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Foreign Affairs, Defence and Trade Legislation Committee
21/11/2013
Estimates
FOREIGN AFFAIRS AND TRADE PORTFOLIO
Tourism Australia

Tourism Australia

[15:37]

CHAIR: We begin with Tourism Australia on outcome 1: 'Increase demand for Australia as a destination, strengthen the travel distribution system, and contribute to the development of a sustainable tourism industry through consumer marketing, trade development and research activities.' Would you like to make an opening statement?

Ms Halbert : No.

Senator CAROL BROWN: I would like to start by getting some clarity around the division of responsibility between the minister and Parliamentary Secretary Baldwin in tourism. Could someone provide that information to me, please.

Mr Gosper : Under the arrangements that have been put in place under the new government, Andrew Robb, the Minister for Trade and Investment, has taken charge of tourism within the Foreign Affairs and Trade portfolio. I understand that Parliamentary Secretary Bob Baldwin is still involved in a number of issues related to aspects of tourism, but that is not a continuing arrangement.

Senator CAROL BROWN: I am not quite sure that I understand that. Does Parliamentary Secretary Baldwin have a specific role? He is the parliamentary secretary in this area, isn't he? What is his title?

Mr Gosper : I cannot attest to his specific title. He is a parliamentary secretary within the Industry portfolio, and has been asked to give some attention to aspects of the domestic tourism agenda.

Senator CAROL BROWN: So we have no clear understanding as to what aspects of the domestic tourism industry he is going to play a role in—a very important role, we would hope?

Mr Gosper : That would be a matter for the Department of Industry.

Senator CAROL BROWN: Are you saying that it is Minister Robb who is responsible for international tourism and domestic tourism?

Mr Gosper : Responsible for international tourism.

Senator CAROL BROWN: Who is responsible for domestic tourism?

Mr Gosper : That is being addressed within the—

Senator WONG: What do the AAOs say?

Mr Gosper : That would be part of the Industry portfolio, and of course in cooperation with state and territory governments.

Senator CAROL BROWN: It was my understanding that domestic and international tourism were being looked after by the one portfolio, by the minister, Minister Robb, and with assistance from Parliamentary Secretary Baldwin. You are telling me that Parliamentary Secretary Baldwin has a role, but it cannot be defined here today.

Ms Halbert : Tourism Australia has been asked by the government to focus on international tourism and so we are transitioning out of the domestic tourism field and focusing all of our attention on attracting international visitors to Australia. Tourism Australia, our board, reports directly to Minister Robb.

Mr Gosper : Senator, can I ask that Deborah Lewis, head of the tourism division, add to the answer.

Ms Lewis : The administrative orders note that all tourism functions are in the Department of Foreign Affairs and Trade portfolio. The role for Parliamentary Secretary Baldwin is to wind up the current discretionary grants program and then his role will cease in tourism.

Senator WONG: Chair, I raise a point of order. Mr Gosper, I do not understand your evidence as being correct, with what the official has just said, nor the evidence which was given to Prime Minister and Cabinet. You may wish to get some advice. Unless I am wrong, and please tell me if I am, I understand that the position articulated by the official is the correct one.

Mr Gosper : I am satisfied that Ms Lewis has clarified my answer.

Senator WONG: So domestic is here?

Ms Lewis : It is.

Senator FAULKNER: That means that now Austrade has responsibility for domestic tourism. Is that what we are saying?

Senator Cormann: Minister Robb has got responsibility for the tourism portfolio.

Senator FAULKNER: Yes, but I am asking about agency responsibility. Austrade now has responsibility for domestic tourism?

Ms Lewis : That is correct.

Senator CAROL BROWN: What are you defining as domestic tourism?

Ms Lewis : It is difficult to split international and domestic tourism in this context.

Senator CAROL BROWN: Exactly.

Ms Lewis : In this context, though, the split of functions, as Ms Halbert outlined, is that Tourism Australia's remit is to market Australia internationally. Under the previous government, there was the program of activity called Tourism 2020, where all state and territory tourism ministers and the federal government signed up to a program of activity to ensure that on the supply side in Australia we are able to facilitate growth in the international tourism market. That is how the split is divided.

Senator CAROL BROWN: From the answers that I have been receiving thus far, you can see why there is some confusion out in the sector. On the organisational chart that is on the DFAT website that is dated November 2013, can you tell me where the tourism department sits within that chart?

Mr Gosper : The tourism function is referred to on the Austrade website. There is a reference there to the functions coming into the portfolio and the resources and work undertaken previously by the tourism division in the Resources, Energy and Tourism portfolio coming into Austrade. The tourism division, under Ms Lewis's direction, is currently working as part of Austrade, providing advice to the minister on tourism issues, as it did previously. And we work in conjunction with DFAT, advising the network and developing approaches on issues for advice to the minister.

Senator CAROL BROWN: Thank you for that answer, but my question was: whereabouts in the organisational chart can I find it? I cannot see it anywhere. Is it on here?

Ms Lewis : It is not on the DFAT website; it is on the Austrade website. Austrade is in the portfolio of DFAT.

Senator CAROL BROWN: So where would I find it?

Ms Lewis : On the Austrade website.

Mr Gosper : It is on the front page.

Ms Lewis : Can I explain the machinery-of-government arrangements?

Senator CAROL BROWN: Yes.

Ms Lewis : The tourism division is in the process of being moved into Austrade. The website is one of the administrative things that need to occur in terms of transferring all the information that was on the previous Department of Resources, Energy and Tourism website, now residing on the Industry website, to be moved into the Austrade website. On the Austrade website, on the front page, there is a link to tourism program activity—the work that my division does—and that links to the Tourism 2020 program of activity.

Senator CAROL BROWN: So it is on the front page of the website.

Senator WONG: I thought you said the organisational chart was on the front page of the website.

Mr Gosper : I believe I said a reference to the tourism function is on the front page, and then that links through to the current website, I understand.

Senator CAROL BROWN: My question really has not been answered satisfactorily. I understand what you are saying, but where is the tourism division? I cannot see that on your organisational chart through Austrade.

Senator Cormann: If I might assist you, I suspect the reason for that is that the transfer of responsibilities is still in train, and in fact most of the active logistical transfers will be happening throughout December. What I can confirm for you is that Austrade is now responsible for all tourism policy programs and research, and about 80 to 90 staff covering these functions are in the process of being transferred to Austrade from the Department of Industry. Obviously that involves quite a bit of detailed work, which is now underway. Formal personnel transfer is expected to occur in December 2013, with physical co-location with Austrade's Canberra office in early 2014. Obviously, the sorts of questions that you ask are directly related to those physical transfers actually having occurred. Right now we are essentially in a period of transition that is expected to be finalised as soon as possible.

Senator CAROL BROWN: Thank you, Minister. What I am actually trying to do is give clarity to the industry out there about where they would go. It is not on the organisational chart, and I understand in terms of your response, but where does a tourist operator call if they are looking it up? Do they go to the Austrade, DFAT, or Industry websites?

Ms Lewis : Tourism operators would go to Industry primarily, or to state and territory government representatives. My division works closely with state and territory governments, who are involved in tourism. Since the election we have had a meeting of all tourism ministers across Australia. Minister Robb chaired that meeting. He has written to all tourism ministers across Australia. I have written to officials at my level across Australia as well, and the industry peak bodies are aware of the arrangements.

Senator CAROL BROWN: Thank you. You have just told me that Minister Robb is responsible for domestic and international tourism; Parliamentary Secretary Baldwin, we think, has got a little bit about winding up grants—so far, so good; and on the DFAT website on the front page there is a link. But you are expecting the industry out there, thousands and thousands of members of the industry, to log on to the industry website. Don't you find that confusing?

Ms Lewis : As the minister just advised, we are working through the process of moving internet pages across to the Austrade portfolio. There is that link on the Austrade portfolio website. There have been a number of announcements that tourism policy programs and research functions are going to be done in Austrade, so I think we are clearly working through administrative arrangements, but I do believe we have let the industry know where we are, and all of our contact with our state and territory counterparts has continued since the election. Those people have all of the contact details of my staff. They are clear about the role that we are undertaking.

Senator CAROL BROWN: That information you just gave me was the basis for the letter you said you have sent out? You have written to—

Ms Lewis : I wrote to all of my counterparts in state and territory governments, yes. And I have met with them since the election as well. I speak to them regularly.

Senator CAROL BROWN: And Minister Robb's letter indicated the same—?

Ms Lewis : I do not have a copy of that with me, but it would have been clear that tourism was in the DFAT portfolio and that tourism programs and research was in the Austrade department.

Senator CAROL BROWN: Can we have a copy of your letter that you wrote to the states and territories?

Ms Lewis : I do not have that with me. I can take that on notice.

Senator CAROL BROWN: That means you will provide it on notice?

Ms Lewis : Yes.

Senator CAROL BROWN: Where are the personnel, the former tourism officials, located?

Ms Lewis : We are located in Allara street in—

Senator CAROL BROWN: Is that where you were before?

Ms Lewis : Correct.

Senator CAROL BROWN: Is there an intention to be moved from there?

Ms Lewis : Yes, there is. Austrade is in the Minter Ellison building. We are currently working through accommodation arrangements there, and as soon as it is practicable we will relocate to that building.

Senator CAROL BROWN: Have you had any—if anyone from Tourism Australia would like to respond—concerns raised by people in the industry?

Mr Gosper : None that I have been aware of. I know a couple of industry groups, like the Transport and Tourism Forum, have indicated that this is a better arrangement; that the movement of tourism into the foreign affairs and trade portfolio is a logical and positive step.

Senator CAROL BROWN: Representatives from Tourism Australia?

Ms Halbert : We have had similar feedback but not in any detail.

Senator CAROL BROWN: You have not had any concern about the split between domestic and international?

Ms Halbert : Domestic and international both sit under Minister Robb—

Senator CAROL BROWN: I know. But we just heard evidence to say that domestic tourism would be pushed back to the states and territories.

Ms Halbert : Yes, so we will be focusing on attracting international visitor arrivals; that is correct.

Senator CAROL BROWN: Have you had any concerns from people that are in the tourism industry about the focus being shifted from what it was?

Ms Halbert : Not that I am aware of, but I would need to take that question on notice to consult with the broader organisation.

Senator CAROL BROWN: Well, I have to say—and I am not relying on media reports because you should not always do that, Senator Cormann—I have spoken to members of the tourism industry and there is a lot of concern about that split, about the refocusing of the tourism portfolio. So nobody here at the table has had any concern raised with them, Ms Lewis? No responses to your letters? When did you send your letter out?

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

Senator CAROL BROWN: And I suppose, Minister, you will not be able to respond on behalf of Mr Robb.

Senator Cormann: I can assure you that nobody has raised any concerns with me personally. Obviously, I am not aware of what matters may or may not have been raised personally with Minister Robb, but I am happy to take that on notice on your behalf and get back to you if I can add further value for you.

Senator CAROL BROWN: Okay. When are we looking to see the officials actually move? Would that be hoped to be early next year?

Ms Lewis : Yes. As soon as we can next year but any time, I think, between January to March.

Senator CAROL BROWN: So if we had tourist operators that wanted to reach the tourism department for assistance on federal grants, which office would they go to?

Ms Lewis : Are you talking about people that have applied for a grant, Senator?

Senator CAROL BROWN: Yes.

Ms Lewis : Anyone who has applied for a grant already has contact details of my grants team and they will continue to contact those people on those numbers. Those numbers have not changed.

Senator CAROL BROWN: Okay. Can I ask Tourism Australia: could you just outline to the committee who they are reporting to now, and what process has been put in place—how is it going to work?

Ms Halbert : Certainly. Tourism Australia is a CAC Act agency. Our board reports directly to Minister Robb, the Minister for Trade and Investment. We have always worked very closely with the tourism division and we continue to do so now that they are placed in Austrade.

Senator CAROL BROWN: Okay. I have a couple of other questions there, but I will put them on notice because I know I am time-limited. I want to go to the question of grants programs. My first question is, when did the reviews into the T-QUAL and TIRF grants start, and what was the reason for the reviews?

