Senator KERNOT (4.51 p.m.) —The Australian Democrats think the question is whether the former Minister for Shipping and Aviation Support, Senator Collins, persistently failed to investigate allegations and irregularities and whether we can prove that the delay really was an inordinate delay anyway. As far as we can see, the time line is as follows. In mid-March the tender was determined. By early April, when the Public Works Committee started the inquiry into the building works involved in TAAATS, obvious problems were surfacing in relation to the tender process. In early May, Senator Collins began discussions with his Department about setting up an inquiry. On 27 May, Senator Cook took over the portfolio. On 3 June, the Public Works Committee tabled its report and recommended an inquiry be held into the awarding of the contract to Thomson. On 11 July, the inquiry started. So we have a period, technically, of about six weeks between the determination of the tender and Senator Collins's first discussions with officers of his Department about setting up an inquiry.

Senator Macdonald —What about the Estimates Committee on 31 March?

Senator KERNOT —Is 31 March to May inordinate? Three weeks later Senator Cook was the Minister responsible. One week after that the Public Works Committee recommended an inquiry. Five weeks later, Mr Macphee had been appointed and the inquiry had started.

Senator Macdonald —There were a lot of questions before that.

Senator KERNOT —There are a lot of questions—but are they about Senator Collins, or are they about the bigger question of the role of GBEs, about the concept of `arm's length'? I think they could well be. Are there questions about the actions of Mr Baldwin and Dr Edwards, for example?

  The Democrats believe that there is a strong case that the two executives most responsible for this debacle, Mr Baldwin and Dr Edwards, should be dismissed immediately. We think it is inconceivable that Hughes could have any confidence in the re-run tender process if those two officials are reinstated. There is also sufficient evidence to warrant a review of the appointment of the Chairman and the Deputy Chairman, Mr Ted Butcher and Mr Henry Bosch. In our view, they oversaw a clearly flawed process and appeared to us not to properly and independently question the judgment and action of the two senior executives in question, Mr Baldwin and Dr Edwards. Mr Butcher is, after all, the Chairman of the National Rail Corporation as well as the Civil Aviation Authority. He surely must take responsibility for the haphazard and hasty sequence of events leading to the decision to favour Thomson over Hughes. His position in the NRC is critical to the national interest, and reassurance as to his judgment and determination to act is needed.

  In response to one of Senator Macdonald's interjections, I said that what has happened here raises the big question of the role of GBEs and the way in which this Government, with the support of the Opposition, which said, `Yes, yes, corporatise; you must corporatise; it is not as good as privatising, but it is a good first step along the road'. So it raises the question of the role of GBEs, their relationship with government, and the notion of what `arm's length' should mean in relation to GBEs.

   As I understand it, Mr Macphee said that he felt that the Chief Executive and the board either did not know or did not properly understand the Civil Aviation Act, which established the CAA, in that it seemed to him that they interpreted that Act to mean that the sole purpose of the CAA was to operate on a commercial basis. Again, I think the assumption is that the relationship between government and GBEs—in this case, the Civil Aviation Authority—was akin to one between a board and shareholders. But the Democrats would argue strongly that because the Government has ownership, a more direct sense of control and responsibility is required.

  Although the Government has many government business enterprises under its authority, we think that—it is the old line: horses for courses—there are some which quite obviously the Government may wish to say have a primary objective of operating commercially. But, quite clearly, there are others whose prime consideration is the purpose of delivering public good. Chapter 2, on page 11 of Mr Macphee's report, quite clearly specifies:

The Board of the CAA has the purposes:

  (a)to decide the objectives, strategies and policies to be followed by the Authority; and

  (b)to ensure that the Authority performs its functions in a proper, efficient and economical manner.

This does not mean that its sole objective is to operate on a commercial basis.

  Mr Macphee also suggested that there were other considerations that governments ought to have in mind. On page 13 he lists an indicative and far from exhaustive list of the possible objectives of the Government to be met by the CAA beyond the efficient production of the specified products of the CAA. In the first instance Mr Macphee talks about the `provision of safety in relation to civil aviation'. He talks about `artificial deterrents to demand for or supply of civil aviation'. The first one is quite clearly a public good. The second one he describes as `to reduce the incidence and therefore cost of externalities'. He also talks about assistance to Australian industry to meet the wider policy objectives of producing a portfolio of goods and services.

  When we debated this matter a couple of years ago, we talked about what a wonderful delivery of services we were going to get from this corporatised CAA. I think we should look again. We should say, `It has failed to deliver'. In one sense, we have a GBE which clearly seems to be ignoring its purpose and its major considerations beyond commerciality. The Government needs to take a good, long and hard look at the way the CAA Board is interpreting the Act which establishes it.

  I ask again: what is the point of having corporatisation if we are just going to have a board at arm's length making these sorts of decisions, costing this amount of money for a review and a government which stands back? I hope this will cause the Government to look more closely at its relationship, not just with this government business enterprise but with all its government business enterprises.