, I can't answer that question. You would have to ask the Prime Minister's office. We provided it to the Prime Minister through the Prime Minister's office and through his briefing system. I don't know if it was distributed to other ministers following that.

Senator KITCHING: Would you be able to take that on notice to see if it's gone to any ministers or their officers and when?

Mr Walter : Sure.

Senator KITCHING: Have any departments been provided with a copy?

Mr Walter : Certainly not through us. Again, I'd have to take that on notice. If a minister got it, they might have passed it to their department. But I wouldn't know the answer to that.

Senator KITCHING: I should really, just for the sake of completeness, ask: have any other parliamentarians, not just ministers, received a copy of the report?

Mr Walter : Again, not from the department, the secretariat or the panel. If the Prime Minister's office distributed it, I would have to check.

Senator KITCHING: If you could take that on notice, that would be great. Thank you. In relation to the final report, was consultation done with PM&C or was it really drafting?

Mr Walter : We provided the secretariat to the panel. I had a small team that was providing the secretariat to the panel, so we did everything from arranging the consultation process for the panel to receiving and analysing submissions for them. We did the physical drafting of the report under instruction from the panel. But the panel were the ones who signed off on the final report.

Senator KITCHING: Other than the small secretariat or team you had in place, was the wording of the report or any of the recommendations subject to consultations with anyone outside of the expert panel?

Mr Walter : No.

Senator KITCHING: Did the Prime Minister or his office receive any drafts of the report?

Mr Walter : We naturally kept the Prime Minister's office informed as we worked. The panel was aware of that and, yes, I think they saw an early-ish version of the report.

Senator KITCHING: Was that last week or the week before?

Mr Walter : It would have been a couple of weeks ago.

Senator KITCHING: Was it just one draft?

Mr Walter : That's right.

Senator KITCHING: Did they suggest any amendments?

Mr Walter : No.

Senator KITCHING: So you just provided them with a draft report and said, 'This is a draft—

Mr Walter : They asked me some questions about the content and what certain things meant to understand the report, but they certainly didn't suggest to me that things needed to be changed.

Senator KITCHING: Was that just on the phone?

Mr Walter : Yes, that's right.

Senator KITCHING: As you said, the Prime Minister's asked the Attorney-General to lead the government's deliberation in response. Is the Attorney-General going to be supported by the AGD or by PM&C?

Mr Walter : By the Attorney-General's Department.

Senator KITCHING: What happens to the staffing allocation in PM&C?

Mr Walter : We are quietly dispersing. We lost most of our team last Friday and they've gone back to various departments, whence they came. Three of us will go back to the Attorney-General's Department next week.

Senator KITCHING: So you were lucky enough to come to PM&C estimates!

Mr Walter : That's right. We have a couple of staff from PM&C who will go back to their line areas as well.

Senator KITCHING: Which other departments were staff from?

Mr Walter : I can give you the whole list. We borrowed people from a variety of places. In addition to the Attorney-General's Department we had three people from the Department of Jobs and Small Business, two from the Department of the Environment and Energy, one from the Treasury and one from the Department of Agriculture and Water Resources. Their role was primarily around processing the very large number of submissions we received. And we are very grateful to those departments.

Senator KITCHING: Were those departments chosen for a reason, or was it because of the expertise or the history that someone might have had prior to being in those departments?

Mr Walter : We went to a range of departments and asked for people who had skills in handling that kind of data. We got a whole pile of resumes and went through them and picked the people we thought were most suitable.

Ms Foster : We had an initial staffing proposal. With the number of submissions so large, it became apparent that we would need more assistance. So we did a callout, essentially, to departments to say we need some help: 'It'd be a great experience for some of your staff to be involved in an inquiry like this. Here are the sorts of skill sets we're looking for.' As Mr Walter said, we were delighted that our colleagues responded by providing us the necessary resources to get the job done in time.

Senator KITCHING: The chair and I were on the Senate select committee for the exemptions to the Marriage Act. It is a very interesting area. When does the government expect to publish its response to the report?

Mr Walter : It's a matter for the Prime Minister, but he has indicated that he expects to release the report and, most likely, some kind of initial response in the next few weeks.

Senator KITCHING: Regarding the process of deliberation to the report, will that be done within the PMO or will it now include the Attorney-General and his office? How do you envisage that?

Mr Walter : The Prime Minister has asked the Attorney-General to take the lead on considering the report. Normal practice would suggest that he will work with his department to do it.

Senator Cormann: I might be able to assist. This report will go through the usual deliberative processes of cabinet. As is usually the case, relevant announcements are made when relevant decisions have been made.

Senator KITCHING: So the cabinet will be consulted.

Senator Cormann: It will go through the normal cabinet processes. As such, every minister of the cabinet, by definition, will be consulted.

Senator KITCHING: Will any agencies be consulted?

Senator Cormann: Again, the deliberative cabinet process of government means that all of the relevant agencies providing advice to their ministers will have the opportunity to express their view. That is part of the normal cabinet process.

Senator KITCHING: I just want to be clear. Will that include any other MPs or external stakeholders?

Senator Cormann: No. You asked me about agencies of government.

Senator KITCHING: I want to expand on that. I want to see if there is anyone else who might be consulted.

Senator Cormann: Not as part of the cabinet process.

Senator KITCHING: No, but—

Senator Cormann: There has obviously been a process of consultation already. What the next steps will be from here will be a matter for the deliberation of the cabinet, and I can't pre-empt what that decision may or may not be.

Senator KITCHING: On 20 March the Prime Minister published a statement saying that he was going to agree to extend the reporting date. On what date did Mr Ruddock write to the Prime Minister requesting that he extend the reporting date for the review? Did that request come from the panel itself, from the chair?

Mr Walter : Yes, it did. Mr Ruddock wrote to the Prime Minister on 8 March.

Senator KITCHING: Was the extension needed because of the large number of submissions?

Mr Walter : That's right. I'll just fill out the story. The panel had considered at its meeting on 19 February the question of whether an extension would be needed, and that was just shortly after—five days after—submissions had closed. The panel realised it had far more submissions than it had expected, so, yes, that was the driving force to make sure that they could give due consideration to those submissions.

Senator KITCHING: Was there any discussion with the Prime Minister's office by the chair of the expert panel prior to that letter being sent?

Mr Walter : I flagged the possibility with the Prime Minister's office. I'm not sure whether the chair did or not.

Senator KITCHING: Or any other panel member?

Mr Walter : It would've only been the chair or me, and I certainly did just to make sure that there would be reception for it, I guess. The chair may have, I just can't recall.

Senator KITCHING: The chair might have—

Mr Walter : Might have also discussed it with the Prime Minister's office.

Senator KITCHING: Before the Prime Minister received the letter asking for the extension?

Mr Walter : That's right.

Senator KITCHING: And that was the only reason for extending the reporting date?

Mr Walter : That's right.

Senator KITCHING: Are you able to give us the total number of submissions received by the panel?

Mr Walter : I can, yes. The final total we've settled on—and I can explain my language on that—is 15,695 submissions. Last time I was here I mentioned that we'd received in excess of 16,000. Technically, we did; however, it turned out that a large number of them were duplicates or in some instances blanks. So the figure that we've kind of settled on is 15,695.

Senator KITCHING: Were some longer form submissions and some sort of campaign or proforma submissions? Do you have a breakdown of where the 15,695 sort of fall?

Mr Walter : There was considerable variation—from some that literally went for a couple of lines to ones that literally went for hundreds of pages. There is considerable variation in there. Your kind of average submission—if you just clicked on one—is usually about one or two pages long. They are the vast majority.

We received approximately—and it's a little bit hard to get this exactly right—2,500 of what we called substantially similar submissions. They're basically within 75 to 100 words of other submissions. They're all grouped together. You might call those campaigns. The biggest one of those was from the Australian Christian Lobby. There were around 2,000 letters that were generated from their website. There were a couple of others in groups. We've got them on the website. We grouped those ones together when we published them so that you can see that they're all substantially the same, and then the other ones are kind of individual.

There is another one that I might mention. We counted as one submission a petition from just.equal. That had 5,428 signatures attached to it. It's one physical submission and we only counted it as one physical submission, but it does have a large number of names attached to it.

Senator KITCHING: Were all the submissions published online?

Mr Walter : No. We published 8,420 submissions. The panel made the decision to publish all submissions where it had the consent of the author and there was no other reason not to publish—that is, there was basically no legal risk associated with publishing a submission. So we published 8,420. We did not have consent to publish 7,210 submissions, so we didn't. Then we did not publish 65 for a variety of reasons but mainly because of concerns about legal risk. As long as my maths is correct, that should come to 15,695.

Senator KITCHING: I'm going to take your word for it! Did you do any other breakdowns of those submissions—for example, by state?

Mr Walter : When the report is published there will be some breakdown of that material. I'm struggling to remember off the top of my head. A slightly higher proportion of submissions came from New South Wales than from other areas, but more or less it fell within what you would expect based on population distribution. The only catch is that we did not have everyone's postcode, so it's not a complete picture, but there is a picture for a large number of submissions. The pattern is broadly what you'd expect in terms of population distribution. It matches where the populations are.

Senator KITCHING: Obviously there are some areas where there was a higher no vote.

Mr Walter : We didn't go into that. We didn't try to go by electorate or even down to postal level. We didn't do that analysis. Part of the reason for that was that the question the panel was asked was about the adequacy of current legal arrangements. We got 16,000 submissions, many of which expressed a view mainly about religious freedom generally—but the panel was most concerned about arguments about the law, whether it's working and examples of where it is working or not working. We did a lot of analysis of the submissions, but it wasn't the only factor. They were interested in the substance of the arguments that were being made particularly.

Senator KITCHING: QON 46 indicates that the panel met with a total of 73 organisations and 28 individuals. Is that the final number?

Mr Walter : No, the final number is 151 organisation and 33 individuals.

Senator KITCHING: Will they be listed at the back of the report?

Mr Walter : They'll be listed at the back of the report. I'm happy to table a copy of that list as well, if that helps.

Senator KITCHING: That would be great, yes. Thank you. Is there are a table showing which panel members attended which meetings? Is that going to be in the report?

Mr Walter : It's not in the report. I can tell you who attended which consultations. I went through it at the last estimates—I'm trying to remember when the last estimates was—but I can—

Senator KITCHING: Have you got that in a form that can be tabled?

Mr Walter : No. I can do it as a QON fairly easily. It's up to you: I can either read them out or I can do it as a QON.

Senator KITCHING: I'm happy for you to read them out. Then they're on the record.

Mr Walter : On 5 and 6 February, all members attended. That was in Canberra. The chair attended all of them, so I won't read him out each time. The chair attended every consultation. On 12 and 13 February in Perth, we had Annabelle Bennett, Nicholas Aroney and Rosalind Croucher—she participated by phone. On 14 and 15 February in Sydney we had Annabelle Bennett, Nicholas Aroney and Rosalind Croucher, who was there for part of the day. On 19 February they went to Hobart, and we had Annabelle Bennett, Frank Brennan and Nicholas Aroney. On 20 and 21 February in Melbourne we had Nicholas Aroney, Annabelle Bennett and Frank Brennan. On 23 February in Western Sydney it was the chair and Nicholas Aroney. On 26 February in Brisbane we had the chair, Annabelle Bennett, Frank Brennan, Nicholas Aroney and Rosalind Croucher. On 27 February in Adelaide we had the chair and Frank Brennan. On 2 March in Sydney, again, we had the chair and Rosalind Croucher. On 5 and 6 March in Darwin we had the chair, Frank Brennan, Rosalind Croucher and Annabelle Bennett and Nicholas Aroney, both by phone. In Sydney on 8 and 9 March we had the chair, Rosalind Croucher, Frank Brennan, partial attendance, Annabelle Bennett, partial attendance, and Nicholas Aroney, partial attendance. On 23 March in Sydney we had the chair, Frank Brennan, Annabelle Bennett, Nicholas Aroney and Rosalind Croucher, partial attendance. Then on 26 March in Canberra we had all members.

Senator KITCHING: Is there a total cost for the review?

Mr Walter : As at 30 April, which is the latest figure I've got, we are currently at $505,540. The budget for the whole process is $1.043 million. It will go up, obviously, from then but it won't be a substantial amount. I expect it will come in around the $600,000 mark overall. We had a couple of costs this month because we had a few more legal costs, but I'd imagine it will be about that—a few hundred thousand under budget.