Senator Cormann: I might be able to take that question. After the election, the government initiated a review of all uncommitted discretionary grants funding, in order to ensure that any spending, moving forward, was not wasteful, was not duplicating other efforts and was properly aligned with the priorities of the new government. That is a process that took place right across government, specifically in relation to the tourism grants rounds. You would be aware that the coalition took a policy to the last election very clearly indicating that, should we be successful, we would refocus the grants programs into a better quality spend to ensure that instead of subsidising competitive businesses—that is, that instead of picking winners by subsidising one competitive business with taxpayer support against other competitive businesses—we would be refocusing those grants into demand-driver infrastructure and into approaches to increase the level of tourism activity across the board, instead of having committees of public servants picking winners by choosing one private sector business at the expense of another. Now—

Senator CAROL BROWN: Thank you, Minister.

Senator Cormann: No, I am just finishing—

Senator CAROL BROWN: But that was not my question.

Senator Cormann: I am just finishing my answer. You asked the question and I am just going through—

Senator CAROL BROWN: It was not my question.

Senator Cormann: So what has happened since then is that we were faced after the election with a circumstance where in the week leading up to—

Senator CAROL BROWN: With respect, Minister, my question was: when did the grants review start?

Senator Cormann: Chair, I am answering the question.

CHAIR: I think, Senator—

Senator CAROL BROWN: He is not answering the question.

Senator EDWARDS: It was a good question and he is giving you an answer.

Senator Cormann: I am giving you a very direct and very relevant answer.

CHAIR: Senator Cormann is putting this issue in context, and I think that he—

Senator CAROL BROWN: My question simply was—

Senator WONG: Chair, a point of order: we are getting close to on air argument, seriously.

CHAIR: Senator Cormann, could you continue, but make it relevant to the tourist industry.

Senator Cormann: It is highly relevant to the tourism industry. We did initiate a review of all discretionary uncommitted grants funding across government, including those particular grants. Specifically in relation to tourism grants we had an election commitment, and I refer you to point 16 in the coalition's tourism policy, where we very specifically say—

Senator CAROL BROWN: I did not ask about your election commitments. All I want to know is—

Senator Cormann: But it is relevant to your question.

Senator CAROL BROWN: You have already answered that question. So if you could tell me—

Senator Cormann: No.

Senator CAROL BROWN: when the reviews were completed—

Senator EDWARDS: Do you want to know the answer or don't you?

Senator Cormann: No, I am going to go through it in a logical sequence.

What is happening here is that we were faced with a situation where the former government, a week before calling the election, sent out a whole heap of letters announcing approvals of funding but not actually finalising contracts.

Senator EDWARDS: Shame!

Senator Cormann: The former government was in quite a rush to get a lot of money out of the door very quickly, raising expectations right across Australia.

Senator CAROL BROWN: Look, there is a—

Senator Cormann: What we did after the election was make sure—

Senator CAROL BROWN: The tourism industry is in upheaval, and—

Senator Cormann: What we—

Senator CAROL BROWN: all we are listening to is political point scoring.

Senator Cormann: Chair, I am answering the question here and Senator Brown is—

CHAIR: Yes. Senator Brown, let's be just a little bit patient and listen to what the minister has to say. I think the fact that tourism has now been put in the Department of Trade is a development which we all need to understand the reasons for, and I am sure Senator Cormann will put it all into context.

Senator CAROL BROWN: He is supposed to be responding to my question.

Senator Cormann: What I am pleased to confirm is that after the election, given the timing of various announcements that were made by the former government in the week leading up to the election being called, we did apply some additional scrutiny. We have now decided—and I can give you the specific date, on 11 November 2013—in my capacity as the Minister for Finance I did advise the Minister for Tourism that the 2013 round of T-QUAL grants, the Tourism Quality Projects Grants program, could proceed in relation to the approvals that were made by the previous government.

Senator CAROL BROWN: So you took that?

Senator Cormann: However, and I think it is going to be interesting for you to listen to this full answer and then we might be able to—

Senator CAROL BROWN: Yes, I am just trying to—

Senator Cormann: ask some follow-up questions after that. So the Tourism Industry Regional Development Fund grants program was assessed for consistency with Australian government priorities and commitments as part of its review of discretionary grants programs as well. Subsequently, the government has determined that round 2 of the Tourism Industry Regional Development Fund grants program would not proceed. Applicants in round 2 of the program have been contacted accordingly. And in line with the Australian government's policy priorities for tourism, uncommitted funds from the Tourism Industry Regional Development Fund grants program will be refocused to support the demand to drive our infrastructure for the tourism industry.

There are no projects awaiting funding under the T-QUAL Strategic Tourism Investment Grants program. Uncommitted funds from this program will also be redirected to the new higher-quality, better-spent program that we promised the Australian people we would implement before the last election.

Senator CAROL BROWN: We are yet to see that. So, Minister, just to confirm: on 11 November you approved those T-QUAL grants? Is that right?

Senator Cormann: No. As I was explaining earlier, as part of the review—

Senator CAROL BROWN: I understood that. I just want to have—

Senator Cormann: That is why it was important to provide context. As part of the process initiated right across government to review all uncommitted discretionary grants funding across the whole of the government, there was an additional level of scrutiny applied which required approval by the Minister for Finance for individual portfolio ministers to spend money in these programs. On 11 November, in relation to the pending round of T-QUAL Grants where approvals had been made but contracts had not been signed, I provided approval, in my capacity as Minister for Finance, to the Minister for Trade and Investment, Minister Robb, to proceed with that final pending grant. So there are no projects now awaiting funding under the T-QUAL tourism investment grants program. However, uncommitted funds from this program will be redirected into a very focused, better quality program consistent with the policy we took to the last election.

Senator CAROL BROWN: Was it on the same date that the decision on the TIRF grants was made?

Senator Cormann: I cannot recollect specific, individual grants, but maybe somebody at the table can assist us.

Senator EDWARDS: On this very point, it is a very good question, Senator Brown.

Senator CAROL BROWN: I would like an answer first.

Senator Cormann: I will take it on notice. We have literally dealt, across the whole of the government, with hundreds and hundreds and hundreds of grants. If you want to ask me a question now in these estimates in relation to a specific individual grant, I will take it on notice and provide you with an answer when I can.

Senator CAROL BROWN: I am happy for you to take it on notice. That is all you have to say. Have the officials at the table received any feedback about the cutting of these grants?

Ms Lewis : I can answer that. In relation to the TIRF program, all applicants were notified that that round was not proceeding. My understanding is that last Thursday and Friday some applicants contacted my staff, either by email or by phone, to express disappointment. I followed up with staff today to ask whether we had had further contact from anyone this week. My understanding is we have not had any follow-up contact from people between Tuesday and today.

Senator CAROL BROWN: The cutting of it was of concern. Have you had any feedback from the state and territory governments.

Ms Lewis : No, I have not.

Senator CAROL BROWN: None at all?

Ms Lewis : No. At the tourism ministers meeting—

Senator CAROL BROWN: When were they advised that these grants would not be going forward?

Ms Lewis : I will have to take that on notice, but it would have been last week I imagine. I can take that on notice. It was an email from me to state and territory officials.

Senator CAROL BROWN: Okay. I am again surprised that you have not received any feedback from state and territory governments, but it could still be making its way through this convoluted structure that has been set up.

Senator Cormann: There is nothing convoluted about it. We are implementing explicitly the policy we took to the last election.

Senator WONG: The bloke sitting next to you did not know he had responsibility for domestic tourism, so do not come in here and say it is not convoluted. Can we get on with the questions.

Senator Cormann: With all due respect, Senator Wong, Senator Brown just made a gratuitous comment,40900 and I am not just going to let it stand on the record without actually providing a correcting statement on behalf of the government, the same way as you would have done in your day. I still remember asking questions of Senator Faulkner in this room some years ago, and he would have provided the same correction, so I just made those points as well.

Senator WONG: Can we get to your response. Everybody can see you are wasting time. It is a bit too obvious to the world that you are wasting time, so why don't you just get to the point that this government just does not want to answer questions. That is the reality, isn't it. That has been demonstrated quite clearly this estimates.

Senator Cormann: My answer is this: in relation to tourism grants the Australian government is doing nothing more and nothing less than what we said before the last election we would do. I again refer you to point 16 in the coalition's policy for tourism which has a headline 'Refocus tourism grants to drive demand for tourism services', and it is a very important part of our policy. Under Labor the tourism industry has seen grants for indoor plants and one competitor's taxes upgrading the other's hotel. So we will instead refocus funding for existing tourism grant programs on demand driver infrastructure to ensure that the benefits of any government investment can be multiplied across the tourism sector, including accommodation—

Senator CAROL BROWN: Point of order, chair. He has already read this.

Senator WONG: Chair, I have a point of order.

CHAIR: Yes.

Senator WONG: The point of order is that the minister is reading the coalition's election policy. I think there is not a better example of time wasting. We are quite capable—

Senator Cormann: This is directly relevant to addressing—

Senator WONG: Could I finish. I have the call.

CHAIR: Let us proceed to questions.

Senator WONG: Do I have the call?

CHAIR: Perhaps we could begin at the beginning and explain why Tourism Australia has been placed with the department of trade and what the need for the restructure was.

Senator CAROL BROWN: We are nearly out of time.

Senator WONG: Point of order: the opposition, via Senator Brown, have a few minutes left to finish their questions. We would really like to finish them. We have been interrupted a number of times.

CHAIR: Yes, you are quite welcome to do so.

Senator WONG: Thank you.

CHAIR: I am not sure that it is very understood why this change in structure has to be made.

Senator WONG: So the chair is now intervening. You are taking the call from the opposition.

CHAIR: I am not.

Senator WONG: Well, you are.

CHAIR: I am just saying: let us do this in an orderly way. If you want to ask questions, proceed to do so. I personally would like to hear some explanation of the need for the restructure—

Senator CAROL BROWN: You can have a private briefing.

Senator WONG: So you are now intervening. Your way of dealing with the minister—

CHAIR: when I get to my questions.

Senator WONG: Thank you. Can Senator Brown finish.

CHAIR: Yes, she can.

Senator CAROL BROWN: Thank you, Chair.

CHAIR: Senator Cormann was just trying to be helpful.

Senator Cormann: I was responding to the questions asked by Senator Brown.

Senator CAROL BROWN: He is known for that! Can I ask the department, then: was there any consultation done with the industry in terms of cutting of these grants.

Senator Cormann: Again, I answer that question on behalf of the government. The coalition did extensive consultation throughout our years in opposition in putting together our policy, which we are now implementing and which is designed to maximise the benefits from any government investment in tourism. So I can absolutely confirm that there were extensive consultations over a lengthy period in opposition with all sectors of the tourism industry, and of course our policy was openly and transparently there for all to see in the lead-up to the election. We are doing what we should be doing, which is implementing the policies that we took to the last election.

Senator CAROL BROWN: I will ask this question again, and maybe I can get the department to—

Senator Cormann: Sorry. This is not a question for the department; it is actually a question for the government.

Senator CAROL BROWN: No, I am asking a different question.

Senator WONG: Let her finish her question. I know you do not like anyone else speaking, but let her finish her question. It should be fun around the cabinet table!

Senator CAROL BROWN: So you are suggesting that the feedback that will come is that the tourism industry would be happy with the cutting of these grants.

Senator Cormann: The refocusing of these grants.

Senator WONG: You can keep trying to run that line if you want, Minister.

Senator Cormann: That is what it is.

Senator WONG: 'We refocused away from you—that is, we cut it.'

CHAIR: We do not have defined times, Penny. We have three agencies.

Senator CAROL BROWN: Can I ask the department if there is anybody here that would be able to answer about the cost the industry incurs in preparing grant applications and, of course, the cost that departments incur in launching grant rounds and receiving applications. Are you able to give me any figures about those costs?

Mr Gosper : I think we will have to take that on notice.

Senator CAROL BROWN: All right. I have some time left, Chair?

CHAIR: Yes, you do. There is three hours allocated for this session.

Senator WONG: No.

CHAIR: Yes. There have been no formal arrangements on time.

Senator WONG: I understood we were going to move to trade proper at four.

CHAIR: That has never been discussed with me, I have to say.

Senator EDWARDS: It is now a quarter past four.

Senator WONG: Sure.

Senator EDWARDS: You have been given a lot of latitude, and now I want to have a shot.

Senator CAROL BROWN: If I can just ask one final question to the minister—

Senator WONG: My suggestion would be that Senator Brown finish up. I appreciate that the government may have some tourism questions.

Senator EDWARDS: Yes, real ones about real issues that are on the ground.

CHAIR: I think this is really a matter for a private meeting. It should not be on the record on Hansard.

Senator WONG: I am happy to have a private meeting.

CHAIR: We have three hours allocated for this. I think Tourism Australia is an important dimension. I personally plan to give an hour to each of the three subjects.

