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Tuesday, 18 May 1993
Page: 716


Senator COLLINS (Minister for Transport and Communications) (3.23 p.m.) —Anybody who takes the trouble, and they should, to read the documents—the determination, the gazettal notice, the information paper and the advice which I have freely tabled in the Senate today from both Mr Gyles QC, a highly respected member of the commercial bar in Sydney, and the Attorney-General (Mr Lavarch)—and who then comes to the extraordinary conclusion that Senator Alston has just come to about what he would have done had he got the determination will come to the conclusion that this is a rabbit that is just not going to run.

  Senator Alston said correctly this morning that this was a completely separate issue from the problem of the deposit—and indeed it is. I accept the totally unwelcome fact that it is sitting before us and has to be dealt with. I am dealing with it as the Minister for Transport and Communications. We all, particularly the industry, could have done without it. Someone said to me a couple of weeks ago, `If you hadn't conducted that scrupulous examination of these documents, this probably would never have been found and probably would never have caused a problem'. I want to lay out just how arcane the scenario is that Senator Alston has just referred to.


Senator Alston —Ask Mr Evans.


Senator COLLINS —Have a look at the determination. Have a look at the Commonwealth of Australia Gazette.


Senator Alston —Why did Mr Evans offer to tap the mat?


Senator COLLINS —Senator Alston should read his letter and he will see the distinct difference.


Senator Alston —I have.


Senator COLLINS —Read it carefully. He does not ever bother doing that. Senator Alston is just head hunting, and he is not basing it on the facts. That is what is going on in here.

  There are three documents issued in relation to this matter. First of all, I issue a determination, which Mr Gyles said was `legally valid'. That is what I do. A couple of weeks later a gazettal notice appears which gives just a very general description of what is available for tender. The important document that then appears is the information paper. I might add—Senator Alston has ignored this—that this is a process which the department and industry have embarked on again and again. These determinations are regular events in telecommunications; they go out all the time. The industry is well aware of it.

  The prospective tenderer has a look in the Gazette to see what is available. I think there is a mailing list of over 500 organisations that regularly tender for telecommunications and broadcasting issues. This one cuts across both: it is both a telecommunications and broadcasting matter. Basically, the gazettal notice just says, `Send for the information paper'. This is the document on which the tenderers base their tender. Senator Alston knows that, despite trying to make bricks without straw.

  People do not normally go back to the determination and start searching it for abstruse legal difficulties. They get the information paper—that is what it is for—and they base their tender on it.


Senator Alston —They assume you have done your job.


Senator COLLINS —Correct.


Senator Alston —Taken advice.


Senator COLLINS —That is right. That is how arcane a situation this is. Having had this matter brought to my attention in a detailed way, with the advice I have now tabled in the Senate, what is being lost in this debate is what an arcane situation would have to have arisen for this to have ever caused a problem. I will tell the Senate what would have happened in order for people to understand why I took the responsible decision that I did to take this to Cabinet and recommend abrogation—not an easy course politically, and I was well aware of it, but it was the only responsible course, in my view.

  If a person applied for and received the information paper under the Gazette—I just ask people to read it; Senator Alston is always talking about reading things but he clearly has not read this—it will tell him not only that he cannot apply for an individual channel, but also that if he does his tender will be invalid. That is what it tells us—it is in here. I do have not time to quote it all. I would say to anyone with a serious interest in nailing down responsibility, `Read it yourself'.

  The information paper on which all normal tenderers would base their detailed bid states that if a person applies for an individual channel—that is, if someone says, `I want channel five in Sydney'—his tender will be ruled invalid. That is correct. For someone to have actually caused a problem, if this had not been discovered—the full detail of it was only discovered because of the re-examination of all the tender documents by a fleet of lawyers—he would have had to have completely acted against the information in the information paper and run the risk, according to the information paper, of having his tender ruled invalid.

  He would have had to have gone back to the original determination and found this obscure drafting difficulty. And despite Senator Alston's unbelievable assertions, it is an obscure problem, referring to the singular instead of the plural in the determination. It was originally drafted, I was told not unreasonably, by applying the normal rules of statutory interpretation that single means plural except where otherwise determined. Of course, we should have picked that up straight away—Senator Alston would have. That is rubbish, and he knows it.

  Having found that arcane legal difficulty in drafting and ignoring the information paper—this is the scenario that potentially could have occurred, which is why I took a submission to Cabinet recommending abrogation as being the only responsible way of handling a problem once it had been directly brought to my attention—what could have happened was this: tenderer X, this shyster who wants to put in a shonk bid, ignores the advice in the information paper that tells him that if he does this his tender will be ruled invalid, picks up the drafting difficulty in the determination, and puts in a tender for channel 5 in Sydney for $20 or $100.