Senator KITCHING: Is it possible to get a breakdown of the costs along the lines of administrative and staff fees, sitting fees for the panel members, travel fees for the panel members, secretariat travel costs, entertainment and hospitality and consultant fees? Were there consultant fees?

Mr Walter : Yes, we did have a data consultant who we used.

Senator KITCHING: Sorry; a consultant on what?

Mr Walter : On data. Yes, we can do that. I can give you some information now. I can't give you all that. I can give you the panel costs if that would be of interest.

Senator KITCHING: Yes.

Mr Walter : And then the other ones I'd have to take on notice because we're kind of rounding out the budget now, if that makes sense.

Senator KITCHING: That's fine.

Mr Walter : The total costs that we've spent on panel remuneration, including travel allowances, as at the end of the process was $119,308. That covers the four panellists who we were paying. We weren't paying Rosalind Croucher because she is a full-time statutory office holder. However, we were paying for any costs associated with her travel and meal allowances and those types of things. We just reimbursed the Human Rights Commission for those costs.

Senator KITCHING: That's fine. I'd like to have all the other costs—secretariat travel costs, entertainment and hospitality, consultant fees, printing and design fees and any other costs—on notice if that's fine.

Mr Walter : Yes.

Senator KITCHING: Are there any ongoing costs? For example, in the Attorney-General's Department will there be any costs that arise from the work that will be done by that department? Will there be any costs going forward?

Mr Walter : It will depend on the government response, obviously.

Senator KITCHING: Yes, of course. We might come back and ask that. Thanks very much.

CHAIR: Sorry; just to clarify—because I was having another conversation while this was tabled—this is the list of organisations that the committee met with; is that right?

Mr Walter : That's correct, and the individuals are on the last page.

CHAIR: Great. That's very extensive.

Senator WONG: Could we get Mr McKinnon back to the table for a moment please? Thank you.

Senator McALLISTER: Mr McKinnon, I did want to follow up on the issues around oversight and the recommendations in the L'Estrange-Merchant review. Back in October we talked about it and I asked you very specifically whether those oversight recommendations were being considered in the context of the working group you were leading in PM&C. You said that they were and that in fact they were all being implemented. You have since written to me saying that they are not, and I have a copy of that letter, which I'm happy to table if that's of assistance. I'm also tabling a letter that you provided to the PJCIS correcting evidence provided later in February. Mr McKinnon, in that letter you apologised for misleading the committee, and I thank you for that. Can I ask whether you are formally withdrawing your evidence to this committee?

Mr McKinnon : No, I'm not. In fact, I'd like to be able to explain. I think there has been some confusion—certainly on my part. Subsequent to that letter I was tracking back to see how I could have misled the committee when, of course, I was aware exactly where things were up to. Looking back at the transcript—and with the Chair's indulgence I might just read a couple of lines of it—Senator McAllister, you were recorded as saying:

I do understand that, because I have read the transcript, thank you. I had just asked whether in the work of the committee that you were chairing, Mr McKinnon, or in this work you are undertaking, the L'Estrange recommendations around oversight were being developed there, or considered.

I said yes, and you said: 'Great. That's all I needed to know.' That was, if you like, the end of that part of the conversation.

Then, as it's recorded in Hansard here, I say, apropos nothing, 'They are all being implemented?'—with a question mark at the end of it. My recollection is that there was some sort of question about implementation and I asked, in confirming that, 'They are all being implemented?' Your response was similarly a question-statement: 'All of them are being implemented?' And I said, 'Almost all of them in their original form—a couple of them slightly amended'—almost all of them. And there was a repeat of that in the PJCIS. I confirmed that that's what I said. And looking very carefully at the letter that you sent to the Attorney-General, that quotes almost verbatim that part of the estimates record, except that it takes away the question mark where I said, 'They are all being implemented?'—question mark; the question mark's in the original record. It leaves the question mark on your declaratory statement, so it makes it look as though I am being absolutely definitive: 'Yes, they are all being implemented.' And that's what I could never reconcile, because I knew that at that stage the government wasn't up to that.

So, I think there has been some confusion in all of that, I'm sorry. I didn't mean to have the committee work under the assumption that they are all being implemented, which is why I sent the letter when you wrote to the Attorney-General just making it clear; if I've conflated 'consideration' and 'implementation' then I apologise. I didn't mean to mislead the committee. I wouldn't do that deliberately.

Senator McALLISTER: Mr McKinnon, with respect, I don't understand who you could have been asking a question of in the transcript as you describe it. It looks to me as though you are rather definitively saying they are all being implemented.

Senator Cormann: Mr McKinnon has just explained that, and he has explained that in your transcribing of the official record a material question mark disappeared. And that question mark was of course material—but because it changes a rhetorical question into what is perceived as an assertive answer. If you look at the official Hansard record and you compare that with the way you have transposed that, changing the punctuation arrangements—the change in punctuation changes the meaning of that particular extract. I think you might want to reconsider the official Hansard record and compare that with the way you have put this extract to the Attorney-General in your letter of 4 April 2018. I think that Mr McKinnon, based on what I have in front of me, has given you a candid and proper and honest explanation of what was, on the face of it, inadvertent confusion, which can happen in the heat of Senate estimates from time to time, or in the to and fro of Senate estimates. I think Mr McKinnon has directly addressed the question you have asked him.

Senator McALLISTER: The problem is that, as Mr McKinnon acknowledges, I put the same information to him subsequently, in February, during a PJCIS public hearing, and he confirmed the evidence he'd previously provided. And that was in the context of talking about the creation of the Department of Home Affairs and talking very specifically about the oversight arrangements that would be associated with the new arrangements for the intelligence community.

Senator Cormann: Well, you were asking a question about previous Senate estimates, and all I can note is that you have copied and pasted the relevant extract from the Senate estimates Hansard inaccurately, with a material difference in punctuation, which is relevant because it changes the meaning of what took place.

Senator McALLISTER: Well, we can all go and look at the video.

Senator Cormann: We can look at the video, but a question mark—

Senator McALLISTER: We can go and look at the video, because a confirmation was provided of the arrangements.

Senator Cormann: A question mark at the end of a sentence is very different to a full stop at the end of a sentence. I think you can agree. And your letter shows a full stop, whereas the Hansard transcript that has been put in front of me has a question mark.

Senator WONG: Do you know what this reminds me of? It reminds me of a flub of Senator Brandis's that DFAT tried to pass as the difference between a capitalised and a not-capitalised phrase. But anyway.

Senator Cormann: Well, I think there's a difference between a question and a statement. I hope we can all agree on that.

Mr McKinnon : Senator, even in the PJCIS subsequent testimony it was the same sort of language. At that time, in October, you said that almost all the recommendations would be implemented in their original form, a couple of them slightly amended. Look, I apologise if I was confused by that. But in my own mind, working on these things at the time, these were the things I was working on and I knew that we didn't have a government decision on it. That's why I couldn't understand why there was that confusion until I looked back. I apologise. The fault was conceivably all mine. But there was some confusion there. I'm sorry.

Senator McALLISTER: Okay. On both occasions officers from—well, on the first occasion Senator Brandis was present, and on the second occasion other officials intimately involved in the project were present. None of them sought to correct or explain the situation in the way that you describe it existed. So, for practical purposes, this committee and the PJCIS were working on the assumption that the recommendations were being implemented, and that is a problem.

Mr McKinnon : My lawyer was there to make sure that if I made any mistake in talking about where the issues were up to she would correct me. She heard it like I did, I think. She didn't correct me at the time. Again, I can only apologise if there has been some confusion. At that time the government was yet to consider things. We were still working on them.

Senator McALLISTER: When you say that the government was yet to consider things, what had taken place at that time in terms of developing a response to that part of the review, particularly recommendations 21 and 23, which go to the operation of the PJCIS?

Mr McKinnon : As much as I can say is that if you look at the details of the independent intelligence review there are, under 23 headings, if you incorporate the couple of classified recommendations, 77, I think. So, there's a whole lot of them. On the day when the Prime Minister announced the release of the review he indicated his acceptance of several of them, such as the establishment of an Office of National Intelligence and the establishment of ASD as a separate statutory entity within the broader defence portfolio, and he nominated several of them. At the time, he said that they were all a good basis for further consideration, so there was in several tranches different consideration. And I think that by the stage that we're talking about all of them had at least commenced consideration.

Senator McALLISTER: When you say 'commenced consideration', what precisely are we talking about?

Mr McKinnon : I wouldn't like to go into any more detail because this is cabinet consideration I'm talking about. But, as I indicated this morning when responding to another senator, even with the Prime Minister expressing satisfaction with the review overall as being a good basis for implementing the biggest changes in our intelligence community's history, there is still the matter of translating what is an independent review by non-lawyers into things that work at a policy and legal level and then passing it to the drafting office. That process is ongoing, and some of that requires going back to the government and saying, 'This needs a further policy decision.' We are moving as quickly as we can, and getting towards the end. That's not inconsistent with the Prime Minister's schedule at the time. He said he expected the office of national intelligence—which is the centrepiece of it, at the core of the coordination and strategic guidance arrangements—would be set up within 2018. They already have part of a budget for this part of the year that they are in, and are building up but they're not actually formally established and don't have the legislation yet.

Senator McALLISTER: That was the situation in October. It was under consideration. You don't want to go into the detail about the nature of that because it is under consideration by cabinet. Is it the National Security Committee of Cabinet that has been dealing with this?

Mr McKinnon : Yes, it is.

Senator McALLISTER: Right. What was the situation in February when I asked you about your evidence and you again confirmed—you said, 'As far as I know, that will still be the case, that's still the government's intention at this time'. That was a fairly definitive thing to say.

Mr McKinnon : Again, based on that same understanding of the language, I can't recall the exact sequence of meetings. I would have to go back and check. Whether it had come on the NSC agenda again, I can't be sure. But we were still working away on the legal and policy aspects of it and, from time to time, putting these things for decision and agreement by the Prime Minister. It is conceivable; although, there is already broad sign-off that we may have to take some back to another stage of decision-making.

Senator McALLISTER: When you provided that evidence to PJCIS, you subsequently wrote and corrected some of your evidence, but you didn't correct that part of the transcript where you and I had this exchange about what the government's intentions were in terms of PJCIS.

Mr McKinnon : I didn't consider it misleading until I saw the letter to the Attorney-General. When it was brought to my attention, I said, 'That's not what I said', but it was—I then saw how it could have been interpreted that way quite clearly in that context and so that's why I wrote.

Senator McALLISTER: Okay. So it was brought to your attention. Who brought it to your attention?

Mr McKinnon : I'm not sure. It was one of my colleagues.

Senator McALLISTER: One of your colleagues? A colleague in Prime Minister and Cabinet?

Mr McKinnon : I'm pretty sure it was one of the people in the vestigial task force—after the larger Home Affairs and IIR task forces, which is now run down into a smaller one as we get to the end of the issue. It was one of my colleagues working for me in that task force, I am pretty sure.

Senator McALLISTER: And he drew your attention of my letter to Mr Porter?

Mr McKinnon : I think it was a she, and I think she drew my attention to it, yes.

Senator McALLISTER: Sorry?

Mr McKinnon : It was not a he; it was a she. I think she drew my attention to it. I just don't know the detail, I would like to not venture any more. But someone came to me and said, 'This is what this letter said'. I said, 'That's not what I said', and we went back and checked it.

Senator McALLISTER: Did any minister or member of a minister's staff speak with you about it?

Mr McKinnon : No, not at all.

Senator McALLISTER: Not at all?

Mr McKinnon : Not at all. I spoke to the PMO about writing the letter—saying I wanted to write a letter and correct the confusion. I did say that, but it was my initiative and I told the PMO that's what I was going to do.

Senator McALLISTER: Who's the relevant person in the PMO that you spoke with?

Mr McKinnon : I will take that question on notice.

Senator McALLISTER: What was their view about it?

Mr McKinnon : Pretty much, 'It's your evidence. You do what you want.'

Senator McALLISTER: You said this morning, in response to questions from Senator Patrick, that the government's view is that oversight should be strengthened. Can you explain why it is that the government believes oversight ought to be strengthened?

Mr McKinnon : All I can say is that it has been the Prime Minister's very strong view from the start that, as we are strengthening the national security and national intelligence framework in response to what the government generally sees as a more threatening environment, we also need to maintain the confidence of the Australian people in the activities of all of our intelligence security agencies. He sees it as a necessary complement, I understand. He made those comments when he released the report, and it fits with the recommendations of the review.