Senator WONG: Which subjects?

CHAIR: We have tourism, the department, EFIC and the Australian Trade Commission.

Senator CAROL BROWN: I have two final questions. Could I ask the department this: I understood the date that Minister Cormann gave me for when he reviewed the grants, but on what date did Minister Robb decide to grant them, and is the money in the bank for those T-QUAL grants? If not, when can they expect that money to be forthcoming?

Ms Lewis : I will have to get back to you on the exact date. Eighty-nine TQP applications were approved prior to the election. Since the announcement that that round can proceed, 10 contracts have been entered into with successful applicants and we are in discussions with other successful applicants.

Senator CAROL BROWN: When you say they 'have been entered into', they have got their money then? Is that what you mean?

Ms Lewis : I would have to clarify that. What I mean is that we have gone to them with a contract and they have come back to us and signed the contract and we have signed the contract as well. So I need to get back to you in terms of whether the money has actually hit their account. I just do not know the time frame it takes to get through the financial system.

Senator CAROL BROWN: Perhaps on notice, and if you can let me know when the other contracts will be entered into for those remaining T-QUAL recipients—

Ms Lewis : Just to be clear, we have written to all of those successful applicants, sent them the draft contracts and we are waiting for them to get back to us.

Senator EDWARDS: Just in relation to the TIRF contracts, the ones that have just been told they were not successful, did you grade them in any way prior to them being told that? Did you tell them whether they were A, B, C, D or whatever classification you have internally? Did you have that ready?

Ms Lewis : No, none of the 450 applicants who applied in TIRF 2, as we call it, have had their applications assessed.

Senator EDWARDS: Nobody checked them, and they are unlikely to until the funds become available from the Treasurer to assess their suitability for the objectives of the government?

Ms Lewis : No, we have not done any assessment.

Senator EDWARDS: The transition that you have just made now into Austrade, are you able to give me some of the positives that have occurred out of that transition from where you have been to where you are going? Are you able to identify those tangible or even intangible positives?

Ms Lewis : We are still in a transition phase, I think it is fair to say.

Senator EDWARDS: Is everybody excited? Is this a wonderful thing? Are we gong to be able to get more benefit from it, and the taxpayer is going to see it as such?

Ms Lewis : From a staff perspective people are immediately happy that their division is staying together and moving to one portfolio. From a personal perspective—and certainly from feedback from staff—Austrade is extremely welcoming of the tourism activity and is very keen to integrate tourism functions into the broader Austrade roles that they undertake. So in general it is quite positive.

Senator EDWARDS: Does this address some of the previous frustration within the department with the disconnect between Austrade and Tourism Australia?

Senator CAROL BROWN: She cannot answer that—

Mr Gosper : Senator, I cannot speak about frustration, but I was going to add—

Senator CAROL BROWN: that is an opinion.

Mr Gosper : if I may, to the previous answer and to also add of course that the tourism function coming into Austrade has enabled us to begin to make some further important linkages between the work we are doing supporting an important export sector. It involves export sector, it involves investment attraction, it involves the education sector as well.

Senator EDWARDS: So you are likely to see efficiencies with this?

Senator CAROL BROWN: Domestic tourists stay in the same hotels.

Senator EDWARDS: This is a very positive thing, Senator Brown, and I would like to hear the answer.

Mr Gosper : I am not sure about efficiencies, but effectiveness I think will be increased. If we are looking at this as a very substantial part of the economy, an important source of growth and export growth over the period of time, then there are obvious linkages across these things. Tourism Australia, for example, is running a program in Malaysia based on food experiences in Australia to attract tourists to Australia. But there are also important issues relating to attracting investment into Australia, providing educational opportunities in the hospitality sector and promoting Australian food exports. So those sorts of linkages enable us to produce, potentially, much more substantial benefit to the sector and to the economy generally.

Senator EDWARDS: So, just to finish up on this line of questioning, one and one might actually make three?

Mr Gosper : I hope we can make a larger impact because of these linkages.

Senator EDWARDS: Great. I will just get down to some specifics. Thank you very much for that; that is very encouraging and we look forward to that growing, as does the rest of Australia. Who funded the Tasmanian Seafood Seduction tour?

Ms Halbert : There was a Tasmanian Seafood Seduction visit where Tourism Tasmania brought some seafood and some other Tasmanian produce to the offices of Tourism Australia. That was funded by Tourism Tasmania to educate the staff of Tourism Australia about Tasmanian food and wine, because we are moving into a tourism campaign focused on the food and wine outputs of Australia over the next 12 to 18 months.

Senator EDWARDS: That is where I am going, because that was part of the first round, was it? What is the budget for that program that you just spoke of?

Ms Halbert : The budget is still being determined. What we have done is that we went out to the industry in September with the platform for our food and wine campaign, which is Restaurant Australia, and we have been speaking to the industry—across the tourism industry and the food and wine industries—about what that program will look like. We are still in the process of pulling together the exact components of the program, and we do not have costings or indeed the exact timings.

Senator EDWARDS: But you are in charge of that operation?

Ms Halbert : I am not specifically in charge of that, but the management team have responsibility for it, yes.

Senator EDWARDS: So when do you think that you will have that pulled together? It is a very big program, as I understand it.

Ms Halbert : It is a big program. I expect that we will be going back and talking to our industry friends at the beginning of December and probably, with Christmas in the break, also in January about exactly what that looks like and what the cost components of that are. It will probably be a 12-month program that we are able to outline at that point next year.

Senator EDWARDS: And about when will you finalise the budget, the program and everything before we embark on it?

Ms Halbert : I am going to say January or February next year.

Senator EDWARDS: So when we are back here in February we will be able to talk about it in greater detail.

Ms Halbert : We should be able to provide you with some details about what the program looks like, yes.

Senator EDWARDS: Tourism Australia appointed ultimatewineryexperiences.com.au as their preferred web traffic destination. What was the process by which that occurred?

Ms Halbert : Ultimate Winery Experiences is one of our 'best of' programs. There are a number of 'best of' programs that we work with; they are industry-based programs. There is one around luxury lodges, high-end accommodation; there is one around golf experiences; there is one around walking experiences; and recently there is one around winery experiences. They are based in the industry. What Tourism Australia does is partner with them and agree to assist them in marketing for a couple of years. The advantage of pulling together those sorts of experiences is that it makes them much easier to reach for wholesalers and the trade internationally—for example, for people in China who are interested in golf to be able to go to one spot and find 18 golf courses across Australia and be able to organise programs and tours around that. So Ultimate Winery Experiences is one example: there are a group of wineries that have come together and we are helping them to promote themselves as Ultimate Winery Experiences. We do not choose the wineries; they are chosen by the group themselves.

Senator EDWARDS: But they are all separate contractors, for golf and wine and walking and all of those? Are there private companies which are contracted or win a contract or a tender?

Ms Halbert : Ultimate Winery Experiences, for example, has eighteen different wineries that are members.

Senator EDWARDS: I have looked at the website, yes.

Ms Halbert : They as an organisation run their website, and we work with them. So if you, as a winery, would like to become a member, you approach that organisation.

Senator EDWARDS: But they are a private organisation—is that right?

Ms Halbert : Yes.

Senator EDWARDS: And they are privately funded; it is a business for them?

Ms Halbert : Yes.

Senator EDWARDS: And you supply them with funds or resources?

Ms Halbert : We assist them with marketing.

Senator EDWARDS: So no money? There are no grants for the start-ups or anything like that?

Ms Halbert : No.

Senator EDWARDS: Can you just define 'assist with marketing'?

Ms Halbert : Certainly. In our materials, for example, we will talk about the Ultimate Winery Experiences. We will promote them through our website. They can participate in events like the Australian Tourism Exchange that we hold every year, where we bring together buyers and sellers of tourism. We might bring in international media from other countries to come in and experience those programs.

Senator EDWARDS: In my notes here, I have that Brigid Kennedy, executive officer of the Ultimate Wine Experience stated that it is a non-profit industry consortium funded by a federal grant and the wine industry is designed to create a community of wineries brought together the auspices of Tourism Australia.

How much money were they provided with, because that is actually the contention on their website?

Ms Halbert : I do not know that; we would have to take that on notice.

Senator EDWARDS: It is not a gotcha question. That was the contention that is out there, and you say that there is no money and that it is marketing assistance. I am just saying that that was there.

Ms Halbert : Let me check that for you.

Senator EDWARDS: I am very keen to see golfing, walking and wineries all prosper, but this is my first day on the community so I just want to get an understanding of it going forward. Are there tender processes? Are there people who are recognised for their expertise and they are supported or sponsored and things like that? The state government tourism—have they all signed up to Restaurant Australia?

Ms Halbert : There are no formal arrangements in place, but they have all indicated that they are very supportive of the program. What we will be doing is similar to what we did this year with our Best Jobs in the World program—that is, we develop a platform which can work across Australia. We go to the states and territories and potentially other partners and we ask them whether they would like to participate in the program or what role they would like to play. We have not formed firm arrangements with the states and territories but we have been working closely with them throughout the process.

Senator EDWARDS: Does that extend also to your collaboration with Wine Australia?

Ms Halbert : That is correct.

Senator EDWARDS: Are they providing in kind support or cash from their funds which they garner from their minister to support this initiative?

Ms Halbert : Again, I am not sure what that would look like yet, but we will certainly be working in partnership. For example, if we have an event in China around Restaurant Australia then Wine Australia would be involved in that event from a wine perspective. Hopefully, Austrade would be involved in the perspective of the food industry, and we will bring in as many other partners as we can to promote Australia as a whole overseas.

Senator EDWARDS: With what has happened since September 11 with Austrade and you all coming together, it seems that we are getting some traction on some efficiencies, some programs and things like that and we actually have quite a bit to look forward to.

Ms Halbert : I think there will be some good opportunities for us to work together around the Restaurant Australia program, yes.

Senator EDWARDS: With the promise with Restaurant Australia and with the marketing overseas, are we sure that we are actually selling something that we can deliver in the regions?

Ms Halbert : The research that we have done with regard to food and wine says that, firstly, people much more now than in previous years are travelling based on food and wine, because they have got a real passion for food. The research also says that people who have not been to Australia rate us 18th or 19th in the world for food but, if they have been to Australia, they rate us 2nd after only France. We believe that presents a huge opportunity for us to go out and talk about the beautiful produce we have, the wonderful natural environment in which you can consume it and the really warm, friendly people of Australia. That combination will absolutely be able to deliver on that promise, because the research shows us that we have been.

Senator EDWARDS: My 30 years of business experience before I came to this place leads me to this final part B question: given your response to that and that we have just heard that TIRF round 2 has been shelved for a while, have you looked at the promises that you are looking to make overseas and domestically and what is actually going to be delivered in the regions and whether the money that you are spending isn't like building a six-star hotel and then telling everybody to come and not having any staff in it? Are you making sure that all those 420-odd applications were not absolutely imperative for you to fulfil the promise that you are going to make to everybody from overseas? I know that in the seat of Wakefield, for which I am a patron senator and is held by the Labor member Nick Champion, the Seppeltsfield Winery, for example, is 150 years old and it is everything that represents the Australian wine industry. Unfortunately, they have suffered one of those emails or letters that says that 'I am sorry round 2 has been deferred indefinitely', and they are one of the destinations. Of course, Seppeltsfield now has artisan brands and tradesmen, and the jam factory has just gone there. That is looking to fulfil the promise, but all of a sudden it has come to a screeching halt. I am just cautioning. I guess it is not my job and I am here to question you, but I just question whether you will look at—

Senator Wong interjecting

Senator EDWARDS: I was just waiting for you, Senator Wong.

CHAIR: Let us have a question.

Senator WONG: Not an adjournment speech.

Senator EDWARDS: I am renowned for it. This is in your home state, Senator Wong and Senator McEwen.

Senator Cormann: This is South Australia.

Senator EDWARDS: And it is a Labor-held seat that I am talking about.

Senator WONG: If you could ask the question—

Senator EDWARDS: I am trying to help you out here. Will you just have a look at how the message that you are looking to deliver about the regions is not going to be compromised by round 2?

Ms Halbert : The department may wish to add to this, but Tourism Australia, the federal government, the state and territory governments and the industry itself have all combined together to form a strategy called Tourism 2020, and that looks at where we want to be in 2020, not surprisingly. That has both a demand and a supply component. We very much focus on the demand component; that is our job and also the job of the state and territory tourism organisations. But there are also a large number of people in the industry and the department itself who focus on the supply component. I really cannot comment on that, but someone may wish to add to my answer.

