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Thursday, 30 April 1987
Page: 2299

Dr THEOPHANOUS —On behalf of the Joint Committee of Public Accounts, I present the 270th report of the Committee, Implementation of the Offsets Program.

Ordered that the report be printed.

Dr THEOPHANOUS —by leave-I wish to make a short statement in connection with the report. This report presents the findings of the Joint Committee of Public Accounts inquiry into the implementation of the offsets program, which I had the privilege to chair. In 1984 the Auditor-General and an independent committee, chaired by Sir Brian Inglis, carried out reviews of the offsets program. It was the acceptance by the Government of the majority of recommendations in the latter report that was the basis for the decision in January 1986 to make significant and fundamental changes to the offsets program. It is in this light that the Committee has conducted its own inquiry into the program. The basic objectives were to examine progress on recent amendments to the program and to recommend whether further action or attention is necessary.

The main thrust of the Committee's findings centres on four main points. First, as the offsets program impacts on only a small section of Australian industry, the Committee considers it essential that Australian participation in the program be increased, both by increasing the number of Australian firms, particularly smaller firms, participating in the program, and by ensuring that overseas firms fulfil the offset obligation fully and in the agreed period. Secondly, the issue of how technology transfer is valued when claimed as an offset is of concern to the Committee. Thirdly, a number of administrative matters were examined and the Committee has made recommendations concerning the dual administration of the program, lack of consultative mechanisms and administrative discretion. Finally, the Committee is very concerned at the inadequate record-keeping of the offsets authorities and at the distinct possibility that some outstanding obligations have not been fulfilled because of those poor records.

In an effort to increase Australian participation in the offsets program, the Committee urges the Departments of Defence and Industry, Technology and Commerce, which are the two administering departments, to increase the visibility of the program's administration, formally liaise with industry, publicise actual offset arrangements and disseminate information to assist participants, including data on local and overseas industry. Technology transfer as an offset receives considerable emphasis under the new guidelines. The valuation of technology is an area that the Committee considers has major potential for abuse. The Committee's recommendation is that as many valuations as possible should be based on a real work outcome for Australia from that technology transfer, rather than a resort to merely notional valuations.

The Departments of Defence and Industry, Technology and Commerce have been jointly responsible for the administration of the offsets program since late 1984. The uniform administration of the program is very important. However, the Committee is concerned that the overall program is seemingly being implemented as two separate programs despite joint efforts such as the publication of common guidelines for participants. The Committee believes it needs to be resolved, preferably by the two departments, whether the administrative role can reside solely within the Department of Industry, Technology and Commerce whilst maintaining suitable links with defence industry policy.

A common concern expressed to the Committee was that the guidelines issued leave too much room for interpretation and judgment by the offsets authorities. The Committee is of the view that the current level of administrative discretion needs to be clarified and recommends a more rigorous set of guidelines, detailed and public registers of precedents, thorough and independent assessment prior to negotiations and comprehensive procedure manuals for staff.

In conclusion, as Chairman of the sub-committee, I thank, in particular, the other members of the sub-committee who worked very hard to produce this report in almost record time. I also thank Ian Penrose and Karin Malmburg for their very hard work on this report. I commend the report to honourable members.