Senator McALLISTER: So there's a relationship between maintaining confidence and having appropriate oversight?

Mr McKinnon : That's right.

Senator McALLISTER: And that includes parliamentary oversight?

Mr McKinnon : I wouldn't parse his words any further than that, because he didn't get down into more granular detail.

Senator McALLISTER: What is your understanding of the significance or role of parliamentary oversight?

Mr McKinnon : I don't know that that would add much to it.

Senator McALLISTER: Nonetheless.

Mr McKinnon : I wish we hadn't had the confusion in front of the PJCIS! But, as far as I'm concerned, I'm there to make it work from a legal and administrative point of view if that's what the government wants.

Senator McALLISTER: So you are merely a technician in this regard? You don't have a sense or an understanding of the significance of oversight in the national security arrangements?

Mr McKinnon : It's not necessary for me to translate the report's recommendations, if the government agrees to them, into legislation and administrative changes. On this occasion, I was never asked for my understanding of it.

Senator McALLISTER: Yes, but I'm asking you now. What's your position, Mr McKinnon?

Mr McKinnon : I'm deputy secretary looking after national security.

Senator McALLISTER: Right. You're the deputy secretary of national security in the Department of the Prime Minister and Cabinet, and I'm asking you: what is the policy basis for establishing parliamentary oversight of the intelligence community?

Mr McKinnon : Obviously, at the most basic level, it's so that the activities of the government, especially where they may impact on the civil liberties and rights of ordinary Australians, are subject to the oversight of the parliament. The things we're looking at, like significantly boosting IGIS's resource base from $17 million to $51 million or so, don't require me to be able to answer that question.

Senator McALLISTER: They don't require you to—I'm sorry, I couldn't quite hear that last answer.

Mr McKinnon : Issues like, for example, facilitating the transfer of the Independent National Security Legislation Monitor and the Inspector-General of Intelligence Services over into Attorney-General's and changing legislation and those sorts of things don't require me to actually have to answer those questions. It's not really a discussion. It is a more mechanical thing.

Senator McALLISTER: How did it come to be that a letter that was addressed to the Attorney-General was in the possession of a member of your staff at Prime Minister and Cabinet?

Mr McKinnon : I think, as it referred to me, there was a sense that maybe I should connect the parts of the system together and check to see whether I agreed with that.

Senator McALLISTER: Was there a request for advice?

Mr McKinnon : No.

Senator McALLISTER: No. It was just handed to someone?

Mr McKinnon : I don't mean to make it sound casual. But my awareness of it was when someone brought it to me and said, 'This is what is being said.' I said, 'Well, that's not what I said.' That's when I began to check the record to see if you could interpret it another way.

Senator McALLISTER: So this letter arrived without a Post-it note on the front of it, without any request for action, for you? It just arrived at Prime Minister and Cabinet and it wasn't handed to you but to a member of your staff. Did it arrive in the post?

Mr McKinnon : Not that I'm aware. I'd like to take that on notice. As far as I can recall, one of my staff members brought it in and said, 'Here it is.' There was no Post-it note attached to it and no requests for me to act. But my guess is that it's just good government that, if there is a suggestion that someone has misled the Senate, we're made aware of that and given the opportunity to consider the record and whether we agree with that and how we should respond to it.

Senator McALLISTER: The thing is that that letter doesn't contain any suggestion that you'd misled the Senate, because I was operating on the assumption that you hadn't, actually. I was simply inquiring as to what the next steps were in implementation.

Mr McKinnon : All I can say is that's how I received it. I can't actually give you any more information about it.

Senator McALLISTER: Right.

Mr McKinnon : I'll see if I can get some more detail, but it's not clear to me, or I don't have a clear recollection of, how it arrived. There was no fanfare. It didn't come in a separate envelope. There were no Post-it notes. It was just handed to me.

Senator McALLISTER: It was just handed to you. Is there anyone—

Senator Cormann: I think the officer has taken this as far as he can.

Senator McALLISTER: It just seems very unusual.

Senator Cormann: Well, you're entitled to that view, but I think the officer has candidly, openly and transparently answered all of your questions. You're entitled to have your own opinions, but the officer can't assist you with opinions. That's a matter for you.

Senator McALLISTER: The government has other material on the record about its approach to this issue, and Mr Porter is quoted publicly in the press as saying:

The best and most logical course is to progress these final oversight recommendations once other recommendations that change the structure of the intelligence community have been progressed and the new Home Affairs and Attorney-General portfolio arrangements have commenced.

Can you explain why that is the best and most logical sequence of events?

Mr McKinnon : If for no other reason than you have to start to put the pieces of the puzzle in place at some point, and setting up Home Affairs was a very big part of that puzzle. There were subsequent changes to the Intelligence Services Act and the Telecommunications (Interception) Act and changes to administrative arrangements in order to bring ASIO into the new portfolio and take IGIS across into their new portfolio. The team looking at that looked at about 60 pieces of legislation and amended about 36, to give some clarity there, and worked that through the PJCIS. I think we looked at it twice, all the recommendations of which were accepted by the government, to my understanding.

Then we moved on to the IIR. The relationship, for example, between 21 and 23 is not a simple thing. You mentioned those two as being the nub of the enhanced integrity and oversight measures, and I wouldn't disagree with you. What you have quoted the Attorney-General as saying seems, to me, to be logical.

Senator McALLISTER: Is that the recommendation of the committee that you're sitting on? Have you provided advice to Minister Porter that this is how it ought to proceed?

Mr McKinnon : No, we have never provided any advice to Mr Porter, to my knowledge, from that task force.

Senator McALLISTER: Have you provided advice to any minister about how the oversight arrangements ought to proceed, that supports the statement publicly made by Mr Porter?

Mr McKinnon : Outside of our own portfolio minister, the Prime Minister, we haven't provided advice to anyone.

Senator McALLISTER: So Minister Porter formed his own view without advice from you.

Senator Cormann: He has his own agency and agencies providing advice to him in the usual way. This department provides advice to the Prime Minister. Minister Porter has the Attorney-General's Department and various other relevant agencies in his portfolio.

Mr McKinnon : It has to be said as well that several times a week we have meetings at a Dep. Sec. level to thrash out some of the policy and legal issues throughout this whole process that's been going on. Again, that makes it hardly surprising to me that I do see a letter that relates to these issues. The system is keeping itself informed. It is not unnatural. I've worked a lot with colleagues in A-G's, from Chris Moraitis down through his deputies.

Senator McALLISTER: Back in October, when Senator Brandis was still here and sitting in Senator Cormann's chair, we had quite a long discussion. He was keen to emphasise the importance of oversight in the new arrangements. Why is it that since his departure we now learn that the oversight arrangements are going to be the last thing to be finalised? Is that a change from the way the government was approaching this, Minister Cormann, a change that's come about since Minister Brandis left?

Senator Cormann: Sorry, can you repeat that question?

Senator McALLISTER: When we had this discussion in October last year, Senator Brandis was keen to emphasise that oversight was at the heart of their new announcements about the Australian intelligence community. The advice now, from Mr Porter and Mr McKinnon, is that these arrangements will be the last thing to be finalised in the changes to the intelligence community.

Senator Cormann: Where are we going? The government's going through—

Senator McALLISTER: My question is this: does this represent a deprioritisation of oversight for the government since the departure of Senator Brandis?

Senator Cormann: No.

Mr McKinnon : I just want to clarify one small detail there. I did mention that back in July last year when the Prime Minister announced that he wanted to establish a Home Affairs portfolio, and with the results of the Independent Intelligence Review, he announced that the core of that was the establishment of the Office of National Intelligence and the role that that would have. I also said that that legislation is tremendously challenging and we are still working on that. Whatever other things are not done, the legislation is still coming to actually establish ONI. I have mentioned several times that ONA is still there with a bigger budget and starting to explore that role, but it is not ONI yet. That legislation is not there.

Senator McALLISTER: On that question, when should we expect that legislation?

Mr McKinnon : I really hope and wish that it will be very soon. We are working hard on it. It is complex. We are dealing with all of the Australian national intelligence community—that is 10 agencies plus the portfolios which they sit in—to try to work out the arrangements. So it's not an easy thing. I don't want to go into the details of that legislation, because it has to come to the parliament to be considered.

Senator McALLISTER: I think Mr Warner suggested last night that it might be introduced in the autumn session. Is that your understanding?

Mr McKinnon : Or even winter. We told Mr Warner that was what we were working towards. That is what we've told all the agencies that we were working towards. The Prime Minister has said 'within 2018'. I would rather it were sooner rather than later, but against that original timetable we are not late.

CHAIR: Senator McAllister, we are right on schedule for our scheduled break and a private meeting. Do you have a couple more questions in this area? I am happy to extend for a few minutes, if that helps.

Senator McALLISTER: I don't wish come back to after the break and I don't have much more to go through.

CHAIR: Then let's continue for a couple more minutes.

Senator McALLISTER: Mr McKinnon, the goal is to establish the arrangements for the agencies in 2018, I think you said. How much longer after that will we have to wait to establish the arrangements for oversight?

Mr McKinnon : It's up to the government when it considers and announces elements of the package, whichever ones are left to be announced. That's all I'm saying.

Senator McALLISTER: We're proceeding very rapidly with some elements of this but not with the oversight. In fact, there's been no public discussion or consultation on it apart from our efforts to bring this through the committee system. Is there any intention to engage with the parliament about the mechanisms proposed for oversight of the intelligence community prior to the introduction of the legislation in any form?

Mr McKinnon : I will take that on notice.

Senator McALLISTER: Thank you.

CHAIR: We will suspend for 15 minutes and committee members will have a private meeting.

Proceedings suspended from 15:47 to 16 : 05

CHAIR: The committee will now resume. I'll just report, for interested parties, that over the break the committee had a private meeting and considered the public interest immunity claim made in writing by the minister this morning, and the committee has resolved to accept that public interest immunity claim.

Mr McKinnon : Chair, before we go on, I want to make sure that I gave the correct numbers to Senator McAllister for the number of recommendations of the Independent Intelligence Review. I think I did. There are 23 headings of recommendations and, depending upon whether you count the classified or the unclassified, there are 75 or, with the unclassified, 77 recommendations, including sub-recommendations.

CHAIR: Thank you. Senator McAllister.

Senator McALLISTER: What role does Prime Minister and Cabinet have in advising on issues relating to the ministerial staff statement of standards?

Ms Foster : I'm trying to recall. I think we traversed this a bit last time and I think the answer was that it is administered by the Department of Finance. I don't believe PM&C has a role in advising on it. But I assume my staff will be checking to make sure that's correct.

Senator McALLISTER: Actually, this does go to the heart of my questioning. In the last round of estimates question on notice 37 was asked and the answer was:

Implementation of the Ministerial Staff Statement of Standards is the responsibility of the Prime Minister's Office and the Government Staffing Committee.

We have had very different advice at times about who is actually responsible for it, but I think this makes it clear that it sits within the PMO. So I guess my question is: what sort of advice is PM&C providing to the PMO in terms of issues relating to that ministerial staff statement of standards?

Ms Foster : I don't believe we have a role advising the PMO on the Statement of Standards for Ministerial Staff but I'll confirm that and let you know.

Senator McALLISTER: Should we conclude from these two separate pieces of advice—the answer to question on notice 37 and the advice you've just provided—that the Prime Minister's office and the Government Staffing Committee implement the ministerial staff statement of standards without support?

Ms Foster : As I said at the start, my recollection is that there is some administrative role in the Department of Finance, but I'm having that checked now and I'll confirm it.

Senator McALLISTER: When you say you're having it checked now, is this something that I could move away from and come back to once you have received the information?

Ms Foster : Yes, that's what I'm hoping.

Senator McALLISTER: All right.

Senator KITCHING: I want to ask some questions about the Prime Minister's recent Politics in the Pub events. There was one at the Carindale Hotel. There was one at the—was it the Seymour Hotel? There was one at the Peachtree Hotel. We'll start with those ones.

CHAIR: My friend and colleague Chris Crewther hosted the Prime Minister recently in Seaford for a very well received Politics in the Pub event, by all reports.

Senator KITCHING: Seaford—that's the one I was looking for, is it? I do want to go to that, because I think there have been a lot of people attending. Could I start by asking: who's responsible for organising these functions—is it the department or the Prime Minister's office?

Ms Foster : Senator, I don't know the answer to that. Let me just quickly find out if the department has any role, and I will come straight back to you—and I am just advised that it is the PMO, Senator, who organises that. Senator McAllister, I've also had confirmed that my earlier advice was correct, that PM&C has no role in advising on the statement of standards for ministerial staff.