Senator EDWARDS: So who is testing the veracity of the offer that you are making and what is actually being delivered down the track if we spend $30 million or $50 million making a promise about what is on offer here in Australia, and when they get here we are not delivering it in the regions in which we promised to do so?

Ms Halbert : I think our research shows that we are currently, but it is important that we continue to do that research to look at what people are looking for and what is available in Australia, and then I guess it is up to other parties to work on delivering some of that supply side.

Senator EDWARDS: Thank you very much. You have been most helpful, and I will look forward to having half an hour with you in February.

Ms Halbert : Indeed.

CHAIR: Could I just ask you some questions about the size and value of the tourist industry. I am told it is valued at something like $87 billion a year. Is that correct?

Ms Halbert : Yes, it is.

CHAIR: So that makes it a very big industry. What proportion of it is international?

Ms Halbert : About $28 billion is international. That is the 2012-13 end-of-year figure, and that is a six per cent growth on the year before.

CHAIR: Good. So where does that put you in the scale of Australian industry?

Ms Halbert : I think we are the fourth biggest export industry.

CHAIR: So it is a very important industry to our economy.

Ms Halbert : It is indeed.

CHAIR: What specific programs are you running to attract people to Australia?

Ms Keeler : I can answer that. We run our brand campaign, which is called There's Nothing Like Australia, across all of our international markets. My colleague referred to food and wine, which is going to be an additional facet of the There's Nothing Like Australia campaign. We also run a global youth campaign called Best Jobs in the World.

CHAIR: Good. So how many visitors are you now attracting internationally?

Ms Halbert : There were 6.3 million international visitors in 2012-13.

CHAIR: So it is very large.

Ms Halbert : Yes, up five per cent on the year before.

CHAIR: Almost a third of the population of Australia, in effect. Good. Thank you. I just wanted to set that context.

Senator WONG: We are happy to move on to trade now. I think we have established that the tourism industry is big.

CHAIR: We have indeed, but I think we have to understand it is an important industry.

Senator WONG: Yes, we did, which is why we would not have—

CHAIR: Thank you. I appreciate your comments, Senator.

Senator WONG: Thank you.

[16:34]

CHAIR: We will now move on to trade, so I thank the tourist industry for appearing. We begin with bilateral, regional and multilateral trade negotiations, which includes free trade agreements including the TPPA and PACER Plus; intellectual property; World Trade Organization compliance and dispute settlement; accessions; trade law; trade policy; and trade commitments.

Senator WONG: We are fairly short of time—because I suspect other senators have questions as well—so I wonder if we could do some of this on notice. On notice, Mr Grigson, can we have details of Mr Robb's travel since the election, including how many staff travelled with him, both personal and departmental, on each of those visits; duration, cost and meetings?

Mr Grigson : Yes.

Senator WONG: Thank you. Can I just understand some of what the government's policy is. First, as I understand it, the government is proposing to fast-track free trade agreements with China, Indonesia, Japan, India, South Korea and the Gulf Cooperation Council?

Mr Fisher : The government is keen to conclude free trade agreements as soon as it can—in particular, the three North Asian agreements, with China, Japan and Korea.

Senator WONG: Thank you. The government indicated a timetable in relation to that. The Prime Minister has said 'within the year', is that right?

Mr Fisher : The Prime Minister has said he would like them to conclude within the year; that is correct.

Senator WONG: And the TPP? Have you indicated a time frame in relation to the TPP?

Ms Bowes : Leaders are working on the basis of concluding the TPP by the end of this year, in accordance with the TPP leaders declaration that was made in October of this year.

Senator WONG: I will come back to the TPP, because there are quite a lot of questions I want to ask. I want to start by clarifying something which came up in Treasury estimates in foreign investments estimates last night—everything is a blur now—was it last night or the night before? Anyway, it was on one of the nights in this place that we have had. Can you explain to me what you understand to be the government's policy in relation to investment thresholds for free trade agreements? Do you want me to give you some background? Currently, the government's policy is to reduce, for the purpose of assessment, to $15 million any proposed investment in agricultural land. There is another level, I think $53 million, in relation to what is described as agribusiness. Can you explain to me, whether you understand that to mean that position, as a negotiating position, will be maintained in all free trade agreement negotiations?

Mr Fisher : My understanding of the government's policies is the same as yours.

Senator WONG: You should just explain what you think it is.

Mr Fisher : Exactly the same as yours.

Senator WONG: No, I am not sure what it is, because I have had a different explanation.

Mr Fisher : I am happy to give you that explanation.

Senator WONG: Thank you.

Mr Fisher : The government's policy as stated is to have a screening threshold for agricultural land of $15 million and, for agricultural business, a screening threshold of $53 million. And, in terms of the FTA negotiations, of course we will be taking the government's policy and implementing it in the context of those negotiations.

Senator WONG: Does that mean it is negotiable or not negotiable in the context of an FTA?

Mr Fisher : We will be taking the policy and using it in the context of those negotiations. I should just say that this is not this department's policy. It is of course the Treasury's responsibility to implement investment policy—

Senator WONG: But investment thresholds are germane to free trade agreements and particularly central—certainly from the public commentary; they may or may not be behind closed doors—to the China FTA. So I again ask: is it a non-negotiable position in relation to the free trade agreement discussions or not?

Mr Fisher : It is a government policy to have those thresholds so we will be negotiating on the basis of government policy.

Senator WONG: But there is a difference, isn't there? You start a position, but you know what is a red line and what is not. The government signed off on a mandate; cabinet signed off on a mandate; that has been announced, is this a red line position, a non-negotiable position or one open for discussion?

Mr Fisher : It would not be normal—as I am sure you would understand—for us to talk about red lines and not red lines in negotiations in the public arena. That would not be appropriate. We will be implementing the government policy in terms of the negotiations. To explain, of course I would not be signalling or telegraphing what the government's negotiating tactics were in this or any other agreement.

Senator WONG: But the Australian people are being told that this is the policy. Do I understand you to be saying that it is therefore non-negotiable in free trade agreements?

Senator Cormann: Senator Wong, if I might just intervene here. I invite you to consider the national interest. I think the official has very clearly answered the question. The policy of the government is clear when it comes to screening thresholds when it comes to foreign investment in agricultural land. It is also very clear that the Australian government is negotiating any free trade agreement on the basis of government policy. I do not think there is anything else that we can sensibly add. I would invite you to reflect on the answer and the context of the answer that the official has given you.

Senator WONG: The minister said last week that you had an attractive investment package to put to the Chinese. That is a public statement from the minister. Is it the case that that package complies with the policy that you referenced?

Mr Fisher : I am not really going to get into the details of a negotiating mandate. That is something I would not intend to do here.

Senator WONG: If you do not want to confirm that the government is complying with its election commitments, that is fine. You can make that choice.

Mr Fisher : I am happy to say that the government's policy is what it is; and as I said before the department will continue to comply with that policy.

Senator WONG: By the way, isn't there a deputy secretary who is responsible for trade?

Mr Grigson : Yes, there is. She is overseas at the moment.

Senator WONG: And that person is?

Mr Grigson : Jan Adams.

Senator WONG: She would normally appear when she is not overseas?

Mr Grigson : She would, yes.

Senator WONG: What do you understand the policy to be in relation to investor state dispute settlement clauses?

Mr Fisher : The government has said it will negotiate investor state dispute settlement clauses on a case by case basis.

Senator WONG: Yes, that was what was in the policy. There have been subsequent announcements or comments by Minister Robb in relation to it. What do you understand the current policy to be?

Mr Fisher : That remains the government's policy.

Senator WONG: Can you advise the committee of recent public statements by the minister in relation to investor state dispute settlement clauses?

Mr Fisher : I am not sure which statements you are referring to.

Senator WONG: He is your minister.

Mr Fisher : He may well be my minister—

Senator WONG: I am sure you listen to everything he says.

Mr Fisher : If you have a particular statement you would like us to—

Senator WHISH-WILSON: Senator Wong, I could give you one.

Senator WONG: Sure.

Senator WHISH-WILSON: In the Fin Review on Monday, 18 November 2013:

Following the talks with Mr Yoon—

in South Korea—

Mr Robb said substantial progress was being made on the sticking points in a bilateral free trade deal, including on an investor state dispute resolution clause and better access for Australian agricultural exports.

'I think we are making very good progress and I have a series of propositions which hopefully will see us over-come the no-go areas,'

Mr Fisher : Thank you. The policy remains the same: to negotiate on a case-by-case basis.

Senator WONG: What are the parameters on that case-by-case assessment?

Mr Fisher : Again, I just caution about getting into the tactics and negotiation.

Senator WONG: Thank you for giving me that caution. I am also here as an elected senator to ask questions about what the policy position is. If you are not going to be helpful, I will read you something the minister said and maybe you can explain to people whether the PBS is on the table or not. Mr Robb said:

The pharmaceutical benefits scheme is an integral part of Australia's health system and the government will not permit any outcome which undermines the PBS or Australia's health system …

Are you familiar with that comment?

Mr Fisher : I am.

Senator WONG: What do you understand that to mean?

Mr Fisher : It means exactly what it means. His words are quite clear. I am not sure what you are asking me to comment on.

Senator WONG: You said 'case by case'.

Mr Fisher : That is correct.

Senator WONG: I presume it is not open slather case by case.

Mr Fisher : That is correct.

Senator WONG: This is an opportunity for elected senators here to be clear about, for example: are there limitations? You do not have to go into all the details, but are there limitations in relation to Australia's health system or the PBS?

Mr Fisher : Of course there are areas where you would look to exclude ISDS. That is part of the government and the minister has—

Senator WONG: Sorry, I didn't hear the first bit—

Mr Fisher : There are areas where you look to exclude ISDS.

Senator WONG: Thank you. Why don’t you talk about that?

Mr Fisher : They depend on a case-by-case basis and they are subject to negotiations. What I mean by that is each negotiation has a different character, and you will be looking at a case-by-case basis on whether you would negotiate ISDS, and after you get to that point—

Senator WHISH-WILSON: Can I ask for a point of clarification, Senator Wong?

Senator WONG: Chair, can I finish this?

Senator WHISH-WILSON: Yes, certainly.

Senator WONG: Thank you. Why don't we start there. In which negotiations is the ISDS proposition a relevant matter?

Mr Fisher : It is clear on the public record that Korea, for instance, is keen to have an ISDS provision within that negotiation. That is one of them. Other partners will ask for ISDS. It is on the public record that Japan, for instance, asked for ISDS. I do not cover the TPP but my colleague can do that. Essentially those are two negotiations where we have been asked to include ISDS and we would consider doing so on a case-by-case basis.

Senator WONG: As yet the government's public position is that it is willing to have a discussion about the inclusion of ISDS in relation to Korea, Japan and the TPP?

Ms Bowes : Senator, the position is the same in relation to TPP. It will be considered on a case-by-case basis. But, as I indicated in my previous response, the TPP negotiations are quickly coming to a final stage, and this will be very much a question of the balance in the package. That will be agreed and that will ultimately be a decision for critical assessment by leaders and the government.

Senator WONG: But in short there is not a public position to rule out an ISDS in relation to any negotiation, and you are not prepared to even indicate whether there are any guidelines as to areas we could not contemplate in relation to ISDS?

Mr Fisher : The minister has already spoken of one. These are matters for negotiation. It is difficult to say to you right now: 'This is in; this is out' and so on.

Senator WONG: We can move into private sessions.

Senator Cormann: I might just interpose here again and just remind you, Senator Wong, that this is not a new concept, and that your government, in 2009 when you signed the free trade agreement with Chile, included ISDS provisions into that agreement. So I think the official has really comprehensively answered the question. The government is considering the inclusion of ISDS clauses in FTAs on a case-by-case basis, as we should; but we are not going to be conducting free trade agreement negotiations through Senate estimates. We are going to be conducting them in the national interest, as you would have when you were in government, in the appropriate way.

Senator WONG: Okay. Are you prepared to have a private or in camera discussion about these matters? I don't mean now, at this point.

Senator Cormann: As you know, Senator Wong, I am the representative minister for this portfolio so I would have to seek the minister's guidance on that.

Senator WONG: Sure. At the same time, maybe you could ask him how he has gone with my letter asking for a briefing from the department; if he wants bipartisanship, I would have thought would have been a good thing.

Senator Cormann: I will discuss that with him and get back to you as soon as possible.

Senator WONG: As I provided him previously. Can I ask about the TPP. Ms Bowse, you are the TPP person?