  This is a process that is well understood by the industry and which it routinely follows. If tenderer Y puts in a genuine tender based on the detailed advice in the information paper—I do not know what these licences are worth because the market will determine that, but let us say $1 million—at the time of allocation the top six prices are pulled out of the box and the six channels are then allocated by the department. The other matter that has not been referred to in this debate by Senator Alston is that the channel numbers and frequencies are secret information. The channel numbers and frequencies are held by the department in total security and are not allocated until the six licences are allocated in descending order of bids.

  What then happens is that the highest tenderer gets channel 1, the next highest tenderer gets channel 2 and so on down to channel 5. In terms of our legal advice I stress what could have happened is that if the shonky bidder got his $20 bid for the single channel, instead of one licence in a group of licences, and the Government then allocated successful tenderer Y channel 5 for a million dollars, the shonky tenderer could then go to court, get the court to bring down a decision that the correct legal interpretation of the determination was a singular licence not plural and then the court could allocate that licence to the shonky tenderer for $20. Therefore that would upset the proper tender process and cost the public the million dollars it should have got for the licence, but further it could open up a potential legal challenge for damages from the failed genuine tenderer, tenderer Y, who put in a bid for a million dollars.

  I might add that that situation was described to me, I think, accurately as being very remote. When I first had this brought to my attention by officers of the Attorney-General's Department and the Department of Transport and Communications, the two courses of action that were being considered at that stage—and, I might add, strongly argued among the lawyers concerned because this is a very arcane legal problem as anyone who takes the trouble to read the advices and look at these determinations will see—were to continue the process because of the acknowledged small risk of the problem ever occurring or to legislate to correct it.

  For people who want to be concerned about the prospect of legislating, I refer them to Mr Gyles's advice because this is covered there quite well. The problem with legislation is that it would have been an incredibly complicated matter to construct legislation that would have covered off, retrospectively validated the determinations and taken into account as well the effect of the court order in Perth on all of those determinations. In other words, that is a complicated exercise. Of course, the more complicated it would have been the higher the risk would have been that, despite the most extreme care devoted to it, we would still get it wrong. Those two options were the ones that were being considered.

  When the matter then went off for private legal advice for the first time and after a great deal of consideration by Mr Gyles, the third option of abrogation emerged as being the surest way of guaranteeing the process that we could possibly adopt.

  It was clear to me very early on that this was a matter that I responsibly had to take to Cabinet, particularly as the level of risk involved—this can be seen if one reads Mr Gyles's advice—between those options of legislating and abrogating was something that indeed Cabinet could have had a different view on. One of the potential outcomes would have been, and could have been, that Cabinet asked me to further consider and explore the question of legislation rather than abrogation. I would have understood that to be a reasonable outcome.

  In all the circumstances, and knowing the Attorney-General's advice was similar at the end of day to Mr Gyles's advice—and I believe it was the correct option—I determined that the matter should go to Cabinet. I asked for the matter to be prepared as a draft submission to Cabinet, with all of the legal advice attached and all the options laid out as is normal in a Cabinet submission, that is the background and the pros and cons of the three options that were being considered and all the legal advice attached to it as a draft Cabinet submission. That was delivered to my office sometime on Thursday. Honourable senators would recall—Senator Bourne and Senator Alston will certainly recall—that on that day we were successfully getting through both Houses of Parliament legislation to ensure that the central policy intent of this Senate chamber, as I have said many times, of getting a nationally delivered satellite service with an ancillary service for MDS applied, was being pursued.

  Senator Alston knows full well that that process did not conclude until about 2 o'clock in the morning in the House of Representatives. I was physically in the House of Representatives anterooms at that point in time and reliable advice tells me—with the best intentions in the world—that Senator Alston was over there as well. At about 2 o'clock both Bills had successfully passed through both Houses of Parliament.

  I went back to my office at half past two on Friday morning—and I might tell the Financial Review that I do not do this out of choice; it is just because when the job is there to do, one has to do it—and dealt with the ministerials of the day. There were about 50 of them at that stage. I did not get to the other 49. The chief one was the draft Cabinet submission. At that point in time I did not even bother to read the background and the options papers—I went straight to Gyles's advice and I read it. By about half past three or 4 o'clock I said to my staff, `Look, it is just not possible for me to do this. This is so complicated and so delicately balanced, I should not consider this until I have had at least a few hours sleep'.