Senator McALLISTER: Thank you. Senator Cormann, in terms of the Prime Minister's recent Politics in the Pub events, is it the Prime Minister's office that would be responsible for compiling the guest list?

Senator Cormann: It's the Prime Minister's office that is responsible for supporting the Prime Minister in organising various public events, including the sorts of events that you are referencing. How the logistics work in detail and who is responsible for which bits, I'm happy to take on notice. But I can confirm that there is no involvement of the department, in terms of a Politics in the Pub guest list. These sorts of functions and events are supported for our Prime Minister in the same way as they were supported for previous prime ministers of both political persuasions.

Senator McALLISTER: How many people have attended this year's functions?

Senator Cormann: I would have to take that on notice. But these sorts of events are organised together with relevant local members of parliament—which I suspect is not dissimilar to the way these sorts of events are organised by the personal support staff of the Leader of the Opposition, as he travels around the country.

Senator KITCHING: If you could take it on notice that would be good. I guess that's also incorporating the question about whether records are kept on the numbers. Who pays for the events?

Senator Cormann: These arrangements would be the usual arrangements. If you have any questions about specific events, I'm happy to take those on notice. But the arrangements that apply for this Prime Minister are the same arrangements that applied for previous prime ministers for these sorts of events, including for former prime ministers Rudd and Gillard. The arrangements, I suspect, would be similar when events are organised by the support staff for Mr Shorten in his capacity as Leader of the Opposition. I think it's entirely appropriate for senior representatives of parliament, on all sides of parliament for that matter, to engage with the public through these sorts of events, and it is appropriate for these events to be supported.

Senator KITCHING: So you will take that on notice, is that correct?

Senator Cormann: To the extent that I can add to the information I have just provided you, yes.

Senator KITCHING: Thank you. Are the events open to the public?

Senator Cormann: I've already answered that question.

Senator KITCHING: For example, both you and the chair have indicated that perhaps a local member might be part of the organisational arm of that function—are the events therefore open to, for example, Liberal Party members? Or are they open-slather events?

CHAIR: Senator Kitching, I can tell you that I've seen them advertised on Facebook, where members have put up a post inviting people to come. They're not secret.

Senator Cormann: Like all parliamentary representatives, the Prime Minister meets with many members of the community at large. From time to time, like every member of parliament, he engages with party members. I don't think that that would be a surprise to anyone. I'd be very surprised if Mr Shorten didn't from time to time meet with various members of the Labor Party or indeed, at various times meet with members of the public. I can confirm—breaking news for the Senate Finance and Public Administration Committee!—from time to time, the Prime Minister meets with members of the Liberal Party, and from time to time, he meets at public forums and community events with members of the broader community—as I'm sure every single member and senator does from time to time, although some of our House of Representatives colleagues might reflect on the frequency with which those of us in the Senate do that on an ongoing basis.

CHAIR: Very unfairly, I might add.

Senator Cormann: I totally agree, and I think there would be bipartisan agreement on that point.

Senator KITCHING: You're meeting with some people on Saturday.

Senator McALLISTER: But at what time?

Senator Cormann: I had a very good meeting on Saturday.

Senator McALLISTER: A very early morning meeting, as I understand it.

Senator Cormann: No, it was an eight o'clock meeting, which is usually the time our state executive meets.

Senator McALLISTER: Is that right?

Senator KITCHING: The chair's mentioned that he's seen them advertised on Facebook—are they also advertised in local papers or on radio?

Senator Cormann: It depends. Unless this is a fishing expedition—if you've got a question in relation to a specific event, I'm happy to assist you.

Senator KITCHING: Yes, I do.

Senator Cormann: But, other than that, it's going to be very hard for me to assist you because the Prime Minister has a great diversity of events he attends. Some of them are attended by members of the fourth estate, some by members of the local community organisations and others by party members. The way a forum or event is advertised depends on what the particular topic, issues or occasion is. I can't give you a blanket statement about how every event is advertised as a matter of course but, if you have any queries in relation to a specific event, I'm be happy to assist.

Senator KITCHING: I'm going to come to some, but can I just ask about the vetting—does anyone vet the guest lists?

Senator Cormann: Again, I assume that, whether it is the Leader of the Opposition or the Prime Minister, there would be a level of scrutiny that is applied in the context of security requirements. How that works in practice, I'll take on notice whether there's anything I can add to that.

Senator KITCHING: Would there be any specific vetting processes to ensure that nobody attended who could, for example, embarrass the Prime Minister or the government?

Senator Cormann: Are there vetting processes at Labor Party branch meetings that are attended by Bill Shorten? Are people from the Left faction excluded? How does that work in the Labor Party? Do you protect Bill Shorten from getting attacked by people from the wrong faction in Victoria? What sort of question is that?

Senator KITCHING: Are you aware of any guest vetting done for an event at the Carindale Hotel on 17 March?

Senator Cormann: I'm not aware of the specific arrangements for and logistics of an event for the Prime Minister on the 17 March, but if you would like me to enquire with the relevant people in relation to specific arrangements for that event, I'm very happy to assist and provide that information on notice.

Senator KITCHING: That would be very useful, if you could.

Senator Cormann: And I guess that you will share with me the specific arrangements for Mr Shorten's various events.

Senator KITCHING: I'm on this side of the table.

Senator Cormann: Mr Shorten is equally supported in terms of his activities—

Senator McALLISTER: I don't think that's true.

Senator Cormann: through public taxpayer resources.

Senator McALLISTER: I don't think that's true.

Senator Cormann: Well, it is true—it is precisely true.

Senator McALLISTER: Equally supported?

Senator KITCHING: Can I ask about a particular event—

Senator McALLISTER: Equally?

Senator Cormann: He's equally supported by taxpayer resources—absolutely, he is.

Ms Foster : Equally, he is.

Senator Cormann: Equally, he's supported.

Senator McALLISTER: Equally, he is—thank you, Ms Foster; you are so helpful.

Senator Cormann: I didn't say—unless you're telling me that the Leader of the Opposition has got the same level of responsibility as the Prime Minister of Australia, obviously, there are certain differences that come with the level of responsibility.

Senator KITCHING: Can I just describe an event which happened at the Carindale Hotel.

Senator Cormann: So you attended, did you, Senator Kitching?

Senator KITCHING: No. In fact it's been in the media, Senator Cormann.

Senator Cormann: So you're relying on reports from whom?

Senator KITCHING: I'll come to that, and then we can have a discussion about it. Media reports from the event describe a man being issued with an infringement notice from police after yelling abuse because the Prime Minister had been served at the bar before he was. Are you aware if this man was an invited guest?

Senator Cormann: I'm not aware of the circumstances. As it happens, the event that you're describing, I sort of caught it on the television news a few days ago, I think, but I'm not aware of the specific circumstances.

Senator KITCHING: You're aware of the incident though?

Senator Cormann: I'm aware of what I saw in a split second on a distant television screen while I was dealing with other matters, yes.

Senator KITCHING: There was no vetting done by the department on the Carindale hotel event?

Senator Cormann: I've already indicated to you that the department was not involved in organising this event.

Senator KITCHING: The man in question appeared on the Kyle and Jackie O Show on KIIS FM this morning. Apparently, the man goes by the nickname 'Bluey'. Bluey was asked about the incident and I'll just read the transcript of the interview—it's quite short—and then I'd like to ask some questions about it.

CHAIR: Perhaps you could table the transcript? That would be of assistance to the committee members.

Senator KITCHING: Sure.

Senator Cormann: It is a matter of utmost public interest that the Labor Party is pursuing the Finance and Public Administration Committee of estimates is the interview on—Jackie O?

CHAIR: Kyle and Jackie O.

Senator Cormann: On radio this morning. So we're now going to talk about an interview with 'Bluey' who made obscene gestures at the Prime Minister in a pub.

CHAIR: Allegedly.

Senator Cormann: That's the No. 1 priority that the Australian Labor Party wants to talk about in the Finance and Public Administration Committee of estimates. That is unbelievable.

CHAIR: I'm sure it's the first time anyone has made an obscene gesture in a pub.

Senator Cormann: Senator Kitching, I have to say, you're making the Labor Party in Victoria proud. I think they think you have picked the public policy priorities in the best possible way. That is what Australians are talking about.

Senator KITCHING: Hang on, Senator Cormann—

Senator Cormann: Families around Australia wanting to get ahead—

Senator KITCHING: I'm just coming to you with it—

Senator Cormann: they will want to know what Bluey had to say this morning on Kyle—what is it?

Senator KITCHING: If you don't mind, this is my copy of the transcript—

Senator Cormann: Kylie and—Kyle and Jackie O.

Senator McALLISTER: We will let the listeners of Kyle and Jackie O know that you think of them with contempt.

Senator Cormann: I don't think of them in that way at all. I think it is an important show. But I'm not sure whether the committee exploring the budget in the finance and public administration estimates committee should treat it as a top priority.

Senator KITCHING: I don't want to leave you with bated breath. The transcript is coming.

But the Labor Party is very focused on what Bluey had to say on This Kylie and Jackie O Show this morning.

CHAIR: Minister, I think Kyle and Jackie O will be running that as an endorsement from now on: 'It's a very important show'—Minister for Finance.

Senator KITCHING: They'll take advertising—

Senator Cormann: I think they would be very pleased to hear me talk about Kylie and Jackie O with my good Australian accent.

Senator KITCHING: They'll love this. They might run through the transcript.

CHAIR: Immensely, it will boost their ratings no doubt.

Senator Cormann: I am really pleased that Senator Kitching is doing such good research into the public policy priorities of Australian families.

Senator McALLISTER: While we're waiting, can I just finish up some questions. It will only take about two minutes.

CHAIR: Please.

Senator Cormann: You actually have a question?

Senator McALLISTER: I have a question.

Senator KITCHING: I do. I have many questions, Senator Cormann. I'm coming back to you. But I'm interested that you're so sensitive about it.

Senator Cormann: We have shifted away from Bluey now. Sorry.

Senator McALLISTER: Minister, I want to ask a follow-up question about the advice Ms Foster provided earlier. Your advice is that the Department of the Prime Minister and Cabinet does not provide any support to the government staffing committee or to the PMO in relation to the government staff statement of standards. Can you advise who does? Is there a departmental responsibility for providing advice of any kind?

Ms Foster : I don't know, Senator. I'm not being tricky—

Senator McALLISTER: No, I know. I'm just wondering if the minister might be able to assist, because the alternative proposition is that this something that lives with the SMOS. In the interest of being abundantly helpful, do you think it's the Department of Finance? I'm trying to ascertain—

Senator Cormann: The Department of Finance that what?

Senator McALLISTER: I'm trying to ascertain which government department has responsibility for the ministerial staff statement of standards. It has gone back and forth, back and forth. Do you think it's the SMOS?

Senator Cormann: The Department of Finance has an administrative role in relation to it and if you want to ask them questions about their administrative functions, I'm sure—we have actually traversed that with finance in previous estimates.

Senator McALLISTER: I will come back to it when we get to the finance portfolio. I'm really just trying to understand. Ms Foster tells me that PM&C has no role. We accept that. I don't think that's disputed.

Senator Cormann: That's right. Obviously, the Prime Minister has overall responsibility. The Prime Minister, as we went through at some length last time, is supported by the Prime Minister's office, and the finance department has got various administrative responsibilities that flow from relevant decisions that are made from time to time.

Senator McALLISTER: I'm really just trying to get a straight answer, Minister.

Senator Cormann: I've given you a straight answer.

Senator McALLISTER: I did run through this with Ms Foster earlier but you may have been otherwise occupied. Question on notice No. 37—

Senator Cormann: No. I heard you.

Senator McALLISTER: You heard the bit? The ministerial staff statement of standards is the responsibility of the PMO and the government staffing committee and, in that, they are supported by the Department of Finance.

Senator Cormann: That's right—administratively. And we've gone through that in February too, as I've just indicated.

Senator McALLISTER: Okay. Great. That's fine. We'll come back to it at—

Senator Cormann: That's what I've just confirmed again.

Senator McALLISTER: I'm trying to understand whether by using the word 'administratively' you are deliberately narrowing the nature of the support that's provided. You may not be; I'm just trying to understand.

Senator Cormann: No, I'm not. We had a very lengthy conversation about this in the February estimates. The boundaries are still the same.

Senator McALLISTER: That was more about appointments. This is about standards.