Ms Bowes : In fact, all of our TPP negotiators are away. However, I am acting first assistant secretary. There is a negotiating round ongoing at the moment. However, I will assist as far as possible in answering questions on the TPP.

Senator WHISH-WILSON: I just want to interrupt briefly. I just want to have clarification on what Senator Wong was asking. You said then that the ISDS would be included on a case-by-case basis and that your negotiators are away today. I attended a briefing in Sydney this month where four times it was made very clear that ISDS had not been given to the negotiators as being on the table for anything. So that has changed in the last three weeks?

Ms Bowes : As I said, there is an ongoing negotiation round this week in Salt Lake City. I am not aware of any offers having been made. However, the government position is that ISDS will be considered for inclusion on a case-by-case basis. However, as I explained, we are approaching the end game, so ultimately it will be a question of the balance in the package as to whether ISDS will be included.

Senator WHISH-WILSON: Just to clarify. Unfortunately, I do not have the gentleman's name, but he was the chief negotiator and he did make it very clear that they had been given no instructions to include ISDS in any negotiation.

Senator WONG: Can I just continue. First, the stated or public position—and I am only talking about through the media obviously—of the United States in relation to the TPP was—perhaps we will start with this, and maybe you are not the right person to ask, given all negotiators are away. But do you think you could give a reasonably succinct—because we are short of time—explanation of what role, from Australia's perspective, we see the TPP playing; and in what way is it regarded as a stepping stone to further trade liberalisation?

Ms Bowes : The Australian government views the TPP as an important opportunity to be involved in shaping some regional architecture on multilateral trade negotiations. It does represent one pathway towards the ultimate goal of a free trade area of the Asia-Pacific. We hope that it will have considerable market access benefits. We are talking about a partnership region that represents something like 40 per cent of global GDP, and our exports to the partners in this region account for about $100 billion. So, being in this partnership, negotiating increasing market access outcomes, including with those members with whom we do not already have an FTA, is one important outcome that we are seeking. It also includes issues that have not been previously included in multilateral global free trade agreements or multilateral agreements such as the WTO. It is a 21st century agreement, and it is important that we are involved in those 21st century issues to shape the global trading system further.

Senator WONG: To what extent is additional market access, particularly to the United States market—this is obviously a United States driven initiative; would you agree with that characterisation?

Ms Bowes : I think it is a shared concern or aim of the members of the TPP negotiations, increased market access, that is one of the aims of the agreement—

Senator WONG: Sorry, no. Would you agree that the TPP is a United States driven initiative?

Ms Bowes : Originally it was centred in the region so the P4 members were actually—

Senator WONG: Correct.

Ms Bowes : Singapore, Brunei, Chile and New Zealand.

Senator WONG: Well done.

Ms Bowes : But of course, yes, it was seen as one way of shaping regional architecture in the Asia-Pacific. But we were very much part of that push at the very beginning.

Senator WONG: Yes. The previous government was supportive. I have seen some public comments which suggest that the US position is that existing FTA partners would not be eligible or likely to get further market access through the TPP. Are you able to give us some detail on that?

Ms Bowes : It is very much our goal, the Australian goal to seek increased market access with our existing FTA partners, and that does include the US.

Senator WONG: Do you agree that that has been the public position of the US? I appreciate it is a public position.

Ms Bowes : I have seen some reports to that effect. It is not our position.

Senator WONG: Is it our position that additional market access is a critical aspect of finalising the TPP from Australia's perspective?

Ms Bowes : The government has made it very clear that market access is key to a conclusion of this agreement and for Australia accepting what would be an overall balanced package.

Senator WONG: This reporting of Mr Robb's comments—tell me if this is broadly reflective of the position—that the TPP would have to show a material improvement in market access, and that the government has identified agricultural products, including sugar, grains and beef as priorities. Is that right?

Ms Bowes : That is correct.

Senator WONG: What else? Are they the only priorities in terms of additional market access? Financial services? Perhaps changes to the government procurement arrangements, which looked better perhaps than they have been?

Ms Bowes : One of the other benefits of the TPP agreement is an increase in the access to services sectors. So services is a very key part of the TPP. We are as I mentioned, looking at market access into partners with whom we do not already have an FTA, and they include some of the agricultural commodities you referred to. There are others, depending on the specific market, such as wine, non-ferrous metals or pharmaceuticals. So it really depends on the particular country with whom we are dealing as to our preferred access goals, as it were. But we would also like to seek increased market access with those partners with whom we already have FTAs; FTA plus outcome. But I should add that market access negotiations are invariably very difficult and they are ongoing.

Senator WONG: Given the announcement of the fast-tracking of the FTAs, have any additional resources been allocated to advancing these agreements?

Mr Fisher : Do you mean all of the negotiations, not just the TPP?

Senator WONG: The fast-tracked ones?

Mr Fisher : There have been additional resources allocated, particularly to my division. We have gone up approximately 40 per cent in terms of resources—

Senator WONG: What is that in FTE?

Mr Fisher : About 12. But we are still delivering those staff into the division. It takes a little time, as you would understand, to release people.

Senator WONG: Which means you had what?

Mr Fisher : Around 30.

Senator WONG: One of you said at the outset that the TPP is rapidly approaching finalisation. Can you give us some time frames on that?

Ms Bowes : Ministers and leaders declared in October that the aim is to reach conclusion by the end of 2013. That is the basis on which we are proceeding.

Senator WONG: I was hoping for a little more information than what I can read from an old statement. Give me some of the meetings. There is currently a meeting; there is a meeting in—just take me through that.

Ms Bowes : There is currently a meeting in Salt Lake City involving 13 negotiating groups, looking to seek conclusion on outstanding issues and to narrow issues. There is also a ministerial meeting that will be taking place in Singapore from 7 to 9 December, with the ultimate aim of concluding outstanding issues.

Senator WONG: Is that before or after there is another ministerial level WTO meeting?

Ms Bowes : There is a WTO ministerial meeting, MC9, the Ninth WTO Ministerial Conference, which will be held in Bali from 3 to 6 December. So it is immediately following.

Senator WONG: So is the Singapore meeting the last ministerial level meeting this year?

Ms Bowes : Yes.

Senator WONG: So, if there is going to be an agreement, it would be finalised there, or close to?

Ms Bowes : The aim is to finalise outstanding issues, and that is the basis on which we are proceeding.

Senator WONG: What are the outstanding issues?

Ms Bowes : Some of these outstanding issues include issues such as intellectual property, environment and treatment state owned enterprises, but there are a number of others that are still ongoing.

Senator WONG: Sure. I am actually genuinely trying to understand it. I am not making a political point here. I might; but I am not right now. Does environment include the impact on ISDS on domestic and environmental regulation?

Ms Bowes : I might have to take that on notice. I am not aware of the extent to which environment would be subject to any dispute settlement arrangements or enforcement or any other ISDS type arrangements.

Senator WONG: No, you said 'some of the outstanding issues included IP, environment and the treatment of state owned enterprises'. My question was does your category of 'environment' include some of the potential risks associated with ISDS arrangements for domestic environmental regulation?

Ms Bowes : Senator, the environment chapter is really looking at ways to achieve environmental objectives through trade related measures. One example is the liberalisation of environmental goods and services, reducing tariffs—

Senator WONG: That has been a longstanding discussion.

Ms Bowes : Yes, which has been a longstanding policy.

Senator WONG: I think that objective was in place prior to us coming to government.

Ms Bowes : I understand, yes.

Senator WONG: Okay. I have had some communications, and I am sure other senators have, about some concerns around intellectual property. Are you able to give us any indication of where that discussion is at?

Ms Bowes : In broad detail, because it is difficult for me to go into the specifics of the negotiations; but we are negotiating within the framework of our existing intellectual property settings, including those obligations to which we are bound under international agreements such as the TRIPS agreement in the WTO. So that is the framework within which we are working.

Senator WONG: Okay.

Ms Bowes : We are not looking at anything that would go beyond our existing policy settings, particularly on issues such as copyright. We are looking at working within our domestic policy settings at the moment.

Senator WONG: Can I ask, in terms of the other thing—and I suspect other senators might want to ask more about that, but I am a bit short of time; but I do want to ask a transparency point. I do understand the argument that given—I do not know if trade negotiations are like every other negotiation, but there are always many drafts and many different views about drafts and so forth, so I understand the national interest reason why you would not necessarily provide every draft at every opportunity, but when is the government intending to release publicly draft TPP agreements, if at all?

Ms Bowes : Senator, the government is intending, in accordance with the usual practice, to table the text as agreed between the parties through the JSCOT processes. That would involve 20 sitting days in parliament.

Senator WONG: But isn't the challenge with that at that point it is already signed?

Ms Bowes : The tabling through the JSCOT process does allow for parliamentary scrutiny, as well as public scrutiny and public comment on the text.

Senator WONG: That is not really an answer to my question. At that point it is already signed and agreed.

Ms Bowes : It is agreed, but, there are various domestic ratification processes to go through and of course JSCOT is part of that process.

Senator WONG: True. But my recollection around the US FTA—and it is a long time ago—when there was an issue raised and, actually ISDS, I think, was one of the primary issues. There had to be side arrangements then because the text itself could not be changed. Is that not right?

Ms Bowes : Senator, I would have to take that on notice. I am not sure about that.

Senator WONG: Could you? I appreciate some indication of what the capacity is of parliament and the community to respond to the TPP or, indeed, any other trade arrangement or agreement under the process that you have outlined.

Ms Bowes : Senator, just on that, it is of course open for JSCOT to make recommendations after public scrutiny on the treaty itself.

Senator WONG: Okay. The coalition's policy says that the government will appoint eminent Australian business people as special envoys. Have any been appointed?

Mr Fisher : No, not yet.

Senator WONG: Thank you. Industry reps? Have any of them been appointed?

Mr Fisher : No, it is still under consultation, Senator.

Senator WONG: Ministerial Advisory Council on Trade and Investment? That is part of the policy too—he looked very surprised.

Mr Grigson : It is under consideration.

Senator WONG: Under consideration? That is a good term. The former minister in 2011 released five guiding principles on government trade policy. It was a trade policy statement released in 2011. What is the status of those guidelines now? Does anybody know what I am talking about? I have a download from your website last year. It is just called 'Australia's Trade Policy' and it has five guiding principles—unilateralism, nondiscrimination, separation, transparency, and indivisibility of trade policy and wider economic reform.

Mr Fisher : They are the policy of the former government. Many of those principles will remain important.

Senator WONG: If they are no longer the guidelines then what are the guidelines?

Mr Fisher : The government's current policy guidelines.

Senator WONG: Well, what are they?

Mr Fisher : They have a document.

Senator WONG: So there are no high level principles. You are talking about the very pretty picture of men in blue ties. That one?

Mr Fisher : I think it has a blue cover.

Senator WONG: I think they have almost all got blue ties on.

Mr Fisher : They may well have.

Senator WONG: Can you tell me the status of the Australia-Japan FTA?

Mr Fisher : I can. The negotiations are well advanced on the Japan Australia FTA. As we mentioned earlier, we are working to conclude that as soon as possible. It is clearly an important negotiation, given Japan is our second largest trading partner and has high tariffs on agricultural items. In terms of the present status, the final market access and investment package is still to be finalised. It is important to recognise the context of dealing with Japan. Japan has not yet done an FTA with a large sophisticated trading partner like Australia, so we are breaking new ground on this one. It is a difficult negotiation given where Japan is starting from with high agricultural tariffs, but we are pretty well advanced and working to conclude that as soon as we can.

Senator WONG: I am advised by my staff that we actually downloaded the guidelines I referred to off your website yesterday. So maybe you can check if they remain government policy or not.

Mr Grigson : We will do that. As I sat here they seemed unremarkable and I would find it hard to argue against any of them.

Senator WONG: Do you understand the Prime Minister has committed to have an agreement with China signed off within the government's first year?

Mr Fisher : Correct. Within 12 months.

Senator WONG: Can you explain to me how that can do anything other than affect your negotiating position negatively? If I am going to sell a house, the last thing I would want to say to a potential purchaser is, 'I really have to sell this by the end of the year'.

Senator Cormann: Just to be specific about what the Prime Minster actually said, he said he would be disappointed if we could not conclude a significant free trade agreement with China within 12 months. That is his frame of mind but at the end of the day the national interest will of course come first as we conduct and seek to finalise those negotiations.