  On Saturday, I carefully read the entire draft Cabinet submission. It was my view that it should in fact go to Cabinet and had to go to Cabinet. And it was also my view that the recommendation I would take to Cabinet was abrogation, despite the obvious difficulties of that course of action. It provided the surest way of ensuring, for the genuine bidders, that the process would not be upset by this obscure possibility, this remote possibility, that some shonky bidder could exploit this. I consulted with the office of the Prime Minister (Mr Keating) on Monday morning—


Senator Alston —Why did Graham Evans have to—


Senator COLLINS —I am laying it all out. I told the Prime Minister's office that it was my view that the matter needed to go to Cabinet at the first available opportunity, which was yesterday. The Prime Minister's office agreed with me and I gave instructions that the draft become a formal Cabinet submission. It was considered by Cabinet yesterday. There was indeed discussion about the two viable options, at least potentially viable options, of legislation rather than abrogation and abrogation. Following that discussion, Cabinet supported the recommendation I made that abrogation should be the case.


Senator Alston —This is just filling in time. Tell us why Graham Evans—


Senator COLLINS —I am laying all this out because of the terms of the MPI this afternoon. It falls down instantly. This MPI says that I fail—

  Senator Loosley interjecting—


Senator COLLINS —Yes, I fail because I have not acted to take control, et cetera. The facts are on the record. This is the first major indication of a systems failure in the Department of Transport and Communications since it was established as the Department of Transport and Communications. I ask Senator Alston to name another.

  When this matter was made obvious to me a fortnight ago, I acted instantly. I asked the secretary to the department to conduct a complete, immediate investigation which has since been overtaken by an independent inquirer, the former Commonwealth ombudsman. And I am getting a little tired of comments being made about that because those comments are really based on nothing but false assumptions. The secretary advised me that that process was already under way. A scrupulous re-examination was made of all the tender documents, including, I might add, even such things as tenders for the acquisition of computers by the department. The results of that examination show that this is the problem which has been revealed.

  In terms of the question asked by Senator Alston, this is where people should simply refer to Mr Evans's letter. The fact of the matter is that some time in February—early February, I am told—there was an indication that there was a drafting difficulty. At that time, my then adviser, Mr Meagher—who is now back working for Senator Richardson—had some general knowledge that a drafting technicality had been discovered. It was placed no higher than that. The department expected that technicality would be resolved in the court action because it had strong legal advice—written advice—that the court action would be successful and that the technicality could then be addressed. That was the full extent of the advice which was given. I bring it to the attention of Senator Alston that that is why Mr Evans took the action which he did.

As I said, on about 19 or 22 February the department received written advice from the Attorney-General's Department—this was well and truly after the Federal election was announced on 7 February—saying that there was a problem in terms of the drafting. That was made available to the department. No further advice was received either by my office or myself on the matter because it was simply assumed that it would be corrected by the court action. The court action did not validate the revocation but what the court action did—and I read it out this morning—was to issue an order following agreement between the Commonwealth's lawyers and Mr Stokes's lawyers, who met the morning before the court case and formed an agreement which was satisfactory to both us and them. I have quoted this but I will quote it again. The court directed the Government to `accept and treat as valid any tender or revised tender complying with a ministerial direction under which the tender process was conducted'.

  It was determined by the legal advice of the department then that that provided a valid basis for the tender process to proceed with the agreement of all parties. The advice given to me from Perth was that we had a valid basis on which the tender process could proceed. I was advised in writing on 8 April that the order—that is, the order from the court—`enables the MDS tender process to be completed under the existing ministerial determination'. I am not quite sure how much more precisely I can lay out the advice that I received.


Senator Alston —I raise a point of order, Madam Acting Deputy President. I am not sure that this is the most appropriate way of doing it, but I simply ask the Minister to indicate whether the two documents he has tabled are the only ones that he intends to table today in relation to his undertaking to the Senate last Thursday night.

  The ACTING DEPUTY PRESIDENT (Senator Giles)—There is no point of order. It is totally up to the Minister to decide what he will do with that intervention.


Senator COLLINS —Mr Evans has asked Mr Hutchinson, a senior officer in the department, to provide a full report on this particular drafting problem. I said today in Question Time—and I reiterate it—that that report and any relevant papers that are attached to that report will be made available to the Senate, and they will, including the one I have just mentioned.

  Senator Alston interjecting—


Senator COLLINS —I wish to avoid any more spurious points of order that are designed to waste my time. Honourable senators should look at the wording of this MPI. As I said before, it is a rabbit that just will not run. I have taken scrupulous action as Minister to lay out for this Senate—and it will be laid out—all the matters involving both these errors. They are the only ones now discovered. I refer to the failure to apply a deposit in the first instance and, secondly, a drafting problem here.

  Mr Evans felt that he should accept, as he said, formal responsibility for the legal advice that all the lawyers—I might add, not just ours but of those opposite as well—provided, to quote my advice, `a basis that enables us to complete this process under the existing ministerial determination'.

  I concur in and support the Prime Minister's advice that, having had that request from Mr Evans, it should not be accepted because of the very significant record of this department, apart from these two errors that have had major consequences in the pay TV process, and the significant achievements of this department in shipping, waterfront, aviation, broadcasting and telecommunications over the past five years. (Time expired)