Senator Cormann: No. It went across a range of different areas, I think you will find.

Senator McALLISTER: Okay. So, in relation to the statement of standards specifically, I should direct questions about that to the Department of Finance?

Senator Cormann: You can direct questions to the Department of Finance, yes.

Senator McALLISTER: Terrific. Chair, that's it on that issue.

Senator KITCHING: We're just waiting on the photocopying.

CHAIR: Yes. We have the transcript, we are just waiting on a correct version of it.

Senator KITCHING: Not 'a correct version'. I don't want you to think it was an incorrect version.

CHAIR: Sorry. I wasn't reflecting on you, Senator.

Senator Cormann: I want to add some information, which is relevant in the context of Senator Kitching's line of questioning.

Senator KITCHING: I thought you wanted to only discuss policy.

Senator Cormann: The committee might be interested to know that members of the CFMEU attended the PM's 'Politics in the Pub' last Tuesday, not the one you asked questions about. This was in Dunkley with Chris Crewther, and the Prime Minister took questions from members of the CFMEU that were in attendance.

Senator KITCHING: Why wouldn't he? Is there some suggestion he shouldn't?

Senator McAllister interjecting

Senator Cormann: As you can see, we are very welcoming of all people that have questions of the Prime Minister, not just—

CHAIR: The vetting must be very generous if it allows CFMEU members, with their track records, to attend.

Senator Cormann: Indeed. Not only do we end up in the pub with Bluey but also with members of the CFMEU.

Senator McALLISTER: Is that really necessary? Really. That is actually offensive. Actually, James, It is offensive. You shouldn't do that. I'm quite serious. People have a right to join their unions and—

Senator KITCHING: We do have freedom of association and it is an important principle in a democracy.

CHAIR: The track record of CFMEU officials is well known, and we can debate that in other committees.

Senator McALLISTER: We can debate that, but you were talking about members in explicit terms.

Senator KITCHING: Going to the transcript, the man in question appeared this morning on Kyle and Jackie O and he goes by the nickname 'Bluey'. So Bluey was asked about this incident. I will read the transcript for you and then I'll ask you some questions.

Jackie O, one of the radio hosts, asked: 'So you wanted a drink, obviously, just as much as the rest of us, and got a little annoyed that Malcolm Turnbull jumped the queue?' Bluey responded: 'Yeah, it's exactly right. I was there with a friend of a girl of mine and I was just there to have a couple of pokes on the pokies, and I was in line for at least about five minutes. I was at my local. I go there most afternoons after work. Then, when I finally got to be served, the Prime Minister just pushed in, and I was like "What?" I don’t care who you are, even if you’re the PM, when you walk into my local, everyone should be equal.' A fair sentiment, one might think.

Why did the Prime Minister push in, Senator Cormann? Why couldn't he just wait his turn like everyone else does?

Senator Cormann: I don't accept, as you appear to, the representation of Bluey. He would say that, wouldn't he? I wasn't there. I didn't witness it. I wouldn't accept it necessarily as read that that is the way events unfolded.

Senator KITCHING: You are here representing the Prime Minister. Maybe you can take it on notice and ask him why he wasn't able to wait his turn.

Senator HINCH: He wanted Bill Shorten's pie.

CHAIR: You seriously want the finance minister to take on notice—

Senator Cormann: Senator Hinch is quite right. I might see whether we can find any information in the archives about the poor lady that was left in tears who sold Mr Shorten a pie and who was on the receiving end of a torrent of abuse from then Minister Shorten—

Senator McALLISTER: Well, I think those facts are disputed. I don't think 'torrent of abuse' is accepted as an account of what happened.

Senator Cormann: on the back of him not clearly understanding what it is that she was saying to him.

Senator KITCHING: Kyle Sandilands then said: 'Exactly, exactly', to the sentiment—if you walk into my local, everyone should be equal—

Senator Cormann: Do you have shares in the Kyle and Jackie O Show?

Senator KITCHING: Jackie O: 100 per cent. Kyle: 'There is no place where every man, woman is more equal than the local pub.' That's the end of it. But I do want to ask about—

Senator Cormann: Well, I think Australia will be stronger, more prosperous, more peaceful, more secure, as a result of you having asked these questions.

Senator McALLISTER: Why don't you let the senator ask the questions.

Senator KITCHING: Does the Prime Minister think he's better than anyone else? Why did he push in to the queue?

Senator Cormann: That is a ridiculous question. I reject the premise of that question.

Senator KITCHING: Has the Prime Minister apologised to Bluey?

Senator Cormann: You're making the mistake of just accepting, without question, the assertions that were made.

Senator KITCHING: He'll know, though, won't he?

Senator Cormann: The Prime Minister is somebody who conducts himself with the utmost courtesy and respect to other Australians, and if there was a misunderstanding then it would have been precisely that—a misunderstanding. I'm very certain that no harm would have been intended in the context where there would have been a lot of people in the pub waiting to hear from the Prime Minister. Quite frankly—

Senator KITCHING: So it's okay—

Senator Cormann: Let me finish—

Senator KITCHING: So, in fact, he is more important than other people?

Senator Cormann: You've asked this very important question, so let me finish providing the answer.

Senator KITCHING: He needed to get his beer first because everyone was waiting to listen to him?

Senator Cormann: That is ridiculous. Honestly!

Senator KITCHING: So, he should have pushed in? Really? And you're saying that's okay?

Senator Cormann: Chair, I was answering the question. The Prime Minister treats Australians with the utmost courtesy and respect. He engages with them with great charm. Of course, if there was a misunderstanding, it would have been just that—a misunderstanding. There's absolutely no way the Prime Minister would have intentionally conducted himself the way Bluey is asserting. To be frank, I can't believe, Senator Kitching, you are spending this amount of time on this sort of trivia.

Senator KITCHING: Has the Prime Minister apologised for pushing in?

Senator Cormann: I have not had a conversation with the Prime Minister about this event. I am not aware. I have no idea. I'm happy to ask him and, if you want me to provide an answer on notice to that question—

Senator KITCHING: Yes, please.

Senator Cormann: if that is what you really want—

Senator KITCHING: Please.

Senator Cormann: then I will get the necessary government processes in train to ensure we can get to the bottom of this very important matter of public interest.

Senator KITCHING: Thank you. Do you think the Prime Minister's pushing in contributed to the incident?

Senator Cormann: I reject the premise of your question. You are just accepting as read one version of events. There are always two sides to any story, and I don't think you should just accept what you've read.

Senator KITCHING: Which means that you can't dismiss Bluey's version of events.

Senator Cormann: I wasn't there—

Senator KITCHING: If you truly believe there are two sides—

Senator Cormann: Senator Kitching, as I've already—

Senator KITCHING: By your own words, you accept that—

Senator Cormann: Honestly! You might think you are like the surgical Inspector Clouseau here, but let me tell you: I wasn't there. You weren't there. I do accept that different people can experience the same event in different ways, depending on their perspective. What I'm saying to you is that I'm very, very confident that the Prime Minister would not have intentionally conducted himself the way Bluey is asserting, and if that is what happened, or that is what Bluey perceived happened, it would have been a misunderstanding. I can't believe that we're spending this amount of time talking about this particular encounter of the Prime Minister of Australia with a member of the public in a pub.

Senator KITCHING: Can I move to another event at the Peachtree Hotel. It's also known as the 'Peachy' event, which I understand was held on 14 May. Was any vetting of the venue itself done? Is any vetting done of venues where the Prime Minister goes?

Senator Cormann: I've already told you that I'd take that sort of question on notice. You've asked that question on several occasions before. I've taken it on notice on several occasions. I'm not aware—myself, personally—what the specific arrangements are. I think you'll find, as I also said on previous occasions earlier today, that it probably depends on the nature of the event and the venue where the event takes place.

Senator KITCHING: So, you're going to take on notice whether vetting is done and whether vetting of the Peachtree Hotel, which is also known as the Peachy, was done. Are you aware that the New South Wales police minister, Troy Grant, named the Peachtree Hotel as one of New South Wales's most violent licensed venues in 2015 and that the Peachtree recorded 15 violent events in that year?

Senator Cormann: I was not aware, but I take your word for it.

Senator KITCHING: Could you put this to the Prime Minister or his office?

Senator Cormann: What? The—

Senator KITCHING: I want to know if they were aware that the NSW police minister had named the Peachtree Hotel as one of New South Wales's most violent licensed venues.

Senator Cormann: With that question, you're suggesting that the Prime Minister shouldn't have attended that venue? Is that—

Senator KITCHING: I'm just asking whether he was aware—or his office. It goes to the vetting of the venue, which is why I was asking you before. Are you also aware that last year two men were arrested in separate incidents for supplying prohibited drugs at the Peachtree Hotel?

Senator Cormann: I was not aware.

Senator KITCHING: They were arrested as part of New South Wales Police's operation sweeper, which targeted drug-related crime in the Penrith CBD on 7 April last year.

Senator Cormann: Is this a venue that continues to operate legally in New South Wales? Is that what we're talking about?

Senator KITCHING: I am asking whether the Prime Minister, or his office, does any vetting of the venues, which he intends to—

Senator Cormann: I have already taken that on notice.

Senator KITCHING: Thank you. Does the department or the PMO seek advice, or information, from the Australian Federal Police or state police services on licensed venues before bookings are made for these events?

Senator Cormann: I've already indicated to you that the department is not involved in Politics in the Pub events. The Prime Minister is supported in this role, in relation to those responsibilities, in the same way as prime ministers before him have been supported, and relies on the same level of security support as would have been in place for his predecessors.

Senator KITCHING: I might move on to another topic.

CHAIR: You certainly may, Senator Kitching, after 20 minutes on pub attendance.

Senator KITCHING: I will go to the cost of cabinet catering. I would like to ask some questions about arrangements for catering for cabinet meetings. I understand that catering is provided for cabinet meetings, is that correct?

Ms Cass : That's correct. Modest catering is provided for cabinet meetings.

Senator KITCHING: Modest catering, is that a hot meal?

Ms Cass : If a meeting is held around 8 pm in the evening then dinner is provided but alcohol is not provided.

Senator KITCHING: Does it include deserts, tea and coffee?

Ms Cass : It can include hot dishes, salads or snacks.

Senator KITCHING: No alcoholic beverages?

Ms Cass : No alcohol.

Senator KITCHING: Are the cabinet committee meetings catered or just the full cabinet?

Ms Cass : It is cabinet and cabinet committee meetings. If they are held around 8 pm they will be served a light meal, and, similarly, if it is around midday to 2 pm then a light lunch will be provided.

Senator KITCHING: Is that the majority of cabinet and cabinet committee meetings that would be around those times of the day?

Ms Cass : No. It's infrequent.

Senator KITCHING: I understand that during the Rudd-Gillard Labor government, cabinet ministers were required to make a contribution towards the cost of catering for cabinet meetings. That's correct isn't it?

Ms Cass : That is true. My understanding is that a trust fund arrangement had previously operated. That was, I understand, found to be fairly cumbersome and resource intensive to actually track down payments and keep a tally of payments.

Senator KITCHING: I understand that asking ministers to contribute towards the cost of cabinet catering has reflected a long-standing practice that was followed by previous governments, including the Howard government, is that correct?

Ms Cass : I believe it was a practice. I believe it ceased in September of 2015.

Senator KITCHING: What was the rationale for asking ministers to make a contribution towards the cost of cabinet catering?

Ms Cass : I believe it was about them making a contribution. I think the average costs that we've got by financial year going back many years indicate that there has been consistent, moderate and average expenditure for catering over a long period.

Senator KITCHING: How much does Prime Minister Turnbull require his ministers to contribute towards the cost of catering for cabinet meetings?

Ms Cass : This arrangement ceased in September 2015.

Senator KITCHING: So, nil contribution.

Senator Cormann: The officer has already answered that question. What the officer has indicated is that the arrangement was found to be cumbersome and that it ceased in September 2015.

Senator KITCHING: September 2015: that was Prime Minister Abbott. Prime Minister Turnbull didn't reinstate the requirements for ministers to contribute?

Senator Cormann: I don't know the specific date. Have you got the specific date?

Ms Cass : The arrangement of the trust fund, I understand, ceased in September 2015, and since then PM&C has funded moderate—average—costs for the catering at cabinet and committee meetings.

Senator Cormann: I've got to say, adding to this, I'm not aware ever of the trust fund having been in operation. So it might have existed. It's the first I've heard of it myself, so there you go.