Senator WONG: The Chinese are very good negotiators, I just do not understand why we would telegraph our desire to have something finalised. It then puts a premium on them holding out. They know that holding out has more costs for us than for them. There are many people who want an agreement with China, are there not?

Senator Cormann: What we are telegraphing is our keen interest to finalise a deal with China. It does not mean that we would take any deal. Of course we will continue to conduct the negotiations, and we will only conclude them if doing so is in the national interest. I think what the Prime Minister did by saying what he said, in terms of expressing a view that he would be disappointed if we could not conclude a significant free trade agreement with China within 12 months, was really give an expression of his keenness to see these negotiations conducted as speedily as possible and concluded as quickly as possible.

Senator WONG: Are you able to give an update of the status of the China FTA and what are the primary issues that are relevant?

Mr Fisher : The China FTA is not as far advanced as the Korea and Japan FTAs. We still have some issues to resolve there. For instance, on chapter text we are still some way behind with the China FTA. It has obviously been a long and difficult negotiation. That reflects some difference in starting point, let me put it that way. The key outstanding issues are the market access package, both for investment and for agriculture or for goods, but in particular for agriculture. There are some elements there that you would understand—the Chinese are interested in investment; Australia are interested in market access on agriculture in particular, but we also have some small other market access interests in goods and some access interests in services. Typically in these sorts of arrangements those interests are decided right at the end, so at the moment we are working towards that end game when you do that trading to get the best outcome in terms of access. But there remains quite a lot of work to do on that FTA.

Senator WONG: Can you tell me what some of the issues are for us in relation to market access? I am particularly interested in full services. I am interested also in what I think are described as 'behind the border issues' and what are our priorities in that context.

Mr Fisher : I can give you a broad sense, but I would be happy to give you more detail on notice. In services, China has tended to and continues to tend to liberalise unilaterally and so we find that what has happened over the period of the negotiations is it has done a certain amount of liberalisation, so the issues change. With the Shanghai free trade area, for instance, that will also potentially change, and with the third plenum that will potentially change again.

Senator WONG: You probably were not here at the time but I did ask for some assessment of the third plenum communique and I am particularly interested in the issues you have just raised.

Mr Fisher : On notice, I would be happy to give you some more detail, to the degree I can. Our services interests are a significant part of the package, let me put it that way.

Senator WONG: What domestic reforms behind the border do we regard as a priority? Financial Services?

Mr Fisher : Obviously financial services; we are interested in legal services, mining services, environmental services—the range of areas where we have an interest in seeing whether China would be willing to give us better outcomes.

Senator WONG: I have been asked to wind up. I will put a couple of things on notice. In relation to all of the FTA negotiations, can you tell me whether or not an industry representative has been appointed to be involved, or is that covered by your previous answer that, no, that it is still occurring?

Mr Fisher : It has been covered.

Senator WONG: The same for a special envoy?

Mr Fisher : That is correct.

Senator WHISH-WILSON: Can I go back to the comment I made a bit earlier about the DFAT briefing in Sydney earlier in the month. It was made very clear that ISDS was not being considered in any negotiations but then we have had comments from the minister recently that they are looking at a way forward. Does that mean that there are some outstanding issues that will require you to look at ISDS to get the deal done? Is that the way I would read it? If they have not been considered at all to date but now they are on the table, does that mean there are probably sticking points that require ISDS?

Ms Bowes : I assume you are referring to the TPP?

Senator WHISH-WILSON: Correct.

Ms Bowes : As you refer to, the minster has made it very clear that ISDS will be considered on a case-by-case basis.

Senator WHISH-WILSON: Made it clear through you today?

Ms Bowes : No, through public statements. Through his policy that will be considered on a case-by-case basis. I am not aware of the specifics of the negotiations at this stage; however, ISDS in any of the FTAs could be the situation—I will speak for the TPP—where we have to look at the overall balance of the package, the final deal.

Senator WHISH-WILSON: The overall balance being that to get the deal done you may have to consider ISDS?

Ms Bowes : I think the minster has made it clear that one of the aims of the TPP is a significant market access outcome. But that is just one of the issues that he has made clear.

Senator WHISH-WILSON: Sure, and there is no doubt that that is a good issue to focus on. The way I read investor-state dispute settlement procedures, my concern is that they are really designed to reduce the sovereign risk or the political risk for corporations when they are investing in foreign countries. It lowers their required rate of return, adjusts their risk premiums et cetera. I understand that. But the other side of the ledger is that it raises our risk, particularly in government, because it takes away our sovereignty, and the potential to be sued for changes to laws is not acceptable to me or to any Australians, I would have thought.

Ms Bowes : ISDS provisions, as they have evolved over time—and I would note, as Senator Cormann said, that that it is not a new concept for Australia—

Senator WHISH-WILSON: But you would recognise that it has been a very controversial concept.

Ms Bowes : The provisions have evolved over time to reflect a balance between investor protections and the right of a sovereign government to regulate in the interests of public welfare for legitimate public welfare purposes. So there is a balance that is inherent in ISDS procedures as they have evolved over time.

Senator WHISH-WILSON: Could I read from those comments that a balance would mean you are putting equal weighting on what a corporation's objective is, which is making returns for shareholders—or profits—and public interest?

Ms Bowes : Some of the investor protections that are reflected in investment obligations and that are or could be subject to ISDS include obligations to treat foreign investors no less favourably than domestic investors or to treat foreign investors of different nationalities in equal fashion and to provide fair and equitable treatment, for example. They are specific investment protections; however, there are recognised exceptions and procedures that do allow for sovereign governments to regulate on a non-discriminatory basis in the interests of public welfare.

Senator WHISH-WILSON: I understand that, although it is disputed by a lot of experts that that is actually what has happened in previous disputes with ISDS. I can still think of a lot of really good examples of what could be easily classified as being discriminatory by a foreign corporation—for example, if I want to label Australian food Australian made. These sort of things have come up before. It still focuses on this risk: we lose our ability to legislate in Australia's interests, in Australian companies' interests and also in the community's interests in areas like the environment and labour laws. This is not something I am pushing as a troublemaking greenie here. This is the same argument that has happening in the US at the moment and in places all around the world. It is a very serious issue. I would like to also put on record that I do not necessarily agree with Senator Wong's comments that it is in the national interest to negotiate these things in secret, behind closed doors, because it just creates a perception that it is corporations that are dictating the agenda in these trade deals.

Ms Bowes : We consult with a wide variety of public groups. We consult with civil society and industry groups—senators, for example. We have a very active stakeholder engagement program. We hold public stakeholder consultations around the country in the lead-up to our negotiating rounds. We find that the views of stakeholders across the whole spectrum of Australian society are very important in influencing and shaping our negotiating position.

Senator WHISH-WILSON: I respect that. A year ago in Senate estimates when I asked the same question I got the same answer. It is different to consult. CHOICE is one example of an organisation that has been involved, but consulting with someone is different to, on the other hand, providing the transcript and the draft documents directly to corporations and lobby groups, which we know has happened in the US. My question to you is: can you provide us with a list of companies and organisations that have seen the draft documents and the updated draft documents in Australia?

Ms Bowes : Senator, we do not share the draft documents with corporations.

Senator WHISH-WILSON: Okay. So you have not shown it to any corporations or any organisations in Australia?

Ms Bowes : Not to my knowledge, no. We do not share it with corporations.

Senator WHISH-WILSON: How does it work then? You have negotiations, and then the draft documents are kept with DFAT and the US government?

Ms Bowes : All the government officials of negotiating partners have access to the negotiating text, however, I would emphasise that that text actually has no status until it is agreed.

Senator WHISH-WILSON: I understand that, and I will get to that in a second. So none of these other, let us call them special interests—and that includes NGOs and a whole range of different people—have seen the most recent draft document?

Ms Bowes : To my knowledge, no.

Senator WHISH-WILSON: Or the previous draft document?

Ms Bowes : Not to my knowledge, no. The negotiating text is for government officials and we have signed a confidentiality agreement. There is an understanding amongst the 12 parties of the Trans-Pacific Partnership Agreement to retain negotiating documents, which includes text but can also be other negotiating documents, as confidential. However, that understanding does allow us to hold these stakeholder consultations. So we give oral briefings and we also provide an update on the outcome of each negotiating round on the DFAT website. We invite comments through a web portal, and we also give individual briefings. We welcome comments.

Senator WHISH-WILSON: I would certainly welcome your interest in, I am guessing, a significant number of comments you are going to get. It is very clear that ISDS is on the record as being on the negotiation. Senator Wong went into this in some detail, but there is a bit I don't get about the final draft, if it is concluded by December. Interestingly, at the briefing in Sydney, there was dispute between the DFAT staff and some of the people in the audience about this, and I would like to clarify it today. The final draft gets shown to cabinet first, who sign off on it, and then it goes to parliament for ratification, and off to JSCOT. Is that correct?

Ms Bowes : Senator, I would have to take that on notice as to the precise details. I do not wish to mislead you. I know it is submitted through JSCOT and tabled in parliament.

Senator WHISH-WILSON: If you could find that out for me—everyone was arguing about this earlier in the month and it seemed a point of real contention. It is very important in the perspective of whether this deal is going to get scrutiny. A lot of us are in politics here, and once the deal has been done there is going to be significant pressure to get this through parliament. It is very important that for those stakeholders who do not necessarily have a voice that they get a chance to scrutinise this document.

Ms Bowes : Senator, I would reiterate that we do welcome comments from the whole of the spectrum of Australian society, and we have received a number of submissions. We publish those on our website, if the author agrees, and of course we are quite happy to do one-on-one briefings if we are contacted.

Senator WHISH-WILSON: I would just like to go back to the point about ratification by parliament. I know with the US free-trade deal there was significant scrutiny and there were some changes. The bit that is confusing me is that if there are 12 negotiating parties and we decide to make changes to the free-trade deal, what happens then? Does it go back for renegotiation? Or is it a, 'here, take it or leave it, this is all Australia will sign up to', and that is it?

Ms Bowes : The final text that will be tabled in parliament will be the text as agreed between the 12 parties.

Senator WHISH-WILSON: Okay, as agreed between the 12 parties.

Ms Bowes : Correct.

Senator WHISH-WILSON: So is it correct to say that if the draft agreement gets changed by the Australian parliament, it then has to go back to the other 11 parties, and they have to agree to the changes, otherwise the whole thing falls apart?

Ms Bowes : I will have to take that question on notice as to the precise procedures.

Senator WHISH-WILSON: It is very important in what is going to happen in the coming months, if you are going to try to ratify this deal in the two or three months that we understand that process.

Ms Bowes : I just wanted to clarify—and I do not want you to be under the misapprehension that we are expecting to see a deal tabled in parliament at the end of December—that the objective is to work towards finalising it but, with trade negotiations, objectives obviously sometimes can slip.

Senator WHISH-WILSON: I would certainly throw my weight behind Senator Wong's comment about: is there a process we could go through where it could be made available? the reason I ask that is we had a leak with WikiLeaks very recently, which is just one chapter and probably seven or eight points of very strong contention in just that one chapter, and I am guessing, given how expansive and how complex this arrangement is, there is going to be a lot of time needed to scrutinise it and a lot of people concerned about different aspects of it.

Senator WONG: In the answer to a question just then, you made clear finalising did not mean finalising final text, so perhaps you could explain to the committee, when you say finalised, what you mean?

Ms Bowes : The objective is to work towards concluding the agreement by the end of this year—that is the agreement. Once you have agreement on outstanding issues, that is the objective. There are some outstanding issues that are currently under discussion and might well continue into discussion in Singapore. There is then a process whereby the text has to be put into a legal form, as it were, that represents a treaty. We call it a legal scrub. That might well take some additional time and that is why I wanted to make it clear that you were not acting under the misapprehension that something is going to be tabled.

Senator WONG: No, I have forgotten the phrase legal scrub. So is it the government's intention to release anything prior to the legal scrub and the final text of the treaty?

Ms Bowes : I would have to take that position on notice as to what is considered the final text. Generally, I would imagine it is after the legal scrub but I would have to take that on notice to clarify.

Senator WHISH-WILSON: Can you confirm that the text made publicly available through WikiLeaks on 13 November was the August negotiating text?

Ms Bowes : I cannot comment on the contents or the accuracy of that document.

Senator WHISH-WILSON: So you are not prepared to.

Ms Bowes : I cannot.

Senator WHISH-WILSON: If you could just indulge me, I understand other free trade deals have been done differently. I understand the complexity of this, but is there a reason why it was chosen to be done in secrecy and behind closed doors?

Ms Bowes : No, in fact the process whereby the negotiating texts remain confidential is consistent with standard international treaty negotiating practice so that applies across the board. There is no difference. What I could say is in fact the level of transparency which the negotiating partners have aspired to, particularly the Australian government, is perhaps leading the way in terms of stakeholder engagement and consultation. We are really making quite a large effort to ensure that stakeholders are kept informed, but it is completely consistent with international practice.

Senator WHISH-WILSON: So with the text, it is obviously a big document and no-one who has seen it who has been involved in any of the negotiations apart from government officials. When you sit down to negotiate elements of that with all the various interests, how do you go about that then if you do not show them something? Are you building on an original template, or do you say, 'What's on the table? This is what we want.'

I just get the feeling that some parties, logically, must have been privy to most of the information in the text. If you are a large corporation and this is an important area to you, surely you must know a lot more detail than someone from civil society who has been invited in for a five-minute briefing.

Ms Bowes : As I have said, we do not show the text to corporations. Briefings, such as the one you attended, are conducted on an oral basis. We do seek input from interested stakeholders across the spectrum of Australian society to influence and to shape our negotiating position. That includes perhaps market access gains or goals that particular industries would like. We do seek information from industry stakeholders as to sticking points or market access issues, or behind the border barriers or tariff barriers that those industries are confronting. That is the sort of industry engagement we would have. But, as I said, that is more to influence our positions, so that we can represent and advocate Australian interests.

Senator WHISH-WILSON: You would be comfortable that, for example, the 600 lobbyists in the US who have been involved over there would have had the same amount of time as broadly civil society and other stakeholders interested in this deal?

Ms Bowes : I cannot speak for the US.

Senator WHISH-WILSON: Okay, in Australia.

Ms Bowes : I can only speak about the Australian experience and our aims and commitments to transparency, so far as it relates to the TPP negotiations.

Senator WHISH-WILSON: Thank you.

Senator MADIGAN: Earlier, we were speaking about the national interest. Could you expand a bit on that as to what are some of the points that the department uses to protect the national interest? What are the some of the cornerstones or dot points, so to speak?

Mr Fisher : Would you like us to speak generally or about a particular negotiation? What would suit you best?

Senator MADIGAN: With free trade agreements and this trans-pacific partnership, you said about the national interest. Can you explain to me where the negotiators go to do these negotiations? They must have some goalposts and guiding points to work to. Can you allude to what some of them are?

Mr Fisher : Sure. I will speak a little bit about the bilateral free trade agreements. Essentially, we are looking to increase or maintain market access for our businesses, so potentially bringing down tariffs. That is a national interest to provide access to markets that we are either in or seeking to get into, protecting market share in key markets like the three north Asian markets. We would be looking to provide better conditions for our investors potentially. We will be looking to protect potentially sensitive industries to the degree we can. There would be a range of interests like that. We generally gather these interests through the sorts of consultations that Elisabeth has talked about: going and talking to industry bodies and other groups about their interests in particular companies. We invite submissions at the beginnings of an FTA process from interested individuals and interested businesses.

Gathering all of that information together, we gain a detailed matrix, if you like, of the national interest in terms of specific commercial interests in mostly—because it is a trade agreement—detailed interests. We will then present a distilled version of them as a request to an FTA partner. They will make an offer and we will make a request. That process goes on until you meet at a certain point when you are hopefully gaining significant advantage for your businesses and they will get something out of it, depending on what you are prepared to offer. That is the process and how national interest is distilled down into specific propositions.

Senator MADIGAN: With these investor-state dispute settlement issues, there is a lot of concern in the community about these. The feeling is that why on earth would the Australian government put us at risk of another government—or foreign company, multinational or whatever—suing our government for doing what is in the national interest. Why would we take that risk?

Ms Bowes : As I previously explained, the investor-state dispute settlement provisions, as they have evolved, do preserve the ability of governments to regulate in the interests of the public; for example, for public health objectives or the environment. There are safeguards contained in existing or modern ISDS provisions that recognise the sovereign right of governments to regulate for public welfare purposes.

Senator WONG: Can you table any of those examples? Can you table example clauses of the sort you have described, which actually protect? Do have any of those accessible or could you just reference where they are?

Ms Bowes : I can take it on notice, but there are more modern examples. I think Chile was referred to earlier. But I am happy to take that on notice as examples of the types of safeguards that are included.

Senator WONG: Thank you.

Mr Fisher : If I might indulge, we have included ISDS in four of our seven FTAs. We also have 21 investment protection agreements. The fact is that ISDS is not a new thing in the Australian context. Elisabeth has spoken a little bit about how it has evolved. Some of those agreements go back some decades. The more modern ones have evolved to have higher levels of balance protection or however you like to describe it.

Senator MADIGAN: In these negotiations with the TPP agreement, there has been concerns raised about US pharmaceutical companies being able to strengthen their patent rights. That than leads to the question of what impact this will have on Australian pharmaceutical companies and affordable medicines for Australian consumers.

Ms Bowes : The government has made it very clear that they would not agree to anything in the TPP, or indeed any other FTAs, that would undermine the Pharmaceutical Benefits Scheme or indeed Australia's healthcare system.

Senator MADIGAN: Do any aspects of these free-trade agreements interfere or go against any of Australia's domestic laws and requirements? If so, which ones?

Ms Bowes : I am not sure I understood the question. Do you mean in relation to pharmaceuticals specifically?

Senator MADIGAN: Generally, across the agreement. There is concern out there that these agreements could potentially interfere or go against our domestic laws in this country.

Ms Bowes : As I explained to Senator Wong, we are working within our domestic policy settings and consistent with our laws. I mentioned the example of the intellectual property regime. We are working within that framework.

Senator MADIGAN: A few weeks ago, there was a lot of media about invitations being rescinded to numerous journalists who were invited to attend the public briefings by DFAT. Is this true? If so, why?

Ms Bowes : Thank you for the question. I believe Senator Whish-Wilson was at that briefing. Those briefings are held on an off-the-record basis. They are intended for interested stakeholders; but, within the confines of the confidentiality agreements I spoke about, they are off the record. But this also allows freedom for participants to voice their views without attribution. However, I am aware that some members of the media did attend that briefing in a private capacity basis and participated in that briefing. All those media representatives that were registered for the briefing were contacted and offered a one-on-one briefing for the purposes of media reporting. That is our usual practice. We do provide journalists with one-on-one briefings for the purposes of reporting and informing their own journalism and reports. We welcome approaches by the media for such briefings. That is a general practice. But media representatives did attend, I am told, in a private capacity.

Senator MADIGAN: Earlier you mentioned about stakeholders, could I put on notice that you give us a list of who you would term as stakeholders—a list of those?

Ms Bowes : On our website, we do publish the submissions that we receive from interested parties. They include industry groups, corporations, academics and members of civil society. There is a list on our website. I can provide to you as part of the answering of questions on notice. That, of course, is subject to their consent; those individuals or those corporations agreed to having their submission published on the website.

Mr Grigson : I think you are asking what was our definition of a stakeholder. Is that right?

Senator MADIGAN: Yes.

Mr Grigson : We will get you that: how we decide who is stakeholder is. Is that what you mean?

Senator MADIGAN: Yes. Thank you.

Senator McEWEN: I just had a few questions about the negotiations for the FTAs with both Japan and Korea. Could you advise whether the matter of tariffs in the Australian car industry is on the table for negotiation as part of both of those FTAs?

Mr Fisher : Those are interests of both of those negotiating partners.

Senator McEWEN: Can you elaborate any further than that?

Mr Fisher : No, I am not able to elaborate. They are interested in those tariffs. Clearly, a large part of their exports to Australia are subject to those tariffs. Of course, they are interested in reducing those if they can.

Senator McEWEN: So both Japan and Korea are interested in reducing the tariffs on Australian cars?

Mr Fisher : That is correct.

Senator McEWEN: Sorry, the tariff on cars imported into Australia.

Mr Fisher : Yes.

Senator McEWEN: Have the Australian unions that operate the car industry been involved in those negotiations or consulted about what is being proposed?

Mr Fisher : I would have to take it on notice whether they have provided a submission, for instance. I am happy to do so. In terms of consultations, I guess I can do that as a starting point for you.

Senator McEWEN: So you would wait for them to make a submission or would you actively go out and seek their views?

Mr Fisher : Let me come back to you and see what was actually done. These negotiations have been ongoing for some time. I think it is best that I get you accurate information on how that consultation process has unwound.

Senator McEWEN: Thank you, I would appreciate that.

Senator SMITH: My questions relate to the Export Finance and Insurance Corporation and specifically to the $200 million dividend that was extracted under the previous government.

CHAIR: We need the EFIC officials here.

[17:43]

Mr Hunter : I am the managing director and chief executive officer of EFIC. I thought it would be worthwhile just to start with a restatement of what EFIC's purpose is and what we are all about, which is simplistically to provide financial support to Australia's exporters. I actually think we did a pretty good job in 2012-13. We provided 168 facilities that are worth $513 million. I think, significantly, 80 per cent of those facilities that we provided were to Australian exporting SMEs. In aggregate, we supported about $2 billion worth of exports.

In the last few months, I have had the opportunity to go out to see some of the SMEs that we have provided support to in Melbourne, Brisbane and Sydney. And what I got to see were some great Australian export success stories, across a whole bunch of different sectors—manufacturing, agriculture, technology and mining services.

There were two particular companies that really stood out for me. They were both in Melbourne. The first one was a company called Camatic Seating, which makes seats for stadiums. Here we have this small Australian company in Melbourne, and they manufacture and export seats for stadiums right around the world. There are a number of stadiums in the US, for example, where there are people watching a game of football and the 70,000 seats in that stadium came from Australia. I think that is a fantastic story.

There was another company I got to visit in Melbourne called ANCA Abrasives. They are a world leader in CNC grinding machines and systems. So we are providing support to some great Australian exporters, and that contributes significantly to the economic benefits that we get here in Australia, such as additional jobs, benefits to GDP, much-needed foreign exchange reserves and generally the wellbeing of ordinary Australians. I see our exporters as Australian ambassadors. They create considerable goodwill for Australia in foreign countries.

Finally, I would just like to mention that EFIC takes seriously the environmental and social aspects of its business. We have developed policies and procedures to manage these very important risks. I would be pleased to take your questions. Senator, could I just get you to repeat your question regarding the dividend?

Senator SMITH: Yes, my question is about the $200-million dividend, but I have not actually asked any questions yet.

Mr Hunter : I beg your pardon.

Senator SMITH: Just going back to your opening statement: in the beginning you talked about $513 million worth of projects. What was the number of projects? Was at 83 or 183?

Mr Hunter : It is 168 facilities.

Senator SMITH: One hundred and sixty-eight—great, thanks. When did you become the managing director and CEO?

Mr Hunter : Almost 4 months ago.

Senator SMITH: Almost four months ago. If you are not in a position to answer any questions then I invite your colleagues on either side of you to.

Mr Hunter : Thank you.

Senator SMITH: Under the previous government, legislation was passed to require EFIC to pay a $200 million special dividend in June 2013. That is true isn't it?

Mr Hunter : That is correct.

Senator SMITH: Can you just share with me what the recorded profit for EFIC was in 2010-11, 2011-12 and 2012-13?

Mr Hunter : I can share with you the profit from 2012-13--$22.6 million. This is our commercial account profit. The profit in 2011-12 was $26.7 million. Can I take on notice the profit in the previous year?

Senator SMITH: Was it significantly larger, significantly smaller or consistent with that figure?

Mr Hunter : Mr Pacey, do you know, roughly?

Senator SMITH: Roughly will be fine.

Mr Pacey : I believe it was a little bit larger.

Senator SMITH: A little bit larger, great. Isn't it correct that under previous EFIC legislation that a dividend payable in a financial year could not exceed the EFIC profit for that year?

Mr Hunter : Yes.

Senator SMITH: So EFIC paid a $200 million special dividend and the law prior to amendment said that EFIC could not pay a sum greater than the profit it made in any financial year. Is that correct?

Mr Hunter : Yes.

Senator SMITH: Is it also true that as a result of the $200 million dividend payment that EFIC made that it ended the 2012-2013 financial year with a cash-capital adequacy ratio of only 11.3 per cent.

Mr Hunter : Yes.

Senator SMITH: I just want to go to your annual report of 2012-2013, if I might, and I am quoting directly from page 4—and it is signed by the previous managing director and CEO, not you, Mr Hunter.

Mr Hunter : That is right.