Senator KITCHING: I followed your stellar career, Senator Cormann! So, when have you been in cabinet?

Senator Cormann: September 2013. To the best of my recollection, I can't remember ever having been asked to contribute to a trust fund.

Senator KITCHING: So from September 2013 no minister would have contributed? The trust fund might have existed, as you say, but no one's made—

Senator Cormann: Well, it may have existed. For all I know, it might have existed under the previous government, and the arrangement under the previous government, for a period, might have been the same. I'm quite happy to provide you that further information on notice. But what Ms Cass has indicated to you is that at some point the decision was made that the process was cumbersome and inefficient. I have never had any awareness at all that there was such a process. That's the first I've heard of it—to the best of my recollection, I should hasten to add.

Senator KITCHING: Thank you. I appreciate your clarifying that. In fact, from September 2013, when former Prime Minister Abbott was elected, no-one made any contributions?

Senator Cormann: It's the only period over which I have any recollection, because I wasn't there prior to September 2013. What I will identify on notice is precisely at what time contributions to the trust fund that may have continued to stay in existence, but by the sounds of it was dormant, stopped being made.

Senator KITCHING: Can I ask, Senator Cormann: why did the Liberal government decide that the taxpayer should foot the entire bill for ministers' food?

Senator Cormann: I'm not confident that that is what happened.

Senator KITCHING: But you've just said that you have never made a contribution. In fact, it's news to you now that in fact this arrangement—

Senator Cormann: Yes, but your question assumes that the arrangement was being applied and administered under the previous Labor government. I'm not accepting that assumption. So I will take it on notice and check, on notice, what the arrangements were, now that you've raised the issue.

Senator KITCHING: Thank you.

Senator Cormann: I will check what the arrangements were under the previous Labor government.

Senator KITCHING: Sorry, in this current government?

Senator Cormann: In the previous Labor government. I will check what the arrangements were.

Senator KITCHING: In the former government, the Rudd-Gillard government, ministers did make a contribution.

Senator Cormann: Up to a period, is what I've heard Ms Cass say.

Senator KITCHING: No, I think what Ms Cass said was that that arrangement ceased—I think this is correct, Ms Cass—in September 2015.

Senator Cormann: No, Ms Cass said that the trust fund ceased. That is a very different—

Senator KITCHING: So the trust fund existed. We can ask—

Senator Cormann: That is a very different—

Senator WONG: Hang on: Chair, I've just walked back in—

Senator Cormann: Hang on; I haven't finished.

Senator WONG: She hasn't finished the question. You're interrupting her again.

Senator Cormann: No, she had actually finished her question, and I was—

Senator WONG: Yeah, I've made a contribution. Is that what it was?

CHAIR: Order!

Senator Cormann: I was trying to get an answer out and she was coming up with the next question. The time of ceasing the trust fund is not the same as the time of ceasing the arrangement that you're describing, Senator Kitching. What I need to identify on notice is precisely when the arrangement that you are talking about ceased. In my estimation, that wasn't September 2015.

Senator KITCHING: I think Ms Cass said that the contribution for the cabinet meeting catering did occur during the Rudd-Gillard government; I think that's correct, Ms Cass, that there were payments made?

Senator Cormann: We are taking on notice when these arrangements—

Senator KITCHING: We can go back to the Hansard tomorrow.

Senator Cormann: What she said was that this happened at some point in the past and that at some point—

Senator KITCHING: No.

Senator Cormann: She made the point that at some point the arrangements—

Senator WONG: Maybe we should ask her what she said.

Senator Cormann: It is actually on the Hansard record.

CHAIR: Order!

Senator Cormann: The point that was made, and I'm answering on behalf of the government—

Senator WONG: Be quiet, Ms Cass!

Senator Cormann: is that there was an arrangement in place and at some point it was discontinued because it was found to be cumbersome. That is the word that Ms Cass used, and I have taken on notice the precise time at which the arrangement changed. What I'm saying to you is that the ceasing of the trust fund is not the same time period, I believe, as the ceasing of that arrangement. The trust fund may well have remained in place, dormant over a period while—

Senator KITCHING: We can, in fact, just ask Ms Cass now, again. But my understanding from Ms Cass was that the Rudd-Gillard government ministers made a contribution to cabinet meeting catering. Is that correct, Ms Cass?

Ms Foster : Could I answer?

Senator WONG: Yes—it's correct. As a former cabinet minister. Thank you.

Ms Foster : We don't have a start date for this. What we have is an end date. We could take that on notice to find out.

Senator WONG: Prior to the end date, can you confirm that was the arrangement?

Ms Foster : We will do that on notice.

Senator WONG: Why can't you do it—

Senator Cormann: I've already taken it on notice. You're trying to repechage.

Senator WONG: I'm just letting you know, as a cabinet minister in those governments, that we did. So there you go.

Senator Cormann: The evidence that was provided, at some point, was discontinued. If you want me to provide a list of the ministers who did and didn't pay, the evidence was—

Senator KITCHING: No, I wasn’t—but now that you've raised it, that's a good question.

Senator Cormann: that it was hard to chase people up around payments.

Senator KITCHING: Senator Cormann, you're very helpful.

CHAIR: Order! Senator, continue.

Senator Cormann: I will provide, in detail, information on notice about what was done at what point. Don't worry, you'll get the formation. But I'm not going to let stand the proposition that September 2015 was the first time, necessarily, that this arrangement ceased. It's when the trust fund ceased.

Senator KITCHING: I think, Senator Cormann, though, Ms Cass, that I asked about the Howard government and, in fact, ministers in that government made a contribution to cabinet meeting catering. We had that discussion as well. So it has been in place for a long time.

Senator Cormann: I've taken on notice—

Senator KITCHING: It's just so that we're clear, so that we can clarify what the time line is. There had been, for a long period of time, a trust fund that people paid money into, and that contributed to the cost of catering for cabinet meetings. In September 2015 that arrangement ceased. I think that is correct. What you have added to the evidence, Senator Cormann, is that you have never made a payment, so maybe from September 2013 nobody contributed.

Senator Cormann: I can't recall ever having been asked to make a payment. That is indeed what I've said. What I will verify on the record is when the arrangement changed. I think you will find that the arrangement changed before September 2013.

Ms Cass : To clarify, I don't know when this arrangement started. It would be safer for all of us to go back and find out the accurate information.

Senator WONG: Fair enough; no worries.

Senator KITCHING: Senator Cormann, given your government is cutting $17 billion from schools and billions of dollars from hospitals, is it too much to ask you and your cabinet colleagues to make at least a small contribution towards the cost of your own meals?

Senator Cormann: I reject the premise of the question. We're increasing funding for schools. We're increasing funding for hospitals. We're increasing it substantially. We're increasing it in a way that funding is guaranteed within the budget—not like under the Labor Party, where spending was out of control. Spending growth was out of control.

Senator WONG: Net debt, lower under me than you. It's doubled. Actually, not in 2012.

Senator Cormann: And you left behind a spending growth trajectory that was locked into legislation.

Senator WONG: He's just telling lies!

CHAIR: You can respond after he has finished.

Senator WONG: He is just telling lies.

CHAIR: Order!

Senator Cormann: You imposed a deceiving assumption on your spending—

Senator WONG: Look at PEFO.

Senator Cormann: trajectory over the medium term by saying that—

Senator WONG: Your MYEFO was a politically driven document.

CHAIR: The finance department is tomorrow.

Senator WONG: I'm not coming, don’t worry.

Senator Cormann: You imposed an assumption on your spending growth trajectory that you would control spending growth to two per cent above inflation, year on year—

Senator WONG: Net debt higher under you, though.

Senator Cormann: when the trajectory that you had locked into legislation was closer to four per cent per year above inflation, year on year. That is a matter of public record. You of course locked into legislation spending growth in years 5 and 6, outside the budget forward estimates, in a deliberate attempt to mask that. Our government continues to increase funding for schools and hospitals, and we are increasing it in a way that is affordable and sustainable within the Australian economy.

Senator KITCHING: Ms Cass, I want to ask, firstly: what's an example of a modest light hot meal? Can I get an example of that?

Ms Cass : It can be a small main meal—sausages and mashed potatoes, a stir-fry, or a salad.

Senator KITCHING: Is it possible to break down the cost of catering for cabinet and cabinet committee meetings into the following categories: food, beverages—there are no alcoholic beverages, but other beverages, and any other costs? And is the catering provided directly by the Department of Prime Minister and Cabinet, or by the Prime Minister's office, or is it provided by an external contractor?

Ms Cass : The catering is provided by the Department of Parliamentary Services.

Senator KITCHING: By DPS, okay. Does DPS pay for it—do they owe money to their own catering department? Yesterday we had evidence from DPS that there was quite a significant amount of money outstanding for catering. The catering is within their department, but how does that get charged?

Ms Cass : They invoice the Department of Prime Minister and Cabinet.

Senator KITCHING: Are they longer than a 30-day payee? Do they owe money for more than 30 days?

Ms Cass : I don't know about the billing and payment arrangements, so I will check that for you.

Senator KITCHING: You are going to take on notice how much PMC owes DPS, is that right? OK, good. Are we able to get a copy of those invoices?

Senator Cormann: We will take that on notice.

Senator KITCHING: Actually, Senator Cormann, I've got a problem with that, because—

Senator Cormann: With a copy of invoices?

Senator KITCHING: I don't mind about the invoices, but I do mind—

Senator Cormann: But that's what you—

Senator KITCHING: Can I just let you know that I am still waiting for responses to QONs, for example No. 688, which I asked on 5 February. I asked for a breakdown of the cost of catering for cabinet and cabinet committee meetings. I'm happy to table the QON again. I have been waiting since early February. I've had no response. It's not good enough. I don't want to keep taking it on notice. It will be another two and a half months, and we will be back here for the spring session!

Senator Cormann: I will take questions on invoices on notice and I will—

Senator KITCHING: I would like them responded to within the prescribed period, as all QONs should be.

CHAIR: Indeed, Senator Kitching. You may well be aware that ministers have mixed records in this area, including from your time in government.

Senator KITCHING: I am happy to table my QON from 5 February if that facilitates a response.

Senator WONG: Can I just ask PM&C: what is the reason for that question on notice not being answered yet?

Ms Cass : I will need to check on the answer.

Senator WONG: Can you check? I'll sit here and wait while you do that, please. Officials should come to estimates understanding the reason behind responses to QONs not being provided.

Ms Cass : Absolutely. To my knowledge, all of our QONs have been answered.

Senator Cormann: In my own portfolio, I follow these things through. But I will check in relation to the question you have referenced. Chair, if I may, officers from National Security Division and International Division have to attend NSC this evening. Is it possible for us to do international and security issues before 6.30?

Senator WONG: Yes. Can we just finish this off and then we'll start that?

CHAIR: Yes.

Senator WONG: If we just finish this topic. We've got, I think, essentially three categories for Mr McKinnon at al. Let me just check.

Senator KITCHING: In fact, I think Ms Cass could help. I've got two outstanding QONs—QON 688, as I indicated, and QON 689.

Ms Foster : Were they from the February estimates?

Senator KITCHING: Would you like me to table them?

Ms Foster : We can find them, thanks.

Senator WONG: Ms Cass, Senator Kitching is just saying to me it may be a chamber QON, so maybe we can come back to this.

Senator Cormann: I'll chase it up.

Senator WONG: The question on notice No. is 688.

Ms Foster : It's a parliamentary one.

Senator WONG: Yes. Sorry, that's what I meant by chamber QON.

Senator KITCHING: It was lodged on 5 February, and my recollection is that that was so it could be answered at estimates—so you knew that I was going to ask it.

Senator WONG: Do we have an answer as to why the chamber—

Senator Cormann: So we did answer all questions from the last estimates?

Senator WONG: Yes. Is there an explanation as to why that chamber question on notice hasn't been answered?

Ms Foster : Just trying to get one.

Senator Cormann: I'm chasing it up.

Senator KITCHING: Thank you.

Senator Cormann: If I may just provide some information. In our cabinet meetings, there's no alcohol provided, whereas I'm advised—and Senator Wong might be able to assist—that alcohol was part of the dining arrangements in the previous cabinet, and the trust fund only covered 50 per cent of the expenses, which was to account for the alcohol consumed. There is no alcohol consumed at our cabinet meetings.

Senator McALLISTER: Mr McKinnon, you would be aware that The Sunday Telegraph had a story on 29 April which was entitled 'Let us spy on Aussies'. It revealed that there had been discussions between the Department of Defence and the Department of Home Affairs to allow their ministers to approve the surveillance of Australian citizens by the Australian Signals Directorate. When did the department first become aware of these discussions between Defence and Home Affairs?