Senator SMITH: In that annual report it says:

During the year, legislation was passed to require EFIC to pay a $200 million special dividend to the Federal Government as required under the 2012-13 Federal Budget. Consequently, EFIC ended the financial year with a cash capital adequacy ratio of 11.3 per cent, …

Further in that same paragraph in that annual report it says, signed by the chairman and the managing director:

… EFIC experienced a number of breaches of capital-based limits specific to large exposures as a consequence of paying the special dividend.

I might just read from page 57 of the same annual report, for the benefit of the committee. It is under the topic of capital adequacy:

Under section 56 of the EFIC Act, the Board is required "to ensure, according to sound commercial principles, that the capital and reserves of EFIC at any time are sufficient" in order to—

meet a number of obligations. It then goes on to say, as outlined above:

… recent changes to the EFIC Act which give the Minister … power under Section 55A(2) to direct EFIC to pay specified dividends within a specific period means EFIC's capital base may not meet the regulatory definition of capital.

That was from the annual report of 2012-13. I just want to go to some questions in part (a) of my questioning, if I may, which speak specifically about EFIC performing its function outlined in your opening statement. I am keen to know, Mr Hunter and others at the table: have there been impacts or potential implications for the number or value of loans possible in the periods after the special dividend was taken?

Mr Hunter : Senator, as you referenced from our annual report, EFIC adopts a risk framework, which is required under the act, and that risk framework is broadly consistent with APRA guidelines and Basel III.

Senator SMITH: Broadly consistent?

Mr Hunter : That is correct.

Senator SMITH: So it is consistent?

Mr Hunter : Broadly consistent, because EFIC is not a bank and is not regulated by APRA but our board has chosen to adopt a risk framework which is broadly consistent with APRA guidelines and Basel III. As you noted, during the course of the financial year we paid a special cash dividend of $200 million that reduced EFIC's cash capital from $430 million to $228 million. Our cash capital adequacy ratio came from 21.2 per cent at the start of the financial year to 11.3 per cent. As a consequence EFIC experienced a number of breaches of large exposure capital based limits. We have subsequently had discussions with the previous government and the current government regarding additional capital and those discussions with the government are continuing.

Senator SMITH: My question went to the number or value of loans possible in the period as a result of the impact of the extraction of that $200 million special dividend. So I am just curious to know: could we have seen more than 168 loans because we have seen a greater value of $513 million? Could we have seen a larger percentage of support being given to SMEs?

Mr Hunter : Senator, I come back to EFIC's purpose. Our purpose is to provide financial support to Australia's exporters. We seek to do so within a risk framework that the board considers appropriate for EFIC. During the financial year, as a consequence of the special dividend, we ended up in breach of a number of capital based limits and we have approached the government because we would like to have our capital reviewed to enable us to continue to function in accordance with the risk framework that the board considers appropriate.

Senator SMITH: So is there no impact on your ability to support Australian exporters as a result of the extraction of $200 million by way of a special dividend? Is that what you are saying?

Mr Hunter : No, it is not.

Senator SMITH: My question is trying ascertain what is the impact, or potential impact.

Mr Hunter : The impact is that we experienced a number of breaches of our large exposure capital based limits. We as a board and as a management are cognisant of our capital position and the APRA guidelines and Basel III that we feel are important to the management of EFIC. Going forward, we feel that additional capital will enable EFIC to operate in a prudent fashion, consistent with our purpose of supporting Australia's exporters financially.

Senator SMITH: I will come to the issue of prudence in a moment. Would you prefer, Mr Hunter, to—

Senator WONG: I just want to clarify—

Senator SMITH: I afforded you some courtesy. I think that is only—

Senator WONG: So did I.

CHAIR: He has made his position clear.

Senator SMITH: Would you prefer to take that on notice, Mr Hunter?

Mr Hunter : I am happy to take the question on notice.

Senator SMITH: Where does the reduction in EFIC's equity have the greatest impact? Is it on small or medium businesses, or does it have implications applied across the board, across your client base?

Mr Hunter : Across our client base.

Senator SMITH: So there is an impact?

Mr Hunter : On the special dividend, I am happy to restate what I stated before.

Senator SMITH: Your comment, Mr Hunter—and I note that you were not the managing director before four months ago—is replicated in the annual report of 2012-13, so I can see it in that; I have read it. You have just shared with me your view that the reduction in EFIC's equity has the greatest impact across your client base. So when I go back to my first question, which was whether there have been impacts or potential implications, the answer must be yes.

Senator WONG: Point of order. The senator cannot tell the official how to answer the question. He may not like the answer but it is the official's answer. He has just phrased the question to him that essentially says, 'This is the answer that I want you to give.' As frustrating as it may be, the official is entitled to quote parts of the annual report back to him.

CHAIR: I think Senator Smith is just adding what he read in the annual report and it is—

Senator SMITH: Other members of the committee are welcome to ask questions to defend the previous government's actions after me.

Mr Hunter : I am happy to answer your question. EFIC have approached the government for additional capital—

Senator SMITH: I am sure you have—

Senator WONG: Point of order. Let the official answer the question.

Senator SMITH: and if I was in your position, having had to take $200 million out—

Senator WONG: Point of order.

Senator SMITH: I would be approaching them, too.

Senator WONG: Point of order.

CHAIR: Yes, all right, Senator Wong.

Senator WONG: We are going to be courteous and if people are not we can go down a different path.

CHAIR: I accept your point of order. I think you should let the witness answer.

Senator SMITH: Yes, my apologies, Chair.

CHAIR: Then you can respond to his answer.

Mr Hunter : We felt the need to write to the previous government and the current government regarding our capital position because we have adopted a risk framework that is broadly consistent with APRA guidelines and Basel III. And most importantly for EFIC we want to have EFIC in a capital position that enables us to support all of Australia's exporters, both big and small.

Senator SMITH: I think that is a very prudent thing to do in your position at this point in time. What specific sectors are you now out of bounds in supporting as a result of the $200 million reduction in your balance sheet?

Mr Hunter : That is a question that I will need to take on notice, if that is okay?

Senator SMITH: Yes. Further, are there any regional locations where EFIC is now overexposed and therefore restricted in providing support?

Mr Hunter : Again, I will have to take that on notice.

Senator SMITH: Have there been any concerns expressed by EFIC's stakeholders about the decision of the former government?

Mr Hunter : I would find that a difficult question to answer—to speculate on what previous people may have said.

Senator SMITH: True. Mr Hopkins, are you aware of any stakeholders having expressed concern at the decision of the former government?

Mr Hopkins : I am not aware of any at the moment, but I would need to check and again, like the managing director, take that question on notice.

Senator SMITH: Going back to your earlier comments, Mr Hunter, in regards to breaches of capital based limits, how many breaches of capital based limits occurred in consequence of this decision to pay the special dividend?

Mr Hunter : I will need to take that on notice to give you a thorough and detailed response.

Senator SMITH: So there have been breaches and there has been more than one breach?

Mr Hunter : That is correct.

Senator SMITH: Thank you. When do you expect that EFIC will have recovered to the position it was in prior to the special dividend having been taken, absent of any new injection you might be requesting from the government?

Mr Hunter : Sorry, I did not quite catch the question. When will we be in a position—

Senator SMITH: When do you expect EFIC to have recovered to its position prior to the extraction of the $200 million special dividend—

Mr Hunter : Yes, I understand.

Senator SMITH: in the absence of getting an injection from the Commonwealth?

Mr Hunter : EFIC made a profit in the last financial year of $22.6 million. We paid out a special dividend of $200 million. If I do the maths roughly, I am guessing that to get our capital position back to the same level will take roughly eight years, assuming the same level of profitability.

Senator SMITH: Eight years, almost 10, assuming that the recent profit outcomes are consistent into the future as they have been over the last three years?

Mr Hunter : Our capital base is lower now, and we earn income on our capital base, so we would project that our profits will be lower in the future.

Senator SMITH: This is the last section in my first part of the questioning. Did the responsible minister in the former government express any concern at the decision and the consequences of the impact on the EFIC balance sheet? Again, you might just have to ask your colleagues for assistance.

Mr Hunter : I think we had best to take that on notice.

Senator SMITH: Thank you very much. I want to go to the second part of my question.

Senator Wong interjecting

Senator SMITH: It refers to—

CHAIR: He is asking questions still related to this.

Senator RHIANNON: I have questions on EFIC too, Chair.

CHAIR: Let Senator Smith conclude his questions.

Senator SMITH: My next set of questions goes to the annual report of 2011-12. I will just read from the annual report of 2011-12.

Senator WONG: You did not like it when the officials read from an annual report. Now you are going to do it. Is that how it works?

Senator SMITH: 'In the 2012-2013 federal budget'—I am reading from the annual report, signed by the chairman and the former managing director, at page 9:

In the 2012-13 Federal Budget, the Treasurer announced that EFIC would be required to pay a 'special dividend' of $200 million during 2012-13. The mechanism to direct how this will be paid is yet to be determined; however, legislative changes to the Export Finance and Insurance Corporation Act 1991 (Cth) will be needed to enable payment. The timing of these legislative changes is yet to be finalised, but the Budget requires the dividend to be paid to the Federal Government by 30 June 2013.

There are no surprises in that statement.

Despite this—

this is from the annual report signed by the chairman and the managing director—

our capital base is solid and allows us to support many small and medium-sized exporters. However, the level of demand to support large, long-term transactions continues to be greater than we can prudently meet on the Commercial Account.

Why does the annual report of 2011-12 talk about the special dividend needing to be paid and does not—to replay your comments, Mr Hunter, you are a risk averse organisation. We go to the composition of the board, whose photographs are in this annual report, who are well-regarded, risk averse individuals. Why is that we go from this, not raising any alarms about the need to extract $200 million, and then in one annual report we go to statements about breaches of adequacy requirements and we go to requests for the new government to provide capital injections? It seems like a very, very large shift in attitude for a risk averse organisation with many prominent people on its board. I am just wondering if someone can provide an explanation about why the 2011-12 annual report did not express more caution, was not more prudent, and did not reflect the risk adverse nature of the organisation and, I expect, the board members.

Mr Hunter : I obviously cannot comment on an annual report written 12 months ago when I was not on the board—

Senator SMITH: Agreed.

Mr Hunter : and I do not think it would be appropriate for my colleagues who would not have been sitting at the boardroom table at that point, so I will take that question on notice and we will give you a response.

Senator SMITH: How are annual reports presented to EFIC? Who drafts them and who prepares them?

Mr Hunter : The executive prepare the annual reports, draft them for discussion and consideration by the board.

Senator SMITH: Are they heavily edited or not edited at all? Perhaps the legal counsel could provide some evidence—

Mr Hunter : Could you define 'heavily edited'?

Senator SMITH: I do not mean grammatical or spelling change. I mean material changes to how information might be represented.

Mr Hunter : I am happy to address the question. I sat through the board audit committee this year and I did see considerable challenge from the board about disclosure, about the way things were disclosed, and I would say that there is a sensible and prudent discussion about what stakeholders need to know and how it is represented in the annual report.

Senator SMITH: That prudent sensible decision-making seems to be absent in the 2011-12 annual report where it talked about an extraction of $200 million, but did not anywhere that I can see in that annual report—and I am happy to be pointed to it—have any cautions, disclaimers, discussions about how this might actually affect the performance of EFIC into the immediate or longer-term future.

Mr Hunter : I do not think that is necessarily correct.

Senator SMITH: Please correct me.

Mr Hunter : As I indicated with your previous question, we will respond to you about the change from one annual report to the next.

Senator SMITH: If you are able to disclose attitudes or discussions that happened at the audit scrutiny of the 2011-12 annual report, that would be most valuable.

Mr Hunter : I understand.

Senator SMITH: I suspect that the 2012-13 annual report is a more accurate description of EFIC's position. I am curious to know what the audit committee or audit discussions or audit scrutiny happened around the 2011-12 report. I go back to my point, this is a very big departure in one annual report in a 12-month period for what should be a highly prudent, risk-adverse organisation.

I have another question, one that goes to the issue around capital adequacy. Is it true that EFIC needs a balance sheet stronger than a conventional bank because by its nature it is providing riskier loans than conventional banks and given it is filling a gap that is unmet by the private sector and advancing loans when others might not wish to advance them. Is that an accurate statement?

Mr Hunter : EFIC adopts a risk framework that we consider appropriate for the risks that we take on, balanced across countries and industry sectors as well as large exposures.

Senator SMITH: Thank you.