When did the department first become aware of those discussions between Defence and Home Affairs?

Mr McKinnon : I was out of Australia at the time, but the department, I know, only became aware on the same day that it became public in the newspaper.

Senator McALLISTER: The journalist appears to have had access to classified documents, and they're photographed and published in the paper—or part of them are. They reveal that the Secretary of the Department of Home Affairs, Mr Pezzullo, wrote to the Secretary of Defence, Mr Moriarty, in February. Then a memo is produced, I think, from Defence to Minister Payne on 13 March. So you find out about it when it's published in April and it's drawn to your attention just because it's in the papers. A member of staff brings it to your attention?

Mr McKinnon : That's right.

Senator McALLISTER: So the Department of Prime Minister and Cabinet had not been involved in any of those discussions between Defence and Home Affairs up to that point?

Mr McKinnon : That's right.

Senator McALLISTER: What did you do when you found out? Did you make contact with either Mr Pezzullo or Mr Moriarty to clarify the situation?

Mr McKinnon : What I can say—and I think you may be aware of this, Senator—is that it has been confirmed by the Secretary of Home Affairs, the Secretary of Defence and the Director of ASD in a joint public statement on the issue that there is no such proposal for increased ASD powers to monitor Australian citizens. I did keep one eye on the proceedings yesterday for the Home Affairs portfolio where Secretary Pezzullo was quite clear. He said, 'I have not proposed nor would I ever propose that ASD powers be expanded in the way described in this'—

what he called-'false reporting.' He confirmed that he had asked the heads of Defence and ASD about whether the agency could be involved in disrupting cybercrime in cases where criminal networks used Australian telecommunications structures, but he made the clear distinction between signals intelligence and that sort of cyberactivity.

Senator McALLISTER: First, I'm just a little confused. I take the point that he disputes the specifics about what was under discussion, but plainly a discussion was taking place between ASD, Defence and Home Affairs—you don't dispute that?

Mr McKinnon : You say you're not disputing the specifics or there is some discussion about the specifics. That makes it sound like a trivial distinction, but they are very, very clear. There is no proposal, and never has been, to increase monitoring of Australian citizens or anything of that nature-no proposal for ASD powers to monitor Australians. So that's fundamental rather than specifics. I should say too, Senator, that I didn't—again, I was away at the time—but Secretary Parkinson did speak with the Prime Minister, Secretary Pezzullo and Secretary Moriarty about the leak itself on the day that it was in the media.

Senator McALLISTER: So you spoke to Mr Pezzullo and Mr Moriarty about the fact that the materials were in the media.

Mr McKinnon : That's right.

Senator McALLISTER: Did you make that phone call?

Mr McKinnon : I was away, and I have Kylie Bryant here who was acting in my position at that time.

Senator McALLISTER: Ms Bryant, this was drawn to your attention and you rang the gentleman in question?

Ms Bryant : No, the phone call was made between Dr Parkinson and the other secretaries. It was just brought to my attention by Dr Parkinson that the leak had occurred and that we had the statement from the secretaries.

Senator McALLISTER: What was the purpose of Dr Parkinson's call?

Mr McKinnon : We don't know, but you can only assume that it was to establish that he has a complete and accurate grasp of all of the facts and before he speaks to the Prime Minister. That would be my assumption, but I can check that for you.

Senator McALLISTER: Right. So when did he first brief the Prime Minister on this question?

Mr McKinnon : On that day.

Senator McALLISTER: On that same day?

Mr McKinnon : I say 'brief'. He was in contact with the Prime Minister but, again, PM&C was not aware of this issue until it was out in the media that day.

Senator McALLISTER: In his exploration of those issues, did he discover whether any other ministers or their officers had been aware of the discussions between Mr Pezzullo and Moriarty prior to their publication in the Sunday Telegraph?

Mr McKinnon : We are not aware. We'll take that on notice.

Senator McALLISTER: You mentioned the joint statement made by Mr Pezzullo and Mr Moriarty. Did the department have any role in coordinating or drafting that statement?

Ms Bryant : No.

Senator McALLISTER: So they coordinated it between themselves. Did they inform Dr Parkinson that they were intending to make a statement?

Mr McKinnon : We'll have to take that on notice. That would be, presumably, part of the discussion on the telephone, but I don't know.

Ms Foster : I can assist with that. Dr Parkinson spoke with the two secretaries the day before the media statement. The purpose of that call was to understand the antecedents of the story, what was actually going on and how they intended to respond.

Senator McALLISTER: So both gentlemen were aware on 28 April that the story was about to be published. And was that the date that Dr Parkinson spoke with them?

Ms Foster : It was the day before they released their joint statement.

Senator McALLISTER: And what was that date?

Mr McKinnon : Just to be clear, I think that Ms Foster's talking about a discussion before they released a statement but after it became public in the media that there had been the release of details.

Ms Foster : That's correct.

Senator McALLISTER: What is the date of the joint statement?

Mr McKinnon : We'll have to take that on notice. I'm not exactly sure of the date. Again, I wasn't—

Senator McALLISTER: I'm just trying to check whether I've got the statement in my documents. I had understood—and I may understand it wrongly—that this statement was released on 29 April, the same day as the publication. Is that correct? No-one can tell me?

Mr McKinnon : Sorry; we'll have to take that on notice.

Senator WONG: Can someone—one of the Labor staffers listening—please send the link.

Senator McALLISTER: Yes.

Senator WONG: We don't have the joint statement in the folders.

Senator McALLISTER: In any case, Ms Bryant, Dr Parkinson spoke to these gentlemen for the first time after the document was published?

Ms Bryant : That's my understanding.

Senator McALLISTER: And did they inform him then that they had already agreed to make a joint statement, or was this a conversation that occurred later?

Ms Bryant : I think we would have to take on notice the exact sequencing of the discussion with Dr Parkinson.

Mr McKinnon : I think a very clear thing out of Secretary Pezzullo's statements yesterday was that the assertion there was at any stage a proposal to collect information on citizens and covertly access their data was completely false. Categorically he hasn't proposed it and nor would he. But he confirmed that the discussion was about whether the agency could be used in disrupting cybercrime—so, in effect, rather than a single intelligence operation. So one thing was completely out of court but the other thing he confirmed that he was discussing with them. In that sense, the newspaper reporting was quite incorrect.

Senator McALLISTER: Right. That statement was made on the same day. Nonetheless, there is now confirmation, after the publication, that the cybersecurity function is being enhanced.

Senator WONG: Would you like us to read it to you—the joint statement that you don't appear to have?

Mr McKinnon : It would enlighten me. I don't have it with me.

Senator WONG: It was issued by Greg Moriarty, Michael Pezzullo and Mike Burgess. It said:

In relation to today’s media claim, there is no proposal to increase the ASD’s powers to collect intelligence on Australians or to covertly access their private data.

ASD’s cyber security function is being enhanced under reforms agreed by the Government last year in response to the 2017 Independent Intelligence Review.

The Parliament has already passed legislation establishing ASD as an independent statutory agency within the Defence portfolio on 28 March 2018 in response to this recommendation.

The cyber security function entails protecting Australians from cyber-enabled crime and cyber-attacks, and not collecting intelligence on Australians. These are two distinct functions, technically and operationally.

In the ever changing world of cyber security as officials we should explore all options to protect Australians and the Australian economy.

We would never provide advice to Government suggesting that ASD be allowed to have unchecked data collection on Australians—this can only ever occur within the law, and under very limited and controlled circumstances.

Senator McALLISTER: What I am confused about is that the article goes on to quote a number of different government personnel in response to the assertions, but Minister Payne says:

There has been no request to the Minister for Defence to allow ASD to counter or disrupt cyber-enabled criminals onshore.

So the article isn't talking about intelligence collection. Everyone in the article is talking about cyber. I'm just not certain, Mr McKinnon, why that distinction that you've referenced on a number of occasions in your evidence is so relevant. Perhaps you might explain why you think that's relevant.

Mr McKinnon : I'm referencing the evidence from Secretary Pezzullo yesterday. He was one of the secretaries involved.

Senator McALLISTER: You are the deputy secretary of national security. I'm asking why you think in relation to the onshore activities of ASD it's meaningful to draw a clear distinction between countering and disrupting cyberenabled criminals and intelligence collection.

Mr McKinnon : It is for the reasons the secretaries emphasised in their statements. Clearly those agencies are not and do not want to be seen to be asking for untrammelled access to the data of Australian citizens in any way. Anything that implies that is something that they feel they have to come out quite strongly against. From my perspective, when I got back from overseas that statement was already in place and I knew—or I believed that I knew—they were talking about cybereffects. That in itself is not anything that is completely new. The Cyber Security Strategy at the start of 2017 confirmed that Australia had an effects capability.

Senator McALLISTER: Nonetheless, what is under discussion between those two gentlemen clearly requires change to the legislative arrangements. That's why the document that's photographed and published is headlined 'ASD as a statutory agency: further amendments to the Intelligence Services Act 2001'. What is under discussion requires legislative change. It requires a change to the powers of ASD, does it not?

Mr McKinnon : Again, that's hardly surprising. As I said to you in an earlier conversation about Home Affairs, we changed, I think, 36 acts. If they were contemplating something, in their discussions they would have to talk about the policy objectives and the effect they are trying to achieve. They would have to talk about the cost of that, the right administrative responsibilities and whether the legislative framework allows for it. That, to me, is a standard part of policy discussion.

Senator McALLISTER: So these things are under discussion between Mr Moriarty and Mr Pezzullo?

Mr McKinnon : I am not saying that they are or not. They have made it very clear that they are not discussing mandatory or any sort of collection on Australian citizens. That's what I want to emphasise.

Senator McALLISTER: Perhaps if we can move away from mandatory collection—

Mr McKinnon : Sorry, 'mandatory' is not the word. It's collection on Australian citizens full stop.

Senator McALLISTER: Let's talk, then, about proposals to expand the role of ASD. This conversation is underway between Mr Pezzullo and Mr Moriarty, isn't it? That's not disputed?

Mr McKinnon : There are a range of conversations underway, because of the changed cyber environment that we are in. Whether that relates to the way that they assist in the job of ensuring that the cybersecurity arrangements of Australian agencies, Australian business and ordinary Australians are up to the task or challenge that they face now or whether they are talking about degrading the servers of criminals who are streaming appalling things into Australia's own internet environment, those sorts of things are being discussed.

Senator McALLISTER: They've been discussed to the point where Mr Moriarty is receiving correspondence from Mr Pezzullo and preparing a memo to his minister which contains some very specific proposals to expand the remit of ASD—and that's what's reported on the 29th of April by the Sunday Telegraph.

Mr McKinnon : As Mr Pezzullo says, he says that that was false reporting.

Senator McALLISTER: I find it hard to reconcile that with a picture of a document—and you and I know documents can be doctored—that says ASD is a statutory agency; further amendments to the Intelligence Services Act. It does sound like there is something reasonably specific; the journalist isn't writing about nothing. I haven't seen the documents.

Mr McKinnon : Again, I would suggest that, were there to be something involving proposed changes of legislation, we would be aware of it.

Senator McALLISTER: Have you seen copies of the documents referred to in the article, Mr McKinnon?

Mr McKinnon : No I haven't. And, again, when I got back from overseas that statement saying that there was never any contemplation of collection against Australian citizens was what I paid attention to. The idea that other aspects of ASD's performance could be considered, we would expect would be a constant part of the discussion. How do our intelligence agencies react to a very dynamic changing environment? If they're not considering that, they're not doing their job.

Senator McALLISTER: Well, it does cause quite a lot of confusion, doesn't it? Because the Minister for Home Affairs is asked about the proposal two days later, and he says there's a case to be made. Minister Bishop, the Minister for Foreign Affairs, says on 29 April, 'There is no plan.' I'm interested to understand what role the department played to ensure that there wasn't any confusion between the Department of Home Affairs and the Department of Foreign Affairs.

Mr McKinnon : I'm not aware that we did play any role, but I will take that on notice.

Senator McALLISTER: Can you rephrase your answer. That was one of those double negatives that could be misunderstood. Could we have another go?

Mr McKinnon : I'm not sure that we played any role at all, but I will check to see whether we did. There are meetings at all times at all levels, and so there's a secretaries committee and other different committees. I don't know whether there was any discussion at any stage at any of those as I was not there, but I will check.

Senator McALLISTER: Can you assist, Ms Bryant?

Ms Bryant : A similar answer, Senator, from me: when Mr McKinnon was away, I also had no direct involvement in any of these discussions.

Senator McALLISTER: There is obviously some confusion though, isn't there, because Minister Bishop and Minister Dutton are providing very different responses to similar sets of questions? Are they being briefed differently by their departments—is that the cause of the confusion?

Mr McKinnon : I have no idea what their departments have briefed them on, but you might think there seems to be some confusion, if you're looking at what Mr Pezzullo is saying about this being false reporting and the fact that there was some sort of a minute. It may be the case, for example, that one minister might be talking about cyber effects in certain limited circumstances within carefully defined parameters and another one might have been talking about the lack of any need for what was implied in the article, or stated specifically in the article: collection against Australian citizens. So maybe—and, again, speculation is dangerous, and I wouldn't go any further than that—there was confusion in the article and maybe they were being asked different things. That's as far as I would like to speculate, Senator.

Senator McALLISTER: Are you aware of whether or not Ms Bishop had been involved in the discussions or briefed in any way about this process Mr Pezzullo and Mr Moriarty were going through in terms of working up a proposal for a change in ASD's role?

Mr McKinnon : We don't believe that she was briefed. Of course, as you would be well aware, Senator, policy often starts small and then is worked out in circles. That's not her portfolio, and there's no reason why she'd be briefed at that early stage. There are ideas floated the whole time. I don't mean to be difficult, but I just don't know.

Senator McALLISTER: I think you mentioned that Mr Parkinson did brief the Prime Minister. Was that on 29 April?

Mr McKinnon : I had, in my briefing, just a note that he spoke to the Prime Minister and he also spoke to those secretaries.

Ms Foster : Can I clarify the dates now? The media story and the joint statement were indeed on the same day, as you said, Senator Wong. And Dr Parkinson spoke to the secretaries on that same day and he had no prior knowledge of the story before it broke.

Senator WONG: But he had prior knowledge of the statement, obviously.

Ms Foster : I believe he spoke to the secretaries before the statement.

Senator WONG: In order to: 'We've got to resolve this, so can you put a joint statement out so it's clear?'

Ms Foster : I don't think he was directing a joint statement.

Senator WONG: Let's not get into an argument about verbs. The issuing of a joint statement was discussed with the secretary. It was in the phone call. I think that was the earlier evidence. Is that not right? No?

Mr McKinnon : That's only—

Senator McALLISTER: I think it is. Ms Bryant is nodding.

Senator WONG: Sorry, I jumped the gun.

Ms Bryant : Whether it was discussed, but I know that the secretary was aware of the draft joint statement before it was released.

Senator WONG: I love the passive voices. Who made the secretary aware?

Ms Bryant : The other secretaries.

Senator WONG: Did PM&C get a draft of the joint statement before its release?

Ms Bryant : Yes, that's my understanding.

Senator WONG: Did that go to you?

Ms Bryant : No.

Senator WONG: I'm sorry, I'm jumping in. Did you get that?

Ms Bryant : It is my understanding that Dr Parkinson got a draft of the statement before it was released, and I saw a copy of that email later in the day.

Senator WONG: At the time he gets the draft, does he get any advice from a particular section or branch or officer in order to confirm that what's contained in it is correct?

Ms Foster : Can I just clarify? The statement was not discussed with him beforehand and he didn't see a draft.

Senator WONG: That's not the evidence that was just given.

Ms Foster : That's correct, Senator. I'm just correcting that evidence, I believe.

Senator WONG: Do you two need to talk?

Ms Bryant : Sorry, I will check. I'm sorry if I've—

Senator WONG: I'm not going to have a go at people who make mistakes, but that's entirely at odds with the evidence that was just given.

Ms Foster : That's correct. I think Ms Bryant's brief was not correct.

Ms Bryant : Yes.

Senator WONG: Your brief wasn't correct?

Ms Foster : The evidence that Ms Bryant has just given you was mistaken.

Senator WONG: Do you want five minutes on this so we can be clear on what the evidence actually is?

Ms Foster : I can be very clear that Dr Parkinson did not receive a draft before it was finalised and it was not discussed with him beforehand.

Senator WONG: Was the fact of the joint statement discussed with him?

Ms Foster : We'll clarify that, Senator.

Senator WONG: The content and the fact of. Did anyone at PM&C receive a draft of the joint statement before it went out?

Ms Foster : No. The fact of the statement was not known to him. And, no, nobody in PM&C received a draft.

Senator WONG: Why not? You've got a significant story with a pretty substantial policy change alluded to. We can have a discussion. Mr McKinnon, you and Senator McAllister were having a discussion about what the detail of it might have meant. Can I just set that aside for one moment? It's obviously a substantial proposition. You are the central department in the Prime Minister's department. I think this is before the difference between Ms Bishop and Mr Dutton becomes clear.

Senator McALLISTER: Yes, it is.

Senator WONG: I want to come back to that. You have a coordinating role; you want to make sure you get a reasonable and accurate outline of government policy. You've got three agencies involved. Why wouldn't PM&C be involved? I'm actually more disturbed by the correction than by the evidence earlier.

Mr McKinnon : Perhaps I can say it like this: there are, as I said, ideas being generated all the time—that's what we want to deal with a very dynamic environment—but the question is: at what stage do people engage with the broader system?

Senator WONG: This is a non-responsive answer, with respect, Mr McKinnon.

Mr McKinnon : No, there is a point to it.

Senator WONG: It is. I'm making a process point. You are now giving me, with respect, a discussion about the policy-making process, which is interesting but not germane to the question. The question is a process question and it is about the coordination role that PM&C have. If you have a substantial story and you have three agencies responding, why wouldn't you have PM&C have a look at it?

Mr McKinnon : A moment ago I thought you were talking about the proposal and my simple—

Senator WONG: No. Ms Bryant gave evidence that Dr Parkinson saw it. Ms Foster then corrects that. I'm not going to make an issue of that. People get the wrong brief et cetera; fair enough. Ms Foster says Dr Parkinson didn't see it, didn't know of the fact of nor the content of the statement before, and I'm actually just asking: why not? What's your role?

Mr McKinnon : Well, if the response from the three secretaries is, 'This is a complete nonstory, it is false news, there is nothing to it and we will be putting out a clear statement to that effect,' we wouldn't say, 'We want to carefully vet those words.'

Senator WONG: No, but that's not the evidence. The evidence that was just given is the PM&C didn't know there was a statement.

Mr McKinnon : Yes, but in the conversation that the secretary had—we will come back and give you more information—we don't need to see everything if it's complete junk and it's being characterised as such. And again, picking up from Mr Pezzullo's statement yesterday, the assertion is completely false; this is false reporting. If we understood that was to be the nature of every short, sharp statement, we wouldn't necessarily say 'We need to make sure of that as well.'

Senator McALLISTER: I'm interested that the Prime Minister didn't request that this be managed more carefully. I hear your assertion that it's a false story, but all of evidence to date suggests there is a proposal on foot to expand ASD's remit. It's revealed—partially, imperfectly—in a newspaper article on the front page of that newspaper, Dr Parkinson goes and talks to Mr Turnbull and there is no direction back to manage this in any way? Or to bring it to conclusion?

Mr McKinnon : I didn't say there was no direction. I said we didn't know.

Senator McALLISTER: Didn't know what?

Mr McKinnon : Well, we didn't have knowledge of the leak in advance of it; we didn't have knowledge of whatever the proposal or nonproposal was in advance of it. Again, following the clear statement from the secretaries, the issue, as far as taking data on Australian citizens without any particular restraint, seems to have been put to bed completely—or it should be.

CHAIR: I will take the opportunity to update anyone watching from home who has been following these matters with interest: the committee has received a letter from Mr John Lloyd in relation to his evidence yesterday. It is being uploaded to the committee website, but I'll read it for those who are watching from home:

Dear Senator

I have taken advice on the issue of public interest immunity when responding to questions raised in yesterday's Senate Estimate proceedings.

I have carefully considered that advice.

Public interest immunity will not be sought on the question of whether an inquiry is being conducted.

I confirm that there is no inquiry being conducted to which I am the subject.

I reaffirm my concern to ensure that the scheme of the Public Service Act 1999 is observed. Specifically, inquiries should be conducted in a manner that ensures the privacy of a complainant and a respondent is respected during the course of an inquiry.

Yours sincerely

John Lloyd PSM

Senator WONG: Can I just go back to another set of questions that Senator McAllister asked about the two different positions articulated by ministers? On 29 April when asked about the article which we've been referencing, the Minister for Foreign Affairs said 'There is no plan,' and then Mr Dutton said two days later, 'There is a case to be made,' and I think you answered, Mr McKinnon, in response to questions from Senator McAllister that you don't know how their departments brief them and, essentially, you didn't offer an explanation about why there were two different answers. Is that a reasonable—I'm trying to be fair?

Mr McKinnon : I know you are. I did speculate that maybe one minister was responding to some implied or actual assertion that there was a plan afoot to increase coverage in terms of signals intercept and another minister might have been talking about what might have actually been about cybereffects.

Senator WONG: What I'd suggest to you is, regardless of the details that you might try and rely on to reconcile those two statements to the public—Ms Bishop saying, 'There is no plan,' and Mr Dutton saying, 'There is a case to be made,' when asked about the same article—they are not the same position to the public. So I'm asking whether anyone from PM&C, as a consequence of these two different positions, or, at least, ostensibly different positions, being put by two senior cabinet ministers, did anything. Did anyone contact Minister Dutton's department or Ms Bishop's department and say, 'The relevant ministers appear to be on different pages. Can you clarify what the position actually is?' Was there any discussion as a consequence of the two senior cabinet ministers saying two different things publicly?

Mr McKinnon : I think that the statement was fairly clear. We have to apportion our efforts where there is a requirement for something, and here—

Senator WONG: So is the answer no? Can we just answer the question: did anybody do anything?

Mr McKinnon : What's the answer is that the statement was, in our view, conclusive—that we didn't need to do anything.

Senator WONG: Okay. In fact, the statement precedes Mr Dutton contradicting—what I would say, at least, in terms of how the public understood it—Minister Bishop.

Senator Cormann: Minister Dutton and Minister Bishop are very clear that their statements are consistent and that they are of one mind.

Senator WONG: I think the plain words demonstrate otherwise. Even if you're right, and black is white and white is black and all of that kind of stuff, I'm actually just saying that if you've got two public messages—an article says Aussies are going to be spied on, one minister says, 'There is no plan,' other minister says, 'There is a case to be made'—surely someone thinks, 'That's two different messages. We're going do something about it.' But is your evidence that nothing happened at an officer level?

Mr McKinnon : My evidence is that, were there a need for coordination, PM&C would see that role and step into it, as they often do. What you're saying is not unheard of. With a statement like there was, though, there is no need. There was no need.

Senator WONG: Minister Dutton's statement came after the joint statement to which you're talking, so the joint statement can't possibly cure the division I am talking about.

Mr McKinnon : And, presumably, as his secretary is one of the signatories to the joint statement, that has been plugged back into his office properly, and he's satisfied that what he has said is completely consistent with the statement and with the foreign minister, and she is likewise.

Senator WONG: Can someone explain to me, then, how 'there is no plan' and 'there is a case to be made' can possibly be consistent?

Mr McKinnon : I thought I was just trying to do that—obviously not to your satisfaction, Senator. Sorry.

Senator WONG: I don't think the public believe they're consistent.

Senator McALLISTER: Mr McKinnon, there have been a range of statements, particularly from Mr Dutton, that suggest that there is a plan to do something to change the way the ASD operates, and that is not inconsistent with the evidence you've already provided, which is that, in a changing world where the threats are changing and the technology available to us is changing, we ought to be considering new options at all times. I don't wish to put words into your mouth, but I think that's your earlier evidence. Mr Dutton says, in discussing this with Ray Hadley on 2GB on 3 May, which is days after the article was released:

… we're looking at options at the moment and if we've got a proposal to put forward, we'll put it forward.

He goes on to talk about some of the detail, but he says:

We need to recognise that the internet now is being used in a way that people never envisaged and to convey those images and that content—

he's talking about child exploitation—

we need to deal with it and we're looking at ways that we can do that right now.

What is on foot? We've got ministers in the public domain, particularly Mr Dutton, talking about new options for ASD being developed; we've got correspondence between Defence and Home Affairs, with the most senior officials in tho